WALL STREET JOURNAL FEATURES BAIRD v. RED GRANITE

WALL STREET JOURNAL Front-Pages R. W. Baird

“Brokerage Houses Attack,” Screams Headline

Purcell Portrait on P. C1

Baird Spokesperson Claims Defendants Untruthful

By Michael Horne

The ongoing dispute between Robert W. Baird & Co., Inc. and Red Granite Advisors, LLC has made its natural progression to page C1 of today’s Wall Street Journal. In an article entitled, “The Breakup: When Brokerage Houses Attack,” staff writer Susanne Craig recounted the charges and countercharges swirling in a lawsuit filed by the old-line Baird against startup Red Granite, a story Milwaukeeworld has followed from the beginning.

In the Wall Street Journal story, readers were introduced to Baird CEO Paul Purcell with these words, “For years, Paul Purcell operated in the shadow of his brother Phil, the former head of Wall Street giant Morgan Stanley.” The Journal article, on the front page of the “Money & Investing” section, includes a portrait of the smiling Purcell. His brother had likewise been immortalized in the Journal’s distinctive stippled-line portrait style. Now mom has a pair of them to hang in her parlor.

Baird is introduced to us as being “a player in the Midwest, but dwarfed by New York firms like Morgan Stanley and Goldman Sachs Group.”

[“You hear that? Wall Street says we’re a player!”]

The article recounts Baird’s take-no-prisoners approach to former employees who split from the firm this spring to form Red Granite. The defection resulted in a loss of many highly desirable institutional clients at Baird, some of which followed the former employees to Red Granite, also based in Milwaukee. Funds under management at Baird dropped precipitously in the wake of the turmoil caused by the defection.

The Journal article goes on to note “the tactics firms use as they try to keep lucrative clients when top employees depart. In this case, rather than quietly file an arbitration claim, Baird filed a lawsuit in state court, throwing its allegations into the open.” (Boy, did they ever, with over 60 items in the case file thus far.)

We hear once again that the Red Granite defendants had warned, while still at Baird, that some employees there did not have the required securities licenses. The Wall Street Journal readers read, as milwaukeeworld.com readers first did, that an angry Purcell told them “…it would have been much better to discuss this before you start papering the file for the regulators.”

[[It did not go on to continue the quote, as milwaukeeworld did back in August. The remainder of Purcell’s warning read:

“and they [the regulators] rotate backwards with great precision and then some of those words in there, if they ended up in the front page of The Wall Street Journal or the New York Times, you wouldn’t feel good, and I guarantee I wouldn’t feel good and you would be very sorry that you had ever said them, I believe, because it wouldn’t be good for your business. In any event a much better way to get our attention, which was to talk to me.”

You can be assured that Purcell, his fear granted, does not feel good today —Ed.]]

The article also quoted Purcell’s dismay at the lack of “team play” by the future Red Granite defendants.

(Readers did not learn that the focus of the defendants’ concern was Mary Ellen Stanek, Baird Advisors Managing Director and Chief Investment officer.)

The article had this to say about Baird’s response to the charges :

“John Rumpf, a Baird spokesman, says the former employees left Baird because of a compensation disagreement and that they have made false allegations to divert attention from their misconduct.

“Mr. Rumpf says allegations that the firm [had] inadequately licensed employees on staff are false.”

(Rumpf did nothing to support his charge against the Red Granite partners such as giving an example of their alleged falsehoods or any evidence whatsoever to back up his claim. There had been no prior accusations that the defendants lied prior to the publication of this story. Mr. Rumpf may have reason to regret his words if the facts are adjudged otherwise.

It would be quite a different matter to say, “we disagree on fundamental points,” or there remains question as to the facts of the case,” or any other appropriate circumlocution, but calling the Red Granite defendants liars might not be adjudged a prudent move in the fullness of time.)

Finally, the article says Purcell had “encouraged each of the employees to talk with the firm’s in-house lawyer to discuss the issue fully.”

As has been mentioned in another posting on this website, Baird’s general counsel, Glenn F. Hackman, who may or may not be the “in-house lawyer” mentioned in the story, is among a number of General Counsels for Wisconsin-based firms who lack Wisconsin law licenses.

Next up in the case: Injunction hearings scheduled for November 16^th and 17^th. A pretrial hearing is scheduled for May 8^th, 2007.

BALLOTS STILL BEING COUNTED IN CITY

As of noon Wednesday, ballots were still being counted for Ward 54, a Brady Street district that votes in the Cass Street School. [See update below -- Ed.] The 1400 ballots allotted to the ward were insufficient for the demand, and the City Election Commission printed out a batch of non-scannable paper ballots. These were then collected in a shopping cart, where hundreds accumulated between the hour of 6:30 p.m., when the originals ran out, and about 7:45 p.m. when a batch of scannable ballots finally materialized for the few remaining voters. Ald. Mike D'Amato was a presence in the polling place, having put out a similar electoral fire at the Maryland Avenue School earlier in the day. As the shopping cart filled with ballots, D'Amato handed out green registration cards to the endless stream of new voters of the ward. He said, good humoredly, that he fully expects to hear the talk radio people mention how D'Amato's iniquitous district is a place where ballots cast for Republicans are tossed into a basket and ground up for cattle bedding, or multiply like amoebae if for Democrats. The facts are more prosaic.
The paper ballots run up by the commission in the emergency are being re-created by Election Commission staff on scannable forms, and then run through the machines, explaining the delay in the count.
The ward voted 3-to-1 Democratic during the 2002 election.

UPDATE: Wednesday, 1:49 p.m. The votes are in at Ward 54. A total of 1,614 ballots were cast, meaning about 200 emergency ballots were cast, which seems right. In the governor's race, Doyle outpolled Green 1,151 to 412 in that heavily-democratic district.
***
Amusing, isn't it, that the Republicans made such a stink in 2004 about Mayor Barrett's profligate ballot printing spree? Especially since the good burghers of Waukesha County, a Republican stronghold, ran out of the precious documents yesterday due to this misplaced economy measure.
***
There is an interesting etiquitte to the closing of the polls, at least as practiced on Cass Street. The head election official stands at the door and announces, "Hear Ye, Hear Ye, The Polls are Closed!" It is an eighteenth-centuryism that is as unlikely to assault the ears of the terrestrial twenty-first centurite as would be "Ahoy!"

--Michael Horne

ELECTION DAY OBSERVATIONS

Updated at 4:00 p.m.
LIBRARY TURNOUT ALREADY TOPS 2002 Number
At 3:50 p.m., the number of votes cast in Wards 60 and 62 at the Central Library was 602, far surpassing the entire 2002 gubernatorial vote there of 477 ballots cast. Furthermore, as of 3:50 p.m., more than 190 potential voters were standing in line at the polling place, registering to vote. As mentioned in a previous post, those exercising their franchise for the first time appeared to be Marquette University students. The two wards produced over 2000 votes in the 2004 presidential election.
--Michael Horne



Updated at 3:15 p.m.
LOVELY WEATHER, ISN'T IT?

[A Special Report from the Meterological Department of www.milwaukeeworld.com]

By Michael Horne
An examination of November election day weather in Milwaukee from 1986 to the current date shows that today is the mildest on record for the period. As of this reporting, the temperature at Mitchell International Airport is 57 degrees. The low this morning was 42 degrees. The last election with weather nearly as good was the presidential election of 2000, also on November 7th. The temperature that day ranged from 39 to 55 degrees. However, that high temperature was reached in the very early morning, before the polls had opened. The thermometer fell throughout the day. The temperature also reached into the fifties in 1994 and 1996. For the most part, however, the weather is in the thirties and forties on Election Day here.
Will this alone affect the vote? The record is mixed. In 2002 (42 degree high) some 1,775,349 Wisconsinites cast their vote in the gubernatorial election. In 1998 (43 degree high) the number was 1,756,014. In 1994 (53 degree high) the turnout was only 1,563,835. The coldest election day in the survey, 1990, (32 low; 42 degree high) also had the lowest turnout, with 1,379,727 voters casting ballots for governor. The Wisconsin State Elections Board is projecting a turnout of 2,000,000 voters, today. If so, that would represent half the state's electorate, the first time more that 50 per cent would have voted since the election of 1970. Will we surpass that milestone? The good weather certainly can't hurt.
--Michael Horne

CITY TURNOUT HIGH

By Michael Horne
By 9:40 a.m., I was the 359th person to have voted at Cass Street School, in the Brady Street neighborhood. "We didn't even have 359 voters all day in the February election," a poll worker at Ward 54 told me. [Presumably she meant April, as there was no February election in the City of Milwaukee in February.] A line of about 7 people registered to vote on the spot, also higher than ordinary, and younger than usual. [The polling place later ran out of ballots. See Wednesday's posting.] Over at the Election Commission in City Hall, the workers were, for the most part, dressed in their finery, as is the custom in that department on election day. In an adjacent room on the fifth floor, about 10 workers fielded a nonstop stream of telephone calls from voters wondering where their polling place was located. At the Milwaukee Public Library downtown at 11:15 a.m., 252 voters had cast their ballots into the machine that counts them for both ward 60 and 62. Last time this combined ward business caused bookkeeping errors that led to all ballots in the city being hand-counted. Apparently, the software problem has been fixed. Yet another thing we will know by the end of the evening.
Ward 60 traditionally has a low turnout, yet is geographically quite large. Its location is what you see around you as you drive on the high rise bridge; its population consists in good part of those you see around you if you happen to be in jail.
Ward 62 encompasses just about 5 blocks between W. Wisconsin Ave. and W. Wells St. around the Marquette University campus. Of the 21 people in line at the Central Library polling place that serves thetwo wards, 14 of them were busy filling out green registration cards. All appeared to be students at the university, which has residence halls in the 62nd ward.

TOUGH LUCK, KARL ROVE: YOU ENERGIZED THE WRONG VOTERS!

I have a feeling if the intent of the right wing zealots to put the anti-gay marriage amendment referendum on the ballot was to energize conservative voters, their ploy may have backfired in the city, judging from what I observe to be a much higher than usual turnout of young people. And they are not voting "yes."
The current generation of first-time voters, at least in the city, do not seem to favor this ridiculous amendment, and have told pollsters they plan on voting "No." (And said the same to me.) Now it looks like they actually have done so. We shall see whether this proves to be the case, and how things work out in the rest of the state.
Recent events have shown people that the Gay people they should fear are not the ones trying to get married, but the ones who are married -- like Rev. Ted Haggard -- or pretend to be straight -- like Rep. Mark Foley.
The political forces that engineered this nationwide-amendment push are as hypocritical as the two aforementioned individuals. If I know a thing or two about closet cases, some most likely have even more than that in common with them.
The question for J B Van Hollen and Kathleen Falk: Will the attorney general's race be won in Milwaukee -- or in Minocqua? [Update: Wednesday -- Minocqua it is. You can vote from a deer stand or a duck blind there.]
--Michael Horne

CLINTON, IN TOWN, RIBS HERB KOHL

Plus: A look at the Financial Results for Herb's Superb Milk Shack, 2006


By Michael Horne

For the Democratic party faithful, the holding of a rallying speech by Bill Clinton in their hometown is like having the bishop fill in for the parish priest at Sunday mass. Hell, it's like having the pope come to town to baptize your firstborn. There is Bill Clinton, and then there are all other politicians, none of whom are as good at connecting with the people.
Clinton worked his magic in Milwaukee Friday, speaking to 3,000 at a public gathering at the Milwaukee Theater and later to a couple hundred at a private dinner in the Hyatt Regency Hotel. At the public rally, Clinton was the featured attraction on the stage. Along with him were such worthies as Governor Jim Doyle, Kathleen Falk, the always-radiant Barbara Lawton, the irrepressible Gwen Moore and Senator Herbert H. Kohl, the latter wearing a blazer with brass buttons. Where in Wisconsin was First Lady Jessica Doyle? Right there, although she can be easy to miss. She was on stage with her husband and sons Gus and Gabe.
About 100 regular and some irregular folks sat in risers on the stage, facing the full house audience, and waving Doyle-Lawton or Herb Kohl signs at appropriate moments as the candidates were introduced. Among the people in the bleachers: Frank Gimbel, the visionary who gave us this theater; Vel Phillips; Julilly Kohler; Enrique Figueroa; Martha Love and others too numerous to mention including cigar merchant John Piette, who recently raised a couple of thousand dollars for the governor as a lark, and is getting into the excitement of the political process. In the audience were such figures as D.A. candidate John Chisholm; Judge Jeff Wagner, fresh from a sentencing; and many students, quite a few too young by far to vote. They were there to cheer on their handsome teacher, Glen Allen, Jr., of Morse Middle School, who was one of the civilians on stage who got to speak a few words before the candidates and the ex-president were introduced.
Of the candidates, Gwen Moore made the best performance, in a symbolism-laden speech in which she advised the audience to git on board the ship of hope. "Your vote is your first-class ticket," she said, adding that she is sick of the Bush administration's "tax cuts and giveaways to people like Paris Hilton."
Things were getting a bit windy onstage and a bit yawny in the audience by the time the last of the political speeches were made, but if Herb Kohl were a soporific (and you can bet your chocolate milk that he was), Bill Clinton was a tonic, and the crowd was his. Clinton wore a dark suit, a white shirt, and a red tie. The hue of the latter habiliment was likely chosen to complement the ex-president's complexion. He is simply the reddest-faced sober man you'll ever see.
He gave a speech pointing out that the country is going in the wrong direction, that he has travelled to 29 states in this campaign, and that the Republicans' extremism will come back to bite them within the course of the week.
He also reiterated a line I had heard him use before, telling us that he was a poor man until he became ex-president. Now that he's rich, they are showering tax breaks on him that he doesn't need. Then, gesturing to Kohl, seated on the bleachers, he said, "I'm not as rich as Herb K0hl. Nobody's as rich as Herb Kohl." Milwaukeeans are not accustomed to talking about Herb's wealth, especially when he's around. For his part, the Senior Senator from Wisconsin fidgeted in his seat like a basketball player who has just been benched by his coach, or sold to the Bucks.
Later, at the closed-to-the-press event at the Hyatt, Clinton gave a more nuanced speech to the folks there, and again mentioned Kohl's wealth. Most likely, Clinton was hitting up Herb for cash, you'd imagine, and a look at the senator's recent campaign filings shows he has been busy lending his campaign considerable jack that he, as a virtually-unopposed shoo-in, does not need for his own campaign. [See sidebar below. -- Ed.]
Bill Clinton told the crowded ballroom that the Republicans are simply too extreme, and that ideology can be constricting, especially when certain things must be done. Clinton reached into his incredible store of facts, telling us that the two European economies most like the United States' were England and Denmark. Those countries have adopted green economic principles, and as a result employment is up, while energy use is constant. He then predicted that green engineering will be the engine of the American economy, since we can no longer afford to finance "both sides of the war on terror," as he put it. We need a green roof on the Hyatt Regency hotel, for example, and energy-efficient windows, and this and that and the next thing.
"Why am I going into all of this detail?" he asked. "Because there are no ideological answers to these problems. You have to know something. ... They asked me what great economic idea I brought to Washington and I said 'arithmetic.'"
The ideologues have put us in a dead-end situation, and their extreme positions are "contradicted by science, philosophy and religion," he said.
While Clinton spoke, Governor Doyle sat on a chair offstage, and watched in wonderment, as did the well-heeled audience.
Among the attendees were Jackie Boynton; Kailas and Becky Rao; hotel owner Gary Grunau; other hotel owner Steve Marcus; JoAnne Anton of the Kohl campaign staff; Randy Nash and others. Jessica Doyle and her son Gus sat at table #1, where Herb Kohl also sat. Herb ate his salad -- except for the cherry tomatoes. Jessica Doyle didn't touch a thing on her plate.

A NOTE ON HERB KOHL'S FINANCES
On November 2nd, the day before the rally, Kohl lent his campaign $250,000. A week before, on October 25th, he sent the campaign $550,000, which followed a half-million dollar loan on October 13th, $125,000 on October 5th, and another $125,000 on October 2nd. He also outright gave the campaign $383,747.55 on September 13th, just two days after the campaign repaid him $1 million he had lent the campaign previously. Why Herb pulled a million out of his campaign only to lend it back -- and then some -- within a few weeks is confounding, especially since his seat is sacrosanct. We'll have to check back later and see where the money went. Let's guess for sure that Hillary Clinton would like her piece of it. Altogether Herb's campaign owes Herb around $5 million.
Also, we have the report of the sales from Herb's Superb Milk Shack, a perennial event of State Fair, sponsored by the senator.
It appears the senator spent $41,087.44 on flavored milk from the Kemp's Dairy in Cedarburg, and another $900 for cups, etc. The State Fair Park rent looked to be around $500, and there were other expenses. The milk sales brought in $30,693 to the campaign, before expenses, so the Milk Shack revenues did reduce the subsidy that Herb had to come up with out of his pocket. But it is still a loss. After all, what does this guy know about selling milk? -- Michael Horne

Election Night Excitement
The place to be on election night is Lakefront Brewery, 1872 N. Commerce St., where Sen. Kohl and other Democrats like Gwen Moore and Jon Richards will gather beginning at 7 p.m. for the evening's drama. The Kohl campaign will supply food and beverage, and after what has been a rather dry electioneering season, it will be quite welcome. The weather is expected to be mild, the crowd is likely to go wild.