The Financial Industry Regulatory Authority accused Washington-based Success Trade Securities and its 45-year-old founder, Fuad Ahmed, of lying to 58 investors — most of them current and former NFL and NBA players — about how he planned to use their money. Ahmed sold $18 million in promissory notes to investors without telling them how he was spending it, including a $1,300-a-month lease for his Range Rover and an $82,000 interest-free loan for his brother, according to a complaint. Finra slapped the securities firm with a temporary cease-and-desist order while it investigates. [NYP]
Loans
‘Success Trade Securities’ Not So Successful At Conducting Itself Like A Legitimate Business
By Bess LevinPhil Falcone Maintains ‘Absolute Lawfulness’ Of Lending Himself A Hundred Mill From Investor Fund
By Bess Levin
Remember, back in 2009, when Phil Falcone realized he’d forgotten to set aside enough cash to cover his taxes and came up with the idea to loan himself the money from a gated investor fund? And investors got all bent out of shape about it and the SEC did too? If the former was looking for some sort of an apology and the latter was looking for some show of groveling (in an attempt to avoid paying a fine/having a judge rule he can’t come within 200 feet of a public company), sorry, ’cause Phil’s not sorry. Read more »
One lazy but fun thing to do as a financial blogger is to find two publications saying the opposite thing on the same day, and then be all “haha, dopes.” Business Loans Flood the Market, the Journal informed us this morning, while Bloomberg tells us that by another measure loans are at a five-year low, though being Bloomberg the way they put it is JPMorgan Leads U.S. Banks Lending Least of Deposits in 5 Years. So is there a flood of loans, or a least of loans? Which is it, guys?
Well, both, obviously; “haha, dopes” would not be fair here. Loans are up, relative to the last couple of years, but loans as a percentage of deposits are at a low – 84% for the top 8 commercial banks, per Bloomberg, as opposed to 101% in 2007. Bloomberg acknowledges this tension:
Falling ratios don’t mean banks have shut the lending spigots. Measured in dollars, total loans rose in the fourth quarter for the biggest eight lenders to $3.9 trillion.
As does the Journal, which notes that “The push comes at a time when many banks have been flooded with deposits as slow economic growth and low interest rates crimp investment.”
The way I think about banks is that they do two somewhat separate things, which are:
- satisfy some people’s demand for money claims (short-term, safe, exchangeable-for-fixed-amount-of-cash bank liabilities),1 and
- satisfy other people’s demand for loans.
It’s not entirely obvious why those things would move in lockstep: Read more »
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MBAs
Investment Manager Sues Playboy Modeling Ex-Girlfriend For Writing Herself Blank Check, Tuition Fees
By Bess Levin
Until 2007, investment manager Andrew Oberwager and his girlfriend Karolina Stefansi were a happy, highly educated couple in love. Oberwager was a PM at Columbus Circle Partners, who had earned the right to not only put the letters C, F, and A after his signature, but M and D as well, having graduated from Harvard Med school before getting into investing. Stefanski, left, was a former Playboy model from Germany, who had earned her journalism degree from Suffolk University (the $33,000 tuition for which Obes covered). Thing were good. Then MDCFA maybe supposedly started an affair with a chick from Texas he met online, a relationship Stefanski was not cool with even though it probably meant nothing to Oberwags (i.e. he didn’t put her through vet school) and she took it to mean that upon breaking up, she was entitled to write herself a check from his account for $80,000.
Stefanski…contends the blank check was for her personal use. She wrote it out for $80,000 when she decided to return to Germany….Attorney Kurosh Marjani is arguing, however, that Stefanski had no authority to write out a blank check for $80,000. The blank check was meant to pay for household expenses, Oberwager testified Tuesday
Also? He wants the $33,00 back, too. Plus interest. Read more »
The more college loans and credit card debt that young adults age 18 to 27 have, the higher their self esteem — and the more control they feel they have over their lives. They tend to view debt positively, rather than as a burden. [NYT, related: drug highs vs debt highs]
This Is A Conversation Among Credit Suisse Employees Debating Loaning A Stripper $1 Million
By Bess Levin“This is really asking for a second opinion.” Read more »
Several months back, it came to light that Phil Falcone had loaned himself some $113 million from one of Harbinger’s funds to pay personal taxes. He didn’t tell anyone about it at the time because he hadn’t thought it was that big a deal but when investors finally heard about it in November, it turned out they were mighty pissed. Goldman and Blackstone pulled their entire investments from the flagship fund and even though they should’ve take the loan as a postive sign (Falcone pays his taxes! Not everyone does that!), a bunch of clients feared it was a harbinger of not very good moments to come (some where also miffed about the fact that the loan was taken from a fund in which redemptions had been suspended). We too were a bit worried and couldn’t help but going to the dark place in which Wilbur, the Falcone’s piano-playing pig was laid off, Lisa had to sell the crown jewels of her wardrobe (including The Gladiator, Mermaid Chic, and Slutty Peacock, and the couple’s bar-in-closet could no longer stock top shelf liquor. The whole thing was very stressful, so today’s news brings some sweet relief. Read more »
The last month or so has not been the best of times for Phil Falcone. Harbinger Capital’s flagship is down, Goldman Sachs, Blackstone and some others have pulled their money, investors have been giving him shit for borrowing $113 million from one of his funds (where redemptions had been frozen) in order to pay personal taxes, he had to put up his art as collateral to borrow even more cash (for what, it’s unclear), he’s being investigated by the SEC and Wilbur, the family’s dancing pig, has been such a god damn bitch. He told the Times none of this is any way a big deal (“The last thing I’m thinking about in the morning is whether I have a cash-flow problem,” he said) and now, he’s be forced to defend his liquidity again. This time, with regard to the mortgage he took out on his house over the summer, after buying it for $49 million in cash. Read more »
Late last week, it was reported that in Phil Falcone had loaned himself $113 million from one of Harbinger Capital’s funds, where redemptions had been suspended, in order to pay personal taxes. The hedge fund manager said he checked with his lawyers before borrowing the money but investors still were fairly miffed anyway. Goldman Sachs pulled its entire investment, as did Blackstone, and one client informed Reuters, “You can’t treat the fund like a personal piggy bank to pay taxes. I don’t know that there is really anything illegal about it, but it is certainly disgustingly immoral and shows a complete lack of fiduciary care.”
Which is why the sensitive ones in the bunch should be thrilled to hear that the next time Falcone needed a little money, he simply went to the bank and asked for some coin to tide himself over, rather than taking it out of their pockets and risking another lecture from mom and dad about “right” and “wrong.”
Earlier this month, Falcone and his wife posted some of their “fine art” as collateral for a secured five-year loan from Bank of America, public records show. The so-called security agreement between Bank of America and the Falcones was filed with the New York Secretary of State’s office on Nov. 4.
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