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Archive for the ‘Oppenheimer’ Category


Oppenheimer Orchestrates Management Shift in Los Angeles

Richard Wisely, who has managed Oppenheimer & Co.’s shifting fortunes as manager of its Los Angeles-area office under several ownership structures, has stepped aside, a spokeswoman said.

Wisely, who has been with Oppenheimer & Co. and predecessor companies since 1984, is handing the reins of the New York-based firm’s approximately 50-broker office in Westwood office to Kevin F. Friedman, who joined as a producing manager from running Wells Fargo Advisors’ Woodland Hills branch.

Wisely, who began his career at Prudential-Bache Securities predecessor Bache & Co. in 1972 before joining then-Oppenheimer parent CIBC World Markets in 1984, will remain with the New York-based firm as its regional manager for Arizona and southern California, the spokeswoman said. She could not immediately say how many branches or brokers are in the region, but Oppenheimer has about 90 U.S. branches.

The veteran broker was prominently mentioned in a long-running “raiding” arbitration case that Oppenheimer pressed against Citigroup in 2003, when the bank’s Smith Barney unit recruited nine brokers allegedly representing about 30% of production from Wisely’s office. The actions occurred as Oppenheimer was trying to reassure brokers concerned about the firm’s pending sale by parent Canadian Imperial Bank of Commerce to the small Canadian firm Fahnestock Viner Holdings.

The arbitration, decided in Citigroup’s favor in 2011 at a cost of $100,000 to Oppenheimer, mentioned that Wisely himself came close to jumping with a group of brokers to Bank of America. Fahnestock, under the control of Albert Lowenthal, still chairman and CEO of Oppenheimer, offered Wisely “a generous retention package and bonus” but rejected his advice to up its package to other brokers to 75-100% of trailing 12-month production from 35-40% and to retain an attractive deferred compensation plan.

Friedman, Wisely’s successor at the branch, joined Oppenheimer two weeks ago with at least one client associate after an 18-year career with Wells Fargo Advisors and its predecessor firm Wachovia Securities. Neither he nor Wisely returned calls for comment.

Wells’ Woodland Hills office that Friedman managed is currently being overseen by Steven Townsend, the branch’s market manager, according to a person taking calls at the office.

Wisely’s BrokerCheck history over his 40-year career is unmarked by a customer or regulatory complaint, according to the Financial Industry Regulatory Authority database.  He gained notoriety in 2005, however, when he was permitted to cash out investments in a poorly performing hedge fund that had trapped some wealthy Oppenheimer clients, according to  this Wall Street Journal article.

Friedman was named a top branch manager in 2015 by “On Wall Street” magazine for his coordination of 50 brokers in the Woodland Hills branch. He has one mark over his 21-year career, a customer complaint lodged in June alleging that he failed to supervise a broker in connection with an unspecified complaint. The issue is pending, according to his BrokerCheck record.

Prior to joining Wells, Friedman was registered for three years with Merrill Lynch in New York City.

SEC charges former Oppenheimer private equity fund manager

The Securities and Exchange Commission today charged a former portfolio manager at Oppenheimer & Co. with misleading investors about the valuation and performance of a fund consisting of other private equity funds.
 
An SEC investigation found that Brian Williamson disseminated quarterly reports and marketing materials to prospective investors misstating that the valuation of the Oppenheimer fund’s holdings was based on values received from the portfolio managers of those underlying funds.  Williamson actually valued the fund’s largest investment at a significant markup to the manager’s estimated value.  He also sent marketing materials reporting an internal rate of return that failed to deduct fees and expenses.  As a result, the fund’s reported performance as measured by its internal rate of return – a key indicator of the fund’s performance – was significantly enhanced.
 
According to the SEC’s order instituting administrative proceedings against Williamson, he was an Oppenheimer employee from 2005 to 2011.  Williamson marketed Oppenheimer Global Resource Private Equity Fund I, L.P. to pensions, foundations, endowments, and high net worth individuals and families.  From September to October 2009, Williamson marketed the fund using materials that reported an internal rate of return that did not take into account any fees and expenses that the fund paid to underlying fund managers or the additional fees and expenses that the fund paid Oppenheimer.  Furthermore, Williamson modified the Oppenheimer fund’s marketing materials in October 2009 by increasing the reported value of the fund’s largest investment – Cartesian Investors-A LLC – from $6 million to approximately $9 million.  This increase was a significant markup to the underlying manager’s estimated value.  Nonetheless, the marketing materials falsely stated that underlying fund values were “based on the underlying manager’s estimated values.”
 
According to the SEC’s order, Williamson made or approved additional material misrepresentations that created the misleading impression that the Oppenheimer fund’s increased internal rate of return was due to increased performance or third party valuations.  In fact, it was Williamson’s revised valuation of Cartesian that resulted in a material increase in the Oppenheimer fund’s reported performance.  For example, for the quarter ended June 30, 2009, Williamson’s markup of the Cartesian investment increased the reported internal rate of return from approximately 3.8 percent to 38.3 percent.

Oppenheimer Global Resource Private Equity Fund

The former private equity arm of Oppenheimer Holdings may have exaggerated the valuation of one of its holdings.  The Securities and Exchange Commission and Massachusetts authorities are investigating the Oppenheimer Global Resource Private Equity Fund, a fund of private equity funds launched by Oppenheimer in 2008. Among the fund’s holdings was a $6 million investment with Cartesian Capital Group’s Cartesian Investors A. That fund, in turn, invested all of its capital in a closed-end fund established by the Romanian government to benefit victims of the country’s Communist era.

In the fall of 2009, as Oppenheimer sought to raise more money for the fund, it valued its investment in Cartesian A at 33 cents a share. That valuation was well above the 20 cents that Cartesian placed on the investment, and almost five times as high as the roughly seven cents that the closed-end fund, S.C. Fondul Proprietatea, was trading at the time.  Oppenheimer’s valuation added more than $4 million to its bottom line, and turned an internal rate of return from a 6.3% loss to a 38% gain, The Wall Street Journal reports. Oppenheimer used those figures as it raised more than $55 million from investors, including two Massachusetts cities and an Illinois university.

The SEC is currently conducting an “informal inquiry” into private equity valuations. The regulator sent information requests to about a dozen firms in December.

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