Archive for March 2012

  • 23 Mar 2012 at 2:17 PM

That’s Dr. Fab Tourre To You!

Goldman Sachs’s former resident of fabulousness is going back to school. Read more »

You think you had a bad day? Bats Global Markets Inc, the six-year-old equity exchange, saw its debut as a public company go haywire as a system error caused incorrect price quotes and Apple Inc. (AAPL) was halted due to a transaction on its platform. “It’s a pretty inauspicious start,” Sam Ginzburg, a partner and head of capital markets at First New York Securities LLC, a New York-based proprietary trading firm, said today in a phone interview. Data received by Bloomberg showed Bats’s shares, the first ever to be listed on its Lenexa, Kansas-based market, traded for pennies following the initial public offering at $16. Nasdaq OMX Group Inc. later said they were canceled and Bats suspended its own stock until further notice. At the same time, a single trade of 100 shares of Apple, the world’s most valuable company, triggered a circuit breaker that paused the stock. [Bloomberg]

Random poll: is the guy or girl who sits next do you at work a) forgoing a chair and instead squatting in front of his/her computer b) doing lunges and push-ups behind you or c) breathing alarmingly heavily and sweating profusely post-deskside workout in which he or she shouted things like “Market’s going up! Heart rate’s going up!”? If you answered no to all of the above, your office is apparently miles behind the curve. According to a segment aired on Bloomberg TV earlier this morning, everyone on Wall Street is working out on the job. Read more »

Opening Bell: 03.23.12

Credit Suisse Chief Takes Sharp Pay Cut (WSJ)
Mr. Dougan’s compensation more than halved to 5.8 million Swiss francs ($6.3 million) from 12.8 million francs a year earlier. Like all of Credit Suisse’s top managers, he didn’t get a cash bonus. While Mr. Dougan’s base salary remained unchanged, his bonus, awarded in the form of deferred stocks, fell 69% to reflect the sharp drop in profits last year and the 41% drop in Credit Suisse’s share price in 2011.

SEC Probes Rapid Trading (WSJ)
Federal securities regulators are examining whether some sophisticated, rapid-fire trading firms have used their close links to computerized stock exchanges to gain an unfair advantage over other investors, people familiar with the matter say. The wide-ranging probe, being handled by the enforcement staff of the Securities and Exchange Commission, is focusing on the computer-driven trading platforms of exchanges, including BATS Global Markets Inc., the people said.

Fed’s Bullard Sees Price Threat From G-7 Delaying Tighter Policy (Bloomberg)
U.S. monetary policy may be at a “turning point” and the Fed’s first interest-rate increase since the global financial crisis could come as soon as late 2013, Bullard said in a speech earlier today. That view contrasts with a debate among Fed policy makers on whether more stimulus is needed even after the U.S. economy accelerated and the unemployment rate fell.

Bales Had Troubled Broker Career Before Allegations (Bloomberg)
Robert Bales, the U.S. soldier suspected of shooting Afghan civilians, started selling community-bank stocks in 1996 as a 23-year-old driving a Chevy Cavalier. That may have been the peak of his financial career. Before Bales enlisted in the Army in 2001 after the Sept. 11 terrorist attacks, he worked at five firms in five years. After he left the industry, he was hit with a $1.5 million settlement for his role in swindling a couple out of more than $600,000 from their retirement account. “He wanted to be an investment adviser, and he had a plan as to how he was going to accomplish that,” said Robert K. Cargin, who hired Bales in September 2000 at Quantum Securities Corp. in Westerville, Ohio. “It just didn’t work out.”

BofA Tests An Option To Foreclosure (WSJ)
Borrowers would agree to a what is known as a “deed-in-lieu” of foreclosure, where they essentially sign over ownership of the property to the lender. This is less costly to the bank and also does less damage to a borrower’s credit than a foreclosure. In exchange, former owners would be offered one-year leases with options to renew the leases in each of the following two years at rents that the bank determines are at or below the current market price. Borrowers would have to demonstrate an ability to pay the market rent.

‘Linsanity’ pot nipped in bud (NYP)
The Knicks’ new superstar point guard’s legal eagles threw cease-and-desist orders at three California medical-marijuana dispensaries that were offering customers “Linsanity” weed…Two of the dispensaries discontinued the names and the other simply rebranded its grass “Insanity.” Read more »

Write-Offs: 03.22.12

$$$ Volcker Rule Delay and Simplification Gains Support in Congress [Bloomberg]

$$$ Fed Official Signals Guidance on ‘Volcker Rule’ [WSJ]

$$$ UBS hires dealmaker Orcel [FT]

$$$ Credit Suisse Names Sole Head of Investment Banking [DealBook]

$$$ Drake’s new music video will feature a re-enactment of his bar mitzvah [Miami Herald]
Read more »

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  • 22 Mar 2012 at 7:09 PM

Congressional Insider Trading Gets Somewhat Less Legal

Today is a good day for Congress passing laws with sunny punny names, so after the JOBS Act on we go to the STOCK Act, for Stop Trading On Congressional Knowledge, which, who wouldn’t want JOBS and STOCKS and also much less Congressional insider trading. Anyway it passed, so now Congressional inside information is like corporate inside information in that if you trade on it you go to jail, maybe, sometimes. There was however some controversy as Reuters explains:

House Republican leaders argued that the political intelligence provision, which targeted former Capitol Hill insiders who use their contacts to gather information on pending legislation and sell it to Wall Street investors, could tread on First Amendment free speech rights. The final version orders a study of what to do about that increasingly widespread practice.

Coincidentally, earlier in this deadly deadly week we talked a little about the First Amendment and securities regulation, but that was in the context of people being able to say true non-confidential things about their investment prowess or prowesslessness. Even there, for non-Congress-related people, the First Amendment doesn’t seem to do much for them, though maybe the Supreme Court will change that but don’t count on it. Read more »

On an alarmingly regular basis, people send emails to Dealbreaker seeking insight, on all manners of business. “I just received an offer from [insert hedge fund here] and I wanted to know what you think of the place.” “I’m a high-yield trader looking to jump ship– do you have any leads on jobs or ideas about where I should look?” “I have a bet going re: who would prevail in a street fight, Jamie or Lloyd and need you to weigh in.” “Is it possible to have romantic relationships (one-night stands) while spending every waking moment at the office?” “Do you think Vikram Pandit is the person responsible for his Wikipedia page including the line ‘he then turned to business studies & finance and earned an M.B.A in 1980 followed by a Ph.D. in Finance from Columbia Business School in 1986, after publishing a thesis involving a crushingly complex financial puzzle, entitled “Asset prices in a heterogeneous consumer economy’?” “Coke or Pepsi?” “Medium or rare?” “Do you think Biff Basness has tried to have you killed?” “Are you still in touch with Gianna Beamers?” “How would you construct a Wildebeest costume? Don’t ask me why.” While we (I) have no real expertise in much of anything, you may have noticed that we are quite fond of expounding on topics which some would comment we know nothing about. With that thought in mind, we’ve decided to now answer your questions, whatever they may be, on a weekly basis, on the site* (all names/emails/identifying details removed, of course). Read more »

Matt Taibbi wrote today about this Bloomberg story describing how JPMorgan’s munis business is booming despite maybe screwing a few muni clients over the years here and there. You can read Taibbi for a rundown of the shenanigans but his basic question is why, after said shenanigans, does JPMorgan still dominate muni finance? His answer is sort of unconvincing:

The news about Chase and Bank of America continuing to dominate a market they’ve already admitted to feloniously rigging says a lot about the state of modern finance.

Sure. But what does it say?

Bloomberg offered a telling quote from a state official justifying the decision to continue to do business with these criminal banks:

“I haven’t found an investment bank that hasn’t had some problem in the last three years,” California Treasurer Bill Lockyer said in a telephone interview. “We do business with them all. I think they provide good service. I think they’ve been highly ethical with us.”

This is coming from an official whose state, California, has seen multiple bid-rigging cases in recent years, from Riverside to San Mateo to Sacramento to Los Angeles to Santa Barbara, for starters. So a quote like that is pretty sad. It tells you that the system works fine for state officials and banks — and no one is representing the people who actually lose out.

Erm … it doesn’t really. Maybe evil Bill Lockyer is in the pocket of giant banks who are screwing The People, or maybe he’s an idiot, or maybe he’s, y’know, basically right about the whole providing-good-service thing. Hard to tell from that quote. Here is what seems to be the real reason, per Bloomberg, that California stood by its JPMorgan: Read more »