Posted on 09/10/2002 5:23:51 AM PDT by Libloather
Lawmakers get Grubman e-mail
Tue Sep 10, 7:24 AM ET
Noelle Knox USA TODAY
NEW YORK -- Salomon Smith Barney on Monday turned over to a congressional committee copies of e-mail and correspondence between the firm's former telecom analyst, Jack Grubman, and executives at Global Crossing.
The House Financial Services Committee has initiated a broad investigation into conflicts of interest on Wall Street and has requested similar documents from Goldman Sachs and Credit Suisse First Boston. The committee also wants to know if the firms doled out shares in hot new Internet companies as a way to attract investment-banking business.
During the Internet boom, stock in initial public offerings often shot through the roof in the first days of trading, allowing early shareholders to turn a quick profit.
Salomon, a division of Citigroup, has already handed over its records about IPO shares the firm sold to executives and directors at WorldCom.
WorldCom and Global Crossing, which are operating under bankruptcy-court protection, are being investigated by the Justice Department.
Salomon is expected to produce the documents pertaining to the IPO shares received by Global Crossing executives but only after the committee issues a subpoena. Salomon has maintained that it can't hand over the information without a subpoena because of client confidentiality laws.
Nevertheless, the congressional investigation still presents a formidable challenge for Charles Prince, 52, who was named to head Salomon on Sunday. Prince replaces Michael Carpenter, who will oversee Citigroup's investment portfolio.
With all of Salomon's regulatory and legal issues -- the firm also is being sued for some of its dealings with fallen energy giant Enron -- an executive like Prince makes sense, industry analysts say. Prince was Citigroup's general counsel and most recently its chief operating officer.
Robert Rubin, former Treasury secretary and the current chairman of the executive committee for Citigroup's board, will also be more involved in running Salomon.
In announcing the management shakeup, Citigroup Chairman Sandy Weill said, ''As a result of recent events, we have recognized that we need to re-examine our business practices and make appropriate changes. There are certain industry practices that we should all be concerned about, and although we have found nothing illegal, looking back, we can see that certain of our activities do not reflect the way we believe business should be done. That should never be the case, and I am sorry for that.''
Grubman quit Salomon last month, saying he couldn't work in the ''current climate of criticism.''
...into the ground unless he does the perp walk - sooner rather than later.
Enron Probers Pressure Big Banks, Ex-Execs -Sources
Mon Sep 9, 7:16 PM ET
By Kevin Drawbaugh
WASHINGTON (Reuters) - Government investigators probing Enron Corp. have notified two major Wall Street banks of possible civil action related to the collapsed energy trader, while interviews of former Enron insiders have accelerated sharply in recent days, sources said on Monday.
Two so-called "Wells Notices" have been issued by the market-regulating U.S. Securities and Exchange Commission, under pressure to show results on the Enron case, to unnamed Wall Street investment banks, said sources close to the case.
The SEC staff sends a Wells Notice to a company to tell it the staff is considering recommending that the commission take action against the company, which can then respond in writing.
The SEC -- which has already charged former Enron financier Michael Kopper with securities fraud -- declined to comment.
Three major Wall Street banks were brought before Congress this summer to explain their dealings with Enron, including Citigroup's Salomon Smith Barney unit, J.P. Morgan Chase & Co. Inc. and Merrill Lynch and Co. Inc..
All three said their relations with Enron were proper.
"Wells Notices have gone out to two banks," said a source who asked not to be identified. Said another, "Some banks have received Wells Notices ... Who has gotten them, I don't know."
A Merrill spokesman declined to comment, except to say, "We always cooperate fully with (regulatory) inquiries." Citigroup and J.P. Morgan also declined to comment.
At the same time, sources said, the SEC and the Department of Justice have been bringing former Enron directors and executives into Washington for intensive interviews.
"They're trying to determine, along a number of lines of inquiry, whether the (Enron) financial statements were misstated beyond what's been reported to date," said a source.
The interviews may signal a shift by prosecutors away from technical accounting aspects of the case and toward allegations of fraud that are simpler for juries to grasp, sources said.
The accelerated pace of interviews and depositions also points to the likelihood of more legal action, lawyers said.
"Everybody is just kind of waiting for another shoe to drop. The sense is that it's going to happen sooner rather than later," said Philip Hilder, a former federal prosecutor and head of the law firm Hilder & Associates in Houston.
On Aug. 21, Kopper became the first Enron insider to plead guilty and agreed to cooperate with a criminal probe into the collapse of Enron, which filed for bankruptcy on Dec. 21.
Kopper helped set up and manage a vast network of partnerships designed to hide debt, pad profits and deceive investors, prosecutors said. He pleaded guilty to money laundering and fraud charges in a hearing in Houston.
Houston-based Enron's collapse wiped out thousands of jobs and billions of dollars in equity and was the first in a wave of corporate scandals that damaged U.S. investor confidence.
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Boilerplate Whitewater ~right down tothe straw-man father-in -law
By September it was revealed that Terry had underwritten the Clinton Mortgage in NY ~ the case seems to have died
ELECTRICAL WORKERS (IBEW)
DOL Sues Union Fund Tied to Clinton-Crony McAuliffe
The U.S. Dep't of Labor filed suit May 5 against two trustees of the $8.3 billion Nat. Electrical Benefit Fund charging improper dealings between the fund and top Clinton-fundraiser Terence R. McAuliffe. According to DOL, NEBF trustee John Grau and ex-trustee Jack F. Moore imprudently lent over $6 million in pension assets. NEBF is operated jointly by the Int'l Bhd. of Electrical Workers, from which Moore retired as secretary in 1997, and the Nat. Electrical Contractors Ass'n, of which Grau is a vice president.
The scam involved a $6 million loan in 1992 to Columbia Land & Development Corp. of Orlando to buy a subdivision called Country Run which was to be developed into 545 lots. McAuliffe and his wife, Dorothy S. McAuliffe, own Columbia. The loan was in default from Dec. 1992 to Oct. 1997. DOL says NEBF should have known the loan couldn't be repaid in full with interest. The suit seeks the trustees to reimburse the fund for losses, including interest.
The McAuliffes also own Am. Capitol Management, a partner with NEBF in a separate investment called Am. Capitol Group I Assets LP, which guaranteed payment of the Columbia loan. In a separate 1991 investment, NEBF paid $38.7 million to buy five apartment complexes and a shopping center near St. Petersburg. The partnership bought the properties from the Resolution Trust Corp., which had taken control of them from a bank in receivership that had been owned by McAuliffe's father-in-law.
DOL alleges NEBF imprudently purchased a $2.45 million interests in ACGIA, a move that reduced the value of the ACM guarantee on the Columbia loan. McAuliffe's holdings in ACM had been collateral for the loan. The suit further alleges trustees made one of the purchases in the ACM partnership even though the Columbia loan was in default. The pension fund then reportedly sold its share of the partnership and the Columbia loan to ACM at a loss. [Pensions & Investments 5/17/99]
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