Introducing John Hempton: the Plunderer from Down Under

While an examination of the recently-unsealed products of discovery in the Fairfax Financial (NYSE:FFH) vs. SAC Capital, el al, lawsuit reveals the extensive involvement of most all the usual players — both in the world of hedge funds and business journalism — one name, mostly unknown to those outside Fairfax circles, appears quite prominently: John Hempton of Sydney Australia.

While an examination of the recently-unsealed products of discovery in the Fairfax Financial (NYSE:FFH) vs. SAC Capital, el al, lawsuit reveals the extensive involvement of most all the usual players — both in the world of hedge funds and business journalism — one name, mostly unknown to those outside Fairfax circles, appears quite prominently: John Hempton of Sydney, Australia.

Hempton, it appears, conceived of and initially orchestrated the entire Fairfax fiasco. At the time, he was a senior analyst at Australia’s Platinum Asset Management hedge fund. Last year he left Platinum to join Global Value Investors, though on May 15 of this year, Hempton started a blog and began calling himself semi-retired; leading me to presume that some time in early May, Hempton and GIV parted ways.

Though possibly mere coincidence, Herb Greenberg abandoned his MarketWatch gig on May 1, 2008 while Bethany McLean announced her departure from Fortune three days later. Greenberg and McLean, as it turns out, both play notable roles in the apparent Hempton-inspired conspiracy.

A reading of Hempton’s early efforts to win converts to his thesis that Fairfax was a ticking time bomb waiting to implode suggests his conclusions were based on what he viewed as sound principles; he really was convinced, and composed multiple, lengthy missives outlining his reasoning. I suspect Hempton’s mistake was then convincing some of the worst people on Wall Street, whose methods fill the pages of this blog, and whose influence probably turned his project from a speculative to a criminal enterprise, dragging Hempton down with it.

That’s not to say that any of this absolves Hempton of blame.

For one, a 2002 email sent to Rocker Partners employee Monty Montgomery makes it clear that Hempton is prominent stock message board poster Brolgaboy (and brolgaboy1 on Yahoo Finance).

I asked Hempton to comment on or clarify this email, but he refused.

That may be because he knows that, thanks to the Yahoo Dissembler Sorting Algorithm bug, it’s possible to know with certainty that in addition to brolgaboy1, Hempton is also Yahoo posters jamiewoodford1, scudzy_short, zipperdydoodah, and (my favorite) mr_byrnes_sith_lord.

Between them, these accounts have many hundreds of posts on Yahoo Finance, to say nothing of the hundreds more posted to several other boards.

Here’s where I really begin to lose patience with John Hempton.

On August 15, 2005, Hempton created and began posting taunting messages under the name mr_byrnes_sith_lord. This was three days after contributor and CEO Patrick Byrne announced a lawsuit against Gradient Analytics and Rocker Partners hedge fund for conspiring to get rich by destroying his company. At that time, Byrne further announced that he had evidence of a central figure — whom Byrne metaphorically compared to the shadowy “Sith Lord” of the Star Wars series — coordinating these attacks in ways nobody had previously considered possible.

Also on August 15, 2005, Hempton created the Sith Lord blog, which he further used, over the space of two months, to deride Byrne for claiming that short-selling hedge funds might operate in a coordinated way to destroy public companies.

In case you’ve missed it, the extreme irony here is that at least initially, in the case of the attack on Fairfax Financial, Hempton himself filled a version of the very role he attacked Byrne for daring to claim exists.

More than just irony, this, my friends, is a perfect example hubris as defined by the ancient Greeks: an act of extreme pride and arrogance that humiliates the victim, and ultimately the perpetrator as well.

If this article concerns you, and you wish to help, then:

1) email it to a dozen friends;

2) go here for additional suggestions: “So You Say You Want a Revolution?

  1. Mr. Bagley — Thanks for publicly-exposing this Aussie character. The “evil” stuff he wrote on that blog site — just made my skin crawl.

    Now, some comments this evening about beefing-up punishment for financial crimes. Deterence is key, in my opinion. And, these financial thugs have their eyes on the prize (easy money). The law must be rewritten to provide for deterence via harsh punishment. After all, enough is enough: $50 Billion last week, and what’s the future financial crime going to amount to? $50 Trillion – and the entire market collapses?

    If the financial crime is $1+Million, then a life sentence in prison without parole is warranted. But, if a Hedge Fund Manager, for example, is the perpetrator of a premeditated $1+Billion financial crime, then capital punishment should be an option given to the jury. That financial criminal needs to be removed from society – permanently – so that his criminal-mindset of sophisticated-financial-theft (in some cases) is not shared with any others.

    Until the punishment fits the FINANCIAL DAMAGE of the horrendous destruction caused by Naked Short Selling, then these evil characters are going to continue popping-up under different names — targeting additional victims. The regulators must be able to track fails-to-delivers from the “Cradle to the Grave” — so that these evil characters can be removed from society quickly — BEFORE financial harm is done to one (1) more Naked Short Selling victim company — employing 100, 500, 1000 or however many people that company employs. My point is: This financial crime affects thousands & thousands of people. Additionally, we all saw how the Naked Short Sellers caused the panic-selling in the Banks/Primary Broker-Dealers! It affected the entire market. So, in reality, Naked Short Selling is negatively-affecting EVERY LEGITIMATE INVESTOR.

    What is so very pathetic to me — is when I read about the censor/small fines being levied against financial criminals. Does a SMALL FINE stop a financial-criminal-mindset from pursuing MEGA-BILLIONS via Naked Short Selling? Answer — NO – and it never will.

    Thanks again Mr. Bagley for your investigative journalism to expose the world’s most evil financial characters. And, again, maybe – just maybe – the punishment can be beefed-up for financial crimes so the criminals’ reward will be LESS than the risk of a harsh punishment — fitting to the size & scope of the crime.

    Keep exposing them Mr. Bagley — and thanks to every set of eyeballs reading this blog — who puts links ALL OVER THE INTERNET. It is public exposure and public disgust that will finally stop these financial criminals. The People will force the lame legislators to write laws to protect Ma & Pa Investor — not protect a Mega-Billionaire’s ability to engineer Naked Short Selling efficiently.


  2. so what you are saying here is that people from all over the world have been posting on message boards and saying whatever they want and helping hedge fund drive the price down. Can they do this in ALL STOCKS. Is this a common practice? I guess they thought they would never be caught or exposed. US investors reading this negative stuff 24/7 and seeing the price go down might change their mind on their investment even have stock holders blame mgn’t for the falling price. What a game plan sounds easy to do, yell fire and watch the people run

  3. Judd, what exactly is the Yahoo Dissembler Sorting Algorithm bug?

    And, is it possible for others to use it to help expose other paid bashers?

  4. Oh no! Good luck with Obama’s new SEC boss.

    I think she was involved in the rule change, in the middle of the game, to stop the Hunt silver trades to prop up the dollar in 1980. If so she is a wreck of a choice.IMHO

  5. NOYBIZNIZ: If you look hard enough, you can find out about the DSA (as we call it), but I’m under strict instructions, from the person who taught me about it, not to reveal how it works.

    What I can do is run the Yahoo aliases you suspect of being crooked through it, and give you the results. Feel free to send as many as you want to: [email protected]

  6. I wouldn’t worry about posters. Just do your own research and you’ll get the right investments. Plenty of people tout stocks that are shit and don’t get punished. Who’s to say they are not trying to drive the price up so they can short the hell out of it later?

  7. Judd,

    Bernard LoVerde Jr.has spent at least 5 years bashing stocks on the Raging Bull web site…

    Bernard J. LoVerde Jr. executive vice president for Liberty Title & Escrow Co. in East Greenwich, Rhode Island

    He’s former Wall Street insider who solicited the SEC to permit Joe Six Pack to operate on a level the playing field. This he says, could be done by adopting the market makers and broker-dealers deceitful and protected practices of ignoring regulations and requirements for disclosure… in other words let everyone be a crook.

    From his letter to the SEC:

    “… market makers and broker/dealers have rigged the game so they can play by a different set of rules than the general public and, to date, this has been protected by the regulatory bodies. These market makers and broker/dealers have done this for no other reason than to line their own pockets, under the sham of maintaining “fairness” in the market. Every day, market pros short sell IPO’s, short sell on downticks, and short sell without regard to the availability of certificates, all things done at the expense of individual investors, who do not have the right to do the same. They do it quietly, without regulation, and without a requirement for disclosure; often in direct contradiction to the public “recommendations” of analysts…”

    Source: Bernard LoVerde’s letter to the SEC, January 31, 2000:

  8. Just got a call from my broker. He said they’re calling all clients who have previously gotten paper shares – said the DTC will no longer issue paper shares. They are apparently eliminating it altogether.

    How convenient.

    One has to go through the transfer agent now.

  9. Very strange–if I try to post this story or a link to it on the Yahoo FFH board, my post gets deleted. Another post with a deepcapture link was also deleted. I tried again a minute ago and it was posted and immediately removed.

  10. Judd, Thank you for your work. Watching the short and distort crowd work the new media has left me dismayed disheartened and delusioned. A poster child for captured new media journalist? ( I hate using this title to describe these micreants) has to be Mr Henry Blodget ,he completely disgraced himself as an analyst and has applied his same severly challenged ethical standards to his new media stock tout gig.

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