Archive for December 2006

Shorter DealBreaker

BabyNewYear_1.jpgNYSE to Close in Ford’s Honor (WSJ) We grew up believing that Gerald Ford was at best a joke and at worst an enemy. It’s still hard to not think of Chevy Chase’s pratfalls when we hear his name. And his choice of liberal Republican plutocrat Nelson Rockefeller as vice-president marked him as not only on the wrong side of history but on the wrong side, period. In the years since he exited the stage of national politics the best thing that can be said is that he stayed off stage, no small feat in the age of ex-presidents as global superheroes. But we’ll give this to him: the man knew when to die. The NYSE, the America Stock Exchange, the Chicago Board Options Exchange and the CBOE Futures Exchange have all announced they will be closed on Tuesday in observance of a national day of mourning for Ford. And now the banks are sending out memos giving everyone the day off as well. Which means we hit this New Year’s Eve weekend with four days off—and an extra day to recover from the damage we plan to do to ourselves, our loved ones, our livers and our souls on Sunday night. So here’s to Ford. In the end, not such a bad guy.

Apple Probe Finds Jobs Recommended Some Grants
(WSJ) Here’s an Apple commercial you won’t see—the one where Hodgeman comes on asking why the hell the Mac guy is always so effin smug, and the Mac guy replies that not only did he get backdated options but he’s totally getting away with it. Look, we’ve said again and again that, for the most part, backdating was a phony scandal. And nothing illustrates this better than what happened with Steve Jobs’ backdated options grants. You see, Jobs got two grants that were pegged to earlier dates, essentially giving him options that would be priced cheaper than if they were dated on the correct date. But these were later cancelled when the company gave Jobs a bunch of restricted stock. Now if you keep in mind that restricted stock is basically an option with an exercise price of zero, you can understand why scandalizing backdating is so silly. A cheaper option is a crime but a free grant isn’t? It’s a wonderful world.

Hedge Hogging
(New York Post) The limits of the insider trading laws are a bit fuzzy, in part because so few of those charged actually go to trial. Except for the most obviously criminal enterprises—such as this year’s Plotkin Plot—the SEC settles most insider trading cases out of court, which means that there actually isn’t much in the way of legal precedent testing the limits of the laws. So you can bet on some legal fireworks in the case of John Mangan, a co-founder of Mangan & McColl Partners, who was accused by the SEC yesterday of insider trading. Mangan is accused of gaming a PIPE of CompuDyne stock, and plans defend himself by claiming it was just a bureaucratic mix-up. The outcome of the case could provide guidance for how banks and hedge funds can be held liable for screwing up trading executions.
Bringing Back The Brick (GrooveKing) Nothing says classic Wall Street like the old brick cellular phone. Now someone has gone and figured out how to get one of these babies working again by tearing out the insides and using Bluetooth technology to bring it up to date. Bess, we finally found a Hanukah gift for you.

And That Was 2006:
The entire DealBreaker team wishes you a happy New Year. We’ll be back on a full schedule next week. See you in 2007.

Shorter DealBreaker

thehodgmeister2.jpgBernanke Recovers From Missteps to Earn Inflation Credibility (Bloomberg)

After early doubts about the Fed chief’s commitment to fighting inflation and charges that he was too candid about policy, investors are now giving the 53-year-old Bernanke a vote of confidence. The yield on the benchmark 10-year Treasury note has fallen to 4.65 percent — from 5.25 percent in June — even though he stopped raising interest rates in August with inflation above his declared comfort level.

It’s like we always say– never question the street cred of a man with a beard. It’ll always come back to bite you in the ass. Always.
SEC Charges Trader (The Street) The SEC has filed a suit against John Mangan Jr., a former hedge fund manager, for the alleged insider trading of shares in a small company involved in private placement. The lawsuit is the “latest in a long string of regulatory actions to stem from the investigation into allegations of improper trading in [a 2001 investment in PIPE], which raised $12 million for Compudyne, a Maryland security-services company.
Apple ‘falsified’ files on Jobs’ options (Financial Times) Stevie-boy Jobs was reportedly given 7.5 million stock options back in 2001 sans the pesky little “required authorization” from Apple’s board of directors.

Records that purported to show a full board meeting had taken place to approve Mr. Jobs’ remuneration, as required by Apple’s procedures, were later falsified. These are now among the pieces of evidence being weighed by the Securities and Exchange Commission as it decides whether to pursue a case against the company or any individuals over the affair, according to these people.

Still adamant in his desire to “F the S.E.C,” Jobs apparently continued today barraging reporters with threats pointed toward the government organization in regards to his purported might as bizarrely derived by a recent series of television ads produced by Apple. “Have you seen our ‘I’m a MAC/I’m a P.C. commercials?” he was heard asking a reporter in a tone that was best described as sounding “psychotic.” “If you’d seen them you’d know the S.E.C. don’t have shit on me.” “No, really, I’m not kidding you, if you can’t agree with the statement ‘That Hodgman get my goat every time,’ you haven’t seen the commercials. Most people think the one with them in the boxes is the best but I think the best one is when P.C. and MAC are at a “marriage counselor” and they’re talking about how P.C. feels inadequate compared to MAC and oh my god it’s just hilarious, they’re pretending to be like a husband and wife, I kid you not, I’m in stitches every time I see that one. STICHES! I’m not kidding. I love those ads. I love them. I love them. [whispering] I love them. I love…[trails off].”
Seagate CEO apologizes for porn remark (Fortune) We just like that headline. Sue us for living.
PAYOLA SCORES ANOTHER $4.25M (NYP) Shocker: Hurricane Spitzer strikes again.
Lindsay gets a visit from Mr. Flash (WallStrip)

Shorter DealBreaker

thehodgmesiter.jpgDow Runs to New Record (The Street) Despite light trading, the Dow closed at a new record today, finishing at 12,511, thanks to gains in Alcoa, Citigroup, and GM. Over the past two days, only 1.67 billion shares were traded on the NYSE, while the NASDAQ only traded 1.24. Tomorrow could be the last day in 2006 for Wall Street, as trading may be cancelled in light of former President Ford’s death. Four-day weekend? Yes please.
Merrill brokers get plum (NYDN) Merrill Lynch’s 2007 Focus on Growth bonus program will very sweetly reward brokers who bring “lots of revenue into the firm,” while still increasing fee-based business.

Brokers who are growing their business can achieve a much greater award under the production-based program than under the current scheme, according to an internal memo. Bonuses of 10%, 20% and 30% of the commissions and fees produced over the past 12 months are available, according to people briefed on its specifics. Since advisers at Merrill Lynch on average take home about 40% of the revenue they produce as base pay, those who win the top bonuses theoretically could end up taking home more than 70% of their production.

Trump mortgage chief inflated resume (Money) Not that the whole “Miss Teen USA is a cokehead, Trump, arbiter of all things moral and not etc may or may not pardon her, TONIGHT! on things we’re too educated well-bred coked-out ourselves to work up the energy to get our panties in a bunch over but will watch because, honestly, who knows where the remote is Network” and Big D and Big O’D, Live at the Garden were getting stale but…you know how it is. We needed some fresh meat. Apparently the big guy heard our prayers and said, “I think I’ve got something you might like, if you’ll just step over here, and take a look in the trunk of my car, I’m sure we can find something you’d be interested in.” E.J. Ridings, the man brought into Trump Mortgage to “inject integrity into an industry that has the reputation for giving customers a raw deal” may have given old Donny-boy the “raw deal” himself.

First, Ridings’ initial bio stated that before joining the company he was “a top executive at one of Wall Street’s most prestigious investment banks.” Second, the bio had said that Ridings was an “established leader” at one of New York’s leading mortgage boutiques. Third, the bio said he had 15 years of experience in the financial industry. All three claims appear to be false, according to regulatory documents obtained by Money and interviews with former colleagues of Ridings.
Ridings, 42, has never been a top professional on Wall Street. Ridings, in an interview with Money in September, said the “top-executive” reference in his bio refers to an 18-month period in which he was a retail stockbroker at Morgan Stanley.

Absence of Reports Keeps Trading Light (AP) C’mon, you know the drill– lower oil prices.
Report: Apple Probed on Stock Options (Forbes)

Shares of Apple Computer Inc. fell almost 5 percent in early trading Wednesday after a legal publication reported that federal prosecutors are probing whether former company executives forged documents to maximize executives’ stock option profits.

When asked for comment, Steve Jobs apparently remarked off-handedly (and off-the-record): “F the S.E.C. Have you seen our ‘I’m a MAC/I’m a P.C. commericals‘? Seriously, that Hodgman gets me every time. I dare you to look me in the eye and tell me that shit’s not adorable. You can’t do it. You can’t.”
U.S. regulator does turnabout on stock options reporting rule (International Herald Tribune)

The U.S. Securities and Exchange Commission, in a move announced late on the last business day before Christmas, reversed a decision it made in July and adopted a rule that would allow many companies to report significantly lower total compensation for top executives.
The change in the way grants of stock options are to be explained to investors is a victory for corporations that had opposed the rule when it was issued in July, and a defeat for institutional investors that had backed the SEC’s original rule.

Finally, justice for corporate America. [fist pump] Finally. [chest bumps all around]
Philip Morris Altria rebrands Lindsay [WallStrip]

Shorter DealBreaker

newcramerdoll.jpgEx-Trader Tells Story as a Warning (NYT)
After you’ve lost $1.3 billion in Japanese stock futures and bonds, run your employer into the ground, provoked the ire of the Queen of England and served four years in prison, there isn’t much left to check off on the Things To Do Before I Die list, save for serving as the general manager of an Irish soccer club, is there? Nicholas W. Leeson, a 39-year-old Londoner who has the distinct pleasure of having accomplished all of the aforementioned, begs to differ. The “Rogue Trader,” who began working for Barings Bank in 1989 and had no small part in its ’95 $1 billion-in-losses-collapse, now tells his cautionary tale to the tune of £5,000 ($9,800) a speech, in addition to a book deal and the general contentment of being able to say Hey, I may have lost a 233 year old bank a pretty penny, but now I’m turning the tables on them and insisting “The British bank was culpable for failing to supervise [me] and for accepting the bluster of a young trader who was prepared to disguise his trading losses.” You can’t put a price tag on that kind of satisfaction.
Bernanke, Fukui, Trichet May Fail King’s `Boring’ Test on Rates (Bloomberg)
2006: skinny jeans, Aleksey Vayner, Jim Cramer bobble heads, predictability. 2007: mini-skirts, Valentin Mironov, Jim Cramer dashboard dolls*, volatility. Analysts are expecting a global economy with both slowed growth and inflation; Goldman predicts Bernanke will cut the Fed’s rate to 4.5 percent, Barclays thinks it’ll be kicked up to 6. John Lipsky foresees “reasons why you should worry that [things] could be dicier.”
Questions for Peter Singer (NYT Magazine)
In case you missed it, Peter Singer (the Ira W. DeCamp professor of bioethics at the Center for Human Values at Princeton University) answered Times Magazine readers’ questions about the ethics pertaining to spending and philanthropy over the weekend. Unsurprisingly, Singer is painfully principled (“Ultimately, I don’t think my [minimal] indulgences can be justified. I know that I’m very far from being a saint. I should spend less on myself and give away more of what I earn. Of course, I give much more than most. But I know that that isn’t the right standard. As for deciding how much is enough, I just do a little better each year”) and pragmatic (“I’m a pragmatist: whatever works”), but we’re pretty sure most of you will be willing to overlook such character flaws if only for the singular reason that Singer steps into the ring with Carney, Muhammad Yunis-style.
Winners and losers: Tallying a year of outsize successes and bitter disappointments (Bloomberg News via IHT)
“Where there’s a loser, there’s a winner,” is what our psychologically-damaging-to-an-11-year-old tennis coach used to tell us. But you know what? He was right. When somebody loses, somebody else wins. He was also right about the fact that there’s nothing wrong with seeking approval even if it brings one to the brink of a nervous breakdown, if it brings perceived satisfaction to those from whom we are seeking it. Maybe if Yahoo! had done a little more seeking and a little less sinking, it wouldn’t be watching YouTube get a pat on the back from Bloomberg on the other side of the court. We mean net. Internet. Why won’t you love me?!
Biz-y day at some N.Y. shops (NYDN)
Having beat the dead horse that is the old “we’re out of ice” trick a few too many times, but still desperate to get out the house, consumers took to the streets and racked up nearly $16.2 billion in sales over the weekend. Too little, too late, however, for the economy’s sake, as sales are predicted to be up less than 5% nationally this holiday, the slowest pace since 2002.
New Year in Detroit (Forbes)
Jonathan Fahey’s tips for GM, Ford and Chrysler. Hint: turn a profit.
*like the hula girls? Don’t even try and act like you’re not psyched for those bad boys.

Merry Christmas!


  • 25 Dec 2006 at 6:38 AM
  • admin

Happy Holidays

DealBreaker will be on a reduced publishing schedule this week. We’ll be doing once-a-day news wrap-ups and the DealBreaker trifecta, Bess, Joe and Carney will return on January 2nd.
Happy Holidays from everyone at Dead Horse Media.

Write-Offs: 12.22.06

$$$The Holiday Emergency List [Banker’s Ball]
$$$“I collect stamps, coins, and stones. And i have 6 cats…You should e-mail me.” [Craigslist]
$$$ How to get an A on your 13-D. [Long or Short Capital]

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“HOO-AH!!!” [copyranter]