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), 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.
Select the service that is right for you!COMPARE ALL SERVICES
Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.
- $2.5+ million portfolio
- Large-cap and dividend focus
- Intraday trade alerts from Cramer
- Weekly roundups
Access the tool that DOMINATES the Russell 2000 and the S&P 500.
- Buy, hold, or sell recommendations for over 4,300 stocks
- Unlimited research reports on your favorite stocks
- A custom stock screener
- Upgrade/downgrade alerts
Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.
- Diversified model portfolio of dividend stocks
- Alerts when market news affect the portfolio
- Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.
- Real Money + Doug Kass + 15 more Wall Street Pros
- Intraday commentary & news
- Ultra-actionable trading ideas
Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.
- 100+ monthly options trading ideas
- Actionable options commentary & news
- Real-time trading community
- Options TV