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Man of Steel?; Will SEC prove to be his kryptonite?
Topic Started: Jan 24 2009, 06:52 PM (1,183 Views)
HSLAXMOM

http://durhamwonderland.blogspot.com/

Saturday, January 24, 2009
Steel Under Investigation

The Wall Street Journal is reporting that the Securities and Exchange Commission has launched an investigation of Duke Trustees chairman Bob Steel.

Over the summer, struggling Wachovia Bank had named Steel as its CEO--preposterously citing his ability to lead institutions in a “time of turmoil” as a criterion for the selection. In a CNBC broadcast on September 15, Steel asserted that Wachovia had a "great future as an independent company." He added, "But we're a public company, so we're going to do what's right for shareholders, I can promise you that. But we're also focused on the very exciting prospects when we get things right going forward."

Within two days, Steel was privately discussing a merger with JP Morgan--contradicting his assertion that Wachovia had a "great future as an independent company."

The Journal notes that "whether Mr. Steel misled investors and violated securities laws will depend on what Mr. Steel knew at the time of his comments. In general, securities laws say that an executive can't knowingly make a false statement that is material to the company's prospects."

Anyone who followed the lacrosse case wouldn't have been surprised by Steel's penchant to try to "spin" the press with misleading information--this is, of course, the same Bob Steel who privately claimed knowledge of "terrible, terrible" things in the lacrosse captains' house. He has never explained the evidence for which he based his claim, which the details presented in the Attorney General's report wholly rebuffed.

It is unclear whether Duke will allow Steel to remain as chairman while under SEC investigation--although, given the University's unwillingness to demand accountability for his failures in the lacrosse case, I wouldn't expect Steel's removal on this matter anytime soon.

[Update, 3.54pm]: A commenter correctly points out that Steel is entitled to the presumption of innocence. The mere fact of an investigation, however, places Duke in a delicate position. A chief responsibility of a BOT chairman at any university is raising and managing funds. I'm not aware of any recent case (at a prominent university, at least) in which a BOT chairman under investigation for alleged financial improprieities didn't step aside, if only for the duration of the investigation.
Posted by KC Johnson at 1:10 PM
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HSLAXMOM

http://johninnorthcarolina.blogspot.com/
Reuters reports - - -

U.S. regulators are probing former Wachovia Corp Chief Executive Robert Steel over comments he made on television about his bank the day before it started talks about a potential merger, the Wall Street Journal reported late on Friday.

Citing people familiar with the matter, the paper said the Securities and Exchange Commission has been probing whether Steel, a former Treasury Department official, misled investors in an appearance on CNBC's Mad Money show during the height of the financial panic last September.

"In an extremely challenging and volatile time, Mr. Steel always did his best to convey the position of Wachovia accurately. Should any questions arise, he is very comfortable addressing them," the Journal quoted a spokesman for Steel as saying, adding that the SEC declined to comment.

Wachovia shareholders approved the bank's takeover by rival Wells Fargo & Co (WFC.N) in late December, bringing one of the largest mergers stemming from the financial crisis near to completion.

Well Fargo could not be immediately reached for comment.

The SEC wants to ascertain whether Steel misled investors when he told CNBC's "Mad Money" program on Monday, September 15, that the company had a great future "as an independent company," as panic about the bankruptcy of Lehman Brothers roiled markets, the paper reported.

**********************************************************

My comments:

If Steel, chair of Duke University’s board of trustees, misled investors that won’t surprise people familiar with the Duke lacrosse hoax, frame-up attempt and their ongoing cover-up.

Since March 2006 when a false accuser told self-contradicting lies about a gang rape and other crimes that never happened, Steel’s been misleading the Duke community and the broader public.

With Duke’s President Richard H. Brodhead, Steel put in place Duke’s disgraceful “throw the students under the bus” strategy which has stained the university’s reputation and embroiled it in multiple lawsuits, including one with one of its insurers.

Hat tip: An Anon commenter
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HSLAXMOM

The SEC is investigating Bob Steel's comments on Cramer's Mad Money show. The following are some of Cramer's comments on Steel's appearance there.

http://www.cnbc.com/id/26945323/

Monday, 29 Sep 2008
Wall of Shame: Wachovia CEO Bob Steel
Posted By: Tom Brennan
Topics:CEOs and CFOs | Stock Picks | Stock Market
Sectors:Financial Services
Companies:Washington Mutual Inc | JPMorgan Chase and Co | Citigroup Inc | Wachovia Corp

Just two weeks ago, Wachovia CEO Bob Steel told Mad Money viewers that out of $500 billion in loans on the bank’s books, only $10 billion were bad. Today, Citigroup bought Wachovia “for a pittance,” Cramer said, because the actual total was $42 billion, and the FDIC was about to seize Wachovia.

Now Cramer’s not calling Steel a liar. He believes that Steel believed. After all, the CEO bought $16 million worth of Wachovia stock on the open market and never hedged with options.

And Steel wasn’t at the helm when Wachovia [WB 5.54 --- UNCH (0) ] made those bad loans. Cramer allowed for the fact that maybe Steel didn’t yet have systems in place to properly value the loans.

The nail in the coffin, though, was probably JPMorgan’s [JPM 24.28 1.18 (+5.11%) ] massive devaluation of Washington Mutual’s [WM 0.044 --- UNCH (0) ] loans. The numbers were much lower than those at which Wachovia was valuing its own portfolio, and many of the loans were comparable to WaMu’s. Once that happened, Cramer said, “Wachovia was toast.”

More than anything, Cramer was mad at himself for letting his viewers down. He trusted Steel, who he’s known as a solid financier for 25 years, and he urged viewers to do the same. Cramer should have been more critical, more skeptical – especially during a time like this – but he wasn’t.

“I let you down,” Cramer said.

But what else went wrong? How could Steel have been in a position where he could come on the show and tout his, more or less, healthy bundle of loans?

Lack of transparency.

There are, of course, regulators for this. But the SEC and multiple bank examiners all signed off on Wachovia’s books. Even Steel, a former number two at Treasury, couldn’t see how bad his own balance sheet was. He just didn’t know what was there.

If the truth about Wachovia’s bad loans had been on the books, then there would have been no way Steel could have been so positive about his bank’s situation. The only thing investors can trust is a company’s financials, Cramer said, and like Lehman Brothers [LEHMQ 0.0435 -0.0025 (-5.43%) ], Wachovia’s financials “just didn’t reflect reality.”

Cramer thought that if Paulson’s plan passed, and there’s no guarantee that will happen now, then Wachovia could dump its troubled assets on the government and move forward with its deposits and good loans. Cramer believed in the financials and Steel. But “in this era, that’s a level of trust that’s misplaced.”

“I let my judgment of Steel cloud my thinking about Wachovia,” Cramer said.

Maybe Steel, ever bullish as all CEOs are, took advantage of Cramer. But in the end, he said, Cramer’s the last line of defense for Homegamers, and he holds himself responsible.

As for Bob Steel, he has to be held accountable in his own right. And for not knowing just how in trouble his bank was, and watching Citigroup [C 3.47 0.36 (+11.58%) ] snatch it up at a huge discount, the CEO has been added to the Mad Money Wall of Shame.
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HSLAXMOM

and more from Cramer a few days later....

http://www.cnbc.com/id/27015500/
Friday, 3 Oct 2008
Man of Steel?
Posted By: Tom Brennan
Topics:Politics & Government | Mergers & Acquisitions | Stock Picks | Stock Market
Sectors:Financial Services | Insurance
Companies:Hartford Financial Services Group Inc | Metlife Inc | Prudential Financial Inc | Citigroup Inc | Wells Fargo and Co | Wachovia Corp

Wachovia seems to have slipped away from an FDIC-assisted Citigroup buyout that would have wiped out shareholder value and instead entered a deal with Wells Fargo, which will buy the bank for about $15.1 billion. The move has humbled Cramer, who on Monday lambasted Wachovia CEO Bob Steel for what looked like the bank’s collapse into Citigroup.

When the news broke Monday that Citigroup [C 3.47 0.36 (+11.58%) ] would be acquiring both Wachovia’s [WB 5.54 --- UNCH (0) ] deposits and debt, with the help of the FDIC, Cramer couldn’t believe it. Barely two weeks prior, Bob Steel had appeared on Mad Money, telling viewers that his loan portfolio was solid. Only $10 billion out of $500 billion total were troubled assets. Then it turns out Wachovia’s situation was so dire that the FDIC had to get involved? Did Steel really come on the show and lie to Cramerica? Cramer was so beside himself he immediately added Steel to the Mad Money Wall of Shame, an honorary list of the market’s worst CEOs.

What a mistake. It turns out the whole time Steel was working to get his shareholders a better deal. He couldn’t say so publicly because it might have either ruined the possibility of such a deal or caused more problems if one never materialized. But the bottom line is that Steel was doing whatever he could to save Wachovia. And when you consider that WB was trading at about $2 Monday and the Wells Fargo [WFC 15.87 0.08 (+0.51%) ] deal values the bank at $7 a share, Steel has done right by holders of Wachovia stock. So Cramer was a bit red-faced Friday. He realized he should have given Steel the benefit of the doubt.

The FDIC, on the other hand, doesn’t deserve such confidence, Cramer said. An important tax law passed on the very day that the FDIC was pushing a Citigroup-Wachovia merger that would allow an acquirer to deduct the entire amount of embedded, unrealized losses from the institution that it’s acquiring. So a Wachovia, which carried such losses, actually becomes a good investment because a suitor like Wells can now deduct tens of billions of dollars in taxes. Wells no longer needs government help to deal with Wachovia’s troubled assets. The law plays such an important role in making Wachovia a much more attractive takeover target that Cramer said he wouldn’t be surprise if a bidding war erupts between Citi and Wells.

Way to go, Bob Steel.

If Wells Fargo does end up the winner, Wachovia is a great compliment to Wells’ already-strong business. Now Wells’ will have a national rather than regional footprint and strong set of brokers and financial advisers. Not to mention that Wachovia’s securities business alone was recently valued at close to $10 billion. Once this crazy market evens out, that division, if run well, might pay for the entire $15 billion transaction, Cramer said, given Wells the bank it wanted for free. And by taking losses on Wachovia’s portfolio, Wells won’t have to pay taxes for years to come.

So if Bob Steel is off the Wall of Shame now, who takes his place? Cramer said that honor goes to Senator Harry Reid of Nevada. Reid announced at a press conference this week that he’d heard there a chance of a major insurer – a household name, he said – was in danger of failing, and that in turn sunk virtually every insurance company trading on the open market as investors tried to guess who it was.

Prudential [PRU 25.47 1.62 (+6.79%) ] dropped 18%, MetLife [MET 26.63 1.13 (+4.43%) ] 24%, Hartford Financial Services [HIG 14.10 1.92 (+15.76%) ] 35%, just from Wednesday’s opening to Thursday’s close.

Harry Reid should have known better, Cramer said. For that reason, he’s the newest member of the Mad Money Wall of Shame.

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HSLAXMOM

and if you want to be the judge, here's the link to the transcript where Steel is interviewed by Jim Cramer

http://www.cnbc.com/id/26728133/

Monday, 15 Sep 2008
CNBC EXCLUSIVE: CNBC TRANSCRIPT: CNBC'S JIM CRAMER INTERVIEWS WACHOVIA PRESIDENT & CEO ROBERT STEEL ON "MAD MONEY W/JIM CRAMER" TONIGHT
Posted By: Jennifer Dauble

WHEN: TONIGHT, MONDAY, SEPTEMBER 15th AT 6PM ET

WHERE: CNBC'S "MAD MONEY W/JIM CRAMER"

Following is the unofficial transcript of a CNBC EXCLUSIVE interview with Wachovia President & CEO Robert Steel tonight on "Mad Money w/Jim Cramer."

All references must be sourced to "Mad Money w/Jim Cramer."
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abb
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Hopefully, Cramer will be frog-marched off to jail along with Steel...
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Bill Anderson
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Whatever Steel did was bad enough....

:bill:
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Bill Anderson
Jan 24 2009, 11:23 PM
Whatever Steel did was bad enough....

:bill:
Terrible, terrible things happened at Wachovia!
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Baldo
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Scuttlebutt has it that Steel is in hot water over this and especially in the current climate. As a former republican under secretary of the Treasury he doesn't have much political cover.

The question posed in this investigation is "Will Steel have to take the Fifth Amendment?" Will he hide behind a Wall of Silence?

Also it will certainly open up the door to examining all of his financial dealings and that of the groups he served in a leadership position, namely "The Gang that couldn't shoot straight", Duke University.

I look forward to Bob proving his innocent and in any case he surely could clear up any misjudgment on appeal.

Some how some way we must get Bob off this thread!
Edited by Baldo, Jan 29 2009, 05:16 PM.
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chatham
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Steel could claim that he was really a democrat.
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brittany

http://media.www.dukechronicle.com/media/storage/paper884/news/2009/01/27/News/Sec-Looks.Into.Steels.Comments-3599119.shtml
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brittany

Comment in the Chronicle.

The good news is that term limits will force Bob "Wachovia" Steel from our Board of Trustees on June 30th. Then he can focus full time on defending himself before the SEC and also in the lax lawsuits.
Edited by brittany, Jan 29 2009, 04:29 PM.
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Baldo
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"I hereby offer this pledge. I will not protest with a "Castrate" sign in front of the Aspen Institute. I will not call for his expulsion as its Chairman. I support his right to defend himself in the Court of Law." Baldo

Robert K. Steel Elected Chairman
of Aspen Institute Board of Trustees

“We are delighted to have Bob Steel assume this important role,” said outgoing chairman Bill Mayer. “He has a clear understanding of the mission of the Institute and a proven track record of strong leadership. The Institute will be in good hands with Bob Steel at its helm.”

“I am honored by this important opportunity,” said Steel. “I look forward to working with Institute President and CEO Walter Isaacson and the Board of Trustees to continue to build on the good work and forward momentum that has characterized the Institute under Bill Mayer’s direction.”

http://www.aspeninstitute.org/site/apps/nlnet/content2.aspx?c=huLWJeMRKpH&b=3818507&ct=6320297

Do ya think they are having second thoughts?
Edited by Baldo, Jan 29 2009, 05:39 PM.
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chatham
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Just remember. Jamie Gore lick was hired not because she knows anything, but, because of who she knows.
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brittany

http://online.wsj.com/article/SB123275454114111651.html?mod=yahoo_hs&ru=yahoo

I started a thread on the underground about this 1/23 and was surprised that only Tidbits posted a reply.
Edited by brittany, Jan 29 2009, 08:31 PM.
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