The $1mn fees roiling Miami’s golf clubs

One big poach to start: Goldman Sachs’ global treasurer, Philip Berlinski, is leaving the bank after 24 years for New York-based hedge fund Millennium Management, according to two people familiar with the situation.

In today’s newsletter:

• Miami’s golf scene

• Monaco bank’s mafia test

• KPMG cheating scandal

Miami’s new billionaires drive up the price of golf

The exodus of hedge fund managers and bankers fleeing New York for Miami has put a strain on everything in the Sunshine State. Housing prices shot up, restaurant reservations became impossible and so did getting your kid into a good school.

Now, Wall Street’s properly settled, and they want to play golf. Luxury clubs in south Florida are poised to cash in, charging high six- and seven-figure joining fees as the pandemic-driven influx of wealthy Americans drives up demand for tee times. Top clubs around Miami have doubled or tripled their membership fees since 2020.

Citadel, which announced in 2022 that it was moving its headquarters from Chicago to Miami, is one of the biggest culprits for driving up demand in the area. But the hedge fund’s employees are in good (ie rich) company. Affluent residents include activist investor Carl Icahn, Amazon founder Jeff Bezos, Blackstone’s Stephen Schwarzman and venture capitalist David Blumberg.

The clubs aren’t just expensive; they’ve also become nearly impossible to get into. Overflowing demand has left the most exclusive clubs with years-long waiting lists.

New clubs are cropping up to capitalise on the demand. New York-based developer Witkoff announced on Wednesday plans for the first new club in the Palm Beach area in 25 years, with joining fees topping out at $350,000. The cost of membership at the group’s invitation-only Shell Bay club is $1.35mn.

“There’s this access to luxury golf arms race that’s happened,” said one hedge fund investor who plays in the area. While there are some public courses, “these people look at themselves as masters of the universe, and that is not going to be good enough for them”.

Golf clubs aren’t the only corner of Miami feeling the squeeze. Manhattan transplants have brought their private school blood sport with them. Sought-after schools such as Gulliver Prep have set new records for applications each of the past four years.

While Miami’s flush with cash now, the hedge fund golfer wonders how long it’ll stay that way: “Is this Florida thing a permanent deal where people are going to stick around and support these clubs until the end of time?”

Monaco bank faces US’s anti-mafia laws

Anti-mafia crime laws in the US are about to have their first test against a bank in Europe.

A California court agreed that a Russian businessman could sue CMB Monaco under legislation from 1970 designed to crack down on the mafia. The jury trial will take place this summer after an attempt to stop the case from proceeding was dismissed by a judge at the end of March.

CMB Monaco, which is owned by Italy’s Mediobanca, caters to the ultra-wealthy from its headquarters in Monte Carlo. Lawyers in the case believe it is the first time a European bank has been sued under the Racketeer Influenced and Corrupt Organizations Act — more commonly known as Rico.

In the 1980s, Rudy Giuliani used the legislation to pursue heads of five mafia families in New York. Since then, it’s also been used against junk-bond king Michael Milken, football governing body Fifa and most recently, Donald Trump.

The CMB case started with a fight between two Russian businessmen. Former politician Ashot Yegiazaryan and his business partner Vitaly Smagin invested in a Moscow property that ultimately went sour. Smagin then sued Yegiazaryan in London, and won $84mn in 2014.

Yegiazaryan refused to pay. By this point, he had fled to Beverly Hills, so Smagin pursued him there. Smagin was able to obtain a freezing order on Yegiazaryan’s California assets, but in response, he moved his money through a series of shell companies to his Monaco account at CMB.

So, Smagin went after CMB. He launched a Rico suit against his former business partner and the bank, claiming the two colluded to evade enforcement in California. The case, which is scheduled to be heard in June, could open up foreign banks to being pursued through the US courts under Rico laws, where penalties can be much higher.

KPMG gets in trouble for cheating (again)

You might think the $50mn fine imposed on KPMG in the US in 2019 for, among other violations, widespread cheating by staff on their training courses, would have been a wake-up call to the accounting firm’s workforce elsewhere in the world.

Or perhaps another big fine on KPMG Australia in 2021, where the US audit regulator found hundreds of staff Down Under were improperly sharing exam answers.

Surely, by December 2022, when the US Public Company Accounting Oversight Board levied fines on KPMG’s UK and Colombian arms, for hundreds more incidents of cheating, the message would have got through.

Not so, it seems. The PCAOB on Wednesday found that as late as the end of 2022, KPMG staff in the Netherlands were sharing questions and answers on the panoply of exams required to make sure they’re current on accounting standards, conflict of interest rules and — ahem — professional ethics.

KPMG is hardly alone. EY paid a whopping $100mn in 2022 to settle charges of exam cheating by its US staff and an allegation that it hid the scandal from the regulator. PwC and Deloitte have been dinged, too.

What gives? The FT’s Stephen Foley, who covered the latest KPMG settlement, asked PCAOB chair Erica Williams why so many accountants cannot be trusted to do these training exercises without cheating.

She said the regulator was asking itself the same question. The PCAOB has launched a “culture review” of some of the audit firms it oversees, to see if leaders are setting the right tone. If DD readers have the answer, we’d be interested to hear it.

This note has been amended to reflect which KPMG office was fined by the US audit regulator in 2021

Job moves

• CaaS Capital Management has hired Pawan Passi after the Morgan Stanley banker was previously punished in the block-trading probe that ensnared Wall Street, Bloomberg reports.

• Sidley Austin has hired John Godfrey as a partner for its global M&A and private equity group in New York. He joins from Paul Weiss.

• Houlihan Lokey has hired Ashish Patel as a managing director in its capital markets group. He previously worked for Deutsche Numis.

• Paul Hastings has hired Tom McKay as a partner on its financial restructuring team in Europe. He previously worked for Shearman & Sterling, and has completed secondments at BlackRock and Goldman Sachs.

• Skadden has hired Sebastian Barling as a partner for the firm’s financial institutions regulatory group. He previously worked for Linklaters.

Smart reads

‘Bully boy’ Patrick Drahi, the French-Israeli tycoon who has built a media empire, may be nearing the end of his debt-fuelled binge, Bloomberg reports.

Credit moment The slow, humdrum world of corporate lending is suddenly all the rage, Lex writes.

Defamation pit bulls Law firm Clare Locke helped win a $787mn settlement against Fox News. It was torn apart in the process, The New York Times reveals.

News round-up

Four Paramount directors to step down as company discusses Skydance merger (WSJ)

Lloyds Bank axes risk staff after executives complaint they are a ‘blocker’ (FT)

US regulator criticises Swiss handling of Credit Suisse as ‘unhelpful’ (FT)

Wall Street turns to ‘solar grazing’ sheep in its push to go green (FT)

Vertex to buy kidney disease drug developer for $4.9bn (Bloomberg)

Top commodities traders dismiss IPO route after bumper profits (FT)