Note: This post is about Malachi Group of Georgia, not Malachi Financial in Ridgeland.
Malachi Group is acting as the city of Jackson's "Independent Financial Adviser" in the $25 million refinance of its bonds. Jackson Jambalaya reported on the proposed deal last month. Malachi sold this deal to the city as a way to free up over $5 million next year to apply towards a projected $10 million deficit. Documents provided to the city council show Jackson will save $5 million a year for several years in interests costs. However, Jackson will then pay $1 million a year for four years, nearly $2 million for one year, then approximately $4.5 million a year for four years, and finally $6 million in the last year, costing the city $8 million more in interest costs over the life of the bonds than if they were not refinanced.
Malachi recommends this deal to the city but the question must be asked: who is Malachi Group? Malachi Group is located in Atlanta but is represented in Jackson by local aspiring player Porter Bingham. The same Porter Bingham of Malachi Group who sold Hinds County on some interest-rate swaps back in 2006 (yes, the same type of swaps that blew up Jefferson County). What exactly is the track record of these guys? A check of FINRA's database reveals it suspended Mr. Bingham for twelve months and fined him $10,000 in 2007 for not telling the truth on Malachi's financial statements provided to the regulatory agency FINRA Report (Page 6).
Mr. Bingham has never re-registered with the FINRA or SEC. He is not registered with the state of Mississippi as a broker/dealer or an investment adviser. However, Mr. Bingham is not the only party in this deal who has faced regulatory problems as Malachi has its own checkered history. Regulatory agencies have disciplined Malachi seven times since 1997. The National Association of Securities Dealers expelled the firm for not paying fines in 2006. Malachi is not registered with the SEC nor FINRA. FINRA report Neither Mr. Bingham nor Malachi are registered with the SEC or Mississippi as investment advisers either.
However, all of the fines, suspensions, and trouble that seem to follow these cats around didn't stop Jackson from engaging them as its "Independent Financial Adviser". Page four of the documents linked above even state their duties to the city. Read it and weep. How much are we paying these rogues of finance? $80,000 (Page 6). I would provide a copy of the contract with Malachi Group for you to read except for one problem. There is no contract nor is there going to be one according to the public records request I filed a few weeks ago. The city answered last week: "No contract will be executed." No contract for Malachi. I'm not making this up. Jackson is giving $80,000 to a group that is not registered, has a representive who was suspended and has no license, yet does not make them sign a contract protecting Jackson's interests. I spoke to Communications Director Chris Mims and was referred to Rick Hill, Deputy Administrator (I am waiting for him to call me.). Mr. Mims and I spoke for a few minutes but in all fairness to him, this is not his area of expertise nor should it be. However, one can hope the city will execute something binding on Malachi.
Note: FINRA is "The Financial Industry Regulatory Authority (FINRA) is the largest independent regulator for all securities firms doing business in the United States. All told, FINRA oversees nearly 4,700 brokerage firms, about 167,000 branch offices and approximately 635,000 registered securities representatives." (FINRA website) NASD and the NYSE Committee merged in 2007 to form FINRA.
Wednesday, July 21, 2010
Jackson paying Malachi $80,000 despite no contract.
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27 comments:
Shouldn't Delbert be all over this? How is this legal? How can this guy give investment advice?
How can the city legally hire an investment advisor without taking bids or at a minimum checking out their credentials. I never cease to be amazed at the antics of the Jackson City Council. What a bunch of loosers.
Amazing. Money down a rat-hole. I smell corruption.
$ 80k = 640 $125 /tows
or 1230 $ 65 /tows
Do we have a U.S. Attorney yet?
I think for advising a city on muni bonds, they don't have to be licensed or registered.
I met with Malachi once, and within fifteen minutes of meeting me, they were making investment recommendations. So much for getting to know me and gaining an understanding of my goals and concerns.
There's a Malachi Group in Jackson with offices in Mississippi. They are a different group.
So, the "5 million freed up" will cost 8 million? What a novel and convuleted way to bleed the city......Why not just hand out the money on the street and cut out the middle man.
once again, that great sucking sound-
I was expecting better out of Harvey. Seems he really is as bad as I feared.
No contract? That can't be right. Basically they just wrote a check for 80k and no specific performance. How do I get into thus gig with the city? Maybe I should go represent the towers! They can write me a 20k check to advise them how to get more money out of the city and when my attempt falls on deaf ears I wiil advise them of the definition of cold day in hell. Basically same deal with city, if the don't do anything they will pay them 80k. Follow the money.
No checks have been written yet and there are several more steps in this process before it is finalized.
So they are extending an 80k check to this person for what? It appears from the order that indicates "no contract" he is providing as a "Financial Advisor"....
1. Financial advice. Read: a lot of pretty powerpoint presentations.
2. Analysis and evaluation of complex financial funding/re-funding.
3. Participation in presentations and official statements. Read: PR.
4. The list goes on...I'm not going to repost your attachment...
I find it funny, we have fine financial institutions here in Jackson, MS...the Sterne Agee Group comes to mind. Why haven't they approached a locally owned, with a stake in the game company, LICENSED DEALER-BROKER INSTITUTIONAL EXPERT to look at this?
Reeks of favoritism or if you really read between the lines...an admission that the City has no freaking clue what they are doing or about to do to the city.
Compared to the taxpayer money being given away downtown this is small potatoes. The City of Smoke and Mirrors.
And I thought the water park in MetroCenter that Harvey Johnson was promoting in a story on WAPT yesterday was ridiculously stupid. Damn...
READ THE POST. It makes it clear right at the beginning.
Ok, once again, I am referring to Malachi out of Atlanta, not Ridgeland. I know nothing about the Ridgeland firm. Let's stay on the bond deal.
is malachi not listed in the bond resolution? that serves as a contract bw the professionals hired and the city. if not - very interesting.
thats not contract as a resolution is not in and of itself an agreement. I would say it shows an intent.
See here for more on some Malachi Group bond doings...
http://www.enterprise-journal.com/news/article_b86c6541-8e08-5012-af90-f68c17408596.html
"The McComb city board voted 3-2 Tuesday to file suit against former chief financial officer Mary Adams for unauthorized payments to businesses in Jackson and Atlanta."
"The first point of contention involved the amounts of the payments. The original agenda item issued Friday called for legal action involving $233,213 in payments to the Malachi Group consultants, bond attorneys Chambers and Gaylord, and the Harris & Geno law firm of Jackson."
HOW ABOUT THIS:
"Dowdy polled selectmen in response, asking “Anybody else that knows where the contract with Malachi is, please raise your hand.”"
The excerpts at 12:31 AM do not give the complete picture- reading the entire story at the link will give an idea that it seems to be a confusing mess.
Did we have a contract?
If we did where is it?
It seems to be a curious situation...
KF - in go bond transactions - the Bond Resolution serves as a contract. Typically it states as much in the contract. The intent resolution will work as well.
Understand what you are saying but the city told me there would not be one nor did it give any clarification as you did. I've left my number for rick hill to call me but he has refused to do so. Therefor the headline stands and its on them to show otherwise.
The City of Smoke and Mirrors, flat broke, rushes headlong into more ill-advised debt. Meanwhile the infrastructure continues to collapse, Harvey Johnson wants to co-sign, and partially pay, for a private developer's loans Jackson can't afford and KF's buddy wants a regressive general sales tax increase to pay for more nice-to-have-but-can't-afford boondoggles.
WAPT-Jackson City council dealing with this big old thing---renaming streets.
West County Line Road to Tougaloo Village Road
part of Pascagoula Street to University Boulevard.
Must be nice to not have another damn thing to do than talk about renaming streets.
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