The SEC's Kiss of Death
April 20, 2010 9:01 AM Subscribe
"When a company or individual receives a surprise subpoena on a Friday from the SEC, it is usually designed to ruin their weekend plans. Yes, the SEC can get personal in its own way...Back in the day as the criminal CFO of Crazy Eddie, I received a surprise subpoena from the SEC late Friday afternoon. I had to wait until Monday before my attorneys had time to advise me on a course of action." Ex-white collar felon Sam Antar blogs about the SEC's recent move.
(via Jay Hancock of the Baltimore Sun)
(via Jay Hancock of the Baltimore Sun)
Wow. It's good to see he's trying to atone for his sins, so to speak. I grew up in NY in the 70's and 80's and clearly remember their commercials with Jerry Carroll.
Carroll did ads for Willoughbys electronic stores in the 'mid 90's. "The beauty of the spot is you don't have to show Jerry yelling and screaming," Mr. Spero said. "But the audience keeps waiting for yelling and screaming."
posted by zarq at 9:13 AM on April 20, 2010
Carroll did ads for Willoughbys electronic stores in the 'mid 90's. "The beauty of the spot is you don't have to show Jerry yelling and screaming," Mr. Spero said. "But the audience keeps waiting for yelling and screaming."
posted by zarq at 9:13 AM on April 20, 2010
I too grew up on Long Island in the eighties and those commercials are BURNED into my brain.
posted by JBennett at 9:14 AM on April 20, 2010 [1 favorite]
posted by JBennett at 9:14 AM on April 20, 2010 [1 favorite]
"Usually, corporate lawyers are unavailable on short notice to work weekends."
Oh, would that this were true.
posted by Admiral Haddock at 9:15 AM on April 20, 2010 [8 favorites]
Oh, would that this were true.
posted by Admiral Haddock at 9:15 AM on April 20, 2010 [8 favorites]
"Usually, corporate lawyers are unavailable on short notice to work weekends."
I had to laugh at this. There is no corporate law firm that would not bend over backwards (nights/weekends/holidays) to get and keep Goldman Sachs as a client. You can safely assume that many attorneys at Skadden were and are burning the midnight oil working on Goldman's problems right now.
posted by longdaysjourney at 9:19 AM on April 20, 2010 [2 favorites]
I had to laugh at this. There is no corporate law firm that would not bend over backwards (nights/weekends/holidays) to get and keep Goldman Sachs as a client. You can safely assume that many attorneys at Skadden were and are burning the midnight oil working on Goldman's problems right now.
posted by longdaysjourney at 9:19 AM on April 20, 2010 [2 favorites]
Let's just post the entire full disclosure, because it is fucking awesome and I can't wait (though I won't hold my breath) to see the same mea culpa 20 years from now from Tourre:
I am a convicted felon and a former CPA. As the criminal CFO of Crazy Eddie, I helped Eddie Antar and other members of his family mastermind one of the largest securities frauds uncovered during the 1980's. I committed my crimes, simply because I could.
If it weren't for the efforts of the FBI, SEC, Postal Inspector's Office, US Attorney's Office, and class action plaintiff's lawyers who investigated, prosecuted, and sued me, I would still be the criminal CFO of Crazy Eddie today.
I do not own Goldman Sachs securities short or long. However, it did scam Goldman Sachs analyst Richard Balter about Crazy Eddie's financial reports during my criminal days as the CFO of the company.
My research on Goldman Sachs is a freebie for securities regulators and the public in order to help me get into heaven, though I doubt that I will ever get there anyway. I personally believe that some people at Goldman Sachs may end up joining me in hell.
posted by spicynuts at 9:21 AM on April 20, 2010 [5 favorites]
I am a convicted felon and a former CPA. As the criminal CFO of Crazy Eddie, I helped Eddie Antar and other members of his family mastermind one of the largest securities frauds uncovered during the 1980's. I committed my crimes, simply because I could.
If it weren't for the efforts of the FBI, SEC, Postal Inspector's Office, US Attorney's Office, and class action plaintiff's lawyers who investigated, prosecuted, and sued me, I would still be the criminal CFO of Crazy Eddie today.
I do not own Goldman Sachs securities short or long. However, it did scam Goldman Sachs analyst Richard Balter about Crazy Eddie's financial reports during my criminal days as the CFO of the company.
My research on Goldman Sachs is a freebie for securities regulators and the public in order to help me get into heaven, though I doubt that I will ever get there anyway. I personally believe that some people at Goldman Sachs may end up joining me in hell.
posted by spicynuts at 9:21 AM on April 20, 2010 [5 favorites]
The transition between the cold-eyed shark at the beginning, the newspaper editorialist calling a move 'dumb' in the middle, and the penitent condemnation at the end was fascinating.
To be fair, I can't keep a stable narrative voice either, so said my poopyhead high-school english teacher.
posted by LD Feral at 9:21 AM on April 20, 2010 [2 favorites]
To be fair, I can't keep a stable narrative voice either, so said my poopyhead high-school english teacher.
posted by LD Feral at 9:21 AM on April 20, 2010 [2 favorites]
Thanks so much for sharing, this is awesome fodder for my accounting brain.
posted by VickyR at 9:22 AM on April 20, 2010
posted by VickyR at 9:22 AM on April 20, 2010
those commercials are BURNED into my brain
Me, too. It's INSAAAAANE.
posted by Civil_Disobedient at 9:27 AM on April 20, 2010 [2 favorites]
Me, too. It's INSAAAAANE.
posted by Civil_Disobedient at 9:27 AM on April 20, 2010 [2 favorites]
This was a very, very, very interesting essay. Thanks a great deal for this.
posted by Sticherbeast at 9:28 AM on April 20, 2010 [1 favorite]
posted by Sticherbeast at 9:28 AM on April 20, 2010 [1 favorite]
Oh man, Godamn Snacks dudes didn't listen when guy said, "don't talk to cops!" which can easily be extended to "don't talk to reporters, either," because if shit gets in print you may as well have said it to cops. Don't say a fucking word, man....
posted by seanmpuckett at 9:30 AM on April 20, 2010
posted by seanmpuckett at 9:30 AM on April 20, 2010
It's much more refreshing than I'd've guessed to read something written by a guy who not only admits to having been a criminal, but makes absolutely no attempt to justify or excuse his criminal behavior.
posted by cerebus19 at 9:33 AM on April 20, 2010 [2 favorites]
posted by cerebus19 at 9:33 AM on April 20, 2010 [2 favorites]
Wow, that's a great article. I had no idea this guy was still around -- and now working for the uncrazy side.
posted by Kraftmatic Adjustable Cheese at 9:35 AM on April 20, 2010
posted by Kraftmatic Adjustable Cheese at 9:35 AM on April 20, 2010
I love that it's surprising the SEC wouldn't tell Goldman Sachs it was filing a lawsuit until they actually, you know, filed the lawsuit. I bet there were some cold shoulders down at The Club that evening. "Yes, we're not sharing a martini with Rupert this evening. Did you hear he sued Mortimer without telling him?"
posted by Nelson at 9:38 AM on April 20, 2010 [4 favorites]
posted by Nelson at 9:38 AM on April 20, 2010 [4 favorites]
His problem was that, according to Wikipedia, Crazy Eddie did $300 million in sales at its peak. Goldman Sachs just had $3.46 BILLION in earnings for the QUARTER.
He clearly didn't have enough to spend on lawyers.
posted by infinitefloatingbrains at 9:41 AM on April 20, 2010 [2 favorites]
He clearly didn't have enough to spend on lawyers.
posted by infinitefloatingbrains at 9:41 AM on April 20, 2010 [2 favorites]
My favorite part is the non-disclosure of the Wells Notice. I mean, how do you spin your way out of that?
posted by spicynuts at 9:42 AM on April 20, 2010 [1 favorite]
posted by spicynuts at 9:42 AM on April 20, 2010 [1 favorite]
Years ago I had a friend who got out of college in accounting and became a CPA. Boredom ensued. He apparently met an Federal Reserve official at a party who suggested a new career opportunity, and next thing we knew he was a deputized Federal marshal. He was part of the team that shut down insolvent banks and cleaned up the mess. Apparently, this involved showing up at the banks (a team would go to every branch) on Friday afternoon, always Friday, and telling everyone "hi...this bank is now shut down and noone is going anywhere until we've secured all the records". So...not just the SEC likes to ruin peoples weekends.
posted by kjs3 at 9:44 AM on April 20, 2010 [4 favorites]
posted by kjs3 at 9:44 AM on April 20, 2010 [4 favorites]
He was part of the team that shut down insolvent banks and cleaned up the mess.
My brother in law works for them on the accounting side, processing records and assets from insolvent bank closures. They've been extremely busy since the end of '08.
posted by zarq at 9:49 AM on April 20, 2010 [1 favorite]
My brother in law works for them on the accounting side, processing records and assets from insolvent bank closures. They've been extremely busy since the end of '08.
posted by zarq at 9:49 AM on April 20, 2010 [1 favorite]
My favorite part is the non-disclosure of the Wells Notice. I mean, how do you spin your way out of that?
They argued it was non-material.
posted by JPD at 9:49 AM on April 20, 2010
They argued it was non-material.
posted by JPD at 9:49 AM on April 20, 2010
kjs3 - OTS appoints the FDIC as receiver and a "SWAT team" of FDIC agents and marshalls swoop in. Act 2 of TAL episode 377 and 60 Minutes have covered the process.
posted by djb at 9:51 AM on April 20, 2010 [1 favorite]
posted by djb at 9:51 AM on April 20, 2010 [1 favorite]
There's a great Planet Money podcast with Crazy Eddie. Totally worth a listen...
posted by ph00dz at 9:52 AM on April 20, 2010 [2 favorites]
posted by ph00dz at 9:52 AM on April 20, 2010 [2 favorites]
*waves* Another Long Island native here who can't see the words Crazy Eddie without immediately picturing Jerry Carroll screaming at me.
posted by Never teh Bride at 10:03 AM on April 20, 2010 [1 favorite]
posted by Never teh Bride at 10:03 AM on April 20, 2010 [1 favorite]
Looks like Britain is going to be investigating the branch on their side of the pond as well. Looks like they'll need to move operations to an abandoned oil derrek in the Atlantic, and set up the sovereign nation of Sachsland.
Their national motto can be 'Paper, or Plastic'
posted by LD Feral at 10:07 AM on April 20, 2010
Their national motto can be 'Paper, or Plastic'
posted by LD Feral at 10:07 AM on April 20, 2010
Sounds like they're just being a bunch of sad Sachs.
Great article, though.
posted by backseatpilot at 10:14 AM on April 20, 2010
Great article, though.
posted by backseatpilot at 10:14 AM on April 20, 2010
Goldman Sachs? Oh you mean the company that just reported quarterly profit of $3.46 billion? Meanwhile, among the many missing pieces of the AIG puzzle, one finds that AIG insured seven [of the Goldman] Abacus deals. And while the long-term health of banking may be in question, with some calling for the big banks to be broken up, one thing's for sure: an army of banking lobbyists is busy working against any and all reform.
posted by HP LaserJet P10006 at 10:16 AM on April 20, 2010 [5 favorites]
posted by HP LaserJet P10006 at 10:16 AM on April 20, 2010 [5 favorites]
Oh man, Godamn Snacks dudes didn't listen when guy said, "don't talk to cops!" which can easily be extended to "don't talk to reporters, either," because if shit gets in print you may as well have said it to cops. Don't say a fucking word, man....
I think they honestly believed they would never come to account for it, so they weren't so worried about getting caught. They were considered untouchable for a while, since it appeared Paulson had conflicts working on TARP but nothing was ever done about it. Plus, it's pretty difficult for most people to understand how it all went down unless someone does the work for you, like this guy. I've read him before. He's pretty good, at least since he started doing this gig.
posted by krinklyfig at 10:27 AM on April 20, 2010 [1 favorite]
I think they honestly believed they would never come to account for it, so they weren't so worried about getting caught. They were considered untouchable for a while, since it appeared Paulson had conflicts working on TARP but nothing was ever done about it. Plus, it's pretty difficult for most people to understand how it all went down unless someone does the work for you, like this guy. I've read him before. He's pretty good, at least since he started doing this gig.
posted by krinklyfig at 10:27 AM on April 20, 2010 [1 favorite]
I always liked the part where the US Attorney called him "The Darth Vader of Capitalism."
posted by schmod at 10:28 AM on April 20, 2010 [1 favorite]
posted by schmod at 10:28 AM on April 20, 2010 [1 favorite]
Weird how he keeps talking about himself in the third person. I kept having to scroll up and remind myself which Antar he was again.
posted by gottabefunky at 10:29 AM on April 20, 2010
posted by gottabefunky at 10:29 AM on April 20, 2010
So...not just the SEC likes to ruin peoples weekends.
I considered becoming a CPA, but the idea of the boredom of working on other people's finances pushed me away. Breaking up banks sounds like a lot more fun.
posted by krinklyfig at 10:31 AM on April 20, 2010 [1 favorite]
I considered becoming a CPA, but the idea of the boredom of working on other people's finances pushed me away. Breaking up banks sounds like a lot more fun.
posted by krinklyfig at 10:31 AM on April 20, 2010 [1 favorite]
So...not just the SEC likes to ruin peoples weekends.
For what it's worth, I think the theory is that by doing it on a Friday afternoon they'd just ruin the bank employees weekend (and their own, of course). Doing it another weekday, they'd end up with bank customers showing up and making a scene.
posted by inigo2 at 10:57 AM on April 20, 2010 [2 favorites]
For what it's worth, I think the theory is that by doing it on a Friday afternoon they'd just ruin the bank employees weekend (and their own, of course). Doing it another weekday, they'd end up with bank customers showing up and making a scene.
posted by inigo2 at 10:57 AM on April 20, 2010 [2 favorites]
The blogger, Sam E. Antar, is referring to Sam M. Antar in this article, not referring to himself in the third person.
posted by ursus_comiter at 11:08 AM on April 20, 2010
posted by ursus_comiter at 11:08 AM on April 20, 2010
According to Noam Scheiber this Goldman Sachs skulduggery may be the boost financial reform needs:
posted by Kattullus at 11:10 AM on April 20, 2010 [11 favorites]
The reason the recent developments are so remarkable is that all reforms tend to weaken as they get closer to passage, as legislators hash out compromises with powerful interests in order to secure a deal. Bizarrely, financial reform appears to be headed in the opposite direction. When it comes to derivatives, at least, the bill Senator Chris Dodd moved through his Banking Committee in March was significantly tougher than the bill the House passed in December. Then, last week, Lincoln shocked Wall Street by producing an even tougher bill than that. “This thing is not a battle they’d anticipated,” says one administration official. The industry had widely expected Lincoln to soften Dodd’s derivatives measure as part of a compromise with her Republican counterpart, Saxby Chambliss. (The Senate Banking and Agriculture Committees share jurisdiction over derivatives.)Also, this is funny, from The Daily Show, These F@#king Guys - Goldman Sachs. Besides being funny, it does demonstrate how overconfident Wall Street seems to be on financial reform.
What happened? For weeks, Wall Street had viewed the Dodd language as a placeholder while Lincoln and Chambliss hashed out the real details. Instead, the practical effect of the Dodd language was to create a minimum standard of toughness from which Democrats would be unwilling to retreat. As Lincoln and Chambliss bargained in March, the administration began to focus on the issue and discovered its popular resonance. “I have a clear memory of the time the House passed [its financial reform bill] in December. I directly tried to engage the White house … It was pretty much a non-event, primarily because of health care,” recalls Rep. Chris Van Hollen, who heads the House Democrats’ campaign arm. “It’s been a total transformation … a quantum leap in engagement.” By the time Lincoln finally sent the administration the contours of a possible deal with Chambliss the week of March 29th, there was no way the deal could pass muster. Several days later, Michael Barr, the assistant Treasury secretary with the derivatives portfolio, told Lincoln's staff the administration would be unable to support it because it weakened the Dodd bill.
That left Lincoln with a dilemma: She’d been planning on moving the compromise through the Agriculture Committee with bipartisan support, meaning she could afford to lose a few liberal Democrats. Now that she’d be losing Republican votes to win the administration’s imprimatur, she’d have to construct a political coalition that would bring the liberals aboard. The result was the apparent lurch from what was widely expected to be the weakest derivatives bill on the Hill to what’s far and away the strongest.
That was last Tuesday. As of Thursday night, it still wasn’t entirely clear whether Lincoln had calibrated correctly. The bill was so much more hawkish than anything that had come before it—one provision could effectively ban big banks from trading derivatives outright—that it risked repelling not just Republicans but moderate Democrats. (Ben Nelson and Max Baucus both sit on Lincoln’s Agriculture committee.) Then came Friday’s Goldman revelations and suddenly Lincoln had the upper hand. “I’ve heard there’s been some folks on her committee pushing back a little bit,” says a former Democratic Senate aide who now consults for the financial services industry. But, “if you’re a Democrat, it’s harder to vote against something after the Goldman stuff. It puts pressure on Republicans and pressure on Democrats.”
posted by Kattullus at 11:10 AM on April 20, 2010 [11 favorites]
Godamn Snacks
I am now going to use this nickname for Goldman Sachs every opportunity I get. (Sure I'm unlikely to get the chance. But if it comes up I'm ready!)
posted by JHarris at 11:14 AM on April 20, 2010
I am now going to use this nickname for Goldman Sachs every opportunity I get. (Sure I'm unlikely to get the chance. But if it comes up I'm ready!)
posted by JHarris at 11:14 AM on April 20, 2010
Antar's article is amusing, but his thesis about GS being legally lonely for the weekend is completely wrong.
posted by anigbrowl at 11:15 AM on April 20, 2010
posted by anigbrowl at 11:15 AM on April 20, 2010
Kattullus: Holy crap! You mean the system worked for a change??
posted by JHarris at 11:18 AM on April 20, 2010
posted by JHarris at 11:18 AM on April 20, 2010
Related: SEC says it is scrutinizing the Enron-styled "accounting" practices of Lehman Bros.
posted by HP LaserJet P10006 at 11:28 AM on April 20, 2010
posted by HP LaserJet P10006 at 11:28 AM on April 20, 2010
Antar's article is amusing, but his thesis about GS being legally lonely for the weekend is completely wrong.
I have a friend who suggested that the problem is the Sabbath. Orthodox jewish lawyers, being the implication here.
posted by spicynuts at 12:28 PM on April 20, 2010
I have a friend who suggested that the problem is the Sabbath. Orthodox jewish lawyers, being the implication here.
Goldman has a billion outside legal counsel they could turn to. I am sure there are enough non-Orthodox Jewish corporate lawyers at Sullivan and Cromwell that are immensely qualified to advise them on the spur of the moment.
posted by Falconetti at 1:37 PM on April 20, 2010
Goldman has a billion outside legal counsel they could turn to. I am sure there are enough non-Orthodox Jewish corporate lawyers at Sullivan and Cromwell that are immensely qualified to advise them on the spur of the moment.
posted by Falconetti at 1:37 PM on April 20, 2010
Paulson & Co. is John Paulson, no relation to Hank. That had me really confused.
posted by bhnyc at 1:51 PM on April 20, 2010 [2 favorites]
posted by bhnyc at 1:51 PM on April 20, 2010 [2 favorites]
Nelson: "I love that it's surprising the SEC wouldn't tell Goldman Sachs it was filing a lawsuit until they actually, you know, filed the lawsuit. I bet there were some cold shoulders down at The Club that evening. "Yes, we're not sharing a martini with Rupert this evening. Did you hear he sued Mortimer without telling him?""
Oh, it's better than that. They were given a Wells notice a year ago. The SEC isn't required by law to do this, but it does and did.
posted by pwnguin at 3:25 PM on April 20, 2010
Oh, it's better than that. They were given a Wells notice a year ago. The SEC isn't required by law to do this, but it does and did.
posted by pwnguin at 3:25 PM on April 20, 2010
*rocks back and forth*
Six-four-five, eleven-ninety-six
Six-four-five, eleven-ninety-six
Six-four-five, eleven-ninety-six
Six-four-five, eleven-ninety-six
Six-four-five, eleven-ninety-six
Six-four-five, eleven-ninety-six...
posted by ZenMasterThis at 4:03 PM on April 20, 2010
Six-four-five, eleven-ninety-six
Six-four-five, eleven-ninety-six
Six-four-five, eleven-ninety-six
Six-four-five, eleven-ninety-six
Six-four-five, eleven-ninety-six
Six-four-five, eleven-ninety-six...
posted by ZenMasterThis at 4:03 PM on April 20, 2010
I like that the wikipedia infobox has a "Fate: " field for the company.
posted by delmoi at 4:56 PM on April 20, 2010 [1 favorite]
posted by delmoi at 4:56 PM on April 20, 2010 [1 favorite]
Ok, this is pretty awesome. Guess who insures Goldman against investor law suits? Go ahead, guess.
posted by ryoshu at 5:44 PM on April 20, 2010 [2 favorites]
posted by ryoshu at 5:44 PM on April 20, 2010 [2 favorites]
That's going on the business card:
armage
Imperial Dark Lord of Capitalism
and Professional Geek
posted by armage at 5:45 PM on April 20, 2010
Imperial Dark Lord of Capitalism
and Professional Geek
posted by armage at 5:45 PM on April 20, 2010
Guess who insures Goldman against investor law suits?
From that article: [AIG] is the lead insurer of Goldman Sachs Group Inc.’s board against shareholder lawsuits
The SEC is suing GS. That insurance policy protects GS Board members in case of shareholder lawsuits. But the SEC is not a GS investor and the GS Board is not GS.
posted by ryanrs at 11:30 PM on April 20, 2010
From that article: [AIG] is the lead insurer of Goldman Sachs Group Inc.’s board against shareholder lawsuits
The SEC is suing GS. That insurance policy protects GS Board members in case of shareholder lawsuits. But the SEC is not a GS investor and the GS Board is not GS.
posted by ryanrs at 11:30 PM on April 20, 2010
The SEC is suing GS. That insurance policy protects GS Board members in case of shareholder lawsuits. But the SEC is not a GS investor and the GS Board is not GS.
I never said otherwise. However, a successful SEC lawsuit may lead to an investor lawsuit against the board. Especially with rumors that this went to the highest levels of GS and now Germany and the UK are investigating GS too.
posted by ryoshu at 6:01 AM on April 21, 2010
I never said otherwise. However, a successful SEC lawsuit may lead to an investor lawsuit against the board. Especially with rumors that this went to the highest levels of GS and now Germany and the UK are investigating GS too.
posted by ryoshu at 6:01 AM on April 21, 2010
@inigo2: As explained to me, it's partially so that customers don't wander into the middle of a bank closing, but also to give the Feds a couple of days to figure out how screwed up the bank is and make arrangements so that the bank opens without incident under new management first thing Monday morning. They want to avoid panic.
@djb: Yeah. I know.
posted by kjs3 at 9:58 AM on April 21, 2010
@djb: Yeah. I know.
posted by kjs3 at 9:58 AM on April 21, 2010
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My research on Goldman Sachs is a freebie for securities regulators and the public in order to help me get into heaven, though I doubt that I will ever get there anyway. I personally believe that some people at Goldman Sachs may end up joining me in hell.
posted by GenjiandProust at 9:06 AM on April 20, 2010 [6 favorites]