Wednesday, July 11, 2018

SEC Bans Porter Bingham & Malachi

The financial advisor for many minority governments in Mississippi must find another line of work. The Securities and Exchange Commission banned Porter Bingham and his company, Malachi Financial Products from the municipal bond business two days ago.  The SEC sued Bingham and Malachi for misleading the town of Rolling Fork on a bond sale and plundering it for fees. The final order says it all:


Accordingly,  it is hereby ORDERED pursuant to Section 15B(c)(4) of the Exchange Act and Rule 15Bc4-1 thereunder,  that Respondent Bingham be, and hereby is barred from association with any broker, dealer, investment  adviser, municipal  securities dealer, municipal advisor, transfer agent, or nationally recognized statistical rating organization.
and succinctly tells the story of how Bingham got banned from bonds:

1. From 2005 through at least 2017, Bingham was the president and sole shareholder of  Malachi Financial  Products, Inc.  (“Malachi”).  When the Commission’s  registration system was established in 2014, Malachi registered with the Commission  and the Municipal  Securities Rulemaking  Board (“MSRB”) as a municipal  advisor.  Bingham,  56 years old, is a resident  of  Roswell,  Georgia.

2.  On June 29, 2018, a final judgment  was entered by consent against Bingham  that, among other things,  permanently  enjoined  him  from future violations  of Sections  15B(a)(5) and 15B(c)(1) of the Exchange Act and MSRB Rule G-17 in the civil  action entitled  Securities  and Exchange Commission  v. Porter B. Bingham,  et al., Civil  Action Number 3:18-CV-00001,  in the United States District  Court for the Southern District  of Mississippi.

3.  The Commission’s  complaint  alleged that Malachi and Bingham fraudulently overcharged the City of Rolling  Fork, Mississippi  by $33,000  in May 2015,  in connection  with providing  municipal  advisory services with  respect to that city’s bond offering.   The complaint alleged that, to effectuate the fraud, Bingham and Malachi prepared and submitted  to the City an invoice  for $33,000,  purportedly  for additional  services that Malachi and Bingham never provided  and to which the the City did not agree.  The Complaint  also alleged that Malachi and Bingham recommended a municipal  securities dealer to the City to underwrite  the bond offering,  but failed to disclose   to the City that a registered representative of the municipal r had paid Bingham  $2,500  only a few weeks earlier.
The SEC also revoked the registration of Malachi Financial Products. 

JJ reported the lawsuit in January in a post, The Rape of Rolling Fork:

Rolling Fork was interested in financing infrastructure improvements with the sale of municipal bonds.  The city hired Malachi Financial Products of Roswell, Georgia, a municipal financial advisor.  Malachi is owned by Porter Bingham.  Mr. Bingham recommended the city sell bonds to raise $2 million.  However, the bond sale was lowered to $1.1 million due to Rolling Fork's limited borrowing capacity. 

Most aldermen and councilmen lack the financial expertise to understand bond deals and are thus ripe targets for some good ole fashioned plucking. Rolling Fork was no exception as the bond pimps proceeded to loot the bond sale.

Check out the fees* on this bond deal:

Malachi Financial Products: $55,000
Bonwick Capital Partners (Underwriter0: $130,000
Chambers & Gaylor (Bond counsel): $25,000
Mississippi Development Bank: $2,500
Balch & Bingham: (MDB Counsel): $5,000
Allen Woodard (Issuer's Counsel): $10,000
Trustmark (Bond Trustee): $2,500
Jackson Advocate: $150
Spence Flatguard (State bond attorney): $1,000
Munideals, Inc: $1,200
Total: $232,349. 
Percentage of Bond issue: 21%


Rolling Ford realized it might have been had so it sued Malachi, Bondwick, and Chambers & Gaylor in May 2016 to recover the fees in Sharkey County Circuit Court.  Rolling Fork said its contract with Malachi said the fees  were "not to exceed 2% of the debt issuance" for Malachi's services.  The city was also supposed to pay Bonwick a fee that was 1.5% of the actual bond sale. Bonwick's fee should have been $16,500 but it charged the city $130,000.   The city was going to hire Lord Snow as bond counsel but it instead hired the law firm of Chambers & Gaylor after Mr. Bingham recommended that it do so....

The payment of the fees were never approved by the Board of Aldermen or the Mayor.
The complaint charges the defendants with breach of contract.  Malachi's fee was limited to 2% of the bond sale at $22,000.  However, Malachi charged the city $55,000.  The city demands that Malachi repay $33,000 to the city.  A demand is also placed upon Bonwick to repay $113,500.  The complaint also seeks repayment from Chambers & Gaylor and accuses the firm of "professional malpractice."

However, the fees are small potatoes compared to the ticking time bomb that Rolling Fork  was placed into its finances.  A bond sale for this amount is considered to be a very small issue.   Malachi had a fiduciary duty to advise Rolling Fork that it did not need a financial advisor for such a small sale and that it could have simply obtained a bank loan.  Such a loan would require fewer professional services and thus less fees. However, Malachi recommended the city use the Mississippi Development Bank.  Using the Mississippi Development Bank meant the city has to pay an extra $150,000 in capitalized interest and ten years of extra payments.  The bonds have a thirty-year maturity instead of a twenty-five year maturity, thus costing

If the city had simply borrowed the money from the bank, only the services of a bond counsel and city attorney would be required.   Going through the development bank meant an underwriter, state bond counsel, issuer's counself, and other services and thus fees were needed, thus generating more fees for everyone.  

The complaint also charges the defendants with fraudulent representation, negligent misrepresentation, and breach of fiduciary duty.  It seeks actual and punitive damages as well as attorney's fees.

The Securities and Exchange Commission sued Malachi and Porter Bingham for fraud earlier this week in U.S. District Court in Jackson.  The SEC also said that Mr. Bingham is fraudulently acting as a municipal financial advisor.  He never passed the required Series 50 test and thus is not qualified to represent himself as one.  

*Source: Rolling Fork complaint and DFA. 

Kingfish note: This little group has been preying upon majority-black governments for years in Mississippi.  Porter Bingham would swoop in as the financial advisor promising all sorts of financial goodies while Tony Stovall (Rice Financial Products and then Bonwick) and Tony Gaylor (as bond counsel) would surf on his coattails into the deal.  Prime examples of this posse's plundering are the 2015 JPS and Canton School District bond deals.

Most of the supervisors, school board members, and aldermen lack any financial expertise whatsoever so rely upon these guys for their advice.  The advice means they get cleaned out while everyone gets paaaiiiiid.  Woe be the government that wised up and kicked out these scoundrels.  They would get on WMPR on Friday nights and proceed to play the Uncle Tom card and trash them for not helping minority businesses.


 Earlier posts about Malachi Financial Products
SEC sues Malachi for Rolling Fork fraud, Advisor was not an advisor.  
No invoices for JPS bond deal.
Malachi gouges Jackson and Canton public school districts on bond deals.
Malachi and Blackmon gouging Rolling Fork?
Malachi wants $500,000 to draft JPS budget
Pay me now or pay me later.
$182,000 on Siemens deal.
Jackson will pay an extra $8 million to refinance bonds











26 comments:

Anonymous said...

Good job again Delbert! OOPS.

Anonymous said...

Thanks Dilbert. Instead of being over in federal court trying to get your buddies into the timber scam dollars, Porter and his crew were raping citizens throughout the state with their scam. Really glad your securities department was watching what was going on under your nose -but I guess there was no money for you or your contributors to make looking into PorterBingham.

Anonymous said...

Dogbert ran off anyone with any securities experience I understand, except for one.

Anonymous said...

Well, at least one person is interested enough to comment on this

Anonymous said...

I attempted to read through the narrative only to find multiple partial sentences, sentences with no subject or verb and other words strung together that made no sense.

Example copied and pasted as it appears:

“The bonds have a thirty-year maturity instead of a twenty-five year maturity, thus costing

The city could have simply sold the bonds to a bank as a qualified investment. Only the services of a bond counsel and city attorney. “

Anonymous said...

Harvey Johnson hired Porter Bingham to do multiple bonds deals for City of Jackson. Will take Jackson years to recover from this debt.

Anonymous said...

Bingham is a criminal. I am so glad to see this. I only wish that the SEC or some other enforcement agency would require him to disgorge some of the millions he bilked out of the municipalities and other entities he was defrauding.

Anonymous said...

The silence of this website on the Tate Reeves road debacle is deafening

Anonymous said...

I wonder if this will prevent him and his cronies from being hired in some capacity for the upcoming JPS bond issue? There's just too much money on the table to expect them to just walk away.

Wow said...

I believe they did the bond issue refinancing too.

Anonymous said...

3:27, I'm sure it will be under another name with some stand-ins.

Anonymous said...

Yes Bingham is a known crook and the people that hire him know he is dirty. That is why he is hired. Everyone get a share.

Anonymous said...

Remember a group named ACORN twelve years ago? Crooked as snakes and connected to the Obama administration. The first thing he did as president was move the Census Bureau under his direct control and hire all the ACORN stooges under a different group name to work the census for three years.

Baby Chock is an Obama disciple.

Anonymous said...

Kingfish and some of these commentors are just miserable trolls. The City of Jackson mismanged its money as did most of the other cities. The whole city wants fine wine but cant reconcile the fact that they can barely afford duff beer. Kane Ditto, Dale Danks, Madison, Brandon, Pearl, and white folk in general robbed the city blind for years. Now they want to point the finger and say look at you. Miss me with that.

Anonymous said...

For the low IQ conservatives that think opinions and memes are facts.
https://www.factcheck.org/2009/06/acorn-and-the-census/

Anonymous said...

Bingham and Malachi soaked Hinds County for untold millions. Graham the legend was in on this too.

Anonymous said...

Follow all these guys to the Chrysler and Mercedes dealerships. Why are they not going to jail?

Anonymous said...

Porter Bingham reminds me of Cleavon Little in Blazing Saddles when he said "These people are so dumb!!!!!"

Kingfish said...

Nice try. I wrote about Kane Ditto's sale of bonds to cover the Municipal Retirement Accounts. Yes, he sold debt to pay off debt. I wrote about the Pearl bond problems.

I've shown questionable bond deals in other areas. But of course, its easier for you to scream racism. Probably the only word you know is the K word. Your speech is probably "mush mash mush mush KLAN mush mush"

Anonymous said...

affirmative action in action--

Anonymous said...

Kingfish, Bond pimp is what you called Porter. I have never seen you use derogatories of such bitter vitriol toward anyone white.
You speak in racist dog whistles. That makes you racist. Face it. It will make you stronger. Nothing sadder than chicken that thinks he’s a swan. You are so in love Jackson that you have Ridgeland PO box. Go have a seat with Tate Reeves.

Anonymous said...

7:58am

You assume that "pimp" is somehow associated with being black. It's you that are racist.

Statistically speaking, "pimps" are, by far, majority white males.

Now, I'll assume this "Porter" is, indeed black, only due to your comment. Your weird chicken/swan metaphor sounds like it's more self-reflection than attempt at insult.

Anonymous said...

Hmmm. I never said pimps were black or made in associations that suggested otherwise. You did that in your 2011 post “Uh OH The Bond Pimp is Back”, which features black man dressed in a 70’s era (blaxploitation) pimp suit.
But in all your “investigations” you want people to believe that you have never looked up Porter or Malachi found out he was black.
C’mon on man! Really?

Anonymous said...

http://kingfish1935.blogspot.com/2011/03/uh-oh-bond-pimp-is-back.html?m=1

You wrote that right?

Pimps don't Cry said...

9:20am here

I don't have any "investigations" and I've never "looked up Porter or Malachi".

YOU stated "Kingfish, Bond pimp is what you called Porter. I have never seen you use derogatories of such bitter vitriol toward anyone white.
You speak in racist dog whistles. That makes you racist.
"

So, yes, you are attempting to insinuate that reference to a "pimp" is reference to someone black, otherwise referencing someone as "pimp" would have zero racial connotation. YOU made the racial connotation.

And I am not Kingfish.

Take off those race-colored glasses maybe then you would gain understanding.

Well, shit. Since I feel sorry for you due to your overwhelming need to make things unnecessarily about race, I'll explain. The dude apparently "pimps" bonds. Like a car salesman "pimps" used cars. It's a relatively common term that knows no boundaries in race or class. It is indeed often used to indicate someone that sells things for their own personal benefit and not necessarily to provide a needed product or service to others.

Anonymous said...

The SEC is regcap at its finest. They’re always late to the game, and it was designed that way from the get go. I watched a documentary in which a mathematician proved with mathematical formulae that BM’s returns were impossible. He presented this to the SEC and they looked the other way.

This is the org. that’s supposed to protect your retirement from going belly up again. There is nothing secure about a security in America with these “cops on the block.”

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