The actions of MG’s board of supervisors in this incident have spurred
widespread debate and criticism, as well as several lawsuits. Some analysts argue
that MGRM’s hedging program was seriously flawed and that MG’s board
was right to terminate it. Others, including Nobel Prize-winning economist
Merton Miller, argue that the hedging program was sound and that MG’s board
exacerbated any hedging-related losses by terminating the program prematurely.
The discussion that follows reviews the hedging alternatives that were open to
the firm, the risks associated with the strategy it chose, and critiques of that
strategy offered by a number of economists.