Credit Suisse revamps rate trading after income slide (Reuters)
Credit Suisse said it would restructure its interest rate trading activities following a third-quarter slide in revenue at its investment bank. The Swiss bank said overall net profit rose on the year to 454 million Swiss francs ($509.1 million) from the year-ago period, where charges linked to its own debt ate into profits. The profit missed by far analyst estimates, which averaged 705 million francs. “Credit Suisse is restructuring and simplifying its rates business in order to increase returns,” in a bid to lower risky assets and leverage, the Swiss bank said in a statement on Thursday.
Icahn Pushes Apple For $150 Billion Buyback (WSJ)
Activist investor Carl Icahn has boosted his investment in Apple by about 22% to 4.73 million shares, and continued to push for a massive $150 billion buyback at the company, according to a letter he sent to Apple Chief Executive Tim Cook. The billionaire investor suggests the company use a self-tender offer to buy back the stock, and pledges that he himself wouldn’t sell the stock and take profits. “There is nothing short term about my intentions here,” he said.
Fed Proposes Stricter Liquidity Rules for Largest U.S. Banks (WSJ)
The proposal outlined by Fed officials goes beyond international agreements, requiring the largest banks to hold enough safe assets—such as cash or those easily convertible to cash—to fund their operations for 30 days if other sources of funding aren’t available. The rules are intended to prevent a repeat of the 2008 financial crisis, when financial markets froze due to a lack of liquidity. The proposal would ensure banks had access to cash and other assets in times of market dislocation.
Hamptons Sales Surge Fuels High-End Home Tear-Downs (Bloomberg)
Hamptons real estate deals are surging, fueling a boom in knockdowns, expansions and quick resales in the beachfront towns favored by Wall Street financiers and celebrities. Home purchases in the three months through September jumped 32 percent from a year earlier to 534, the most for a third quarter since 2005, appraiser Miller Samuel Inc. and brokerage Douglas Elliman Real Estate said in a report today. “Because of the scarcity of land in the Hamptons on which you can build there today, the land is worth more than the house,” said Mitchell Pally, chief executive officer of the Long Island Builders Institute, a regional trade group. “In most places, the bigger the house, the harder it is to sell. In the Hamptons the bigger the house, the easier it is to sell.”
Hedge fund mogul in nasty divorce battle with ex (NYP)
James Dondero, co-founder and president of the $18 billion asset manager Highland Capital Management, claimed in court that despite allegedly earning more than $36 million in 2010, several pending lawsuits against the firm have rendered him insolvent under the court’s accounting rules. The bitter, two-year divorce battle — which has seen his one-time partner testify for the 33-year-old wife, Rebecca Dondero — went to trial Wednesday. The battle has captured the attention of hedge-fund titans from coast to coast, not only because Dondero refused to settle short of a trial and risk embarrassing testimony in court — but because a casual conversation between him and Patrick Daugherty, the former partner, resulted in Dondero getting slammed at a hearing last year. Daugherty testified for the wife that Dondero told him he planned to try and hide assets just to stiff Rebecca on the pre-nup. Daugherty also claims in court papers that Dondero asked him to lie at an earlier hearing and tell the court Dondero was not hiding assets. “Dondero [attempted] to help Daugherty remember how he should testify regarding his wife, suggesting that it was Daugherty’s idea that he pay his wife nothing and that Daugherty referred to Dondero’s wife as a whore,” court papers claim. Daugherty hung up on Dondero when he made the request, court papers claim.
Lehman sues Giants Stadium over swap contracts gone sour (NYP)
The case goes back to 2008, when Lehman’s historic collapse served as a key catalyst to the global financial crisis…The lawsuit came about as Lehman and Giants Stadium could not agree on the settlement amount of two swap contracts after the investment bank filed for bankruptcy. The swap contracts, mostly underwritten by Lehman Brothers, were intended to hedge interest rate risks on about $650 million in bonds issued by the Giants entity. When the swaps were terminated in September 2008, at a time Lehman filed for bankruptcy, Giants Stadium “undertook a contorted plan” to avoid paying millions of dollars, the investment bank said in a lawsuit on Wednesday. Giants Stadium estimated that Lehman owed it about $301 million after the termination of the swaps contracts, a figure disputed by Lehman, the filing said. Later, Boston-based Baupost Group LLC, one of the world’s biggest hedge funds, bought the Giants Stadium claims against the Lehman estate and in turn sought to amend its claims to about $585 million for each contract, the lawsuit said. Lehman said the swaps were about $60 million in its favor just days before it filed for Chapter 11. On Wednesday, Lehman sought damages of no less than $94 million plus interest, after what is says was the “proper calculation” of the settlement amount of the swaps.
UBS Probed Over Disclosure of Restructuring, Settlement (WSJ)
UBS AG is being investigated over whether it breached disclosure rules last year when it announced a major restructuring and a 1.4 billion Swiss franc ($1.57 billion) settlement with regulators over interest-rate fixing, Switzerland’s principal stock exchange said Thursday. The regulatory arm of the SIX Swiss Exchange said in a statement it had already conducted a preliminary investigation into whether Zurich-based UBS had met its obligations in disclosing the two decisions, which were made last year. The exchange deemed a continued probe was necessary.
Bonds Erase ’13 Losses as Three-Decade Rally Defies Bears (Bloomberg)
Borrowing costs for corporate, sovereign and securitized debt have fallen to 1.94 percent, within 0.5 percentage point of historic lows, five months after Pacific Investment Management Co.’s Bill Gross said that the rally had probably ended. BlackRock Inc. Chief Executive Officer Laurence D. Fink said a scaling back of quantitative easing could come as late as next June.
Lake Brantley High School teacher suspended for taping girl up (CO)
Greg Sims, a science teacher at Lake Brantley High School in Altamonte Springs, was suspended for five days without pay, according to a letter addressed October 8 from Superintendent Walt Griffin. His suspension runs through early November. According to the letter, Sims “taped a student’s hands together, attempted to tape her mouth closed as a means of addressing her disturbing class and taped her book bag to a pole in the classroom.” “I have determined that your conduct in this situation does not conform to the Seminole County Public Schools Student Conduct and Discipline Code,” Griffin wrote. “This is unacceptable conduct on the part of a professional educator and represents misconduct in office.”