Friday, March 13, 2009

Keep it in The Family

While UBS has been at the epicenter of an international tax shelter fraud and while the investment banking market has been silent, one of their employees, Francis Tucci has been spending his time and most likely UBS resources in a most unique manner.  In an attempt to discredit a fund in which his family and his father - Gerald Tucci were both invested, Francis an investment banker at UBS has been applying his own brand of due diligence.  With not much else to do, he has been allegedly utilizing UBS resources during firm work hours, to better understand the underlying assets in the fund in which his family had invested.  With all of his time and effort along with a wealth of resources behind him, provided by UBS, what did our investment banker learn?  Simple, companies in the micro-cap market often have low revenue and low prices.  Bravo, Francis, but we recommend you hang on to your day job as long as you can, because there’s no place for you in the world of due diligence, but maybe we can find one in the family business.

When Gerald and his family decided they wanted to redeem their investment, a recent article in Forbes stated, that according to assertions filed in legal papers, that the Tucci family sent two burly men to the offices of the NIR Group in Roslyn, NY, who stated they were, “silent partners” of the Tucci’s and demanded their investment capital along with profits, returned immediately and in cash, $1.5mm.  The Tuccis “silent partners” even brought their own brief case, empty, confident they could utilize unethical tactics, to retrieve their money illegally that very moment.  Further, according to legal papers filed, these men also threatened the manager of the fund and his entire family, causing the temporary need for protection professionals.

These are indeed bleak economic times with many funds simply unable to handle the pressure and redemptions - we find, some left with no options- close, while others, utilize gates to retard the process.

Most commonly, we see restructures that provide several options for investors allowing the investor a bit of latitude in light of the tough decision they must make.  These options are always dictated by the guidelines of the previous investment documents that are signed by both manager and investor.  This contract and the guidelines within it are to ensure that each and every investor is treated equally.  Without them, lawlessness ensues.  This lawlessness may be exactly what the Tucci’s had counted on.

As an investment banker at UBS, Francis Tucci should have understood that his family and their investments were bound by the documents they signed.  And in all likelihood he did.   We believe this is why he and his father Gerald Tucci and brother Michael Tucci made the alleged decision to send goons to the Roslyn offices of the NIR Group.  Their goal was to simply utilize fear and threats as tactics to circumvent the legal documents. In other words, the Tuccis attempted to break the law.  Given the vast fraud rumors regarding UBS; and considering Tucci’s colorful past and now present, perhaps there is far more here than meets the eye.  The one thing we do know for sure, the Tuccis are indeed a group that likes to, keep it in the family.

Article Written by:  A. Pennington