Do This, But Never Do This

Do This: If you haven’t read Decisions, then what are you waiting for? Get it; read it!

Review by Nomi Prins, author of All the Presidents’ Bankers and It Takes a Pillage

“Janet Tavakoli is a born storyteller with an incredible tale to tell. In her captivating memoir, Decisions: Life and Death on Wall Street, she takes us on a brisk journey from the depravity of 1980s Wall Street to the ramifications of the systemic recklessness that crushed the global economy. Her compelling narrative sweeps through her warnings about the dangers of certain bank products in her path-breaking books, speeches before the Federal Reserve, and in talks with Jaime Dimon.”

“She probes the moral complexity behind the lives, suicides and murders of international bankers mired in greed and inner conflict. Some of the people that touched her Wall Street career reflect broken elements of humanity. The burden of choosing money and power over values and humility translates to a loss for us all.” Read more…

Here’s a blurb from ProPublica’s Jake Bernstein after he read Decisions:

“Tavakoli takes us on a scenic tour of the recent lowlights of Wall Street and the industry’s handmaidens in Washington from the perspective of an insider…demystified and rendered tragically human. It’s a compelling tale.”
Jake Bernstein, winner of the Pulitzer Prize for National Reporting

Get it from Amazon as a trade paperback or eBook. No Kindle? No problem. Download a free app and read it on any device.

But Never Do This

A reporter from a well-respected financial newspaper called me about the SEC’s complaint against a high profile female money manager and asked about CDOs and overcollateralization tests. He was going down a rabbit hole. I wondered if that reporter, and most of the other reporters who wrote on this matter bothered to read the SEC’s complaint .

This is not a matter of who knew and/or said what when, and it isn’t a complicated case. Here’s what you need to know; everything else is icing on the SEC’s allegations:

The SEC alleges in this excerpt of point 7:

“…[Manager] certifies these financial statements and represents that they are prepared in conformity with generally accepted accounting principles (‘GAAP’).”

Yes, you read that correctly. The SEC alleges the money manager “certifies” her own financial statements, and if you read points 57-60, you’ll see she provided a cover letter, a certification that “provides, in part, that the balance sheet and income statements provided are prepared in accordance with U.S. GAAP.” But according to the SEC’s complaint, they were not.

In point 8, the SEC alleges:

“However, contrary to these statements, Respondents do not prepare the financial statements in conformity with GAAP. Significantly, rather than applying a GAAP-compliant impairment methodology, Respondents impair assets only when [the manager] decides to withdraw support for a distressed company. This approach mirrors the discretionary approach [the manager] uses to categorize assets and does not conform with GAAP. It is also inconsistent with other disclosures in the financial statements that falsely indicate that Respondents assess and consider impairment issues and the fair value of the Funds’ loan assets.”