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Until that moment, for all Bardey or anyone else in his circle knew, this man was simply a clever trader who kept neat books.
And the clever trader played them all masterfully.
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Less plausibly (but you never know), clever traders might have been positioning themselves for a large sale of Goldman shares.
Clever traders try to predict tomorrow's events and their implications for everything from the price of orange juice to demand for steel.
In other words, regulators are nervous that clever traders might try to buy certain financial products hoping that they increase in value and then selling them -- but claiming that the products had really been purchased to help a client.
It seems likely that some clever traders with high-speed computers are able to multiply the volatility with huge amounts of money and additional leverage by buying long and short on alternate days.
And, as everyone learned when the Long-Term Capital Management hedge fund nearly failed in 1998, it is possible for clever traders to borrow huge amounts of money to use in playing the markets.
However, this internal police force of do-gooders can create an incentive for more clever traders to come up with more clever ways to duck the rules, he says.
Clever traders at Enron and El Paso Energy created many financing tricks that in the years since have become part of the financing trade: derivatives, synthetic credit default swaps, deals financed with little or no equity.
However clever a trader is at covering his tracks (and this one knew back-office systems), bets bigger than a bank's entire market capitalisation should be detectable.
In the world of risk management, more leverage tends to be applied to less volatile assets; you need more bang to get your bucks.Nassim Taleb wrote his book Black Swan several years ago to point out the flaws in this reasoning; despite their clever maths, traders are caught out by the events they don't anticipate and model for.
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Justyna Jupowicz-Kozak
CEO of Professional Science Editing for Scientists @ prosciediting.com