This Day On The Street
Continue to site right-arrow
ADVERTISEMENT
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
Cramer's Action Alerts PLUS - See his portfolio and get alerts BEFORE every trade. Learn more NOW!

The 5 Dumbest Things on Wall Street This Week: March 9

3. Goldman Gets Sacked

And now for this week's episode of As the Goldman Pillages.

On Monday, El Paso (EP) pushed back a shareholder meeting to vote on the pipeline company's proposed $21 billion acquisition by Kinder Morgan (KMI) in order to give investors more time to chew on a judge's critical ruling of the deal's dirty details.

El Paso said the meeting would be held Friday, instead of Tuesday, and added that shareholders can still change their votes before the gathering. As of Monday, 70% of the outstanding shares have been voted with almost 99% of those shares favoring of the deal.

So what did Delaware Chancery Court Judge Leo Strine say that was distressing enough to delay what most people thought was already a done deal?

Well, he said a heck of a lot about our good buddies at Goldman Sachs (GS - Get Report), and not much of it nice.

You see, Goldie was on every conceivable side of this deal, sucking every available cent out of it, from a $20 million fee for advising on the transaction to the pop it's getting from its own $4 billion stake in Kinder Morgan and everything in between.

And all that money-sucking would be fine -- egregious, but still fine -- if investors had only known about it. Unfortunately, as Strine points out, Goldman and El Paso CEO Douglas Foshee were far less than forthcoming about what was going on behind the scenes.

As a result, Strine did not block the transaction, but still slammed both the investment bank and Foshee for "incomplete and inadequate" handling of the deal's many conflicts of interest.

One particularly cringe-worthy example of Goldman's conniving cited by Strine was the investment bank's push to have Morgan Stanley (MS) act as a second adviser to the deal in order to prove Goldman's impartiality.

The rub was that Morgan would only get paid if El Paso followed Goldman's bidding and sold out to Kinder Morgan. As a result, the so-called "conflict-cleansing bank" willfully followed Goldman's commands and pushed for the sale.

Oh man, that's a clever maneuver. It's also brazen to the point of stupidity considering Goldman just ponied up $550 million for its conflict-of-interest sins just last year.

Then again, you know the old adage: A vampire squid can't change its stripes.

3 of 5

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Try it NOW
Only $9.95
Try it NOW
14-Days Free
Try it NOW

Check Out Our Best Services for Investors

Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Options Profits

Our options trading pros provide over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • Actionable options commentary and news
  • Real-time trading community
Try it NOW
Try it NOW
Try it NOW
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!
SYM TRADE IT LAST %CHG
C $53.56 -0.20%
GS $189.00 -0.35%
OSTK $23.14 1.50%
P $15.40 -0.23%
AAPL $126.39 -1.70%

Markets

DOW 18,135.72 +38.82 0.21%
S&P 500 2,101.04 +2.51 0.12%
NASDAQ 4,982.8090 +15.6680 0.32%

Partners Compare Online Brokers

Free Reports

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs