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Lynchings still take place. Chip Flowers is stepping down. It is time to consider his legacy, and boy, what a great legacy it was…

Chip Flowers is the first and only treasurer to take on the Cash Management Board, a select group of appointees who can get their position by donating large amounts of cash to the successful Governor candidates, even when one has a record for making investments on the fly without informing the investors trusting you with their money, of your personal conflict of interest against making money for them. Even if you were fined and had to pay over $976,000 for your illegal activity?

David Marvin of the Cash Management Board did just that. Paid $976,980 in a fine to the SEC. Through his generous PAC donation to Jack Markell, he now sits on the Cash Management Board, and who knows what conflict of interests are in play with Delaware’s Treasury’s monies?

Do you know? Don’t you think we should at least find out? Why then is it against the law for the public to even find out what their conflicts of interests are?

Before anyone diminishes Chip Flowers’ achievement, let us remember the legacies left by those former Treasurers, including our current Governor, Jack Markell..

If you remember, the legacy he touted when running for governor, was that he computerized the Treasury Department. Hell, the entire government was computerized during the 2000’s, as well as the entire corporate world. Former Treasure Markell’s legacy was nothing more than being in the Treasurer’s office at the right time when computers came into being…

Prior to that, former treasure Rzewnicki. Her legacy was her attempt to bash Carper with a domestic abuse case. That is her lasting memory.

And before that, Tom Carper. lucklily happened to be in when Pete Dupont rewired Delaware’s laws and investment environment. Delaware was able to increase the rating of its bonds, but it wasn’t done as a result of decisions made in the Treasury. The decisions were made by the General Assembly and put into practice by Pete duPont.

So when it comes to legacies, the Treasury department by the very low level of duties alloted to it, is hard to make a lasting legacy. But that is what has been done by Flowers. We had an engaged treasurer, who actually made many of our sleep-walking members of the Delaware General Assembly aware there even was even a Cash Management board… There must be something very wrong with having a former guilty procedure breaker, handling the monies of the state in ways no one knows, and who is protected against anyone finding out.

That we know this, will be how the future views Chip’s legacy. This is huge.

Reflecting upon today’s news, it is best that he step down. It is unlikely that any second term could do more to add to what he has accomplished. It is best to “get-‘er-done” and move one, and not let the dilution process that naturally happens when one is in office too long, to occur on one’s second shift minimizing ones accomplishments and action.

At least now for the future, when anyone says “Chip Flowers”, we will always have the image of Delaware’s First Black Treasurer, who ran on the platform that it was the “People’s Treasury”, and was the first treasurer to ever do anything to return the Treasury back to the people whose money it handles. He and all of Delaware can be proud of that.

I agree with his decision. It is smart to move on and it is now up to us, “We, The People”, to arrest and hang the lyncher. David Marvin needs to be pulled off the board, even if it takes a bill originating in the General Assembly, and all the state gets to watch the next Speaker of the House twist in the wind between either supporting his “boss”, or all those thousands of citizens who voted him into office. Secondly, we need to know who and how this sickness ever got so close to Delaware’s people’s Treasury….

Ericka in today’s world, is a distraction. The real problem has always been that crook who was fined over $976,000 and now sits, at the discretion of the governor, where he can pass his hands through the state’s money at will… and no one is even allowed to look over his shoulder.

We need to know why he is still there….

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That was the consensus of how Sean Barney came across in yesterday’s debate. Perhaps it is the lisp he has, or his youthful choice of adjectives, but, when stacked next to the current treasurer, Barney comes across the weaker choice.

The debate pitted idealism against reality. As a child intent on making the world a better place, the idealism of Barney became too much as the hour progressed. Far too often he was tripped up by Flowers on specifics of the office that in our circle are common knowledge, but apparently Barney didn’t know.

As one sometimes feels sorry when two football teams are extremely mismatched, one feels the same for Barney.

After all, several external events recently undercut Barney’s campaign.

One: The treasurer was honored by the auditors report for being squeaky clean and honest. Unlike Markell (Barney’s old boss) Chip Flowers had no dings on his reporting of finances…

Two: Flowers acted promptly and properly over his deputy’s transgressions. There is no crime in being vicitmized and Barney lost points in trying to tie Flowers to the action of his deputy. Flowers responded to the problem, and currently now, for any future treasurer, it cannot happen again.

Three: Jack Markell’s and Tom Carper’s reputation are the kiss of death. It was ironical for Barney to accuse Flowers of travel violations when Barney’s own boss was accused of the very same, and unlike Flowers, has done nothing to resolve it… Markell had a low level staffer simply brush it off.

Four: The economy of Delaware is not booming. Problems outnumber successes. The Markell Administration is under fire for Fisker, Bloom, TDC, gutting the Coastal Zone Act, Common Core, Smarter Balanced Assessments, a diminishing economy, loss of revenue, casinos going bust, Charter Schools failing, so Barney’s advertising that he was Markell’s POLICY DIRECTOR, is nothing short of an albitross hung around his neck.

Five: It borders incredulous that Barney was unfamiliar with Dave Marvin’s malefeasance as member of the Cash Management Board, and that the single person leading the charge against Chip Flowers, was fined for being dishonest to his investors, and lying and cheating in his disclosures as required by law. Basically Sean Barney was unfamiliar with this man. This completely undercuts Barney’s argument that Chip is flawed because he can’t get “crooks” to like him. That exchange was incredulous to listen to.

Six: Complaining that Flowers was incompetent because he couldn’t get his legislation passed by Markell’s flackeys, was turned on its ear by Allan Loudell who immediately brought up that Markell couldn’t get his 10 cents a gallon passed, barely got his Smarter Balance Assessments passed (had to bribe Greg Lavelle with a spot on Chuck Todd), barely got gun legislation passed, failed to get Flower’s sanctioned last year. If not getting legislation passed is a crime, then Barney’s own boss was guilty of far more…

Seven: After a full hour, one gets an overall sense, that if you want the Delaware way to continue, where a few dictate things behind the scenes and there is no way one can contest or derail it, then Sean Barney is the way to go. One senses that he will not do anything without getting his bosses approval first. “I’ll have to ask the boss.” On the other hand if one feels the elite have run Delaware into the ground, and think a new direction is necessary, one which will improve economic possibilities for all Delawareans not making over $10 million a month, Chip Flowers should be the Democrats choice on the General Election ticket…

It depends who you are, on which one you should vote for. If you are a Greenville elitist, I doubt that you will be happy with Chip Flowers. Heck, if you are one of them, I doubt that you will be happy with anyone. Which in turn, would be good for Delaware….

As background information, here is the link and below is the copy of the SEC report citing David Marvin currently of Delaware’s Cash Management Board, and fining his firm M & P, $976,000 dollars…

Here is Celia’s account of last years inside dealing, targeting Marvin as the prime whiner in the infamous Cash Management Board pushback… It just dawned on me that Marvin probably handles investments for Markell and Blevins. Which would if true, provide clarity to the mechanizations that took place this past year.

Since the 15 year expiration is about or has already hit, (it was difficult to find), I am posting the entire judgment here, so it will last, if the SEC eliminates it off-line…. Without Further Ado….

=======

 

UNITED STATES OF AMERICA
Before the
SECURITIES AND EXCHANGE COMMISSION

 

INVESTMENT ADVISERS ACT OF 1940
Release No. 1841 / September 30, 1999

 

ADMINISTRATIVE PROCEEDING
File No. 3-10072

 

In the Matter of

MARVIN & PALMER ASSOCIATES, INC.,
DAVID F. MARVIN,
MACTHOM ASSOCIATES, INC. and
THOMAS E. DUBIS

ORDER INSTITUTING PUBLIC PROCEEDDINGS, MAKING FINDINGS, IMPOSING REMEDIAL SANCTIONS, AND ISSUING CEASE-AND-DESIST ORDER

 

I.

 

The Securities and Exchange Commission (“Commission”) deems it appropriate and in the public interest to institute public administrative proceedings pursuant to Sections 203(e), (f) and (k) of the Investment Advisers Act of 1940 (“Advisers Act”), against Marvin & Palmer Associates, Inc. (“M&P”), David F. Marvin (“Marvin”), MacThom Associates, Inc. (“MacThom”) and Thomas E. Dubis (“Dubis”)(collectively “Respondents”).

 

In anticipation of the institution of these proceedings, each of the Respondents has submitted an Offer of Settlement (“Offer”) to the Commission, which the Commission has determined to accept. Solely for the purpose of these proceedings and any other proceedings brought by or on behalf of the Commission or in which the Commission is a party, and without admitting or denying the findings contained herein, except for the jurisdiction of the Commission over them and over the subject matter of this proceeding, which is admitted, Respondents consent to the issuance of this Order Instituting Public Proceedings, Making Findings, Imposing Remedial Sanctions, and Issuing Cease-and-Desist Order (“Order”) and to the entry of the findings, cease-and-desist order, and remedial sanctions set forth below.

 

Accordingly, IT IS ORDERED that proceedings pursuant to Sections 203(e), (f) and (k) of the Advisers Act be, and hereby are, instituted.

 

II.

 

On the basis of this Order and the Offers submitted by the Respondents, the Commission makes the following findings:

 

RESPONDENTS

 

A.Marvin & Palmer Associates, Inc., incorporated and located in Wilmington, Delaware, has been registered with the Commission as an investment adviser since August 1986. As of March 11, 1999, M&P had approximately 62 clients and $7.6 billion in assets under management. M&P’s clients are primarily large institutional investors.

 

B.David F. Marvin, age 58, resides in Delaware and is Chairman, Chief Executive Officer and 50 percent owner of M&P. Marvin is the largest shareholder of M&P and is responsible for the overall management of the firm.

 

C.MacThom Associates, Inc., located in Kent, Ohio, was formed in 1996 and is wholly owned and operated by Thomas E. Dubis. The firm was ostensibly formed for the purpose of providing research services to M&P. At no time has MacThom been registered with the Commission as a broker-dealer or an investment adviser.

 

D.Thomas E. Dubis, age 58, resides in Kent, Ohio.

 

INTRODUCTION

 

E.This proceeding involves the failure of M&P, a registered investment adviser, to disclose to its clients its use of at least $920,000 in soft dollars derived from a directed brokerage arrangement with a registered broker-dealer (“Broker”) in violation of provisions of the Advisers Act. The term “soft dollars” generally describes an arrangement whereby an investment adviser uses commission credits generated by securities trades executed in advisory client accounts to pay for research, brokerage, or other products, services, or expenses.

 

THE SOFT DOLLAR ARRANGEMENT

 

F.Since 1991, M&P has maintained a soft dollar arrangement with the Broker. Pursuant to the arrangement, M&P receives $.50 in soft dollar credits for each $1.00 in brokerage commissions directed to the Broker.

 

G.In February 1996, at Marvin’s behest, M&P directed the Broker to begin paying invoices submitted by MacThom, ostensibly for research performed by MacThom for M&P. In fact, MacThom conducted only a small amount of research, with a total value of $63,000 during the relevant time period. Most of the soft dollar payments were used by MacThom to compensate Dubis, MacThom’s principal and a close friend of Marvin, as well as the family of a deceased business associate and friend of Marvin, for their efforts in making introductions and referrals to M&P in its early years. From February 1996 through August 1998, the Broker paid $920,000 to MacThom, and MacThom and Dubis paid $635,000 of this amount to this family. With the exception of the research valued at $63,000, the payments to MacThom provided no benefit to the clients of M&P whose commissions generated the soft dollars used to make the payments.

 

M&P’S FAILURE TO DISCLOSE THE SOFT DOLLAR ARRANGEMENT

 

H.Neither the existence nor the terms of the soft dollar arrangement were disclosed to M&P’s clients in their advisory contracts or otherwise. Furthermore, M&P failed to amend its Form ADV after directing the Broker to begin paying invoices from MacThom and the arrangement was never disclosed in M&P’s Form ADV in effect between February 1996 and July 1998, the period during which the arrangement was in effect.

 

I.M&P failed to disclose the types of products and services it received pursuant to its soft dollar arrangement in response to Item 12 of Part II of the Form ADV, which requires registered investment advisers to describe the factors considered in selecting brokers, including the products, research and services obtained, and any procedures used to direct client transactions to a particular broker in return for products or services.

 

J.From February 1996 to July 1998, M&P’s Form ADV reflected a “no” answer in response to Part II Item 13.A., which asked whether the adviser “receives some economic benefit (including commissions, equipment or non-research services) from a non-client in connection with giving advice to clients.” In view of its soft dollar arrangement with the Broker, and the uses to which the payments were put, this response was false.

 

K.During the period in which the arrangement was in effect, M&P amended its Form ADV on at least eight occasions. Marvin reviewed and signed all but one of M&P’s Forms ADV and amendments filed with the Commission.

 

III.

 

LEGAL ANALYSIS

 

A.An investment adviser has a duty to disclose to clients all material information which might incline an investment adviser consciously or unconsciously to render advice which is not disinterested. SEC v. Capital Gains Research Bureau, Inc., 375 U.S. 180, 191-92 (1963). A fact is material if there is a substantial likelihood that a reasonable investor would consider it important. Basic, Inc. v. Levinson, 485 U.S. 224, 231-32 (1988).

 

B.Soft dollar arrangements are material because of the potential conflict of interest arising from an adviser’s receipt of some benefit in exchange for directing brokerage on behalf of client accounts. See Kingsley, Jennison, McNulty & Morse, Inc., 55 SEC Docket 2434, 2441 (Dec. 23, 1993);Interpretive Release Concerning the Scope of Section 28(e) of the Securities Exchange Act of 1934, Exchange Act Release No. 23170, 35 SEC Docket 905, 909 (Apr. 23, 1986) (“1986 Soft Dollar Release“).

 

C.Moreover, disclosure of soft dollar arrangements is specifically required by Form ADV.1 See Oakwood Counselors, Inc., Advisers Act Release No. 1614, 63 SEC Docket 2485 (Feb. 10, 1997); S Squared Technology Corp., Advisers Act Release No. 1575, 62 SEC Docket 1560 (August 7, 1996). Form ADV embodies mandatory disclosure requirements to ensure that material information regarding brokerage placement practices and policies are disclosed to investors. See Investment Adviser Requirements Concerning Disclosure, Recordkeeping, Applications for Registration and Annual Filings, Advisers Act Release No. 664 (Jan. 30, 1979); Disclosure of Brokerage Placement Practices By Certain Regulated Investment Companies and Certain Other Issuers, Advisers Act Release No. 665 (Jan. 30, 1979) (“1979 Soft Dollar Release“).

 

D.Items 12 and 13, and Schedule F, of Part II of Form ADV require registrants to disclose soft dollar arrangements with broker-dealers. For investment advisers who have discretionary authority to select the broker-dealers to be used to execute trades in client accounts, Item 12.B. requires a description of the factors considered in selecting brokers and determining the reasonableness of their commissions. Further, Item 12.B. requires advisers to describe the “products, research and services” given to the adviser or related persons, if the value of such “products, research and services” is a factor in selecting broker-dealers.2 Item 13 requires an investment adviser to disclose and describe any arrangement whereby it either receives an economic benefit from a non-client in connection with giving advice to clients or directly or indirectly compensates any person for client referrals.3 These disclosure requirements are designed to “assist clients in determining whether to hire an adviser or continue a contract with an adviser, and permit them to evaluate any conflicts of interest inherent in the adviser’s arrangements for allocating brokerage.” Kingsley, 55 SEC Docket at 2441-42; See S Squared, Advisers Act Release No. 1575, 62 SEC Docket 1560.

 

VIOLATIONS OF SECTIONS 206(1) AND 206(2) OF THE ADVISERS ACT

 

E.Sections 206(1) and (2) prohibit an investment adviser from employing any device, scheme, or artifice to defraud clients or from engaging in any transaction, practice or course of business that operates as a fraud on clients. Sections 206(1) and (2) establish a fiduciary duty for investment advisers to act for the benefit of their clients. Transamerica Mortgage Advisers, Inc. v. Lewis, 444 U.S. 11, 17 (1979). An investment adviser’s failure to disclose its soft dollar practices violates Sections 206(1) and 206(2). Renaissance Capital Advisors, Inc., Advisers Act Release No. 1688, 1997 SEC LEXIS 2643 (Dec. 22, 1997) (Sections 206(1) and 206(2));Oakwood, Advisers Act Release No. 1614, 63 SEC Docket 2485 (Sections 206(1) and 206(2)); S Squared, Advisers Act Release No. 1575, 62 SEC Docket 1560 (Section 206(2)). Scienter is an element of a Section 206(1) violation. Steadman v. SEC, 603 F.2d 1126, 1134 (5th Cir. 1979). Proof of scienter is not required to establish a violation of Section 206(2). SEC v. Capital Gains Research Bureau, Inc., 375 U.S. at 195.

 

F.M&P willfully violated Sections 206(1) and (2) by making materially false statements and omissions in M&P’s Form ADV and by failing otherwise to disclose to its clients that M&P was using soft dollar credits to pay non-research expenses.

 

G.Marvin willfully aided and abetted and caused M&P’s violations of Sections 206(1) and (2) by knowingly or recklessly making materially false and omissive statements in M&P’s Form ADV and by failing otherwise to disclose to M&P’s clients that M&P was using soft dollar credits to pay non-research expenses.

 

H.MacThom and Dubis caused M&P’s violations of Sections 206(1) and (2) by knowingly participating in a course of conduct which they knew or should have known was a violation of M&P’s fiduciary duty to its clients.

 

I.As a result of the conduct of M&P, Marvin, MacThom and Dubis, M&P and MacThom were unjustly enriched by $857,000.

 

VIOLATIONS OF SECTION 207 OF THE ADVISERS ACT

 

J.Section 207 of the Advisers Act makes it unlawful for any person willfully to make any untrue statement of material fact in any registration application or report filed with the Commission or willfully to omit to state in any such application or report any material fact required to be stated therein.4 A person violates Section 207 by filing false amendments to Form ADV. Stanley Peter Kerry, Advisers Act Release No. 1550, 61 SEC Docket 431 (January 25, 1996).

 

K.M&P’s “no” answer to Item 13.A. in its Form ADV in effect from February 1996 forward was false. M&P was in fact receiving an economic benefit from Broker, a non-client, in the form of soft dollar credits and payments to MacThom for M&P’s benefit. M&P’s response to Item 12.B. in its Form ADV in effect from February 1996 was misleading in that the response failed to disclose that M&P was receiving non-research services from Broker in return for directing client brokerage.

 

L.M&P’s omissions and false and misleading disclosures regarding its soft dollar arrangement were material.

 

M.M&P and Marvin willfully violated Section 207 in that they made untrue statements of material fact in M&P’s Form ADV and failed to disclose in M&P’s Form ADV the existence of the soft dollar arrangement and the non-research services received from the Broker.

 

IV.

 

Based on the foregoing the Commission finds that:

 

A.M&P willfully violated Sections 206(1), 206(2) and 207 of the Advisers Act.

 

B.Marvin willfully violated Section 207 of the Advisers Act and willfully aided and abetted and caused M&P’s violations of Sections 206(1) and 206(2) of the Advisers Act.

 

C.MacThom and Dubis caused M&P’s violations of Sections 206(1) and 206(2) of the Advisers Act.

 

V.

 

In view of the foregoing, the Commission deems it appropriate to accept the Respondents’ Offers of Settlement.

 

Accordingly, IT IS HEREBY ORDERED that:

 

A.M&P shall be, and hereby is, censured;

 

B.M&P shall cease and desist from committing or causing any violation and any future violation of Sections 206(1), 206(2) and 207 of the Advisers Act;

 

C.M&P and MacThom shall, jointly and severally, within 30 days of the entry of this Order, pay disgorgement and prejudgment interest in the total amount of $976,980 to the United States Treasury. Such payment shall be: (A) made by United States postal money order, certified check, bank cashier’s check or bank money order; (B) made payable to the Securities and Exchange Commission; (C) hand-delivered or mailed to the Comptroller, Securities and Exchange Commission, Operations Center, 6432 General Green Way, Alexandria, Stop 0-3, VA 22312; and (D) submitted under cover letter that identifies M&P and MacThom as Respondents in these proceedings, and the file number of these proceedings, a copy of which cover letter and money order or check shall be sent to Ronald C. Long, District Administrator, Philadelphia District Office, Securities and Exchange Commission, 601 Walnut Street, Suite 1120E, Philadelphia, PA 19106;

 

D.M&P shall, within 30 days of the entry of this Order, pay a civil money penalty in the amount of $50,000 to the United States Treasury. Such payment shall be: (A) made by United States postal money order, certified check, bank cashier’s check or bank money order; (B) made payable to the Securities and Exchange Commission; (C) hand-delivered or mailed to the Comptroller, Securities and Exchange Commission, Operations Center, 6432 General Green Way, Alexandria, Stop 0-3, VA 22312; and (D) submitted under cover letter that identifies M&P as a Respondent in these proceedings, and the file number of these proceedings, a copy of which cover letter and money order or check shall be sent to Ronald C. Long, District Administrator, Philadelphia District Office, Securities and Exchange Commission, 601 Walnut Street, Suite 1120E, Philadelphia, PA 19106;

 

E.M&P shall comply with its undertakings as specified in its Offer of Settlement to perform and implement the following:

 

1.Within 60 days of the entry of this Order, M&P will revise its procedures manual to include a section setting forth policies and procedures regarding soft dollar arrangements with broker-dealers. Included in these procedures will be the requirement that all soft dollar arrangements be approved by in-house counsel employed at M&P. M&P will hold a mandatory meeting with its employees to review policies and procedures including those relating to soft dollar arrangements. Attendance at the meeting will be recorded and a copy maintained in the files of M&P.

 

2.Within 30 days of the entry of this Order, M&P will file with the Commission and provide each of its advisory clients an amended Form ADV disclosing all material terms of any soft dollar arrangement it has with any broker-dealer;

 

3.Within 30 days of the entry of this Order, M&P will provide a copy of this Order to all of its current clients;

 

4.Within 60 days of the entry of this Order, M&P will file an affidavit with the Commission’s staff, addressed to the attention of the District Administrator of the Commission’s Philadelphia District Office, 601 Walnut Street. Suite 1120E, Philadelphia, PA 19106, setting forth the details of its compliance with the undertakings set forth in subparagraphs E.1., 2. and 3. above;

 

5.For a period of one year after the entry of this Order, M&P will provide a copy of this Order to all of its prospective clients;

 

6.One year from the entry of this Order, M&P will file an affidavit with the staff of the Commission certifying its compliance with subparagraph E.5. above.

 

IT IS FURTHER ORDERED that:

 

F. Marvin shall be, and hereby is, censured;

 

G.Marvin shall cease and desist from committing or causing any violation and any future violation of Sections 206(1), 206(2) and 207 of the Advisers Act;

 

H.Marvin shall, within 30 days of the entry of this Order, pay a civil money penalty in the amount of $25,000 to the United States Treasury. Such payment shall be: (A) made by United States postal money order, certified check, bank cashier’s check or bank money order; (B) made payable to the Securities and Exchange Commission; (C) hand-delivered or mailed to the Comptroller, Securities and Exchange Commission, Operations Center, 6432 General Green Way, Alexandria, Stop 0-3, VA 22312; and (D) submitted under cover letter that identifies Marvin as a Respondent in these proceedings, and the file number of these proceedings, a copy of which cover letter and money order or check shall be sent to Ronald C. Long, District Administrator, Philadelphia District Office, Securities and Exchange Commission, 601 Walnut Street, Suite 1120E, Philadelphia, PA 19106;

 

I.MacThom and Dubis shall cease and desist from causing any violation and any future violation of Sections 206(1) and 206(2) of the Advisers Act.

 

By the Commission.

Jonathan G. Katz
Secretary

 


 

FOOTNOTES

 

1 The “safe harbor” provided by Section 28(e) of the Securities Exchange Act of 1934 (“Exchange Act”) does not excuse an investment adviser from these disclosure obligations. The safe harbor protects an investment adviser only from charges of breach of fiduciary duty for failing to obtain the lowest available commission rate where the amount of commission is reasonable in relation to the value of brokerage and research services provided. 1986 Soft Dollar Release, 35 SEC Docket at 907.
2 See 1986 Soft Dollar Release, 35 SEC Docket at 909. There is a presumption that receipt of non-research and non-brokerage products or services, except where nominally valued, is a factor in the selection of brokers. 1979 Soft Dollar Release at n.6.
3 The 1986 Soft Dollar Release noted the relevance of Form ADV, Part II, Item 13 to soft dollar disclosure. 35 SEC Docket at 909 n.32.
4 Section 204 of the Advisers Act and Rule 204-1 thereunder require periodic filing and amendment of Forms ADV by investment advisers. Pursuant to Rule 204-1(d), a Form ADV or an amendment thereto is a “report” within the meaning of Section 207.

 

http://www.sec.gov/litigation/admin/ia-1841.htm

 


 

Modified:10/01/1999

 

witch
Content, Image and interview courtesy of Delaware Politics.Net

In an effort to repeat their past glory, Sher Valenzuela has taken Christine O’Donnell’s new mantle… She has become the new Republican “Prima Donna” and the new “Great Attractor”…

I believe it was Al Mascitti who said it on Tuesday… What do Christine O’Donnell and Mike Protack have in common? There was never an office they DIDN’T run for…. I believe he called them political opportunists, and I will use that word today…

I’ll let Sher herself explain her opportunism in her own words….

“this is the first chance we (republicans) have to win in twenty years and I could not let it slip away.” (notice nothing about being a…. treasurer?)

After a chat with State Republican Chairman Charlie Copeland in October, Mrs. Sher Valenzuela pondered running for the position of State Treasurer, (notice nothing about being a …… treasurer?)

“No one was saying anything different or speaking up for our conservative values”, (notice nothing about being a ….. treasurer?)

She was also unhappy that the other GOP candidate is perceived by her not to have an appreciation for the state’s dependence on Casinos… (notice nothing about being a….. treasurer?) Anybody notice a trend here?

“I think the best qualifications for this office in terms of what we need to bring to the arena, is business background. This office should be involved in economic development. We should be looking to build our economic future,” … (Hello… it’s a treasury office, not a governor’s race… Quick question: do you even know what a Treasury Officer does?)

She further states that two of our top ten revenue sources include casinos and unclaimed property, and that both are unreliable.“One of the focuses of the office should be calling attention to the fact that some of our top revenue sources are unreliable and developing more reliable revenue through economic growth,” So getting rid of half a billion dollars, to make that up on a tax rate of 6%, we need salary income growth of $8.3 billion a year covering that short-fall. At a job rate of $50,000/year we would need to hire 166,000 people and put them to work… Currently there are 26,000 listed as unemployed, so we would need to import 140,000 people into this state in one year to do what Sher says she wants to do…

Everything revolves around that economic engine. Hopefully people know that I am not a fly-by-night person seeking office. I am not a person with baseless political aspirations, but the key to getting our state back on track is reducing unnecessary regulation and incubating new businesses” Yeah, how well did that work in the Bush years?

“We don’t need people in office acting like they are smarter than the people they serve. Ken Simpler (Valenzuela’s opponent) was working with a Democratic Official’s son to turn the Seashore State park into a casino location, What would Democrats do with that? ”

“more jobs, less government. I don’t know why the chief financial officer can’t go in with sleeves rolled up to reduce regulation and offer new ways to have sustainable revenue through economic development.” Sher, read the Job description….

Our education process will also include the state’s top ten revenue drains ????? (like education? like highways?) Does she think she does the state budget instead of the governor? ?????

Valenzuela states that she will be an advocate of cutting taxes and reducing the size of government, while unleashing Delaware’s economic engine so the people of Delaware have sustainable sources of revenue.

Now, where have we heard this before? Where someone who shoots from the hip challenges a methodical thoughtful person in a Republican Primary and hits them over the head with a brickbat as soon as they pay the filing fee? Familiar?

Let us not bring up the gigantic contradiction… That elephant in the room here…. She’s for less government, unless they are guaranteeing millions of dollars in loans to her business or contracting with her business to the tune of millions as well. She literally wrote a book about how to exploit loopholes and get government money. Don’t believe me? She’s even selling it on her campaign website!?

Ms. Valenzuela criticizes Mr. Simpler because he was willing to invest his “OWN” money in casinos. I guess if he had gotten a government grant it might have been different…

Furthermore In Sheryl Valenzuela’s world Republicans are never to associate with Democrats, much less they are not to do business with Democrats, and certainly not, if this includes their children.

“Hopefully people know that I am not a fly-by-night person seeking office.” Naa! Why would they think that? You only woke up on the morning of the last day for filing and jumped in a race that had a declared candidate, forcing a primary…….

We have a new Christine O’Donnell who is running: because she thinks she can win….

Did anyone else notice there was nothing about being …… a treasurer?

Now, listen to her opponent…. Ken Simpler…..

“When I began exploring this race, I began with a premise that a two billion dollar portfolio should be managed by someone with experience managing a billion dollar portfolio.”

Sometimes doing things Simpler, is best.

The treasurers debated today. Here is one account.… Here another and better account

Debates at the small end of the political spectrum are fun to watch. Like two fat ladies wrestling in mud, their blows are thrown with such earnest, but hit wildly off their mark… Still it’s enough spectacle making it hard for one to turn away….

Overall, it was a draw… One’s arguments will resonate if you are already in agreement with those arguments. One’s arguments will slide like Gordan Ramsey’s food off of Teflon, if you aren’t…. What you believed when you came in, is what you believed when you came out….

One thing was clear, however. if you support the upper class or 1%… Barney like Carper and Markell and Carney, is your man. If you would rather give an edge to the 99%, stick with Flowers…..

A bill was placed on the docket to change Delaware Law.  It was supposed to slip through the last minute when no one was watching.    That is Blevins SB 151 regarding the Treasury…   Since it was a surprise, a lot of hoopla as been thrown  in the fire by pundits reacting to the impact of first impressions.   In their defense that was all they had to go on…

Due to time constraints this investigation will take a series of small steps, probably spread across Delaware’s official blog circuit, with help from Starkey of the News Journal

But to back up the word coup in my title,  I first want to show you how the original language was written then show you how it looked with the changes after SB 151.  Of course this was stated as necessary to keep the state treasure in line, a ploy that El Som and Cassandra seem to have swallowed hook, line and sinker.

First the original bill:

For those who follow along (you all are great) here is the passage number  Title 29; 2716(a)(2)

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(1) Require as a condition to any deposit of such funds in any state or national bank or savings and loan institution that such deposits be continuously and fully secured by direct general obligations of or obligations the payment of the principal and interest on which are unconditionally guaranteed by the United States of America or other suitable obligations as determined by the Board;

(2) Require that the selection of financial institutions to provide banking and investment services pursuant to this section be conducted on an open and competitive basis; and

(3) Require that temporary clearing accounts as well as major disbursement accounts be established in a bank or banks whose principal office is located within the State.

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That was the original piece of legislation.  Patty’s bill seeks to amend the section 2 of that piece, the embolden area.  From SB 151…

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(2) Require that the selection of financial institutions to provide banking and investment services pursuant to this section be conducted on an open and competitive basis as defined by the Board.; It shall be the responsibility of the Board to approve the selection of each of the said financial institutions by a majority vote of the members of the Board. The Board, by a majority vote of its members, shall be responsible for setting the policy as to the allocation between short and long term investments and the allocation of funds to the respective financial institutions selected through the open and competitive process; and

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Notice a “lot” of new language. In the synopsis this was sold as a clarification of the responsibilities of the board and the trimming of the responsibilities of the Treasurer. Instead, in what is now typical Markell modus of operandi, this if more of a surreptitious law-change than a clarification.

Previously the directive was this should be done in on an open and competitive basis. The previous directive specifically states this further down: 2716 (e)(1)

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The investment of money belonging to the State shall be made by the State Treasurer in accordance with policies established by the Board and subject to the terms, conditions and other matters, including the designation of permissible investments relating to the investment of the money belonging to the State,

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It is obvious to all that the existing law separates the Treasurer specifically out from all other board members when it comes to the investment of the state’s finances.

And that was really all existing code says in regards to the investment portfolio of the state’s money.

But, the new law, the one proposed by Blevins titled SB 151, makes HUGE changes. Now the board must make that decision. The board which according to Title 29; 2716(c)(4):

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The Board shall meet as often as shall be necessary to properly discharge its duties; provided, however, that the Board shall meet at least 2 times annually; and provided further, that the State Treasurer or the Chairperson of the Board shall be authorized to call special meetings of the Board.

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and 2716 (c)(2)

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a quorum of 5 members shall be necessary to hold a meeting of the Board.

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and 2716 (d)(5)

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The use of teleconferencing or videoconferencing is authorized for use in conducting meetings of the Cash Management Policy Board.

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Even now under existing policy only 3 people out of nine, if they time their conference-call correctly, can decide the future investment strategy of this state. Patty Blevin’s law would now give those three people (whomever they might be) unprecedented power and remove the current oversight of the only elected official responsible to the public.

“Coup” is the proper term for it.