RIGHT TRADE, WRONG TIME.(Canary Capital's market timing scheme)(The Talk of the Town)

Publication: The New Yorker

Publication Date: 20-OCT-03

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COPYRIGHT 2003 All rights reserved. Reproduced by permission of The Condé Nast Publications Inc.

Speculators get a bad rap. In the popular imagination they're greedy, heedless, and amoral, adept at price manipulations and dirty tricks. In reality, they often play a key role in making markets run smoothly. Their frequent trades make it easier for the rest of us to find someone to trade with, and their perpetual hunt for market inefficiencies can make prices more accurate. But sometimes speculators really are just greedy and amoral. Certainly that's true of the hedge funds that are at the heart of Wall Street's latest scandal, which surfaced last month when New York State Attorney General Eliot Spitzer brought civil charges against a New Jersey hedge fund called Canary Capital, which is run by Edward Stern, a son of the former Village Voice owner Leonard Stern. Canary, Spitzer alleges, engaged in an elaborate bunco straight out of David Maurer's classic...

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