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I wasn't a trader back in '87, but here's a story of a shooting star that
lost (more than) it all in the big crash shorting puts, I assume. He had his
account liquidated leaving him owing millions to the clearing firm. He
pulled a Niederhoffer, or should I say Niederhoffer pulled a Lawrence?
Scott Hoffman,
Issaquah, WA
December 10, 1998
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Can a Former Options Ace Thwart
The Collectors From Bear Stearns?
By RICHARD B. SCHMITT
Staff Reporter of THE WALL STREET JOURNAL
MIAMI -- Stephan Jay Lawrence once devised brilliant options-trading
strategies that earned him millions of dollars. That was before he took huge
losses, was ordered to pay Bear, Stearns & Co. $20.4 million and lapsed, he
asserts, into a "vegetative" state.
It's all part of a long-running and strange debt-collection saga -- one that
shows how a solitary debtor with cutting-edge financial knowledge and
whatever-it-takes determination can hold off even a Wall Street giant for a
long time. Whether Mr. Lawrence's methods have been entirely legal is a
matter of some debate. Some of Bear Stearns's actions likewise are open to
question.
Mr. Lawrence, a math wizard who was once one of the biggest traders on the
Chicago Board Options Exchange, was wiped out overnight in the stock-market
collapse -- the one in 1987. Bear Stearns cleared trades for Mr. Lawrence
and had covered the yawning deficit in his margin account. In March 1991, an
arbitrator ruled Mr. Lawrence owed Bear Stearns $20.4 million as
compensation for its losses. A federal court upheld the award.
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