$$$ Does GM have no sense of reality? [The Deal]
$$$ Rightsizing at Sun Capital [Dealbook]
$$$ Pershing Square Dropped 12% in 2008 [Bloomberg]
Archive for January 2009
Back before the holidays we wondered aloud if self-administered funds, common in the United States and less so in Europe, had any future. We suspect not. Now, with former Made-off sponsors (like Union Bancaire Privée) shying away from integrated shops, and other firms recommending that their investors pull any capital housed in such institutions, the new rule of due diligence might include the checklist item “do you use a third party administrator?”
Lots of luminaries seem to enjoy claiming that the infrastructure of “Modern Finance” is finished. We prefer to think that the old regime is finished, but that a new one is waiting anxiously to take its place.
You know what their neighbors think of the Noel family and now, via Business Sheet, Colin Tennant, founder of the Mustique Company, tells us how he feels about the Greenwich branch of the Madoff Movie of the Week. Spoiler alert: Tennant characterizes the Noels as “…worms. They’re terrible snobs, those people. They’re frightfully badly behaved snobs.” But you should really take a second to click (skip to 6:05) cause it sounds better with his accent, and there’s the bonus of watching what appears to be Tennant’s houseboy chase Walter Noel off his lawn (and if you’ve got time, at 4:15 Tennant dresses Noel down like a naughty school girl over something about a “board” which “wasted two years of [his] life.” It’s dismissive, demeaning and fairly amusing to watch, especially when Noel is reduced to groveling and apologizing and promising not to waste “another two years” of Big T’s life).
This was sent out to a bunch of Wacheople earlier, but we were told Wells Fargo has suspended emailing privileges for many of you until they’re earned back, so just in case– do not forget to sign up! The rest of you should feel free to put together your own similar challenges, since the vending machines have obviously proved too difficult. To the Wells people reading this, and perhaps suffering an extreme case of second-hand embarrassment– you picked these guys. Apparently when we begged and pleaded with you to man up, you heard “put these on.”
From: [redacted at wachovia]
Sent: Wednesday, January 07, 2009 11:33 AM
To: [redacted at wachovia]
Subject: One Team — One Dream
Presumably, this would include the outcome of inflating your cash assets by $1 billion or so?
Global IT Company [Satyam]
As the 2009 AVN Adult Expo opens in Las Vegas this week, Girls Gone Wild CEO Joe Francis and HUSTLER magazine publisher Larry Flynt are petitioning the newly convened 111th Congress to provide a financial bailout for the adult entertainment industry along the lines of what is being sought by the Big Three automakers, a spokesperson for Francis announced today.
Adult industry leaders Flynt and Francis sent a joint request to Congress asking for $5 billion in federal assistance, “Just to see us through hard times,” Francis said. “Congress seems willing to help shore up our nation’s most important businesses, we feel we deserve the same consideration. In difficult economic times, Americans turn to entertainment for relief. More and more, the kind of entertainment they turn to is adult entertainment.”
I don’t even know where to begin.
Hustler’s Larry Flynt and Girls Gone Wild CEO Joe Francis Ask for Government Bailout of the Adult Entertainment Industry [PR Newswire]
Though we were pretty sure the cannoli surprise back in October was intended to be a hint as to what employees at Morgan Stanley could expect come bonus time, it seems as though John Mack has come through yet again for the Mackettes. The following numbers are apparently confirmed, for “a blend of industry and product bankers” (they do not include base pay, and it’s unclear what the mix of cash vs. deferred cash vs. stock is). According to one of the happy government workers at 1585, “I was surprised how high they came out, but given who’s left (the A-team), not surprising that they are being taken care of.”
As previously mentioned, cuts are going down at Bank of Amerillwide today, and are expected to continue through the week. From the front lines:
According to our sources of totally unestablished reliability, Bank of Merrill Lynch America is canning basically the entire commodities desk. Anyone care to Blackberry us from inside the HR offices to confirm? tips [at] dealbreaker.com is your fast track to unrecognized “in-the-knowdom.”
Eye popping frauds don’t become so overnight typically. Rather, they likely build year after year, starting, perhaps, with a bit of cookie jar revenue to smooth results, and progressing until things are out of hand. Most of the big frauds seem to follow this pattern including Enron, Phar-mor (anyone remember the World Basketball League?), and now Satyam. Consider this quote from Chairman B. Ramalinga Raju:
“The gap in the balance sheet has arisen purely on account of inflated profits over a period of last several years … what started as a marginal gap between actual operating profit and the one reflected in the books of accounts continued to grow over the years….”
This is one reason these are so difficult to detect. Small, incremental fraud built on at least some foundation of actual returns, actual revenues, actual profits, blends in. Likely the Made-off scam began with a bit of results smoothing. (Several bloggers have hinted that the dot-com bubble bursting is where Bernie may have made the transition from smoothing to outright fraud).
In any case, it doesn’t look very good for Satyam, given that almost all their cash appears to be illusory. What this means for various subsidiaries (like Bridge Strategy Group, for instance) also remains to be seen.
Satyam shares crash 77% after overstatement [Marketwatch]
By which they mean the millions of dollars worth of “Hannukah gifts” he mailed out while under house arrest, not the $50 billion Ponzi scheme. Also likely indicative of a lack of respect for the “rules” is that sitch with the barnyard animals and Cool Whip, but that’s not pertinent to our case. What Mades may be locked up for, if prosecutors successfully get bail revoked, are the 13 watches, a diamond necklace, an emerald ring, 2 sets of cufflinks, a diamond bracelet, Cartier and Tiffany watches, four diamond brooches, and a jade necklace that he and wife Ruth still claim were merely sent to family members as holiday gifts, and not to hoard assets. The defense has til the end of the day to turn in what should be a delightful argument as to why big boy shouldn’t have to bunk with Bubba.
