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Just Another Day At Sentinel

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Things continue to go swimmingly over at Sentinel, the cash management firm which, to date: didn’t know the exact regulatory body to contact about halting redemption requests from investors (and incorrectly guessed the CFTC); was accused of selling assets too cheaply—at discounts of as much as 30 percent to market prices—and without asking permission first, to Ken Griffin at Citadel; filed for Chapter 11 bankruptcy; and had a complaint filed against it by the SEC claiming Sentinel defrauded its clients by improperly “commingling, misappropriating, and leveraging their securities without their knowledge,” in violation of the Investment Advisers Act. Regulators checking out the befuddled fund manager’s collapse said yesterday that, oh, $500 million was missing from its accounts, which could indicate Sentinel’s further screwing of clients.
Obviously this sort of public revelation is not a big deal for Sentintel, which has been called out for much worse in the past, and is probably disappointed it took regulators so long to find this one. Today the party line is no foul play; tomorrow, your guess is as good as ours, but we’re thinking something involving Bear Stearns's High-Grade Structured Credit Strategies Enhanced Fund team, a couple of Quaaludes, and confusion over the safety word gone horribly wrong.
Earlier: Sentinel Only Playing Dumb, Actually Run By Racketeering, Fed Manipulating Geniuses
Sentinel's $500m shortfall [Financial Times]


Yahoo! RésuméGate, Day 7: Third Point Is Not Enjoying This At All

In fact, Dan Loeb and Co. find this "embarrassing episode" painful to watch. Dear Board of Directors: Six days have passed since Yahoo! acknowledged the fabrications in Chief Executive Officer Scott Thompson and Director Patti Hart's resumes. Since then, the following has occurred: (i) shareholders have been told that Mr. Thompson's errors were "inadvertent", (ii) Mr. Thompson made a classic "I'm sorry you feel that way" non-apology without actually accepting responsibility, (iii) Ms. Hart announced she will not seek re-election to the Board presumably due to her leadership of the botched CEO hiring process but intends to serve out her term, and (iv) the Board has formed a special committee to conduct a "thorough review" into Mr. Thompson's academic credentials. It appears very clear to us – and to many corporate governance experts, Yahoo! employees, and fellow Yahoo! shareholders – that Mr. Thompson's fantasy degree was in no way an "inadvertent error". The evidence shows he had been using false credentials for years. Mr. Thompson's "apology" was clearly insufficient and it seems that the only thing he actually regrets is that he has been caught in a lie and publicly exposed. Without any explanation or accountability, Yahoo! has been left to flounder under a discredited leader for an undefined period. So, after six days, we must ask – what is this Board waiting for? It seems farcical to us that the Board will most likely spend more time deliberating over whether Mr. Thompson should be fired than it did properly vetting whether he should have been hired. The necessary investigation into whether certain senior executives and Board Members knew of Mr. Thompson's deceptions before hiring him should not delay decisive action over his ethical breaches. Third Point has over $1 billion invested in Yahoo! and we take no joy in witnessing this carnage. This Board's unchecked value destruction must stop once and for all. Therefore, we once again call upon the Board to immediately (i) place Third Point's entire slate on the Board replacing Mr. Thompson and Ms. Hart, (ii) appoint an interim CEO—we would suggest CFO Tim Morse or Head of Global Media Ross Levinsohn (assuming neither had any knowledge of Mr. Thompson's fabrications) and (iii) allow Third Point nominee Michael Wolf to Chair the Search Committee for a new permanent CEO (Mr. Wolf will waive the $15,000 fee that Ms. Hart received for her work as Head of the Search Committee last year, which we expect she will promptly disgorge). This is the only way for Yahoo! to move past this embarrassing episode. Sincerely, Daniel S. Loeb Chief Executive Officer Third Point LLC