Rajat Gupta, Gary Cohn, Lloyd Blankfein, and the truly lovable Brad Hintz
In November 2011, I posted a piece entitled ‘Why Goldman Sachs fears the knowledge of Rajat Gupta’, which ended with the words, ‘I suspect this is one outbreak of smelly wind Goldman Sachs will not easily waft away’. So it has proved. This was the key passage that my legal beagle at the time said would get me into trouble:
‘Gupta’s request for courtroom testimony from Cohn is a direct shot across the Goldman President’s bows. During that same busy year of 2008, Gupta’s former associate Raj Rajaratnamhas had the odd very long lunch with both Cohn and Loeb….during which they discussed major bank takeovers, the TARP programme, and several other fripperies of the day. The Feds have never bottomed out the question of Government Securities purchases at the time TARP was passed….and how Raj Rajaratnamhas got to know enough to buy a whole chunk of bank stocks at rock-bottom prices…’
But the months have passed, and there have been no solicitors’ law firm letters with fancy Wall Street zipcodes plopping onto the coconut matting here in Sloggers’ Roost. So we might as well carry on speculating. The Cohn referred to above is Gary Cohn, Goldman’s President up there in the top dining room with Lloyd Blankfein and (increasingly) Worldwide Asset managing Manc
and future Bank of England boss and wannabe Manchester United boss Jim O’Neill. Cohn you will recall as the bloke who created the Euroblown crisis by teaching Greece how to make borrowings look like currency swaps so they could lie to the Brussels Sprouts. So far he has escaped accusation by legal authorities everywhere, which is odd because he did it – of that there is no doubt – but is Too Big to Jail.
The problem the Sachs face is that Gupta knows the location of several cadavers here and there, bricked up in the Goldman walls. But not according to Brad Hintz, an analyst at Sanford C. Bernstein & Co. He told Bloomberg today that there’s “no evidence whatsoever” that Goldman Sachs’s investment banking franchise is at risk from the Gupta case. Hmmm.
Let’s take a closer look at Brad. He was the Chief Financial Officer at Lehman Brothers. Would you want that on your cv?
Mr Hintz thinks Goldman Sachs is Too Big To Fail. Mind you, this doesn’t seem to be something of which he disapproves. On June 1st 2011, for example, he told Bloomberg (my italics):
“If an alleged violation is identified during a Goldman investigation, we expect a reasoned response from the Justice Department. In a worst case environment, we would expect a ‘too big to fail’ bank such as Goldman to be offered a deferred-prosecution agreement, pay a significant fine and submit to a federal monitor in lieu of a criminal charge.”
A “reasoned response”. And a “worst case” scenario in which Goldman crime is decriminalised. Amazing.
But why would a fine, upstanding man like Brad Hintz want to defend the 666 guys in Goldman Sachs? Could it be because Brad is a crook himself?
On the 8th February 2006, a fine of $200,000 was imposed on Charles B. (“Brad”) Hintz, one of Sanford C Bernstein’s research analysts, for violations of NASD’s research analyst conflict of interest rules…..NASD also found that Hintz violated NASD rules as a result of numerous stock transactions in a discretionary brokerage account maintained at a domestic trust company….The account held securities in six companies that Hintz covered. Between August 2002 and January 2004, Hintz’s discretionary account engaged in 27 transactions in those securities that were contrary to his ratings. Also, 39 transactions were executed in the account either 30 days before or five days after Hintz published a research report on the company, thus violating NASD rules prohibiting transactions during a proscribed blackout period. In addition, between August 2002 and December 2003, Sanford Bernstein and Hintz did not disclose his holdings in these six securities in 60 research reports, as required by NASD rules….”
Niiiiyyeeece….Hintz by name, gives hints by nature.
It really does make one wonder, does it not, WTF Bloomberg is doing listening to jerks like Hintz on the subject of a firm mired in conflict of interest litigation, when the man himself has an MA degree in the practical application of conflict of interest. But such is the nature of banking business these days, this will go down as merely another example of The Slog’s “remorseless cynicism” when dealing with Wall Street.
Meanwhile, back at the plot, Gary Naftalis, Gupta’s lawyer, has said in court that prosecutors told him two other Goldman Sachs employees are suspected of leaking tips about companies including Apple Inc. (AAPL) and Intel Corp. (INTC) Naftalis said one was an executive caught on a wiretap talking to Rajaratnam. Without naming the person, Naftalis said the defence may present evidence of the other hinters, sorry, tippers at Gupta’s trial.
Two other Goldman Sachs employees — David Loeb, head of Asia Equity Sales in New York and a managing director, and Henry King, a technology analyst in Hong Kong — are under U.S. investigation, according to people with knowledge of the probes who weren’t authorised to speak publicly. It’s unclear if Loeb or King are the employees referred to by Naftalis and in letters prosecutors filed in court. But then, who else might they be?
A third employee, Matthew Korenberg, a managing director based in San Francisco, has been the subject of a U.S. insider- trading investigation for more than two years. Korenberg remained employed by Goldman Sachs and has not been investigated for passing on tips unauthorised tips. Hey – give the kid time: he’s just a rookie…he’ll learn.
But wait for it….here comes the Newscorp line: Goldman Sachs has “fully cooperated” with federal authorities for more than two years on this and 40 other cases, a GS spokesman averred six days ago.
I love this job. It’s like shooting severely disabled ducks in an Olympic swimming pool.