Dealbreaker

Posts by Dealbreaker

Write-Offs: 10.31.14

$$$ “One reporter publicly confirmed that a CEO of a top 5 bank personally emailed him the lurid details of the lawsuit, and we also have heard directly from other reporters that they also are getting information and encouragement to pile on from some of our competitors.” [Jefferies]

$$$ Trick or treat at this billionaire’s haunted house [CNBC]

$$$ J.P. Morgan Found Hackers Through Breach of Road-Race Website [WSJ]

$$$ The Case for ‘Alternative’ Investments [WSJ]

$$$ Help desk worker suspended for using fake robot voice [CNBC] Read more »

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Opening Bell: 10.31.14

pot farmThe texts that sparked the SEC pot stock probe (NYP)
A pair of investing tycoons traded giddy text messages this spring as they planned to unload a massive haul of hyped-up shares in GrowLife, a supplier to pot farmers that has come under regulatory scrutiny. “April 10 is your day! Buy two houses in Miami!” David Weiner, a Los Angeles-based penny-stock financier texted to fellow investor Fred Knoll, according to messages obtained by The Post. “Lol you are my hero,” replied Knoll, an MIT-educated Wall Street veteran. The duo were licking their chops over the April 10 expiration of a restriction against selling a massive chunk of GrowLife shares they’d acquired after giving the company a cash infusion, Knoll admitted in a brief interview Wednesday. “There was a restriction on the shares that was expiring,” Knoll said, declining to elaborate. The plan for a big payday was thwarted at the last minute, however, when the Securities and Exchange Commission halted trading of GrowLife stock at 50 cents a share before the stock opened for trading on April 10. At the time, the SEC cited “potentially manipulative transactions” in the stock. The specific reason for the SEC’s halt on GrowLife shares had been a mystery up to now — but a source confirmed that the SEC made its move after reviewing the lock-up expiration data and the text exchange.

Big Banks Brace for Penalties in Probes (WSJ)
Big banks in the U.S. and Europe are stockpiling billions to pay for a potential trans-Atlantic settlement of allegations that they manipulated foreign-exchange rates as talks heat up with regulators on both continents. The possibility of a major deal soon, instead of the firms settling with regulators one by one, is a new wrinkle in the long-running talks to settle foreign-exchange probes that have ensnared about a dozen banks in the U.S. and Europe. Several people familiar with the discussions said banks appeared more optimistic of reaching a global settlement than U.S. regulators. One person said the direction of the talks was changing by the hour.

Citigroup Legal Costs Jump as Currency Probes Accelerate (Bloomberg)
Citigroup revealed that it’s facing a U.S. criminal probe into the bank’s foreign-exchange business and took a $600 million legal charge that forced it to restate third-quarter results reported two weeks ago. The lender is cooperating with criminal and antitrust investigations by the Justice Department as well as inquiries by the Commodity Futures Trading Commission and regulators in the U.K. and Switzerland, New York-based Citigroup said today in a regulatory filing.

3 years later, some MF Global creditors get paid (Reuters)
A large group of creditors of MF Global’s bankrupt brokerage unit will soon receive their first payout, as $518.7 million of checks start to be mailed out on Friday, the third anniversary of the company’s Chapter 11 filing. James Giddens, the trustee liquidating the MF Global brokerage unit, on Thursday said the payout to unsecured general creditors will cover 39 percent of claims he has deemed valid. He said another $32.3 million will be distributed to some “priority” claimants, covering all of their valid claims.

StanChart faces US sanctions probe (FT)
US authorities have reopened an investigation into Standard Chartered to determine whether the UK bank hid transactions that flouted sanctions laws as it was settling a related action two years ago, people familiar with the matter said. The inquiry is a blow for StanChart and its embattled management team. Peter Sands, one of the longest serving chief executives of any global bank, faces growing doubts about his future after this week announcing the group’s third profits warning of the year.

Fridge-raiding Teletubbie charged with burglary (UPI)
Police in Pennsylvania said a man who dressed as the yellow Teletubbie and broke into a friend’s home for leftover Chinese food has been charged with burglary. Bethlehem police said Lehigh University student Terez Owens Jr., 20, was dressed as Laa-Laa, the yellow Teletubbie, when he allegedly broke into a friend’s house about 2 a.m. Sunday and filled his “man purse” with leftover Chinese food from the refrigerator. The door to the residence was damaged during the break-in, police said. Officers caught up to Owens, who police said was dressed up for a nearby Halloween party, shortly after the incident, but he was released when the victim initially declined to press charges. Read more »

Write-Offs: 10.30.14

$$$ Swiss Boards Command Top Pay as Members Refuse ‘Peanuts’ [Bloomberg]

$$$ Tim Cook Speaks Up [BusinessWeek]

$$$ QE was a ‘nonevent’: Billion-dollar bond manager [CNBC]

$$$ Raymond James reports strongest recruiting year since 2009 [Reuters]

$$$ A Memphis divorcé who left his wife a year ago broke into a dance at a Bank of America branch last week after paying the last of his alimony payments, an online video shows. “I am done!” he exclaims with his check in his right hand. “Thank you Jesus, I am free at last! Free at last! Wooo!” [NYDN] Read more »

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Opening Bell: 10.30.14

The show must go on.

The show must go on.

$1.5 Million Sent in Error to Money Manager (Both Are Missing) (Dealbook)
Credit Suisse says it wired a total of $1.5 million in three transactions to the hedge fund’s bank account on one day in January. Two weeks later, according to its lawsuit, the bank realized it had made a mistake: At the time of the wire transfers, the hedge fund, Galbraith Capital Investment Management, was winding down operations and it had no cash left in its account with Credit Suisse. The bank asked for its money back. It is still waiting. The bank sued Galbraith Capital and its manager, Joseph B. Galbraith, seeking to recover the money. Credit Suisse filed a motion in a New York State court in August seeking a default judgment against Mr. Galbraith and the hedge fund. At a hearing this month, a New York State judge orally granted a judgment against the hedge fund but not against Mr. Galbraith, a person briefed on the matter said. Mr. Galbraith has yet to file a legal response in the case or be personally served with court papers. So now Credit Suisse is left to play a different game: Where in the world is Joseph B. Galbraith? People who know Mr. Galbraith, 42, who renounced his United States citizenship in 2011, say they think he is living with his second wife in Europe, possibly in Monaco. Reached by a reporter recently via email, Mr. Galbraith said he had not been aware of the Credit Suisse lawsuit. In an email, he said the accusations against him were “ridiculous, bordering on laughable” and part of an effort to malign and slander his character.

Investor Activism, Already Robust, Expected to Rise in Next Year (Dealbook)
…virtually all the senior corporate executives and activist hedge fund managers surveyed by the law firm Schulte Roth & Zabel and the data provider Mergermarket said they believed that activism would rise over the next 12 months. More than half said the increase would be “substantial.” The results, to be released at an activism conference hosted by Schulte Roth on Wednesday, signal the undiminished confidence in the power of outspoken dissident investors. Over the last year alone, activist shareholders have prompted management changes at Darden Restaurants, helped spur breakups at a slew of companies, and gained seats on numerous corporate boards. Recent data suggests that the success of activism campaigns has more than doubled over the last decade, to more than 70 percent.

Bad Bets Rock Fortress’s Macro Fund (WSJ)
The $3 billion Fortress Macro Fund, which Mr. Novogratz launched in 2002, has lost more than 9% so far this year, with half of that drop coming this month. It is the latest setback for macro funds, which seek to anticipate global economic shifts in various markets. The Fortress loss is worse than most others and stands out following years of market-beating performance. The culprit? A series of bad bets against U.S. government bonds and the Japanese yen, along with a wrong-way wager on Brazil, investors say.

Pimco Brings Back Two Former Executives (WSJ, earlier)
The food truck, called Monsieur Madame, according to its Facebook page, will continue operating, according to a person familiar with the matter.

Barclays bribed Saudi royalty: lawsuit (NYP)
Barclays bribed a member of the Saudi royal family and ignored a defaulted lease payment from the country in order to secure a rare banking license inside Saudi Arabia, a lawsuit against the bank alleges. The giant UK bank should have gone after the lease payment but chose not to because it didn’t want to anger the government and risk losing the lucrative business, according to the lawsuit, filed by a Saudi real estate company in Manhattan state court. “Barclays knew that any such license would be extremely lucrative and that its litigations against the Saudi government made obtaining such a license impossible,” according to the suit. The real estate company, Jadawel International, also claims Barclays paid millions in a “thinly disguised bribe” to a company owned by a Saudi prince for advisory services. Barclays strongly denied the accusations.

Suspected meth dealer turned in by own dog while hiding behind Alabama home: police (NYDN)
The suspected meth head managed to run out the backdoor and down a 25-foot ravine where officers temporarily managed to lose him. It was at that moment they were greeted by Henderson’s pit bull-husky mix who came out of the woods where Henderson had fled. “The dog, later identified as Bo, looked at one of the investigators and the investigator pointed at Henderson and said go get him. Bo without hesitation went down the ravine trailed by two Drug Enforcement Investigators,” the police department said in a release. While the two investigators weren’t immediately successful, Bo apparently was. Upon exiting the brush Bo tipped them off to some tall grass he was now hiding in, all by the swoosh of his tail. There with him they found Henderson lying flat on the ground. “Bo was rewarded with dog biscuits from our K-9 Sergeant,” the Prattville Police Department said. Read more »

Write-Offs: 10.29.14

$$$ Fed Closes Chapter On Easy Money [WSJ]

$$$ Alibaba’s Underwriters Are Bullish on the Stock [WSJ]

$$$ U.S. prosecutors reopen probes against several big banks: NYT [Reuters]

$$$ Billionaires’ feud is the bane of Bahamas [NYP]

$$$ Break-In Suspect Dresses As Teletubby, Allegedly Steals Chinese Food In Man Purse [HP] Read more »

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Opening Bell: 10.29.14

Mark Zuckerberg & CoFacebook Vows Aggressive Spending (WSJ)
On a conference call with analysts, finance chief David Wehner said he expects Facebook to incur higher expenses than normal in the quarters to come, in the wake of big investments in both engineering talent and acquisitions. He expects costs to rise as much as 75% for the year. Mr. Wehner and other Facebook executives urged analysts and investors to look further into the future, and not just at the financial results before them. Mr. Zuckerberg kicked off the call by stressing the company’s long-term goals stretch more than a decade into the future and require “investing aggressively.”

Deutsche Bank Swings to Third-Quarter Loss (WSJ)
Deutsche Bank AG swung to a net loss in the third quarter after the lender boosted its reserves to cover fines from pending litigation. Germany’s largest bank on Wednesday reported a net loss of €94 million ($119.7 million) for the quarter, compared with a net profit of €41 million in the same period last year. The loss was expected after the bank said last week that it would book €894 million in additional litigation reserves in the quarter, which was more than analysts had expected. The lender has now set aside €3 billion to cover fines from pending investigations.

Pimco Replaced by BlackRock at $6 Billion Prudential Fund (Bloomberg)
Pacific Investment Management Co., seeking to stem redemptions after its co-founder Bill Gross left unexpectedly, was dropped as manager of a $6.16 billion strategy offered by a unit of Prudential Financial Inc. Pimco, based in Newport Beach, California, will be replaced as subadviser of the AST Pimco Total Return Bond Portfolio by BlackRock Inc. and Loomis Sayles & Co., according to a filing with the U.S. Securities and Exchange Commission yesterday. Pimco will also be dropped as manager of the U.S. fixed-income portion of the AST Advanced Strategies Portfolio, which had $8.75 billion in assets as of Sept. 30.

Translation Adds Complexity to European Central Bank’s Supervisory Role (WSJ)
The European Central Bank’s impending role as supervisor of the eurozone’s largest banks is reviving an issue that has long complicated its activities: the language in which it does business. About a quarter of the 120 banks the ECB will start supervising in November have chosen their national language, rather than English, for written correspondence with their new regulators. The ECB’s draft framework text for supervision made it clear it wanted banks to use English, its working language since its creation in 1998. But the ECB can’t insist on that provision because European law allows citizens to contact European institutions in any of the European Union’s 24 official languages. After negative feedback from banks, the final version of the regulation lost the reference to seeking an explicit agreement to use English.

Split MSG business would be a garden of delight for investors (NYP)
MSG, which is exploring a possible separation into two publicly traded entities — one for its Knicks, Rangers and MSG Network and the other for the venues — could be worth as much at $9.7 billion after the separation, the Wall Street pros said.

How a $1,000-an-hour escort rose to the top 1% of her field by playing the ‘perfect woman’ for Wall Street (DM)
Svetlana Z, as she refers to herself, moved to New York from Chelyabinsk, Russia, when she was 19 years old and had $300 to her name. Lured by the promise of quick money, she entered the escort industry and made a small fortune by catering to investment bankers, 90per cent of them married. ‘Mostly, I offered understanding,’ she wrote for Medium. ‘The truth is, even for guys who hire me for three or four hours, the sex usually only takes about 15 minutes.’ Not bad for $1,000 an hour. Svetlana – who describes herself as 5ft 7in, 119lbs, with long legs, hazel eyes, full lips and a slender figure – remarks that when it did come to sex, however short-lived, massaging her client’s ego was key.
Around 98per cent of men wanted to go down on her, and 80per cent of them would ask if she had come, or insist she had multiple orgasms before they did. This wasn’t about her pleasure, of course, it was their need to ‘prove themselves.’
Svetlana faked orgasms with relative ease and presumably on nearly every occasion. Her mind, she says, was always in business mode. She refers to one instance in which a client asked to pour honey all over her before they had sex. She agreed – but only after he agreed to pay triple her hourly rate – and she spent the whole rampant session mulling over cleaning the sheets and re-doing her hair and make-up…Svetlana was highly tactful when it came to demanding the best. Rather than appear spoiled in her requests to fly first class while travelling with clients, she would weave silky allusions into the conversation. For example, she would claim that her ‘really long legs’ would get cramped in coach, which would hinder her ‘flexibility’ and thus affect her ‘d***y-style’ performance…And perhaps in part to her dogged attention to detail and her carefully considered approach, she managed to avoid any dangerous or traumatic experiences.When she once caught a client attempting to videotape them having sex on the sly, she simply grabbed his phone, erased the footage, and told him to ‘get the hell out’ of her apartment. Another threatened to call the cops on her if she didn’t give him free sex, so she threatened to post his phone number to a gay escort listing…Then there was the client who had sex with her for a full hour straight, all the while making ‘woo woo woo’ train noises. Aside from these mentions, life as a high-class escort appears to have suited Svetlana. Couples were her favorite sorts of clients, and she got to charge double the fee for the same amount – often less – of work. ‘That’s the cool thing about capitalism,’ she points out.
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Write-Offs: 10.28.14

$$$ Facebook CFO Says Fourth Quarter Will Be ‘More Difficult’ [Bloomberg]

$$$ WhatsApp Gets a Warm Welcome Into Facebook [BV/Matt Levine]

$$$ Insider-Trading Probe Focuses on Medicare Agency [WSJ]

$$$ Short-seller Chanos says China seeing faster capital flight [Reuters]

$$$ Cops: Teletubby Broke Into Pal’s House, Stole Food [TSG] Read more »

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Opening Bell: 10.28.14

Carl BovardUBS Rises as Investors Bet Legal Challenges May Ease (Bloomberg)
UBS, Switzerland’s biggest bank, rose in Zurich trading after the bank set aside 1.84 billion Swiss francs ($1.94 billion) for litigation provisions, easing investor concern about the future cost of legal challenges. “We are making progress,” Chief Executive Officer Sergio Ermotti said in a Bloomberg Television interview as the bank posted a 32 percent jump in third-quarter profit. “We are today in a position to have a better estimate of how to address those issues. In some cases we may be able to reach conclusions in the foreseeable future.” [...] Net income rose to 762 million francs in the quarter from 577 million francs a year earlier helped by a net tax gain of 1.32 billion francs. While the securities unit had a pretax loss because it booked the bulk of the legal charges, all other businesses, including the wealth-management unit, posted earnings that met or exceeded analyst forecasts.

CIT Profit Rises on Tax Benefit as Assets Grow (WSJ)
The company said CIT Bank’s total assets grew to $20.3 billion as of Sept. 30 from $18.3 billion at the end of June, reflecting its acquisition of Direct Capital as well as new business generation. Its new business volume reached $2.2 billion, up 34% from a year earlier. Loans were $14.7 billion, compared with $10.9 billion a year ago. For the overall firm, assets from continuing operations grew to $46.5 billion as of the end of the third quarter from $42.3 billion a year ago. Overall, CIT posted a profit of $514.9 million, or $2.76 a share, up from $199.6 million, or 99 cents a share, a year earlier. The most recent period included a tax benefit equal to $2.01 a share, the company said.

Phil Falcone isn’t giving up on LightSquared (NYP)
Lawyers for the investor argued in Manhattan Bankruptcy Court on Monday that LightSquared LP is worth more than the $2.5 billion owed to creditors — and therefore Falcone, as majority owner of the equity in LightSquared Inc., its parent, is entitled to receive any excess cash from the sale of its assets. The move by Falcone is a stark turnaround from his position in August — when he said he was seeking a “divorce” from the company. But the latest move shows Falcone is still trying to profit from the company. In addition to the equity, LightSquared Inc., is also part owner of a lease to make telecom’s spectrum work, according to a person familiar with the lease. Falcone tipped the world to his fighting spirit at a Minnesota conference last week. “I will continue to fight for LightSquared,” Falcone said at the Duluth conference, close to where he grew up. “We’re fighting, and will continue to fight until we win, which I know we’ll do,” he said.

Italy’s Monte Paschi discussing capital options with government (Reuters)
Italy’s Treasury has not ruled out extending repayment deadlines on hundreds of millions of euros in state aid to help troubled lender Banca Monte dei Paschi di Siena as it struggles to raise fresh capital, a person close to the matter said on Tuesday. Officials, who declined to be cited by name, said Monte dei Paschi Chairman Alessandro Profumo and Chief Executive Fabrizio Viola had held meetings in the Economy Ministry on Monday to seek options for the bank, after it failed European Central Bank stress tests. Monte dei Paschi, Italy’s third-largest bank, was left badly exposed by the ECB’s health check of 130 European banks, needing to raise 2.1 billion euros ($2.7 billion) to meet capital thresholds designed to ensure the solidity of the financial system.

Meet the half-blind sanctuary owner who hand feeds his 14 big cats – including a 700lb Siberian tiger – and lets them cuddle in his bed (DM)
He has been bitten on the nose by a leopard and had his shoulder separated after wrestling with a full-grown Bengal tiger. But Carl Bovard, who is blind in one eye, believes living with 14 big cats including two lions, six tigers and a desert lynx, is a risk worth taking to raise awareness about endangered species. They all spend time living in his Florida home before moving into the outside enclosure and are seen clambering over the pool table and cuddling up in his bed. After an accident left him blind around 13 years ago, Mr Bovard realised the main thing he missed was seeing animals – so when he regained sight in one eye he adopted his first two tiger cubs…His biggest tiger is a Siberian named Samson – he weighs more than 700lbs and is over nine and a half feet tall when he stands on his back legs. Despite the fact that Samson could tear him in two with one swipe of his massive paw Carl still carries his food right to him. He added: ‘Some people use a guillotine system to feed their tigers but I walk the food right in. Read more »