droopy, wagoner (5/2/2009 6:47:43 AM)

He might be a good cellmate for Mr. Madoff.

Graychin, Eucha (5/2/2009 11:56:52 AM)

Is Mr. Kivisto going to argue that his trading strategies (the ones that sunk the company) were NOT "risky"? That they did not "put the company in peril"?

That everything would have been OK if banks would only have given Kivisto more money to gamble with, until he got back to "even"?

O&Gtrader, ft. worth (5/2/2009 12:33:34 PM)

From what I have read, the "trading strategy" prior SemGroup's spectacular failure as an ongoing business was similar to a "Martingale System". (Check it out on Wikipaedia.) Allegedly, SemGroup was making oil trading bets using ongoing supplies of differing banks' and hedge funds' money with "strings attached", not SemGroup's money. (Apparently, SemGroup was close to not having any at that time per Ronan's "underwater" email.)

Note: Selling "naked" crude oil option "puts" collects money for the seller....but that money isn't yours to own until the contract expires or you buy them back to close the position. Ask the Nymex for more info on selling "put" options.

If you go to WinStar casino and you max out your Visa card to gamble and you're doubling you bets everytime you lose hoping to get even, is it Visa's fault that you're losing money? Should you blame Visa for being upset or curious about your skills because you're using up a lot of their money real fast? Is it Visa's fault you have to leave the casino as a "loser" because they shut off your ability to get more of their money on their card? And as you walk out of the casino as a loser, your number finally wins, adding to your angst.

Dumb trading isn't a crime. But, if a company doesn't tell the truth on a loan application for funds to be used for trading, the kind of loans that are covered by federal and state laws, now that might get that person in hot water.

ITN, (5/2/2009 12:40:28 PM)

I think I must agree with Kivisto's strategy... There is a not a lot of benefit for him to spill his guts to Freeh when he was hired by opposing sides. They can try to call him unbiased but the simple truth is, he was paid nearly $2Million by the remaining Sem Management team that are trying desperately to keep themselves out of the story... Thane Ritchie and Riverstone aka Goldman. No reason to load their guns for them. I think I would save my story for the court if that day comes.

ITN, (5/2/2009 1:00:19 PM)

o&g trader...

What your overly simplified anaylsis fails to consider is that Sem's banks were some of the largest banks in the world and were therefore quite sophisticated counterparties. Many of these banks have been involved in their syndicate for years and most certainly had sent their risk and credit analyst to audit Sem's trading practices(this is referenced in the Freeh report yet somehow ignored in the examiner's opinion).

Had Sem been trading outside of their risk policy and normal course of business these banks would have pulled their lines long ago.

I think the energy markets got historically volatile (thus Sems increased margin calls and need for cash), the housing market tanked, credit got tight, and bank of america got scared and over reacted.

O&Gtrader, ft. worth (5/2/2009 1:16:09 PM)

Graychin: Excellent point. Do you think the banks would have kept supplying money if they had been consistently informed of the alleged growth of the mark-to-market loss position of the overarching SemGroup strategy?

ITN: Should the judge then consider throwing out Freeh's report and hire a new examiner to re-examine the case?

Courage, bartlesville, home of the late BYD (5/2/2009 2:13:36 PM)

They were down 2.5 billion on hedges. their liabilities were over 9.5 billion, their over valued assets were only 7.5 billion. They got caught on top of a house of cards, it has happened before and it will happen again. That party is over, with another round of layoffs just yesterday, another company getting the emulsion plants on lease, and Ritchie buying the patents, Semmaterials and the biggest part of Semgroup are now history.

O&Gtrader, ft. worth (5/2/2009 2:13:36 PM)

ITN: I appreciate your point of view. But, big banks aren't as sophisticated as you suggest when it comes to risk. See the price of common stock of Citibank, AIG and Bank of America since Jan, 2008. Those charts don't give me much confidence in the banks' (and investment banks) ability to understand big risks, sophistication or not. Remember, all the best high-paid, well educated thinking Citi and AIG could do has made you and me and other taxpayers part owners of those companies now.

As far as your audit comments, my analogy about that is equally simple: If you only checked your smoke alarm one time since 2007, your smoke alarm has a greater chance of not working when you need it today.

Bank of America probably wouldn't have pulled Semgroup's line of credit if the trading team at SemGroup had done the exact opposite of their mysterious trading "system". So, who's at fault? The bank followed its risk management "system". Did SemGroup even have one? Clearly, we have all learned, "Never take a loss.." doesn't work when you need it to.

The two biggest risks to survival in the energy business are (1) people and (2) credit.

bewildered, (5/4/2009 3:53:33 PM)

Courage:
Kinda curious. Any idea as to who the company is that leased the emulsion plants? Thanks:

Courage, bartlesville, home of the late BYD (5/5/2009 7:29:00 AM)

A refiner out of MS, I don't remember the name.

Courage, bartlesville, home of the late BYD (5/5/2009 7:29:22 AM)

I will try to get it

O&Gtrader, ft. worth (5/5/2009 2:33:49 PM)

There is a small refiner in Jackson,MS (Mississippi) called "Ergon". I know their crude supply guy. Is that is the company?

bewildered, (5/5/2009 4:16:56 PM)

courage:
Many Thanks. If you come up with the name for sure, I'd appreciate knowing.

Courage, bartlesville, home of the late BYD (5/7/2009 7:12:08 AM)

O&G, that is supposed to be the company. Supposedly they owned the boat that ran into and destroyed the I-40 bridge a few years ago.