Opening Bell: 07.16.14

S&P Weighs Restarting Talks on U.S. Suit (WSJ)
Standard & Poor’s Ratings Services, after more than a year of fighting a crisis-era lawsuit, is willing to reopen discussions with the Justice Department to settle the case, according to people familiar with the matter. The company isn’t in active talks with the Justice Department and no deal is imminent, these people said. And while no penalties have been discussed, negotiations would likely focus on a range of several hundred million dollars to around $1 billion, these people said. The firm also doesn’t want to admit wrongdoing, the people said, fearing such an admission would leave it vulnerable to further litigation. However, it is unclear whether the Justice Department would accept such terms. The government had previously demanded more than $1 billion before talks broke down. It then filed a lawsuit in February 2013 seeking $5 billion. S&P’s apparent strategy shift is in part tied to a new general counsel taking over at S&P’s parent company, McGraw Hill Financial Inc. The company also has generally grown more willing to resolve the lawsuit instead of fighting, according to the people familiar with the matter. S&P has previously called the lawsuit “meritless” and alleged it was retaliation for its 2011 downgrade of U.S. sovereign debt, which the government denied.

Bank Earnings Surprise on Pickup in Trading (WSJ)
“It’s not something we should do cartwheels over, but something we can stand up and cheer” about, said Tom Jalics, a senior investment analyst for Cleveland-based Key Private Bank, which manages J.P. Morgan and Goldman shares. “We should take note today but should be cautious about trading results going forward as well.”

Yahoo to Keep More of Alibaba After IPO, Return Cash (Bloomberg)
Yahoo! Inc will return at least half of the cash it reaps from Alibaba (BABA) Group Holding Ltd.’s initial public offering to shareholders, providing solace to investors who’ve hung on as Chief Executive Officer Marissa Mayer struggles to revive sales. The U.S. Web portal is also keeping a bigger stake in the Chinese e-commerce company, ensuring that Yahoo continues to benefit from its investment in the world’s largest Internet market. The plans for Alibaba were a bright spot in a report yesterday that showed Yahoo’s sales fell last quarter, missing analysts’ projections.

Ex-CalPERS CEO admits he’s a crook (Fortune)
When former CalPERS CEO Fred Buenrostro was charged more than a year ago by both federal and state officials with fraud and obstruction of justice charges, something didn’t seem right. The allegations focused on how Buenrostro had forged documents to help placement agent pal Alfred Villalobos get paid by some of his private equity clients, but there was no mention of Buenrostro personally benefiting (beyond a $300k per year job with Villalobos upon retirement from CalPERS). Not was there any evidence that Buenrostro improperly influenced investment decisions at CalPERS. But it seems he did both things, according to his guilty plea last Friday in a San Francisco courthouse. Buenrostro’s attorney had previously suggested that his client was prepared to roll over on Villalobos, who continues to insist that he did nothing wrong. And roll over he did, acknowledging not only the fraud, but also: The receipt of $200,000 in cash from Villalobos — stuffed into shoe boxes and paper bags over a series of three meetings – in exchange for confidential CalPERS information and influence in directing CalPERS to invest in Villalobos’ clients…[also] Villalobos paid for Buenrostro’s 2004 wedding.

Jamie Dimon: Companies should feel free to bail on the U.S. (Fortune)
Dimon’s public thumbs up for inversions—the growing practice where American companies buy smaller foreign companies to relocate overseas and avoid paying U.S. taxes—came in response to a question from Fortune on a media conference call after JPMorgan released its second quarter results. He said the real problem was the tax code, not CEOs trying to shirk their responsibilities. “You want the choice to be able to go to Wal-Mart to get the lowest prices,” Dimon said on a conference call with reporters on Tuesday morning. “Companies should be able to make that choice as well.” Dimon did not elaborate on the difference between choosing where to buy your underwear and where a corporations calls home. In a recent cover story for Fortune, Allan Sloan argued that U.S. companies are “positively unpatriotic” when they move their corporate headquarters overseas to pay lower taxes because of the benefits they receive by being (except for tax purposes) American companies. What’s more, Sloan argued undermining the U.S. tax base will be bad for all shareholders in the long run.

Massachusetts Taco Bell employee shoots customer with BB gun (NYDN)
A Massachusetts Taco Bell employee allegedly shot a customer with a BB gun after the diner grew angry because no one would take his order. Springfield Police arrested 26-year-old Steven Noska on assault and battery charges for the Sunday morning incident, WWLP reported. Around 4 a.m., the customer, also 26, pulled into the drive-thru at the Springfield, Mass., Taco Bell, police said in a statement. He was hungry and wanted tacos, he told officers. The restaurant was open, but no one came to the window, he claimed. After waiting for a while, the customer started banging on the glass. When that didn’t getthe employees’ attention, the man parked his car and went to the restaurant’s door. He banged on that, too. Finally, Noska came to the door to confront the fuming would-be diner. The two men started arguing, police said. Then, it got violent. Noska allegedly shoved the customer, walked to his car and grabbed a BB gun. Police said Noska shot the man several times before hitting him with the pistol.

How much do U.S. brokers make? Their business cards provide clues (Reuters)
A financial adviser who is a “managing director” is likely at the top of his game, but the honorific has different meanings at different company. A Morgan Stanley broker who is a managing director had to bring in $8 million over the previous three years (earning the broker about $1.2 million a year); at Wells Fargo it’s $1 million in each of the two prior years (earning the broker $460,000 annually, not counting bonuses and deferred awards). Bank of America’s Merrill Lynch Wealth Management reserves the managing director title for advisers who produced at least $3.75 million of revenue in each of two previous consecutive years (roughly $1.7 million for the broker). UBS Wealth Americas, the smallest of the big four brokerage firms, has a complicated formula, limiting the title to those who produced at least $2.6 million in the previous year and brought in $6 million over the previous two years. UBS said it looks for leadership qualities and also confers the title on any broker who has been with UBS at least 25 years.

Do Two-Thirds of Shark Tank Deals Fall Apart? (BusinessWeek)
Of the more than 35,000 people who now try out each season, fewer than 150 make into the tank. Anyone who has seen the show knows how this plays out: Contestants spend up to two hours getting drilled on their business by the panel of sharks. The sessions are edited down to less than 15 minutes and invariably include an embarrassing shot of a bewildered entrepreneur. In every show, at least one lucky entrepreneur gets a hug and a handshake worth tens or hundreds of thousands of dollars. What happens next is far less inspirational. As many as two-thirds of those televised deals never come to fruition, estimates TJ Hale, who has interviewed more than 70 participants for his show, Shark Tank Podcast. Investors receive no information prior to filming, so they get to perform due diligence only after taping. They may discover legal, tax, or financial red flags. Or they can just change their minds. “One entrepreneur said basically the shark just never called them,” says Hale.

57-year-old former employee sues Twitter for age discrimination (The Examiner)
Peter Taylor, a 57-year-old who formerly managed deployment at Twitter’s data center, filed his lawsuit July 9. In it, Taylor’s lawyers say he received a positive employee evaluation just six weeks before he was fired without notice or explanation. “Plaintiff’s supervisor made at least one critical remark about plaintiff’s age,” the lawsuit states. “The persons defendants employ in positions similar to plaintiff’s position are all substantially younger than plaintiff. Defendants replaced plaintiff with several employees in their 20′s and 30′s.” A month before he was fired, Taylor underwent surgery to remove kidney stones that had caused him to be ill since April 2013. In his lawsuit, Taylor claims he asked Twitter to assign extra staffers to help with his workload while he was ill. Taylor claims Twitter declined and instead gave him more responsibilities.

Madoff Sons Deleted E-Mails, Hindered Probe, Trustee Says (Bloomberg)
Bernard Madoff’s sons deleted e-mails to obstruct a 2005 U.S. Securities and Exchange Commission investigation that could have exposed their father’s $17.5 billion Ponzi scheme, the trustee unwinding his company said. The trustee said Andrew Madoff and Mark Madoff labeled printouts of some e-mails as “trash” before deleting them from a server during an SEC probe into Madoff’s investment advisory business, according to an amended complaint filed today in U.S. Bankruptcy Court in Manhattan.

Workers Can Only Spend 6 Minutes In The Bathroom Each Day (HP)
During a protest before work last Wednesday, Teamsters union members at the WaterSaver Faucet Co. in Chicago told a local CBS affiliate they filed a complaint with the NLRB over a company policy that penalizes workers for spending more than 30 minutes per week — which breaks down to just six minutes a day — for bathroom breaks. “This year, they installed a washroom monitoring system that basically keeps track of every minute you’re in the bathroom,” Teamsters Local 743 business agent Nick Kreitman told CBS Chicago. The union said as of June, WaterSaver had already “unfairly” disciplined 19 workers for “excessive use” of the bathroom. The company, which make faucets on a manufacturing line, reportedly installed a system that requires workers to swipe in and out of the bathroom earlier this year. But the union told Progress Illinois the disciplinary action for going over the bathroom time limit is recent — and, perhaps not coincidentally, it came after tense labor contract negotiations during which members asked for paid sick days and health care benefits. WaterSaver owner Steven Kersten told the Chicago Tribune the workers’ current contract allows for a 10-minute morning break, a 30-minute lunch and 15-minute afternoon break. Kersten, who admitted to CNN he doesn’t have to swipe in to use the bathroom, said the company lost 120 hours of productivity in May due to unscheduled bathroom breaks. Kersten told CNN that as an incentive to employees, the company has a rewards system under which workers can earn a gift card of up to $20 each month — $1 a day — if they don’t use the bathroom at all during work.

22 comments (hidden to protect delicate sensibilities)
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Comments (22)

  1. Posted by guest | July 16, 2014 at 7:44 AM

    I'm surprised HP didn't ban newspapers and magazines in the toilets as well.

  2. Posted by Guest | July 16, 2014 at 7:56 AM

    "the company has a rewards system under which workers can earn a gift card of up to $20 each month — $1 a day — if they don’t use the bathroom at all during work."

    it costs the company a $1 a day for 6 minutes of employee toilet use? I can't wait until someone sues the company for health problems caused by the draconian toilet policy. 324,000 employees saving $324k a year. If they have to nickel and dime that much, maybe there's something wrong with the business model.

  3. Posted by Shaz's beard | July 16, 2014 at 8:08 AM

    making MD at UBS PWM after 25 years due strictly to the fact that you couldn't find a better job/haven't been fired/are still breathing is the NKI

  4. Posted by Ken Lewis | July 16, 2014 at 8:10 AM

    Maybe that's how you get back those four weekend days per month not worked?

  5. Posted by CashIsStillKing | July 16, 2014 at 8:28 AM

    what a way to turn on a guy and yourself. $200k he gave you in shoebox money.

  6. Posted by McNugget Fanatic | July 16, 2014 at 8:33 AM

    [youtube 7x1iRyDumiE http://www.youtube.com/watch?v=7x1iRyDumiE youtube]

  7. Posted by guest | July 16, 2014 at 8:56 AM

    I'd love it if someone would pay for my wedding.

    -guy whose fiance thinks 3k is reasonable for a cake

  8. Posted by guest | July 16, 2014 at 9:01 AM

    Surely that's next.

  9. Posted by guest | July 16, 2014 at 9:02 AM

    "He was hungry and wanted tacos."

    Famous last words, my friend.

  10. Posted by A friend | July 16, 2014 at 9:18 AM

    3k buys you about 80 nubile filipino pies you could stuff with your own filling.

  11. Posted by Flarky | July 16, 2014 at 9:22 AM

    I've had a weasel pig growler brewing for a fortnight.

  12. Posted by Guesteban | July 16, 2014 at 9:36 AM

    Six minutes? That's six minutes too many.

    – Bloomberg

  13. Posted by Frank | July 16, 2014 at 9:49 AM

    That would never happen at the Penn Station Taco Bell.

  14. Posted by Guest | July 16, 2014 at 9:55 AM

    < six minute bathroom break + Chipotle for lunch = a bad time

  15. Posted by Margie | July 16, 2014 at 10:18 AM

    Ohhh yah, is it reasonable?

  16. Posted by J Shazman | July 16, 2014 at 10:32 AM

    I'd tap that.

  17. Posted by Morley Shaboom | July 16, 2014 at 10:36 AM

    I fucking love hoagies!

  18. Posted by Quant me maybe... | July 16, 2014 at 12:20 PM

    That's three thousand pesos, right?

    >Because she's going to get much more expensive as time goes on. Unless she's from Connecticut, in which case she'll also get fatter and meaner.

  19. Posted by Parabolic | July 16, 2014 at 1:04 PM

    From Water Savers' Website:
    Employee Development. As manu­facturing in the United States has declined, we find it increasingly difficult to recruit employees that have the skills we need to operate. Our decision to remain and expand in the City of Chicago may accentuate this skills gap. We have therefore made a significant commitment to invest in our human capital. We have implemented extensive programs to provide our employees with the training they need to perform their jobs. We teach our employees what they need to know, from reading and interpreting a blueprint, to using measuring instruments, to programming a computer-controlled machine tool.

  20. Posted by Guest | July 16, 2014 at 2:05 PM

    my bad. it's $324k a day, ~$8.1mm a year. That sounds like something a McKinset consultant would come up with to justify his $500 and hour rate.

  21. Posted by Guest | July 16, 2014 at 11:14 PM

    "Kersten, who admitted to CNN he doesn’t have to swipe in to use the bathroom, said the company lost 120 hours of productivity in May due to unscheduled bathroom breaks."

    How much do the factory employees cost per hour, $30-40 max with taxes and benefits? So 120 hours is what, $5K/month? Fighting this thing will cost 5 years worth of that in legal fees.

  22. Posted by Guest | July 17, 2014 at 12:29 AM

    In defense of WaterSaver – because HuffPo would never say it – these rules are the sort of shit that develops from "tense labor negotiations" with a union. Next think you know, a third of your disgruntled union workforce is spending 45 minutes a day in the can, and you can't do anything about it unless there's a written policy. Should these rules be necessary? No, because you should just have a normal workforce where you fire people who are abusing the system rather than having to rely on all the detail that a union contract spells out for work rules and disciplinary procedures. The owner of this business may well be a bastard, but I'm highly skeptical that these Teamsters are as innocent as HuffPo makes them out to be.

    As for all of these calculations, you're ignoring the fact that this work isn't office work. It's on a manufacturing line, and constantly having people leaving their stations can really screw up the flow of a manufacturing line more than a simple dollars per hour calc would indicate.