Herd instincts: Hillary's investment profits - ethics of Hillary Clinton's cattle futures investments - includes related article - Cover Story

National Review, Feb 20, 1995 by Caroline Baum, Victor Niederhoffer

As far as we know, there are no indicia for commodities-trading fraud. So we took it upon ourselves to develop a checklist of fraud indicators that would apply to a broad range of financial trickery. We are confident that any investment activity that scores high on our test merits a red flag. We have rated the likely legitimacy of Mrs. Clinton's activities on a scale ranging from 1 (highly likely) to 10 (highly unlikely) for each of ten criteria.

1. Were the returns excessive as measured against a normal yardstick of performance? Yes. As discussed above, Mrs. Clinton's annual return was more than eighty times George Soros's in his best year. As far as we know, no non-professional has ever achieved a return of that magnitude. Stanley Kroll, a well-known commodities broker who worked at three major firms at that time, has written that none of his retail customers turned a profit. Neither did those of any of his colleagues at other firms. Even Mrs. Clinton's trading advisor, Jim Blair, who says he was "damn good" at making money in commodities, declared bankruptcy with a $15-million trading loss shortly after his pupil stopped trading. Score: 10 points.

2. Has there been any effort to suppress investigation of the transaction? Yes. Mrs. Clinton was adamantly opposed to the appointment of a special prosecutor to look into her and her husband's financial dealings, including her own trading activities, during the late 1970s and 1980s. She attempted to deflect attention from the matter by explaining away her newfound wealth as a gift from her parents, until the Clintons' 1978 and 1979 tax returns were made public and the actual source of her windfall profit was revealed. Furthermore, despite our repeated and friendly requests to both the First Lady's and the White House's press representatives, none of our questions concerning the elementary details of Mrs. Clinton's trades and the availability of original documentation has been answered. Score: 10 points.

3. Are crucial records of the transaction missing or available only in duplicate form? Yes. The purchase and sale confirmations for Mrs. Clinton's two most profitable trades are lost or missing. Her first, extraordinary transaction is also among the missing. The details were furnished by the Chicago Mercantile Exchange. Mrs. Clinton has no independent recollection of her first trade, which produced a 530 per cent return overnight. You can be sure that Fernando Valenzuela hasn't forgotten the five shutouts in his first seven games as a rookie pitcher for the Los Angeles Dodgers in 198 1. Score: 10 points.

4. Did the suspect alter his story regarding the activity in question? Yes. The White House furnished everchanging versions of Mrs. Clinton's trading activities. First, we were told she did her own research, relying primarily on the Wall Street Journal, and placed all of her own trades. Then mentor James Blair played an advisory role, but she made the decisions, determined the size, and placed all the trades. As it now stands, she relied on Blair's advice, and he placed most of her trades. When queried, the First Lady said the confusion was the result of the way the story was communicated to the press. Score: 10 points.