The defense had asked for 6.5 to 8 years on account of 1) the fact that, they say, Raj only made $7.4 million off his trades and 2) the “unique constellation of ailments ravaging his body” that would result in him dying behind bars if given a sentence “anywhere near” the prosecution’s request for 19.5 to 24 years. Continue reading »
Archive for October 2011
Some protesters objected to city and the landlord’s depiction of the park and said some would try to remain, no matter what the city or Brookfield do. “Unsanitary? We have a cleaning department here,” said Junior Martinez, 23 years old, who lives on the Lower East Side when not camping out. He added: “Tents or not, we will sleep without tents. I think people are going to end up doing it no matter what.” [WSJ, earlier]
JPMorgan Earnings Fall Less Than Expected on Accounting Change (Bloomberg, release)
Third-quarter net income fell to $4.26 billion, or $1.02 a share, from $4.42 billion, or $1.01, in the same period a year earlier and $5.43 billion, or $1.27, in the second quarter, the New York-based company said today in a statement. The average per-share estimate for adjusted earnings was 92 cents in a survey of 30 analysts by Bloomberg. JPMorgan would have reported a loss for its investment bank without the debt-valuation adjustment, which added 29 cents a share, under U.S. accounting rules allowed when the market value of a company’s liabilities declines. Chief Executive Officer Jamie Dimon, 55, said in the statement that the gain “does not relate to the underlying operations of the company,” which suffered from a 13 percent decline in investment-banking revenue from the prior quarter.
Long Jail Terms on Rise (WSJ)
In the past two years, defendants sent to prison on insider-trading charges in New York federal courts have received a median sentence of about 2½ years, according to the Journal analysis of white-collar sentencing data from court records and archives involving 108 cases. Just Wednesday, hedge-fund trader Michael Kimelman was sentenced to 2½ years in prison for inside trading. Those sentences compare with a median sentence of 18 months in the past decade and 11½ months from 1993 to 1999, according to the Journal analysis. Meanwhile, a higher percentage of guilty insider-trading defendants on Wall Street and in corporate America have been incarcerated in recent years, according to the analysis. In the past two years, 79% of defendants sentenced in New York have been sent to prison, compared with 59% in the 2000s and less than half from 1993 to 1999, the analysis shows.
Slovakia Clears Road to Complete Euro Bailout Fund Approval (Bloomberg)
Slovakia will approve Europe’s enhanced bailout fund today or tomorrow, completing the ratification process across the 17 euro countries as the region’s leaders prepare for a summit this month. Party leaders in Bratislava yesterday secured backing for the European Financial Stability Facility in a second vote, Robert Fico, head of the largest opposition party Smer, said. Prime Minister Iveta Radicova’s SDKU party in exchange agreed to back early elections to be held on March 10.
Deutsche Bank chief attacks recap plan (FT)
Mr Ackermann described the current recapitalisation debate as “counter-productive” because it would not address the problem of government bonds losing their risk-free status. “On the one hand it [the debate] sends the signal that a [debt] haircut is more likely, and on the other because the resources for recapitalisation will surely not come from private investors, but rather states would ultimately have to raise the funds themselves, thereby worsening their debt levels,” Mr Ackermann said.
Bloomberg visits Occupy Wall Street, says power-cleaners are coming to Zuccotti Park (NYDN)
The mayor went to inform the anti-corporate demonstrators that the owner of Zuccotti Park – where they began camping almost a month ago – plans to bring in power washers Friday. “The last three weeks have created unsanitary conditions and considerable wear and tear on the park,” said Deputy Mayor Cas Holloway. “The cleaning will be done in stages, and the protesters will be able to return to the areas that have been cleaned.”
Continue reading »
Finance professor Jialan Wang won the Internet today with a beautiful note on Benford’s law in US accounting data (for completeness of her victory see here, here, here, here, and here).
Here’s the argument. Benford’s Law is a statistical regularity that applies to many collections of numbers of differing orders of magnitude. As Wang writes:
A second earth-shattering fact is that there are more numbers in the universe that begin with the digit 1 than 2, or 3, or 4, or 5, or 6, or 7, or 8, or 9. And more numbers that begin with 2 than 3, or 4, and so on. This relationship holds for the lengths of rivers, the populations of cities, molecular weights of chemicals, and any number of other categories.
The explanation generally seems linked with exponential growth, and the formula is P(d) = log10 (1 + 1/d). So the probability of a number starting with a 1 is log 2, or 30%; the probability of it starting with a 9 is log 1.11, or about 4.6%. Strong men have been driven mad peering into this abyss.
Benford’s law ought to hold for lots of kinds of financial data, particularly if you just take a big unsorted pile of stuff. So Wang took 50 years of various financial data (revenues, assets, and 41 other publicly reported categories) from 20,000 publicly reporting companies and just plotted the number of numbers that started with 1s, 2s, 3s … etc. And it was a pretty good match to the Benford distribution:
So far so good. Now the bad news: the relationship has been moving away from a Benford distribution over time.
Continue reading »
Mr. Paulson, the money manager who made billions during the financial downturn betting against the subprime mortgage market, admitted in his quarterly conference call that he had made a bad bet on a recovery in the domestic economy, the linchpin of the firm’s investment thesis this year. Now, Mr. Paulson is moving to cut leverage in one troubled portfolio, the Advantage Plus fund, which is down 47 percent this year. He also plans to reduce the firm’s exposure to the stock market more broadly, according to several people who listened to the roughly hourlong call. [Dealbook]
…and gives Congress a glimpse of the silver tuna. Want to see the full enchilada? The golden goose? The cast-iron baby arm? El Chorizo? Then you’re gonna have to get some other deep pocketed guys and gals to show what kind of heat they’re packing. You do that and WB promises he’ll give you the full autopsy results. Those are the rules. No tit? No tat. If anyone thinks he’s going to be the only one left standing naked, they can refer themselves to a fateful game of strip poker in ’57 from which he learned his lesson the hard way, and think again. Continue reading »
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Posted in:
Banks
Masterminds At Goldman Sachs May Have Found A Way To Avoid Parsing Through 19 Slide Flowchart
By Matt Levine
You could, if you wanted to, divide the world into people who find parsing through the Volcker Rule draft creepily fascinating, and people who would rather not, thanks for offering. The first category, as far as I can tell, consists of (1) me, in small doses, and (2) a PowerPoint-enabled band of lawyers at Davis Polk, who helpfully put together an insane flowchart of the Volcker Rule. The latter category is everyone else.
So if you were, say, David Viniar, and you clicked on Davis Polk’s flowchart and noticed that it had nineteen slides many of which look like this:
… you might say “fuck it, there has to be an easier way.” Fortunately, there is, and it’s right there on Step 1: if you’re not an insured depositary institution (or bank holding company or affiliate), you’re not subject to the rules and you can go merrily on your prop trading way.
True? Somebody thinks so:
Continue reading »
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Posted in:
interesting choice of words
Eliot Spitzer Is Having ‘Loads’ Of Fun Telling Other People How To Do Their Jobs
By Bess Levin
“You know what I would like to see?” Spitzer asked the crowd. “I’d like to see a petition with a hundred million signatures, submitted to the White House tomorrow morning, saying, ‘Give us a treasury secretary who understands reform.’ Bring Paul Volcker in. Bring in Joe Stiglitz. Bring in Paul Krugman. Bring in Robert Reich…Spitzer, who was booted from the network after the program failed to offset a ratings slump, told Capital on his way out the door that he has no plans to embark on another media venture anytime soon. “Right now I’m having loads of fun,” he said. [Capital NY]
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Posted in:
insider-trading
Reader Poll: How Long Will Raj Rajaratnam Suffer The Indignity Of Unflattering Jumpsuits?
By Bess Levin
At some point tomorrow, Raj Rajaratnam will be sentenced for the 14 counts of securities fraud and conspiracy he was found guilty on in May. The prosecution, which claims the Galleon founder netted “at least” $50 million in ill-gotten gains, has requested he go away for anywhere between 19 years and seven months to 24 1/2 years, while the defense, which argues Raj scored a mere $7.4 million, would prefer 6 1/2 to 8 years. To that end, the Rajaratnam team led by attorney John “How long are you going to suck [U.S. Attorney for the Southern District of New York] Preet’s teat” Dowd has 1) asked friends of Raj to send character letters to Judge Howell highlighting what a great guy he is and 2) made the bold statement that Rajaratnam is suffering from a “unique constellation of ailments ravaging his body” and that he will most certainly “perish if given a lengthy prison term.” To date, individuals vaguely and otherwise connected to the Galleon case have been sentenced to 2.5 years (Danielle Chiesi), 3 years (Emanuel Goffer), 4 years (lobster fiend) 10 years (Zvi Goffer). So! Continue reading »
Earlier this morning, Fortune hosted a breakfast with Vikram Pandit to pick his brain on what’s been a’ poppin’ at Citi and the economy in general. According to Pandit, the Big C will report a profit for the third quarter and he does “not expect the U.S. to go into a recession,” which is all very exciting news. When asked about the individuals occupying Wall Street, he said that their grievances are “completely understandable” and that “trust has been broken between financial institutions and citizens.” And that’s not all. Continue reading »
Jamie Dimon > Any Banker In The NY Metro Area, Says Mayor Bloomberg
By Bess LevinTags: Jamie Dimon, Jamie Dimon Is A Saint!, Jamie Dimon pays his taxes, JPMorgan, Lloyd/Vickles/Gorman- comment?