The firm probably employs at least a handful of people who drink themselves into oblivion multiple nights a week as a coping mechanism for dealing with professional unhappiness but the unidentified male who knocked back a few too many last Friday night, took a stroll through the West Village, chatted up a young lady outside Benny’s Burritos, stumbled into some outdoor tables, and reportedly acted like a racist prick toward the person offering him help before getting himself knocked out apparently isn’t one of them. Read more »
Fabulous Fab Tourre is on his way to trial in the SEC’s securities-fraud lawsuit over the Abacus synthetic CDO he built at Goldman Sachs for John Paulson, and Andrew Ross Sorkin has a column today about all the things that the SEC doesn’t want him to be allowed to say to the jury. You should read it, it’s enraging, though who you get enraged at is entirely up to you.1 But I’ll give you a quick and tendentious summary, which is:
- The SEC’s main argument is that Fab deceived ACA, the “portfolio selection agent” on the Abacus deal, and
- ACA were sort of stupid scumbags, and
- the SEC understandably doesn’t want the jury to find that out.
SAC Capital is under intense scrutiny from the government over alleged insider-trading violations, but at least one Wall Street firm with a track record of getting things right appears to be betting that the big hedge fund will ultimately survive. Goldman Sachs recently lured away from arch rival Morgan Stanley a veteran stock salesman who counts as his biggest client SAC Capital. The salesman, Jack Johnston, was offered a lucrative managing director position at the prestigious Wall Street firm — a promotion from his previous job as an executive director at Morgan…“Goldman is obviously betting that whatever happens in the investigation, SAC and Cohen will make it,” said one Wall Street trader who has first-hand knowledge of Johnston’s hiring. “There’s no way that Goldman would offer someone whose biggest client is SAC a managing director spot if it thought SAC was going away.” [FBN]
How shady is this morning’s delightful Journal story about the travails of Equity Inns preferred stockholders? I think the answer is “just the right amount of shady,” but you might disagree. The gist is that Goldman Sachs real estate private equity funds bought out Equity Inns but left almost $150mm of preferred stock outstanding. Once ENN was no longer a public company (because Goldman owned all its common stock and it had fewer than 300 shareholders), it delisted its preferred stock and stopped providing public financial information.1 This saddened the preferred holders and they expressed their sadness by bidding down the price of the preferred to under 40 cents on the dollar.
Also by complaining to the company, and the SEC, and the Journal, and anyone else who will listen. Also by doing this:
One of the preferred shareholders is responding by creating 300 separate trusts to hold his preferred shares. He argues that should qualify the company for reporting.
Should it? I don’t know but I love it. You gotta fight silly formalism with silly formalism. Read more »
I find the story of Dragon Systems hilarious and horrifying so I’m never going to miss an opportunity to tell you about it and one occurred today. The story, quickly, is (1) Dragon Systems, a closely held speech-recognition company, hired Goldman to advise it on a merger with Lernout & Hauspie, (2) Goldman assigned Dragon an extremely JV team of bankers, (3) Dragon sold itself to L&H in June 2000 in an all-stock deal, (4) L&H soon turned out to be a massive fraud, and (5) L&H filed for bankruptcy in November 2000 and Dragon’s shareholders lost $300 million. Dragon sued, Goldman won a trial in January, and today they won some more, for reasons I’m not clear on. That is, I’m not sure why they had to win again – the judge issued an opinion finding in favor of Goldman, even though a jury did the same thing in January. Also it’s not much of a stirring win: Read more »
Umm so maybe someone wants to explain to me what happened to Glenn Hadden? He’s the head of rates at Morgan Stanley, formerly at Goldman, and he was just banned from all CME trading floors for ten days, which is a little funny because, like, what, was he going to walk around on an exchange floor? Like in a tour group? But actually he can’t use computers either,1 so basically, no Treasury futures for ten days. That starts in mid-July and, god, I’d like to be banned from a computer for ten days in July, but I guess the perks of being a successful rates trader include punishments like that.
Anyway the thing he did was … well here is the Notice of Disciplinary Action, which says that the thing he did was violate CBOT Rule 560, which requires that big “positions must be initiated and liquidated in an orderly manner.” So his offense was to trade in a disorderly way when he was at Goldman five years ago. Specifically:
December 19, 2008, during the final minute prior to expiration of the December 2008 10-Year Treasury futures contract, in order to cover the tail (a standard form of risk management activity associated with holding a Treasury futures position at expiry) for the position held by Goldman, Sachs & Co.’s Treasury Desk, Hadden, then a Treasury trader for Goldman Sachs & Co., executed a 100-lot market order, and then submitted a 50-lot limit order, which was only partially filled as a result of illiquidity in the market. During the course of these orders and subsequent fills, the market traded up 27+ ticks resulting in the final price of the December 2008 10-year Treasury futures contract settling above what was indicated by the December – March calendar spread.
So: he tried to buy a lot of Treasury futures real fast, and as a result of that he ended up paying too high a price for them. I guess that’s a little “disorderly” but also sort of underwhelming.2
What is going on? Obviously there are two possibilities: Read more »
Not All Goldman Sachs Summer Intern Applicants Worthy Of Face-To-Grundle Time With Gary Cohn, Says Gary CohnBy Bess Levin
Out of 17,000 applicants, just 350 college students made the cut and will begin their investment banking summer internships next week at Goldman Sachs offices around the world. That is roughly the same yield as prior years, a 2% acceptance rate. It’s easier to get into Harvard or Stanford…Applicants also had to submit a resume and a 300-word cover letter describing the qualities they would bring to Goldman and their motivations for applying. And of course they had to survive a round of interviews. “We have no problem attracting people,” Gary Cohn, Goldman’s president, said at a conference on Thursday about the applicants to the program. “I won’t say they’re all highly qualified, but the vast majority were highly qualified kids that wanted to come to work at Goldman Sachs for the summer and do the internship program.” [WSJ, related, related]