Opening Bell

Opening Bell: 02.27.14

Bitcoin Foundation Aided Prosecutor’s Probe of Mt. Gox (Bloomberg)
The Bitcoin Foundation, an advocacy group for the nascent digital currency, provided information to federal prosecutors this week that aided a probe into Mt. Gox, a shuttered exchange in Tokyo. “The Bitcoin Foundation proactively reached out to the Southern District of New York to offer assistance,” the Seattle-based organization said in an e-mailed statement yesterday. “We are continuing to help them and we are cooperating fully with their investigation.” Shortly after Mt. Gox’s chief executive officer, Mark Karpeles, resigned from the foundation’s board on Feb. 24, the organization briefed the Manhattan U.S. Attorney’s office with information about the possible theft of as much as $400 million from the Bitcoin exchange, according to two people familiar with the effort. They requested anonymity because the talks were private.

Some Companies Alter the Bonus Playbook (WSJ)
U.S. companies increasingly are using unconventional earnings measures in determining bonuses, making it easier for them to appear more profitable when they reward executives with big paydays. Last year, 542 companies said they determine compensation using financial measurements that differ from U.S. accounting standards, according to an analysis performed by consultant Audit Analytics for The Wall Street Journal. That is more than double the 249 companies that did so in 2009. The practice can be controversial because it strips out various costs—from employee stock payments to asset write-downs—that can depress profits. Such moves are on the rise at a time when the Securities and Exchange Commission has said it is scrutinizing nonstandard earnings measures. The commission declined to comment on their use in executive-pay decisions. “Everything you can think of to manipulate this has been done,” said Gary Hewitt, head of research at GMI Ratings, a corporate-governance research firm.

Is Wall Street Pay Hampering U.S. Innovation? (BusinessWeek)
…venture capitalist Andrew Yang is here with yet another critique of the fact that a disproportionate number of college graduates are squandering their hard-earned educations on Wall Street careers. “A friend told me about a young Princeton graduate she knew named Cole. Cole studied mathematics and went to work for a hedge fund directly out of school. He’s now making well into six figures at the age of 24. That’s his whole story to date,” Yang writes in an excerpt from his book, Smart People Should Build Things. “That’s success and the American way. And yet how excited are you about Cole’s trajectory?” Yang argues that our idea of achievement has become far too narrow and materialistic. It is hurting the economy by taking math, science, and liberal arts graduates away from fields where they might invent and build and hire people at new companies they found and concentrating them in the financial sector, where they aren’t likely to contribute to future economic growth. He asserts that many of the most highly educated young people are also some of the most risk-averse, overly concerned about predictable career advancement and impressing their parents and friends.

Corporate Economists Are Hot Again (WSJ)
Many companies had corporate economists on staff in the volatile 1970s and ’80s, but dropped them when the U.S. economy was steady and strong. Information from government agencies, such as industrial output from the Federal Reserve, was plentiful, along with research from private consultants, including Macroeconomic Advisers LLC in St. Louis and IHS Global Insight of Englewood, Colo. “The reaction in the corporate world was: ‘I can get my average GDP forecasts from anybody. Why do I need an economist in my shop?’ ” said Ellen Hughes-Cromwick, chief economist for Ford Motor Co. The key to the revival of in-house economists, companies and economists say, is the need to digest huge amounts of data—from production volumes in overseas markets to laptop usage in urban areas—to determine opportunities and risks for companies’ business units, not just in the U.S. but around the world…Richard DeKaser, a vice president and corporate economist at Wells Fargo, leads a team of eight people, including six economists, who standardize the models and data used to measure risk in different business units, such as mortgage lending and credit cards. Previously, one unit might base unemployment figures on payroll data, while another would use household surveys. Doing so undermined the accuracy of tests to measure risks for losses and contributed to mistakes in business planning. “The great recession laid bare a lot of fundamental mistakes that an economist can be useful in preventing,” said Mr. DeKaser, who was previously chief economist for National City Bank.

Suspect: I didn’t know cocaine is illegal (KIN)
A Key West man was jailed Sunday for alleging trying to ditch a bag of cocaine in a planter at the Pier House Resort at 1 Duval St. in Key West. Guy Lanchester, 46, reportedly told Officer Darnell Sealy he didn’t know why he was being arrested: “I don’t understand. I thought cocaine wasn’t illegal in Florida.” Sealy arrested Lanchester about 2 a.m. following a call from a Pier House security guard who saw Lanchester and two others walk onto the property, then heard a scream. In addition to cocaine possession, Lanchester is charged with felony tampering with evidence. Sealy describes the second charge: “I asked Lanchester what he had in his hand and Lanchester quickly shoved his hands into the flower pot and yanked them back out.”

Funds underperform, but hedge fund kings rake in $24.3 billion (NYP)
George Soros, the 83-year-old retired hedgie superstar whose fund has been around for 40 years, and who is now managing his family’s wealth, earned $4 billion — matching the record-high earnings that David Tepper, of Appaloosa Management, took home in 2009. And speaking of Tepper, the 56-year-old investor earned $3.5 billion in 2013, which comes out to roughly $1.5 million an hour based on a 50-hour workweek and four weeks of vacation. Since Soros is retired, he makes money just breathing — about $457,000 every hour he is alive.

The Fraud Behind a $14 Million Whistleblower Award (WSJ)
The case that led to the $14 million-plus payment centers on allegations last year that about 250 investors, mostly Chinese, were “duped” by 30-year-old Anshoo R. Sethi and his two Chicago, Ill.-based companies into paying a total of more than $155 million for a supposed plan to build a hotel and conference center, said the people familiar with the matter. The SEC said the investors were led to believe they were boosting their chances of green cards, because the scheme was designed to qualify for an immigration program that offers U.S. residency for job-creating investments. In fact, the agency alleged, Mr. Sethi and his companies lacked the necessary building permits, their claims to have the support of major hotel chains were false and the documentation they gave to the immigration authorities was “phony.” A lawyer representing Mr. Sethi and his companies declined to comment, and an SEC spokesman declined to comment on the award…The award is by far the biggest arising from a 2010 law designed in part to encourage tipsters to come forward with information about financial fraud. The SEC announced the payment in October without naming the whistleblower or the case, as the law gives tipsters the option to remain anonymous.

JPMorgan Chase Moves to Brooklyn (BusinessWeek)
..the country’s largest bank by assets is planning to relocate employees from its 60-story Manhattan tower 1 Chase Manhattan Plaza to Brooklyn’s MetroTech Center, after reviewing its real estate portfolio with an eye toward cutting expenses.

Bank of America disputes $2.1 billion claim in U.S. fraud suit (Reuters)
Bank of America said it does not owe the U.S. government the $2.1 billion it is seeking in penalties after a jury found the bank liable for fraud over defective mortgages sold by its Countrywide unit, according to a court filing made on Wednesday. Lawyers for the bank said the government’s request “contradicts every pertinent legal principle” and called it a “dramatic departure from reality,” the filing stated. Bank of America said in the filing that it should only have to pay the amount it made in profit from selling the loans, which it contended was zero.

Sean Avery joining ‘Dancing With the Stars’ (NYP)
The former Rangers star has been spotted working out in preparation for the show at the New York studio of Gwyneth Paltrow’s trainer Tracy Anderson. The move will be Avery’s latest career change after working at high-fashion ad agency Lipman, which ran out of cash and closed last year. Sources said the former NHL stud recently posted a video of himself online showing off some Anderson-inspired dance moves to Katy Perry’s “Dark Horse,” but the video was taken down.

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60 Responses to “Opening Bell: 02.27.14”

  1. Quant me maybe... says:

    Sean Avery joining ‘Dancing With the Stars’…..

    >The only way anyone who reads this blog will care about this is if the Sports Illustrated swimsuit models were to dance naked. With each other. While kissing. And maybe a pole is involved.

  2. Guest says:

    $1,500,000 /hour… $416 every one Mississippi.

  3. KingCo says:

    Yang argues that our idea of achievement has become far too narrow and materialistic. It is hurting the economy by taking math, science, and liberal arts graduates away from fields where they might invent and build and hire people at new companies they found and concentrating them in the financial sector, where they aren’t likely to contribute to future economic growth.

    Translation: They should become insufferable Silicon Valley douches like me.

  4. Guester says:

    That must be how Gerorge can afford that fancy blush he wears around his eyes.

  5. I'm not funny. says:

    So on this whole bottomless brunch thing, will il Bastardo now be going out of business? That place is great for bottomless brunch! Techno beats, and dancing on your seats!

  6. Guest says:

    There's a face only fist could love.

    -A.Ferreyr

  7. guest says:

    Last time I saw a mouth like that it had a hook in it.

    -chazzy dangerino

  8. Common Fucking Sense says:

    Why does every twat in finance think that some stereotypical Silicon Valley chotchikie peddler is the only thing out there working "innovation"?

  9. Downvoted says:

    There are entirely too many rational and level-minded posts in this comments section. Needs more slams and rants about horizontal-striped shirts.

  10. Single in FiDi says:

    "Let's put a smile on that face!" – Soros pic

  11. Danny Werfel says:

    Step it up guys. Step it up. You can do better. I know you can. I have seen it.

  12. Guest says:

    “The great recession laid bare a lot of fundamental mistakes that an economist can be useful in preventing”

    Word.

    – Former Lehman Chief Economist

  13. Rebecca M. says:

    Photo Caption: It's the girth that makes her feel feel like she's giving birth.

  14. St. Copious says:

    Who's the idiot – me or the NYPost? George Soros "made" $4 billion managing his own money? Who paid him?