American library books » Other » Fooling Some of the People All of the Time, a Long Short (And Now Complete) Story, Updated With New by David Einhorn (tohfa e dulha read online TXT) 📕

Read book online «Fooling Some of the People All of the Time, a Long Short (And Now Complete) Story, Updated With New by David Einhorn (tohfa e dulha read online TXT) 📕».   Author   -   David Einhorn



1 ... 64 65 66 67 68 69 70 71 72 ... 130
Go to page:
every day. Why should anybody care?” It seemed odd to me that The Washington Post would be so dismissive of a government-related fraud conducted by a local company. This seemed to be their beat.

“Do you know if the SBA is going to do anything?” O’Hara asked.

“We’ve given them the same information we’ve given you,” I said. “Hopefully, they’re going to pursue it.”

As it turned out, this was the first of a number of meetings we initiated with a “Who’s Who” of the financial media. Each declined the story in one of three ways. Some were like The Washington Post—that is, if we could show them that the government was cracking down, that would be news. Otherwise, they weren’t interested. The second group would indicate that so much had been written about Allied and Greenlight that they didn’t see what was new. We would respond that all the previous coverage was “he said, she said” and invited them to spend some time, independently research the facts—for which we could provide a road map—and determine for themselves and their audience whether Allied had acted badly. The third group would act as Eichenwald did initially. “I can’t believe this. How could everyone else turn this down? We need to do more stories like this!” For this last group, months would pass. Inevitably, we would hear that they would get to it after they completed some other project. They never got to it.

Certainly, one of the biggest things I have learned from the Allied experience is the surprising reluctance of the media to dig into complicated financial stories. Even if the story is served up on a silver platter, there is not much interest. We needed someone able to do more than talk to us, talk to Allied, he said, she said. This story required investigative journalism. When Allied and we disagreed, someone needed to be willing to spend time, do the work, and come to an independent view on this complicated debate. There was simply nobody in the business press willing and able to do this.

On June 23, 2004, David Armstrong from The Wall Street Journal left me a message late in the afternoon, after I left for the day. He also called Bruce. By the time Bruce located me, it was too late to reach Armstrong before his deadline. It turns out that Allied had been notified it was under investigation by the SEC after all. Rather than announce the bad news themselves, again, they gave Armstrong, crusader against hedge-fund evil, the story. It was no surprise that Armstrong didn’t reach out to me until after business hours. Armstrong’s story positioned the announcement of the investigation as regulators paying heed to some noisy short-sellers who had been attacking the company for years. It was almost positioned as good news for Allied to have an opportunity to achieve vindication.

Allied put out a release confirming the SEC investigation. According to Walton:

Over the last two years, we have consistently refuted frivolous allegations made by short-sellers based upon false and misleading information and distorted facts. We welcome the opportunity to fully cooperate with the SEC, provide all the facts, and demonstrate once and for all that the short-sellers’ allegations are false. Allied Capital is a great company and as the facts are understood we expect to put this short attack behind us.

O’Hara covered the story in the next day’s Washington Post. Again, the coverage made us the focus of the news. The story began:

Allied Capital Corp.’s stock price fell 10 percent yesterday after the Washington financial services company disclosed a Securities and Exchange Commission inquiry involving its small-business lending affiliate. Allied officials said the agency’s investigation was triggered by accusations made by short-sellers, who enter into risky agreements which make money only if a stock price falls. It was the second time in two years that Allied has become embroiled in a public struggle with short-sellers, particularly New York’s Greenlight Capital LLC and its manager David Einhorn. (©2004, The Washington Post. Reprinted with Permission.)

This was an SEC investigation, not a public struggle with short-sellers. I couldn’t believe that the “risky” nature of short-selling made it into the lead of the story. The article discussed the $9 million loan transfer and Allied’s explanation that it wasn’t a big deal. The article then reported we had investigated BLX and reported our findings to the SBA and quoted me explaining why the $9 million transaction was fraudulent, undisclosed, misleading and led to BLX and Allied inflating their results.

Walton was quoted in the Post discussing the short-sellers, “They’ve learned how to play the fiddle, and we want to break the strings.” Rather tough talk from a guy who just received news that his company was the subject of an SEC investigation.

PART FOUR

How the System Works (and Doesn’t)

CHAPTER 22

Hello, Who’s There?

Later in the summer of 2004, Herb Greenberg, a reporter who had written several critical articles about Allied for TheStreet.com and CBS Marketwatch.com, called and asked if I paid my phone bill online.

“No,” I said. “Why?”

“You should check to see if someone has opened an online account to get your phone records,” he told me.

“How would I do that?”

Greenberg explained, “If someone else opened up an online account, if you try to open one yourself, it won’t let you and will say that an account is already open.”

“Why are you asking about this?”

Because it happened to him—he was calling his sources to see if the same thing had happened to any of them. I agreed to check, and when I tried to open an account at Verizon, my local phone service provider, there was no problem. In light of that, I forgot all about it.

About a week later, Jim Carruthers of Eastbourne called me at home. He asked me the same questions as Greenberg, telling me, “My cell phone and home phone records have been taken,” he said.

Now, I was curious. While Carruthers held on our call, I checked my cell phone account. Again, no problem. Then I tried

1 ... 64 65 66 67 68 69 70 71 72 ... 130
Go to page:

Free e-book: «Fooling Some of the People All of the Time, a Long Short (And Now Complete) Story, Updated With New by David Einhorn (tohfa e dulha read online TXT) 📕»   -   read online now on website american library books (americanlibrarybooks.com)

Comments (0)

There are no comments yet. You can be the first!
Add a comment