Questions Over Goldman Deal as Investors Sit in the Dark
The fight raises such a cornucopia of financial issues that it could shoulder an entire business school course. The holders of preferred stock in the company have taken to commenting to the Securities and Exchange Commission in outrage. Professor Angel accuses Goldman of multiple securities law violations. In essence, the question is: In these post-financial crisis days, what constitutes improper conflicts of interest?
In 2007, a Goldman private equity fund called Whitehall took a company that runs franchised motels, like Residence Inn, private in a $2.2 billion transaction. It renamed the company W2007 Grace Acquisition. A Goldman entity, Goldman Sachs Mortgage Company, was the main lender for the leveraged buyout. Grace is run by current Goldman employees.
Goldman did not buy the publicly traded preferred shares, however. Instead, Grace went “dark,” as Floyd Norris explained last year. That meant it no longer filed financials with the Securities and Exchange Commission, a move allowed for companies with fewer than 300 shareholders. Grace delisted from the New York Stock Exchange and stopped paying dividends. It took other steps to make it difficult for anyone, including the preferred holders, to get any information about the company. Shareholders had to request the financials from the company and, at one point, had to pay 10 cents a page for the privilege of finding out how their investment was doing. They also had to sign a nondisclosure agreement.
In 2012 and 2013, a mysterious entity named PFD Holdings started buying those battered-down preferred shares. In 2012, PFD was paying $3 to a little more than $5 a share. Soon after, the preferred doubled in price, and now the shares trade at about $12. As of its last announcement, PFD owns 58 percent of the preferred shares. Nice trade!
So, what is PFD Holdings? Few outsiders really know because there’s little information out there about PFD. In Grace’s news releases, the company calls it a “sister company.” In other words, Goldman is ultimately behind PFD. I asked a former Goldman executive. He hadn’t heard of it but jokingly suggested the initials stood for Pretty Fishy and Dodgy. Well, in truth he used another “F” word, but you get the idea.
When deals like this go down, I feel like we are nation of Jake Gitteses, watching big bank deals with incomprehension. In “Chinatown,” the private detective asks the wealthy baron Noah Cross: “Why are you doing it? How much better can you eat? What could you buy that you can’t already afford?”
The scary thing about this Grace deal is that the money is so small (well, relative to Goldman, at least). The preferred shares amounted to about $146 million initially. It’s almost as if Goldman does it because it can.
I’d Rather See Bernanke’s Meeting Schedule That’s Not Reported
It was widely reported the other day when Bernanke gave a speech in Abu Dhabi for which he was paid $250,000.
And someone sent me an article today reporting that Bernanke will conduct a meeting with 8 hedge fund titans for another $250k plus he will be doing a speech in Turkey for $300k (article link).
At least now we know why Bernanke took the Fed-head job rather than remain in his cushy ivory tower at Princeton. Now Bernanke can afford to enjoy the same luxuries as do the Wall Street his money printing and bailout policies enriched.
But I would be much more interested in seeing Bernanke’s meeting schedule that does not get reported. I know Greenspan had one that would surprise all of you. One of my best friends in NYC, Jerry Epstein (now deceased from diabetes), was a top-notch chef who did many gigs with very wealthy people. He chef’d for people like Carl Icahn, Michael Steinhardt, Mickey Drexler (J Crew/GAP) and Doris Duke. Around the time Greenspan retired from the Fed, Jerry was Steven Cohen’s personal chef. About two weeks after Greenspan left the Fed, Jerry called me to tell me that he was preparing a meal for Greenspan, who was having lunch with Cohen at his residence in Westchester (his home was in Westchester, his office was Stamford, Connecticut). While I got the details Jerry’s menu, I would have been more interested in the menu of what would be discussed.
I bring this up because, while Bernanke’s visible speaking engagements are actively reported, I can guarantee you that he is conducting very private, non-disclosed meetings for which I’m sure he’s paid much higher “consulting fees” than his publicly announced speech compensation. After all, how many of you heard about Greenspan’s one-on-one luncheon meeting with Steven Cohen? It’s not the news you see that should bother you, it’s the news that doesn’t get reported that is most dangerous.
NY Fed Joins War On Whistleblowers To Shield Goldman Sachs From Its Own Examiner
And this sort of egregious behaviour from a 'regulator.' They argue out of both sides of their mouths whether Goldman is a 'bank' or not, in order to get what they want for... Goldman.
The Fed is not a government agency, but a privately owned creature of the very Banks whom it is charged to regulate and restrain.
And as we have seen, over and over again, the Fed is not part of the solution, but has become very much a part of the problem in distorting the banking system in favour of a few powerful financial interests.
A Mangled Case of Justice on Wall Street By Pam Martens May 8, 2014
If this Federal Court allowed a regulator to twist a Federal whistleblower law inside out and upside down, it would be sending a chilling message to every other bank examiner in America: keep your mouth shut or you too can be fired with impunity.
The unfairness of the proceeding was heightened when just 20 days before the Judge issued her written decision on April 23, she convened a phone conference with both sides to make a shocking announcement: “it had just come to her attention that her husband…was representing Goldman Sachs in an advisory capacity” according to the telephone conference transcript.
Judge Abrams’ husband is Greg Andres, a partner at law firm Davis Polk & Wardwell LLP who previously worked under Lanny Breuer in the Criminal Division of the U.S. Department of Justice. (Breuer announced his resignation one day after the PBS Frontline program reported that “when it came to Wall Street, there were no investigations going on. There were no subpoenas, no document reviews, no wiretaps.”) To date, not one key executive at any Wall Street bank that played a role in the financial collapse has been indicted. Following that telephone conference, Segarra’s lawyer, Linda Stengle, filed a letter with the court asking for a more complete disclosure of the Judge’s husband’s relationship with Goldman Sachs.
Wall Street Firms Using Their Dark Pools To Make Markets in Their Own Stocks
These self-named dark pools are operating as private exchanges, with a faux type of specialist system managing the order book, with all the insight and power that it entails. The layman may not quite comprehend this, but anyone familiar with Wall Street operations and history will certainly do so.
That they are trading for their own parent company stocks, and possibly for their own books, ought to raise more than a few eyebrows.
We ought to have internalized the lesson by now that markets are not naturally efficient and self-regulating. But even moreso when the business of price setting and order matching is being done in darkness, and apparently with lax regulatory oversight.
The lack of integrity in the Western financial system must seem appalling to anyone whose ears are not firmly taped to the corporate news feed droning out of New York and London.
The Banks must be restrained, and the financial system reformed, with balance restored to the economy, before there can be any sustainable recovery.
After Charges of Running a Price Fixing Cartel on Nasdaq in the 90s,
Wall Street Banks Are Now Trading Their Own Stocks in Darkness
Questions Over Goldman Deal as Investors Sit in the Dark
ReplyDeleteThe fight raises such a cornucopia of financial issues that it could
shoulder an entire business school course. The holders of preferred
stock in the company have taken to commenting to the Securities and
Exchange Commission in outrage. Professor Angel accuses Goldman of
multiple securities law violations. In essence, the question is: In
these post-financial crisis days, what constitutes improper conflicts of
interest?
In 2007, a Goldman private equity fund called Whitehall took a
company that runs franchised motels, like Residence Inn, private in a
$2.2 billion transaction. It renamed the company W2007 Grace
Acquisition. A Goldman entity, Goldman Sachs Mortgage Company, was the
main lender for the leveraged buyout. Grace is run by current Goldman
employees.
Goldman did not buy the publicly traded preferred shares, however.
Instead, Grace went “dark,” as Floyd Norris explained last year. That
meant it no longer filed financials with the Securities and Exchange
Commission, a move allowed for companies with fewer than 300
shareholders. Grace delisted from the New York Stock Exchange and
stopped paying dividends. It took other steps to make it difficult for
anyone, including the preferred holders, to get any information about
the company. Shareholders had to request the financials from the company
and, at one point, had to pay 10 cents a page for the privilege of
finding out how their investment was doing. They also had to sign a
nondisclosure agreement.
In 2012 and 2013, a mysterious entity named PFD Holdings started
buying those battered-down preferred shares. In 2012, PFD was paying $3
to a little more than $5 a share. Soon after, the preferred doubled in
price, and now the shares trade at about $12. As of its last
announcement, PFD owns 58 percent of the preferred shares. Nice trade!
So, what is PFD Holdings? Few outsiders really know because there’s
little information out there about PFD. In Grace’s news releases, the
company calls it a “sister company.” In other words, Goldman is
ultimately behind PFD. I asked a former Goldman executive. He hadn’t
heard of it but jokingly suggested the initials stood for Pretty Fishy
and Dodgy. Well, in truth he used another “F” word, but you get the
idea.
When deals like this go down, I feel like we are nation of Jake
Gitteses, watching big bank deals with incomprehension. In “Chinatown,”
the private detective asks the wealthy baron Noah Cross: “Why are you
doing it? How much better can you eat? What could you buy that you can’t
already afford?”
The scary thing about this Grace deal is that the money is so small
(well, relative to Goldman, at least). The preferred shares amounted to
about $146 million initially. It’s almost as if Goldman does it because
it can.
http://dealbook.nytimes.com/2014/03/19/questions-over-goldman-deal-as-investors-sit-in-the-dark/?
I’d Rather See Bernanke’s Meeting Schedule That’s Not Reported
ReplyDeleteIt was widely reported the other day when Bernanke gave a speech in Abu Dhabi for which he was paid $250,000.
And someone sent me an article today reporting that Bernanke will
conduct a meeting with 8 hedge fund titans for another $250k plus he
will be doing a speech in Turkey for $300k (article link).
http://pagesix.com/2014/03/27/ben-bernanke-to-address-eight-top-hedge-funders/
At least now we know why Bernanke took the Fed-head job rather than
remain in his cushy ivory tower at Princeton. Now Bernanke can afford to
enjoy the same luxuries as do the Wall Street his money printing and
bailout policies enriched.
But I would be much more interested in seeing Bernanke’s meeting
schedule that does not get reported. I know Greenspan had one that would
surprise all of you. One of my best friends in NYC, Jerry Epstein (now
deceased from diabetes), was a top-notch chef who did many gigs with
very wealthy people. He chef’d for people like Carl Icahn, Michael
Steinhardt, Mickey Drexler (J Crew/GAP) and Doris Duke. Around the time
Greenspan retired from the Fed, Jerry was Steven Cohen’s personal chef.
About two weeks after Greenspan left the Fed, Jerry called me to tell me
that he was preparing a meal for Greenspan, who was having lunch with
Cohen at his residence in Westchester (his home was in Westchester, his
office was Stamford, Connecticut). While I got the details Jerry’s menu,
I would have been more interested in the menu of what would be
discussed.
I bring this up because, while Bernanke’s visible speaking
engagements are actively reported, I can guarantee you that he is
conducting very private, non-disclosed meetings for which I’m sure he’s
paid much higher “consulting fees” than his publicly announced speech
compensation. After all, how many of you heard about Greenspan’s
one-on-one luncheon meeting with Steven Cohen? It’s not the news you see
that should bother you, it’s the news that doesn’t get reported that is
most dangerous.
http://investmentresearchdynamics.com/id-rather-see-bernankes-meeting-schedule-thats-not-reported/
NY Fed Joins War On Whistleblowers To Shield Goldman Sachs From Its Own Examiner
ReplyDeleteAnd
this sort of egregious behaviour from a 'regulator.' They argue out of
both sides of their mouths whether Goldman is a 'bank' or not, in order
to get what they want for... Goldman.
The Fed is not a government agency, but a privately owned creature
of the very Banks whom it is charged to regulate and restrain.
And
as we have seen, over and over again, the Fed is not part of the
solution, but has become very much a part of the problem in distorting
the banking system in favour of a few powerful financial interests.
A Mangled Case of Justice on Wall Street
By Pam Martens
May 8, 2014
If
this Federal Court allowed a regulator to twist a Federal whistleblower
law inside out and upside down, it would be sending a chilling message
to every other bank examiner in America: keep your mouth shut or you too
can be fired with impunity.
The unfairness of the proceeding was heightened when just 20 days
before the Judge issued her written decision on April 23, she convened a
phone conference with both sides to make a shocking announcement: “it
had just come to her attention that her husband…was representing Goldman
Sachs in an advisory capacity” according to the telephone conference
transcript.
Judge Abrams’ husband is Greg Andres, a partner at law firm Davis
Polk & Wardwell LLP who previously worked under Lanny Breuer in the
Criminal Division of the U.S. Department of Justice. (Breuer announced
his resignation one day after the PBS Frontline program
reported that “when it came to Wall Street, there were no investigations
going on. There were no subpoenas, no document reviews, no wiretaps.”)
To date, not one key executive at any Wall Street bank that played a
role in the financial collapse has been indicted.
Following that telephone conference, Segarra’s lawyer, Linda Stengle,
filed a letter with the court asking for a more complete disclosure of
the Judge’s husband’s relationship with Goldman Sachs.
http://jessescrossroadscafe.blogspot.com/2014/05/ny-fed-joins-war-on-whistleblowers-to.html
Wall Street Firms Using Their Dark Pools To Make Markets in Their Own Stocks
ReplyDeleteThese self-named dark pools are operating as private exchanges, with a
faux type of specialist system managing the order book, with all the
insight and power that it entails. The layman may not quite comprehend
this, but anyone familiar with Wall Street operations and history will
certainly do so.
That they are trading for their own parent company stocks, and possibly
for their own books, ought to raise more than a few eyebrows.
We ought to have internalized the lesson by now that markets are not
naturally efficient and self-regulating. But even moreso when the
business of price setting and order matching is being done in darkness,
and apparently with lax regulatory oversight.
The lack of integrity in the Western financial system must seem
appalling to anyone whose ears are not firmly taped to the corporate
news feed droning out of New York and London.
The Banks must be restrained, and the financial system reformed, with
balance restored to the economy, before there can be any sustainable
recovery.
After Charges of Running a Price Fixing Cartel on Nasdaq in the 90s,
Wall Street Banks Are Now Trading Their Own Stocks in Darkness
By Pam Martens and Russ Martens: June 3, 2014
http://jessescrossroadscafe.blogspot.com/2014/06/wall-street-firms-using-their-dark.html