10 Dumbest Things on Wall Street in 2008

DUMBEST OF 2008 #5

Schwarzman Bashes Birthday

By Gregg Greenberg, 11/07/08

The party of the century is giving Steve Schwarzman the hangover of a lifetime.

The CEO of private equity giant Blackstone Group (BX) finally admitted in early November at a New York press conference that his multi-million dollar 60th birthday celebration was a mammoth public relations mistake. The garish gala, held on Valentine's Day 2007, featured British rocker Rod Stewart, comedian Martin Short, singer Patti LaBelle, two Harlem choirs and a marching band.

"Obviously, I wouldn't have wanted to do that and become some kind of symbol of that period of time -- who would ever wish that on themselves? No one," said Schwarzman at the conference.

Schwarzman was also quick to point out that his 61st birthday party was held this year with far less fanfare.

But it sure was one heck of a fiesta, wasn't it Steve? It was a business blowout second only to former Tyco (TYC) chief Dennis Kozlowski's infamous Sardinia bash.

Unfortunately, aside from bad taste, Schwarzman's party also suffered from bad karma. Blackstone went public a few months later at the peak of the buyout boom at $31 a share. The stock closed Dec. 24 at $5.75 after trading as low as $4.15 a share in November.

And it's going to get worse for the former private equity princes, says Doug Kass of RealMoney Silver, a premium Web site from TheStreet.com. Kass contends that a slew of pension fund capital calls and unbearable debt burdens make "private equity the next shoe to drop."

That may be good news for Schwarzman. He can use the shoe to repeatedly kick himself for being so stupid.

Update 12/26: Blackstone shares traded below the $6 barrier last week as the pummeling of private equity funds continues unabated. No plans have been released about Schwarzman's birthday plans for this coming February. But if this keeps up, he may have to settle for Chuck E. Cheese's.

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