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by Jeff Manning, The Oregonian

Corporate Oregon’s declining contribution is due at least in part to what Portland investment adviser Bill Parish called “the explosion of accounting gimmicks and tax schemes” that corporations use to manipulate their bottom lines and dodge taxes.
“Measure 97 is a beautiful tax because by taxing gross sales above $25 million it ensures taxes will be collected,” Parish said.

Read full story here:  How Measure 97 might affect Oregon businesses

 

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by, Joseph Tanfani and Evan Halper, Los Angeles Times

“When it comes to money, they’re all on the same page,” said Bill Parish, an Oregon investment advisor who blogs about tax policy.

Read full story here:  Renaissance Technologies execs team up to conquer Wall Street

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In 2010 the Supreme Court ruled in favor of Citizens United, opening the door for unlimited political contributions, essentially turning major political races over to billionaires.  Republicans and Democrats now openly agree this has had a major impact on the political process.

Billionaire Donald Trump himself has openly criticized this decision, calling it a disaster for Democracy.   During the campaign he has also called opponents, including Marco Rubio and Ted Cruz ,”puppets for their billionaire donors.”  Trump is self funding his campaign.

Parish & Company reviews candidates financial information for various news organizations and this post looks at the Donald J Trump foundation.  The purpose is not to criticize Mr. Trump but rather articulate key dynamics for these journalists.

Most notable about the foundation is how small it is, with total assets of only $1.3 million.

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berniesanders

Today Bernie Sanders finally released a tax return, only one year, 2014.   The obvious questions is, why has it been so difficult for Senator Sanders to reveal his tax returns while his opponent Hillary Clinton has released several years of complete returns, opening her up to severe criticism over her income sources.  After only releasing two pages of his federal return with no schedule of itemized deductions, he then released 7 pages for the 2014 return.

For a former CPA and now investment advisor like myself who does these reviews for numerous major news organizations, two names come to mind when reviewing Sanders return.  The first is Rick Santorum, former Republican candidate, who like Sanders “self prepared” his returns in 2012.   This is simply remarkable, that a Presidential candidate would not pay a few hundred dollars to have a CPA complete his return and likely the chances of avoiding an error.  It also raises the question of Sanders capacity to manage/delegate in general.

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The following Friend of the Court Brief  was sent to Magistrate Judge Nathanael Cousins, United States District Court, Northern District of California regarding the Intel 401K Class Action.

 

January 15, 2016

 

TO: Judge Nathanael Cousins

San Jose Courthouse, Courtroom 7 – 4th Floor

280 South 1st Street

San Jose, CA 95113

 

FROM: Bill Parish, Parish & Company

10260 SW Greenburg Rd., Suite 400

Portland, Oregon 97223

 

SUBJECT: Friend of the Court Brief – Intel 401K Class Action, Why a Nuisance Case Resulting from a Plagiarized Analysis whose conclusions were misrepresented.

 

Dear Judge Cousins,

This is the third time in 20 years as a registered investment advisor I have submitted a friend of the court brief. The first was regarding the Microsoft Anti-trust case, which I supported and the second was regarding the Hewlett Packard/Compaq merger, which I opposed. This brief will explain how my work on Intel’s 401K was plagiarized and misused by plaintiff shopping attorneys. See page 28, point 113 of complaint, for reference to my blog post made in January 2014.

I am generally recognized as a national expert in evaluating retirement plans, going back to 1998 when my work was featured in a major article, also featuring then Secretary of Labor Alexis Herman, regarding the importance of adhering to the 404C prudent fiduciary guidelines.

Leading national journalists are constantly asking me to review various financial data, including financial disclosures and tax returns of local, regional and national politicians. This includes Romney’s financials for the Wall Street Journal, Jeb Bush for the LA Times, etc. In December 2015 the NY Times ran a story on Intel’s 401K that featured my comments. There is also extensive national and international coverage of my comments regarding hedge and private equity funds going back to 2003, focusing on KKR, TPG and Blackstone.

The truth is that Intel has a terrific 401K plan. Yes, like many plans it could be better yet my sense is that their plan is in the top 5 percent of all plans. Some might argue that for a good look at a bad plan which should stimulate a legal action, one might examine that of the law firm Cohen Millstein. Me I’ll just say it is “interesting.”

Most remarkable about Intel’s plan is that they so openly disclose the high fees with respect to the private equity and hedge funds, what is called carried interest. Other plans do not openly disclose these fees.

Private equity and hedge funds are an important asset class that now control trillions of the financial markets and to not participate in this would not be prudent. For that reason you see leading endowments, foundations and public pensions with enormous participation in this area.

The real problem rests with the Securities and Exchange Commission and IRS inability to enforce the rules, rules that firms like Intel need to rely on being enforced. For this reason, even though perhaps a prudent decision in the spirit of 404C, such investment does not make sense given regulatory failings, in my opinion, which I highlighted to Intel management. That was the subject of my blog post that was used by the Oregonian and led to the action. The term I used was “subject to a class action suit,” knowing full well that it would be a nuissance suit.

Attention to maintaining a top quality plan is one reason why Intel is not only a strategic holding in my personal investment portfolio yet also for my clients. It speaks very well of the firm that, after I expressed my concern, they realized that despite their best efforts to diversify such participation, it made sense to outsource it to a financial firm and also add more choices than those available previous to my observations.

So here is what really happened.

In addition to looking for good investment opportunities in the health care area,  a related goal was to shine a light on hedge and private equity funds, in general, and focus on two things. They are price fixing of generic drugs and medical procedures and tax evasion in which private equity and hedge funds are using unusable tax deductions belonging to tax-exempt limited partners. Key players here are KKR, TPG and Blackstone. And their investors include your own CalPERS and what we call OPERS up here in Oregon. Attached is the December 2015 agenda for OPERS in which KKR made a presentation and once again referenced the investment in drug based cash flows. KKR manages billions for OPERS and CalPERS together.

Perhaps you have seen some of the controversy resulting from stories that originated in the NY Times regarding hedge fund managers buying specific drugs and immediately invoking dramatic price increases and related anti-competitive practices?

I laid this out to the NY Times in November 2014 yet it took almost 8 months for the first story to appear. Enclosed is an email from Gretchen Morgenson of the NY Times responding to this story idea in late 2014. In return for the story details I asked that my name not appear in the story. She collaborated with another NY Times reporter, Andrew Pollack, and have done amazing work. Regarding the tax evasion schemes, however, still nothing has appeared, which is disappointing.

Attachments:

1) Email to Oregonian reporter Jeff Manning in December 2013 outlining concern regarding Intel’s 401K plan containing hedge and private equity related investments. Jeff immediately passed this along to his colleague Brent Hunsberger. Note that “Larson” referred to in point 4 is an executive at Intel Capital.

Brent was still using an Oregonian newspaper email at the time, even though he had become a contractor and was working full time for a local investment firm. Several months later he then farmed out several of my observations for comment to other investment advisors and positioned me as providing a negative comment regarding Intel.

Fully plagiarizing my work was bad enough yet completely misrepresenting the nature of my conclusions was very poor judgement. After expressing my concern Brent did update his email address and add disclosures regarding his changed role at the paper.

A subsequent story at the Oregonian was done by Mike Rogoway which accurately reflected my perspective.

Again, my purpose was to first draw attention to the dramatic increase in hedge and private equity fund investment in retirement plans, both public plans such as Calpers and Opers and private plans including Intel’s. This could then lead to a detailed discussion regarding the appropriateness of investing in generic drug and medical procedure price fixing and tax evasion, as seen in KKR.

2) Oregon PERS Investment Council Member Keith Larson. Larson, who is also an executive at Intel Capital, was the past Chair of the $70 billion fund, prior to current Chair Katy Durant. At the time Oregon and California PERS were investing aggressively in private equity firms, including KKR, who were buying cash flows from particular drugs and medical procedures. My public comments reflected in the Oregon PERS meeting minutes go back to 2013 on this issue.

3) Tax evasion via gaming residency. I had hoped the NY Times would address this issue yet thus far they have chosen to only focus on the price increases and anti-competitive behavior of these funds. Key havens for these medical related schemes include Canada, the UK and Switzerland.

As major companies including Pfizer concoct corporate tax inversions to evade most US taxes, my strategy was to start local in order to generate awareness.

For this reason I asked the Times to confirm that the Chair of Oregon’s $70 billion fund, Katy Durant, is a full tax resident of the State of Oregon for tax purposes. When asked to confirm this, Durant declined. State Treasurer Ted Wheeler confirmed he was. Durant’s husband, Gordon Sondlund, a local real estate developer, claims Washington tax residency, a state, unlike Oregon, in which there is no state income tax.

4) Conclusion: The good news is that my plan has resulted in a major national discussion on drug prices, including Senate hearings. The bad news is that Intel has had its reputation impacted by this nuisance suit given they have an outstanding retirement plan.

Thank you for considering these thoughts.

All the best,

Bill Parish

 

 

 

Email from Jeff Manning, Oregonian reporter

 

Manning

 

 

 

The New York Times story on Intel’s 401K plan 

 

Intelmorgensonstory

 

 

 

Oregon Investment Council December 9, 2015 Meeting Agenda

 

OIC

 

 

 

Email from Gretchen Morgenson, New York Times reporter

 

Morgenson

 

The New York Times story on Drug Pricing

 Pollack

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As an independent investment advisor with a background that includes previously having been a CPA and Chief Financial officer with extensive audit, tax and operational experience, it is particularly easy for me to provide substantive comments on political candidates financial disclosures, including investments and tax returns.

This work has been featured in leading publications including the Wall Street Journal,  New York Times, Bloomberg, the Los Angeles Times and the Oregonian.   I strive to be completely independent and provide the same focus regardless of a candidates political affiliation.

Gaining access to these reports can appear confusing and the purpose of this post is to articulate how anyone has access these reports given most major news stories review them yet do not provide a link to the source information.

On December 15, 2015 I called the Cruz campaign and asked why all the candidates financial disclosures appeared on the federal election commissions website except Mr. Cruz.  I had already obtained the report from another website yet an important question remained, why was it not on the federal website.

At the same time I requested that leading reporters from the NY Times, Wall Street Journal, Bloomberg and LA Times ask the question.  Finally the report was posted on December 17, 2015, after several Republican debates had already occurred.  Rubio posted his report on June 4th, Bush on August 21 and Trump on August 21.

Clearly, the FEC did not post it on the website because it was in dispute over particular disclosures.  And even after being posted on the site 12/17/2015 it still does not specifically note the salary for Heidi Cruz, a managing partner for Goldman Sachs whose firm has made a margin loan against the value of their securities to Cruz.

Other candidates, most notably Hillary Clinton and Jeb Bush, have taken intense criticism upon revealing their income sources.  Here in Portland the World Affairs Council would not reveal how much Clinton was paid for a local speech yet her tax return clearly indicated $250,000.  That was a big story here in Portland, that a tiny non-profit trying to encourage younger participation would pay such a fee and make ticket prices out of reach for many.

Ted Cruz has still not released any tax returns since 2010, which is remarkable.

Jeb Bush has released more than 10 years of returns and took similar criticism for a variety of issues.

Here is a direct link to the Federal Election Commission page that lists all candidates reports, both Democrats and Republicans.

http://www.oge.gov/Open-Government/2016-Presidential-Candidate-Records/

The following pages for Cruz, Rubio, Trump and Bush clearly indicate when the filings were posted to the website.  In Cruz case, December 17, after several debates, was the first time his filing appeared on the website.

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by Gretchen Morgenson, The New York Times

Bill Parish, a registered investment adviser at Parish & Company in Portland, Ore., is a big fan of Intel and owns its shares for his clients. In an interview, he characterized Intel’s retirement plan as “great” but said it would be even better if it jettisoned the hedge funds.

Last year, in an email to Andy D. Bryant, Intel’s chairman, Mr. Parish expressed his concerns about those investments in the retirement plan. Mr. Bryant responded by saying he would forward the criticism to the appropriate Intel officials, according to the email.

“My perspective, regardless of whether it is prudent diversification, is it doesn’t make investment sense,” Mr. Parish said. “It would be better for Intel to eliminate hedge funds altogether because they don’t meet the standard with respect to financial disclosure. They’re too opaque.”

Read full story here:  Intel Lawsuit Questions Place of Hedge Funds in Retirement Plans

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