Hillary Clinton's Investment Debate
Did Hillary take investment help in exchange for favors from Bill Clinton?
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On October 11, 1978, while Bill Clinton was attorney general of Arkansas, Hillary Clinton opened a futures account with a broker named Robert L. "Red" Bone. She traded the account under the guidance of James Blair. Blair was then an attorney working as outside counsel to Tyson Foods Inc., a large Arkansas food chicken-processing firm. Bone had formerly worked for Tyson Foods. She put $1,000 into the account and apparently gave Blair authority to manage it. Over the next year, profits from the account were just under $100,000.
While Clinton's account was wildly successful to an outsider, it was small compared to what others were making in the cattle futures market in the 1978-79 period. An investigation of the cattle futures market at that time by Rep. Neal Smith (D-Iowa) found that in one 16-month period 32 traders made more than $110 million in profits from large trades -- those of 50 contracts or more. Clinton traded positions of 50 or more contracts only three times.
Blair, who at the time was outside counsel to Tyson Foods Inc., Arkansas' largest employer, says he was advising Clinton out of friendship, not to seek political gain for his state-regulated client. At the time of many of the trades, Bill Clinton was governor.
Hillary Rodham Clinton was allowed to order 10 cattle futures contracts, normally a $12,000 investment, in her first commodity trade in 1978 although she had only $1,000 in her account at the time, according to trade records the White House released yesterday.
Why would Robert L. "Red" Bone, who ran the Springdale, Ark., office of Ray E. Friedman and Co. (Refco), allowed Clinton to initiate and maintain many trading positions – besides the first – when she did not have enough money in her account to cover them. Bone could not be reached for comment, but Blair said he thought he knew why. "I was a very good customer," he said, noting he paid Bone $800,000 in commissions over the years. "They weren't going to hassle me. If I brought them somebody, they weren't going to hassle them."
Hillary Clinton has said she made all the trading decisions herself and has tried to play down Blair's role. But she acknowledged in April, three weeks after her trades were first disclosed, that Blair actually placed most of the trades
Some believe a scheme was designed to surreptitiously transfer an illegal bribe or gratuity to Clinton in exchange for a political favor or for political influence. They believe that Don Tyson--a major political supporter of Clinton--was the benefactor. Here is a simple example of how a dishonest broker could achieve this objective: Execute buy and sell orders in the same contract. The contract price will eventually go up or go down. If it goes up, assign the profitable buy trades to the favored account and assign the losing sell trades to an account owned by the benefactor. If the price falls, assign the profitable sell trades to the favored account and assign the losing buy trades to the benefactor's account.
Fraudulent trade assignment is difficult in electronic trading systems. Such systems typically require brokers to enter client account numbers when submitting orders.
Leo Melamed, a former chairman of the Merc who reviewed the records for the White House, said in an interview. "I have no reason to change my original assessment. Mrs. Clinton violated no rules in the course of her transactions,"