$$$ Here are Dick Fuld’s call logs from March through September of 2008. Tim Geithner, Hank Paulson, Lloyd Blankfein, Jamie Dimon, Ken Lewis, Rodge Cohen, Raj Rajaratnam … [Jenner]
$$$ “If mortgage REITs were not delivering to investors they would not be in a position to raise capital. Last I checked, the United States was still a capitalist country despite efforts to the contrary.” This quote from the CEO of mortgage REIT Annaly is not encouraging [Bloomberg]
$$$ “But the debate between Krugman and Paul on Bloomberg TV this afternoon was more awkward than awesome, like a special episode of the Sopranos with the character of Tobias Funke.” [DI]
$$$ This novel by a former Lehman MD begins “The weight of the cufflinks was palpable.” [Fiction Studio]
As some of you may recall, a month after Lehman Brothers went under, the House Committee on Oversight and Government Reform released an interesting email Dick Fuld had sent to LEH vice-chairman Thomas Russo on Saturday, April 12, 2008, circa midnight. Dick had just come back from a dinner with Hank Paulson and was so excited to relay the details he couldn’t wait ’til the next day to get in touch with Russo, who he apparently viewed as his “teacher.” Fuld said his key “takeaways” were that the government loved Lehman, that Paulson wanted to “kill the bad hedge funds” (like those diabolical shorts Fuld knew were to blame for his problems), and that while the then Treasury Secretary appeared to have a “worried view” of Merrill Lynch, Dick got the sense that Paulson thought Lehman was in terrific shape. Per the bankruptcy documents put online last week, here’s how the rest of the conversation between Fuld and his Sensei went.
Corporate venture capital has begun to rival “traditional” venture capital and angel investing in its importance as an investment source for healthcare industry innovation. However, unlike VCs and angels, there is a dearth of information on how the various players in the corporate venture sector operate.
We’ve talked a little before about how I don’t understand Wall Street research. Let’s start […]
Several months back, it was announced that Goldman Sachs’s head of equity trading in Moscow, […]
In 1992, Tara Obenauer was a dancer at the now-defunct gentleman’s club Strinfellows. The Long Island native had graduated from Adelphi University the year prior and was set to attend law school but, she told the New York Times for an article titled “Topless Bars For A Crowd In Pin Stripes,” “The money here is just so good. I can make $1,000 a night ore more, if I really work at it.” Obenauer worked hard for the money a few years longer and following a brief interlude as a stay-at-home mom, received her MBA from Hofstra and got a job at Guggenheim Capital Markets, where she spent five years as a compliance officer before joining Forbes Private Capital Group as a Vice-President. If Mike Tedesco, the Long Island cop who used to two-time his wife with Obenauer had taken a page from her playbook, maybe he would have been lieutenant by now. Unfortunately, none of Obenauer’s can-do work ethic rubbed off on Tedesco and this had to happen:
“He would be at my house for hours during his shift, hanging out in his uniform on the couch, watching TV with my kids, taking a nap,” said Obenauer, who is single. Her children are from a previous relationship; the officer is married with two kids. “He was stealing time from the county for six months. He [would ask his pals to] take his calls.’’
Obenauer, 42, of Massapequa, said Tedesco, 43, got defensive when she confronted him about his no-show work habits. “I did ask him why he wasn’t out working.” Obenauer said. “We argued about it, but I’m not his mother and I’m not his supervisor.
“I’ve been doing this for 22 years,” Tedesco bragged, according to Obenauer, a vice president of a global financial firm. “Let the f–king newbies chase these kids from their parties and go to house alarm calls.’’ She said he called the other cops his “assist bitches.”
The under-cover operation came to a screeching halt when a suspicious neighbor blew the whistle. Tedesco, 43, was suspended after cops compared the neighbor reports with GPS records from his squad car. They showed at least 57 visits, sources said. Obenauer said that when Internal Affairs detectives showed up at her home Feb. 9, she at first though Tedesco had been shot. But the news they delivered was nearly as bad. They said her boyfriend “was a fully married man” with no intention of divorcing his wife. “I was devastated,’’ Obenauer said. “It had been years since I had let a man into our lives. This was an extreme level of betrayal. It was all lies.’’ Tedesco later called her to ask what she told Internal Affairs, she said. “He screamed at me, ‘You f–king tell them that I’m just a friend who stops by once in a while,’ ” Obenauer said. “I told him, ‘They have your GPS records, you moron. I’m not perjuring myself for you. We’re over, and I want my key.’ ”
Mistress says Nassau cop spent overnight shifts shacking up at her place and other cops covered for him [NYP]
Related: “I can make $1,000 a night or more, if I really work at it,” said Tara Obenauer, 21, of Massapequa, L.I., who dances at Stringfellows.
As previously mentioned, if one were inclined to relive the fall of Lehman Brothers, one could do so via the bankruptcy documents that were recently made available online. There you’ll find, among other things, countless examples of what has been said so many times since September 15, 2008, which is that it’s amazing how delusional the people at the very top were, vis-à-vis the firm’s solvency/what people thought of it/everything. Also worth marveling at? The fact that Lehman lasted as long as it did with what appear to be barely literate troglodytes running the place.
[The following dialogue is re: CITIC considering an investment in a US bank and the suggestion that it is more interested in Bear Stearns.]
Falcone Agrees To Step Aside (WSJ)
Hedge-fund manager Philip Falcone agreed to step aside eventually as the public face of his LightSquared Inc. venture, a concession that may keep the wireless-telecommunications company from defaulting on its debt, people familiar with the negotiations said. Mr. Falcone’s compromise is expected to prompt LightSquared’s lenders to approve a one-week extension on a debt-term violations waiver that expires Monday morning, the people said. If a deal is finalized, Mr. Falcone and LightSquared’s lenders plan to continue negotiations for a longer extension of somewhere between 18 months and two years, the people said…Mr. Falcone has said he viewed bankruptcy as the “best way” for him to keep control of the company and keep it from creditors he believes want to “take control and flip” the firm.
Occupy Wall Street Plans Global Disruption of Status Quo May 1 (Bloomberg)
In New York, Occupy Wall Street will join scores of labor organizations observing May 1, traditionally recognized as International Workers’ Day. They plan marches from Union Square to Lower Manhattan and a “pop-up occupation” of Bryant Park on Sixth Avenue, across the street from Bank of America’s Corp.’s 55-story tower. “We call upon people to refrain from shopping, walk out of class, take the day off of work and other creative forms of resistance disrupting the status quo,” organizers said in an April 26 e-mail…Tomorrow, beginning at 8 a.m. in Bryant Park, scheduled events include teach-ins, art performances and a staging area for “direct action and civil disobedience,” such as bank blockades.
RBS M&A Bankers Plan Boutique Spin-Off (Reuters)
The bank, 82-percent owned by the British government, is exiting mergers and acquisitions as part of a restructuring announced in January aimed at reducing costs and exposure to areas of investment banking deemed risky by the authorities. Sources told Reuters last week that the M&A business would be spun off, with around 45 bankers from RBS joining the new firm led by John McIntyre, currently head of corporate finance for EMEA at the bank.
Romney Holds Fund Raiser At John Paulson’s House (TDB)
FYI: A neighbor who witnessed the event from across the street described it to as a large crowd of “older white people, mostly men,” who started showing up around 7:30 p.m. Thursday. Around 8 p.m., sirens started blaring as more and more people started to show.
Hedge Funds Hurt By Volatility (WSJ)
All told, U.S.-based funds that bet on and against stocks had a median return of -0.92% from April 1 through April 13, according to data from Morgan Stanley’s MS -1.51% prime brokerage, after having returned 1.16% in March. Returns improved as the markets stabilized. Through April 26, the median return was down 0.03% for the month.
City Mulls Happy Hour Ban (NYP)
“It’s absolutely been discussed,” confirmed a department source. “It goes to show you the spirit with which they operate. Everyone is a child.” High-level conversations have gone beyond merely “throwing pencils on the ceiling and seeing what sticks,” another Health source revealed. Sources said the happy-hour ban is being pushed by the agency’s marathon-running boss, Commissioner Thomas Farley, and is serious enough for one source to say the alcohol lobby had better find itself a good lawyer. Agency spokesman Sam Miller denied existing “plans to pursue any policy around discount-alcohol sale.”
Goldman: US Likely Added Only 125,000 Jobs in April (CNBC)
The forecast is far lower than the Reuters estimate of 170,000, and the average 177,250 jobs created every month from December to March.
Hedge Funds Bet Against Eurozone (FT)
“The deeper balance of payments problems in the eurozone remain unresolved, and cannot be resolved by liquidity assistance alone,” noted Brevan Howard, Europe’s biggest global macro hedge fund in its last letter to investors.
Shiller: We Are in Age of ‘Late Great Depression’ (CNBC)
“Our whole economy has been affected by variations in confidence. Central banks are sort of trusted, but the actions they have often affect people’s confidence by appearance rather than substance. We’re not in the most trusting mood now,” Shiller said.
Goldman’s O’Neill Reported Among Candidates for BOE Chief (Bloomberg)
When asked in September 2007 if he would be interested in the role at a time when the government was considering whether to reappoint King, O’Neill told John Dawson on Bloomberg Television that he couldn’t imagine that “anyone would be daft enough to offer it to me.” He added that he very much enjoyed his then job as head of global economic research at Goldman Sachs.
Titanic II Planned by Billionaire Palmer in Chinese Yard (Bloomberg)
Australian mining billionaire Clive Palmer plans to build a 21st-century replica of the Titanic and sail it from England to New York accompanied by the Chinese navy by the end of 2016. He has signed a first-stage agreement with Nanjing-based CSC Jinling Shipyard to build the ship as part of a planned fleet of luxury liners, the Gold Coast, Queensland-based businessman said in an e-mailed statement today.
$$$ “Being violation-free alone does not guarantee that a public company or registered entity will not face the wrath of the U.S. Securities and Exchange Commission Division of Enforcement, its director, Robert Khuzami, told Thomson Reuters Tuesday.” Good to keep ’em guessing. [Reuters]
$$$ How to Leak to Gawker Without (Hopefully) Getting Caught, usefulness not limited to Gawker [Gawker]
$$$ BNP Paribas would like to find an emerging markets equities analyst for its Boston office, if you know anyone [DBCC]
$$$ After Quiet Years, British Regulator Gets Tough on Abuses [DealBook]
$$$ Lazard profit drops on costs, but still beats Street [Reuters]
Remember in 2008, when Ken Lewis was all, “Oooh, wait, I don’t know about this Merrill Lynch thing” and tried to back out of buying the bank? And Hank Paulson threatened to stuff him in a meat locker if he did so Ken Lewis said okay, fine, I’ll do it? BAC investors are still upset about that.
Bank of America directors’ $20 million settlement of investor lawsuits alleging the bank overpaid when it bought Merrill Lynch & Co. amounts to just 4 percent of the board’s $500 million in insurance coverage and is inadequate, lawyers objecting to the accord said. Attorneys for Bank of America shareholders suing in Delaware over the $50 billion acquisition of Merrill Lynch have asked a judge in that state to keep their claims alive even though a federal judge in New York is considering a $20 million settlement of almost identical suits brought by other bank investors. If that accord is approved, it could wipe out the Delaware claims. “The proposed settlement is grossly inadequate and represents only 0.4 percent of the value of the $5 billion derivative claims that the Delaware Derivative Plaintiffs have been vigorously pursuing,” lawyers for the Delaware investors said in a Delaware Chancery Court filing late yesterday. The settlement also amounts to “only 4 percent” of available insurance, they said.
Disgruntled shareholders contend the board and former Chief Executive Officer Kenneth D. Lewis misled them about the brokerage firm’s losses leading up to the buyout and should have pulled the plug on the deal. Lewis, who left Bank of America in 2009, is now chairman of Chicago-based LaSalle Bank NA.
How will you be spending your weekend? I know what I’ll be doing, which is […]
As some of you may recall, back in March, Highland Capital Management founder and CEO James Dondero testified that he is “insolvent under Texas family law, if not according to normal accounting rules,” despite a 2010 tax return showing his adjusted gross income that year to be in excess of $36 million. The reason his finances were in question was because Dondero filed for divorce in September, and how much he owes his wife Becky is currently in dispute. Becky is “seeking enforcement of a prenuptial agreement guaranteeing her half of the couple’s community property, capped at $5 million,” plus “spousal support and interim attorney fees.” James, perhaps you can glean, is hoping it will be less than that and perhaps even nothing. One thing that really didn’t help?
Patrick Daugherty, a former senior portfolio manager at Highland who quit in October, testified that he met with James Dondero for drinks last month. “He told me his plan was to get his net worth down and pay her as little as possible,” said Daugherty, who was called to the stand by Becky Dondero.
That testimony was given on March 28th. On April 11, this happened:
Highland Capital Management, the $20 billion hedge fund and private equity firm based in Dallas, has launched a lawsuit that calls its former private equity investing chief a “megalomaniacal” manager who engaged in “abusive tirades” that “dehumanized employees.” Patrick Daugherty is the former head of stressed special situations and private equity at Highland Capital Management, where he was responsible for $8 billion of assets until he resigned in September 2011. Known as a blunt-speaking Texan, Daugherty has served on the board of Metro-Goldwyn-Mayer and as chairman of companies like Cornerstone Health Group.
According to a 14-page complaint Highland filed in Texas state court in Dallas earlier in April, Daugherty has been paid in excess of $26 million while at the firm, but voluntarily resigned after “Highland refused to accede to his unacceptable ultimatums and megalomaniacal demands regarding compensation.” The lawsuit claims that Daugherty was “belligerent to peers” and that Highland employees complained and even quit after Daugherty publicly berated them as “‘f—ing idiots’” and disparaged them using other vulgarities. Highland, which has a reputation in the investment community for using hard-hitting tactics, pulls no punches in a lawsuit that at times can appear cruel. It claims that Daugherty’s tenure at Highland was characterized by extreme behavior and his performance diminished over the years as he “became increasingly unmanageable, erratic, and insubordinate.”
It didn’t have to be this way, Patrick!
Sorted by class year and review ranking.* Investment banking division only, sadly. Source is a […]
When people think of John Alexander Thain, as people surely often do, lots of thinks come to mind. High school wrestling. Competitive bee-keeping. Masterful stewardship of Wall Street firms. $68,179 19th Century Credenzas. $35,000 commodes. $28,091 curtains. $87,784 area rugs. $1,405 garbage cans. A keen eye for interior design and fabulous taste in general. Though we knew the current CIT Group chief executive officer was a father, we probably wouldn’t have included his parenting skills on a list his noted attributes and accomplishments, only because he has too many to mention. Apparently this represents a gross oversight because John Thain? Is a phenomenal dad. Award-winning, in fact.
he National Father’s Day Committee, an entity of the Father’s Day/Mother’s Day Council, each year confers Father of the Year Honors on contemporary lifestyle leaders of our culture whose lives are dedicated to family, citizenship, charity, civility, responsibility and reverence. The funds raised by our Annual Father of the Year Awards Presentation are directed to the support of worthwhile concerns affecting men, fathers, and families. The objective of our program is to enhance the meaning of Father’s Day and encourage universal observance. 2012 Honorees include: Oscar Feldenkreis, Reynold Levy, Shaquille O’Neal, and John Thain.
An award of this magnitude of course deserves a little more than a press release, so naturally, there will be a luncheon and presentation on June 14. Until then, the group is accepting nominations to add to the list, so if you think any of your favorite dads have been overlooked, do speak up today. Ken Lewis could use this.
LightSquared Lenders Pressure Falcone (WSJ)
If Mr. Falcone doesn’t agree to eventually leave LightSquared’s board and make way for new executives and directors at the wireless communications firm, lenders are likely to balk and the company could end up filing for bankruptcy protection, they said.
Shareholders Rebuke Barclays, Credit Suisse on Pay (Reuters)
More than a quarter of Barclays shareholders look set to vote against the British bank’s controversial pay plan for bosses and Credit Suisse is also facing a backlash as investors seek a greater share of profits. Stormy annual shareholder meetings at both banks got underway on Friday with many attendees complaining executives are getting too big a slice of bank income at their expense…Barclays Chairman Marcus Agius apologized for badly communicating the bank’s pay strategy and promised to “materially” increase the dividend shareholders receive, helping to lift the bank’s shares more than 4 percent. But he was heckled during his speech to a packed hall of about 2,000 shareholders and his comments about pay were greeted with laughter in some quarters.
Renowned short-seller bets against Fortescue (SMH)
Hedge fund short-seller Jim Chanos has singled out Fortescue Metals as a “value trap” stock, telling a New York conference that shares in billionaire Andrew Forrest’s company will fall “materially.” In a presentation this month to Grant’s Spring Conference, a private investment forum, Mr Chanos, the boss of Kynikos Associates, told investors he feared iron ore miner Fortescue has “a somewhat promotional management team.”
Goldman Banker Probed For Alleged Leaks To Galleon (WSJ)
U.S. prosecutors and securities regulators are investigating whether a senior Goldman investment banker gave Galleon hedge-fund traders advance word of pending health-care deals, according to people familiar with the matter. The banker, whom the people identified as Matthew Korenberg, is a San Francisco-based managing director for Goldman, a senior post. Among the merger deals being scrutinized by Los Angeles federal prosecutors and the Securities and Exchange Commission is the 2009 acquisition by Abbott Laboratories of Advanced Medical Optics, a Santa Ana, Calif., medical-device maker—a deal in which Mr. Korenberg advised Advanced Medical Optics, the people say. Another is the acquisition of APP Pharmaceuticals Inc. by Fresenius, announced in July 2008, in which Goldman advised APP, they say.
Unlikely Allies (NYP)
Billionaire hedge-fund mogul and Republican stalwart Paul Singer is in an odd position of late — asking the Obama administration for help to keep troubled mortgage lender ResCap out of bankruptcy. Singer, whose Elliott Associates owns debt in the mortgage lender, a unit of Ally Financial, asked Treasury Secretary Tim Geithner in recent weeks to use the government’s 74-percent stake in Ally to press for an alternative financial cure. An out-of-bankruptcy solution would help Elliott, to be sure, but would also assist the White House by keeping a unit of one of its high-profit bailouts from outright failure. But Singer, so far, hasn’t gotten any satisfaction. Geithner, insiders said, doesn’t want to use Treasury’s muscle to stop the likely Chapter 11 filing because it could be interpreted as the government overstepping its bounds.
Spain Urges Focus On Reforms After Downgrade (WSJ)
The government has embarked on a plan of far-reaching reforms to overhaul the economy, including new labor laws and a cleanup of the banking sector. Mr. Jiménez Latorre said these reforms will pay dividends in the medium- to long-term. The S&P ratings action “just focuses on the immediate effects,” which won’t be positive, Mr. Jiménez Latorre said.
Dream Stenographer / Lucid Dreaming Partner (Craigslist)
“I possess the wonderful gift of regularly occuring and incredibly vivid lucid dreams. In these dreams I have written Pulitzer Prize winning novels, bioengineered the cure for HIV, and brokered a lasting Israeli-Palestinian peace agreement. I have also composed Grammy winning albums. The only problem is humanity hasn’t and can’t benefit from my accomplishments because I forget how I achieved them shortly after waking. As a modern Renaissance man and philosopher scientist, my conscience cannot be at peace knowing I’m not doing everything possible to save my fellow human beings. Therefore I would like to a hire a dream stenographer to write down my ideas so that I may share them with the world. You, the dream stenographer, will sleep within arm’s reach of me on selected nights when I feel my mind is operating at its peak performance level. Sleeping is mandatory as I’m not able to reach my optimum dream state when someone is watching me sleep. Remaining within arm’s reach at all times is also mandatory so that I may wake you as quickly as possible to begin recording my stream of consciousness.Qualified applicants will be excellent note takers with unrivaled penmanship.”
KKR Earnings Beat Expectations (WSJ)
Economic net income, a measure of private-equity firms’ profitability that analysts follow because it includes both realized and unrealized investment gains, was $727.2 million, or 99 cents a share, compared to $742.5 million, or 96 cents a share, in the year-earlier period. The earnings came in at the top end of analysts’ estimates, with a consensus economic net income of $486.6 million, or 74 cents a share, according to Thompson Reuters.
NYSE CEO ‘very disappointed’ to lose out on Facebook listing (DJ)
Just so you know.
Wells Fargo to Buy Merlin Securities Prime Brokerage (Bloomberg)
The purchase is Wells Fargo’s first foray into prime brokerage services and the bank will use the business as a foundation to expand, said Christopher Bartlett, head of equity sales and trading at the San Francisco-based lender. Prime- brokerage includes services such as lending, clearing trades and record-keeping that help hedge fund managers run their firms. Bartlett wouldn’t say how much Wells Fargo paid and a statement set to be released later today didn’t disclose the terms.
Bo Xilai’s Son Ticketed in Porsche (WSJ)
Disputing a notion common in China that he lives a lavish lifestyle, Mr. Bo wrote to the Harvard Crimson on Tuesday saying he wished to address “rumors and allegations about myself.” Among other things, “I have never driven a Ferrari,” he wrote. The Wall Street Journal reported in November, based on people familiar with the episode, that Mr. Bo, the grandson of an illustrious Communist leader of the Mao era, arrived at the U.S. ambassador’s residence in Beijing in a red Ferrari last year to pick up the daughter of the then-ambassador…Massachusetts Department of Transportation records show Mr. Bo was stopped by police for allegedly running stop signs in December 2010 and May 2011, one of them at 2:20 a.m., and for speeding in February 2011. The license plate of the car, which the Journal learned from someone familiar with the matter, showed it was a black 2011 Porsche Panamera registered to someone at his address.
$$$ S&P cuts Spain ratings two notches to BBB-plus [Reuters]
$$$ “AIG May Not Be As Healthy As It Looks” [Bloomberg]
$$$ The Telus proxy fight is amazing [DealBook]
$$$ Legalizing Spousal Necrophilia in Egypt, but only for the first six hours [Volokh Conspiracy]
$$$ Relax, America, the Bacon Crisis Has Passed [CNBC]
$$$ CEO pay is inflated by faulty comp sets [Bloomberg]
$$$ A strange data point on flows vs. inventories [FTAV]
$$$ Bank bailouts, hedge funds, and foreign sovereign immunity [Economist]
$$$ “We do not accept claims for elbow licking.” [The Hairpin]
$$$ Here is a baby anteater named Corndog hugging a stuffed animal [ZooBorns]
I confess I was pretty much unable to read this BCG report about what banks […]
You may remember that Chesapeake Energy got some bad press last week for giving its […]
What were AIG employees doing in April 2008? Carelessly writing CDS on enormous quantities of mortgage-backed securities and (allegedly) laying the groundwork for being sued over “racist [and sizeist?] taunts,” apparently.
An obese black lawyer filed a federal lawsuit yesterday against insurance giant AIG and an ex-supervisor, saying his white boss yelled out “Hey! Hey! Hey! It’s Fat Albert!” and other racist taunts. Earl Brown, 43, an Ivy league-educated lawyer, claimed in the civil-rights suit that the ex-boss, John Hornbostel, 49, peppered him with racist remarks and cruel jokes about his weight for years before he was canned without cause. “Make sure you grab a bite to eat before this one does! He’s been known to clean out a Danish platter,” Hornbostel yelled about Brown during a meeting in April 2008, the suit claims. Hornbostel then allegedly walked away humming the tune to the “Fat Albert and the Cosby Kids” animated TV show.
Hornbostel seems to have ended up at a hedge fund post-AIG. It’s unclear if he’s tried out any new material on his new colleagues.
While Charles Martin, too, passed out in the back of his taxi on the ride home, like his brother in arms, upon coming to he merely questioned the sexuality of the officers on the scene before threatening what would happen if they came any closer.
A city man with more than $1,300 in his pocket was charged Thursday morning with trying to snub a taxicab driver out a $43 fare, police said. Charles Martin, 35, of 15 School St., Norwalk, was charged with sixth-degree larceny and resisting arrest and was held in lieu of $1,000 bond. Norwalk police Sgt. Lisa Cotto said a Stamford cab driver showed up at police headquarters just after 3:30 a.m. Thursday complaining that he had a man in his cab refusing to pay the fare from the Stamford train station to the man’s School Street home.
When police went to the cab, Martin was asleep and appeared drunk, telling them to leave him alone, Cotto said
After he was arrested, police found $1,353 in cash in his pocket, Cotto said. Unhappy with being arrested for trying to stiff the cabbie, Martin allegedly warned the police officers — who he also said were gay — what would happen when they removed the cuffs from his hands.
No word on what that was but odds it involved a pen knife are high.
Cops: Man with $1,300 in pocket refused to pay $43 cab fare [Stamford Advocate]
Related: Banking Exec Maintains Innocence Re: Stabbing Cab Driver
Yesterday, the Wall Street Journal ran a front page story reporting that the Securities and Exchange Commission had “blown” the cover of whistleblower Peter C. Earle. The article claimed that Earle, a former employee of Pipeline Trading Systems turned government informant, had his identity “inadvertently” revealed through a “gaffe” on the part of an SEC lawyer, who showed a Pipeline exec “a notebook from the whistleblower filled with jottings about trades, calls and meetings.” The executive was said to have recognized Earle’s handwriting and told his colleagues, who had previously suspected but did not know for sure that “Pete’s the whistleblower.” The story was easy to believe because if you’ve been keeping up with the SEC over the last number of years, you know that this sound exactly like something they’d accidentally do. Except that whereas the regulator fully copped to, for example, missing Madoff while trying to access ladyboyjuice.com 385 times/day, it says that this accusation? Is bull shit. It did not “inadvertently” “blow” anyone.
Here’s its strongly worded letter to the Journal saying as much:
The Securities and Exchange Commission in no way exposed Peter Earle as a whistleblower, and our use of his notebooks in an investigative deposition was neither “inadvertent” nor a “breach” or “gaffe” (“Source’s Cover Blown by SEC,” Page One, April 25). It was a deliberate decision, which SEC lawyer Daniel Walfish discussed in advance with his supervisor, who was present for the deposition in which the notebooks were exhibited. Nor did the fully authorized use of the notebooks in any way compromise Mr. Earle or the integrity of the SEC’s investigation of the Pipeline Trading Systems matter.
Although it was widely known among executives of Pipeline and Milstream Strategy Group that Mr. Earle had approached the SEC after he was terminated from Milstream—a fact volunteered by several witnesses and acknowledged by Mr. Earle long before any use of his notebooks—the SEC declined to confirm his identity and still treated his status as a cooperating witness as confidential. The SEC made sure to obtain all of the notes of the approximately six Milstream traders, and in the SEC’s deposition of Gordon Henderson (the supervisor of Mr. Earle and the other traders), the SEC used other traders’ notes along with those of Mr. Earle. The use of these traders’ notes—highly relevant evidence prepared in the ordinary course of their work at Milstream—in no way revealed whether Mr. Earle or any other trader was or was not cooperating with the SEC.
George S. Canellos
New York Regional Office
U.S. Securities and Exchange Commission
Remember Occupy Wall Street? After being evicted from its Zuccotti Park global headquarters in Lower Manhattan last year the group seemed to loose a bit of steam but has vowed a resurgence, starting with a May 1 “spring offensive.” Protests have been planned in 115 cities where “the financial elite play and plan,” including the midtown offices of JPMorgan and Bank of America. Worried your place of business or home might be the target of some uninvited guests and/or a surly gigantic check? Then you might want to get in touch with your fellow prey and start strategizing.
Planning for May 1 in New York began in January in a fourth-floor workspace at 16 Beaver St., about two blocks from Wall Street, according to Holmes. The date serves as an international labor day, commemorating a deadly 1886 clash between police and workers in Chicago’s Haymarket Square. The midtown demonstrations will take place from 8 a.m. to 2 p.m., followed by a march from Bryant Park to Union Square and a 4 p.m. rally there, according to an online schedule. Protesters, including labor unions and community groups, have a permit to march from Union Square to lower Manhattan, according to police. Goldman Sachs Group’s headquarters is among financial- district picketing options, Holmes said.
Brian McNary, director of global risk at Pinkerton Consulting & Investigations, a subsidiary of Sweden’s Securitas AB works with international financial firms to “identify, map and track” protesters across social media and at their assemblies, he said. The companies gather data “carefully and methodically” to prevent business disruptions. Banks are preparing for Occupy demonstrations at the North Atlantic Treaty Organization’s Chicago summit on May 20 and 21 by sharing information from video surveillance, robots and officers in buildings, giving “a real-time, 360-degree” view, said McNary, who works on the project. Banks cooperating on surveillance are like elk fending off wolves in Yellowstone National Park, he said. While other animals try in vain to sprint away alone, elk survive attacks by forming a ring together, he said.
As for what to do in the interim, pre-attack by wolf pack, lock it up. You’re not doing anything. You’re not teaming up with other elks, you haven’t even heard about the demonstrations. What is Occupy Wall Street? Sayeth Mcnary, “When you portray a position of weakness, it invites attack. [Banks] don’t want to provide the perception that they’re hunkering down behind their bulwarks and putting up big walls.”
Barclays Cautious Despite Investment Bank Gains (WSJ)
In the first quarter of 2012 Barclays said total revenue fell 25% to £5.52 billion ($8.92 billion) from £7.34 billion a year before. The group recorded a net loss of £337 million for the quarter compared with net profit of £1.24 billion a year earlier. Chief Executive Bob Diamond said the business environment picked up in the second half of last year, but “frankly it remains quite challenging.” Mr. Diamond warned that economic conditions across Europe and the U.K. had deteriorated since January, as the sugar rush caused by cheap loans dished out by the European Central Bank began to fade. “It was not a robust first quarter; it was only robust compared to the third and fourth quarter,” Mr. Diamond said. “There is still slow economic growth around the world.”
Deutsche Bank Profit Drops On Debt Crisis (BW)
The slowdown in April hasn’t been “significant” and Deutsche Bank needs to assess the effect of the Easter holidays on revenue, Chief Financial Officer Stefan Krause said today on a conference call. Pretax profit at Deutsche Bank’s investment banking unit fell to 1.72 billion euros in the first quarter from 2.29 billion euros a year earlier and compares with a 422 million loss in the fourth quarter. That beat the 1.64 billion-euro average estimate of eight analysts.
More Americans Than Projected Filed Jobless Claims Last Week (Bloomberg)
Jobless claims fell by 1,000 to 388,000 in the week ended April 21 from a revised 389,000 the prior period that was the highest since early January, Labor Department figures showed today in Washington. The median forecast of 48 economists surveyed by Bloomberg News called for a drop to 375,000.
SEC Faces Questions About Tipster Policy (WSJ)
“Whistleblowers are essential to root out fraud and malfeasance,” the senator wrote in a letter sent Wednesday afternoon to SEC Chairman Mary Schapiro and reviewed by the Journal. “I am concerned that the SEC may not be properly protecting the identity of whistleblowers and others who come to the SEC with information on securities law violations.”
La Guardia flights delayed when dog flees Delta jet and sprints to runway (NYP)
A puppy took flight at La Guardia Airport yesterday, speeding down a busy runway and dodging planes and a posse of desperate pursuers. Taxiing airliners ground to a screeching halt, giving their passengers front-row views of the spectacle that at one point saw a frustrated worker get down on his hands and knees in an unsuccessful attempt to convince the 14-month-old Rhodesian ridgeback, named Byrdie, to surrender. In a final fit of desperation, Port Authority cops pulled the dog’s owner, Austin Varner, off her Delta flight and drove her out to the tarmac. Byrdie broke free while being loaded on the plane in a kennel at around 10:20 a.m. — and the 70-pound pooch made a beeline down the tarmac. An air-traffic controller barked into his radio, “We got a dog running like crazy down there.”
Former Morgan Stanley Exec Pleads Guilty In Anti-Bribery Case (Reuters)
A former Morgan Stanley executive pleaded guilty to conspiring to evade internal controls required by a US anti-bribery law, in a case that underlines the fall of a once high-flying dealmaker for the firm in China. Garth Peterson, who was a managing director in Morgan Stanley’s real estate investment and fund advisory business, also settled yesterday related charges with securities regulators, and agreed to roughly $3.7 million in sanctions and a permanent bar from the industry. Peterson secretly arranged to have millions paid to himself and a Chinese official and disguised the payments as finder’s fees charged to Morgan Stanley, regulators said.
Geithner Warns Of Economic Risks (Bloomberg)
Treasury Secretary Tim Geithner is warning that the US economy faces risks from the “severe and protracted crisis” in Europe while the feud with Iran has put upward pressure on oil prices. He added the economy will encounter a “fiscal cliff” at the end of the year when large spending cuts and tax increases are set to take effect. “That cliff presents a risk, but it also provides an opportunity for bipartisan agreement
Bernanke Says Prepared To Do More As Policy Unchanged (Bloomberg)
“We remain prepared to do more as needed to make sure that this recovery continues and that inflation stays close to target,” he said at a press conference today following a meeting of the Federal Open Market Committee in Washington. Additional bond-buying is still “very much on the table.”
Bull Market For Chicken Feed (WSJ)
In case you were wondering: “Futures for soybean meal, the protein in feed that makes broilers plump and juicy, are up 34% so far this year. Prices for the yellow powder, a soybean byproduct that resembles wheat germ, are outpacing the likes of crude oil and gold.”
In Mayfair, outrage over tire-slashing arrest (Philly)
It was a little more than two months ago when a 44-year-old butcher named David Toledo had a message for the vandal who was slashing car tires up and down his block of Aldine Street and on nearby streets in his Holmesburg neighborhood. “I feel like butchering the one who is doing this,” Toledo said shortly after reporting to police that all four tires on his Jeep Cherokee had been slashed, just one week after the same thing had happened to his wife’s car. Wednesday night, Toledo’s outraged neighbors had a message for him: Back at ya, pal. The news that police had arrested Toledo in connection with the wave of tire slashings that had plagued parts of the Northeast angered and infuriated his neighbors, as they spilled out onto front steps on a bright spring evening to gossip and to vent. Adding insult to the injured tires is the fact that Toledo had been arguably the most vocal neighbor in speaking out against the vandalism and in urging fellow residents to organize a community watch group to nab the slasher.
Meredith Whitney is a banking analyst made famous by Citigroup downgrading Citigroup in late October 2007, saying that the bank was facing a $30 billion capital shortfall and later telling the press “Citigroup is in such a mess Stephen Hawking couldn’t turn this company around.” In the years since she’s had less than flattering things to say about the firm and as recently as March 14, 2012, told CNBC that Citi “has no earnings power, isn’t going to grow, hasn’t been investable in four years” and “is like an old broken-down Victorian house.” (In the same interview, she told Maria Bartiromo that the only way she’d change her mind about the big C would be if she received “a new brain.”) So it probably surprised a few people when, earlier this month, she upgraded the bank. But please, do not get the mistaken impression that she’s suddenly in love with the place or has developed any feelings for it whatsoeverWhile her latest move was seen as an endorsement of Citi, Whitney said not to read too much into the call. “It certainly doesn’t mean I’m running into the loving arms of Citigroup or I’ve become bullish on Citigroup. What it means is I don’t see any near-term negative catalyst for the company,” she said. “In the collective it’s not that interesting of a stock.”
Ya hear that, Citi? Not if you were the last two people on earth!
Financial news is very serious business and you should probably fret more than you do […]