One of our loyal tipsters emailed us a new SEC settlement with RBC Capital Markets, nailing the bank for advancing cash to a mystery City’s mayor and other officials to eat, shop and play in the Big Apple while they were wooing rating agencies—and then paying itself back out of proceeds from the bond issues.
Here’s how it worked: In 2004 and 2005, some mayor and few of his city hall buddies would come to New York for a day (or maybe two) of meetings with the ratings agencies. The OTHER four days they spent in our quaint, little burg, they went to see crappy Broadway shows, stay at overpriced chain hotels and chow down at overrated tourist traps. The bankers at RBC would advance the local yokels the cash for this, then get it back by including it in its fees for the bond issue—typically used for inconsequential things such as building schools, financing hospitals and repairing roads. But hey, it was The Lion King.
Here’s a rundown of the spending, (pretty much) straight from the SEC docs:
-$8,958 for rooms at the Westin New York at Times Square at a cost of $8,958 for five city officials and their families.
-$7,522 for meals at Tavern on the Green, Rocco’s on 22nd Street (you remember him: he made his sweet Italian mother slave away in his kitchen making meatballs while he threw tantrums and modelized), Del Frisco’s Steakhouse, Le Cirque, and Mr. Chow’s.
-$7,250 for tickets to Broadway plays Mama Mia, The Lion King, Chicago, and The Producers. And a Knicks game.
-$8,883 for car service of which just a grand was attributable to use by the
City officials on Monday, March 22, the day they met with the rating agencies.
–The Total: More than $33K, or roughly eight per cent of that City’s 2004 bond issuance costs.
For the second trip in question, in 2005, they did basically the same thing, except they skipped the Knicks game (can’t blame them for that) and went to the Met (oh, we can blame them for that). That year’s ticket, though, was $42K, accounting for 11% of the city’s muni fees.
The punishment for RBC: It has to pay $125K to the Feds.