Dealbreaker

Posts by Dealbreaker

Write-Offs: 09.18.14

$$$ Ellison Becomes Oracle Chairman as Catz, Hurd Split CEO Job [Bloomberg]

$$$ Fed Takes Enforcement Action Against Santander’s U.S. Unit [WSJ]

$$$ Big Banks Poised to Ride Rising Rate Tide [WSJ]

$$$ Ben & Jerry’s Mulls Renaming ‘Hazed & Confused’ After Complaints [Bloomberg]

$$$ Giant Buffalo Wedding Brawl Took Seven Police Departments to Break Up [Gawker] Read more »

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Opening Bell: 09.18.14

Alibaba IPO Gives Insiders Rare Chance to Sell Early (WSJ)
A swath of early investors in Alibaba Group Holding Ltd. will be able to sell more than $8 billion worth of shares on the day the Chinese e-commerce company goes public, an unusual arrangement that is influencing how bankers price the offering. Insiders and other investors in companies staging initial public offerings are generally required to hold on to shares for several months, in “lockup” arrangements banks design to help protect the stock’s price in its early days. But with Alibaba, a number of shares equal to about a third of what could be sold in the deal aren’t covered by such restrictions, according to the company’s public filings. In contrast, no pre-IPO shares of Facebook Inc. were allowed to be traded when the social-media company made its market debut.

London Finance Empire Seen Dominating After Scots Vote (Bloomberg)
The Scottish nationalists’ narrative is that of London as disinterested overseer, having shrunk from what Salman Rushdie in the “Satanic Verses” described as the “capital of vilayat” (foreign) for the once-colonized, to the capital of the shriveled Great Britain. At stake is London’s relationship to what remains: Wales, Scotland, Northern Ireland and those scattered appendages of past glory, the 14 British Overseas Territories, which replicated and improved on the financial secrecy of the City to become outposts of London’s empire of money. Bloated with the talented young and the moneyed old, London, at least in the measurable currency of investment and capital, is impervious to the departure of Scotland. “London’s power is also from other metrics, like the concentration of state-funded institutions, or the diversity of its population,” said Richard Bell, a professor at the University of Maryland in College Park who teaches a course on London and the British Empire. “London will continue to hold a special place in the global imagination, even though it may be modestly diminished economically.”

Charlie Gasparino Weighs In On Hedge Fund Manager AssGate (Twitter, earlier)

Jobless Claims in U.S. Decline to Two-Month Low of 280,000 (Bloomberg)
The number of Americans filing applications for unemployment benefits plunged last week to a two-month low, a sign the labor market continues to strengthen. Jobless claims decreased by 36,000 to 280,000 in the period ended Sept. 13, the Labor Department said today in Washington. The median forecast of 52 economists surveyed by Bloomberg called for a decline to 305,000. Those already collecting unemployment benefits fell to a more than seven-year low.

Fed Plots Cautious Course on Rate Rises (WSJ)
The Federal Reserve took two steps toward winding down the historic easy-money policies that have defined its response to the financial crisis, but stopped short of the move markets are awaiting most: signaling when interest rates will start to rise. With the economy gradually improving, U.S. central-bank officials plan to end the bond-buying program known as quantitative easing after October, hoping to finally stop expanding a six-year experiment in monetary policy that has left the Fed holding more than $4 trillion of Treasury and mortgage bonds. The Fed on Wednesday also detailed a new technical plan for how it will raise short-term interest rates, something most officials currently don’t intend to do until next year. The central bank has kept the federal-funds rate near zero since December 2008 and offered assurances along the way about rates remaining low, another part of its varied efforts to boost the post-financial-crisis economy.

Man Says Stripper Chocolate Chambers Robbed Him Outside Club Boom Boom (TSG)
A South Carolina man told cops that a stripper known as Chocolate Chambers robbed him early yesterday after he refused to buy her an expensive drink inside Club Boom Boom. Derrick Lashawn Sinclair, 31, told police that he was attacked by Chambers late Monday night when he exited the Spartanburg nightspot. The woman, Sinclair said, pounced and “next thing I know I’m on the floor, she knocked me down and took my money.” Sinclair said that his cash was inside a “crown bag,” an apparent reference to the velvet bag in which Crown Royal whiskey is packaged. Police noted that Sinclair smelled of booze and “spoke with a slurred speech” when reporting the attack by Chambers, whom he described as a black female. Sinclair acknowledged that he was still “timpsy” from the prior night’s revelry. Read more »

Write-Offs: 09.17.14

$$$ Blockbuster launches dominate new funds landscape [HFI]

$$$ Fed Cautious On Rate Strategy [WSJ]

$$$ SEC’s Alibaba Structure Review Inadequate, Senator Says [Bloomberg]

$$$ High-Frequency Firm Found Clever Way to Save on Capital [BloombergView/Matt]

$$$ Agitated Woman Vows To Poop On Inconsiderate Dog Owners’ Yards [HP] Read more »

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Opening Bell: 09.17.14

Barclays Hid Traders’ Role After Questions: Schneiderman (Bloomberg)
Barclays hid the role of high-frequency traders in its dark pool even after the bank said it had shut off clients who engaged in suspect activity, New York Attorney General Eric Schneiderman said. Schneiderman sued Barclays in New York State Supreme Court in Manhattan in June, accusing Britain’s second-largest bank of bilking its own customers in order to expand its dark pool. The bank in July asked the court to dismiss the case, saying that the suit is based on factual errors and fails to show any investors were harmed.

Credit Suisse Loans Draw Fed Scrutiny (WSJ)
Credit Suisse is under fire from U.S. regulators over concerns the bank isn’t heeding warnings to stop making loans regulators see as risky, according to a person familiar with the matter. The Swiss bank in recent weeks received a letter from the Federal Reserve demanding the bank immediately address problems with its underwriting and sale of leveraged loans, or high-interest-rate loans used by private-equity firms and others to finance purchases of companies, among other uses. The letter to Credit Suisse, known as a Matters Requiring Immediate Attention, found problems with the bank’s adherence to guidance issued last year, warning banks to avoid deals that included too much debt or too few protections for the lenders in case of a default, according to the person familiar with the matter.

With Calpers Quitting Hedge Funds, Other Investors Reflect (Dealbook)
For the $2.8 trillion hedge fund industry, the size of the Calpers investment is minuscule. But losing it is important because Calpers has long been a trendsetter among public pension plans, and the reasons for its decision resonate with many public workers, retirees and the plans’ trustees: Hedge funds can just seem too complicated and costly. “A lot of the employees’ labor unions will applaud this,” said Christopher J. Ailman, chief investment officer of California’s big pension fund for teachers. He said organized labor tended to be wary of Wall Street in general; big fees for hedge fund managers are seen as siphoning away money from public workers. His crosstown rival, Ted Eliopoulos, chief investment officer at Calpers, indicated that he expected the decision to have a ripple effect. “We certainly had a very thoughtful and deep conversation with our peers in the institutional investor network, as well as a wide variety of talented active external managers, and so we considered those opinions in forming our own conclusion,” Mr. Eliopoulos said.

Goldman Sachs’s Oryza Asia Hedge Fund Said to Top $1 Billion (Bloomberg)
Goldman Sachs Investment Partners, set up to allow clients to invest with some of the bank’s top proprietary traders, raised about $1 billion for its first Asia hedge fund, said two people with knowledge of the matter. The fund, named Oryza Capital LP, informed investors in June that it would stop taking additional money after capital committed had reached its capacity, said the people, who asked not to be identified because the information is private. The Asia-focused equity long-short fund started in September 2013 with an initial capital of $80 million, according to a document sent to potential investors.

German Court Lifts Ban on Uber Ride Service (NYT)
A court in Frankfurt overturned a nationwide ban against the company’s car-sharing service in Germany, lifting, for now, one of the most severe legal restrictions that Uber had faced anywhere in the world since it was founded in 2009. The temporary injunction on the service, which allows drivers to connect with potential passengers through a smartphone application, had been imposed by the court at the end of last month before a hearing could be held. After the hearing on Tuesday, judges announced that Uber, a start-up company based in San Francisco, could now operate in Germany. The judges were sympathetic to the arguments of Taxi Deutschland, a trade body that had brought the initial case against Uber, claiming that the service competed unfairly with local taxis, said Arne Hasse, a spokesman for the Frankfurt court. But he said that while the association was right in bringing the case and requesting the injunction, the group had waited too long to file the case, and therefore the injunction had to be lifted.

Papa Murphy’s Employee Admits Rubbing Scrotum On Pizza Was ‘Stupid’ (HP)
A Texas teen employed at a Papa Murphy’s pizza franchise faces criminal charges after a customer caught him in the act of rubbing his scrotum on an uncooked stuffed-crust Hawaiian pizza that he’d ordered, according to the Austin American-Statesman. When the customer asked Austin Symonds how old he was, he replied that he was 18, KEYE reports. “So you are old enough to know better than to put your balls on someone’s pizza,” the customer said, according to the station. “Yes,” Symonds replied. “Man, I am really sorry, that was stupid.” Symonds was apparently upset that an order had come in just before closing time. He allegedly admitted to police that he’d probably have fulfilled the order with the tainted pizza if he hadn’t been caught. Symonds is charged with tampering with a consumer product. He was released on $10,000 bail. Read more »

  • 16 Sep 2014 at 6:15 PM

Write-Offs: 09.16.14

$$$ Pressure for High Marks at Harvard Extends to Its Investment Chief [Dealbook]

$$$ Law-Firm Employee Charged With Insider Trading [WSJ]

$$$ Banya, Bear and Birch: Bank risks abroad [FT]

$$$ Anheuser-Busch says ‘not yet satisfied’ with the way NFL has handled recent incidents [CNBC]

$$$ ‘Poop & Pooches,’ a Magazine Devoted to Dog-Haters, Is a Hit in Germany [WSJ] Read more »

Opening Bell: 09.16.14

Olive Garden defends unlimited breadstick policy (AP, earlier)
Olive Garden is defending its practice of giving customers as many breadsticks as they want, saying the policy conveys “Italian generosity.” The remark is part of a response by the chain’s parent company, Darden Restaurants, to a nearly 300-page criticism released by hedge fund Starboard Value last week. Starboard took Olive Garden and its management to task for a litany of issues, including its liberal distribution of breadsticks to customers, its failure to salt the water used to boil its pasta and even the length of the asparagus it serves. Darden’s 24-page response doesn’t specifically address each of Starboard’s criticisms, but states that the company is already implementing a variety of strategies to improve Olive Garden’s performance. The company says it has introduced new menu items to underscore value, for instance, and is testing new ordering technologies using table-top tablets…As for its breadsticks, Starboard said last week that Olive Garden was being wasteful because servers weren’t sticking to the policy of providing one breadstick per customer, plus an extra for the table. The investor said servers lacked “training and discipline” and were bringing out too many breadsticks at a time, which also led to cold breadsticks. Starboard noted that it wasn’t calling for Olive Garden to stop giving away unlimited breadsticks, but simply exercise more control in how they’re distributed. Starboard also said servers were overfilling salad bowls and using too much dressing, which it said drives up costs. In its response Monday, Darden said that “Olive Garden’s salad and breadsticks have been an icon of brand equity since 1982.” The company didn’t say whether it would change the way salad and breadsticks are brought out, however.

Alibaba Boosts Possible IPO to $21.8 Billion Amid Demand (Bloomberg)
Alibaba raised the amount it’s seeking in its initial public offering to as much as $21.8 billion, coming a step closer to breaking a global fundraising record after investors showed strong interest in the shares. China’s biggest e-commerce company is now offering the shares for $66 to $68 apiece, according to a regulatory filing yesterday, compared with an initial range of $60 to $66 each. The company and its backers including Yahoo! Inc. (YHOO) plan to offer 320.1 million shares.

Alibaba IPO Is a Bonanza for Select Firms (WSJ)
The initial public offering of Alibaba Group Holding Ltd. this week will be a bonanza for a group of previously undisclosed investors who snapped up preferred shares in the Chinese e-commerce company that were sold in the run-up to its public debut. Roughly two dozen investors bought convertible preferred shares in Alibaba through a little-noticed $1.7 billion private offering in 2012, including sovereign-wealth funds, Asian hedge funds, one of the banks that managed the deal and other big asset managers, people familiar with the matter said. They stand to profit handsomely from the investment—and their potential payday got a little bigger Monday, when bankers pitching the shares to investors moved their price even higher. Based on the anticipated price for stock in the Alibaba listing, which is on track to begin trading Friday, those preferred shares will have more than tripled in value, making the investors big winners in an IPO that could raise $25 billion, a record amount.

Calpers Pulls All $4 Billion in Hedge Funds, Citing Costs (Bloomberg)
The California Public Employees’ Retirement System plans to divest the entire $4 billion that it invested with hedge funds, saying they’re too expensive and complex. The decision to eliminate 24 hedge funds and six hedge fund-of-funds, isn’t related to the performance of the program, interim Chief Investment Officer Ted Eliopoulos said yesterday. The board of the $298 billion pension, known as Calpers, hasn’t decided where to invest the money after the pullout, which will take about a year, he said.

Spider-Man, Batman Arrested After Alleged Times Square Brawl (HP)
Two costumed characters in New York City’s Times Square were arrested on Saturday night along with a third man for allegedly fighting, according to multiple reports. The two characters were doing what costumed heroes do these days — hustling for tips on a street corner in exchange for photos — when two men started yelling and gesturing at them. The New York Post reports that 23-year-old Thomas Rorke allegedly grabbed Batman — aka 41-year-old Jose Escalona-Martinez — from behind and shouted, “I’m gonna fuck you, Batman.” Then, he allegedly grabbed Spider-man — aka 35-year-old Abdel Elkahezai — on the rear. His Spider Sense clearly tingling, Elkahezai allegedly sprayed Rorke with his webbing, or at least his prop Silly String, the paper reported. Soon enough, punches were thrown. Rorke appears to have gotten the worst of it, with CBS New York reporting that he was socked repeatedly in the face and chest. “He (Rorke) was intoxicated and messing with Batman and they got into it,” a rival Spider-man, 50-year-old Paul Smith, told the New York Daily News. “Everybody, no matter what costume they are wearing, has the right to protect themselves. It’s like Stand Your Ground in Florida,” he told the newspaper. All three were arrested. Read more »

Write-Offs: 09.15.14

$$$ Calpers to Exit Hedge Funds, Citing Expenses, Complexity [Bloomberg)

$$$ Scots Breakaway Seen at 45% Probability by Economists [Bloomberg]

$$$ Citigroup, Other Banks Release Midyear Stress-Test Results [WSJ]

$$$ Senior BNP Paribas energy traders quit; bank denies downsizing [Reuters]

$$$ Here’s a review of (the food at) Wall Street Bath & Spa [Gawker] Read more »

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Opening Bell: 09.15.14

Bank adviser pay catching up with traders (FT)
Senior advisory bankers’ pay in London has risen almost on to a par with traditionally higher-earning traders, underlining the shifting fortunes of these distinct businesses within investment banks. UK-based managing directors working on deals and capital raisings have seen total pay rise by a fifth to an average of £586,000 last year, according to data compiled for the Financial Times by Emolument, a pay comparison group. By contrast, senior traders have suffered an average 13 per cent cut to £602,000 after a sharp drop in bonuses, the self-reported numbers from hundreds of staff at 10 European and US investment banks show. It puts a spotlight on the resurgent clout of advisory bankers, after a dearth of dealmaking in the wake of the financial crisis placed them squarely in the shadows of profit-churning bond traders. A sharp increase in takeovers as well as debt and equity issuance by companies and other clients since last year has reversed the fortunes of corporate financiers. At the same time, their colleagues on trading floors have seen profit opportunities squeezed by tighter regulation, lower trading volatility, a ban on proprietary trading, the move towards electronic trading and several manipulation scandals.

As Investors Salivate, Alibaba May Raise Price of I.P.O. (Dealbook)
Only five days into the company’s global journey to promote itself to prospective buyers, its underwriters have told their sales staffs that they plan to close orders for the stock sale by Wednesday, people briefed on the matter said on Friday. And with that intense interest — shown by the huge lines of investors who waited to spend even an hour with Alibaba’s senior management — comes the possibility that the company’s bankers may eventually raise the price range for the offering, pushing it past a fund-raising goal of $21.1 billion. That could make Alibaba the biggest initial offering in history, surpassing the $22.1 billion that the Agricultural Bank of China raised four years ago. But the people briefed on the matter, who spoke on the condition of anonymity, cautioned that no plans had been set and that the price range might remain within the already disclosed $60 to $66 a share, which values the company at roughly $163 billion at the high end. A final decision will be made Thursday, when underwriters are expected to price the offering after examining its order book. Alibaba would then begin trading the next day on the New York Stock Exchange.

Samsung accuses rival LG exec of vandalizing washing machines (Reuters)
Samsung Electronics Co Ltd has accused the head of rival LG Electronics Inc’s home appliances business of damaging Samsung washing machines at retail stores in Germany and asked Seoul prosecutors to investigate. Samsung, in a statement on Sunday, said it asked the Seoul Central District Prosecutors’ Office to investigate LG employees who the company says were seen deliberately destroying several of its premium washing machines on display at two stores earlier this month ahead of the IFA electronics show in Berlin. “It is very unfortunate that Samsung had to request that a high-ranking executive be investigated by the nation’s legal authorities, but this was inevitable, as we concluded that we had to get to the bottom of this incident,” Samsung said.

Brazil’s Batista Faces Criminal Charges (WSJ)
When Brazil’s best-known businessman was hit with criminal charges over the weekend involving billions of dollars in soured deals, he didn’t appear to miss a beat. Instead, Eike Batista was roaming the world scouting for business opportunities. “Yesterday he was in Qatar,” said one of Mr. Batista’s lawyers, Sergio Bermudes, in a telephone interview Sunday. “It was a business trip.” The attorney said Mr. Batista had also planned to go to South Korea and would return to Brazil probably by Friday. When the entrepreneur lands, he will be facing one of the biggest challenges of his life. Prosecutors in Rio de Janeiro last week charged Mr. Batista with financial crimes and requested the freezing of 1.5 billion Brazilian reais ($641 million) in assets belonging to the businessman and people close to him, according to documents posted on the public prosecutor’s website on Saturday. Federal officials accuse Mr. Batista of manipulating financial markets and taking advantage of privileged information when selling shares of his distressed oil company, formerly known as OGX Petróleo e Gás Participações SA.

Austrian billionaire Richard Lugner, 81, marries 24-year-old Playboy model (NYDN)
Richard Lugner, 81, tied the knot with fiancee Cathy Schmitz at a palace on Saturday, claiming “hopefully, this time it’s the right thing.” The pair have been dating since February. Prior to the pair getting hitched, Lugner said “apart from the age difference, everything fits,” reported The Local.

Palin’s Camp Weighs In: We Brawled, But Someone Else Started It (TPM)
The website Real Clear Politics spoke to what it described as a “source close to the Palin family” who offered the Palins’ side of the physical, bloody altercation that took place on Sept. 6 at a house in Anchorage. The article said the source’s description “diverge[d] significantly” from what had been reported elsewhere, but the anonymous portrayal essentially confirmed the broad outlines of the fight, including that Sarah Palin herself was present and was shouting as it all went down. On Friday, TPM published a detailed account of the brawl based on reports from several news outlets as well as our own reporting. Two named eyewitnesses reported seeing the former Alaska governor at the party, including one who said he saw Palin’s husband Todd, son Track, and daughter Bristol were involved in multiple melees with other party guests that night. One anonymous source said Sarah Palin was “nearly crawling on top of people” while screaming and shouting profanities. The source who spoke to Real Clear Politics for its article on Saturday said, however, there were a few details the Palin family saw differently, including how the fighting began. The RCP source confirmed that Sarah Palin’s son, Track Palin, was the first family member involved in the fight, and Todd Palin, Sarah’s husband, was the next member to intervene. But the source said Track Palin was not the one who picked a fight with his sister Willow Palin’s ex-boyfriend. The former boyfriend allegedly “tried to get in” the Palin’s stretch Hummer limousine after some “questionable behavior,” leading Track to get involved, according to the source. The source said four men then began fighting with Track, after which Todd Palin intervened and ended up bleeding from the fight. The source also said Track Palin ended up with four cracked ribs. While RCP’s account was vague on some details, previous reports said there were at least two separate fights at the party that involved the Palins. One of the altercations, according to eyewitness Eric Thompson, who spoke to multiple news outlets, involved Sarah Palin’s daughter, Bristol Palin, who was seen punching the host of the party multiple times. Read more »