UPDATE: The lawsuit in this story was settled between the plaintiff and Cohen & Company Securities and Keefe, Bruyette, & Woods, and dismissed in 2012. There are no remaining allegations of wrongdoing of any kind against Cohen & Company Securities, Keefe, Bruyette, Woods, Dolores Rodriguez or Barry C. Mohr, Jr., and the plaintiff dropped all its accusations against those defendants.
Did you ever take a client out to a lavish dinner, a sporting event or…gulp…a strip club? Better lawyer up fast lads and lasses. If they lost money after doing a deal with you, you may be accused of bribing the buyer.
From Crain’s Chicago:
Sentinel Management Group’s bankruptcy trustee on Monday sued Keefe Bruyette & Woods, Cohen & Co. Securities LLC, and three former or current KBW and Cohen salespeople, accusing them of using trips to strip clubs, tickets to sporting events and lavish dinners to “bribe” Sentinel’s head trader into buying from them hundreds of millions of risky securities that that ultimately led to Sentinel’s collapse 18 months ago.
A spokesman from Cohen & Co. said the allegations were without merit.
Sentinel managed excess cash for futures brokers and hedge funds, and was supposed to invest the funds in safe, liquid securities like government bonds.
KBW, Cohen and the three former and current employees, however, “compromised, co-opted, duped and bribed” Sentinel head trader Charles Mosley into buying as much as $280 million of structured securities that were neither safe nor liquid and that they “knew, or should have known” were unsuitable, the lawsuit alleged.
Ultimately, the securities were worth far less than their face value, and in some cases were entirely worthless, the lawsuit said….
Monday’s 70-page lawsuit details inducements Dolores E. Rodriguez, Barry C. Mohr Jr. and Jacques de Saint Phalle are alleged to have made to Sentinel trader Mr. Mosley. Among the allegations are incidents that took place around the 2006 Orange Bowl in Florida – an event for which KBW allegedly provided Mr. Mosley with two luxury skybox tickets.
“KBW and/or the individual defendants also picked up all of Mosley’s entertainment and other expenses, including limousine transport to and from the game, while he was in Florida,” the lawsuit said. “On information and belief, KBW or Rodriguez also paid for Mosley’s aeroplane ticket to and from Florida.”
During the Florida trip, Mr. de Saint Phalle allegedly took Mr. Mosley to a strip club and paid for several lap dances. Weeks later, Ms. Rodriguez and KBW bought and sold a total of $9.5 million in securities from Sentinel.
Totally makes sense. How could the head trader at a giant like Sentinel be expected to exercise rational investing scepticism after seeing naked ladies and football on the same trip? Clearly, this was an unfair sales technique!
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