In a statement of claim, the city alleges its unsophisticated investment advisers were misled about the worth and nature of a fund into which they poured taxpayer money.
Instead of a safe, secure investment with a bit better interest rate than a government bond, they became "victims of (a) ... well-choreographed scheme to deceive it out of its investment funds."
The defendants, the city claims, "are sophisticated financial institutions that perpetuated a scheme through careful structuring and planning to create, promote and distribute an unstable and volatile product" consisting of a "complex, insecure investment with no real capital structure" supporting it."
See full story here
So, were we victimized or should we have known better?
Thanks toWRCU2 for the idea for this topic.
Interesting that this fact is coming out, as there was someone at the civic league meeting who spoke about the ABCP investments that the city had made.
ReplyDeleteI find that so ironic.
It would seem to me that this law suit to recover the money, plus penalties, is probably doomed to failure.
ReplyDeleteMy question is how there was even $10 million dollars to "invest" in 2007? A lot of needed infrastructure problems, particularly many of the sewers prone to flooding, could have been repaired with such a sum.
Perhaps this was Future Fund money being invested? I sat on the Future Fund Committee for many years and never had a level of comfort with the reports presented to committee by the city financial people, notably Mr. Rosini.
Rather than having a law suit which, even if successful, would drag on for years, there shoud be a full investigation as to who in the city administration was responsible for entering into such a scheme, and that persons, or thoses persons, should be terminated immediately.
I'd agree with Brian. Whoever is responsible should be fired immediately. Hey, I'll admit I'm not a financial genius (although, in a Facebook stock market simulator I'm +50% for the year while the S&P is down), but then I'm not responsible for millions of taxpayers' dollars.
ReplyDeleteIn the private sector "unsophisticated investment advisers" means "UNEMPLOYED investment advisers".
If Hamilton truly has "unsophisticated investment advisors", how many others out there are as concerned as I am about the financial well being of this "corporation"?
ReplyDeleteI seem to recall so many times as a youngster my father reminding me that if it sounds too good to be true it probably isn't!
I agree with Brian, the lawsuit is most likely doomed to failure and our efforts would probably be better spent investigating what went wrong and how do we learn from the mistakes. In business we call this "lessons learned!
M. Desnoyers
TAXPAYER!
I am trying to resist commenting on my own blog, but I'll fail at that at times ;-)
ReplyDeleteThere is no value in admitting that we were "unsophsticated investors" Any law suit gauges mitigation. In other words, the judge will ask the question "what have you done, or what ought you have reasonnably have done to curb or eliminate your losses?".
Admitting that you are an unsophisticated investor, is like throwing the case away- especially if you are a city. It basically conceded that part of this was our own fault for not going into this venture with the skill and acuity necessary to assess it.
In my view, it would have been much better to argue that the investment scheme was so complex, so multi layered and so convoluted that even a reasonably experienced investor, would have been duped, and that those complications resulted in deceit.
Cal
Yes Cal, we were victimized AND we should've known better.
ReplyDeleteBut I am not worthy of mention. I have neither the wisdom
nor the authority to correct anyone's mistakes but my own.
We are a nation of fools led by the blind because our
leaders have chosen to look, but no longer holy see.
Can we comprehend today's tribulations without glancing
through a telescopic lens at history and prophecy?
What of the $10 million investment turned sour?
What about the swine fool's pandemic?
IT has already been written.
The seedy deeds of destiny were sown long ago.
Be glad, everything is just as IT should be!
Rejoice, O ye nations, with his people:
for he will avenge the blood of his servants,
and render vengeance to his adversaries,
and will be merciful unto his land,
and to his people. Deuteronomy 32:43
Woe unto them that decree unrighteous decrees,
and write grievousness which they have prescribed.
To turn aside the needy from judgment, and to take
away the right from the poor of my people, that widows
may be their prey, and that they may rob the fatherless!
Isaiah 10:1-2
Go to now, ye rich men, weep and howl
for your miseries that shall come upon you.
Your riches are corrupted, and your garments
are moth eaten. Your gold and silver is cankered;
and the rust of them shall be a witness against you,
and shall eat your flesh as it were fire. Ye have he-
aped treasure together for the last days. James 5:1-3
Looking on the brighter side, it is the first week of Oct-
ober and we're at the center of IT with the Harvest Moon.
And as a nation with regards to our life sustaining food,
we are all very well fed, contrary to our knowledge of
human history. This is a marvelous week to remember:
Oct 01, 1908 Model T Ford introduced
Oct 02, 1890 Groucho Marx born
Oct 03, 1927 First transatlantic phone call
Oct 04, 2009 Harvest Moon 2:10am
Oct 05, 1869 Saxby Gale
Oct 06, 1967 Record rain fall (48.9cm) Ucluelet, BC
Oct 07, 1931 Desmond Tutu born
I wonder who on council signed off on this boondoggle investment? There must be a public record somewhere, so us taxpayers can hold someone to account for losing our money.
ReplyDeleteIT doesn't matter all that much about WHO, MAW.
ReplyDeleteWhat matters most is WHY. Why must a city feel
it has to ship the blood, sweat and tears of
its residential, commercial and industrial
revenues overseas to multiply a return?
Money generated at home, should stay at home PERIOD
What our leadership should be considering is something
akin to Ithaca Hours, Burlington Bread or BerkShares:
Funny Money
http://www.forbes.com/2006/02/11/local-currencies-ithaca_cz_el_money06_0214local.html
"At present, local currencies don't affect the conventional economy--our dollar economy--much, because they have such limited circulation. Only $12,000 worth of Bay Bucks have been issued, for example, compared with some $700 billion worth of dollars. But the point of local currencies is also to boost the value of resources, such as local labor, that are undervalued in the dollar economy."
Undervalued local labor anyone? When my city loses
$10M in a ponzi scheme with fiat money,
that's exactly how I feel.
A similar story with a shorter URL
Post Carbon Institute - Local Currency
http://www.postcarbon.org/node/1488
"What if things were different? What if the piece of paper - or data embedded on a smart card - was a local currency used to buy locally made things from local people?"
Something to think about.