According to John Mack’s assistant (I kid, of course, though the tip was anonymous so it’s a fifty-fifty chance it could’ve come from her), Morgan Stanley’s population restructuring project will affect “more than just [the rumored] 1,000 brokers,” with cuts occurring in all departments but most heavily in IBD, and impacting 10-15% of total employees. But layoffs, these things happen all the time, and I don’t want to say I’m not beside myself with this news, but I’m not losing any sleep over it. Know what I am losing sleep over? Know what’s seriously cutting into my mid-morning nap schedule? Weighing on my mind? Distracting me from my Mark Haines fantasies? Infringing on my ability to stare off into space? This news (smut, rather) about Goldman Sachs—GOLDMAN SACHS—being forced into this pedestrian layoffs business. Cutting one person—VP, associate, analyst, trader, CEO, secretary, janitor—from Goldman Sachs is too many; according to Reuters, GS will be cutting a whopping 5 percent of its global workforce. I would like to know where the hell God, Goldman Sach’s co-pilot, is during all of this. What he could possibly be doing that’s more important than protecting his children. The only plausible explanation that I can come up with is that he was busy ghost writing this. If that happens to be the case, cool. It was worth it and “Who knows how many men unwittingly dropped their pants under the government’s watchful eye”? That was inspired my friend. Otherwise, we have a problem.
Wall Street, even Goldman, faces ’08 slowdown [Reuters]
What Happens in Men’s Room, Stays in Men’s Room [Bloomberg]
Archive for January 2008
Rogue Trader’s Story Raises More Questions Than Answers (Dealbook)
Given the extent of Jerome Kerviel’s losses, folks aren’t quite ready to believe he was a jackal working alone. We think it probably was though. But for now, people would rather believe that there was a conspiracy of sorts, rather than believe that a little knowledge of SocGen’s computer system was able to render its entire risk management infrastructure 100 percent useless. People like to call big “nine-sigma” events black swans, but they’re really not, because we get once-in-a-millennium perfect storms once every five years or so. But nobody’s got a formula that knows how to take into account one trader that knows how to bypass security checks.
Trader Turns Societe Generale Report Into a Nightmare (Bloomberg)
Someone suggested yesterday that this whole story was a coverup for deep subprime losses. Better to pin it on a 31-year old kid that didn’t even go to an elite college than on the upper ranks. We doubt it. Nobody would’ve blinked if the company had lost another $7 billion on writedowns. As it is, the company actually reported a big subprime writedown and nobody even noticed.
Scottish & Newcastle Agrees To Buyout by Carlsberg, Heineken (WSJ)
Beer consolidation, bring it on. Scottsh & Newcastle looks set to approve a sale to Carlsberg and Heineken in a deal worth $15.4 billion. That’s a lot of money, for beer. With the deal, Scottish and Newcastle will be broken up, with Carlsberg and Heineken each taking over certain regional assets.
Buying Randy Newsom (Ideoblog)
Have you heard about this baseball player that’s going to sell chunks of his future income to the public? Yeah, for as little as $20, you can buy a slice of infielder Randy Newsom’s future earnings stream. Larry Ribstein looks at some of the legal issues and wonders whether this counts as a security that, theoretically, would be regulated by the SEC.
$$$ “I always knew it was a bad idea to let kids run the global financial system.” [DealBook]
$$$ Jerome Kerviel is down to ONE FRIEND on Facebook, from eleven this morning. Let this be a warning to all of you contemplating breaking the law. [Facebook]
$$$ Crash [WallStrip]
Don’t Forget: tonight on MOJO, the people who brought Tim Sykes into all our lives–Wall Street Warriors, season 2 (9:00 PM), Bobby G: Adventure Capitalist (9:30 PM), Start Up Junkies (10:00 PM). Discussion groups tomorrow.
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Posted in:
World Economic Forum
BREAKING: Jimmy Cayne Protests Exclusion From Davos Conference
By Bess Levin
Earlier: Outrage Davos
Alright, so there may have been some sort of mix-up with Société Générale’s accounting but Risk wants you to know that it continues to believe that the French bank deserves the equity derivatives house of the year award. The prize was given on the basis of SG’s innovation in derivatives in 2007, and we submit that in order to scale the heights of an illustrious list of criminals that includes everyone from Nick Lesson to that inimitable puppy lover, and in doing so dethrone the immortal Brian Hunter, Jerome Kerviel must’ve done a little if not a lot of “thinking outside the box.” Plus, it would be a bitch to take the honor back and give to someone else, as the plaque has already been engraved. In other news, Billion Dollar Fraud Quarterly also plans on rewarding SG for its innovation this year, and there’s power in numbers. DealBook’s Andrew Ross Sorkin is also giving props in a blog post later this afternoon and Ron Blarney has been rallying behind SG in AOL chat rooms since he woke up.
In our defence [Risk Magazine]
Equity Derivatives House of the Year – Société Générale [Risk Magazine]
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Posted in:
Credit Suisse
Layoffs Watch ’08: Current And Upcoming Shitcannings At Credit Suisse And Morgan Stanley, Respectively
By Bess LevinA (very) recently fired Credit Suisse employee tells us that “Every conference room on the CMBS floor has an HR representative working through people as they show up for work. Analysts and Associates seem to be the first out the door.” We understand that for the victims, this might seem like bad news, and yeah, you’ll probably feel weird about going to Shake Shack for a while, but the flipside is that you won’t have to deal with the embarrassment of being employed by Bear Stearns, when the two banks merge. In related news, Morgan Stanley has announced plans for its own population restructuring, as modeled after the redistribution project in the Sudan. If you have any other info, feel free to share, or not share, otherwise, enjoy this one on me:
The man picture at left is, purportedly, Jerome Kerviel, the Société Générale employee who executed a bunch of “elaborate, fictitious transactions” that cost the bank a bunch of money. Not to treat him like an object because obviously he’s a person with feelings, but we’re a bit taken a back by how good looking he is. And not like “rogue trader hot,” like “hot, hot” without qualifiers (direct quote from Ron Blarney: “I’m don’t even like Two and A Half Men and I still fuck him”). This attractiveness will serve him well in the event of a nationally televised trial, and even better in prison.
French Bank Finds $7.14 Billion Fraud (AP)
These days, a loss of $7 billion at a major bank is hardly anything to get excited about. It’s all in a days work. But this time it’s different. At Societe General, a single trader is said to have been responsible for more than $7 billion in fraud. This sounds like a story that will take some time to unpack, because it’s still not totally clear what’s happened. Evidently, he used his knowledge of the bank’s security systems (a little odd) to conceal his actions, which involved a scheme of “elaborate, fictitious transactions”. Though apparently they weren’t so fictitious that they didn’t cost the bank money. Anyway, trading in SG shares has been suspended and, this is rich, the trader apparently tendered his resignation, which was accepted. Good chance the trader has more pain coming to him. WSJ has more. and AlphaVille liveblogged the conference call, which sounded like a mess. S[eaking of messy conference calls, did you see that SLM boss Albert Lord apologized for his behavior on that call last year? Too bad. He should’ve stuck to his guns.
Leeson for sale, before he goes on holiday (to Paris) (FT Alphaville)
Not surprisingly, the real winner of this Societe Generale news is Nick Leeson, the man who’s name is synonymous with rogue trading. His losses were lower than this, but he had the bad luck of winding up in a Singapore Prison. The man’s turned himself around over the years and last we heard he was working for a football (soccer) club as a GM or something. Anyway, word is that he’s going to charge more than £1,000 per interview. That doesn’t seem like very much.
Asian Markets Mixed After Dow’s Rebound (AP)
After the US staged a dramatic reversal of fortune, the good kind, not the bad kind, the rest of the world turned in a mixed performance overnight. Some markets were up, while others were down. That’s what we like to see though. Markets moving in lock step, either up or down, are always a bit scary — sort of like lockstep soldiers walking over a bridge. Always good when they break things up a bit and do their own thing.
Next on the Worry List: Shaky Insurers of Bonds (NYT)
Apparently there are these companies called bond insurers and apparently they play a big, under-appreciated role in the economy. And supposedly they’ve taken on too much risk and may collapse, resulting in untold calamity. Have you heard of them? Probably not, cause they’re the next worry. Something to watch out for though, for sure.
Today was the day that was supposed to happen yesterday. The market plunged in the morning and then “staged a turnaround” or “bounced back” or whatever metaphor you want to use for the increasing share prices. The Dow Jones Industrial Average swung more than 600 points.
What’s going on? We’re allergic to explanations of market movements but we’ll venture a bit of speculation. There were rumors of a quant hedge fund liquidating it’s positions that helped drive sellers afraid of a repeat of the turmoil from last August. These might have helped fuel the downward draft. On the upside,
word spread that Wall Street banks might bailout the bond insurers. Since the weakness of the bond insurers has been depressing banking stocks and the failure of a major bond insurer could result in more losses for banks, it’s not surprising that Wall Street would be interested in rescuing them. Shades of Long Term Capital Management.
The movement for the insurers was huge. Shares of insurer Ambac jumped 72%. MBIA was up 33%. The bank stocks surged as well, with Citi climbing something like 9% and JP Morgan Chase surging 12%.
Ben White and Aline van Duyn broke the story wide open in the Financial Times, making what had been a whispered rumor into something much more concrete. According to White and van Duyn, the details of the bailout are still being worked out but “contributions to the bail-out fund would not necessarily be based on how much exposure each individual bank has to the insurers, known as monolines.”
Banks pressed to bail out bond insurers [Financial Times]
LTCM 2.0: Should Wall Street Bail Out the Bond Insurers? [DealJournal]
Earlier today, in the name of justice, gay pimp Billy Ash emailed the latest filings from the Seth Tobias probate case, to a motley crew of recipients that included private investigators, two hedge fund mangers, some fellow pimps, a bunch of Howard Stern show employees and John Carney, Esq. The papers enumerate the occasions on which Filomena abused Seth (one time she struck him so hard that the “force of the slap turned S. Tobias’ head and made a loud popping sound,” another time she threw a phone at him, and once she kicked a door), as well as one instance in which the tables were turned and Tobias “pulled [Filomena's] pony tail.” Mr. Ash also included this impassioned plea:
“I’m trying to keep pressure on the police to move on this bizarre case forward. I need some type of closure. It has been written about in over 5 country’s [sic], over 100 papers and over 500 articles. We need your help to solve this case.”
Normally we wouldn’t suggest that you involve yourselves in a murder case, but since it’s been written about in six countries, we’re saying yes, stop what you’re doing and help us solve this sordid tale. We’ve agreed to organize and co-host a trip down to Palm Beach and have already reserved a van. Duty calls and all that. All those interested in volunteering should shoot an e-mail to andrewross.sorkin@nytimes.com, or try him on his cell at 203-890-2000.
–Stan O’Neal in New York contributed to this report.
Court filing [PDF]
Rumors are swirling that Alopex Capital, the equity volatility arbitrage hedege fund manager founded by ex-Goldman Sachs and Soros trader Peter Van Dooijeweert is shutting down. The Global Vega Fund (no relation to Vega Asset management) was apparently seeded by Tudor Investments in 2003 and in a document filed with the SEC in April 2006 the company listed only $226 million in assets under management –although people we spoke with list current assets significantly higher.
Looking for info from anyone who knows anything. Alopex could not be reached for comment.
–DealBreaker contributor A. Barber.
- Use the Bloomberg command
NH BLG_DEALBREAKER <GO>
to access Dealbreaker
