ROANOKE TIMES
Copyright (c) 1995, Roanoke Times
DATE: Friday, December 29, 1995 TAG: 9512290071
SECTION: BUSINESS PAGE: B-8 EDITION: METRO
DATELINE: NEW YORK
SOURCE: ASSOCIATED PRESS
HIGH-PROFILE BEVERLY HILLS CONSULTANT Jay Goldinger has been accused of squandering millions.
He has written how-to books on the risks of investing, syndicates his advice in newspaper columns and is an oft-quoted source for reporters covering the $4.9 trillion Treasury bond market.
So it's with some surprise that accusations have surfaced against Jay Goldinger, a financial consultant in Beverly Hills, Calif. Two client companies have said his firm squandered tens of millions of dollars they entrusted to him.
There was no indication Thursday that Goldinger is under criminal investigation over the accusations, which emerged earlier this week. But the usually accessible adviser wasn't answering the phone and his lawyer said he wasn't available to talk.
Allegations of improper investment activities regularly pepper the financial markets. Nonetheless, Goldinger's alleged activities seemed particularly out of proportion to his reputation as a dispenser of complex information used by large and small investors.
In addition to his published advice, Goldinger ran Capital Insight, an advisory firm in Beverly Hills that tries to make profits for well-heeled clients by investing their money in financial markets.
Some of his investment advice went awry, according to two clients. Pier 1 Imports, the housewares retail chain, said this week that an adviser, separately identified as Goldinger's firm, had engaged in ``inappropriate trading activities'' that had resulted in a $20 million loss. It said the adviser was managing the firm's excess cash and short-term securities.
Another client, PairGain Technologies Inc., also said that unauthorized trading by a consultant, identified as Capital Insight, had cost it millions of dollars.
Pier 1 didn't name the consultant it accused of wrongdoing. But Goldinger's lawyer, Brian O'Neill, said that Pier 1 was referring to Goldinger's firm, Capital Insight Inc. The company said it would take appropriate legal action and had launched an investigation.
O'Neill also confirmed that PairGain was referring to Capital Insight.
The Securities and Exchange Commission and the Commodity Futures Trading Commission reportedly have started investigating Goldinger's firm. Neither agency can bring criminal charges.
Employees at Capital Insight declined to respond to reports that the firm was closing. They said Goldinger was not in the office and they referred all questions to O'Neill.
Bruce Baird, a Washington lawyer who is former head of the U.S. Attorney's office's securities and commodities fraud unit in New York, was hard-pressed to think of a similar case.
``I can't think of one recently, certainly not one that's this high profile,'' Baird said.
Goldinger has been quoted on the Treasury bond market and the economy, forecasting the direction of interest rates and market events.
But he apparently was not averse to risk. In an updated edition of his soft-cover book, ``Keys to Investing in Government Securities,'' Goldinger wrote: ``Losing cleanses the soul. When you're in a losing trade, you can't think straight until you make that disciplined decision to cut the losses and pain and reverse your position.''
Bond-market traders Thursday said that it is tough to lose that much money in the U.S. Treasury market without being on the wrong side of a bet on the future direction of interest rates.
No one was at home at Goldinger's residence in the opulent Bel-Air section in the hills north of Beverly Hills. An AP reporter who visited the home, said it appeared vacated.
Although the garage door and French doors to a living room were open and inside lights were on, no one was present. The living room was bare, except for a computer terminal and printer. In another indication that someone was moving out, pots and pans were sitting on the counters and floor of the kitchen.
A neighbor, who declined to be identified, told The AP she did not have any knowledge of Goldinger's whereabouts.
``I'd rather not say anything, and I really don't know anything,'' the neighbor said.
Yet
Despite Goldinger's high profile, some financial experts said they were not surprised at the accusations, since it was not the first time Goldinger has gotten into trouble.
The SEC in 1991 charged Goldinger with giving insider trading tips to colleagues about the pending merger of Thrifty Corp. A federal court dismissed the charges, but the SEC has appealed them to an appeals court in San Francisco.
Lucinda McConathy, an assistant general counsel for appellate litigation at the SEC, said that the fresh allegations will not affect the on-going SEC insider trading case.
LENGTH: Medium: 94 lines ILLUSTRATION: GRAPHIC: Chart: Jay Goldinger's advise.by CNB