Jim, I think you're a little right of Hizonner, I mean East, but do you think the poor fellow (after all, he got robbed by Paul Allen's CHTR unless he took the short view) could take us into the heights of ALTA. The guy has friends at MSDW and may want to trade the short view again for the long.... I would offer to trade my MSGI; they say it's nothing but up from here to BAJA vista....
By Andrew Quinn
SAN FRANCISCO, April 7 (Reuters) - Mayor Willie Brown --
famed for a wheeler-dealer image -- snagged eight sizzling IPO
stock offerings last year with the help of a brokerage firm
that has done business with the city, according to news reports
that have some San Franciscans envious and others fuming.
Brown, one of the most powerful political operators in
California, was able to tap a potential profit bonanza from
companies' initial public offerings of stock only dreamed about
by most casual investors.
Officials and analysts said there was nothing illegal about
Brown's participation in so many IPOs, and no evidence that he
has performed favors for companies in which he holds stock.
But some experts said Brown clearly received preferential
treatment from Morgan Stanley Dean Witter & Co. (NYSE:MWD) in
being put in such a good position to profit from the increase
in stock value experienced by some companies that sell shares
to investors for the first time. Officials have not stated
exactly how much money the San Francisco mayor made with the
IPOs.
After a series of financial revelations this week, the San
Francisco Chronicle on Friday quoted Brown as saying he was
given "remnants" of the frenzied IPO market by Morgan Stanley
Dean Witter.
"It's a lot of fun but it drives you crazy," Brown said of
his market forays.
Officials in Brown's office did not return telephone calls
seeking comment on Friday while a spokesman for the brokerage
firm appeared surprised that Brown got so many IPOs.
The mayor's office denied any link between the IPO offers
and the city's choice of Morgan Stanley Dean Witter in a 1997
deal to underwrite $100 million in financing for a new football
stadium. That project has since been put on hold and the bonds
were never sold.
Nevertheless, the stock market score looked likely to
create a fresh image problem for Brown, a legendary power
broker who fought off charges of cronyism to win a bruising
election battle for a second term last year.
"The heck with the 'old economy' and 'the new economy.' I
want a piece of the Willie economy," San Francisco Examiner
columnist Rob Morse wrote.
Brown's success with IPOs, many of which have zoomed in
value as part of the market's fever for Internet and technology
issues, came to light this week when he filed a financial
disclosure statement with the city's Ethics Commission.
MOST INVESTORS WOULD BE ENVIOUS
That statement outlined in broad terms a success with
getting in on IPO deals that would make most investors swoon.
While brokers generally parcel out IPO offers stingily and
only to their most valuable clients, Brown managed to pick up
stocks in eight IPO companies in November and December.
Brown's statement put the value of his stock portfolio at
somewhere between $97,000 and $970,000 -- leading to newspaper
headlines that the mayor may have made close to $1 million in
the market. The newspapers also quoted Brown's spokeswoman as
saying he racked up his stock market successes while "playing
around on the Internet" and day trading in his spare time.
Officials later said the mayor's IPO earnings were
considerably smaller, although they did not give a specific
value. They also revealed that, in fact, Brown had been put
into the IPOs by a broker at Morgan Stanley.
Among the investments, according to a statement released by
Brown's office, was a $20,000 purchase of 400 United Parcel
Service Inc. (NYSE:UPS) shares, which subsequently climbed 30
percent in value on the company's first day of trading.
Brown also pocketed 100 shares of Microsoft co-founder Paul
Allen's Charter Communications Inc. (NASDAQ:CHTR) at $19 per share,
and then watched that stock jump 20 percent in value on its
first day. He also spent $3,000 on 100 shares of
Hewlett-Packard spin-off Agilent Technologies (NYSE:A), an issue
that soared by about 40 percent in its market debut.
OVERALL STOCK STRATEGY HAS LUKEWARM SUCCESS
Despite the IPO boon, Brown's overall stock strategy was
hardly a huge success. He said that between October and
December of last year he invested some $275,000 in the market
and earned $11,000 in profits -- an underwhelming 4.4 percent
gain for a period in which the tech-heavy Nasdaq composite
index soared by about 28 percent.
But questions remained over why a politically powerful
mayor was given entree at the ground level into IPOs denied to
almost everybody else.
"He clearly got favorable treatment, and I consider it
extremely bad form for any investment banker to give favorable
allocation of an IPO to any politician," said Jay Ritter, a
finance professor at the University of Florida who studies the
mechanics of initial public offerings of stock.
Morgan Stanley spokesman Ray O'Rourke said on Friday that
the brokerage house allocates IPO shares to its various offices
for distribution, which is done through individual brokers.
"We're looking into how the allocation decisions were made
(with respect to Brown)," O'Rourke said. "We're doing our own
sort of review of what was done out there."
Copyright 2000, Reuters News Service |
