Thursday, September 04, 2014

Another Private Equity Scam

Russian bank hires two former U.S. senators Center for Public Integrity. Far worse than Cantor.

Another Private Equity Scam: Clawback Language Does Not Work As Advertised

As the SEC, reporters, and analysts dig into the operations of private equity firms, it is becoming obvious that one of the reasons that these financiers have cornered the best legal talent in America is for the express purpose of better fleecing their investors.
A prime example comes up in the use of clawbacks in private equity agreements. For those new to private equity, the clawback provisions are meant to assure that the private equity fund managers do not receive fees meant to reward good performance when the performance was no good.
The prototypical fee structure for a private equity fund is an annual management fee of 2% of assets under management plus 20% of the profits. The majority of funds stipulate that that 20% upside fee (called “carried interest”) kicks in only after a certain rate of return (the “hurdle rate”) has been surpassed. The typical hurdle rate is 8%....

New Zealand: How Crooks’ Buddies at WhaleOil Bounced Out the Chief of the Serious Fraud Office, and More

It was a particularly lively weekend in New Zealand politics, already in ferment as a result of the facts and claims documented in Nicky Hager’s new book about dirty tricks in New Zealand politics. Everyone’s paying a great deal of attention to the workings of the political/media sausage machine and the leaks are flowing.
It turns out not to be a machine, as such, more a tangled writhing heap of politicians on the make, spin merchants on commission, CEOs of massively bust companies, journalists looking for copy, chattering policemen, and bloggers on a sort of nihilistic spree. As you might expect, the resulting display is not at all pretty, or simple. Still, the same sort of thing goes on everywhere else too, and normally one doesn’t get to inspect the workings. One should take the opportunity to look and learn. This will be a brisk, longish walk through a tremendous mess, dear reader. I’ll do my best to get the story straight and highlight my favourite bits.
There was another leak on Friday. That leak promptly claimedthe already-vulnerable scalp of Justice Minister Judith Collins:
Prime Minister John Key has tried to distance himself from claims Mark Hotchin was paying bloggers to undermine the Serious Fraud Office, saying he does not know about the arrangement and it is not a matter for the National Party....
 An aside: Ms Odgers is the baleful blogger, NZ Herald newspaper columnist, wannabe M.P.,  diminutive ninja, tax lawyer, and serial major fraud bystander who appeared in a leading role in a recent NC post about apparent Russian mafia connections in New Zealand. She has since left her job in Hong Kong, “by mutual consent”. That departure might sound like a blogging coup worthy of Odgers herself, but in fact both her former company and Ms Odgers should be quite impervious to any embarrassment arising from our blog post; they’ve heard most of it before. One suspects the job change is motivated instead by the multiple massive breaches of offshore lawyers’ omertà that Odgers is seen to perpetrate in the Hager book.