Blacklisting dates back to at least the late 1990s, when Nextel Communications Inc.’s then chief financial officer Steve Shindler penalized lenders who didn’t participate in the company’s new credit facility by banning them from buying the debt in the secondary market, according to industry newsletter Bank Letter.

It became known as “Shindler’s List,” reflecting Wall Street’s penchant for tasteless puns that twist history. The phrase is a reference to German businessman Oskar Schindler’s list of Jews to be saved from transportation to concentration camp Auschwitz during World War II, the subject of the Oscar- winning film of that name in 1993.

To this day, traders still use the name when talking about blacklists. Shindler, who is now chief executive officer of NII Holdings Inc., the bankrupt mobile-phone company that uses the Nextel brand in Latin America, declined to comment.

‘Disqualified Institutions’

“It’s anti-American,” Lee Shaiman, a senior portfolio manager with Blackstone Group LP’s credit unit GSO Capital Partners in New York, told the LSTA’s annual conference Oct. 23 when asked about the practice. “It’s anti-competitive.”

Some investors find out that they have been barred when they try to complete a trade and are turned away by broker- dealers. Others never know. Most lists are kept privately by the banks that arrange the deals.

Occasionally, they’re included in public credit agreements, like the blacklist orchestrated this year by a Goldman Sachs Group Inc.-controlled company named Interline Brands Inc. An addendum to a March 19 regulatory filing for the deal listed two names as “Disqualified Institutions” that couldn’t buy the loans: hedge funds Bulldog Investors and QVT Financial.

Andrea Raphael, a spokeswoman for Goldman Sachs, said the bank didn’t select the names on the list. Lev Cela, a spokesman for Interline, didn’t respond to e-mails and telephone calls seeking comment. A QVT representative declined to comment.

Phil Goldstein, the co-founder of Bulldog in Saddle Brook, New Jersey, was unaware for months that he had been banned. “It kind of irks you that there’s somebody saying you’re not good enough to do this or we don’t want you for that,” he said.

The whole thing is perplexing to Goldstein.