Unstructured Finance

Goldman fund haggles with REIT investors over 10-cent printing fee

A Goldman fund’s REIT charges investors 10 cents per page for financial statements.

Of all the accusations made by an aggrieved group of REIT investors against Goldman Sachs, perhaps the most surprising is how stingy the bank can be.

A Goldman fund that manages the REIT, formerly known as Equity Inns Inc, requires investors to pay 10 cents per page for print copies of its financial reports. Those reports are not available online, nor are they released publicly — a fact that has led this long-running feud to spill into public view in comment letters to the SEC.

“When I asked for financial reports they said, ‘Can you send a check?,” Art Chandler, an investment advisor at Wedbush Securities, said in an interview. “And I said, I would be glad give you $6 out of the $150,000 in accrued dividends you owe me.”

Another investor, Joseph Sullivan was not allowed to use a personal check or money order. He was required to get a cashier’s check.

Bank of America’s Chalice: Poison or Red Bull?

For months, as he endured hearings on Capitol Hill and fought off a series of lawsuits, Bank of America CEO Ken Lewis trudged through a post-apocalyptic financial landscape against a steady drumbeat of questions about his future. The deal he had called “the strategic opportunity of a lifetime” — his purchase/salvage of Merrill Lynch — had swung from an act of patriotism, keeping the American way of banking from utter ruin, to a scandal over Merrill losses and bonuses.

Perhaps he should have seen the writing on the walls of the vacant houses financed by Countrywide, the mortgage lender Lewis purchased/salvaged just six months before the Merrill deal. The two transactions may have been strategic gems, but they were laced with political poison as the economy floundered toward its dramatic deleveraging and taxpayers pumped $20 billion into Bank of America to fund the Merrill deal.

“It was only a matter of time,” Campbell Harvey, a professor at Duke University’s business school, told Jon Stempel. “There is too much collateral damage.” As Stempel reports, Lewis spent north of $130 billion on acquisitions, including FleetBoston Financial Corp, the credit card issuer MBNA Corp, LaSalle Bank Corp, Countrywide, Charles Schwab Corp’s U.S. Trust private banking unit, and Merrill. In buying Merrill, he added a giant investment bank to what was already the largest U.S. retail bank, credit card issuer and mortgage provider. (Wells Fargo & Co has since become No. 1 in mortgages.)

BoA hearing: class-action fodder?

Ken LewisDennis Kucinich pointed out at a Congressional hearing Thursday that Merrill’s weekly losses in mid-November were greater than the losses in mid-December, and that Bank of America boss Ken Lewis got weekly updates on the investment bank’s losses. Lawmakers repeatedly said Lewis must have known much earlier than he claims about the heavy losses at Merrill, which lost $15.84 billion in the fourth quarter of last year.

That’s something that class action lawyers may latch on to, as they push their case over the Bank of America-Merrill Lynch deal, which hinges on what the bank disclosed and when.

Shareholders OK’d the deal on Dec. 5. Bank of America disclosed Merrill’s losses in January, after the deal closed. If shareholders knew of the losses before, the outcome could have been different.

Stanford whistleblowers tell of concerns, perks

For Mark Tidwell and Charles Rawl, former employees who filed a whistleblower lawsuit against Texas billionaire Allen Stanford’s financial empire, this week’s move by U.S. securities regulators to charge Stanford and two associates with “massive, ongoing fraud” brought a certain kind of redemption. But for the thousands of investors who now cannot tap into their accounwhistleblowersts until a court-appointed receiver sorts out claims, it could be a long wait.

Tidwell and Rawl both worked in Stanford’s posh Houston headquarters until December 2007, when they say they were forced to leave. In an interview with Reuters in Houston on Feb. 19. 2009, the two talked about their growing concerns while working at Stanford, as well as the silver-spooned culture that prevailed. Click here to hear audio

Mark Tidwell, 40, a former senior vice president at Stanford, recalls a plush dining room with a new menu every day, and perks aplenty for employees fortunate enough to make the “Top Producers Club.”

Madoff and the lawyers’ bonanza

LATVIA/By Martin De Sa’Pinto

 

Oh what a tangled web we weave when first we practise to deceive, wrote Scottish novelist Sir Walter Scott, and anyone looking into the alleged Madoff fraud may well understand what he means.

 

Funds, advisors, auditors, fund administrators and custodians are looking around nervously and trying to understand whether they are likely to face lawsuits. Some are pre-empting that by taking out lawsuits themselves.

 

 

In certain cases investors and/or funds are suing auditors, administrators or advisers. Some investors are also looking carefully at the offering documents of their funds to see whether they have been misled over due diligence practices or fund strategies.

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