Opening Bell: 12.19.12

UBS In $1.5 Billion Libor Fine (WSJ)
As part of the deal, UBS acknowledged that dozens of its employees were involved in widespread efforts to manipulate the London interbank offered rate, or Libor, as well as other benchmark rates, which together serve as the basis for interest rates on hundreds of trillions of dollars of financial contracts around the world. UBS’s unit in Japan, where much of the attempted manipulation took place, pleaded guilty to one U.S. count of fraud. Authorities on Wednesday painted a picture of “routine and widespread” attempts by UBS employees to rig Libor and the euro interbank offered rate, or Euribor. The U.K. Financial Services Authority said it had identified more than 2,000 such attempts between 2005 and 2010 with the participation or awareness of at least 45 UBS traders and executives. Regulators on Wednesday released a trove of internal UBS emails and other communications—many of them colorful and expletive-laden—in which bank traders, sometimes with the knowledge of their managers, sought to manipulate the rates in order to boost their trading profits or mask the Swiss bank’s mounting financial problems in 2008.

UBS Traders’ ‘Humongous’ Libor-Fixing Boasts (CNBC)
The FSA documents suggest a macho trading culture on the UBS trading floor. Trader A also said: “if you keep 6s [i.e. the six month JPY LIBOR rate] unchanged today … I will ****ing do one humongous deal with you … Like a 50,000 buck deal.” Traders and brokers implicated in the scandal referred to each other as “the three muscateers [sic]” and “captain caos [sic].”

SAC’s top consumer trader draws scrutiny from U.S. authorities (Reuters)
U.S. authorities are examining trading by one of SAC Capital Advisors’ most successful portfolio managers, Gabriel Plotkin, as part of a probe into the $14 billion hedge fund firm’s investment in Weight Watchers International Inc last year, according to a person familiar with the investigation. Plotkin, a specialist in consumer and retail stocks who makes investment decisions for more than $1.2 billion worth of assets, is among several SAC portfolio managers whose trades are being investigated, said the source, who did not want to be identified. The source would not name the other managers. Federal authorities are trying to determine whether any of SAC Capital’s retail and consumer portfolio managers traded Weight Watchers shares based on non-public confidential information about the diet company, said the source and another person familiar with the investigation. The two sources said it is too soon to conclude if there was any insider trading. Authorities have not charged Plotkin with any wrongdoing.

Banks See Biggest Returns Since ’03 as Employees Suffer (Bloomberg)
Shareholders, impatient for the industry to boost profit, were rewarded as Wall Street firms cut jobs and pay, and exited businesses. The shrinking unnerved employees, who watched the chiefs of two big banks lose their jobs and others contend with a drop in deal making and stock trading, stiffer regulations, trading losses, rating downgrades and scandals involving interest-rate manipulation and money laundering. “There’s always grumbling on Wall Street, which is pathetic given how overpaid we all are, but there is a level of angst this year that is just unprecedented,” Gordon Dean, who left a 26-year career at Morgan Stanley (MS) to co-found a San Francisco boutique advisory firm this year, said in a telephone interview. “It’s just a profound sadness and dissatisfaction.”

Greek Bond Bet Pays Off for Hedge Fund (FT)
One of the world’s most prominent hedge funds is sitting on a $500 million profit after making a bet that Greece would not be forced to leave the euro zone, bucking the trend in a difficult year for the industry. Third Point, headed by the billionaire US investor Dan Loeb, tendered the majority of a $1 billion position in Greek government bonds, built up only months earlier, as part of a landmark debt buyback deal by Athens on Monday, according to people familiar with the firm. The windfall marks out the New York-based firm as one of the few hedge fund managers to have profited from the eurozone crisis. Standard and Poor’s, the rating agency, raised its assessment of Greece’s sovereign debt by several notches on Tuesday, citing the euro zone’s”strong determination” to keep the country inside the common currency area.

Fitch Warns US Could Lose AAA If ‘Fiscal Cliff’ Hits (Reuters)
“Failure to avoid the fiscal cliff.. would exacerbate rather than diminish the uncertainty over fiscal policy, and tip the US into an avoidable and unnecessary recession,” Fitch said in its 2013 global outlook published on Wednesday. “That could erode medium-term growth potential and financial stability. In such a scenario, there would be an increased likelihood that the U.S. would lose its AAA status.”

Science explains Rudolph’s red reindeer nose (CNET)
A collection of Dutch scientists contributed to a paper titled “Microcirculatory investigations of nasal mucosa in reindeer Rangifer tarandus (Mammalia, Artiodactyla, Cervidae): Rudolph’s nose was overheated.” According to the paper, “The exceptional physical burden of flying with a sleigh with Santa Claus as a heavy load could have caused cerebral and bodily hyperthermia, resulting in an overworked nasal cooling mechanism that resembles an overheated cooling radiator in a car: Rudolph suffered from hyperemia of the nasal mucosa (a red nose) under more extreme heat loads during flight with a sleigh.” Of course, scientists don’t like to put all their scientific eggs into just one basket of science. The paper’s authors acknowledge other theories for the red nose, including the common cold, alcoholic intoxication, or a parasitic infection of the nostrils.

GM To Buy Back Stock From Treasury (WSJ)
GM said it will purchase 200 million shares of stock held by the U.S. Treasury Department in the first step of the government’s eventual exit from the auto maker within the next 12 to 15 months. The auto maker will pay $5.5 billion for the shares in a deal that is expected to close by the end of the year. The repurchase price of $27.50 a share represents a 7.9% premium over the closing price on Dec. 18.

Berlusconi Says Italy May Be Forced to Leave the Euro Zone (Reuters)
“If Germany doesn’t accept that the ECB must be a real central bank, if interest rates don’t come down, we will be forced to leave the euro and return to our own currency in order to be competitive,” Berlusconi said in comments reported by Italian news agencies Ansa and Agi.

Knight, Getco Confirm Merger (WSJ)
The $1.8 billion deal for Knight, which values the firm at $1.4 billion plus $400 million in debt held by Getco, will create a trading powerhouse ranking as one of the largest players on U.S. exchanges and the main trading partner of online brokerage firms that service everyday investors.

Porsche Executives Charged Over VW Bid (WSJ)
Prosecutors have charged the former top executives of Porsche Automobil Holding SE with allegedly manipulating financial markets during the company’s attempt to take over Volkswagen AG in 2008, lawyers representing the executives said Wednesday. A court in Stuttgart must now decide whether to open criminal proceedings against Porsche’s former chief executive Wendelin Wiedeking and former finance chief Holger Härter, who are suspected of misleading investors when they denied trying to take over VW in 2008. Market manipulation in Germany can be punished with up to five years’ imprisonment. From early March to October of 2008, Porsche issued at least five statements denying it was trying to raise its stake in Volkswagen to 75%, but the prosecutors allege that Messrs. Wiedeking and Härter had already decided to try to raise the stake and were preparing for the move by purchasing buy options on ordinary and preference shares of Volkswagen. The denials induced investors to sell or make bets the shares would fall by so-called short selling, the prosecutors said, which benefited Porsche by lowering the share price ahead of the planned takeover.

Spanx Bandit On The Loose After JCPenney Heist (TSG)
An unknown thief (or thieves) stole a whopping $4182 worth of the popular body shapers from a JCPenney in Vero Beach, according to an Indian River County Sheriff’s Office report. The Spanx theft was reported Friday afternoon after a JCPenney employee noticed “the empty rack in the women’s undergarment section.” The worker noted that the Spanx stock had been there the prior evening. A subsequent search of the store revealed that about 100 Spanx “were taken along with their plastic hangers.” The purloined undergarments–tan and black tops and bottoms–were from Spanx’s Assets Red Hot Label line, police reported. A JCPenney store manager gave cops an itemized list of the boosted body shapers, but it appears the Spanx Bandit will escape unscathed. Due to a lack of witnesses, evidence, or store surveillance video, no further investigative activity could be undertaken by a sheriff’s deputy.

49 comments (hidden to protect delicate sensibilities)
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Comments (49)

  1. Posted by Boris the Bear | December 19, 2012 at 9:33 AM

    In Russia undergarments Spanx’s you!

  2. Posted by Guest | December 19, 2012 at 9:36 AM

    "Science explains Rudolph’s red reindeer nose"

    I’ve got another theory…

    -Flask carrying MD

  3. Posted by What's fair is fair | December 19, 2012 at 9:44 AM

    Dear Barclays Shareholders,

    You're welcome.

    - Bob Diamond

  4. Posted by LetsBreel | December 19, 2012 at 9:49 AM

    "Soviet" Russia. OTTNC

  5. Posted by LetsBreel | December 19, 2012 at 9:52 AM

    "Like a 50,000 buck deal."

    Buck? Apparently this LIBOR scam goes all the way back to the 1940s.

  6. Posted by Guest | December 19, 2012 at 9:53 AM

    Credit Suisse > UBS

    -Suck my prestige, fuckos

  7. Posted by .Bo | December 19, 2012 at 10:00 AM

    Are all traders such atrocious spellers, or just the UBS ones?

  8. Posted by Guest | December 19, 2012 at 10:05 AM

    $1.5B in't that large for UBS to lose. They once were able to make $20B dissapear overnight.

  9. Posted by Guest | December 19, 2012 at 10:08 AM

    Yes, that rang a false note. As did, "I will fucking do one humongous deal with you". Anyone who has spent three minutes on a trading floor would know that the proper phraseology would be, "I will do one fucking humongous deal with you."

    Posers.

  10. Posted by Guest | December 19, 2012 at 10:12 AM

    That's a lot of bucks!

    -2 Buck Chuck

  11. Posted by R. Johnson | December 19, 2012 at 10:12 AM

    Proof that there are people going into J.C. Penney!

  12. Posted by Guest | December 19, 2012 at 10:14 AM

    If you keep our bill unchanged after adding the bread sticks … I will ****ing leave you a humongous tip… Like over 3 bucks!

    -Latter that night at Olive Garden

  13. Posted by derpies | December 19, 2012 at 10:20 AM

    ..just not to shop.

  14. Posted by guest | December 19, 2012 at 10:23 AM

    "The paper’s authors acknowledge other theories for the red nose, including the common cold, alcoholic intoxication, or a parasitic infection of the nostrils."

  15. Posted by Guest | December 19, 2012 at 10:25 AM

    Thanks Fitch, what would we do without you.

  16. Posted by guest | December 19, 2012 at 10:31 AM

    "and me punching you in face"

  17. Posted by Skeptic | December 19, 2012 at 10:38 AM

    Hyperthermia? I call bullshit on this "scientific" paper. These so-called "scientists" missed the most obvious problem of explaining flying reindeer — that a reindeer flying at speed at altitude during Christmas, even in the Southern Hemisphere, could not possibly suffer hyperthermia, just like you don't see cars overheating in the winter.

    Other than that, no concerns.

  18. Posted by Texashedge | December 19, 2012 at 10:40 AM

    'Fifty?…. '

    'Thousand, yes, bones or clams or whatever you call them'

  19. Posted by UBS trader | December 19, 2012 at 10:40 AM

    your weigh of bass hear, frend

  20. Posted by Austin Powers | December 19, 2012 at 10:45 AM

    Buck = 1 million. In this example, the trader is boasting about a 50 trillion trade, a little more than 3 x's the GDP of the United States, or 70% of total world GDP.

  21. Posted by Victor Kiam | December 19, 2012 at 10:49 AM

    I liked the diet so much, I bought the company.

    S.A.C.

  22. Posted by Yes I read it | December 19, 2012 at 10:55 AM

    Learn something new every day:

    As Rudolph is a male name, this part of the story is confusing because Rudolph is almost always depicted with full antlers in the winter season. Therefore, Rudolph must be a female animal or a castrated male as male reindeer lose their antlers during the winter season.

    - Second section, last paragraph

  23. Posted by Guywithmajorissues | December 19, 2012 at 11:03 AM

    Rudolph is a fucking ginger and henceforth deserves to be ridiculed by other non-ginger reindeer.

  24. Posted by InfiniteGuest | December 19, 2012 at 11:07 AM

    Thanks, how much is a smackeroo?

  25. Posted by Larry, Curly & Moe | December 19, 2012 at 11:09 AM

    That varies on whom you want one delivered to

  26. Posted by Gary Busey, CFA | December 19, 2012 at 11:10 AM

    Missed one.

  27. Posted by grumpy texan | December 19, 2012 at 11:11 AM

    Put up some posts you lazy bums

  28. Posted by UBS S&T BSD | December 19, 2012 at 11:11 AM

    Assuming that UBS employees have spent three minutes on a trading floor that's actually doing deals, let alone fucking humongous ones, is quite a leap, wouldn't you say?

  29. Posted by UBS Libor Intern | December 19, 2012 at 11:12 AM

    Will have that for you in a second, furiously checking Investopedia right now.

  30. Posted by Fucko The Clown | December 19, 2012 at 11:13 AM

    The post where your name got on the MD list that explicitly was referenced as not producing grundle to the face levels of excitement ran yesterday.

  31. Posted by Spelling Bee MD | December 19, 2012 at 11:13 AM

    Mandy Drury works at UBS now?

  32. Posted by DB Name Quant | December 19, 2012 at 11:14 AM

    Apt name.

  33. Posted by Hobbes | December 19, 2012 at 11:14 AM

    "UBS bank traders, sometimes with the knowledge of their managers, sought to manipulate the rates in order to boost their trading profits."

    Profits at UBS? Surely this is a piece of Christmas fiction.

  34. Posted by HR Enthusiast | December 19, 2012 at 11:15 AM

    New theory on Stevie… Investors may not flee but it will be hard to recruit employees whose job it is to be thrown under a bus.

  35. Posted by UBS Humongous Trader | December 19, 2012 at 11:18 AM

    Eh, at least he pays better for the service.

  36. Posted by Jay McOrnery | December 19, 2012 at 11:27 AM

    Give me a tweet and I'll have my dealer take care of you.

  37. Posted by Admirer | December 19, 2012 at 11:31 AM

    I fuckin love Dan Loeb

  38. Posted by Libid | December 19, 2012 at 12:14 PM

    UBS Sucks.

  39. Posted by Vinnie the Guinea | December 19, 2012 at 12:17 PM

    LEBOWSKI!!!!!!!!

  40. Posted by Art Cashin | December 19, 2012 at 12:19 PM

    Hey!!

  41. Posted by Urge 2 Spurge W. | December 19, 2012 at 12:40 PM

    Well he shows more emotion than a Chinese Gov't official having sex with a high priced escort.

  42. Posted by Traped In the DB | December 19, 2012 at 12:41 PM

    I hate old people! They suck!

  43. Posted by Frih Riah | December 19, 2012 at 12:44 PM

    Apt. number.

  44. Posted by PermaGuestII | December 19, 2012 at 1:26 PM

    Twenty simoleons.

  45. Posted by Guest | December 19, 2012 at 2:08 PM

    Wehr you their?

    -Anuther UBS Trader

  46. Posted by Dr. Evil | December 19, 2012 at 2:40 PM

    Why make a trillion when we could make… billions?

  47. Posted by Jail consultant | December 19, 2012 at 2:45 PM

    I'm about to put you in a 2×2 matrix

  48. Posted by Movie/FamilyGuyBuff | December 19, 2012 at 4:17 PM

    GP: Rudolph, we finally figured out what makes your nose red.
    Rudolph: Is it pixie dust or leprechaun tails?
    GP: No, it's a tumour.
    Rudolph: You mean like a magical Christmas tumour?
    GP: No, a malignant tumour, the base of which is lodged deep within your brain.
    Rudolph: Oh.
    [long pause]
    Rudolph: Like a happy special…
    GP: You're going to die!

  49. Posted by sohbet odalari | December 25, 2012 at 4:31 PM

    Thousand, yes, bones or clams or whatever you call them'