Opening Bell

Opening Bell: 04.16.14

Credit Suisse Net Falls on Lower Investment Bank Profit (Bloomberg)
Net income decreased to 859 million francs ($976 million) from 1.3 billion francs in the year-earlier quarter, the Zurich-based company said in a statement today. Credit Suisse tumbled in Swiss trading after earnings missed the 1.09 billion-franc estimate of seven analysts surveyed by Bloomberg.

Mt. Gox Files for Liquidation (WSJ)
Defunct bitcoin exchange Mt. Gox has given up its plan to rebuild under bankruptcy protection and has asked a Tokyo court to allow it to be liquidated, people familiar with the situation said. These people cited as reasons the complexity of the procedure—including the difficulty of holding meetings with creditors spread around the world—as well as the lack of realistic rehabilitation plans for the Tokyo-based exchange. Mt. Gox, at one point the world’s busiest bitcoin exchange, collapsed in February and said as it filed for bankruptcy protection in Tokyo on Feb. 28 that it had lost 850,000 bitcoin worth around half a billion dollars. Since then, about 200,000 bitcoin have been recovered and are part of the exchange’s assets.

Goldman Moves To Energize Stock Trading (WSJ)
Under pressure from unhappy clients and losing market share to rivals, Goldman Sachs Group is trying to jump-start its stock-trading business. At recent trading conferences with top clients, including Fidelity Investments and BlackRock Inc., and in private conversations, investors have vented their concerns with the way Goldman and other firms trade stocks, people familiar with the matter said. Amid the mounting frustration, Goldman has sought to take a more public role in the debate over the market’s future. The firm has encouraged employees to stress to clients its views on market mechanics, and in March the firm’s president wrote an opinion piece about those ideas in The Wall Street Journal. Goldman’s effort also has included discussions over the future of its Sigma X private stock-trading venue. The Journal reported April 8 that Goldman was considering shutting it down.

Fed should beef up low-rate vows, two officials say (Reuters)
“If you commit to keeping rates low even as the recovery is proceeding, even as we continue to recover, I think people have a sense, the Fed has the recovery’s back,” Minneapolis Federal Reserve Bank President Narayana Kocherlakota said at North Dakota State University. “And that’s the message that I think we need to do a better job of promoting.”

Keep Steve Jobs’ personality out of trial – tech companies (Reuters)
Witnesses at an upcoming trial over no-hire agreements in Silicon Valley should not be allowed to offer evidence that Apple co-founder Steve Jobs was “a bully,” four major tech companies argued in a court filing. Tech workers filed a class action lawsuit against Apple Inc, Google Inc, Intel Inc and Adobe Systems Inc in 2011, alleging they conspired to avoid competing for each other’s employees in order to avert a salary war. Trial is scheduled to begin at the end of May on behalf of roughly 60,000 workers in the class, and defendants say damages could exceed $9 billion. The case, which is closely watched in Silicon Valley, is largely built on emails among top executives, including late Apple Chief Executive Steve Jobs and former Google CEO Eric Schmidt. For instance, after a Google recruiter solicited an Apple employee, Schmidt told Jobs that the recruiter would be fired, court documents show. Jobs then forwarded Schmidt’s note to a top Apple human resources executive with a smiley face. In a joint court filing late last week, the companies told U.S. District Judge Lucy Koh in San Jose, California that they were not seeking to bar Jobs’ interactions with other witnesses about the no-hire agreements. However, opinions based on other evidence, like Walter Isaacson’s bestselling biography about Jobs, should be kept out of trial.

Mobile brothel catches fire at German motorway rest stop (DM)
Police and around 35 fire fighters were called to the scene after the mobile home burst into flames at the lay-by near Horneburg, Germany. The female brothel owner parked up at the site as it was a convenient spot for her to offer erotic services to clients. According to the police, these were mainly lorry drivers or car drivers who were travelling along the B73 motorway near the region of Horneburg, southwest of the city of Hamburg in Lower Saxony. The 32-year-old brothel owner known as ‘Lady Jane’ was fortunately conducting business with a truck driver in his cab when her ‘Love-Mobil’, which had included a bed and various erotic aids, caught fire. Read more »

Opening Bell: 04.15.14

Citigroup CEO Vows to Fix Regulatory Problems as Bank Logs Higher Profit, Beats Estimates (WSJ)
Speaking after Citigroup reported better-than-expected first-quarter earnings Monday, Mr. Corbat faced more than a dozen questions from analysts on the bank’s recent failure to win regulatory approval to return capital to shareholders. “Is the Fed denial a wake-up call for Citi or not?” CLSA analyst Michael Mayo asked. “We’re wide awake,” Mr. Corbat replied after declaring earlier, “I want, and I know shareholders deserve, an industrial-strength, permanent solution that paves the way for sustainable capital return over time.”

Stockbrokers Who Fail Test Have Checkered Records (WSJ)
More than 51,500 stockbrokers failed a basic exam needed to sell securities at least once, according to data that Wall Street regulators don’t disclose to investors, and those who repeatedly failed have on average worse disciplinary records. The more times a broker failed, the higher the average total of black marks was, such as criminal charges and firings, a Wall Street Journal analysis of the data found. Those who failed the test more than twice, for example, were 77% more likely to report a felony or financial-related misdemeanor than brokers who passed the exam on the first try, and about 55% more likely to have been terminated.

Mt. Gox founder won’t appear in U.S. for questions about bankruptcy case (Reuters)
Mark Karpeles, the founder of Mt. Gox, said he would not come to the United States to answer questions about the Japanese bitcoin exchange’s U.S. bankruptcy case, Mt. Gox lawyers told a federal judge on Monday. In the court filing, Mt. Gox lawyers cited a subpoena from the U.S. Department of Treasury’s Financial Crimes Enforcement Network, which has closely monitored virtual currencies like bit coin. “Mr. Karpeles is now in the process of obtaining counsel to represent him with respect to the FinCEN Subpoena. Until such time as counsel is retained and has an opportunity to ‘get up to speed’ and advise Mr. Karpeles, he is not willing to travel to the U.S.”, the filing said.

Regulators Weigh Curbs on Trading Fees (WSJ)
SEC officials, including some commissioners, are considering a trial program to curb fees and rebates they say can make trading overly complex and pose a conflict of interest for brokers handling trades on behalf of big investors such as mutual funds.

NY attorney general probes Herbalife: sources (NYP)
New York Attorney General Eric Schneiderman is investigating Herbalife over claims it is a pyramid scheme, The Post has learned. At least two whistleblowers have come forward and given Schneiderman’s investigators sworn testimony, sources said. The New York lawman has also fielded complaints from former Hispanic Herbalife distributors who say they were defrauded by Herbalife, sources said.

Berlusconi Given Community Service for Tax Fraud (NYT)
Former Premier Silvio Berlusconi must spend at least four hours a week in the service of the elderly to repay society for his tax fraud conviction, the first sentence against him ever confirmed by Italy’s highest court. The one-year assignment, announced by a Milan court on Tuesday, curtails Berlusconi’s ability to participate in the upcoming European election campaign — a point of contention among his political allies…The court stipulated that Berlusconi must spend most of his time in the Lombard region, where he lives, but granted permission to travel to Rome from Tuesday to Thursday each week. He must spend at least four straight hours one day a week at an elderly center, the court said. The document did not identify the center, or specify what Berlusconi would do there. Berlusconi was sentenced to four years for tax fraud, reduced to one year for a general amnesty. The one-year community service order may eventually be reduced by 45 days…The media mogul is on trial for political corruption in Naples and under investigation in Milan for witness tampering in trials relating to sex-fueled parties at his villa near Milan. Read more »

Opening Bell: 04.14.14

Europe’s top banks cut 80,000 more staff in post-crisis overhaul (Bloomberg)
Europe’s largest banks cut their staff by another 3.5 percent last year and the prospect of a return to pre-crisis employment levels seems far off, despite the region’s fledgling economic recovery. Spurred into action by falling revenue, mounting losses and the need to convince regulators they are no longer “too big to fail”, banks across the globe have shrunk radically since the 2008 collapse of U.S. bank Lehman Brothers sparked the financial crisis. Last year, the tide of bad news began to turn for European banks, which are among the region’s largest employers. Helped by recovering economies and receding fears for the euro zone’s future, the benchmark Stoxx Europe 600 Banks index .SX7P rose 19 percent, outpacing the 17.4 percent increase in multi-sector stocks. But despite the improved outlook, Europe’s 30 largest banks by market value cut staff by 80,000 in 2013, calculations by Reuters based on their year-end statements showed.

High-Frequency Traders Set for Curbs as EU Reins In Flash Boys (Bloomberg)
European Union lawmakers are poised to approve some of the toughest restrictions in the world on high-frequency trading, the first crackdown in the aftermath of Michael Lewis’s latest book, “Flash Boys.” The curbs are part of revamped EU markets legislation spanning from commodity derivative speculation to investor protection. The high-frequency trading limits include standards meant to keep the price increment for securities from being too small, mandatory tests of trading algorithms and requirements that market makers provide liquidity for a set number of hours each day.

CME Gave High-Frequency Traders Peek at Market, Lawsuit Claims (Bloomberg)
The Chicago-based company, owner of the Chicago Mercantile Exchange and the Chicago Board of Trade, offers futures based on interest rates, equity indexes, currencies, energy products and agricultural commodities. The plaintiffs, in their complaint against CME and CBOT, allege “a fraud on the marketplace” and seek class-action status on behalf of exchange users. CME denied their accusations in a statement. Sometime after the start of 2007, the CBOT and CME began letting HFTs peek “at all orders to buy and sell futures contracts before they were reflected” to the rest of the market, according to the complaint filed April 11 in federal court in Chicago. That glimpse occurred “before the person or entity entering the buy or sell order received confirmation that their order was received — in other words before anyone other than the HFTs were privy to this information.”

Hedge Funds Wield Risky Legal Ploy to Milk Buyouts (WSJ)
When Dole Food Co. sold itself last year to its founder for $1.2 billion, many market watchers saw just another in a string of buyouts. A few investors saw an opportunity to squeeze the buyers for potentially millions of dollars more, using an arcane—but increasingly popular—legal process known as appraisal. Merion Capital LP bought 7.5 million shares of the fruit company in the days before Dole’s October stockholder meeting. It rejected the $13.50-a-share deal price and, alongside three other hedge funds, is seeking more in court through appraisal. Dole’s buyout highlights the rise of “appraisal arbitrage,” in which hedge funds buy shares of companies on the brink of a buyout and ask a judge to award them a higher price. These lawsuits have risen sharply as a growing group of investors looks to extract more money from corporate takeovers.

Gisele audited by IRS after making Forbes ‘rich list’ (NYP)
Gisele Bundchen has revealed that she was audited by the IRS just because she was placed on the Forbes Supermodel Rich List. “It’s sad, because the people who write these things don’t have my bank-account details,” she laughs. “I do OK, I earn plenty, but not as much as they say. I’ve already been audited by the IRS because of this list, and, truthfully, whether I’m on this list or not doesn’t interest me,” the Brazilian supermodel told Vogue magazine on Friday. Mrs. Tom Brady went on to say she’s no different than you or me. “I’ve got the same interests, the same day-to-day life, as any woman. I want to raise my children well, be a good wife and work. This is what I value: Are my children educated, is my husband happy, are people feeling positive energy from me? There should be a magazine to quantify knowledge, understanding and love for people: That is power.” Read more »

Opening Bell: 04.09.14

Goldman Mulls Closing Dark Pool (WSJ)
Goldman Sachs s considering shutting down one of the world’s largest private stock-trading venues, according to people familiar with the matter. In conversations with market participants over the past several months, Goldman executives have broached the subject of closing its so-called dark-pool trading operation, known as Sigma X, the people said. Goldman executives are weighing whether the revenue that the firm generates from operating Sigma X is worth the risks that have been highlighted by a series of trading glitches and growing criticism of dark pools, the people said. No decision is imminent, and Goldman could keep the business, according to the people.

Sotheby’s comes out with defense in battle with Loeb (Reuters)
Sotheby’s (BID.N) on Tuesday published a 53-page slide deck in its defense against hedge fund manager Daniel Loeb, who has been trying to force his way onto the board of the auction house. Sotheby’s said Loeb, whose Third Point LLC is the biggest investor in the company with a 9.6 percent stake, and his nominees would add “no incremental, relevant skills, experience or expertise” to the company’s board, according to a regulatory filing. The auction house’s aggressive response comes after Loeb last week urged investors to support his board slate, arguing he and his fellow nominees would be better able to reinvigorate the company from within after years of poor governance.

Investors Brace for Weak Earnings Reports (WSJ)
Profits of S&P 500 companies are forecast to decline in the first quarter from a year ago, according to Wall Street estimates collected by data provider FactSet. If borne out, that would be only the second year-over-year decrease since the financial crisis.

FTC gives Facebook go-ahead on WhatsApp deal: source (NYP)
Facebook has gotten regulatory approval for its controversial acquisition of WhatsApp, a source close to the situation said. The Federal Trade Commission was close to hitting its deadline to approve the $19 billion deal or extend the merger review, sources close to the process said. Facebook announced Feb. 19 it was buying the mobile messaging service.

How Flappy Bird Is Ruffling Feathers in the Gaming Industry (Bloomberg)
“The mobile audience is humongous, and there are so many developers out there that now you begin to see a lot of experimentation,” said David Helgason, chief executive officer of Unity Technologies, which licenses tools for game developers. “Some games like Flappy Bird can be over in 10 seconds, while other games you see are much deeper. It’s that kind of risk-taking that makes it an exciting space to be in.”

Untaxed U.S. corporate profits held overseas top $2.1 trillion: study (Reuters)
Foreign profits held overseas by U.S. corporations to avoid taxes at home nearly doubled from 2008 to 2013 to top $2.1 trillion, said a private research firm’s report, prompting a call for reform by the Senate’s top tax law writer. “The new numbers … certainly highlight what is one of the key challenges for tax reform. I do think there need to be some reforms in this area,” Senate Finance Committee Chairman Ron Wyden told reporters on Tuesday on Capitol Hill. Under U.S. law, corporations do not have to pay income tax on most of their overseas profits until they are brought into the United States. These earnings can be held offshore for years if they are classified as indefinitely invested abroad.

Syracuse surgeon slapped sedated patients, called them insulting names, feds say (Syracuse)
A doctor at St. Joseph’s Hospital Health Center often slapped anesthetized patients on the buttocks and called them derogatory names before surgery, a government investigation alleges…The slapping and other inappropriate behavior by the surgeon went on for at least a year and the hospital did nothing about it until a complaint was filed with hospital administrators in December, the report says…That report says the surgeon would slap the buttocks or hips of some sedated patients before operating. Three staff members told investigators the doctor called patients names, such as “fat ___ ,” while slapping them hard. One staffer described seeing the doctor “almost wind up” to deliver the slap to a patient. Another said the slaps seemed to be done as a gesture to say “let’s get this procedure going.” The doctor said he slapped patients to test the adequacy of the spinal anesthetic, the report says. Eleven staff members interviewed told investigators they had never seen another doctor do this. Read more »

Opening Bell: 04.08.14

Citi Is Bracing to Miss a Profit Target (WSJ)
Citigroup Inc. is warning investors it may miss a key profitability target after the Federal Reserve rejected the bank’s capital plan last month, people familiar with the matter say. The Fed on March 26 shot down the New York bank’s proposal to boost its dividend and ramp up stock buybacks, saying it had failed to measure potential risks to its operations during a severe economic recession. The rejection makes it unlikely Citigroup can hit its 2015 goal for return on tangible common equity.

Intrade’s New Gamble Is Sports Betting (BusinessWeek)
Contests on Tradesports will consist of a series of markets, where players buy stock based on events within a game. To not run afoul of the law, players cannot simply buy stock on whether the San Antonio Spurs will win; the position must also include a bet on, say, how many rebounds Tim Duncan will pull down. A pot is set in advance, and the stocks can be traded throughout the game. When the final buzzer sounds, players holding stock with the highest combined value win the pot. The company takes a cut of the entry fees.

Bank Regulators Set Vote on Big Jump in Capital Requirements (WSJ)
Under the new “leverage ratio,” scheduled for a vote by the Federal Deposit Insurance Corp. and the Federal Reserve, the eight biggest U.S. firms would have to double the amount of capital they hold as protection against every loan, investment, building, security and other asset on their books—not just the risky ones…The biggest companies would be required to maintain loss-absorbing capital worth at least 5% of their assets, and their FDIC-insured bank subsidiaries would have to keep a minimum leverage ratio of 6%. The amounts, which are line with what banks expected from regulators, compare with the 3% set out by international accord. For the largest banks, satisfying the new requirement will likely be manageable in the near term, but analysts warned it could constrain future growth since it would limit each bank’s ability to increase its asset base, forcing it to either raise more cash from investors or shed assets elsewhere if it begins to bump up against the ratio’s limits.

Tech Firms May Find No-Poaching Pacts Costly (Dealbook)
A high-stakes negotiation is taking place in Silicon Valley among some of the biggest names in the industry — Apple and Google among them — over accusations that they were involved in a collusion to prevent their employees from being hired at rival companies. The employees filed a class-action suit, contending that the illegal hiring practices cost employees $9 billion in lost wages. Now the companies are locked in mediation sessions, hoping to settle the case in the next several weeks. The question being whispered all over town now is how much will Apple, Google, Intel and Adobe ultimately have to pay? The companies privately scoff at the $9 billion figure that the plaintiffs are seeking, contending it amounts to extortion. The employees, who number about 100,000, suggest that the facts are so damning against the companies — and so embarrassing — that they won’t settle for anything less than a blindingly high number.

Cohen firm has new name, still makes big money (CNBC, earlier)
In an internal email issued Monday morning, the company’s president, Tom Conheeney, praised employees for their loyalty…In a telling line of the morning’s memo, Conheeney spoke of the mark the former hedge fund had made in the business. “At its best, SAC was looked upon as the industry’s leading long/short hedge fund, the place where everyone wanted to work and be,” he wrote. “Our goal, certainly my goal, is to see us reach those heights as Point72, but in a manner that no one can ever claim is the result of anything other than your hard work, integrity and smarts.”

Woman Allegedly Calls Cops To Complain About Weed Quality (AP)
Lufkin police Sgt. David Casper said Monday that an officer went to the home of 37-year-old Evelyn Hamilton to hear her complaint that the dealer refused to return her money after she objected that the drug was substandard. Casper says she pulled the small amount of marijuana from her bra when the officer asked if she still had it. She was arrested Friday on a charge of possession of drug paraphernalia. Hamilton said Monday she spent $40 on “seeds and residue.” She says she called police when she got no satisfaction from the dealer’s family. Read more »

Opening Bell: 04.07.14

Fallout From High-Frequency Trading Hits Brokerages (WSJ)
Shares of E*Trade Financial Corp., Charles Schwab Corp. and TD Ameritrade Holding Corp. tumbled last week amid concerns that regulators would ban a practice that allows brokerages to collect hundreds of millions of dollars a year in revenue by selling orders to middlemen who use high-frequency strategies to trade with the brokers’ customers.

Pimco’s problems grow as pension funds take fright (FT)
One of the first investors in Pimco’s $232 billion Total Return fund has begun looking for an alternative fixed income manager as concerns over the world’s biggest bond house escalate. The Orange County Employees Retirement System, situated just 12 miles from Pimco’s headquarters in California, has instructed an investment consultant to search for an “additional” domestic fixed income portfolio manager. The $11.5 billion pension scheme has invested in Pimco chief executive Bill Gross’s Total Return strategy since 1982, but it has put the fund on watch due to “organisational and personnel issues” at the company.

BlackRock Reshuffles Management (WSJ)
BlackRock Inc. took a big step toward picking a successor to co-founder and Chief Executive Laurence D. Fink on Sunday, announcing a reshuffling of the management ranks that will elevate a number of executives to prominent roles at the world’s largest asset-management firm. In a call with employees Sunday afternoon, Mr. Fink and President Robert Kapito stressed that Mr. Fink, 61 years old, would remain with the firm for years to come. But the New York firm laid out its most sweeping managerial overhaul in years. Among other moves, it added a new co-president and tapped a new chief operating officer, while promoting a number of other executives, including its company heads in Asia and New York. Mr. Kapito, 57, long has been seen as the heir apparent to Mr. Fink, and the moves are seen as strengthening that position, according to people at the company. He has been president of the firm since 2007…Among the biggest moves, the firm promoted Charlie Hallac, the New York-based company’s chief operating officer, to the new position of co-president alongside Mr. Kapito, who will remain in that role.

The Best Dirt From 15 Central Park West (NYM)
Billionaires Carl Icahn and Daniel Loeb allegedly tussled over a $45 million apartment; Loeb won by not blinking at the astronomical price. Icahn supposedly offered half the asking, a story he dismisses, saying he only wanted one of two units that could be combined: “There was no hondling,” Icahn is quoted in the book. “Bullshit.” (“Page Six” reports that Loeb was upset that Gross and his book are being feted at the building via a party hosted by political cartoonist and resident Ranan Lurie and his wife, Tamar; it’s still scheduled to take place as of this writing.)

Legendary Man U coach headed to Harvard Business School (NYP)
Alex Ferguson, the legendary British soccer manager for Manchester United who is famous for his volcanic temper, is bringing his coaching techniques to Harvard Business School. Ferguson, who retired from managing ManU last year, will teach in Harvard’s executive-education program, the school said this week. Ferguson, 72, is the most successful manager in British soccer and was knighted in 1999.

Australian groom banned from getting married after showing up drunk (NYDN)
Jake Francis Brookes, 41, was reportedly still drunk from his bachelor party when he rocked up at Exeter Uniting Church in Adelaide in February. Witnesses said he was swaying, bruised and sporting torn clothes. It led Reverend Ian Hunter to refuse to proceed with the ceremony because it was “unethical.” This resulted in a “minor altercation” between Brookes and Hunter – which ended after cops were called, according to the Adelaide Advertiser. Brookes was then arrested and charged with disorderly behaviour and resisting arrest – while his wife-to-be decided to cut her losses and end the relationship. He appeared in Port Adelaide Magistrates Court for a preliminary hearing on Thursday. Afterwards, he told reporters outside: “I miss her to bits – she is always in my heart.” “She wants me to be the best I can possibly be…I had my bucks night the night before bro, I mean come on, we are all men here,” he added. Read more »

Opening Bell: 04.04.14

Australia Model Curbs Speed as CEO Says U.S. Too Far Gone (Bloomberg)
In Australia, where high-frequency trading firms are half as pervasive as in the U.S., the head of the biggest stock exchange has a message for Americans who would rein them in: forget it. “The way the U.S. market structure has been set up creates serious problems,” Elmer Funke Kupper, the chief executive officer of Sydney-based ASX Ltd., told Bloomberg News on the sidelines of a conference March 24. Efforts to rectify that are “very late and unlikely to succeed,” he said. Advantages that are hard to replicate in the U.S. help Funke Kupper curb speed traders. Australia restricts alternative exchanges, solidifying ASX’s near-monopoly and reducing high-frequency arbitrage. By contrast, American trading is spread across more than 50 venues. ASX doesn’t offer payments to traders for orders, unlike in the U.S., where a system of fees and rebates known as maker-taker helps keep HFT in business.

U.S. Banks Expected to Post Weaker Earnings (WSJ)
Among the six largest U.S. banks and securities firms, J.P. Morgan, Citigroup Inc., Goldman Sachs Group Inc. and Bank of America Corp. are expected to post a smaller profit than in the same quarter a year earlier. Analysts predict Morgan Stanley’s earnings will be little changed. The five companies all have seen their estimates fall in the past six weeks.

Bitcoin’s Boosters Struggle to Shore Up Confidence (WSJ)
Jeremy Allaire, a longtime technology entrepreneur who is setting up a bitcoin service for consumers, compares the chaotic environment to the Internet’s earliest days. “The amateur-hour enthusiasts that started bitcoin companies in the first generation are being weeded out in a totally appropriate fashion and…replaced by legitimate companies that are working with the financial industry and government,” he says. “There is still more shaking out that needs to happen.” Mr. Murck says the Bitcoin Foundation is encouraging rules that would help prevent “more bad outcomes.” At a February meeting of state banking regulators, he said the bitcoin industry “is being held to a higher standard than other payment systems.” He added: “As far as I’m concerned, that’s fine.” He says he has never thought about quitting his job because he still believes in bitcoin and thinks the trade group is effective. Mr. Murck has two more reasons to help investigators and root for a rebound in the value of bitcoins. He is paid in bitcoins—and was a Mt. Gox customer when the exchange collapsed. He won’t say how many of his bitcoins are missing. “It isn’t an insignificant amount,” he says with a sigh.

China regulator to run stress tests on banks: paper (Reuters)
The China Banking Regulatory Commission (CBRC) has said it will conduct regional and national stress tests after banks saw a spike in bad loans last year, the Shanghai Securities News reported on Friday, reflecting growing creditworthiness concerns.

JPMorgan Folds London Whale Office Into Another Unit (Bloomberg)
The chief investment office will be folded into the New York-based bank’s Treasury unit, Chief Operating Officer Matt Zames said in an internal memo obtained yesterday by Bloomberg News. Craig Delany will lead the new group as global chief investment officer and treasurer, Zames said.

The Legacy of JPMorgan’s Blythe Masters (BusinessWeek)
As outlined in Gillian Tett’s book, Fool’s Gold, a group of math wizards that included Masters at JPMorgan in the mid-1990s set out to eliminate the risk of lending money by developing a new type of contract that banks could use to insure against the possibility that a loan wouldn’t be repaid. As Bloomberg Businessweek’s Paul M. Barrett put it in a review of Tett’s book, it worked like this: “Bank A, worried about a loan it has made, strikes a derivative deal to pay a fee to Bank B in exchange for Bank B’s promise to compensate Bank A if the loan sours. Bank A sheds some of the uncertainty related to its loan and feels emboldened to make fresh loans. Bank B assumes some of the risk but immediately enjoys the fee income.” These became known as “credit derivatives,” and they would soon be used to insure millions of low-quality mortgages, mixed into batches like cookie dough, divided into pieces, and sold to investors all around the world. When the real estate market crashed in 2007, so did all those derivatives, causing financial carnage too extensive to enumerate. Masters has spent the years since trying to distance herself from the damage her creation inadvertently caused. Is it her fault that her innovation was so badly misused and exploited by others?

Deputies break window to wake alleged drunk driver stopped at light (Wesh)
Deputies said they were forced to break a driver’s window when the man blacked out with a burrito in his hand at a traffic light early Monday morning in Volusia County. A witness first noticed 36-year-old Daniel Hernandez when he allegedly hit a curb and swerved in and out of his lane, according to the Volusia County Sheriff’s Office. The witness followed Hernandez, who allegedly stopped about 50 feet from the traffic light at Doyle Road and Courtland Boulevard and fell asleep, deputies said. Hernandez allegedly sat at the light holding a half-eaten Taco Bell burrito for at least 15 minutes before deputies arrived at the scene. After attempting to wake Hernandez by knocking on the window, officials were forced to break the window, but Hernandez kept sleeping. According to the arrest report, paramedics rubbed Hernandez for two to three minutes to wake him. Read more »