As many of you are aware, when Bill Ackman was just a young pup of a money manager, before he was coming up with genius one-stock funds, he placed a bet against MBIA, based on Ackman’s belief that the company’s AAA rating was the stuff of bull shit. No one had ever dared question the bond insurer, so when its CEO, Jay Brown, got wind of the news, he demanded Ackman show up to his office to discuss the matter, probably referring to the meddlesome manager as “the little pissant” under his breath. Or something. Doesn’t matter. What does matter is what Bill was noshing on before the meeting. It’s something I’ve been thinking about for years as have many of you, as conversations with you leading lights would indicate. Today, finally– finally!– we have an answer.
Before his meeting with MBIA’s CEO, Ackman had lunch with Michael Ovitz, the founder of Hollywood’s Creative Artists Agency and a longtime investor in his fund. As they worked their way through six different versions of toro, the Japanese fatty tuna delicacy, Ackman asked Ovitz’s advice about the upcoming meeting with Brown. “It sounds like a very Japanese meeting,” Ovitz said. In other words, he said, “Just shut up and listen.”
Oh, and here’s how the meeting went (spoiler alert: not great-ish. Because Ackman’s hands smelled like fish. I’m kidding, it’s because Jay Brown was raised in a barn). Read more »
Tax-Break Law Could Benefit JPMorgan (WSJ)
JPM is nearing a deal that would allow it to benefit from a tax refund of as much as $1.4 billion, becoming the latest company to tap a little-noticed plank in an economic stimulus bill. That law let companies apply losses from 2008 or ’09 against taxes paid in the previous five years, instead of the previous two years. Failed Seattle thrift Washington Mutual is eligible for about $2.6 billion in tax refunds, thanks to big losses in 2008. Now J.P. Morgan, which took over WaMu’s banking operations in September 2008, is in discussions with the Federal Deposit Insurance Corp. and bondholders about the refund. According to people familiar with the talks, an agreement under discussion would let J.P. Morgan claim more than half of the total, to be held in an FDIC receivership as part of a larger settlement with bondholders. J.P. Morgan could dip into that pot to satisfy certain claims related to WaMu’s collapse.
Tough-Talking Feinberg Eases A Bit On GMAC (NYT)
According to Mr. Feinberg’s determination letter, GMAC’s compensation committee is free to grant up to $12.5 million of stock to employees that will paid out only if they meet individual performance goals. In addition, the company will be able to award up to another $12.5 million worth of long-term stock at the end of this 2010. That second portion must be approved by Mr. Feinberg and can only be paid out if the company itself turns an annual profit from its continuing operations.
The London-based hedge fund, Moore Capital, was one of the firms raided by the City watchdog the FSA, the BBC has learned. One person at Moore Capital and five other City workers are being held. Those arrested are suspected of taking part in a long-running insider-dealing scheme. The arrests came after 16 addresses were searched in a joint probe by the Financial Services Authority (FSA) and Serious Organised Crime Agency (Soca). Documents and computers were seized from premises in London, the South East and Oxfordshire. It is the FSA’s biggest operation against insider dealing.
Remember, back in the day, when Kenneth Feinberg was named Comp Cop and everyone working at a bailed out company, who were told their asses were about to be capped, threatened to leave if he so much as dared to take a penny of their hard-earned money away? Sure you did, they wouldn’t shut up about it, or the fact that this–this!– was going to be the death of their otherwise phenomenally profitable firms? Anyway, apparently most people were just messing.
Of the 104 senior executives whose pay was set by the federal pay regulator in the last two years, 88 executives, or nearly 85 percent, are still with the companies even though their pay was drastically cut back, according to people briefed on the government data. The relative stability, at least within the executive suite, suggests that a soft job market, corporate loyalty and personal pride helped deter the feared management exodus at the companies hardest hit by the pay rules.
Are you one of the UBS clients who maybe used the firm to get around paying your some or all of your taxes? Have you been considering whether or not to come forward and admit it, not because of the shame (there’s no shame in this! Except that you’re lumped in the same category as Tim Geithner, which is a little hard to swallow), but because of the possible jail time? It turns out these sentences aren’t so bad! They probably won’t send you downtown and, if you get lucky like this guy, you’ll get to play the slots at your leisure.
John McCarthy, a businessman from the wealthy seaside enclave of Malibu, also was placed on three years supervised probation on Monday and fined $25,000 for his guilty plea to a single felony count of failing to report a foreign bank account from 2003 through 2008.In addition to the fine, McCarthy was ordered to make restitution of more than $485,000 he owed to the government, which he already has paid, and to perform 300 hours of community service, which he can do while under home detention.
He had faced a maximum penalty of five years in federal prison and $250,000 in fines.But Judge Valerie Baker Fairbank said she weighed in McCarthy’s favor his cooperation with authorities, the fact that he had no prior criminal record and had otherwise “led a responsible, law-abiding life.”