{ "docId": "019dd923-622c-750b-8b9d-35a25cc47ebe", "docSlug": "f69144a22bb1", "documentTitle": "Lehman Brothers (LEH)", "authorId": "04_Greenlight_Capital", "authorName": "David Einhorn", "documentKindSlug": "conference-presentation", "documentKindLabel": "Conference presentation", "sourceTypeSlug": "activist_investor", "sourceTypeLabel": "Activist investor", "presentationDate": "2008-05-21 00:00:00", "orientation": "portrait", "aspectRatio": 0.77272725, "pageNumber": 2, "pageCount": 9, "prevPage": 1, "nextPage": 3, "slideType": "expose_contradiction", "function": "expose_contradiction", "density": "overcrowded", "nDataPoints": 0, "notes": "This slide uses rhetorical questions and hypothetical scenarios to highlight perceived double standards in SEC enforcement.", "elementsJson": null, "metadataConfidence": 0.9, "imagePath": null, "slideHref": "/slides/019dd923-622c-750b-8b9d-35a25cc47ebe/2", "deckHref": "/decks/019dd923-622c-750b-8b9d-35a25cc47ebe", "deckJsonHref": "/decks/019dd923-622c-750b-8b9d-35a25cc47ebe.json", "deckAnchorHref": "/decks/019dd923-622c-750b-8b9d-35a25cc47ebe#slide-2", "components": [ { "bbox": { "h": 0.06, "w": 0.72, "x": 0.14, "y": 0.65 }, "kind": "paragraph", "text": "Imagine if a hedge fund operated a unit that defrauded the SBA federal lending program out of millions of dollars – engaging in what the SBA inspector general would call “the largest fraud in SBA history.” How long would that hedge fund be in business?", "attrs": null, "subkind": "paragraph", "toolName": null, "toolSlug": null, "confidence": null, "componentId": "3ef34cbc-1547-4987-bce6-5d471ffc282c", "frameworkName": null, "frameworkSlug": null }, { "bbox": { "h": 0.21, "w": 0.72, "x": 0.14, "y": 0.43 }, "kind": "paragraph", "text": "Imagine what would happen if a whistle-blower made a detailed public presentation showing a hedge fund cooked its books. Under no circumstance would the immediate focus start by investigating the accuser. How long would it take for the SEC to arrive and how tirelessly would the media investigate and cover the story? What would the chance be that the SEC would take five years to find exactly the type of record keeping violations that were alleged in the first instance and, then, inflict no meaningful penalty on the offender? How likely is it that the SEC would permit additional sales of equity in that hedge fund to new investors? How likely is it that our most prestigious investment banks would line-up to introduce that hedge fund to new capital?", "attrs": null, "subkind": "paragraph", "toolName": null, "toolSlug": null, "confidence": null, "componentId": "4162e519-cad4-4307-b61c-dc1757424675", "frameworkName": null, "frameworkSlug": null }, { "bbox": { "h": 0.05, "w": 0.72, "x": 0.14, "y": 0.81 }, "kind": "paragraph", "text": "Of course, I don’t know of a hedge fund that has done these things. Everybody now knows that Allied Capital has. The Allied situation persists only because of lax regulatory enforcement and Wall Street’s continued willingness to sell new shares to unsophisticated retail customers.", "attrs": null, "subkind": "paragraph", "toolName": null, "toolSlug": null, "confidence": null, "componentId": "72a5c210-7f8f-4788-bbab-1a57637ad558", "frameworkName": null, "frameworkSlug": null }, { "bbox": { "h": 0.15, "w": 0.72, "x": 0.14, "y": 0.27 }, "kind": "paragraph", "text": "The SEC seems much more interested in whether investors share analysis, particularly critical analysis, of public filings rather than whether management teams made accurate public filings in the first place. The SEC seems more interested in whether investors discuss investments among themselves on private phone calls than in whether management teams make truthful statements on public conference calls. The SEC seems more likely to bring a case against an individual investor over a small crime than it is to prosecute a large corporation that fudges its numbers for years on end and pays out management bonuses in the millions based upon inflated accomplishments.", "attrs": null, "subkind": "paragraph", "toolName": null, "toolSlug": null, "confidence": null, "componentId": "8db7a53b-54bc-4cd6-b004-3b0235925298", "frameworkName": null, "frameworkSlug": null }, { "bbox": { "h": 0.18, "w": 0.72, "x": 0.14, "y": 0.09 }, "kind": "paragraph", "text": "When I speak of investors I am including hedge fund managers. An author on Investopedia defined hedge funds as “lightly regulated, private investment funds that use unconventional investment strategies and tax shelters in an attempt to make extraordinary returns in any market...these factors have given them a secretive and shady aura in the financial community.” Forbes has called us “The Sleaziest Show on Earth.” Basically, according to some in the media, elected officials, government regulators and individuals, hedge funds are really gambling operations amounting to ticking time bombs with secret plans to destroy the galaxy. Good thing they don’t say what they really think. In truth, hedge fund managers at their core are simply investors.", "attrs": null, "subkind": "paragraph", "toolName": null, "toolSlug": null, "confidence": null, "componentId": "dfd89743-355a-43ab-8e48-2ca80f387663", "frameworkName": null, "frameworkSlug": null }, { "bbox": { "h": 0.08, "w": 0.72, "x": 0.14, "y": 0.72 }, "kind": "paragraph", "text": "Imagine if a hedge fund hired a private investigator to impersonate the spouse of a CEO and obtained his home and business telephone records. Imagine if after making loud, public denials, the hedge fund admitted to obtaining the records, but did not explain or apologize, or even return the stolen records, when requested. How long would it be before someone was arrested?", "attrs": null, "subkind": "paragraph", "toolName": null, "toolSlug": null, "confidence": null, "componentId": "f16df1bb-2ec7-49de-8fd9-cb885260f820", "frameworkName": null, "frameworkSlug": null } ], "metrics": [], "tools": [], "frameworks": [ { "name": "fraud-exposure", "slug": null, "matchId": "88fb42a7-4fb6-4bb4-bf39-580dc075e456", "evidence": "The slide systematically exposes regulatory failures and corporate fraud by Allied Capital.", "confidence": 0.8 } ], "arcBeats": [ { "to": 4, "from": 2, "beatId": "cb0f6090-3ccc-4964-a02e-975cb6737c06", "arcName": "Problem-Agitate-Solution", "arcSlug": "problem-agitate-solution", "beatName": "Problem", "beatSlug": "problem-agitate-solution-problem-identify-pain", "evidence": "Exposing contradictions in Lehman's financial reporting", "position": 0, "confidence": 0.8, "parentBeatName": "Complication", "parentBeatSlug": "complication" } ], "loops": [ { "to": 9, "from": 2, "name": "Cost Of Inaction", "slug": "27-cost-of-inaction", "bestFor": "Urgent budget requests, compliance, risk mitigation", "matchId": "f5b8603d-73ce-49fa-a293-3a985765ea33", "evidence": "The sequence of slides building a case for greater transparency", "position": 0, "objective": "The cost of not scrutinizing financial reports", "structure": "The Status Quo -> The Hidden Costs Accumulating -> The Future State of Inaction -> The Tipping Point", "confidence": 0.6, "description": "Quantify what happens if the audience does nothing" } ], "imagePathAlt": null, "thumbSrc": null, "thumbSrcAlt": null, "locked": true }