<div id="image0"><strong>By  Matt Taibbi </strong></div>
<p>Apr 05, 2010 4:09 PM EDT</p>
<p><em>This article originally appeared in RS 1089 from October 15, 2009. This issue and the rest of the Rolling Stone archives are available via All Access, Rolling Stone's premium subscription plan. If you are already a subscriber, you can <a href="http://www.rollingstone.com/cms/digitalArchive">click here to see the full story</a>. Not a member? <a href="http://www.rollingstone.com/cms/digitalArchive">Click here to learn more about All Access</a>.</em></p>
<p><strong>O</strong>n Tuesday, March 11th, 2008, somebody — nobody knows who —made one of the craziest bets Wall Street has ever seen. The mystery figure spent $1.7 million on a series of options, gambling that shares in the venerable investment bank Bear Stearns would lose more than half their value in nine days or less. It was madness — "like buying 1.7 million lottery tickets," according to one financial analyst.</p>
<p>But what's even crazier is that the bet paid.</p>
<p>At the close of business that afternoon, Bear Stearns was trading at $62.97. At that point, whoever made the gamble owned the right to sell huge bundles of Bear stock, at $30 and $25, on or before March 20th. In order for the bet to pay, Bear would have to fall harder and faster than any Wall Street brokerage in history.</p>
<p>The very next day, March 12th, Bear went into free fall. By the end of the week, the firm had lost virtually all of its cash and was clinging to promises of state aid; by the weekend, it was being knocked to its knees by the Fed and the Treasury, and forced at the barrel of a shotgun to sell itself to JPMorgan Chase (which had been given $29 billion in public money to marry its hunchbacked new bride) at the humiliating price of … $2 a share. Whoever bought those options on March 11th woke up on the morning of March 17th having made 159 times his money, or roughly $270 million. This trader was either the luckiest guy in the world, the smartest son of a bitch ever or…</p>
<p>Or what? That this was a brazen case of insider manipulation was so obvious that even Sen. Chris Dodd, chairman of the pillow-soft-touch Senate Banking Committee, couldn't help but remark on it a few weeks later, when questioning Christopher Cox, the then-chief of the Securities and Exchange Commission. "I would hope that you're looking at this," Dodd said. "This kind of spike must have triggered some sort of bells and whistles at the SEC. This goes beyond rumors."</p>
<p><a href="http://www.rollingstone.com/politics/news/;kw=%5B3351,11470%5D">Read More</a></p>
<p>{jcomments on}</p>