It’s been years since Bob Chapman arguably invented the 13-D letter so beloved by activist hedge funds when he discovered that investors could attach missives to the company in public filings. But the head of Chapman Capital is still innovating—this time by being the first person ever to introduce the words “fuck you” in a public company filing with the SEC.
Perhaps surprisingly to some familiar with Chapman’s acerbic style, the obscenity wasn’t Chapman speaking to a poorly performing company Chapman Capital had invested in. Chapman’s a bit too witty to resort to such crude language in a shareholder letter, anyway. He prefers more colorful and literary insults. The words came as what Chapman dryly describes as an “eloquent” response from a chief financial officer on the receiving end of Chapman’s dissatisfaction.
According to Chapman’s letter, his fund had been pressuring working to get Embarcadero Technologies to open itself up to being acquired. As things tend to go in these situations, relations between Chapman and the top executives at Embarcadero seem to have deteriorated.
Chapman’s letter tells the story of a series of telephone calls from three weeks ago in which Chapman complained about the failure of Embarcadero to get itself sold and criticized the reputation Embarcadero chief financial officer Michael Shahbazian. Unsurprisingly, this did not go over well with Shabazian.
But let’s let Chapman’s letter speak for itself, in its own understated way.
On March 7, 2007, Mr. Chapman communicated to Mr. Shahbazian that the Board’s failure to announce a definitive merger agreement no later than March 30, 2007, would result in the filing by the Reporting Persons of an amended Schedule 13D, which should be expected to include as an exhibit a letter to the Board making public the results of Chapman Capital’s recently accelerated investigation into the Board and management of the Issuer. Furthermore, in response to certain comments made by Mr. Shahbazian during a conversation later that day, Mr. Chapman conveyed to Mr. Shahbazian Chapman Capital’s concern that, according to background checks directed by Chapman Capital, Mr. Shahbazian had been viewed negatively by various shareholders of Niku Corporation, ANDA Networks, Inc. and Walker Interactive, all of which in the past had employed Mr. Shahbazian in the capacity of Chief Financial Officer. Mr. Shahbazian reacted temperamentally to Mr. Chapman with the eloquent response, “Fuck you!” Mr. Chapman then forcefully informed Mr. Shahbazian that it was inappropriate and inadvisable for the Chief Financial Officer of a public company to utter such blasphemy to the advisor of a 9.3% ownership stakeholder in the Issuer.
Brilliant. And, as far as we can tell, the first time that the words “fuck you” have been entered into a public company filing with the SEC. Derivations of “fuck” have been entered before, however, both accidentally and intentionally. But the two intentional cases have all related to the titles of pornographic films. Paul Kedrosky]
Since the only reasons for having children are to proliferate one’s own ego and entrapment, Ayferafet Yalincak, 52 and mother of Hakan must be pretty PO’d that she went through—we’re ballparking—18 hours of labor and only ended up with a criminal record and two years in the state pen. Ayferaet is going down for her role in a multimillion-dollar hedge fund scam directed by her son Hakan, a former NYU student who had the brains to “charm his way into the exclusive world of Greenwich high finance by posing as an heir to a wealthy Turkish family,” broker deals with a Kuwaiti financier and put $1.25 million of investor money toward a down payment on a $21 million donation to NYU (so as to come off as wealthy philanthropists to potential investors) but not how to, you know, do it without getting caught and taking the woman who gave him life down with him.
US District Judge Janet Bond Arterton told a packed courtroom, “I don’t have confidence her future will be one without further fraud,” which has got to sting. Mother and son were also ordered to pay $2.25 million in restitution. Hakan is to be sentenced by the court next month, to say nothing of the “grounding of a lifetime” he’s purportedly in for.
Earlier: Mom Helped Hedge Fund Fraud Son
Pound Ridge mom in hedge fund scheme gets 2 years [AP via Journal News]
As expected, investment banking head Ken Moelis quit UBS yesterday.
If a bank wants to be a player in the private equity boom it’s got to be in the lending game. Remember, these “take private” deals used to be better known as “leveraged buyouts” and leverage is finance-speak for “borrowed money.” Private equity firms borrow money to buy companies, and their willingness to pay fees on a host of other investment banking services—from M&A fees to bond issuances—depends in part on how nice the investment banks play with them when it comes to lending.
So you can imagine how frustrated Ken Moelis must have been with his gnome masters at UBS who refused to give him the chips to play at the big boy tables. After he was promoted to head of the investment bank, he never really had the juice to make UBS a big player.
UBS and Moelis both are playing this split as a difference in strategy. In many ways, that’s what it is. But there’s also another way to look at it—as another chapter in the history of how private equity and this period of slutty credit changed the way Wall Street does business. And how one firm—UBS—resisted that change.
UBS’s Moelis Resigns, Leaving Firm Vulnerable in M&A
Something of a scandal has erupted over remarks made by Mad Money host Jim Cramer in the above video from TheStreet.com explaining how traders attempt to play the market price of stocks they take short positions in. One way of doing this–which Cramer describes as widespread although perhaps illegal–is for a hedge fund trader to call reports and analysts to spread negative stories about the stock. Reactions to Cramer’s remarks are divided about whether he is performing a public service in revealing widespread market manipulation and whether he is providing how-to guide to manipulating stocks.
The New York Post broke the story this morning:
In the video from TheStreet.com’s “Wall Street Confidential” Webcast, Cramer boasts about manipulating the price of a high-flying stock down, and even acknowledges that doing so might have been illegal. The video is making the rounds on YouTube.
“A lot of times when I was short, I would create a level of activity beforehand that would drive the futures. . . . It’s a fun game,” Cramer said in the Webcast, which was moderated by TheStreet.com Executive Editor Aaron Task.
Cramer later said that “no one else in the world would ever admit that, but I don’t care.”
One added thing to watch for: Jim Cramer takes a swipe at easily manipulated financial reporters, who he calls “the Bob Pisani’s of the world.” We’re sure his CNBC colleague appreciates it.
Cramer Reveals A Bit Too Much [New York Post]
Delta CEO to Forgo Extra Payout (WSJ)
The CEO of Delta, who has been guiding the company through bankruptcy court, will not receive a dime in bonuses when the reorganization is finally complete. Instead, the money that might have gone to him, as well as some other left over cash, will be distributed among many of the company’s unionized workforce. Typically, of course, a turnaround CEO is looking for a big payoff when the restructuring is successfully completed but Gerald Grinstein says his goal is to see the company succeed, not to enrich himself. Sorry, but this is all way too saccharine for us. For one thing, the guy is 74, so he probably doesn’t have much need for a big multi-million dollar bonus at this point. Instead, he could easily be looking to simply secure his legacy in the twilight of his life. While in a sense it’s “nice” that so much money will be going to the rank-and-file workers, it doesn’t make all that much sense. A turnaround specialist should receive a big bonus once things are complete, because otherwise why take such a risky job? After all, when you’re dealing with a company that in some way is teetering on collapse, you’re opening yourself up to legal problems if things do go south. Of course, you don’t have to take our word for it. We imagine that Gretchen will have something to say about Gerald sooner or later. U.K. Inflation Rate Unexpectedly Rose in February (Bloomberg)
A fresh whiff of inflation was noted in London, prompting concern the the Bank of England will find itself in a tightening mood. Of course, this only pushed the Pound higher, as speculators wanted to get in ahead of higher rates. But there’s some good news. The UK has decided to overweight energy in the inflation statistics that it collects from now on. How is that good news? Well, if energy prices fall, as many people predict, then inflation data numbers should sink as well. Of course, if energy prices surge, that’s ok too, cause economists can just say that things aren’t so bad, ex-energy. Perhaps even more controversially, broccoli has officially replaced brussel sprouts in the UK’s inflation basket. O’Hare awaits big bird (Chicago Tribune)
The infamous A380, which yesterday was in New York, continues its maiden voyage in throughout the states. Today, it will land in Chicago, the Windy City, and fittingly, high winds will prevent it from swooping down over Boeing headquarters. Although, it’s a little strange that a plane the size of a football field should have problem with wind. We’re not sure if Boeing executives will come out to O’Hare to check it out and greet it, but it would be a real classy gesture if they did. BP faces blizzard of criticism (Guardian)
In 2005, BP, as everyone knows, had a major blast at its Texas City plant resulting in the deaths of 15 workers, and the injury of 180 more. It was a pretty bad incident, and the years since then haven’t exactly been the best for the company, even as its industry has enjoyed some good times. So it seems like it’s sort piling on a little late for the US Chemical Safety Board to just now be releasing a report on the incident that’s critical of the company. At this point, we’re pretty sure they get it. Plant explosions are bad.
$$$Nintendo vs. Sony: It’s Like Atari vs. Betamax [Information Arbitrage] $$$28 yo I-banker in Manhattan, voted “Best Smile” in high school, for Halloween, “wrapped myself in gift wrapping paper, put a big bow on, and wore a sign that said “To: WOMEN, From: GOD”…. god’s gift to women… actually did this but this is also a joke,” so get it while it’s hot. [Craigslist] $$$The Market, She’s a Bitch [Long or Short Capital] $$$Cramer’s Comeback [WallStrip]
Remember when Forbes.com warned you to stay away from marrying a career women? Well, it seems they’ve now decided to rectify this error against sexual egalitarianism—by advising women how to avoid paying too much attention to their careers.
That may not be the explicit theme of the series of articles Forbes.com is running under the headline Life-Work balance. But look at the evidence: the series is edited by two guys, and all but one of the articles is written by women. Even more: most the people quoted in the articles seem to be women. (We’ll admit, we only skimmed them and then sent them to Bess.) You get the point: chicks explaining why they don’t work much to their male bosses.
The most unfortunate thing about the series, however, is not the part about putting women back in the kitchen. It’s that the article on “How to Say ‘No’” is not about how to be less slutty in the office. Because Lord knows we need to read something like that around DealBreaker. Fast. Life-Work Balance [Forbes.com]
Ex-JPMorgan banker Dana Vachon’s** much-anticipated and hysterically funny novel, Mergers & Acquisitions, comes out in three weeks. The backdrop is an investment bank called JS Spenser that now has its own website, which includes a page with business cards for several of the characters, some of whom may or may not have real-life counterparts at JPMorgan who shall remain nameless. For the moment. Guesses, however, may be delicately placed in the comment section where they will be reviewed by DealBreaker’s Bess Levin, who will love, feed and take care of them until the book is out, when they will be displayed for all to see. In a friendly, non-litigable way, of course. (See especially, “Terence Mathers” and “Dewey Ananais.”)
Vachon, who once managed to convert the US dollar into itself on a real estate deal, is far better at writing about bankers than he was at being one, so banking’s loss is literature’s gain. The book can be pre-ordered here. JS SPENSER
** Obligatory Spiers disclosure: Vachon is one of my best friends. And the book is dedicated to me. And we have the same publisher. So there are really too many conflicts of interest to count. But funk it; If JPMorgan gossip isn’t DealBreaker fodder, I don’t know what is.
No link to the clip yet, but CNBC’s Charlie “Man Candy” Gasparino just reported that Goldman Sachs is not in on the Blackstone IPO, despite reports by David Farber et al to the contrary. Gasparino noted that the absence of the fee-addicted bank may be because of a rivalry between firms and possibly even personal issues between Stephen Schwarzman and Hank Paulson (guess who wanted to be Treasury Secretary but got passed over for Hank?). This confirms the suspicions of a quasi-credible source we reported about on Friday and now upgrades said source to being semi or, what the heck, approaching-wholly credible!
Ikea just isn’t what it used to be, you know? Once a cool, hip, Swedey design company, it’s basically devolved into just a run of the mill furniture store whose difficulty to get to is rivaled only by the fact that it charges over a hundred dollars to deliver something worth less than forty, playing on the fact that some of us out there can’t fathom carrying a table up five flights of steps. But there’s hope yet! Saving Animals Across Borders is auctioning off the desks of former Enron employees Ken Lay, Jeffrey Skilling and Richard Kinder! Each one has a minimum bid of $25,000 and is made with “an elegant Makore Pommelle veneer,” to say nothing of the vintage edition copies of “Heart of Darkness” and “How To Win Friends and Influence People” (for those saracstic afternoons) in each top drawer. Personally, we’re saving our money for the shredder auction, but you should feel free to bid on these pieces of history today—you’ve got ‘til Sunday!
Ken Lay’s desk goes up for grabs [CNN Money]
File under Things That Will Never Happen: a “gadfly shareholder” has filed an update to Goldman Sachs’s proxy statement proposing that Goldman never grant stock options to anyone.
Gadfly shareholder Evelyn Davis, who has railed against excessive executive compensation for decades, wants investors to bar Goldman Sachs Group Inc. (GS.N: Quote, Profile, Research) from ever again granting stock options to its executives.
Davis’ proposal, included in an amended shareholder proxy filed with the Securities and Exchange Commission on Monday, urges Goldman shareholders to approve a proposal “so that no future new stock options are awarded to anyone.” It also seeks to bar renewing or re-pricing current stock options, unless called for under an existing contract.
Another shareholder is suing over Goldman’s stock options awards, alleging that the firm undervalued the options awards. Because, you know, Goldman is totally embarrassed that it pays its executives so much.
Gadfly asks Goldman investors to end stock options
Gadfly asks Goldman investors to end stock options [Reuters via DealBook]