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Insider Trading Targets Expanding (WSJ)
The government currently is investigating whether roughly 240 individuals, including hedge-fund traders and company insiders, improperly shared insider information, said Mr. Chaves. Roughly half of those, or 120, are “targets,” meaning the government believes they have violated insider-trading laws and is actively building cases against them, according to Mr. Chaves, who oversees one of two white-collar crime squads handling the New York-based insider-trading investigations. The rest are what the FBI calls “subjects,” meaning investigators believe they could have committed crimes and have approached them or could do so to build cases. The large number of “targets” of the investigation—dubbed “Perfect Hedge” by FBI agents—illustrates that the insider-trading probe is broader and deeper than previously believed and potentially the most expansive of its kind in modern history.
Merkel Wins Greek Aid Vote After Warning (Bloomberg)
“Angela Merkel’s strident insistence that bailing out Greece is vastly preferable to the alternative was important,” Kit Juckes, head of foreign-exchange research at Societe Generale SA, said in a note today as he forecast the euro rising to $1.50. “Europe’s leaders have always stepped back from the edge of the abyss after flirting with disaster.”
Focus Turns Now to Greek CDS Payouts (WSJ)
An unidentified market participant has asked a committee of the International Swaps and Derivatives Association to rule on whether the passage of legislation approving collective-action clauses for Greek debt should trigger payouts on credit-default swaps tied to Greek sovereign bonds.
Stanford Declines To Testify At Fraud Trial (Bloomberg)
R. Allen Stanford opted not to take the witness stand at his criminal fraud trial in Houston before his lawyers rested their defense. Prosecutors said they had no rebuttal witnesses, so U.S. District Judge David Hittner in Houston yesterday told the jury to return to the courtroom tomorrow. Lawyers will have two hours each for closing arguments and instructions to the jury will take an hour, the judge said. “The case is over,” Hittner told the jury. Opening statements were delivered Jan. 24.
Wealthier People More Likely To Lie, Cheat (Bloomberg)
The “upper class,” as defined by the study, were more likely to break the law while driving, take candy from children, lie in negotiation, cheat to raise their odds of winning a prize and endorse unethical behavior at work, the research found. The solution, Piff said, is to find a way to increase empathy among wealthier people. “It’s not that the rich are innately bad, but as you rise in the ranks — whether as a person or a nonhuman primate — you become more self-focused,” Piff said. “You can change that by reminding upper-class people of the needs of others. That may not be their default, but have them do it is sufficient to increase their patterns of altruistic behavior.”
Morgan Stanley Details Effect of Possible Downgrade (Reuters)
A one-notch downgrade by Moody’s would require $1.04 billion in additional collateral, and a two-notch downgrade would require $5.17 billion in additional collateral, Morgan Stanley said in its annual filing with the U.S. Securities and Exchange Commission on Monday…Morgan Stanley currently has a “split” rating among the primary ratings agencies. Moody’s rates its long-term debt at A2, one notch above S&P’s A- rating, but at the same level as Fitch’s A rating. Moody’s warned Feb. 16 that it might downgrade Morgan Stanley by as much as three notches following a reassessment of large financial institutions.
Bending The Tax Code And Lifting AIG’s Profit (NYT)
Last week, the American International Group reported a whopping $19.8 billion profit for its fourth quarter. It was a quite a feat for a company that was on its death bed just a little over three years ago, so sick that it needed a huge taxpayer bailout. But if you dug into the numbers, it quickly became clear that $17.7 billion of that profit was pure fantasy — a tax benefit, er, gift, from the United States government. The company made only $1.6 billion during the quarter from actual operations. Yet A.I.G. not only received a tax benefit, it is unlikely to pay a cent of taxes this year, nor by some estimates, for at least a decade. The tax benefit is notable for more than simply its size. It is the result of a rule that the Treasury unilaterally bent for A.I.G. and several other hobbled companies in 2008 that has largely been overlooked. This rule-twisting could deprive the government of tens of billions of dollars, assuming the firm remains profitable.
Barclays Bank told by Treasury to pay £500m avoided tax (BBC)
Barclays Bank has been ordered by the Treasury to pay half-a-billion pounds in tax which it had tried to avoid. Barclays was accused by HM Revenue and Customs of designing and using two schemes that were intended to avoid substantial amounts of tax. The government has taken the unusual step of introducing retrospective legislation to end such “aggressive tax avoidance” by financial institutions.
Fortress Investment Swings To Loss (WSJ)
Assets under management totaled $43.71 billion at the end of the quarter, down from $44.61 billion a year earlier and up slightly from $43.6 billion at the end of the third quarter. Choppy financial markets and swiftly changing sentiment on the health of the global economy made 2011 a tough year for many investment firms. For the fourth quarter, Fortress posted a loss of $234.1 million, compared with a year-earlier profit of $2.8 million.
Plane Makes Emergency Landing Without Front Landing Gear At Newark Airport (Gothamist)
A United Airlines Shuttle Air Express plane made an emergency landing at Newark Airport without its front nose landing gear. The airport was temporarily closed as crews responded to the landing—the passengers and crew left the plane via emergency chutes. The plane, an Embraer 170, was the Shuttle America 3:47 p.m. flight from Atlanta to Newark. According to WABC 7, “The pilot declared an emergency because of a problem with the landing gear. The pilot said an unsafe landing gear indicator turned on in the cockpit. He did a flyby of the air traffic control tower so FAA controllers could see what was wrong with the landing gear. They reported that the nose gear was not extended. The tail gear was fine.” When air traffic control gave the okay for the pilot to land, the Port Authority put foam on the runway and the plane landed just before 6:30 p.m., on its belly.