Dealbreaker

Posts by Dealbreaker

Write-Offs: 12.18.14

$$$ There’s a Blacklist in the $800 Billion U.S. Loan Market and It’s Not Illegal [Bloomberg]

$$$ Goldman’s Waldron Replaces Weinberg as Co-Head of Investment Banking [WSJ]

$$$ LightSquared Files Restructuring Plan That Includes Phil Falcone [WSJ]

$$$ Two Wells Fargo units to pay $1.5 million for anti-money laundering lapses: FINRA [Reuters]

$$$ Sony’s Costs From ‘The Interview’ Likely Near $200 Million [Bloomberg]

$$$ Nasa satellites spot garish Christmas decorations from space; Florida is the worst offender [IBT] Read more »

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Opening Bell: 12.18.14

MoziloCountrywide Whistle-Blower to Receive More Than $57 Million (Dealbook)
A former Countrywide Financial executive who became a whistle-blower is collecting more than $57 million for helping federal prosecutors force Bank of America to pay a record $16.65 billion penalty in connection with its role in churning out shoddy mortgage and related securities before the financial crisis. Edward O’Donnell reached an agreement last week with the government that enables him to collect part of the settlement that Bank of America agreed to pay in August in a deal with federal prosecutors and a number of state attorneys general, according to a court filing. The payment to Mr. O’Donnell arises from a federal civil lawsuit he filed under the False Claims Act earlier this year and which Preet Bharara, the United States attorney for Manhattan, joined and used as the basis for pressing Bank of America to reach a deal. “In my opinion, Edward O’Donnell is the person most responsible for bolstering the bank settlements and holding Wall Street accountable,” said David G. Wasinger, the lawyer for Mr. O’Donnell, who worked at Countrywide from 2003 to 2009.

Ackman Says Pershing ‘Meaningfully’ Built Fannie-Freddie Bet (Bloomberg)
Bill Ackman, founder of Pershing Square Capital Management, said he’s added “meaningfully” to his bets on U.S. mortgage companies Fannie Mae and Freddie Mac in the past two weeks. His New York-based hedge fund firm is wagering that Congress or the courts will restore value to Fannie Mae and Freddie Mac securities after the companies were seized by regulators in 2008. Securities in both plunged after a federal judge threw out a lawsuit on Sept. 30 that would have forced the government to share the companies’ profits with private investors. “The government cannot act outside the law,” Ackman said Wednesday in an interview on Bloomberg Television with Erik Schatzker and Stephanie Ruhle. “This is a decision that will never stand.”

BlackBerry Tries to Win Back Die-Hards With ‘Classic’ (Bloomberg)
BlackBerry Ltd. (BBRY) is going back to its roots with a keyboard-equipped phone that looks like the original “crackberrys” that made the Canadian smartphone maker a household name. The Classic smartphone, which features a qwerty keyboard, trackpad and call and hang-up buttons nestled below a touch screen, was debuted today by Chief Executive Officer John Chen at an event in New York. It restores features largely abandoned on BlackBerry devices last year with the introduction of a new operating system. “When I went to visit customers — and these are the CEOs of top banks in this town — a lot of them pulled out their BlackBerrys,” Chen said at the event. Chen said one financial executive told him: “Don’t mess around with this thing.”

Office Parties—Without the Awkwardness (WSJ)
Keep office parties short—“no more than 30 minutes or an hour,” says Ms. Roth. “You don’t want to distract them for too long, and if you’re serving any alcohol, you want to watch it and not have people get too drunk, because that could get awkward.”

Intercontinental Exchange Proposing Major Stock-Market Overhaul (WSJ)
In a draft letter being circulated among large banks and investment firms, ICE is proposing a trade-off between exchanges and brokers, according to people familiar with the matter. The NYSE would drop the fee for trading stocks at its exchanges to five cents per 100 shares from 30 cents per 100 shares. Banks, in exchange, would accept a rule known as “trade at” that would give more precedence to the stock exchanges, except for transactions involving large blocks of stock and retail investors. A trade-at rule would mandate that stock trades take place on exchanges unless private venues, such as dark pools, offered a significant price improvement. It would force a significant chunk of the estimated 40% of all stock trades that occur away from exchanges back onto exchanges.

Pot shop removes smoking Santa window painting (UPI)
A Los Angeles medical marijuana dispensary removed a pot-smoking Santa painting from its window following complaints from members of the public.
The Harbor House of Dank in San Pedro hired an artist last week to create window paintings including Santa Claus smoking a blunt and a snowman holding a prescription bottle. Pictures of the paintings were posted on Facebook, where they drew hundreds of complaints. Posts on the closed “Coastal San Pedro Neighborhood Watch” Facebook group criticized the paintings for being prominently displayed in an area frequented by children. The paintings were removed from the windows Tuesday. The store manager said he had the artist scrape them off the windows when he learned about the complaints from the public. The furor over the pot-smoking St. Nick may have caused further troubles for the Harbor House, as Los Angeles Councilman Joe Buscaino’s office said the business is operating illegally. Read more »

Write-Offs: 12.17.14

$$$ Russian Crisis Spillover to U.S. Economy Likely to Be Small, Yellen Says [Bloomberg]

$$$ Top Herbalife salesman acknowledges high failure rate in video [Reuters]

$$$ Costolo’s family trust sells Twitter stock: Report [CNBC]

$$$ Johns Hopkins Sends ‘Welcome’ E-Mails to 294 Rejected Applicants [Bloomberg]

$$$ Man finds woman to replace ex for free trip around the world [AP] Read more »

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Opening Bell: 12.17.14

Dov CharneyPlunging Ruble Unsettles Russians, Poses Test for Putin (WSJ)
As Russian President Vladimir Putin has ratcheted up the conflict with the West for most of the year, the economic fallout on ordinary Russians has been limited. Suddenly, though, the plunging ruble is reawakening fears of rising prices and the kind of financial crisis Mr. Putin has sought to put behind his country. As the ruble hit a record low, falling as much as 20% against the dollar Tuesday, Moscow residents rushed to buy electronics and other big-ticket items and drained rubles from ATMs to swap them for dollars and euros—signaling a new feeling of vulnerability among Russians and a fresh challenge to their leader. From St. Petersburg to Siberia, money changers ran out of foreign currency and were raising exchange rates. Sberbank , Russia’s state savings bank, and Alfa Bank, Russia’s largest private lender, said they were experiencing a rush for dollars and euros.

A Pimco Emerging-Market Fund Hit by Russian-Debt Bet (WSJ)
The $3.3 billion Pimco Emerging Markets Bond Fund has lost 9% this month, according to Morningstar Inc., fueled by the decline in oil prices and the gathering effect on Russian economic output of U.S. sanctions.

American Apparel Executives Call for Charney’s Return (Bloomberg)
Paula Schneider, American Apparel Inc. (APP)’s incoming chief executive officer, hasn’t even started work yet and she’s already facing a group of disgruntled managers. More than 30 executives asked the board to reconsider their decision to fire former CEO and company founder Dov Charney, according to a letter obtained by Bloomberg News. Charney should be a part of the retailer’s future by helping the next CEO improve the chain because he is what “makes this thing tick,” the managers said. Charney’s loyalists bring an additional headache to a new CEO already coping with red ink and sluggish sales. The chain has racked up more than $300 million in net losses since 2010, forcing it to raise capital to make ends meet — most recently in July. Schneider also has to contend with image problems at a company that’s been criticized for its racy advertising and sexually charged culture.

Billionaires who made and lost the most in 2014 (CNBC)
In a volatile year for the world’s rich, Jack Ma saw his fortune surge to $29.2 billion from just over $10 billion, according to Wealth-X. That 175 percent increase made him the biggest financial gainer of the year for billionaires, Wealth-X said. Warren Buffett came in second place, with a gain of $13.5 billion in 2014, a 23 percent increase from last year, to push his fortune to US$72.6 billion. Bill Gates saw his net worth grow by US$10.5 billion in 2014 to reach US$83.1 billion. The biggest loser, according to Wealth-X, was Russian energy tycoon Leonid Mikhelson, whose fortune shrank to $10 billion from $17 billion.

“I spend 11,000 a year on takeout” (NYP)
A few months ago, Kris Ruby lost her credit card and briefly had to borrow her dad’s while waiting for the replacement. When her dad saw the bill, it wasn’t clothes, cabs or nightclub charges that gave him a fright — it was sushi. “Dad was like, ‘What are all these charges for Seamless?’ ” Ruby, 27, recalls. She used his card for just one week, but in that amount of time she racked up about $225 worth of sushi, superfood salads and other takeout to her Wall Street home. He promptly banned her from using his card on any future delivery purchases. “I felt like it was my guilty little pleasure and secret,” Ruby says. “I couldn’t wait to put my own card back on it so no one could see my meals.” Ordering through Seamless’ handy delivery app almost every night chomps $900 a month off Ruby’s salary as president of her own p.r. and social media agency — almost $11,000 a year, enough for 98 unlimited MetroCards or 4,720 pizza slices. “Oh, my God, this is shocking,” she says, when realizing just how much she spends. “Sometimes I look at this and I’m like, ‘I need to stop this with Seamless.’ ” Read more »

Write-Offs: 12.16.14

$$$ Bad Quarter, and Bad Year, for Jefferies [Dealbook]

$$$ Speed Trader Study Shows Treasuries Hurt When Breaking News Hits [Bloomberg]

$$$ Western Banks Curtail Flow of Cash to Russian Entities [WSJ]

$$$ Icahn Stands to Lose $286 Million on Talisman Deal [Bloomberg]

$$$ Moody’s cuts Alaska’s outlook to negative on oil [CNBC]

$$$ Rudolph’s revenge: Reindeer destroys sleigh [UPI] Read more »

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Opening Bell: 12.16.14

Obie and friendsCohen Seeks Law Experts For Fund (Dealbook)
The billionaire investor, who managed to fend off a criminal insider trading investigation of himself, if not of his former hedge fund, is looking for a former prosecutor and several agents from the Federal Bureau of Investigation to join his new $10 billion investment firm, Point72 Asset Management, said several people briefed on the matter, who spoke on the condition of anonymity…So far, none of the F.B.I. agents or former prosecutors approached about taking a job at Point72 have expressed any serious interest despite the promise of hefty salaries, the people briefed on the matter said. One person briefed on the matter said F.B.I. agents have “rebuffed” the overtures.

Asia Hedge Funds Survive in Year of Pain for Global Industry (Bloomberg)
In a punishing year for global hedge funds, those investing in Asia are the survivors. Stung by poor returns and large redemptions, 889 hedge funds worldwide shut in the first 11 months of the year, above the annual average of 810 in the five years since the global financial crisis of 2008, according to figures from research firm Eurekahedge Pte. In contrast, 56 Asia-focused funds had closed by the end of November, less than half the average 135 closures in the previous five years.

Foreign Investors Pile Into Bonds (WSJ)
Foreign investors are snapping up Treasury bonds at the fastest clip in two years, propelling yields to fresh lows even as the U.S. economy gains steam. Purchases by China, Japan, Switzerland and others underscore the broad demand for safe government debt amid global turmoil and uneven economic growth, according to new data from the Federal Reserve and Crédit Agricole.

New Hampshire Businessman Files to Set Up Rare New Bank (WSJ)
Bill Greiner is fed up with banks. But instead of quietly seething or complaining to customer service, the 48-year-old is taking a more radical approach: He is trying to launch his own lender. Mr. Greiner’s proposal, filed with regulators in October, is the first deposit-insurance application for a new bank that the Federal Deposit Insurance Corp. has received all year. If Primary Bank, Mr. Greiner’s proposed firm, wins approval, it would be only the second new bank the FDIC has cleared in the U.S. since 2010. The FDIC declined to comment on Primary Bank. “We’re going against the grain, and we’re OK with that because we see a need,” said Mr. Greiner, a Bedford, N.H., real-estate developer and restaurant owner. Mr. Greiner is taking a gamble: Ever since the financial crisis, banks have been struggling with renewed regulatory scrutiny, competition for a limited pool of loans and low interest rates, which squeeze margins and put pressure on profits.

Carlyle’s Holiday Video, With ‘Rap Star’ David Rubenstein (Dealbook)
Mr. Rubenstein, whose firm generated a handsome profit this year on its investment in Beats Electronics, the headphone maker co-founded by Dr. Dre, lays down some finance-themed rhymes in a corporate holiday video released on Monday night. “You know, Dr. Dre is an incredible businessman and artist, and he even inspired me to write my own rap,” Mr. Rubenstein, in a recording studio, says in the Carlyle video. “Let’s hear it,” Daniel A. D’Aniello, Carlyle’s chairman, gamely replies. What follows is not exactly “Straight Outta Compton” or “The Chronic.” Wearing a pair of Beats headphones, Mr. Rubenstein launches into his composition: “It takes a lot of brains to do what we do, Looking for a way to make some dough for you. Energy, commodity, we do it all, So pick up the phone and give us a call. Corporate mezzanine, private equity, Carlyle Group is the place to be. We’re global, we’re mobile, we’re aiming to please. Only goal in mind: serve the LPs.

Obie the fat fighting daschund shows off his incredible 4st weight loss in ‘inspirational’ dog diet calendar (Telegraph)
An obese daschund who lost almost 4st and had a tummy tuck has released an inspirational calendar for animal weight loss. Two years ago Obie tipped the scales at 5st 7lbs and needed to wear a special harness to prevent injury to his bulging belly. However, after being adopted by former veterinary technician Nora Vanatta in August 2012, he was put on a strict diet and exercise regimen. After two years of hard work and surgery to remove excess skin, the svelte seven-year-old now weighs a healthy 1st 9lbs. Now the previously dumpy daschund’s new owner has released an inspirational calendar for 2015 to help motivate other podgy pets shed their pounds. Ms Vanatta, from Portland, Oregon, said: “I feel blessed to be involved in Obie’s rehab and hope he can be an inspiration to any person or animal trying to lose weight. Read more »

Write-Offs: 12.15.14

$$$ Jeffrey Gundlach, on his year as new ‘King of Bonds’ [Jennifer Ablan / Reuters]

$$$ Fallout for the S.E.C. and the Justice Dept. From the Insider Trading Ruling [Dealbook]

$$$ Lehman trustee petitions Supreme Court over Barclays dispute [Reuters]

$$$ Why You’re Drinking Champagne All Wrong [Bloomberg]

$$$ George W. Bush Has Some Artistic Advice for You [Daily Intel] Read more »

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Opening Bell: 12.15.14

Bill GrossBigger Is Better for Retaining Junior Analysts, Report Says (WSJ)
The study found that one-third of investment-banking analysts who started working at the biggest U.S. banks in 2012 remained with the same firm this year. At smaller boutique banks, only about half that percentage—17%—stayed on after two years. Many top boutiques have a disproportionate presence in mergers and acquisitions, promising analysts more exposure to deal making. That often appeals to the buy-side firms. After two years, 63% of bankers who worked in the M&A group, at both big and small banks, left to join buy-side firms, predominantly private equity and hedge funds. “The deal-making skill set is highly valued by buy-side recruiters,” said Alex Orn, director of analytics at Vettery.

Meet the SEC’s Brainy New Crime Fighters (WSJ)
While SEC investigators have been using computer models for several years to detect fraud, the approach has gained added steam under Ms. White, agency officials say. The regulator, known for its platoons of lawyers with little experience in math or coding, is hiring more employees versed in computer programing and mathematics and pressing the old guard to get up to speed with the new methods, these officials say.

A Stuyvesant Senior Made $72 Million Trading Stocks on His Lunch Break (NYM)
Over late nights out and dinners at Morimoto, the three hatched a plan to start a hedge fund. “There are a lot of steps we have to follow through,” said Patrick, calling to mind a more serious Chuck Bass. “But we’re on the right track.” They plan to launch in June, after Mo turns 18 and can get his broker-dealer license. “Mo’s our maestro,” Patrick said. “He’s going to be earning the big bucks. We’re just going to try to fill his needs.” All three plan to attend college next year, but they’re not concerned about classes getting in the way of their goal: “A billion dollars!” Damir said. “By next year!” Mo affirmed the number with a nod. “But it’s not just about money,” he added. “We want to create a brotherhood. Like, all of us who are connected, who are in something together, who have influence, like the Koch brothers …”

Fed considers time to end free money pledge (Reuters)
The U.S. Federal Reserve would give the clearest signal next week that its easy money stance is ending if, as some expect, it drops its two-year long pledge to keep interest rates close to zero for a “considerable time”. The Fed, which meets on Tuesday and Wednesday, first inserted that wording in its post-meeting statements in December 2012, promising then to maintain its highly accommodative monetary stance for a considerable time after its asset purchase program ends and the economic recovery strengthens. Both have occurred.

Amid Crisis, Pimco Steadies Itself (WSJ)
In November, three of Mr. Gross’s former lieutenants delivered by one measurement the best monthly performance in more than a decade by the Total Return bond fund, where he became one of the world’s most famous investors. Prices for some of the investments held by Pimco fell right after Mr. Gross, the firm’s co-founder and chief investment officer, walked out the door of Pimco’s headquarters here for the last time. As investors left, rival traders expected Pimco to be forced to sell some bonds to raise cash. Instead, Pimco executives decided to buy more of certain hard-hit investments, including Mexican, Italian and Spanish debt, according to people at the company. Prices on those securities soon began to rebound—and have grown into a profit of more than $200 million so far. That isn’t much money for Pimco, which manages $1.9 trillion, but it boosted the confidence of executives as they continue a sprawling strategy to end the outflow of cash.

Bungled Marriage Proposal Forces Evacuation (AP)
A Dutchman’s attempt at a romantic wedding proposal was simply smashing. The unidentified lover in the central town of Ijsselstein rented a crane, planning to descend in front of his girlfriend’s bedroom window first thing Saturday morning, play her a song and then pop the question. Instead the crane toppled over, smashing a large hole in the neighbors’ roof…According to the Algemeen Dagblad newspaper, the girlfriend said “yes” anyway. After speaking with police, the pair traveled to Paris to celebrate. Then the crane fell again during attempts to right it with a larger crane, bashing in the rest of the neighbors’ roof. The town’s mayor is on the spot after the building was declared unsafe. Six apartments were evacuated. Read more »