St. Petersburg hires lawyer to see if it can sue Wachovia

ST. PETERSBURG — The city has hired a private law firm to investigate whether it can sue an investment company over $130-million it suspects was mismanaged.

St. Petersburg attorney John Kiefner will analyze all investments purchased on the city's behalf by Wachovia Securities of St. Louis over the last six years.

The city directed Wachovia Securities to invest its money on a short-term basis, said Jeff Spies, the city's finance director.

But in March, he said, the city discovered the firm had purchased investments with terms longer than 12 months with many companies ensnared in the ongoing economic crisis, including Lehman Bros., Bear Stearns, Fannie Mae and CitiBank.

Mayor Rick Baker then told Spies to cut ties with Wachovia Securities and cease all securities investments, Spies said. The early withdrawals cost the city $800,000, Spies said.

Spies said two long-term investments totaling $30-million have yet to be resolved and the outlook is bleak. The companies involved? CitiBank and Lehman Bros.

Although the city's contract with Wachovia Securities did not specifically define a maximum investment period, Spies said investments longer than one year are clearly not short-term.

This is the first time the city has retained an outside counsel to help with its investments, said city attorney John Wolfe.

Wolfe said he hired Kiefner, who represents both investors and brokers in securities cases, based on personal recommendations. Wolfe can retain private legal assistance at a cost of up to $5,000 without the City Council's approval. Kiefner will charge the city $325 an hour.

"If he determines that there is a cause for action against someone, we would naturally file a lawsuit," Wolfe said.

Comments on this article

by fiscal responsibility	Dec 10, 2008 10:46 PM
Where else did Wachovia push Lehman Bros failing paper? Class action lawsuit?

by fiscal responsibility	Dec 10, 2008 10:42 PM
Where else di Wachovia push Lehman Bros failing paper? Class action lawsuit?

by fiscal responsibility	Dec 10, 2008 10:42 PM
Assistant City attorney Badgely approved of the City's security lending agreement. The time to hire a securities attorney is BEFORE the City signs the contract not after the finance director gambled with the City's assets!

by Clyde	Dec 10, 2008 10:42 PM
There is something seriously wrong when a city (which cannot keep thugs out of BayWalk and thugs off the street) uses outside help. They have an attorney, use him or her. $325 an hour means we really should cut the county in half or thirds.

by JR	Dec 10, 2008 10:41 PM
Russ, the city gets a lump of money when property taxes come in and pay that out all year long for salaries, etc. They can't let it sit in a checking account making no return, that'd be mismanagement. So they invest in short term, very safe things.

by Sally	Dec 8, 2008 2:19 PM
No attorney on the planet is worth $325 an hour and this firm is going to clean the taxpayers' clock. The law firm will be the only winner here. Let the city's law department handle this by hiring a few associates for annual pay and benefits! Wise Up

by Jerome	Dec 8, 2008 2:19 PM
Ick on all of them. St. Pete jumping in to annex something on Tierra Verde so builders can do what they do best, build....on a faulty economy, no tourists coming....and a screwed populace. Now, someone wants to sue Wachovia? What are those people?

by Reader	Dec 8, 2008 2:19 PM
Russ, read the article again. It was 30 mil not 130.

by since1962	Dec 8, 2008 11:42 AM
"Although the city's contract with Wachovia Securities did not specifically define a maximum investment period" Was assistant city attorney Winn getting first or second DUI when this contract was drawn? Taxpayers will now pay for merit less lawsuit.

by Inwonder	Dec 8, 2008 11:40 AM
If you want short term investing try Las Vegas, Investing doesn't get any shorter than there, Otherwise let Wachovia do their job.

by Glenn	Dec 8, 2008 11:40 AM
Why are we paying a outside lawyer? Isn't this what we pay the city attorney for??

by tony	Dec 8, 2008 11:17 AM
Relax dude. After the government bail out and payoffs to the fat cat CEO's all will be set right with the world again. Then reinvest in Wal Mart as the Clintonators are back in power and going to feed the bottom feeders.

by Mary	Dec 8, 2008 11:03 AM
The cause of our financial crisis is simply greed that has been going on for so many years, the inevitable results have finally caught up. All financial institutions should be investigated - in depth. Also investigate the cost of forced insurance.

by Mike	Dec 7, 2008 9:50 AM
Investing government funds is nothing new. Almost every government body does it and has for many years. Although it does seem true that they only complain about it when they are on the losing side of the gamble.

by woods2001	Dec 7, 2008 9:50 AM
Another good reason for business owners to move their banking relationships to Synovus Bank.

by Josie	Dec 7, 2008 9:50 AM
So why are we paying for a city lawyer when he can't do the job?

by kipp	Dec 7, 2008 9:50 AM
Buy & hold strategy hasn't worked for 20+ years. Mutual funds are for suckers.If you are not an active trader get out of the market. Buy CDs. WallSt is fixed!

by Allan	Dec 7, 2008 9:50 AM
Adam Smith is full of it. Brad didn't say investing in stocks was for the "short term." He said it was a gamble. And he's right. Adam's simply mouthing the same -- b.s., as Brad rightly called it, that's prevailed the past roughly 30 years.

by Dave	Dec 7, 2008 9:50 AM
Funny thing is that they used Wachovia. We have a local investment firm in Raymond James. Way to support the local econemy! Why Iam i not suprised?

by Carlos	Dec 7, 2008 9:49 AM
So much for the Republican concept of free market solutions for every facet of living.

by Russ	Dec 7, 2008 9:49 AM
Why is no one asking... Why does the city have $130 Million to put in the stock market? Where's this money from? Why not pay off the Dome. That's a guaranteed investment. We'll save the interest we would be paying for the next 15 years.

by Kelly	Dec 7, 2008 9:49 AM
As I have repeatedly said ... what a bunch of arrogant, self-seeking morons!! Says alot for the people who keep voting them in!!

by John	Dec 5, 2008 10:01 PM
Am I the only one who didn't know the city is gambling with taxpayers money?

by Brian	Dec 5, 2008 4:47 PM
HELLO-SIX YEARS Wachovia has been trading-SIX YEARS of confirms, statements etc. Where was the crying when the market was booming 2-3 years ago? Only now that the market is tanking is there claims of fraud. the fraud is the lack of due diligence by

by Adam Smith	Dec 5, 2008 4:41 PM
Stock market is not for short term investing BRAD! We all that, were have you been? If you are not investing long term, to do not look to the markets. Following the herd with always leave you behind. You have to get out in front, that simple.

by Ed	Dec 5, 2008 4:41 PM
$325 an hour seems rather top-drawer, eh?

by Other JR	Dec 5, 2008 4:19 PM
12 months is by no means "short term", JR. Short term investing in this context normally refers to AAA debt with terms of 1-6 months. It's used for things like when you collect property tax in December but need to pay payroll all year.

by Allen	Dec 5, 2008 4:18 PM
Sue, Sue, Sue - New attorney gets to decide if he gets to bill the city LOL wonder what he'll decide. Baker and his goons have soiled themselves- the uruhus should give him the mayorship of their enclave, he certainly keeps SPPD off of them BYERICK

by Unbelievable	Dec 5, 2008 4:18 PM
Someone (Spies) certainly received confirmations of purchases and statements. If those transactions did not meet HIS definition of short term, he should have contacted the advisor. Now, that the city lost money, he wants to blame Wachovia! Waaahhhh!

by Been There	Dec 4, 2008 5:20 PM
Good luck with Keifner!!!!!

by JR	Dec 4, 2008 4:51 PM
Like Spies didn't know the investments were risky but high potential. Give me a break. He should be fired, not Wacovia sued. If there was no contract, 12 months seems pretty short term to me when you are investing in companies. FOREST GUMP FOR MAYOR

by fiscal responsibility	Dec 4, 2008 3:56 PM
Who approved of security lending with the City's operational funds? Spies has a history of risky investing and this council is clueless. And, no one has talked about the pension plan losses, yet.

by Allen	Dec 4, 2008 3:17 PM
I dont belive you Brad - you dog looks smarter than you

by Brad	Dec 4, 2008 1:43 PM
seems that all Americans have been coerced into believing, despite history, that the stock market will always be best place to put your money. the market is a gamble and we have been scammed. free market B.S. my dog knows this.

by CBT	Dec 4, 2008 1:03 PM
Let me is I understand this - the city's own lawyers didn't read the fine print and now they want to sue. They should resign and or fired and take Baker with them!