en.wikipedia.org/wiki/Fred_Malek
3 corrections found
On August 12, 2003, the SEC filed a civil fraud lawsuit against former Connecticut state Senate Democratic Majority Leader William DiBella for participating in a fraudulent scheme to invest $75 million of the state pension funds with Malek's firm, Thayer Capital Partners.
The SEC's civil fraud action against William DiBella was filed on August 12, 2004, not August 12, 2003.
Full reasoning
The year in this sentence is off by one.
Official SEC materials identify the DiBella civil fraud action as a 2004 case:
- The SEC's later litigation release about the DiBella case says: "For further information, see Litigation Release Number 18829 (August 12, 2004)."
- The SEC's 2004 enforcement overview likewise states: "On August 12, 2004, the Commission filed a civil fraud action against William A. DiBella..."
So the filing date was August 12, 2004, not August 12, 2003.
2 sources
- SEC.gov | William A. DiBella, et al.
"For further information, see Litigation Release Number 18829 (August 12, 2004) and Administrative Proceeding Release Number 33-8457 (August 12, 2004)."
- SEC Enforcement Overview
"On August 12, 2004, the Commission filed a civil fraud action against William A. DiBella ..."
On May 18, 2007, Thayer was found in negligence of the Investment Advisers Act of 1940, and was ultimately forced to pay a civil penalty of $150,000, while Malek personally paid a fine of $100,000 for his role in the affair.
May 18, 2007 was the date a jury found William DiBella liable. Thayer and Malek had already settled with the SEC in 2004, when the censure and penalties were imposed.
Full reasoning
This sentence conflates two different events.
According to the SEC:
- May 18, 2007 was when a federal jury found William DiBella and his consulting firm liable.
- Thayer and Malek were not first "found" liable on that date. The SEC says it had previously brought and settled charges against Thayer, Malek, and related entities.
- The actual SEC administrative order against Thayer and Malek is dated August 12, 2004, and that is the order that censured them and imposed the $150,000 penalty on Thayer and $100,000 penalty on Malek.
So the article is wrong to say that on May 18, 2007 Thayer was found negligent and then forced to pay those penalties. The 2007 verdict concerned DiBella; the Thayer/Malek settlement and penalties were imposed in 2004.
2 sources
- SEC.gov | William A. DiBella, et al.
"on May 18, 2007, a federal jury found William A. DiBella ... liable" ... "Previously, the Commission brought and settled charges against ... Thayer, Malek ..."
- SEC.gov | Thayer Capital Partners, TC Equity Partners IV, L.L.C., TC Management Partners IV, L.L.C., and Frederic V. Malek
Release No. 8457 / August 12, 2004 ... "Respondents have submitted Offers of Settlement" ... "Thayer shall pay a civil money penalty in the amount of $150,000" and "Malek shall pay a civil money penalty in the amount of $100,000."
The scheme moved much of the Connecticut State Retirement and Trust Fund into high-risk, long term, non-liquid private equity funds (such as Thayer's).
The transaction involved $75 million, while Connecticut's retirement and trust funds had about $19.8 billion under management in 1999. That was well under 1% of the fund, so it did not move "much" of it.
Full reasoning
This sentence is quantitatively wrong.
The SEC says the investment at issue was $75 million. But Connecticut's own 1999 Treasurer annual report says the state's Retirement Plans and Trust Funds had grown to $19.8 billion under management by June 30, 1999.
That means the Thayer investment represented roughly 0.38% of the total fund assets ($75 million out of $19.8 billion). A sub-1% allocation is not accurately described as "much of" the Connecticut State Retirement and Trust Fund.
Whatever one thinks about the prudence of the investment, the article's wording massively overstates its scale.
2 sources
- SEC.gov | William A. DiBella, et al.
"Pursuant to the scheme, Silvester invested $75 million in state pension funds with Thayer Capital Partners ..."
- State of Connecticut Treasurer Annual Report 1999
The report states that pension and trust assets under management had "grown from $7.5 billion to $19.8 billion" and that the Teachers' Retirement Fund alone had "$10.8 billion under management at June 30, 1999."