Matt Levine wrote an article for Bloomberg titled 23andMe is Just Me Now: Also EF Hutton, Avon CDS, and pig butchering. (19 September 2024) .
« E.F. Hutton & Co. was a brokerage firm founded in 1904 that grew to be one of the biggest brokers in the US. “When EF Hutton talks, people listen,” its old commercials said. Then it went through rough times and was acquired by Shearson Lehman in 1988. As far as I can tell from Wikipedia, the corporate entity ended up as part of Citigroup Inc., which sold the E.F. Hutton brand to some alumni who planned to launch a new firm. That didn’t work out, but the brand kept kicking around, and eventually a firm called Kingswood Capital Markets got hold of it and rebranded itself as EF Hutton. And then it became a leading adviser to special purpose acquisition companies, the blank-check companies that were in vogue for a while as a way to take companies public. It worked on the Trump Media & Technology Group deal, for instance. »
« Okay so. When I read, or write, a paragraph like that, I draw some inferences. Here you have a company that rebranded itself as “EF Hutton” to take advantage of a trusted old name that has no actual connection to the current firm. It works on SPACs, which have had a somewhat checkered past. It worked on the Trump SPAC specifically, which, you know. If you were to come to me with some scurrilous gossip about the current incarnation of EF Hutton, I might be inclined to believe you. »
« Here, though, is a really quite extraordinarily nasty lawsuit against Joseph Rallo, the chief executive officer of EF Hutton, saying that he “falsified and personally approved falsified expenses to fraudulently obtain millions of dollars of reimbursements from” the company, including for things like “tickets for premium seats at sporting events that he attended with his gambling bookie” and “intravenous drips, which upon information and belief, were used to treat hangovers from excessive alcohol and drug usage.” »
« Upon information and belief, Rallo has a severe gambling problem. Rallo bets often, he bets vast amounts (six to seven figures per bet), and he typically loses. Rallo would often share openly with EFH employees his ongoing and recent gambling history. »
« Upon information and belief, from 2021 until now, Rallo has incurred several millions of dollars in gambling losses, particularly, from sports wagers made through an illegal sports book run by a gambling bookie who he considers to be a close friend (the “Bookie”). »
« Upon information and belief, the Bookie also operates a gambling den out of a residential apartment in New York City that hosts card games throughout the day and evening; Rallo would frequent the gambling den during the middle of the workday to gamble and carouse, and afterwards come back to the office in a state that was not conducive or becoming of a CEO of an investment bank. »
« And also some allegations of securities fraud, why not:
On the morning of May 6, 2024, Federal Agents from the Department of Homeland Security and the United States Postal Inspection Service arrived at Rallo’s home and served him with a search and seizure warrant issued from the United States District Court for the Eastern District of New York for the seizure of Rallo’s cellular phone (the “Warrant”). »
« The Warrant was issued in connection with an investigation by the United States Attorney’s Office for the Eastern District of New York, and sought records relating to securities fraud, wire fraud and conspiracies to commit securities and wire fraud involving Rallo (the “EDNY Investigation”). »
« Strong stuff! Anyway that lawsuit was filed by EF Hutton. “Our CEO is under investigation for securities fraud and also leaves the office in the middle of the day to gamble and carouse,” says the company. I feel like, for a lot of investment banking clients, that would be kind of a negative? For some SPAC clients, though, maybe it’s good. ” »
Articles of Interest 