How Edgar Sargent rationalization totally fails common sense!
Much has been said about how the EC made a good deal, sold equity down the river and so much more that I will not go into. Most here know I do not care much about what people say, rather it is their actions that really speak the most truth but as in any “lawyer speak” one has to read in between the lines to a degree. I have read and thought about what Edgar has told us through emails, public release statements about the settlement and other. I will not go into all of that anymore but let’s discuss what Ed did and did not say and the EC’s actions during and after settlement announcement. Now for some facts leading up to the “behind the doors” settlement.
• The EC had been given court authority to pursue deeper discovery on insider trading
• The Judge all but ruled the “hijacking” hedge funds guilty with “colorable claims”
• EC’s Parker Folse’s discussion on 3 billion dollars in ill gotten gains
• Ill gotten gains could be recovered, plus legal fees and damages to an extent
• With deeper discovery already approved by court pending mediation-results all but certain
• TPS, JPM, FDIC-C/R and DIMEQ not invited into mediation
Now for some discussion on Edgar’s prepared statement and his email details involving settlement. I feel I have a good amount of common sense and I generally know when someone is selling me a story or down the river as Ed has. First, let me point out that Ed sold us down a great river that most everybody including Altini will be very happy with once we get to that point. Ed could not tell us the exact truth but the Horsies, DIMEQ/Steinberg and some others did find out some of the truth with a peek behind the curtain. Ed said the following and no I do not have the exact quotes and nor will I look for them.
• Most chapter 11’s end with Equity totally wiped out
• We got a more than fair and reasonable settlement
• We received 75 million in cash, line of credit and more
• We have some NOL’s to use, litigation/liquidation trust set up
• NEWCO may get more money from these
• There is some more, but the reader get’s the idea
Now let’s analyze the aforementioned and when one uses common sense and rationalization, this looks like total bullsh** without any doubt. There is no way the Horsies would have gone much further without a settlement and settlement was probably THEIR idea to get out of this mess. Just a little more publicity and all of those Hedge Funds would have closed due to members pulling their money out as they would not want to be tainted with further litigation about how guilty they are. Edgar’s statement about we had to settle because they would have appealed and more is total garbage as with more publicity these Hedge Funds would have only lost all of their business, they would face loss of standing in society, licenses, careers, sponsorships and more. I find in VERY hard to believe the Horsies would have continued to fight knowing they would lose all of the aforementioned versus and let’s use a small number of their ill gotten gains and say 700 million dollars. To avoid all of the losses, does one not think they would have gone for something this small in order to keep from losing all of this and to be able to keep doing their same scam in the future? Of course they would have and a lot more.
Now would not 700 million look much better than 75 million and I think even a Grade-schooler could get this one correct. Let me take it one step further. What are the two things that have to happen to keep a successful legal firm in business? I believe one is you have to win and the other is you have to have a lot of billing and maybe not in that order. The other thing that Edgar said that is not reasonable is he said the legal fees would become enormous and would not make sense at some point as the litigation could go on for years with equity getting nothing. Since billing is a primary ingredient for a law firm and with money no object in this case as the interest alone is far more than they could legally dream of billing, this statement makes no sense regardless of how Edgar tries to spin this. Analyze the above points now and see if Edgar’s excuses make any sense to you. They certainly do not to me as I would have taken a lot more cash in a much shorter period of time.
Now I will discuss Edgar’s reasoning of the settlement that he cannot talk about. I have no doubts this little company can use its newly won foundation to raise money through innovative capital raise, grow this company into a multibillion dollar organization within months and start using the NOL’s to keep from paying taxes. IMHO, they will raise five billion dollars this year and then buy at least a 2-3 billion dollar profitable organization, do the same thing again within six months from this date and in no time at all this organization is in the multibillions of dollars and paying no taxes. The deal Susman, EC and Edgar got will be stellar proving all along what Edgar, EC and Susman said, this deal is more than fair and reasonable. IMHO, this is what DIMEQ, TPS and TPSC found out through discovery and what the EC has known since they made this SUPERB deal even with their hands tied with a very corrupt Judge, court and legal firms that should be fried!
