June 25, 2017

Wealth Matters: Smart in Medicine or Law, but Not in Managing Money Money Advice for Doctors and Lawyers and the Rest of Us

But their attitudes toward money and investing can create financial challenges later in life.

And the years of education that got them to where they are, their financial advisers say, can also stand in the way of their financial decision-making.

As Greg Erwin, managing principal at Sapient Private Wealth Management who works with doctors, put it, “A lot of these physicians would like to believe that investing and savings is pure science, and that’s not true. It’s an art form.”

Over the last two columns, I have looked at the behaviors of some highfliers — athletes and people who make their living drilling and transporting oil and gas; and those who have built their wealth in volatile fields like technology and real estate.

In each of those cases, I asked financial experts to share their insights into the financial and investing mistakes that are often typical of these clients.

In this column, I’m going to look at what the rest of us can learn from doctors and lawyers.

DO NO HARM Doctors have a reputation among financial advisers for spending every bit of money they make. They earn a lot, after all, and figure they can work a long time. But doctors who engage in this type of spending can forget how hard it will be to maintain their lifestyle in retirement without millions of dollars saved.

“Doctors can have a sense of entitlement,” said Lewis Altfest, chief executive of Altfest Personal Wealth Management, who has a specialty in advising doctors.

“Doctors are highly respected in their communities. They have historically been among the most gifted intellectually and they’re not afraid to exercise it.”

(He has dentist clients as well, but said they generally acted more like accountants than doctors: conservative and more risk-averse.)

While doctors are certainly smart, their medical ability does not necessarily translate to financial acumen.

Mark Gurland, 59, a hand surgeon in New Jersey who is married to a psychiatrist, said he had a theory about doctors’ financial behavior. Since most do not finish their internships and residencies until age 32 — if they have gone straight through from college — they have been living cloistered existences even as their college friends have been working for at least a decade.

“When they’re done, my feeling is, there is this repressed self-sacrifice and when money appears, they’re living in huge houses and driving the fanciest new cars,” he said. “They have a lot of money they worked hard for, and they’re spending it.”

On the investment side, he said, doctors often believe that their knowledge of medical issues translates into something seemingly simpler, like investing.

Dr. Gurland, who has always been a saver, said he had been guilty of making investments on a tip or a hunch. A cardiologist friend persuaded him to invest in fiber optic cables a decade or so ago: he said he doubled his money and then lost almost all of it. When he invested in a company that was promoting a drug for hand surgeries, he thought he had a winner but lost money on that one as well.

Now, he said, he defers to his adviser on investments and thinks of some of his most annoying patients who try to tell him what’s wrong with them.

“Every day, we see patients in today’s world who seemingly know more about medical conditions than the doctor,” he said. “Why? Because they went on the Internet and read about this.”

Mr. Erwin, the adviser, said he tried to offer doctors a financial plan that dealt with their desire for rewards. At the same time, he lets his clients know about the risks inherent in not saving and in trying to fit in time for investing when they have an all-consuming job.

“They’re very methodical thinkers, but they’re also extremely busy,” Mr. Erwin said.

He said he spent time coaching his doctor clients not to get swayed by a friend who thinks they should invest in something they know nothing about or has an opinion about timing the market.

But doctors generally get two important things right. Doctors, particularly those with a unique specialty, buy disability insurance because they know that if they can’t work as a hand surgeon, for example, their income will plummet, even if they can still work as a doctor in a different capacity.

Article source: http://www.nytimes.com/2013/03/30/your-money/money-advice-for-doctors-and-lawyers.html?partner=rss&emc=rss

Site Insight: Are Big Clients Worth the Effort for This Web Start-Up?

Site Insight

What’s wrong with this site?

For me, writing this column brings two fascinating benefits: the people I get to meet and the information they share. Because my days at AbesMarket.com are filled with e-commerce decisions, I appreciate the value of baseline data, and knowing how visitors act on other sites helps me gauge our performance. I hope you, too, can benefit from these ideas and statistics.

In last week’s post, we met Recruiterbox, a three-year-old start-up that organizes the recruiting process. Having grown through smart and frugal marketing, Raj Sheth and his co-founders are debating how to guide their company to the next set of customers. Their focus has been on companies with fewer than 50 employees. Larger companies have more to spend on recruiting, but also demand a more resource-intense sales approach.

We left off asking readers for feedback on which market Recruiterbox should emphasize. We also asked whether you thought the site was easy enough to understand.

One comment suggested focusing on the potential of the small- to medium-size business market. In fact, the commenter went so far as to suggest focusing on start-ups and small enterprises in India and Silicon Valley. His point was that the $100-per-month cost would be easy for these companies to digest given the value Recruiterbox offers. I agreed wholeheartedly that the company should avoid the temptation of catering to larger companies. While the appeal of increasing revenue per client can be tough to resist, it comes with three key obstacles.

  1. Larger companies mean more decision makers, which translates into a significantly longer sales cycle.
  2. Recruiterbox does not have an outbound sales team to sell into that market. This is a significant cost savings but makes outreach to bigger companies tougher.
  3. Large companies are often swayed by reputation, and because Recruiterbox is relatively new to the market, it does not have the corporate credibility that a human resources executive may be expecting.

Other comments provided feedback on how the site functions. I challenged Mr. Sheth with these thoughts, and he shared some of his core site statistics to support his answers.

Is the Try It for Free button too easy to miss?

We used color to help make that button stand out. It is the only blue button on the site. Eighty-four percent of the people who hit the homepage end up clicking on the button. That works for us although we also want people to watch the video to get a feel for the product. On average 7 percent of the visitors that click on the Try It for Free button sign up for the trial version.

At three minutes, isn’t the video too long?

We have remade this video three times. The actual site demo takes 15 to 20 minutes, so it was quite an effort to edit that video down to three minutes. Seven percent of our visitors watch the whole video — or roughly 2,000 of our 30,000 monthly visitors. We don’t have stats on the number of people who start to play it and then stop in the middle. We haven’t made the investment in producing a one-minute concept video although we do understand the value of one. The positive side is that after watching the current video many of our potential customers can jump right in because they understand how to use the application.

On the homepage, why not have the Reasons You’ll Love It section follow the video instead of the Social Proof? Why not put some of that information on a separate page.

This isn’t a focus because so few people scroll down below the fold. Approximately 90 percent of the visitors click on either the Try It for Free button or the video. As to potentially separating those sections into different pages, we believe having all of the key information on the homepage raises our search engine optimization ranking.

Can the text on the homepage explaining what you do be more concise?

We have struggled with that line, appreciate that feedback and agree it could be improved.

Why don’t you advertise on Monster.com or other job sites?

We have tried partnering with job sites but have not made progress. We aren’t relevant to the job seeker, only to the employer, so we are looking to structure a relationship that only shows our ads to employers.

How do you use customer feedback?

We receive a few hundred e-mails per month from paying and trial customers. This is in addition to the feedback we get during our two to three demo calls every day. It is a big advantage to be this close to our customer. We are careful to filter the feedback based on the size of the company — large companies provide different feedback than their smaller counterparts. We compile the feedback, and it drives our development road map, what features we add and when.

Would you like to have your business’s Web site or mobile app reviewed? This is an opportunity for companies looking for an honest (and free) appraisal of their online presence and marketing efforts.

To be considered, please tell us  about your experiences — why you started your site, what works, what doesn’t and why you would like to have the site reviewed — in an e-mail to youretheboss@abesmarket.com.

Richard Demb is co-founder of Abe’s Market, an online marketplace for natural products that is based in Chicago.

Article source: http://boss.blogs.nytimes.com/2013/03/06/are-big-clients-worth-the-effort-for-this-web-start-up/?partner=rss&emc=rss

Media Decoder: Elmo Puppeteer Accused of Underage Relationship

Kevin Clash, on the set of Richard Termine Kevin Clash, on the set of “Sesame Street,” with the character Elmo.

2:38 p.m. | Updated Kevin Clash, the voice and puppeteer of Elmo on “Sesame Street,” has taken a leave of absence after an unsubstantiated claim that he had a sexual relationship with a 16-year-old boy.

Mr. Clash said the relationship started after the person, now 23 years old, was over the age of 18. Mr. Clash told TMZ, which reported the accusation early Monday morning, that the relationship was “between two consenting adults” and he added, “I am deeply saddened that he is trying to make it into something it was not.”

Mr. Clash elaborated in a statement later on Monday. “I am a gay man,” he said. “I have never been ashamed of this or tried to hide it, but felt it was a personal and private matter. I had a relationship with the accuser. It was between two consenting adults and I am deeply saddened that he is trying to characterize it as something other than what it was. I am taking a break from Sesame Workshop to deal with this false and defamatory allegation.”

Mr. Clash’s leave of absence from “Sesame Street” started on Sunday, once it was clear that the accusations were going to become public, according to an executive at Sesame Workshop, which produces the show, who insisted on anonymity because the organization was not commenting officially beyond its written statement.

“Kevin insists that the allegation of underage conduct is false and defamatory and he is taking actions to protect his reputation,” Sesame Workshop said in a statement. “We have granted him a leave of absence to do so.”

No charges have been filed against Mr. Clash.

Sesame Workshop said it received a communication about the relationship from the 23-year-old in June.

“We took the allegation very seriously and took immediate action,” the organization said. “We met with the accuser twice and had repeated communications with him. We met with Kevin, who denied the accusation. We also conducted a thorough investigation and found the allegation of underage conduct to be unsubstantiated.”

The organization said Mr. Clash had “exercised poor judgment and violated company policy regarding Internet usage,” and was disciplined accordingly.

The Sesame Workshop executive said three outside firms had investigated the matter on behalf of the various parties involved and the organization conducted its own internal investigation. As recently as Nov. 7, the accuser’s attorney indicated to the Sesame Workshop that he did not have any proof that his client was underage at the time of the relationship, according to the executive at the organization.

Mr. Clash has been helping to identify other puppeteers who can play Elmo, and some of them will now fill in for him, according to the Sesame Workshop executive, who said that production of “Sesame Street” would go forward as planned.

Mr. Clash, 52, was the star of the 2011 documentary “Being Elmo.” He has played Elmo for more than two decades.


Article source: http://mediadecoder.blogs.nytimes.com/2012/11/12/elmo-puppeteer-accused-of-underage-relationship/?partner=rss&emc=rss

Economix Blog: Deficit Deals Weren’t Always So Antitax

I had an article over the weekend about how previous deficit-reduction deals were much more tax-heavy than anything on the table today — until, that is, 1997. Here’s a breakdown of the deficit reductions that came from higher tax revenue versus spending cuts in the deals passed in the last 30 years:

DESCRIPTIONSources: Congressional Budget Office, Center on Budget and Policy Priorities, Simpson-Bowles Commission, Senator Toomey’s office.

As you can see, the five major deals of the 1980s and early 1990s relied much more heavily on tax increases to do the dirty work of deficit reduction. On average, tax increases accounted for 61 percent of deficit reductions (and much more during the early Reagan years, despite President Ronald Reagan’s reputation as the taxpayer’s friend).

But by 1997, tax increases were wholly ruled out as a source of deficit reduction. In fact, Congress — finally with a Republican majority by that point — decided to cut taxes, which meant spending cuts had to be even greater to make up for the loss in tax revenue. That’s why the chart above shows that tax changes subtracted from total deficit reductions by 71 percent.

The compromise proposal offered by one of the Republicans on the deficit “supercommittee” was significantly less reliant on tax increases than the ’82-’93 deals, offering 24 cents in tax increases for every dollar the deficit was reduced. But still, there was some sense that deficit reductions should come from both sides of the ledger.

Now, with the supercommittee reportedly disintegrating, the deficit reductions are going to look a lot like the 1997 deal: Without a supercommittee proposal, automatic spending cuts of $1.2 trillion over the next decade will kick in, and no tax increases. Congress also looks ready to extend the Bush tax cuts, which are currently scheduled to expire at the end of 2012.

That means that once again, tax changes would detract from, rather than contribute to, deficit reduction.

Article source: http://feeds.nytimes.com/click.phdo?i=07874075cb5bd559ea3358fded3ddee3

You’re the Boss: How J. Hilburn Managed to Expand Online

Case Study

What would you do with this business?

Veeral Rathod (left) and Hil Davis.Mark Graham for The New York TimesVeeral Rathod (left) and Hil Davis.

Last week, we profiled a dilemma facing J. Hilburn, a Dallas clothing company that uses direct sales and multilevel marketing to sell custom shirts and other menswear. Founded in 2007 by Hil Davis and Veeral Rathod, two Dallas financial industry workers, the company’s sales rose from $1 million in 2008 to $3.25 million in 2009 and $8 million in 2010, a year in which it sold 60,000 shirts (starting at $89).

As Mr. Davis and Mr. Rathod built their business, they knew they would have to raise money. They wanted to expand the business with an Internet sales channel, and they needed to build their inventory. But as they went about raising capital, they discovered a problem: potential investors questioned their vision for a company that would blend direct sales with an online channel. Direct sales suffered from a historically dodgy reputation, for one thing, and the blend did not have the sizzle of a pure Internet strategy. Of those investors who were interested, some looked at the Internet channel as a way for the company to increase sales while eliminating — or at least cutting — the commissions paid to the direct-sales reps, something Mr. Davis and Mr. Rathod thought would alienate the people who had helped them build the business. And then there was the problem of how to integrate a direct-sales force with an Internet sales channel, not something commonly done in the retail world.

Mr. Davis and Mr. Rathod solved part of their problem when they met Battery Ventures, a venture capital firm that seemed to understand their vision. Battery sent representatives to Dallas to spend time with J. Hilburn’s sales force — known internally as style advisers — and in August 2008, Mr. Davis and Mr. Rathod raised a $1 million round of funding with money from Battery. They subsequently raised three more rounds, largely from Battery, for a grand total of almost $13 million in financing.

These investments gave them enough money to build inventory and pay for an Internet channel to handle re-orders from existing customers. But having the money to build a Web channel and doing it right proved to be two different things. The first Web roll-out in 2009 — an attempt to adapt an existing e-commerce platform to J. Hilburn’s unusual needs — flopped. A customer-to-customer Internet referral ended up sending out gibberish e-mails. The decision to include all 200 fabrics online, instead of putting up a limited set and allowing the style advisers to explain the full set, baffled customers. And, worse, the process hurt morale by raising and then dashing the hopes of the sales representatives.

So the company went back to the drawing board and custom-developed a new site, a process that took almost two years. Introduced in June, this new site improved the referral program, and it gave sales reps access to more online options than the customers, which meant they could walk their clients through the online shopping process. The sales reps are paid full commission on Web sales, even ones in which they do not participate directly.

So far, the strategy seems to be working. A September online referral promotion — in which the referring customer and the new customer both get a $50 coupon — resulted in about 8,000 e-mails being sent in a month, of which 30 percent were clicked through. Some 63 percent of those click-throughs turned into sales. With an average sale of more than $300, the program is expected to bring in some $500,000 in new sales. Aided by its 1,100 style advisers, J. Hilburn expects its revenue to hit $20 million in 2011 and between $50 million and $80 million next year. Per-customer annual sales have risen from $212 in 2008 to more than $600 today, and average style adviser sales have grown from $7,500 in 2008 to $20,000 over the same period.

Mr. Davis and Mr. Rathod discussed their recent results in a brief interview.

Q: Why were you so adamant about paying your sales representatives full commission on Web sales?

Hil Davis: We felt that they do a lot of upfront work acquiring the customer, and we also want them to be compassionate and caring about customer service, so we decided to keep the full rate commissions where they are and pay them outright.

Veeral Rathod: The style adviser does the brand introduction and can make it more of a tactile experience with fabric swatches, measuring and fitting. And then, the Web site gives them an easy channel to reorder.

Q. Will the style advisers always get full commissions on online sales?

Mr. Davis: I think over time there will be a customer service score associated with online commissions. So if a partner has a high or low customer service score, the commission will reflect that. If they have high customer service scores we’ll pay full boat. And if they don’t, it will give them the incentive to raise their customer service levels. That’s the next evolution — that’s probably 12 months away.

Q: How will you measure that? How do you know how often style advisers should be interacting with customers?

Mr. Rathod: We ran a customer survey in May and June and a partner survey in August, and the customers said they wanted to know and hear about what was new once a month. They may shop once a quarter, but they want to hear more often. When we talked to the partners about how often they felt they should contact the customer that frequency was a lot less, maybe once or twice a year. They didn’t want the customer to feel that they were nagging him.

Q: One reader commented that it might be interesting for you to try charging more for style adviser visits. Perhaps that would move more orders online, thus making sales more efficient.

Mr. Rathod: That’s not in the plans. Because to get the fitting correct, as well as to set the tone, you have to have a person-to-person meeting. The last thing we want to do is to encourage a customer to save money by entering measurements online or shopping online only. If they enter online, they’re going to get a shirt whose fit they’re not happy about. Plus all of our order size metrics go up when we get a style adviser in front of a customer.

Q: Another reader suggested you should try to make all your clothing in the United States, which would be a marketing coup and might get you some tax or investment savings from communities eager to rebuild their manufacturing base.

Mr. Davis: We did try to do as much as we could in the U.S. Ultimately, we found there wasn’t enough skilled labor available to do it. The biggest custom shirt manufacturer in the U.S. can do 5,000 shirts per month. Next year we’ll be doing 20,000 shirts per month. Where we can, we do. Our ties and cufflinks and belts are made in the U.S. We’re working with a U.S. company to resell their shoes. And we do jeans that are made in the U.S. It’s just a lost trade in the U.S.

Article source: http://feeds.nytimes.com/click.phdo?i=56dba4f242a1c0445335703d70675144

You’re the Boss Blog: How J. Hilburn Managed to Expand Online

Case Study

What would you do with this business?

Veeral Rathod (left) and Hil Davis.Mark Graham for The New York TimesVeeral Rathod (left) and Hil Davis.

Last week, we profiled a dilemma facing J. Hilburn, a Dallas clothing company that uses direct sales and multilevel marketing to sell custom shirts and other menswear. Founded in 2007 by Hil Davis and Veeral Rathod, two Dallas financial industry workers, the company’s sales rose from $1 million in 2008 to $3.25 million in 2009 and $8 million in 2010, a year in which it sold 60,000 shirts (starting at $89).

As Mr. Davis and Mr. Rathod built their business, they knew they would have to raise money. They wanted to expand the business with an Internet sales channel, and they needed to build their inventory. But as they went about raising capital, they discovered a problem: potential investors questioned their vision for a company that would blend direct sales with an online channel. Direct sales suffered from a historically dodgy reputation, for one thing, and the blend did not have the sizzle of a pure Internet strategy. Of those investors who were interested, some looked at the Internet channel as a way for the company to increase sales while eliminating — or at least cutting — the commissions paid to the direct-sales reps, something Mr. Davis and Mr. Rathod thought would alienate the people who had helped them build the business. And then there was the problem of how to integrate a direct-sales force with an Internet sales channel, not something commonly done in the retail world.

Mr. Davis and Mr. Rathod solved part of their problem when they met Battery Ventures, a venture capital firm that seemed to understand their vision. Battery sent representatives to Dallas to spend time with J. Hilburn’s sales force — known internally as style advisers — and in August 2008, Mr. Davis and Mr. Rathod raised a $1 million round of funding with money from Battery. They subsequently raised three more rounds, largely from Battery, for a grand total of almost $13 million in financing.

These investments gave them enough money to build inventory and pay for an Internet channel to handle re-orders from existing customers. But having the money to build a Web channel and doing it right proved to be two different things. The first Web roll-out in 2009 — an attempt to adapt an existing e-commerce platform to J. Hilburn’s unusual needs — flopped. A customer-to-customer Internet referral ended up sending out gibberish e-mails. The decision to include all 200 fabrics online, instead of putting up a limited set and allowing the style advisers to explain the full set, baffled customers. And, worse, the process hurt morale by raising and then dashing the hopes of the sales representatives.

So the company went back to the drawing board and custom-developed a new site, a process that took almost two years. Introduced in June, this new site improved the referral program, and it gave sales reps access to more online options than the customers, which meant they could walk their clients through the online shopping process. The sales reps are paid full commission on Web sales, even ones in which they do not participate directly.

So far, the strategy seems to be working. A September online referral promotion — in which the referring customer and the new customer both get a $50 coupon — resulted in about 8,000 e-mails being sent in a month, of which 30 percent were clicked through. Some 63 percent of those click-throughs turned into sales. With an average sale of more than $300, the program is expected to bring in some $500,000 in new sales. Aided by its 1,100 style advisers, J. Hilburn expects its revenue to hit $20 million in 2011 and between $50 million and $80 million next year. Per-customer annual sales have risen from $212 in 2008 to more than $600 today, and average style adviser sales have grown from $7,500 in 2008 to $20,000 over the same period.

Mr. Davis and Mr. Rathod discussed their recent results in a brief interview.

Q: Why were you so adamant about paying your sales representatives full commission on Web sales?

Hil Davis: We felt that they do a lot of upfront work acquiring the customer, and we also want them to be compassionate and caring about customer service, so we decided to keep the full rate commissions where they are and pay them outright.

Veeral Rathod: The style adviser does the brand introduction and can make it more of a tactile experience with fabric swatches, measuring and fitting. And then, the Web site gives them an easy channel to reorder.

Q. Will the style advisers always get full commissions on online sales?

Mr. Davis: I think over time there will be a customer service score associated with online commissions. So if a partner has a high or low customer service score, the commission will reflect that. If they have high customer service scores we’ll pay full boat. And if they don’t, it will give them the incentive to raise their customer service levels. That’s the next evolution — that’s probably 12 months away.

Q: How will you measure that? How do you know how often style advisers should be interacting with customers?

Mr. Rathod: We ran a customer survey in May and June and a partner survey in August, and the customers said they wanted to know and hear about what was new once a month. They may shop once a quarter, but they want to hear more often. When we talked to the partners about how often they felt they should contact the customer that frequency was a lot less, maybe once or twice a year. They didn’t want the customer to feel that they were nagging him.

Q: One reader commented that it might be interesting for you to try charging more for style adviser visits. Perhaps that would move more orders online, thus making sales more efficient.

Mr. Rathod: That’s not in the plans. Because to get the fitting correct, as well as to set the tone, you have to have a person-to-person meeting. The last thing we want to do is to encourage a customer to save money by entering measurements online or shopping online only. If they enter online, they’re going to get a shirt whose fit they’re not happy about. Plus all of our order size metrics go up when we get a style adviser in front of a customer.

Q: Another reader suggested you should try to make all your clothing in the United States, which would be a marketing coup and might get you some tax or investment savings from communities eager to rebuild their manufacturing base.

Mr. Davis: We did try to do as much as we could in the U.S. Ultimately, we found there wasn’t enough skilled labor available to do it. The biggest custom shirt manufacturer in the U.S. can do 5,000 shirts per month. Next year we’ll be doing 20,000 shirts per month. Where we can, we do. Our ties and cufflinks and belts are made in the U.S. We’re working with a U.S. company to resell their shoes. And we do jeans that are made in the U.S. It’s just a lost trade in the U.S.

Article source: http://feeds.nytimes.com/click.phdo?i=56dba4f242a1c0445335703d70675144

DealBook: Corzine-Led Firm Is Said to Be Eyed on Missing Money

Jon Corzine, foreground, a former Goldman Sachs executive and New Jersey governor, was trying to revive his Wall Street career.Brendan McDermid/ReutersJon Corzine, foreground, a former Goldman Sachs executive and New Jersey governor, was trying to revive his Wall Street career.

9:55 p.m. | Updated

Federal regulators have discovered that hundreds of millions of dollars in customer money has gone missing from MF Global in recent days, prompting an investigation into the brokerage firm, which is run by Jon S. Corzine, the former New Jersey governor, several people briefed on the matter said on Monday.

The recognition that money was missing scuttled at the 11th hour an agreement to sell a major part of MF Global to a rival brokerage firm. MF Global had staked its survival on completing the deal. Instead, the New York-based firm filed for bankruptcy on Monday.

Regulators are examining whether MF Global diverted some customer funds to support its own trades as the firm teetered on the brink of collapse.

The discovery that money could not be located might simply reflect sloppy internal controls at MF Global. It is still unclear where the money went. At first, as much as $950 million was believed to be missing, but as the firm sorted through its bankruptcy, that figure fell to less than $700 million by late Monday, the people briefed on the matter said. Additional funds are expected to trickle in over the coming days.

But the investigation, which is in its earliest stages, may uncover something more intentional and troubling.

In any case, what led to the unaccounted-for cash could violate a tenet of Wall Street regulation: Customers’ funds must be kept separate from company money. One of the basic duties of any brokerage firm is to keep track of customer accounts on a daily basis.

Neither MF Global nor Mr. Corzine has been accused of any wrongdoing. Lawyers for MF Global did not respond to requests for comment.

Now, the inquiry threatens to tarnish further the reputation of Mr. Corzine, the former Goldman Sachs executive who had sought to revive his Wall Street career last year just a few months after being defeated for re-election as New Jersey’s governor.

When he arrived at MF Global — after more than a decade in politics, including serving as a Democratic United States senator from New Jersey — Mr. Corzine sought to bolster profits by increasing the number of bets the firm made using its own capital. It was a strategy born of his own experience at Goldman, where he rose through the ranks by building out the investment bank’s formidable United States government bond trading arm.

One of his hallmark traits, according to the 1999 book “Goldman Sachs: The Culture of Success,” by Lisa Endlich, was his willingness to tolerate losses if the theory behind the trades was well thought out.

He made a similar wager at MF Global in buying up big holdings of debt from Spain, Italy, Portugal, Belgium and Ireland at a discount. Once Europe had solved its fiscal problems, those bonds would be very profitable.

But when that bet came to light in a regulatory filing, it set off alarms on Wall Street. While the bonds themselves have lost little value and mature in less than a year, MF Global was seen as having taken on an enormous amount of risk with little room for error given its size. By Friday evening, MF Global was under pressure to put up more money to support its trading positions, threatening to drain the firm’s remaining cash.

The collapse of MF Global underscores the extent of investor anxiety over Europe’s debt crisis. Other financial institutions have been buffeted in recent months because of their holdings of debt issued by weak European countries. The concerns about MF Global’s exposure to Europe prompted two ratings agencies to cut their ratings on the firm to junk last week.

The firm played down the effect of the ratings, saying, “We believe that it bears no implications for our clients or the strategic direction of MF Global.”

Even by Sunday evening, MF Global thought it had averted its demise after a disastrous week. Over five days, the firm lost more than 67 percent of its market value and was downgraded to junk status, which prompted investor desertions and raised borrowing costs.

Mr. Corzine and his advisers frantically called nearly every major Wall Street player, hoping to sell at least some of the firm in a bid for survival.

On Friday, the asset manager BlackRock was hired to help MF Global wind down its balance sheet, which included efforts to sell its holdings of European debt. BlackRock was able to value the portfolio, but did not have time to find a buyer for it given the other obstacles MF Global faced, according to people close to the talks.

By Saturday, Jefferies Company became the lead bidder to buy large portions of MF Global, before backing out late in the day.

On Sunday, a rival firm, Interactive Brokers, emerged as the new favorite. But the Connecticut-based firm coveted only MF Global’s futures and securities customers.

While MF Global was resigned to putting its parent company into bankruptcy, Interactive Brokers was also willing to help prop up other MF Global units, including a British affiliate.

By late Sunday evening, an embattled MF Global had all but signed a deal with Interactive Brokers. The acquisition would have mirrored what Lehman Brothers did in 2008, when its parent filed for bankruptcy but Barclays of Britain bought some of its assets.

But in the middle of the night, as Interactive Brokers investigated MF Global’s customer accounts, the potential buyer discovered a serious obstacle: Some of the customer money was missing, according to people close to the discussions. The realization alarmed Interactive Brokers, which then abandoned the deal.

Later on Monday, when explaining to regulators why the deal had fallen apart, MF Global disclosed the concerns over the missing money, according to a joint statement issued by the Commodity Futures Trading Commission and the Securities and Exchange Commission. Regulators, however, first suspected a potential shortfall days ago as they gathered at MF Global’s Midtown Manhattan headquarters, the people briefed on the matter said. It is not uncommon for some funds to be unaccounted for when a financial firm fails, but the magnitude in the case of MF Global was unnerving.

For now, there is confusion surrounding the missing MF Global funds. It is likely, one person briefed on the matter said, that some of the money may be “stuck in the system” as banks holding the customer funds hesitated last week to send MF Global the money.

But the firm has yet to produce evidence that all of the $600 million or $700 million outstanding is deposited with the banks, according to the people briefed on the matter. Regulators are looking into whether the customer funds were misallocated.

With the deal with Interactive Brokers dashed, MF Global was hanging in limbo for several hours before it filed for bankruptcy. The Federal Reserve Bank of New York and a number of exchanges said they had suspended MF Global from doing new business with them.

It was not the first time regulators expressed concerns about MF Global.

MF Global confirmed on Monday that the Commodity Futures Trading Commission and the S.E.C. — had “expressed their grave concerns” about the firm’s viability.

By midmorning on Monday, the firm filed for bankruptcy.

Azam Ahmed contributed reporting.

Article source: http://dealbook.nytimes.com/2011/10/31/regulators-investigating-mf-global/?partner=rss&emc=rss

Top Spanish Banker to Be Investigated on Tax Charges

MADRID — Emilio Botín, the chairman of Banco Santander and Spain’s most powerful banker, and his family will face an investigation into their tax affairs, the Spanish high court said on Thursday.

Although the case dates back to 2005, an official investigation into the tax contributions of brothers Emilio and Jaime Botín, along with their 10 children, was opened before it exceeded the period allowed by the statute of limitations, the court said.

The Botín family’s deposits at HSBC’s Swiss private banking division caught the eye of the tax authorities after a huge leak of private banking data from the unit last year. They have presented declarations to show their tax situations are normal.

“Given the impossibility of evaluating the declarations within the time period, the investigation is necessary,” the investigating judge, Fernando Andreu, said in a statement.

Judge Andreu said the total amount of potentially unpaid taxes being investigated is more than 120,000 euros, or $170,000. But he noted that if the declarations presented by the family are bona fide, the case will be dropped.

One member of the family being investigated, Ana Patricia Botín, is the head of Santander’s British banking unit.

Santander, Spain’s largest bank and the biggest in the euro zone by market capitalization, declined to comment.

HSBC said in March 2010 that a theft of data by a former employee affected up to 24,000 Swiss client accounts, dealing a heavy blow to the reputation of its private bank.

Article source: http://www.nytimes.com/2011/06/17/business/global/17santander.html?partner=rss&emc=rss

Bucks: Cleaning Up an Online Reputation

Paul Sullivan, in his Wealth Matters column this week, takes note of the women who received Representative Anthony Weiner’s texts to make the point that their names will be forever linked to his in any online search. Yes, this is a high-profile example, but Paul says that all sorts of people can be negatively branded on the Web, even if they did nothing wrong.

Paul also says there are companies that can help people clean up their online reputations. Technology and security firms, for instance, often resort to burying the information as best they can. And some insurance companies offer coverage to protect against defamation and libel suits.

Have you had negative information about you on the Web — true or untrue? How did you deal with it? And did it have any effect on a job search, for instance? Tell us your stories below.

Article source: http://feeds.nytimes.com/click.phdo?i=59efbd35fcd8076ca5f1de330c380fbe