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Another holiday classic… with a dash of finance

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The holidays are fast approaching! For those of us at Telarray, it’s a busy time of year, as we handle year-end transactions for clients and prepare for 2022. Working hard while enjoying some holiday traditions with our friends, families, and colleagues is a dance even the Sugar Plum Fairy can appreciate.

A couple of years ago, in this space, I wrote about the movie “It’s a Wonderful Life.” My column was not just about the holiday connection to the film but also the financial aspect of the underlying story.

As I contemplated a follow-up, I turned again to one of my favorite seasonal movies.

Let me preface this by saying that I am not trying to stir up any controversy — what you’re about to read are my opinions and mine alone. Some of you may agree with what I’m about to write, some of you may not.

But I’ll just say it: One of my favorite Christmas movies is “Die Hard.” The movie, which premiered in 1988, is a Top-5 Christmas movie, in my opinion. Not only that, it also allows me to connect the season and finance together again. For those of you who haven’t seen it — which I hope is just a few of you — let me give you a quick synopsis.

“Die Hard” is the story of an NYC police officer, John McClane, who has traveled to Los Angeles to see his wife, Holly, and their kids. Holly has recently taken a job with Nakatomi Corporation and moved the kids away from New York. Trying to make amends to her now-separated husband, Holly invites John to L. A. to spend Christmas with the family.

John arrives at the Nakatomi offices during the office Christmas party. As far as office parties go, this one is a stinker. As the festivities are ramping up, terrorists storm the building and take the revelers hostage. Gunfights, fistfights, and many explosions ensue. (Did I mention it was an action movie?) In the end, our protagonist triumphs, but I’ll leave out the details in case you haven’t seen the movie yet.

What were the terrorists after? What was their goal in taking the party-goers hostage? This is where the financial part of it comes into play. Terrorist mastermind Hans Gruber has his eye on $640 million in bearer bonds held in the vault located inside Nakatomi headquarters.

Before I became a savvy financial professional, I had no idea why he would want to steal this company’s bond holdings. When I became a little more educated on the subject, I learned why.

Bearer bonds are a type of investment vehicle that gives the holder of the bond the rights to its income and principal. And when I say holder, I mean the person that is physically holding the piece of paper. There is no ownership registration on the certificate and, by law, the United States government must pay the physical holder of the bonds. So you can see why Hans was interested in stealing these certificates.

Bearer bonds used to have certain tax benefits for the possessor of the bond. However, in 1982, Congress passed the Tax Equity and Fiscal Responsibility Act (TEFRA), eliminating the favorable tax status of bearer bonds and ultimately ending the practice of issuing bearer bonds in the United States. The last of these investments matured in 2016, according to the U.S. Treasury.

Since there was no ownership registration on the bonds, in addition to the large denominations in which the government issued the debt instruments, bearer bonds were a preferred investment for criminal organizations and money launderers. The bonds were highly vulnerable to theft, which motivated our movie’s villain, Hans. $640 million buys a lot of holiday cheer!

So, as you cozy up in front of the fire this holiday season with your hot chocolate and turn on this holiday classic, I hope you will view the film from a slightly different perspective now that we are all better educated on the financial motivations behind the storyline.

In closing, I want to thank every one of our clients. You are the reason I love my job! I know I speak for everyone at Telarray when I say that we are extraordinarily grateful for the trust and opportunity you give us. We do not, and never will take it for granted.

OBSERVATIONS

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