April 23, 2024

You are here: Home / Archives for investment banker

DealBook: Court Revives Guy Hands’s Lawsuit Against Citigroup in EMI Sale

May 31, 2013 by Leave a Comment

Guy Hands, center, of Terra Firma Capital Partners, with his lawyer David Boies, left, outside Manhattan Federal Court in 2010.Jessica Rinaldi/ReutersGuy Hands, center, of Terra Firma Capital Partners, with his lawyer David Boies, left, outside Manhattan Federal Court in 2010.

The British financier Guy Hands will have another chance to try to prove his claim that he was defrauded by his longtime bankers at Citigroup.

A federal appeals court on Friday ordered a new trial in the legal fight between Mr. Hands and Citigroup over the buyout of the music company EMI.

The United States Court of Appeals for the Second Circuit in Manhattan vacated a 2011 jury verdict that cleared Citigroup of any wrongdoing in its role in EMI’s sale to Mr. Hands’s private equity firm, Terra Firma Capital Partners. It ruled that improper jury instructions from the trial court judge required a reversal.

Mr. Hands had accused the bank of defrauding him during its handling of an auction of EMI. He said that a Citigroup investment banker lied to him about another bidder, which tricked him into paying $6.8 billion for EMI at the market peak in August 2007. After the financial crisis struck and the music industry slumped, Mr. Hands lost billions of dollars on the investment.

Related Links



He sued Citigroup in federal court, seeking $8.3 billion in damages. The bank said it had done nothing wrong and accused Mr. Hands of having a bad case of buyer’s remorse.

After a three-week trial in 2010, the jury awarded nothing to Mr. Hands. Citigroup, which had also provided Mr. Hands with billions of dollars of loans to pay for EMI, ultimately took ownership of the company and sold it off in pieces. The Universal Music Group, a division of Vivendi, bought EMI’s recorded-music business, and a Sony-led group acquired EMI’s publishing assets.

With EMI seized from Terra Firma and now with new owners, the revived dispute becomes a fight over money. Should Citigroup and Mr. Hands fail to reach a financial settlement, the case will again go to trial before Judge Jed S. Rakoff, who presided over the case. A spokeswoman for Citigroup, Danielle Romero-Apsilos, suggested that was where they were heading.

“We are confident we will again prevail at trial as Citi’s conduct in the EMI transaction was entirely proper,” Ms. Romero-Apsilos said. “The original verdict made clear that Terra Firma’s baseless accusations of fraud were simply an attempt to gain leverage in debt restructuring negotiations.”

The reversal of a jury’s verdict in a civil dispute is rare, and the federal appeals court said it was loath to overturn the case.

“We are particularly reluctant to overturn a jury verdict when, as here, it appears that both parties have had a fair bite at the proverbial apple,” wrote Judge John M. Walker Jr., who wrote the opinion for a unanimous three-judge panel. “The principal actors on both sides provided their version of events, exceptional trial lawyers marshaled and clarified the evidence, and a gifted judge presented the issue to the jury for its evaluation.”

Despite the praise for Judge Rakoff, the court said that he erred in his description of English law related to fraudulent misrepresentation, which applied to the case. Judge Rakoff incorrectly told the jury that Terra Firma had the burden of proof in showing that it relied on Citigroup’s supposed misrepresentations, when according to English law, the burden fell upon Citigroup to prove that it did not lie.

“The district court’s jury instructions were based on an inaccurate understanding of the relevant English law,” Judge Walker wrote.
Terra Firma, through its spokesman, Jonathan Doorley, said, “We continue to believe that we have a strong claim, and with the jury instructions now resolved in our favor, we expect to prevail in any subsequent trial.”

The decision is a victory for Mr. Hands’s star lawyer, David Boies of Boies, Schiller Flexner, who represented him at trial and argued the appeal. If the case is tried again, Mr. Boies will most likely find himself in a rematch against Citigroup’s lawyer, Theodore V. Wells Jr. of Paul, Weiss, Rifkind, Wharton Garrison.

Article source: http://dealbook.nytimes.com/2013/05/31/appeals-court-revives-financiers-suit-against-citigroup/?partner=rss&emc=rss

Filed Under: Global Business Tagged With: , ,

DealBook: Barclays Names Former British Regulator as Head of Compliance

December 12, 2012 by Leave a Comment

Hector Sants, former chief of the Financial Services Authority.Stefan Wermuth/ReutersHector Sants, former chief of the Financial Services Authority.

LONDON – Barclays appointed Hector Sants, a former chief of Britain’s Financial Services Authority, as head of compliance on Wednesday, as part of an effort to revamp its image in the wake of a rate-rigging scandal.

In June, Barclays agreed to a $450 million settlement with American and British authorities over charges that some of its traders reported false interest rates for financial gain. The case led to the resignation of several top executives, including Robert E. Diamond Jr, its chief.

The scandal also prompted questions about the role of the Financial Services Authority, the British regulator, in policing big banks. In 2008, a Barclays employee told the authority that the bank was lowering its submissions for the London interbank offered rate, or Libor, although Barclays never specifically said the activities amounted to manipulation.

Revolving Door
View all posts




Since the summer, Barclays has moved to rethink its compliance and risk-taking activities. It has begun a review of its risky trading operations, and is expected to announce an overhaul of many of its business units in time for its next earnings statement in February.

With the appointment of Mr. Sants, a former UBS investment banker, Barclays is hoping to benefit from his experience working with many of the world’s financial regulators. Mr. Sants left the Financial Services Authority in June.

As head of compliance and government and regulatory relations, Mr. Sants will oversee compliance across all of the bank’s operations, and report directly to the chief executive, Antony P. Jenkins. He will start at the beginning of 2013.

Libor Explained

“Relationships with our regulators and governments around the world are obviously also of critical importance to us,” Mr. Jenkins said in a statement on Wednesday. “We must apply a renewed leadership focus on these to make them as constructive and productive as possible.”

The Financial Services Authority has faced harsh criticism from British politicians, who said it did not do enough to monitor risky trading activity in London’s financial services sector.

In tense testimony before Parliament this year, Adair Turner, the former chairman of the authority, was questioned about the culture at Barclays that led to the rate-rigging scandal.

In April, Mr. Turner had written to Marcus Agius, then the chairman of Barclay, about what the regulator perceived as overly aggressive practices by the bank. The concerns focused on efforts to avoid paying about $770 million in corporate taxes and some of the bank’s accounting methods.

“Barclays often seems to be seeking to gain advantage through the use of complex structures, or through regulatory approaches which are at the aggressive end of interpretation of the relevant rules and regulations,” Mr. Turner wrote, according to documents released by Parliament.

Mr. Sants did raise early concerns about the culture at Barclays. After Mr. Diamond was appointed as the bank’s chief executive, the authority warned the Barclays board that he had “not reached the level of openness, transparency and willingness to air issues” with regulators,” according to an e-mail. “I’d like to record that in that conversation, I made clear that our concerns about Barclays’s culture were not some generic observation but specific to Barclays,” Mr. Sants wrote in a 2012 letter to Parliament.

After the Barclays case, the Financial Services Authority conducted a three-month review of the Libor setting process, which has led to a major overhaul of the rate. It acknowledged that the authorities should have stepped in sooner to fix problems with Libor. It also laid out plans to make attempts to alter the rate a criminal offense, and to implement a new auditing system to ensure traders could not unfairly profit from small changes in the rate.

The Financial Services Authority will soon be disbanded, and many of its regulatory powers are to be returned to the Bank of England, the country’s central bank.

This post has been revised to reflect the following correction:

Correction: December 12, 2012

An earlier version of this post misstated Hector Sants’s new job title. He will be head of compliance and government and regulatory relations, not regulatory regulations.

Article source: http://dealbook.nytimes.com/2012/12/12/barclays-appoints-former-british-regulator-as-head-of-compliance/?partner=rss&emc=rss

Filed Under: Global Business Tagged With: , ,

Prototype: Jobs Crisis In Los Angeles, and Two Possible Approaches

October 2, 2011 by Leave a Comment

THE electric car company is based in China. The noodle factory was founded decades ago by a Chinese immigrant. The two businesses may have China in common, but they represent two different ways of looking at the jobs crisis in this city.

Half a century ago, Los Angeles was a dominant economic force in various respects, with its formidable military contracting industry, for example, and a garment trade that rivaled that of New York. Today, unemployment in Los Angeles County is 12.5 percent, one of the highest rates among the country’s major metropolitan areas. The recession walloped industries like manufacturing and retailing that have traditionally been strong in the city.

Now, Los Angeles is more like an “Athens by the Pacific,” Joel Kotkin, a professor of urban development at Chapman University, has written, comparing the city to modern-day Greece. But dysfunction can breed innovation. As Los Angeles works to solve its economic woes, it could provide a road map for other ailing metropolises, said Austin Beutner, the city’s former first deputy mayor and chief executive for economic and business policy. Mr. Beutner, who was once an investment banker, left his city posts last spring so he could work full time on campaigning to succeed Antonio Villaraigosa as mayor in 2013.

In tackling the city’s jobs deficit, Mr. Beutner asked: Can the city’s sheer size and complexity be turned into an asset? He maintains that it can — provided that the bureaucracy that usually goes along with those qualities can be tamed.

To explain, he points to BYD Auto (the initials stand for Build Your Dream), a Chinese electric car company that was recently scouting for a site for its United States headquarters. Los Angeles, with its heavy population of drivers and its relative proximity to Asia, might have seemed a natural choice.

But when Mr. Beutner sat down to meet with BYD executives about the matter, he was told that the city was off the list. When he asked why, “they took out a 12-inch stack of rules and regulations, things I didn’t understand, and I think were equally unintelligible to them,” he said in a recent interview.

He offered to start over with BYD. Los Angeles couldn’t compete on cash incentives, so he came up with enticements that tapped into the city’s wide array of resources. BYD could showcase one of its cars at the Los Angeles International Airport, which is city-owned. A Hollywood celebrity would be asked to drive a BYD car to the mayor’s annual Oscars party. Finally, a collaboration between the city-owned utility company and government inspection agencies would guarantee that battery chargers were installed in customers’ homes within a week.

“Long story short, they’re coming,” Mr. Beutner said. The decision is resulting in an estimated 150 jobs.

Los Angeles County has a population of more than nine million, and this market size should be used to lure more businesses, Mr. Beutner said. And the area’s diverse resources, from its universities to the creative capital of its entertainment industry, should be harnessed to work with city government, he said. “We’re not using the assets we have, not thinking creatively how the public and private can work together,” he said.

Mr. Kotkin says he thinks a different approach to attracting jobs — one that focuses on the city’s small, local communities, as opposed to its vast size — would be more fruitful. “He’s a deal-maker, but we don’t need deals,” he said of Mr. Beutner. “That doesn’t strike me as the way to build the L.A. economy. He has an investment-banker mentality.”

(In his defense, Mr. Beutner said, “What I learned in the world of finance and deal-making was how you bring people together with opposing views and convince them of a commonality.” To say that it is not a relevant skill, he added, “I think totally misses the point.”)

Mr. Kotkin says that to achieve growth in an economy like that of Los Angeles, “you’ve got to grow it from the ground up, nurture its roots — in the small factories, in people’s houses,” Mr. Kotkin said. “L.A. can never again compete at the megacorporation level. It can’t compete with Dallas.”

E-mail: proto@nytimes.com.

Article source: http://feeds.nytimes.com/click.phdo?i=1cf9d23d138d174986777542e365d681

Filed Under: Business News Tagged With: , ,

DealBook: Goldman Names Co-Head of Investment Banking

May 16, 2011 by Leave a Comment

Goldman Sachs has made another round of senior staffing changes in its investment banking division, according to internal memos obtained by DealBook.

Richard Gnodde has been named co-head of investment banking. He will remain co-chief executive of Goldman Sachs International.

Mr. Gnodde will run investment banking with John S. Weinberg and David Solomon, the current co-heads. In addition, Gordon E. Dyal, global head of merger and acquisitions, will become co-chair of investment banking. Christopher Cole was the sole chair of that division.

Revolving Door
View all posts


London-based Yoel Zaoui, a top investment banker and head of the investment banking in Europe, becomes co-head of global merger and acquisitions. The other co-head is Gene Sykes.

Investment banking is a major profit engine at Goldman, producing $1.27 billion or 10 percent of Goldman’s net revenue in the first quarter. Monday’s staffing changes are aimed at putting more senior bankers in front of clients. Some of the people involved will see their managerial responsibilities reduced, according to a person familiar with the matter but who was not authorized to speak on the record.

“These important changes reflect the continued importance and growth of the firm’s global client franchise,” Lloyd C. Blankfein, the firm’s chief executive, and Gary D. Cohen, the firm’s president, said in a memo.

These aren’t the only changes Goldman has made to its banking franchise this year. The other changes involved the United States division. Today’s changes are focused on Goldman’s global operations.

In March, the firm announced that Michael Carr and Dusty Philip would be the new co-heads of mergers and acquisitions for the Americas.

The memo from Mr. Blankfein and Mr. Cohn:

We are pleased to announce two important changes in the Investment Banking Division. Richard J. Gnodde will join John S. Weinberg and David M. Solomon as co-head of Investment Banking. He remains co-chief executive officer of Goldman Sachs International. Gordon E. Dyal will join Christopher A. Cole as co-chairman of Investment Banking.

Richard is a member of the Management Committee, the Client and Business Standards Committee, the Public Policy Committee and the Steering Committee on Regulatory Reform. He served on the firm’s Partnership Committee from 1999 to 2004. Richard joined Goldman Sachs in London in 1987 in mergers and acquisitions. In 1997 he was appointed co-head of the firm’s Investment Banking Division in Japan and in 1999 became president of Goldman Sachs (Singapore) Pte. and co-head of Investment Banking in Asia. In that same year he moved to Hong Kong to become president of Goldman Sachs (Asia) LLC. In 2005, Richard returned to London as vice chairman and assumed his current role in 2006. He was named managing director in 1996 and partner in 1998.

Gordon is a member of the Management Committee. He joined Goldman Sachs as a partner in 1998. From 1999 to 2001, Gordon was the co-head of European Mergers Acquisitions. In 2001, he was named co-head of Investment Banking in Europe and became global head of MA in 2004.

These important changes reflect the continued importance and growth of the firm’s global client franchise and the contributions that both Richard and Gordon have made to the firm and the Investment Banking Division.

Please join us in wishing Richard and Gordon continued success in their new roles.

The memo from Mr. Gnodde, Mr. Solomon and Mr. Weinberg:

We are pleased to announce that Yoël Zaoui and Gene T. Sykes will serve as global co-heads of Mergers Acquisitions. Together with Timothy J. Ingrassia and Jack Levy, who serve as co-chairmen of MA, as well as other senior merger leadership, Yoël and Gene will lead this important client franchise business.

Yoël is a member of the Management Committee, European Management Committee and Investment Banking Operating Committee, and is co-chair of the Senior Diversity Council. Yoël joined Goldman Sachs in 1988 in Mergers Acquisitions in New York and moved to London in 1989. He was appointed co-head of European Mergers Acquisitions in 1999 and became head of European Investment Banking in 2004. Yoël was named managing director in 1997 and partner in 1998.

Gene was co-chairman of Global Mergers Acquisitions and is chairman of Global Technology, Media and Telecommunications Investment Banking. He is a member of the Client and Business Standards Committee. Gene joined the Mergers Acquisitions Department in New York in 1984 and moved to Los Angeles in 1987. He became a partner in 1992.

Together, Yoël and Gene bring international experience, strong sector knowledge and deep client relationships to the Mergers leadership team and position the firm to continue to provide seamless coverage to clients who increasingly operate as cross-border institutions, seeking advice and execution expertise in every region.

Please join us in wishing Yoël and Gene continued success in their roles.

Article source: http://feeds.nytimes.com/click.phdo?i=e946709082801e2f530b807481013146

Filed Under: Business News Tagged With: , ,