Quantcast
The MFWire
Manage Email Alerts | Sponsorships | About MFWire | Who We Are

Subscribe to MFWire.com's News Alerts [click]

Rating:Bents' Trial Turns On Who Knew What, When; Lawyers Prep Their Closings Not Rated 0.0 Email Routing List Email & Route  Print Print
Friday, October 26, 2012

Bents' Trial Turns On Who Knew What, When; Lawyers Prep Their Closings

Reported by Tommy Fernandez

Friday's testimony marked the end of the evidence phase of the trial against the Bents. Monday should be the start of closing arguments... except it might not be.

Like everything else in New York, the trial could be delayed due to Hurricane Sandy, which is expected to hit the city Monday and Tuesday.

To read the full, continuing saga of the collapse of the Reserve Primary Fund and the ensuing legal battle, see MFWire's living timeline.

The civil fraud case took a cerebral turn today as attorneys questioned witnesses on who knew what, and when, during the critical board meetings on September 15 and 16, 2008, following the implosion of Lehman Brothers.

In particular, attorneys on both sides tried to pin down what Reserve executives told board members regarding the Reserve's [profile] efforts to stay alive, whether the firm was in danger of collapse, and the debate over suspending redemptions. Attorneys also tried to ferret out more details of what the Bents did, and were aware of, regarding the Reserve Primary Fund's plans for a credit support agreement.

Int today's session, the last day for evidence in the trial, attorneys quizzed Stroock attorney Joel Goldberg, who during the Lehman collapse was a Wilkie Farr corporate partner serving as corporate counsel for Reserve, a role he had held for two-years by 2008. Goldberg, with roughly 40 years of legal experience, once served as the director of the investment management division of the SEC.

Also on the witness stand was Ronald Artinian, who in the 1990s served as an executive vice president and national sales manager of institutional debt sales for Smith Barney and has been, and still is, an independent trustee of the Reserve Fund since 2006.

Goldberg Testimony

The quizzing of Goldberg, who was also on the witness stand the previous day, focused on what he actually discussed with the Bents during those two days and what the Bents intended-- and understood.

For example, government attorneys asked Goldberg about his discussions with Bent II regarding the investor disclosures about plans for a credit support agreement to support the failing Reserve Fund. On the stand, Goldberg said that Bent II had questions regarding what was "permissible" with regards to these disclosures, wanting advice to make sure the younger Bent did not "run afoul" of regulations.

They did not expressly discuss the alleged credit support agreement itself, Goldberg said. He also said that he did not provide any advice at all on the subject.

Goldberg was repeatedly quizzed on whether the Bents understood how a credit support agreement worked.

Goldberg responded to these questions in this manner:
We didn't specifically talk on the subject but I saw them as sophisticated investors who understood the issues involved.
When pressed further on the Bents' level of understanding of the subject, Goldberg had this to say:
I understood they would understand the concept. [Goldberg soon qualified this comment with "rather than the mechanics."]
Understanding the concept of a credit support agreement, Goldberg said on the stand, would include understanding the purpose of such an agreement, the meaning of the dollar amount, and the rights of the fund, among other things.

When asked about the $10 million figure used in disclosures about the promised credit support agreement, Goldberg said "I recall having an impression that a number was inserted for pro forma purposes."

When asked about whether he had reviewed the disclosure letter before it was sent out on September 15th, Goldberg responded "I probably read it."

Artinian Testimony

Artinian's interrogation focused on his recollections of trustee board discussion on such subjects as the Bents' efforts to save the fund, the suspension of redemptions and whether the Reserve was a dead fund walking.

Artinian asserted that concern was raised about the survival of the Fund, but no recommendations or motions were raised about its liquidation. During those meetings, Artinian said, trustees still pushed the Bents to do all they could to save the fund.

Further, he said that there had been discussion on seeking suspension of redemptions in the fund, but that there was no such discussion on suspension of purchases, because the idea off anyone buying the fund after September 15 would have come as a "shock" to everyone on the board. 

Stay ahead of the news ... Sign up for our email alerts now
CLICK HERE

0.0
 Do You Recommend This Story?



GO TO: MFWire
Return to Top
 News Archives
2025: Q3Q2Q1
2024: Q4Q3Q2Q1
2023: Q4Q3Q2Q1
2022: Q4Q3Q2Q1
2021: Q4Q3Q2Q1
2020: Q4Q3Q2Q1
2019: Q4Q3Q2Q1
2018: Q4Q3Q2Q1
2017: Q4Q3Q2Q1
2016: Q4Q3Q2Q1
2015: Q4Q3Q2Q1
2014: Q4Q3Q2Q1
2013: Q4Q3Q2Q1
2012: Q4Q3Q2Q1
2011: Q4Q3Q2Q1
2010: Q4Q3Q2Q1
2009: Q4Q3Q2Q1
2008: Q4Q3Q2Q1
2007: Q4Q3Q2Q1
2006: Q4Q3Q2Q1
2005: Q4Q3Q2Q1
2004: Q4Q3Q2Q1
2003: Q4Q3Q2Q1
2002: Q4Q3Q2Q1
 Subscribe via RSS:
Raw XML
Add to My Yahoo!
follow us in feedly


    Sorry, no records in the database matched your search parameters. Clich back and try again.



  1. Nicsa webinar - New research by Alex Edmans and the Diversity Project - The Power of diverse thinking: How the best teams make decisions, July 1
  2. MFDF Director Discussion Series - Open Forum, July 9
  3. MFDF webinar - Mid-Year Tax Update for Registered Investment Companies, July 10
  4. MFDF Director Discussion Series - Open Forum (Philadelphia), July 15
  5. 2025 MMI Women in Advisory Solutions Forum, Jul 15-16
  6. Nicsa webinar - How Trusted GenAI is Transforming Data Access in Asset Management, July 16
  7. MFDF webinar - M&A and Consolidation in Asset Management, July 16
  8. MFDF webinar - ETF Conversions, July 17
  9. MFDF Director Discussion Series - Open Forum (New York), July 22
  10. MFDF Ask Anything webinar - AI Edition, July 24
  11. MFDF webinar - Use of Derivatives by RICs, July 29
  12. MFDF Director Discussion Series - Open Forum (Columbus, Ohio), August 20
  13. Samfund Soiree Boston 2025, August 21
  14. MFDF webinar - The Audit Committee Chair's Guide to Balancing Duties and Emerging Issues, September 3
  15. ICI ETF Conference, Sep 8-10
  16. Nicsa webinar - Reimagining Reconciliation: AI, Regulation, and Capital Markets Transformation, September 10
  17. MFDF webinar - Series Trust Funds - Compliance and Board Reporting, September 10
  18. MFDF In Focus - Board Oversight of DEI in Current Landscape, September 11
  19. MFDF webinar - MFDF 15(c) White Paper Webinar Series: Part 4 – Enforcement Action Takeaways, September 16
  20. MFDF webinar - Latest in Closed-End Funds Litigations, September 23
  21. MFDF webinar - Fixed Income Insights: Navigating Market Trends & Opportunities, September 24
  22. MFDF webinar - Risk Management Essentials for RICs and Boards, September 29
  23. MFDF webinar - Diligent - Tools for Fund Board Book, October 1
  24. 10th annual Fuse Forum, October 8
  25. MFDF webinar - Essential Strategies in Board Oversight of Operational Risk Management, October 14
  26. 2025 MMI Annual Conference, Oct 15-17




©All rights reserved to InvestmentWires, Inc. 1997-2025
14 Wall Street | 20th Floor | New York, NY 10005 | P: 212-331-8968 | F: 212-331-8998
Privacy Policy :: Terms of Use