Friday, November 2, 2007
No More Corporate Crime
Prosecutors and class action attorneys have wiped out corporate crimes. That is the only explanation for the huge drop in prosecutions, right? Law Blog.
IRS Looking At Hedge Funds
The IRS is looking at hedge funds for tax abuse - is there really a significant number that do not even file returns? Institutional Investor
Thursday, November 1, 2007
The $460 Million Fee Request
Not a bad fee...then again, the award was 3.2 billion. From the WSJ law blog.
Tuesday, October 30, 2007
Merrill Hit With Subprime Class Action
Merrill hit With Subprime Class Action
Wasting no time after the announcement of the billions of dollars in losses, and the resignation of Stan O'Neal, Reuters reports that a lawsuit has been filed against Merrill Lynch, contending that the company issued false and misleading statements about its exposure to risky mortgage investments. According to the article, the complaint accused Merrill of issuing materially false and misleading statements about its financial exposure to collateralized debt obligations (CDOS) containing subprime mortgage securities.
Adding insult to injury, the article says that Stan O'Neal has been named as a defendant also.
Wasting no time after the announcement of the billions of dollars in losses, and the resignation of Stan O'Neal, Reuters reports that a lawsuit has been filed against Merrill Lynch, contending that the company issued false and misleading statements about its exposure to risky mortgage investments. According to the article, the complaint accused Merrill of issuing materially false and misleading statements about its financial exposure to collateralized debt obligations (CDOS) containing subprime mortgage securities.
Adding insult to injury, the article says that Stan O'Neal has been named as a defendant also.
O'Neal Retires
Merrill Lynch announced the retirement of Stan O'Neal this morning. No shocker there, as the inside bet was a resignation today.
What is interesting is that it is being labeled a resignation, rather than a termination. We will have to wait to see whether he is "retiring" to (a) spend more time with his family, (b) pursue other interests, or (c) relax and work on his golf game, but with a reported $160 million in retirement benefits, we won't worry too much about Mr. O'Neal.
One hundred and sixty million dollars. An executive leads a somewhat sinking ship, the firm loses billions of dollars during his tenure, he is outsted, and he gets $160 million dollars. That is more money than most of this country makes in a lifetime.
Not that we begrudge Mr. O'Neal his bargained-for compensation and retirement benefits, but someone has to re-think these compensation packages.
The story from Reuters, AP, NYT, WSJ
UPDATE: Merrill said that the board had elected Alberto Cribiore, the founder of the private equity firm Brera Capital, and a Merrill director as interim non-executive chairman, and as the head of the search committee for a new CEO. This afternoon O'Neal also resigned as a director of Blackrock.
What is interesting is that it is being labeled a resignation, rather than a termination. We will have to wait to see whether he is "retiring" to (a) spend more time with his family, (b) pursue other interests, or (c) relax and work on his golf game, but with a reported $160 million in retirement benefits, we won't worry too much about Mr. O'Neal.
One hundred and sixty million dollars. An executive leads a somewhat sinking ship, the firm loses billions of dollars during his tenure, he is outsted, and he gets $160 million dollars. That is more money than most of this country makes in a lifetime.
Not that we begrudge Mr. O'Neal his bargained-for compensation and retirement benefits, but someone has to re-think these compensation packages.
The story from Reuters, AP, NYT, WSJ
UPDATE: Merrill said that the board had elected Alberto Cribiore, the founder of the private equity firm Brera Capital, and a Merrill director as interim non-executive chairman, and as the head of the search committee for a new CEO. This afternoon O'Neal also resigned as a director of Blackrock.
Fraud in Mediated Settlement Agreements
Setting aside a mediation settlement agreement is a difficult proposition - but evidence of fraud might just do it. From Indisputably, a mediation and arbitration blog.
O'Neal Resignation Expected Today
O'Neal Resignation Expected Today
The WSJ is reporting that O'Neal will announce his resignation today. While he is certainly the one taking the blame for mistakes that are undoubtedly not his, he is certainly not alone.
According to the journal,"[w]ith Mr. O'Neal's ouster, the global credit crunch -- triggered by a steep downturn in the value of subprime mortgages to the least-credit-worthy borrowers -- reaches deep into the executive suite. Damage across Wall Street has topped $27 billion, including $3.4 billion at UBS AG, a Swiss bank whose head of investment banking resigned a month ago. It has also cast further doubt on the future of Citigroup Inc. Chief Executive Charles Prince, whose co-head of investment banking resigned after mortgage-related losses."
The press has been reporting that Mr. O'Neal does not have a severance package in his agreement. That seems very unlikely, but we will have to wait to see how many millions an ousted CEO is worth.
The WSJ is reporting that O'Neal will announce his resignation today. While he is certainly the one taking the blame for mistakes that are undoubtedly not his, he is certainly not alone.
According to the journal,"[w]ith Mr. O'Neal's ouster, the global credit crunch -- triggered by a steep downturn in the value of subprime mortgages to the least-credit-worthy borrowers -- reaches deep into the executive suite. Damage across Wall Street has topped $27 billion, including $3.4 billion at UBS AG, a Swiss bank whose head of investment banking resigned a month ago. It has also cast further doubt on the future of Citigroup Inc. Chief Executive Charles Prince, whose co-head of investment banking resigned after mortgage-related losses."
The press has been reporting that Mr. O'Neal does not have a severance package in his agreement. That seems very unlikely, but we will have to wait to see how many millions an ousted CEO is worth.
Monday, October 29, 2007
Did O'Neal Play Too Much Golf?
CNBC had a report this afternoon on Stan O'Neal's golfing, claiming that he was pulling a Nero while Merrill burned. This is the same nonsense that the press trotted out during the Bear Stearns subprime mess. A number of reporters claimed that Bear Stearns CEO James Cayne was out playing golf while major problems were surfacing at Bear.
Is it truly nonsense, unless of course you are so uninformed as to believe that the CEO of a major brokerage firm is the person making the daily decisions and needs to be on top of ever aspect of the firm's business on a day to day, hour by hour basis.
So the concept that playing golf while a press release is being released is indicative of poor management is just silly, but but I did decide to take a look at Mr. O'Neal's golf rounds. In this Internet age, there are no secrets. Think you can sneak out of work in the afternoon and play a round? Well, if you play with a USGA handicap, you really can't - because your handicap, and your last 20 rounds of golf, are public information.
But using the public handicap records to examine a CEO's conduct is just silly. Add to the mix that you are assuming that the dates that the CEO puts down are correct, which is a huge assumption. The handicap system does not require the exact date of the golf round.
Stan O'Neal's dates are not correct. For example, he is posted 4 rounds of golf with a date of August 19, at three different clubs. But more to the point, while I don't know Mr. O'Neal, I am pretty confident in saying that he did not play 4 rounds of golf, at three different courses, in a single day. What I am confident he did is that he played one round of golf at his home course on August 19 - a Sunday - and posted his scores from his last three rounds while he was at the club - and forgot to change the date.
He also has three rounds posted with a date of September 22 at three different courses - Purchase, Shinnecock and Waccabuc Country Club. According to Google Maps, it would take 4 hours to drive from Shinnecock to Purchase to Waccabuc. Add in 4 hours for the round of golf, and to believe the dates in the the handicap system would be to believe that Mr. O'Neal played golf for a minimum of 16 hours on September 22. I hope I don't have to remind anyone that there were not 16 hours of daylight on September 22 (there were only 12 hours between sunrise and sunset on that day), never mind the physical exhaustion if one were to attempt to play three rounds of golf interspersed with 4 hours of driving in a single day - and his scores wer 80, 89 and 90!
This raises another interesting issue, which I am sure that someone will jump on. Most of the dates of postings of scores for Mr. O'Neal are weekends or holidays. But there are 4 times that he posted more than one score on those dates. Was Mr. O'Neal aware, from the Cayne nonsense, of the possibility of someone checking his rounds, and therefore intentionally did not post with the correct dates, in order to conceal his golf rounds?
Pure nonsense of course, but I'd make a small wager that someone comes up with this theory.
Is it truly nonsense, unless of course you are so uninformed as to believe that the CEO of a major brokerage firm is the person making the daily decisions and needs to be on top of ever aspect of the firm's business on a day to day, hour by hour basis.
So the concept that playing golf while a press release is being released is indicative of poor management is just silly, but but I did decide to take a look at Mr. O'Neal's golf rounds. In this Internet age, there are no secrets. Think you can sneak out of work in the afternoon and play a round? Well, if you play with a USGA handicap, you really can't - because your handicap, and your last 20 rounds of golf, are public information.
But using the public handicap records to examine a CEO's conduct is just silly. Add to the mix that you are assuming that the dates that the CEO puts down are correct, which is a huge assumption. The handicap system does not require the exact date of the golf round.
Stan O'Neal's dates are not correct. For example, he is posted 4 rounds of golf with a date of August 19, at three different clubs. But more to the point, while I don't know Mr. O'Neal, I am pretty confident in saying that he did not play 4 rounds of golf, at three different courses, in a single day. What I am confident he did is that he played one round of golf at his home course on August 19 - a Sunday - and posted his scores from his last three rounds while he was at the club - and forgot to change the date.
He also has three rounds posted with a date of September 22 at three different courses - Purchase, Shinnecock and Waccabuc Country Club. According to Google Maps, it would take 4 hours to drive from Shinnecock to Purchase to Waccabuc. Add in 4 hours for the round of golf, and to believe the dates in the the handicap system would be to believe that Mr. O'Neal played golf for a minimum of 16 hours on September 22. I hope I don't have to remind anyone that there were not 16 hours of daylight on September 22 (there were only 12 hours between sunrise and sunset on that day), never mind the physical exhaustion if one were to attempt to play three rounds of golf interspersed with 4 hours of driving in a single day - and his scores wer 80, 89 and 90!
This raises another interesting issue, which I am sure that someone will jump on. Most of the dates of postings of scores for Mr. O'Neal are weekends or holidays. But there are 4 times that he posted more than one score on those dates. Was Mr. O'Neal aware, from the Cayne nonsense, of the possibility of someone checking his rounds, and therefore intentionally did not post with the correct dates, in order to conceal his golf rounds?
Pure nonsense of course, but I'd make a small wager that someone comes up with this theory.
Clean Sweep of the Executive Suite
Stan O'Neal is supposedly meeting at the close with the board of Merrill to negotiate his severance package. According to the media reports, his agreement does not include a package. However, no one expects him to be fired or to resign without a multi-million dollar package.
Interesting comment by an analyst this afternoon on the O'Neill turmoil - the termination of O'Neal is not enough, and the analyst said that what Merrill needs is "a clean sweep of the executive suite."
Interesting comment by an analyst this afternoon on the O'Neill turmoil - the termination of O'Neal is not enough, and the analyst said that what Merrill needs is "a clean sweep of the executive suite."
O'Neal Still on Board
With insiders estimating his resignation date at Tuesday, or the latest Wednesday, Stan O'Neal survived the weekend. However, Reuters is now reporting that the board has reached a broad consensus to remove O'Neal as chairman and CEO, and the Wall Street journal is reporting that O'Neal has decided to leave.
Meanwhile the list of top contenders for the slot is expanding, and now includes Merrill's retail head Robert McCann, Blackrock head Larry Fink, John Thain from the NYSE, and Gregory Fleming, Merrill's co-president.
Meanwhile the list of top contenders for the slot is expanding, and now includes Merrill's retail head Robert McCann, Blackrock head Larry Fink, John Thain from the NYSE, and Gregory Fleming, Merrill's co-president.
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