At What True Count Do You Begin Betting?

One of the more interesting stories in the world of sports betting is the trial of the century. The New York Times reported this past week that the trial of William Pesek, a.k.a. “the hedge fund manager of the year,” regarding a charge of securities fraud has gripped the attention not only of the sports world but of mainstream media as well. 

Pesek Is Accused Of Manipulating The Forex Market

If you’ve never heard of the foreign exchange market (or forex for short), then you’re in for a real treat. The forex market is beyond the comprehension of the average person, but it is an extremely important part of the world of finance.

When people think of finance, usually they think of the stock market or the bond market. Those are all important, but there is another very important market that most people don’t give a second thought to: the forex market.

The forex market is what allows traders to buy and sell currencies. For instance, when a currency trader believes that the U.S. dollar is about to take a hit because of increased speculation in the stock market, he or she might want to bet against the dollar. The opposite is also true: when a currency trader believes that the U.S. dollar is about to rise in value, he or she might want to bet on the dollar.

To put it somewhat differently, if you know the right people, you can make a lot of money in the forex market. But to make money in the forex market you need to do more than just understand the concept of “fiat currency.”

You have to be able to read the news, figureheads, and political situations around the world to be able to pick winning bets. If you can do that, you can make some quick cash in the forex market. And given the right information, anyone can become a successful currency trader.

This is why the markets are always looking for news stories that can affect the value of currencies. One of the most talked about news stories in recent years that had a major impact on the forex market (and the stocks and other related markets) is the trial of William Pesek. The New York Times reports that the trial has gripped the attention not only of the sports world but of mainstream media as well:

“For a trial that has aroused so much interest in the sports world, it has mostly flown under the radar in the news media, where a story about a financial industry pro usually makes for more compelling reading than another case of fraud in an assisted living center.”

What Is The Prosecution Hoping To Accomplish?

The prosecution is trying to demonstrate to the court that Pesek knew exactly what he was doing and lied about it. If the prosecution can prove that, then they can prosecute him for fraud. They are also seeking to ban Pesek from the securities industry, which would keep him from providing financial advice. Finally, the prosecution is seeking heavy damages from Pesek, which could be in the billions of dollars.

The bottom line here is that this case has major implications for anyone in the financial industry, particularly anyone who offers advice about money management. In today’s world of alternative investments and complicated financial products, a lot of money is at stake. If the prosecution is able to demonstrate that Pesek committed securities fraud, then it wouldn’t be a huge leap to assume that he also committed investment fraud. The same goes for anyone who provides advice about money management. If the prosecution can demonstrate that a person lied about their knowledge or intent regarding a particular product or service, then that person could be held criminally liable. Simply put, everything is at stake in this case.

As you might expect, given the stakes involved, the defense is representing themselves. In addition to hiring respected attorneys and investment firms, they have retained the services of two of the most influential men in the financial world: Robert J. Maxwell and John C. Coffee. Maxwell is the former chairman and CEO of Time Warner and Coffee is the former CEO of Merrill Lynch.

The Key Players In The Case

Even those who don’t follow the foreign exchange market closely might know some of the individuals involved in this case. The defendants are:

  • William E. Persek;
  • Lorrie B. Brewster;
  • Robert Maxwell;
  • John C. Coffee;
  • Coffee & Co; (formerly Merrill Lynch);
  • Maxwell & Co; (formerly, Warner & Co);
  • Riverside Capital Advisors;
  • and Terra Partners, LLC.

Some of these individuals have already been mentioned in previous articles on this site, so for the purpose of clarifying things, let’s take a closer look at some of the key players. 

William E. Persek

William E. Persek is an internationally known sports handicapper and a successful trader who co-founded the Edge Group, which is an independent investment firm. 

Persek has been in the news a lot in recent years because of his wagers on sporting events. His most infamous wager is “The Turkey Buzzer,” a bet he made in 2010 against the New York Yankees that has somehow become an internet meme. The meme (which you can find in the form of a graphic or a video) shows a bird randomly landing on the arm of a man in a turkey costume while the caption above the image reads, “Don’t try this at home.” The meme was inspired by a bet that Persek made in 2005 that Babe Ruth would hit a home run in the last game of the season – and he did.

One of the main issues in the case is whether or not Persek understood the complex products and strategies that he was recommending to his clients. If the prosecution can demonstrate that he did not fully understand all the ramifications of some of the products he was promoting, then they can prove that he is guilty of securities fraud. 

Lorrie B. Brewster

Lorrie B. Brewster is the ex-wife of Markel Maroney and the sister of Sean Maroney, both of whom are lawyers at the firm of Cadwalader, Wickersham & Co. (Cadwalader is now known as Cadwalader, Wickersham & Co. LLP, and the firm is simply referred to as Cadwalader LLP).

Markel is one of the attorneys representing William E. Persek, while Sean is co-counsel for Coffee & Co in this matter. In other words, everyone’s family is lawyering up in this case. Even those who aren’t familiar with the case might surmise that there is a lot of money (and possibly future Supreme Court nominations) at stake here. 

Robert J. Maxwell

Robert J. Maxwell is a highly respected attorney who represents several of the defendants in this case. In addition to Cadwalader LLP, he has practiced law at the firm of Cadwalader, Wickersham & Co. (Cadwalader is now known as Cadwalader, Wickersham & Co. LLP, and the firm is simply referred to as Cadwalader LLP).

Maxwell began his legal career at the prestigious law firm of Kirkland, Ellis, & Groves where he worked on some of the most significant civil cases of the 20th century, including the Steelworkers’ strike of 1937, the Montgomery bus boycott of 1955, and the case that established interracial marriage as the law of the land: Loving v. Virginia.

In 1968, Maxwell founded the legal firm of Robert J. Maxwell & Co., where he continues to practice law today. If Maxwell can demonstrate that he did not commit securities fraud, then the other defendants in this case will have a hard time convincing the court that they should be held criminally liable for the acts of their employee, William Persek. 

John C. Coffee

John C. Coffee is one of the more well-known figures in the finance industry, having served as the CEO of Merrill Lynch from 1999 to 2009. During that time, Coffee oversaw the integration of Merrill Lynch into Bank of America and, later that same year, the merger of Merrill Lynch with the Swiss bank, UBS. 

Coffee also served as the chairman of the Federal Reserve Bank of New York from 2006 to 2009. According to the Wall Street Journal, Coffee’s net worth is currently in the billions of dollars. He has also been a prominent figure in the Republican party, giving large amounts of money to political candidates and committees.