Bully for Us

Barron's runs a hit piece on Donald Trump.

In 1990 Mr. Trump pressured mid-size brokerage house Janney Montgomery Scott into firing its "obscure gaming-securities analyst, Marvin Roffman" because the latter was skeptical about the finances of the Taj Mahal casino. Mr. Roffman was fired by Janney in March, 1990, just before the casino opened in April. The analyst did his job.

Roffman had been advising investors to sell the bonds virtually from their date of issue all the way up to his firing, when the bonds had sunk to around 80. He reasoned that the Taj couldn’t earn enough revenue to cover the interest.

And he proved right. The Taj defaulted on its first interest payment in October 1990, driving the bonds’ price down into the 20s. This pushed the Taj into filing a Chapter 11 bankruptcy reorganization the following spring.

Mr. Hoffman was "proved right," but his career in the securities industry was over. (He did receive at least $750,000, less legal expenses, from settlement of lawsuits against Trump and Janney.) In the end Marvin Roffman

became quite successful. He founded a financial advisory firm in 1991 that ran more than $500 million by 2007 at his retirement. The 76-year-old now lives in a 15,000-square-foot mansion featuring extensive gardens and 40 rooms in the Delaware resort town of Rehoboth.

Takeaways:

1) It restores one's faith in cosmic justice that Marvin Roffman achieved great financial success. He believed in his analysis and wouldn't back down when faced by an opponent with overwhelming resources. Just because it worked out for him, however, doesn't excuse the actions by players in 1990.

2) When the chips(!) were down, Janney's cowardice was reprehensible.

3) Donald Trump was, and probably still is a bully who will run over little people to get what he wants. Barron's has been criticized for showcasing a 25-year-old incident, but character very rarely changes and the story, IMHO, is still relevant.

4) That said, we're not voting for Pope but for President. We've tried the "retreat-because-the-bad-guys-are-on-the-wrong-side-of-history" [very Hegelian, n'est-ce pas?] approach, and would-be emperors across Eurasia have rushed into the power vacuum.

The time to get tough is at hand.

[Disclosure: Donald Trump is not my first choice for President.]