Archive for April 2012

Write-Offs: 04.30.12

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$$$ 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]

$$$ The quants and derivatives traders of Occupy Wall Street [WaPo]

$$$ Spain in talks over ‘bad bank’ scheme [FT]

$$$ [@JeffMacke]

$$$ Duke University grad doesn’t want to waste her unique talents working on Wall Street, works in management consulting instead [DealBook, earlier]

$$$ A leading M&A boutique is looking for a class of 2011 or 2010 FIG associate [DBCC]
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  • 30 Apr 2012 at 6:32 PM

Lehman Brothers Thought Fight To Stay Alive Was A Battle Of Good (Them) Versus Evil (Everyone Else)

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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–the wisest man Fuld had ever met–went. Read more »

  • 30 Apr 2012 at 4:58 PM

Banks Apparently Want To Do More Work And Take More Risk For No Money

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We’ve talked a little before about how I don’t understand Wall Street research. Let’s start slow: why publish research? There are I think three, or three-ish, possibilities:

1. To inform your investing clients (asset managers and such) about your best views on how they should manage their money, so that they can manage their money well and thus one day have more of it,
2a. To induce your investing clients to do trades that generate trading revenues for you,
2b. To induce your investing clients to do trades that optimize your book (i.e. slapping a Buy on whatever you need to sell and vice versa), or
3. To induce banking clients (corporate issuers) to pick you as an underwriter.

So, #1, ha ha ha. Choosing between #2 and #3 is harder and if you wanted to be serious about it you might ask questions like how much revenue does trading bring in versus underwriting (more!), how good is that revenue (market making for pennies using your capital: probably not as good as risk-free 7% IPO gross spreads), and how much does research influence trading (meh?) vs. how much does it influence underwriting (meh?).

This weekend, though, we got kind of a strange data point via this FT article about the JOBS Act and the research settlement. In brief, as we’ve discussed, the JOBS Act lets banks basically do whatever they want for research on “emerging growth” companies, including in particular publish research pre-IPO and have bankers and analysts and the company all in the same room pitching business and generally scheming. But there’s a catch, which is that the ghost of Eliot Spitzer, in the form of the global research settlement, still restricts that activity, so all the banks subject to the settlement (the bulge-bracket ones) are disadvantaged vis-à-vis their smaller cousins. But, the FT points out, the big banks have a trick up their sleeves, which is to make all the small banks sign an agreement preventing them from publishing research ahead of the big banks, as a condition of joining the syndicate for any deal: Read more »

  • 30 Apr 2012 at 2:56 PM

Exotic Dancer Turned Financial Services VP Teaches Long Island Cop A Thing Or Two About Hard Work

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In 1992, Tara Obenauer was a dancer at a now-defunct gentleman’s club called Stringfellows. 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 or 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 police officer who used to two-time his wife with Obenauer had taken a page from her playbook, maybe he would have been lieutenant or something by now. Unfortunately, none of Obenauer’s can-do work ethic rubbed off on Tedesco and this had to happen: Read more »

  • 30 Apr 2012 at 1:27 PM

JPMorgan (Et Al) Sued By Occupy Wall Street

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Four New York City Council members sued the city today over the handling of Occupy Wall Street protestors, claiming the police used excessive force and should be subject to an outside monitor. The city and the Police Department made false arrests and violated the free-speech rights of protestors and journalists last year, 15 people including the council members said today in a complaint in Manhattan federal court. JPMorgan Chase, Brookfield Office Properties and Mayor Michael Bloomberg are among the defendants…“Through unlawful exercises of public power and misapplication of law, the NYPD has sought to prevent and has prevented plaintiffs and other citizens from exercising certain constitutional rights, including the right to public assembly and expressive speech,” according to the complaint. [Bloomberg]

Dick Fuld: “The Bros Always Wins”

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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 those 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. Read more »

  • 30 Apr 2012 at 8:31 AM

Opening Bell: 04.30.12

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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.” Read more »

Write-Offs: 04.27.12

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$$$ Spain’s Unemployment Jumps, Deepening Crisis [WSJ]

$$$ “… the McClendon-[X] deal raises a number of concerns, some analysts said,” for any X [Reuters, earlier]

$$$ “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]

$$$ Who Was the Third Person in Bret Easton Ellis and Rielle Hunter’s (Aborted) Cocaine-Induced Threesome? [NYO]

$$$ BNP Paribas would like to find an emerging markets equities analyst for its Boston office, if you know anyone [DBCC]
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  • 27 Apr 2012 at 6:05 PM

Bank Of America Investors Still Don’t Feel Properly Compensated For Having Merrill Lynch Rammed Down Their Throats

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Remember in 2008, when Ken Lewis was all, “Oooh, wait, I don’t know about this Merrill Lynch thing, it looks kinda bad, I don’t think I want to buy it anymore, I’m nervous [bites nails, shifts weight from one foot to the other like he has to pee]” and tried to back out of the deal? And Hank Paulson threatened to stuff him in a meat locker if he did so Lewis said okay, fine, I’ll buy it and then did, for more than one might think is reasonable to pay for a ticking time bomb? BAC investors are still upset about that. Read more »

  • 27 Apr 2012 at 5:56 PM

Experience The Collapse Of Lehman Brothers Again, For The First Time

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How will you be spending your weekend? I know what I’ll be doing, which is reading all the Lehman bankruptcy documents. They’ve been online for a week or two and we’ve had some teasers today, covering how much all the big fish got paid and how much all the medium-sized fish in IBD got paid. Naturally those were the first things anyone noticed because, y’know, money. And money is important. But this industry isn’t just about money. It’s also about hope:

It’s about faith: Read more »

  • 27 Apr 2012 at 4:09 PM

Highland Capital Management Founder Sees Your Hiding Of Assets And Raises You A Megalomaniacal Prick

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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, maybe you can glean, is hoping it will be less than that and perhaps even nothing. One thing that really didn’t help his case? A drinking buddy/former employee/former friend Dondero thought had his back taking the opportunity to speak out of turn!

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– and please, do not think we suggest this is some sort of retaliation but clearly just a mere coincidence–, this happened: Read more »