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Probes, Huge Client Losses Beset Broker Jay Goldinger

Finance: Highflying style marked his rise. But two agencies launch inquiries, and a spate of suits is expected.

January 05, 1996|MICHAEL A. HILTZIK and THOMAS S. MULLIGAN | TIMES STAFF WRITERS

"He always said his statement was more accurate than theirs," said one client. "He said, 'Put theirs in a file and pay attention to mine.' "

That was also Goldinger's pitch to PairGain. "There were voluminous, detailed statements from Refco, but the summary statements which you rely on were from Capital Insight," said Charles McBrayer, the company's chief financial officer.

Whether Goldinger's statements misrepresented the nature of the clients' holdings may be one focus of the regulatory agencies' inquiries.

Also at issue, as the Blumenfeld lawsuit suggests, is whether Goldinger racked up excessive commissions by overtrading in the accounts.

PairGain's McBrayer said Thursday that the commission rate Goldinger charged was "ordinary [but] the amount of trades was extraordinary."

Another financial expert familiar with an investor's account said that investor ended up paying Goldinger $1.5 million in commissions on trading that netted a loss of $10 million.

For all that, Goldinger long attracted a wealthy and influential clientele by projecting the air of a guy who couldn't lose.

In the late 1980s, when basketball's Lakers were the hottest act in town, Goldinger would flash a handful of playoff tickets. During the racing season at fashionable Del Mar, Goldinger would rent an oceanfront house near the track and commute to Beverly Hills by helicopter. He once owned the minor league Salinas Spurs baseball team (until he sold it to the brother of former Kansas City star George Brett).

By always having a comment ready when a reporter called, Goldinger turned himself into one of the most frequently quoted analysts of the bond markets. Associates say he collected clippings of articles mentioning him and used them to bolster his legitimacy when trying to land new investment clients.

In addition to cultivating contacts in the press, he ran regular investment seminars that sometimes led to new clients. He pursued leads relentlessly. Charles R. "Red" Scott, former chief executive of Intermark, the predecessor company to Triton Group, apparently began that firm's relationship with Goldinger, whom he may have met through their joint membership in the Young President's Organization, a Southern California club of young executives.

Scott, who also is a director of Pier 1 Inc., may have provided the link that got Goldinger involved with that firm, resulting in a $20-million loss to the company.

Reached by phone this week, Scott said "the lawyers have told me to say nothing to anybody. . . . This thing has been blown up out of all proportion and I don't want to have any comment."

Times staff writer Greg Miller in Orange County contributed to this story.

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