Fans of enemies of naked shorting, rejoice. Settlement (no admission of guilt, innocence, neutrality, etc.) for the first enforcement actions brought for the vile enemies of all Christian civilization is at hand.
Hazan and the company were accused of betting that share prices would fall without borrowing and delivering the shares, the SEC said in a statement today. Regulations adopted in July require brokers to identify a source of the shares prior to a short sale and to deliver the securities by a certain date. The SEC also barred Hazan from working with any brokerage.
And just in case you thought these sorts of things didn’t travel in pairs:
In a separate case, the SEC settled similar claims against TJM Proprietary Trading LLC, ordering payment of $541,000 in disgorgement. The suit named trader Michael Benson and Chief Operating Officer John Burke, who will pay $250,000 in fines together with the company.
Maybe it is just us, but when the first actions against the practice involve cases with “complex options transactions,” you are simply trying too hard.
Hazan Capital Settles SEC’s First Claims of ‘Naked’ Short Sales [Bloomberg]
You’ll know the recession is over when you actually hear the words your waitress is saying and stop thinking about what you would do to her. That is the basic premise behind the new leading economic indicator, the Hot Waitress Index, developed by Hugo Lindgren. With the recession taking its toll on the usual enclaves of aesthetically gifted females, many of them are trying to make ends meet by leveraging their looks with bars and restaurants desperate to stay in business.
A waitress at one Lower East Side club described… what happened there: “They slowly let the boys go, then the less attractive girls, and then these hot girls appeared out of nowhere. All in the hope of bringing in more business. The managers even admitted it. These hot girls that once thrived on the generosity of their friends in the scene for hookups–hosting events, marketing brands, modeling–are now hunting for work.”
So if you’re sitting at a bar or club trying to imagine your waitress with more clothes on instead of off, the green shoots are blooming.
The Latest Hotness Indicator [CNBC]
Much like the Cubs, the UBS Investment Bank’s rallying cry seems to be ‘wait til next year’ in terms of when the unit will bring home a profitable quarter. As virtually every other major IB was making money hand over fist in FICC trading last quarter, UBS focused its attention on charging up the league table in lawsuits. The (current) CEO Oswald Gruebel recently highlighted just how bad things have become.
“We had virtually nothing, no revenues from credit trading, which was the biggest performer in the last quarter.”
But the news isn’t all terrible. Based on CFO John Cryan’s comments regarding when profitability will return, the concept of the why firms hedge may have finally made its way to the Swiss bank.
“I was asked this by the board, and I likened it to predicting the weather in the U.K.,” he said. “You can predict it for about the next half an hour, but you can’t predict it for much longer than that.”
If Jefferies is done plundering, and the IB can go more than 3 weeks without having to pay up for new senior management hires, they might be able to drop the second derivative loss rhetoric and reacquaint themselves with a color other than red.
Believe it or not the United States and UBSSwitzerland are not anxious to release the details of their 20-Questions: Tax Evaders settlement just this minute (or Friday, when the settlement is due to be concluded). You would think the settlement some sort of public relations embarrassment for Switzerland by this metric.
The settlement is likely to include the handing over of some UBS client data to the U.S. but UBS will be spared paying a fine, U.S. government sources have said.
A second source also confirmed the details were unlikely to be made public on Friday.
There had been speculation the U.S. and Switzerland would wait until the end of September to finalize the settlement to wait until the end of a U.S. voluntary tax disclosure programme.
So, really, the voluntary disclosure program (don’t say amnesty) only applies if you weren’t totally screwed by UBS before you had a chance to dial IRS customer service and fess up. (Or hit the “disclose foreign black account” button in TurboTax, if you work for the Treasury.)
UBS Tax Deal Details Unlikely On Friday [Reuters]
A new FA at GS is reportedly making an attempt to put down 8 pints of beer in an hour. The contestant is around 6 feet tall and the beer has to be at least 5% alcohol and light beers are excluded. Current market is 2:1 with over $3,000 in notional already on the line.
Update I: While this challenge appears pedestrian for those who test the limits of their liver regularly, DB has learned that the contestant has not had a drink in 18 months.
Update II/Final Results: In a heartbreaking ending, the new FA stumbled at the finish line and spat out his beer on the last sip- which was ruled a default by the judges.
How excited are you by the prospect that the Treasury might regulate credit ratings? Us either. And, as it happens, even the Treasury isn’t so keen on the idea. To wit:
The Obama administration is resisting calls to get involved with ensuring that credit ratings are reliable and said on Wednesday this would force investors to rely even more on the ratings.
Although credit rating agencies have been accused of assigning top ratings to complex securities that later crumbled in value, the government should not be in the business of regulating their methodologies or ratings performance, a top Treasury official told Congress.
“To do so would put the government in the position of validating private sector actors and would likely exacerbate over-reliance on ratings,” the Treasury’s assistant secretary for financial institutions Michael Barr said.
Government validating private sector actors? I’m sure you know that the Treasury would never contemplate such a thing.
Treasury Resisting Calls to Regulate Credit Ratings [CNBC]
Poor, poverty-stricken Harvard. Gazing at 30% losses for their latest fiscal year and the tatters of a management team for the endowment, it is unsurprising that they would start trying to fill the ranks. You have to like their chances. It would be pretty hard to look all that bad given the endowment’s recent performance, though we have confidence that the new recruits will give it their full effort.
Harvard Management Co., manager of the nation’s largest college endowment, said it hired a new equity portfolio manager from New York-based hedge-fund firm Caxton Associates.
Emil Dabora, who specialized in event-driven investments at Caxton, is the second recent hire by Harvard Management.
Why are we suddenly reminded of Where Eagles Dare?
Harvard Hires New Equity Portfolio Manager [The Wall Street Journal]
This time with Lenny Dykstra and Ron Insana as our hosts.
LongShortTrader has a piece on the investment masterminds taking credit in their “The Street” newsletters for calls made before they had “The Street” newsletters. Says LongShortTrader:
It’s not the most accurate title in the world, but Lenny Dykstra’s former and Ron Insana’s current newsletters for TheStreet.com (TSCM) have something in common — taking credit for investment recommendations made before the newsletters even launched.
Our attempts to summon outrage have, thusfar, met with abject failure. What’s the problem here, really?
Many years ago, before starting my investment newsletter, I told my friend’s younger sister that her lemonade stand was “a really crappy idea.” That venture’s total collapse not days later would have given the short-seller absolute returns of ~90%+ (assuming reasonable securities borrowing costs). I won’t bother to compute the annual return. How is that not relevant to the awesomeness of my investment newsletter?
Lenny Dykstra & Ron Insana: Two Peas in a Pod? [LongShortTrader.com]
In a confidence inspiring housing green shoots story, the third largest issuer of FHA loans last month, Taylor, Bean & Whitaker Mortgage Corp, was suspended from making additional loans insured by the agency. In the Ponzi era actions such as forgetting to file an annual report and not disclosing, “certain irregular transactions that raised concerns of fraud” almost qualify as acceptable business practices. But the head of HUD, which oversees the FHA, is drawing a line in the sand.
“Today, we suspend one company but there is a very clear message that should be heard throughout the FHA lending world: Operate within our standards or we won’t do business with you,” said HUD Secretary Shaun Donovan
Given that Donovan remarked earlier this year that the FHA may have to go to Congress for a bailout to cover forthcoming losses, the FHA’s standards may lead it to not doing business at all.
Taylor Bean Suspended From Making FHA Loans [WSJ]
If Goldman reminds you just now of that exhibit at the zoo with all the dark red lights, like the school darkroom but with signs that read “No Flash Photography – Nocturnal Exhibit,” you aren’t alone. For a firm that desperately wants to slide back into the warm cape of the dim, Goldman is getting a lot of attention (even with respect to Goldman memos about how Goldman is getting too much attention). And now, this:
In its latest quarterly filing with the Securities and Exchange Commission, the firm offered lots of additional details about its hugely profitable second quarter. But deep into the filing, the investment bank also disclosed two government inquiries that weren’t mentioned in previous filings — one regarding its pay practices, and the other involving credit derivatives.
Goldman has been facing heavy scrutiny lately, especially after it reported billions of dollars in income in the second quarter and set aside more than $11 billion for employee compensation, all during a quarter when it paid back aid it received from the federal government.
The scrutiny appears to be growing.
You noticed, eh?
The reality is that it will be a long time before Goldman can comfortably slip back into the shadows- if ever. In the meantime, a dark pair of shades is probably called for. Just sit back and bask in the sunshine for a bit. It’s going to be a long day.
Goldman Faces Inquiries on Pay and Derivatives [Dealbook]
With yesterday’s announcement that Dan Sontag will be stepping down as head of the Merrill broker brigade because he no longer had his “whole heart” in the game, Ken Lewis may have officially killed the firm’s culture. The 31 years at ML was not enough for the BAC overlords to reconsider giving Sontag a new boss in the form of Sallie Krawcheck. Once unthinkable, one of the truly distinctive cultures on Wall Street may have been completely wiped out by a bank based in North Carolina. If Ken Lewis was worried about broker defections before yesterday, he should be petrified now.
