Wednesday, January 7, 2009

Citi's $800 Million Man-2

"After 18 tempestuous months with Citigroup Inc., the managers of Old Lane Partners LP are looking for a fresh start. Last year, the financial-services firm shelled out more than $800 million to buy Old Lane, eager for its stable of well-regarded former Morgan Stanley executives, led by Vikram Pandit. Mr. Pandit became Citigroup's chief executive last December. ... The hedge fund's hefty price tag and quick demise angered Citigroup employees and investors, especially as Citigroup's overall financial condition worsened. Mr. Pandit reaped at least $165 million from the deal", my emphasis, David Enrich at the WSJ, 24 December 2008.

Well-regarded "former Morgan Stanley executives", by whom? Where's GSG's CNC guillotine? Are the SEC and SDNY US attorney's office looking into the bona fides of this transaction? If not, why not? What are Citigroup's directors like say, Robert Rubin doing? I think this transaction was a sham. See my 24 June 2008 post: http://skepticaltexascpa.blogspot.com/2008/06/citis-800-million-man.html.

7 comments:

Noble said...

Ofcourse it was a sham. What are you going to do about it?

Anonymous said...

IA... I thought what idiots at Citi would pay $800 million for a bunch of execs? If that wasn't a credit bubble indicator nothin was... in fact I wish someone would compile a bubble indicator list... low spreads for risk... ever risig equity P/Es... ridiculous salaries for talent in the finance biz... shrinking cap ratios... I'm sure there are many more...

As for pursuing the "sham" I think shareholders have done a pretty good job of judging Mr. Rubin and his fellow board members... verdict... they're doing a lousy job...

Independent Accountant said...

Noble:
What should I do? I am not the US attorney for the SDNY, nor the Enforcement Director of the SEC.

Edgar Alpo said...

Pandit wasn't the only Old Lane partner to rake it in. Sickening stuff.

Independent Accountant said...

BS:
In my opinion they all belong in federal prison. Including the CPAs who were so "stupid" they couldn't see the subtance and the form of this transaction. Imagine, we bailed out this crew of clowns with over $300 billion.

Patrick said...

Does it save the execs capital gains tax if Citi buys the OL business, rather than paying whopping sign on bonuses to the very same execs?

If so = tax avoidance?

Independent Accountant said...

Patrick:
You may be right.