Irving H. Picard v. Saul B. Katz et al

Filing 170

DECLARATION of Regina Griffin Completed With Exhibits 31 to 45 in Support re: 162 FIFTH MOTION in Limine To Deem Statements By Sterling Stamos Employees In The Course Of And In Connection With Their Employment By Sterling Stamos As Admissions of The Sterling Defendants.. Document filed by Irving H. Picard. (Attachments: # 1 Exhibit 31, # 2 Exhibit 32, # 3 Exhibit 33, # 4 Exhibit 34, # 5 Exhibit 35, # 6 Exhibit 36, # 7 Exhibit 37, # 8 Exhibit 38, # 9 Exhibit 39, # 10 Exhibit 40, # 11 Exhibit 41, # 12 Exhibit 42, # 13 Exhibit 43, # 14 Exhibit 44, # 15 Exhibit 45)(Sheehan, David)

Exhibit 36

From:

Georgette Wong

To:

Sarnantha Bojo

Subject:

n/a

Date:

09/06/2005 15:39:13 (GMT-05:00)

Georgette Wong

GWong@Sterlingstamos . corn
http:

I /www.

sterlingstamos . corn

zhttp Ilwww. sterlingstamos . corn!>

575 Fifth
New York,
T 212 485
F 212 485

Avenue
NY 10017
4370
4371

2400 Sand Hill Road
Menlo Park, CP 94025
T 650 233 0263
F 650 233 0202

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Attachments:

Bayou Talking Points_DRAFT.doc; imageool .gif

F

ThJ

f-

ExhibitL2

Wit:
Date: k, t.
Leslie Rockwoûd CSR RPR

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POTENTIAL TALKING FOENTS
DRAFT AS OF [DATEI

Original Bayou Talking Points from 8/25/05
Letter to Investors (draft attached)
[Johnny's memo re: Bayou redemption]
[possible questions]

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R. C. AULETTA AND COMPANY, LLC.
59 EAST 54' STREET NEW YORE, NY 10022

TEL [phone]

FOR YOUR APPROVAL
Draft #1

TALKING POINTS TO INVESTORS REGARDING
BAYOU FUND

o

We redeemed our investments in the Bayou Funds ¡n early February 2005.

o

We redeemed because Bayou seemed to be drifting away from ts shortterm trading focus which was the reason we had invested with them.

o We pride ourselves on doing extreme due diligence with

all

our

investments to protect our investors and will continue to do so.

T:\Sterling Stamos\PR\Bayou Comments (8-25-05).doc

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[From 12:01 p.m. today insert final copy here]
September 9, 2005
Sterling Stamos
575 Fifth Avenue, 40th Floor
New York, NY 10017
Dear Partner:

As you know, we called you this week to inform you about Bayou Management LLC
("Bayou"). As we shared with you, we redeemed our investments in Bayou as a result of
an investment style change that we considered unacceptable for our funds. At the time of
our redcmption, our funds were subject to a hold back.
While the possibility of retrieving the outstanding capital still exists, we have decided to
take a conservative approach and write down the outstanding balance as a loss. The
accounts of investment partners who invested with us as of March 1, 2005 will not be
affected, as we were no longer invested in Bayou. Investment partners who wete
invested with Sterling Stamos prior to March 1 will receive restated account balances
from February 2005 forward reflecting the write down. In the event any outstanding
capital is recovered, Sterling Stamos will return a pro rata share of the ftinds to all those
affected.
Guided by our firm's principles of partnership, trust, and service, we will continue to put
our investment partners' interests first. We are concerned by the questions being raised
about Bayou and its management and arc taking action to protect our investment partners
now and in the future.
Please feel free to contact )(X with any questions you may have.
As always, thank you for the privilege of being your investment partner.

Best regards,

Peter S. Stamos
CEO

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[hold for Johnny's memo re: Bayou redemption}

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Possible additional questions:

When did ou know about the lawsuits re ardin Ba ou?
Our answer to Ueda: "I will try and gather more information to address this question.'

What happened: We first learned about the Westervelt family lawsuit against Bayou
last December when we completed background checks on Sam Israel 111 and Dan
Marino.
When did you first make an investment in Bayou'?
Our first investment in Bayou was Oct 1, 2003. (our answer to Ueda that was based on
the Portfolio Team's investment memorandum.)
[According to Finance's inflows and outflows, our actual first investment in Bayou was
April 03. See attached sheets]

How much did Sterling Stamos invest? Total amount invested was approximately
$60M.

Flow much did you invest in each find? Please see attached sheets.
How much do you still have in holdback? The holdback varies per find. In
aggregate, we have approximately $65M in holdback.
What other managers are you concerned with'? How are you making changes to
your portfolio?
[KO please fill in]

What is your due diligence process? Has anything changed in jour process duc to
Bayou?
[KO to complete]

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From finance's "Bayou Workpapers"
OFE'SJiQKL

Liquidity
2/1/05 AIiM
Bayou 10%

Holdback

Security

Growth

Levered

REL)AC D

81,168

328,865

619,849

2,023,121

100% Write-off
REDACTED

8/1/05 Est. AIiM
Bayou 10%

Holdback

81,168

328,865

100% Write-off

Liquidity

ONSHOR1
Growth

2/1/05 AUM
Bayou 10%

Holdback

619,849

2,023,121

RE DAdE D

Security

F&F

R E DACTE D

584,909

828,431

1,792,219

255,128

100% Write-off
REDACTED

8/1/05 Est. AUM
Bayou 10%

Holdback
100% Write-off

584,909

828,431

1,792,219

255,128

REDACTEn

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Liquidity

Growth

Levered

Security

Jul-03

3,250,000

-

Aug-03
Sep-03
Oct-03
Nov-03

-

750,000

-

1,000,000

Dec-03

500,000
3,000,000

jan-04
Feb-04
Mar-04
Apr-04
May-

100,000
-

250,000

1,000,000
2,000,000

04

Jun-04
jul-04
Aug-04
Sep-04
Oct-04
Nov-04
Dec-04

jan-05

-

5,000,000

1,500,0(X)

-

1,000,0(X)

750,000

2,000,000
2,000,000

-

500,000

Feb-05

250,000

Mar-05

(760,568)

1,250,000
(3,081,917)

(6,182,765)

(18,952,321)

iRE
Growth

Liquidity
Apr-03
May-

Security

F&zF

1,250,000

750,000

03

-

200,000

Jun-03
Jul-03
Aug-03
Sep-03
Oct-03
Nov-03

-

Dec-03
Jan-04
Feb-04
Mar-04

-

-

-

1,500,000

-

-

-

1,300,000

-

800,000

-

-

1,000,000

-

-

400,000

-

-

1,250,000

1,000,000

1,000,000

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Apr-04
May-

2,000,000

04

Jun-04
Jul-04
Aug-04

-

-

Sep-04

-

-

-

Oct-04
Nov-04
Dec-04
jan-05
Feb-05
Mar-05

-

-

-

500,000

-

1,500,00()

1,250,000

-

-

-

7,500,000
4,500,00()

-

-

2,000,000
(5,479,509)

-

(7,760,932)

(16,789,719)

(2,390,228)

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