0001 1 UNITED STATES SECURITIES AND EXCHANGE COMMISSION 2 3 TRANSCRIPT OF RECORDED TELEPHONE CONVERSATIONS 4 FILE NAME: OSNATO Decl Ex 36-Ledford9-15-149pm 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 0002 1 MR. LEDFORD: This is Patrick. 2 MR. FARRELL: Hey, it's Pat Farrell. 3 MR. LEDFORD: Hey, Pat. 4 MR. FARRELL: Uh, State Street's getting a 5 little antsy here. They sent out ten so far, but they're 6 not going to send out any more. They just can't front us 7 the money. I need to know how much have you raised so far, 8 and how much more do you think you can get [unintelligible] 9 -- 10 MR. LEDFORD: When did they send out the ten? 11 MR. FARRELL: I guess up until about noon, 12 maybe, or -- 13 MR. LEDFORD: Okay. 14 [speaking to party in background: MR. LEDFORD: 15 Dmitri, how -- how -- what do we have in [inaudible] what 16 do we have in total withdrawals? Redemptions, in Primary?] 17 MR. LEDFORD: Eighteen, okay. And, they sent 18 out ten. That means we're in the hole for about eight. 19 MR. FARRELL: You've only raised two? 20 MR. LEDFORD: Excuse me? 21 MR. FARRELL: How much have you raised so far? 22 How much came due today? 23 MR. LEDFORD: Oh, we -- well, we -- we're -- 24 right now, we -- we're carrying a -- you said they've 25 already sent out ten? We've got total -- 0003 1 MR. FARRELL: Yeah. 2 MR. LEDFORD: -- redemptions of 18 billion. And 3 so, you said they sent out ten. So, we're -- we're -- I 4 mean, we're sitting on about 18 billion, Pat, right now, in 5 -- in an overdraft. 6 MR. FARRELL: Yeah, they -- well, how much -- 7 how much do you have coming in today? 8 [speaking to party in background: MR. LEDFORD: 9 How much more do we have -- ] 10 MR. FARRELL: How much is maturing? 11 MR. LEDFORD: Yeah, well we -- we've already 12 counted all of that. 13 [speaking to party in background: MR. LEDFORD: 14 How much have we raised [unintelligible]] 15 MR. LEDFORD: We've raised about a billion. 16 That's all we've been able to raise, Pat. 17 MR. FARRELL: Oh, my gosh. 18 MR. LEDFORD: Yeah. 19 MR. FARRELL: Well, that's really bad. 20 MR. LEDFORD: Well, we've got the maturities 21 coming due tomorrow. They -- there's no way in hell 22 they'll front us the money and offset -- 23 MR. FARRELL: How much is it? 24 MR. LEDFORD: Well, I've got it -- 25 MR. FARRELL: How much do you have -- 0004 1 MR. LEDFORD: Tomorrow, we've got a billion. 2 And then, on the 18th, we've got -- wait, I'm sorry. We 3 don't have anything coming due tomorrow. Oh, yeah, we do. 4 We've got 652 million tomorrow. Then, on 9/17, we've got a 5 billion. Check your BlackBerry. I sent you guys an e -- a 6 message. And then, on 9/18, we've got 2.6 billion. 7 And then, also, you know, is -- we're -- 8 hopefully, the market is going to improve, and we're going 9 to be able to sell more paper tomorrow. Tomorrow -- 10 MR. FARRELL: Can you do a reverse -- can you do 11 a reverse repo? 12 MR. LEDFORD: We -- we already looked at that. 13 We -- nobody's -- nobody's willing to do it yet. 14 [speaking to party in background: MR. LEDFORD: 15 Right? No -- ] 16 MR. LEDFORD: No, not yet. Maybe tomorrow, 17 Barclay's may -- may do a reverse. But, yeah, I looked in 18 -- we looked into that, earlier today. What I should have 19 done is had all this set up, you know, months and months 20 ago, -- 21 MR. FARRELL: Yeah. 22 MR. LEDFORD: -- just in -- you know, in a 23 contingency for a -- you know, a worst case environment. 24 Hey, Pat, this is frickin' horrible. Horrible. I'm -- 25 MR. FARRELL: Yeah, well, State Street is going 0005 1 to -- I don't know what they're going to do. They're going 2 to flip. So, because right now, they sent out -- if they 3 sent out ten, they're not going to send any more. And, you 4 raised how much today? Two? 5 MR. LEDFORD: Yeah, about a billion, yeah. Plus 6 -- 7 MR. FARRELL: Oh, one. 8 MR. LEDFORD: Yeah, plus what we've -- 9 [speaking to party in background: MR. LEDFORD: 10 Hey, Mike, jump on -- jump on this phone with -- with Pat.] 11 MR. LEDFORD: Hey, I got Mike on the phone, too. 12 MR. LUCIANO: Hey, Pat. 13 MR. FARRELL: Hey. 14 MR. LEDFORD: So, Pat, this -- as I told you, 15 we've only been able to raise a billion. 16 MR. FARRELL: What's maturing today? How much 17 matured? 18 [unintelligible background conversations] 19 MR. LUCIANO: Two point eight matured today. 20 MR. FARRELL: How much? 21 MR. LUCIANO: Two point eight billion matured 22 today. 23 MR. FARRELL: Oh, okay. And then -- and you 24 raised another one? 25 MR. LUCIANO: Yeah. 0006 1 MR. FARRELL: So, you got 3.8? 2 MR. LUCIANO: Right. 3 MR. FARRELL: Okay. Holy crap. 4 MR. LEDFORD: So, what are we looking at net, 5 Mike in terms of -- 6 MR. LUCIANO: What we owe is about fifteen, 7 right? We lost -- yeah, about fifteen. We lost eighteen 8 and change. 9 MR. FARRELL: All right, because they can't -- 10 I've got to call -- they can't -- they won't be able to 11 front that money. They're going to have to -- they're 12 going to have to go to the Fed or something here. It's too 13 much. 14 MR. LEDFORD: Who's going to have to -- 15 MR. FARRELL: All right [inaudible] -- 16 MR. LEDFORD: -- who's going to have to go to 17 the Fed? 18 MR. FARRELL: The -- State Street. I don't know 19 if they can cover a six billion tonight, overdraw. Let 20 alone, they won't send out the eight. I mean, that's just 21 -- 22 MR. LEDFORD: Yeah. 23 MR. FARRELL: -- those numbers are staggering. 24 MR. LEDFORD: We've got to get the money out. I 25 mean, shit. 0007 1 MR. FARRELL: I mean, we're going to have to 2 just not -- we're not going to send out that money. We're 3 going to have overdrafts, you know, we're -- those 4 customers are not going to get their money tonight. 5 MR. LEDFORD: Pat, that's going to be the kiss 6 of death. 7 MR. FARRELL: We need to -- we need a call with 8 State Street, and with marketing, and all the -- 9 everybody's got to get on a call. We need to figure this 10 out now. 11 MR. LEDFORD: Let me call -- let me call John 12 Drahzal. 13 MR. FARRELL: Okay. 14 MR. LEDFORD: All right? In fact, let me -- 15 I'll just conference you in. Hang on, just a sec. 16 MR. FARRELL: I mean, unless -- unless they can 17 call some of these clients back and say, "Look, guys, 18 you've got to give us a day." Really. That's -- that's 19 what we really need. We need someone to call the clients 20 and say, you know, you guys are -- are, you know, are 21 causing a problem here. 22 MR. LEDFORD: I know we just got 200 in. Let's 23 see. Oh, fuck. You got 200 in for B and P Paribas, 24 commodity futures. But then, fucking -- and we've been -- 25 frickin' ADP just took out fucking 213. 0008 1 MR. FARRELL: It's not going to -- nothing's 2 going to go. They stopped. Nothing else is going. 3 MR. LEDFORD: All right. Hang on a minute. Let 4 me -- let me get them on -- let me get John on the phone. 5 Oh, fuck. Oh, fuck. This just goes from worse to -- from 6 bad to worse. Hang on. I'm going to transfer him -- I'm 7 going to hook -- hook him in here. Hang on. 8 [DIAL TONE -- DIAL SOUNDS -- PHONE RINGING] 9 MR. LEDFORD: Pat, you still there? 10 MR. FARRELL: Yeah, I am. 11 MR. DRAHZAL: Hey. 12 MR. LEDFORD: Hey, John, I've got Pat Farrell on 13 the phone, too, and Mike Luciano. 14 MR. DRAHZAL: Hey, guys. 15 MR. LEDFORD: Hey, any update on the -- on the 16 contingent guarantee? 17 MR. DRAHZAL: It's -- it's -- it's going to be 18 put in place. We can tell clients. Are we talking about 19 -- about protecting N.A.V.? 20 MR. LEDFORD: Yeah, yeah. 21 MR. DRAHZAL: Yeah, okay. It's done. We're 22 going to do it. But, here's the thing. It's with the SEC. 23 We have to get approval from the SEC to do this, and -- but 24 the agreement, in principle, is absolutely there, and we're 25 just awaiting for -- for that approval. 0009 1 MR. LEDFORD: Okay. That may come just a tad 2 late, John, because we're sitting on about 15 -- I mean, 3 with State Street, we're looking at about a $15 billion 4 overdraft tonight. And, it's -- hey, Pat? 5 MR. FARRELL: Yeah. 6 MR. LEDFORD: Go ahead and jump in here. 7 MR. FARRELL: Yeah. We've got -- we've got 18 8 -- 18 billion in redemptions today. They've sent out ten. 9 And, they stopped at that point. So, right now, we've got 10 eight billion that's not going to go out to clients unless 11 something happens somewhere, or we find money. And, we've 12 only raised 3.8 billion. 13 MR. DRAHZAL: Okay. 14 MR. FARRELL: So, we -- somehow, I -- the 15 perfect scenario would be to call back some of these 16 clients, and say, "Look, guys, you know, you're -- we 17 really would -- you really need to leave the money in for 18 another two days, because the -- it's going to kill us." I 19 mean, -- 20 MR. DRAHZAL: You can't say that to -- 21 MR. FARRELL: I mean, it's going to -- 22 MR. LEDFORD: Yeah, it would start a run. Yeah, 23 we can't -- 24 MR. DRAHZAL: No, no, you can't do that. 25 MR. LEDFORD: Yeah, yeah. 0010 1 MR. DRAHZAL: But, here's what we're doing. I 2 don't know if you see this, Patrick. We -- there have been 3 -- the redemptions have slowed. Not just because it's late 4 in the day, but because we're now telling people -- well, 5 actually, [unintelligible] we were talking about this 6 before you guys called. So, I'm glad that this 7 conversation is happening. 8 You guys, I can't -- I can't sit here and tell 9 you I can go and get that money from clients, because it's 10 already gone somewhere else. 11 MR. LEDFORD: No, John, we're not -- we're not 12 asking you to do that. We're not -- that's not the reason 13 for the call. We're not -- that's -- because we don't want 14 to tell them they can't have their money, because then 15 that's -- that's just going to blow up -- 16 MR. DRAHZAL: Yeah. 17 MR. LEDFORD: -- and exacerbate the whole 18 situation. 19 MR. DRAHZAL: What are our options, beside that? 20 MR. LEDFORD: We need to go back to State 21 Street, I think, Pat, and not to drop it in your lap, and 22 maybe do a conference call with State Street and say, "Hey, 23 listen, here's where we are." 24 I think once we get that backstop in place, and 25 it's communicated out there, I think then -- I think that's 0011 1 going to -- that's going to have a -- that's going to be 2 very, very positive and we'll stop bleeding here. 3 And then, also, I think the market is going to -- 4 the tone of the marketplace is going to be a little better 5 tomorrow and Wednesday, so we can actually liquidate more 6 people -- or liquidate more people, yeah, I'm about ready 7 to liquidate myself. 8 [Laughter] 9 MR. LEDFORD: We're going to liquidate more 10 product in the portfolio and raise more cash. I mean, 11 tomorrow, and I -- tomorrow, we've got 652 million coming 12 due. Then on Wednesday, we've got a billion. And then, on 13 -- on Thursday, we've got a billion -- two billion, 14 2.6 billion, and then the 19th, we've got another billion 15 coming due. I mean, it's just -- we'll -- it's -- we're 16 going to -- we're going to be able to handle this, as long 17 as we can curb the -- the money going out. 18 And, a couple of things. One is I have to -- and 19 again, this isn't wishful thinking, but I have to think 20 that -- that people getting out -- John, jump in here, too. 21 But, the people that are going to get out are getting out 22 today, and I just don't see a -- you know, a slow -- I 23 don't see another day like we had today tomorrow or 24 Wednesday, but -- 25 MR. DRAHZAL: Pat, I think what's happened is, 0012 1 you know, the big super smart money left early in the day. 2 And now, you're seeing people that don't really want to 3 move. Because we didn't have the ability to tell them 4 we're backstopping the fund. 5 And so, we had a couple of defections that I 6 think would come back if we can say, "Hey, look, we're 7 protecting the N.A.V.." They'll come back in, I think, 8 and, you know, put us in a better position. We can clearly 9 stop the redemptions. 10 MR. LEDFORD: Okay. 11 MR. DRAHZAL: So, but we do have to go to State 12 Street. Who would typically make that call? You know, who 13 -- who is on the hook for that? 14 MR. FARRELL: No, no, I'll call them. I just 15 need to know what are we looking at as our final numbers. 16 Because, you know, I don't see them being able -- they 17 can't front us another, you know, another eight today. 18 MR. LEDFORD: Yeah, hey -- hey, John, what's 19 Pershing? Are they coming in tonight? 20 MR. DRAHZAL: You know, let me go find out. 21 MR. LUCIANO: I think they're -- because Brandon 22 mentioned they need their redemption first thing tomorrow 23 morning, so at least they're not coming back tonight, 24 right? 25 MR. DRAHZAL: Yeah. And they know that we're 0013 1 protecting the fund. I spoke to them personally. 2 MR. LEDFORD: All right. 3 MR. LUCIANO: What about Freddie Mac? They took 4 a billion out today. 5 MR. DRAHZAL: I don't know if they're coming 6 back. We've got to call them and let them know. 7 MR. LUCIANO: yeah, we need to know who's coming 8 back. 9 MR. DRAHZAL: All right. Let me -- let me get 10 on that. We'll figure out who we think is going to come 11 back, from a liquidity perspective, so we can get some 12 final numbers, recognizing we still have a lot of trades to 13 process today. 14 MR. FARRELL: Are there -- 15 MR. DRAHZAL: Otherwise, -- 16 MR. FARRELL: -- let me interrupt for a minute, 17 for Mike and Pat. How much -- how many -- do you have any 18 more trades to send over to State Street? [inaudible] 19 trades? 20 MR. LUCIANO: I mean, we just sent them over. 21 But, it doesn't change the number that Patrick gave you. 22 It's -- all we can get rid of is a billion today. I mean, 23 again, we have some reverse repos in the pipeline, but that 24 -- that's kind of -- 25 MR. FARRELL: So, did you raise 3.8 today? 0014 1 MR. LUCIANO: Between the maturities and what we 2 sold, yeah. 3 MR. FARRELL: Yeah. 4 MR. LUCIANO: Yeah. 5 MR. FARRELL: Okay. So, say four. So, if I had 6 18, less four, I got 14 -- 7 MR. LUCIANO: Yeah, that's about right. 8 MR. FARRELL: Yeah, 14 -- 9 MR. LUCIANO: I think you said about 15 -- 14 or 10 15 we're on the hook for. We're going to be overdrawn. 11 So, that sounds about right, yeah. 12 MR. DRAHZAL: And, what would typically happen 13 here? 14 MR. FARRELL: It -- this has never happened. 15 MR. DRAHZAL: Okay. So, -- 16 MR. FARRELL: There's no typical here. That's 17 the problem. And, they've already sent out ten, so I'm -- 18 MR. DRAHZAL: Hey, we -- 19 MR. FARRELL: -- I'm thinking that -- go ahead. 20 MR. DRAHZAL: No, no, no, you go. 21 MR. FARRELL: No, I -- they're -- since they 22 have already sent out ten, and we've only raised four, 23 right now we've got a six billion overdraft we're looking 24 at, plus they're not going to send -- I don't believe 25 they're going to send out any more, unless something magic 0015 1 -- something magical happens. 2 So, I've got to call them right now, and see -- 3 MR. LUCIANO: Hey, Pat, let me join you on that 4 call, all right? 5 MR. FARRELL: Yeah, sure, I mean, it -- yeah, 6 absolutely. It may come -- you want to [inaudible] in? 7 MR. LUCIANO: And, this is not an option. We -- 8 this isn't [unintelligible] an option, because we're going 9 to be screwed. 10 MR. LEDFORD: Yeah, we can't -- we've got to 11 send the money out, Pat. That's the -- I mean, I don't 12 know what else to do. 13 MR. FARRELL: Yeah, I [inaudible] -- 14 MR. LUCIANO: And they know this is money good, 15 and everything is fine. It's just a question of them 16 spotting us for a day. 17 MR. FARRELL: Yeah, well, but it's not a day. 18 This could actually be -- it looks like this could be a 19 week. 20 MR. LUCIANO: Well, you know what? Then, that's 21 what we're looking -- we're looking for a little 22 flexibility here, given the market tone. 23 MR. LEDFORD: Yeah, which in [unintelligible] 24 it's just not our money fund that's -- our platform that's 25 being hit here. It's every money fund in the -- 0016 1 MR. FARRELL: Well, that -- 2 MR. LEDFORD: -- [inaudible] -- 3 MR. FARRELL: -- that's the thing. Everyone is 4 looking for money. 5 MR. LEDFORD: Yeah, we can't -- we just cannot 6 sell -- we can't just -- you know, I mean, nobody wants to 7 take a -- take the paper onto their -- their balance sheet, 8 right now. And, it's -- it's just, like -- I mean, the -- 9 the -- Paulson and Bernanke totally fucked this up. I 10 mean, I don't think they had any -- I don't think they 11 thought this god-damned thing through, to figure out what 12 the -- what the rippling effects would be. 13 But -- but, anyway, that's -- that's beside the 14 point. Okay. 15 MR. LEDFORD: Okay, Mike, we're pretty much done 16 for the day, right? 17 MR. LUCIANO: [unintelligible] number, in all 18 likelihood, yes. 19 MR. LEDFORD: In all likelihood, we're done. 20 We're not going to be able to raise any more money today. 21 Pat -- Pat, you have the maturity schedule, though. I 22 e-mailed it to you. 23 MR. FARRELL: Yeah, you know, I didn't see it 24 attached to that e-mail. I just saw your e-mail but 25 nothing -- nothing was -- was it supposed to be attached? 0017 1 MR. LEDFORD: No, there was no attachment. It 2 was just -- it was right there. I'll re-send it. 3 MR. FARRELL: All right. I'll take a look. 4 MR. LEDFORD: All right, all right. I'll 5 re-send it. All right, and we're here. Give us a call and 6 let us know what's going on. 7 MR. FARRELL: All right. 8 MR. LEDFORD: Guys, thank -- hey, John, thank 9 you. And -- and David -- David, thank you. 10 MR. FARRELL: 'Bye. 11 [END OF RECORDING] 12 13 14 15 16 17 18 19 20 21 22 23 24 25 0018 1 2 C E R T I F I C A T E 3 4 I, June Accornero, hereby certify that the 5 foregoing transcript consisting of 18 pages is a complete, 6 true and accurate transcript of the recorded conversations 7 contained in the recording labeled "OSNATO Decl Ex 36- 8 Ledford9-15-149pm." 9 The foregoing transcript has been typed and 10 proofread by me. 11 12 ___________________________ ________________ 13 Typist/Proofreader Date 14 15 16 17 18 19 20 21 22 23 24