In December 2009, bond guru and self-described “genius” Jeffrey Gundlach quit TCW to start his own firm, DoubleLine LLC. When he left, his former employer alleges, he took with him TCW staff, client information, and technology, which form the basis of their suit against JG (who prefers to be called “The Pope”) that is set to go to trial July 25. What Gundlach did not take with him and instead left in his office for TCW to find was a cornucopia of drugs, paraphernalia, toys and porn that gave the impression he was operating a online wholesale sex shop distributor and keeping the inventory at work. The stash included: Read more »
Archive for July 2011
At a Fortune conference earlier this week, Larry Summers said in an interview that he learned one invaluable lesson about people while running Harvard: “If an undergraduate is wearing a tie and jacket on Thursday afternoon at three o’clock, there are two possibilities. One is that they’re looking for a job and have an interview; the other is that they are an a**hole.” Summers was not speaking generally about assholes but two in particular, Tyler and Cameron Winklevoss, who in 2004, complained to the then Harvard president that Mark Zuckerberg had stolen their idea for Facebook. In the Social Network, Summers is portrayed as being a bit brusque with the Winklevii, essentially to fuck off and go waste someone else’s time, a portrayal he has described as entirely accurate, and for which he makes no apology, on account of the asshole assessment. Apparently the twins caught wind of Summers’ comments and yesterday took the time to respond, via open letter. Spoiler alert: they’re not happy (with Summers’ lack of ‘tact,’ his refusal to shake their hands, the sight of his feet on his desk, and this ‘unprecedented betrayal’): Read more »
Credit agencies warn GOP of ‘death spiral’ (Politico)
House Republicans were cautioned Thursday in a closed door meeting with credit rating agency officials that a “death spiral” in the bond market was one of the possible outcomes in the event of default. One official warned of a worst-case scenario in which a default on the nation’s credit could result in a rapid drop in bond values, sparking chaos in the markets — a dramatic warning as Washington worked on a possible deal on deficit reduction and an increase in the debt limit.
Main rating agencies set to signal default (FT)
Strategists expect all three main rating agencies to determine that Greece has defaulted, because bondholders will suffer losses whatever plan policymakers decide to adopt involving private creditors. The options are debt exchanges, rollovers or buy-backs. Although all three rating agencies were not commenting on Thursday, strategists say Standard & Poor’s is likely to put Greece on selective default, while Fitch will follow a similar route and put the country on restricted default, which is the same thing…Many strategists say a default may not have a big effect on the market as Greece would only default on a temporary basis. Both Standard & Poor’s and Fitch are likely to upgrade the country’s rating back to triple C, a low junk-grade status, once the debt exchange, rollover or buy-back has been initiated to reflect a forward-looking view of Athens, with its reduced debt burden.
Euro Leaders May Avoid Debt-Swap Trigger as They Weigh Default (Bloomberg)
A credit event enabling buyers of protection to seek compensation from swaps sellers wouldn’t occur if changes to the terms of Greece’s government bonds are voluntary. Politicians grappling with the Greek crisis have opposed any move that would trigger insurance payouts or a default rating on concern it would spread contagion.
AIG picks BofA, Citi, JPM for ILFC IPO (Reuters)
American International Group Inc (AIG.N) has picked banks to lead the initial public offering of its aircraft leasing unit and is now waiting for the U.S. Treasury to confirm the choice, a source familiar with the situation said. Bank of America Merrill Lynch (BAC.N), Citigroup Inc (C.N) and JPMorgan (JPM.N) are the banks that have been tentatively identified as the lead underwriters, the source said. The IPO could raise about $1.5 billion and value the aircraft leasing unit, ILFC, at $8 billion to $10 billion, the source said.
Wall Street Mind-Meld: Obama Still Gets Edge (Morning Money)
M.M. has been making the rounds of banks and private equity shops lately and talking to senior bankers about how they see the 2012 presidential campaign playing out given the perilous state of the economy and the likelihood of 8-percent-plus unemployment next fall. … Somewhat surprisingly, even those who strongly oppose the Administration’s policies still think the odds very much favor Obama’s re-election. The main reason cited is the fact that Obama could raise a billion dollars (with or without much Wall Street help) which would wipe out a lot of perceived problems …Other reasons often cited include the perceived weaknesses of all the leading GOP candidates and fact that Obama’s poll numbers are not much WORSE given the flood of bad economic news. “If you’d asked me earlier this year, I would have said no question Obama wins, and probably pretty easy,” one senior executive who is not a supporter of the President said. “I still think he wins, but it’s a lot closer to maybe 55-45 odds.” Read more »
Steve Cohen has said numerous times that Fairfax Financial is up to some unsavory stuff in its neverending lawsuit against every hedge fund shorting the Canadian insurer’s stock in 2009. You might think that convincing his ex-wife to sue him for control of SAC Capital was bad enough, but an even shadier stunt: Fairfax supposedly paid investigators to pretend to be hedge fund managers looking for some inside information from SAC’s co-defendants while their lawyers weren’t looking.
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John Taft, the Chairman of the Securities Industry and Financial Markets Association and the CEO of RBC U.S. Wealth Management, said he’s hearing firms are planning to cut back due to the skittish market and softening economy…He said staff reductions will likely affect all levels—even those with years of experience and expensive MBA degrees. “I think the paper value of an MBA might be overstated,” said Taft. “For it to be useful, it needs to form part of a wider package of skills and attributes, and more than a mere credential next to your name.” Taft said on the job experience in the capacity to perform in the workplace is more important than whether or not you have your MBA. [CNBC]
Yesterday afternoon, Brooklyn District Attorney Charles Hynes shut down High Class NY, serving 17 people involved in the “high-end escort service” with indictments. According to Hynes, the Sheepshead Bay-based business was patronized largely by customers “from the financial markets, many of them hedge fund people, with nothing but money, willing to pay enormous amounts for God knows what,” from girls of every ethnicity but Irish. The bust, one would assume, ruined the days of every investor and financial services hack who relied on HCNY when they were looking to drop $3,600/hour on some high class loving. Today, we discovered yet more bad news- not only did Hynes ruin some of your colleagues’ afternoons, but their upcoming holidays as well. Read more »
Former Lehman Brothers Investment Bank Head May Not Do Time For Misunderstanding Re: Forging Oxycontin, Ritalin PrescriptionsBy Bess Levin
On the whole, things have been on the up and up for most of the late Lehman Brothers brain trust. Erin Callan is said to be wildly happy with her new life out in the Hamptons, which includes spinning classes and a firefighter’s hose. Barclays has allowed Hugh “Skip” McGee to continue his writing career on the side. Dick Fuld has started a new firm and has retained enough pride to not be embarrassed about telling Wall Street he’s “here to help.” Bella, God rest her soul, is in a better place. Late last month, it appeared as though former LEH IB head Bradley Jack might be the one exception to the success stories, after he was accused of forging a prescription for 12 Oxycontin pills and 9 Ritalins, and nailed suspicious pharmacist who called the cops. Fortunately, today brings news he’ll probably get off just fine. Read more »
Strong earnings from Morgan Stanley today, with a top-line beat and lots of positive commentary on the call about converting their Mitsubishi preferred shares and gaining recognition in trading businesses, have MS up almost 10% so far today. Every story about MS earnings seems to be a story about how they’re doing versus Goldman Sachs, and so we may as well just say now: pretty good.
How’d they do it? Two possibilities come to mind:
1. Improved client facility with speed dial.
2. Increased aggressiveness at Morgan Stanley while GS is reducing value-at-risk and complaining about how hard it is to predict political events.
We wanted to figure out which was more important. So we cooked up a toy chart showing the ratio of quarterly trading (FICC and equities) revenue to average daily VaR, arguably a rough measure of the trading performance of those businesses. And here it is.
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Famous friend of Britain’s Prince Andrew Kazakhstan-born beauty Goga Ashkenazi threw a wild party at her St. Tropez villa over the weekend, complete with a topless crasher. Wealthy businesswoman Ashkenazi hosted 350 for dinner, then added another 200 guests to join an after-party. Revelers included Joan Collins, Blackstone’s Steve Schwarzman, Denise Rich, movie producer Lawrence Bender and model Victoria Silvstedt. Grace Jones performed in a black thong when a young woman, who guests described as a “party crasher,” jumped onstage and ripped off her top to “grind” with the rock goddess, before the intruder was “escorted out by security,” a spy said. [NYP]