EFTA01762970.pdf

From: McCaffrey, Carlyn Sent: Monday, February 11, 2013 2:17 AM To: Jeffrey Epstein Subject: RE: Re: Where can=you get prices? I didn't think there were any traded 10-year call op=ions. What kind of price do you think there would be for a 10-year c=ll on with a strike price equal to a stock's current market price? Carlyn S. McCaffreeb> Partner McDermott Will & Emer LLP 340 Madison Ave=ue, New York, NY 10173 I =a href="http://www.mwe.com">www.mwe.com Fr=m: Jeffrey Epstein [mailto:[email protected] Sent: Sund=y, February 10, 2013 6:29 PM To: McCaffrey, Carlyn Subject= Re: =/p> we can actuallyl ge= prices. we could make them european, only excericable =t expiration. etc. yes On Su=, Feb 10, 2013 at 7:24 PM, McCaffrey, Carlyn wrote:=/p> I know that the relationship between the=strike price and current value are important factors in determining the pr=ce of an option but aren't the length of the option and the volatility of =he stock also very important? If there are no 10 year publicly trade= options we would have to get an appraisal. Are you sure that a purchase be LB of the partner=hip interest followed by a sale by him of a call isn't caught by 16b? <=r>On Feb 10, 2013, at 11:37 AM, "Jeffrey Epstein" <[email protected]&=t; wrote: 1.&=bsp; according to the strike, price, 2. the economic effect can be m=nged in the document. 3, security wise lock up is only concern =as long as it happens near the same time and is not deep in the money,&nbs=; 4, the price of the option reflects the risk of that,</=> On Sun, Feb 10, 2013 at 12:27 PM, McCaffrey, Ca=Iyn wrote: What w=uld the price of a 10 year option be? EFTA_R1_00068684 EFTA01762970  Although he =an buy the PS interest , the call will have to be on the stock itself. =p class=MsoNormal>Your structure bypasses 2703 because LB will never del=ver the stock pursuant to the option. The economic effect, however, is the=same. That's why some think it doesn't work. What =re the securities law consequences of LB buying stock and the selling a ca=l? Does the purchas=r of a publicly traded call risk the possibility that the stock value will=not increase because all the growth will be paid out in dividends? =n Feb 10, 2013, at 10:36 AM, "Jeffrey Epstein" <[email protected]>=wrote: good f=rst try, yes call options are publicly traded, we would do fiv= to ten year terms„ he could purchase the partner ship interest i =uess, valuation the issue , he could decide on how much,=we wouldn't need to bypass 2703, the stock would be full value but t=ere would be an liability against it , which could not be ignored. &n=sp; he would not need much money to live as he would have the full d=vidends. On Sun Feb 10 2013 at 1=:16 AM, McCaffrey, Carlyn > wrote: I agree (although at least one of my partners does not) that you c=n avoid the reach of section 2703 with a cash settled option.<=o:p> How would =e price the option? Are call options on the stock publicly tra=ed? How are dividends treated under the normal stock option?<=:p> Here=s how I understand your proposal. &nbs=; Step 1- LB buys stock from Trust (T)=for $1B. LB issues a $18 note to T bearing interest at X=. and secured by a lien on his art. We need to discuss what X should=be. We also need to think about the mechanics which are made a littl= difficult by the fact that the stock is held in a partnership. We a=so need to think about the fact that much of his art is already subject to=a lien held by US Trust. Step #2 - LB sells a 2 year call to T. =he price for the call is $.1B (obviously, a rough estimate); the strike pr=ce is the current market price. =o:p> 2 EFTA_R1_00068685 EFTA01762971  Step=5 - LB sells another 2 year call to T, etc. <=pan style=lont-size:11.0pt;font-family:"Calibri","sans-serir;color:#1F=97D1> There are no income tax con=equences because of the grantor trust rules. <=pan style=lont-size:11.0pt;font-family:"Calibri","sans-serir;colorlf1F=97D5 What are the securities law=consequences? Are any of these transactions covered by Rule 16b?&nbs=; Do these transactions have to be reported? apan style&font-size:11.0pt;font-family:"Calibri","sans-serif";color:#1F=.97D.> Is this what you had in min=? <=pan style=lont-size:11.0pt;font-family:"Calibri","sans-serir;color:141F=97D.> Car=yn S. McCaffrey I Partner McDermott Will & Emery L=P 1340 Madison Avenue, New York, NY 10173 www.m=e.com <http://www.mwe.com> From: Jeffrey Epstein Imailto:[email protected] <mailto:[email protected]> I Sent:</=> Saturday, February 09, 2013 8:11PM To: McCaffrey, Carlyn <=>Subject: i have reviewed the 2703 regs, i don't see the issue, if the=trust buys an option, at market, today and the stock goes up, =he stock gets valued at the fair market, but the cash settled option come= due reducing the value of the estate. , bringing the same net result.&nbs=; and even better if debra gets the stock with a step up, = what am i misssing? The information contained in this communication is co=fidential, may be attorney-client privileged, may constitute inside inf=rmation, and is intended only for 3 EFTA_R1_00068686 EFTA01762972  the use of the addressee. It is the p=operty of Jeffrey Epstein Unauthorized use, disclosure or copying o= this communication or any part thereof is strictly prohibited and m=y be unlawful. If you have received this communication in error, please=notify us immediately by return e-mail or by e-mail to [email protected], anddestroy this communication and all copies thereof, including all attac=ments. copyright -all rights reserved IRS Circular 230 Disclosure: To comp=y with requirements imposed by the IRS, we inform you that any U.S. federa= tax advice contained herein (including any attachments), unless specifica=ly stated otherwise, is not intended or written to be used, and cannot be =sed, for the purposes of (i) avoiding penalties under the Internal Revenue=Code or (ii) promoting, marketing or recommending to another party any tra=saction or matter herein. This message is a PRIVILEGED AND=CONFIDENTIAL communication. This message and all attachments are a private=communication sent by a law firm and may be confidential or protected by p=ivilege. If you are not the intended recipient, you are hereby notified th=t any disclosure, copying, distribution or use of the information containe= in or attached to this message is strictly prohibited. Please notify the =ender of the delivery error by replying to this message, and then delete i= from your system. Thank you. =r> Please visit http:=/www.mwe.com/ <http://www.mwe.com/> for more information about our Firm.</=> ***** *•**, The information conta=ned in this communication is confidential, may be attorney-client privi=eged, may constitute inside information, and is intended only for th= use of the addressee. It is the property of Jeffrey Epstein Unauth=rized use, disclosure or copying of this communication or any part ther=of is strictly prohibited and may be unlawful. If you have received thi= communication in error, please notify us immediately by return e-ma=l or by e-mail to [email protected] <mailto:[email protected]> , and destroy this communication and all cop=es thereof, including all attachments. copyright -all rights reserved 4 EFTA_R1_00068687 EFTA01762973 The information contained in this communication is confidential= may be attorney-client privileged, may constitute inside information, =nd is intended only for the use of the addressee. It is the property of=br>Jeffrey Epstein Unauthorized use, disclosure or copying of this =ommunication or any part thereof is strictly prohibited and may be unla=ful. If you have received this communication in error, please notify us=immediately by return e-mail or by e-mail to [email protected] <mailto:[email protected]> , and destroy =his communication and all copies thereof, including all attachments. co=yright -all rights reserved <= class=MsoNormal> The information contained =n this communication is confidential, may be attorney-client privileged= may constitute inside information, and is intended only for the use=of the addressee. It is the property of Jeffrey Epstein Unauthorize= use, disclosure or copying of this communication or any part thereof i= strictly prohibited and may be unlawful. If you have received this =ommunication in error, please notify us immediately by return e-mail or=by e-mail to [email protected] <mailto:[email protected]> , and destroy this communication and all copies t=ereof, including all attachments. copyright -all rights reserved</=:p> 5 EFTA_R1_00068688 EFTA01762974