Opening Bell

Opening Bell: 12.13.13

Traders Losing $1 Million Build EU Case for Bitcoin Regulation (Bloomberg)
Trading Bitcoins could bleed you dry, the European Union’s top banking regulator said as it weighs whether to regulate virtual currencies. Thefts from digital wallets have exceeded $1 million in some cases and traders aren’t protected against losses if their virtual exchange collapses, the European Banking Authority said in a report warning consumers about the risks of cybermoney.

Most Americans Don’t Know Bitcoin While Some Guess Xbox (Bloomberg)
Some Americans think Bitcoin is an Xbox game. Others think it might be an iPhone app. The majority have no idea it’s a virtual currency they can use to buy everything from T-shirts to Tesla Motors sedans, according to a Bloomberg National Poll. Only 42 percent of Americans who responded to the Dec. 6-9 telephone survey correctly identified Bitcoin, which has gained more than 80-fold in value this year as its popularity expands. “I’m not sure what the value of it is, and what I’d be able to exchange it for,” says Olga Ruff, 62, of Dallas, who correctly identified Bitcoin. Ruff says she’s unlikely to start accepting it for the small jewelry business she operates out of her home: “What use would it be for me?”

Pope attacks megasalaries and wealth gap (Reuters)
Pope Francis said in the first peace message of his pontificate that huge salaries and bonuses are symptoms of an economy based on greed and inequality, and he called again for nations to narrow the wealth gap. In his message for the Roman Catholic Church’s World Day of Peace, marked around the world on Jan. 1, he also called for sharing of wealth and for nations to shrink the gap between rich and poor, more of whom are getting only “crumbs.” “The grave financial and economic crises of the present time … have pushed man to seek satisfaction, happiness and security in consumption and earnings out of all proportion to the principles of a sound economy,” he said. “The succession of economic crises should lead to a timely rethinking of our models of economic development and to a change in lifestyles,” he said…The new pope’s style is characterized by frugality. He shunned the spacious papal apartment in the Vatican’s Apostolic Palace to live in a small suite in a Vatican guest house, and he prefers a Ford Focus to the traditional Mercedes.

Falcone’s Life Insurer Prices Shares at Low End of Range in IPO (Bloomberg)
Fidelity & Guaranty Life, the insurer controlled by billionaire Philip Falcone’s Harbinger Group Inc., raised $165.75 million in its initial public offering, pricing the shares at the low end of the marketed range. Fidelity sold 9.75 million shares for $17 apiece, according to data compiled by Bloomberg, after offering them for $17 to $19. The sale of a 17 percent stake values the company at $965 million. Falcone is focused on running Harbinger Group, which has businesses from insurance to consumer products, after reaching a settlement with the U.S. Securities and Exchange Commission in August that bars him from the hedge-fund industry. He’s also been banned from being an officer or director of Fidelity & Guaranty, which is run by former MetLife Inc. executive Lee Launer. “FGL is being attractively priced,” Manal Mehta, an investor in Harbinger Group via his Sunesis Capital LLC, said in an e-mail before the details were announced. “Falcone’s woes are a gift to investors participating in the offering.”

Startups Are Quick To Fire (WSJ)
Here’s another way that startups are reinventing the way companies work: Firing people before the ink is dry on their employment contracts. At one startup, Steve Fredrick, of venture-capital firm Grotech Ventures, says he saw a senior executive fired after three days. “It was like an organ-transplant rejection,” he adds. Hoping to board a rocket ship to IPO riches and build the next big thing with a beer in hand, tech-savvy workers are flocking to fledgling companies. Almost anyone joining one of these upstarts faces the risk that it could collapse long before minting millionaires as Twitter Inc. and Facebook Inc. have done in the past two years. But there are personal risks, too. New hires often don’t realize just how precarious their job at a startup can be. Startup managers say they try to let underperformers or poor fits go within their first three months, but some hires don’t last even that long.

Residents in affluent neighbourhood turn to ‘vandalising’ cars with sauce in fight against parking on their streets (DM)
Homeowners in Edgbaston, Birmingham, are taking the law into their own hands because they say the local council has done nothing to reduce the number of vehicles left on their road. The word ‘idiot’ has been daubed with a food substance on the [hoods] of cars which are left outside houses all day. The area is known for being an affluent suburb of Birmingham which hosts international cricket and tennis matches every year. But during the year it is seen as a free-parking hotspot due to its proximity to one of Birmingham’s biggest hospitals, the Queen Elizabeth. It is also close to the University of Birmingham, making it a convenient place for students who don’t want to pay for parking. Read more »

Opening Bell: 12.12.13

Banks Speeding Asia Promotions Doubles Rate of Pay Raises (Bloomberg)
Ang Eng Siong, 33, has been promoted every year since he completed Oversea-Chinese Banking Corp.’s management associate program in 2010, when he was put in charge of two older, higher-ranked colleagues. “My team members were all a lot more experienced in that particular role,” said Ang, now a vice-president of corporate treasury in Singapore under the chief financial officer. “An opportunity to manage an important project would be rare so they wanted just to give me the exposure.” Banks and companies across Asia are putting local employees like Ang on a fast track to senior roles to counter a dearth of management expertise in the region and to deter staff from being poached by rivals. Samsung Electronics Co. Ltd. opened its first leadership academy outside of Korea in Singapore in October, following companies from OCBC to Unilever Plc. that have spent millions on training institutes in the region. “Talent is in short supply and secondly businesses are growing faster than people can grow,” said John Nolan, Singapore-based senior vice president of human resources for global markets at Unilever. “One way to fill that talent shortage is to accelerate the rate of readiness of your people.” He said the company’s philosophy is to try to promote employees in emerging markets faster than the five to six years it takes globally to move up a level.

Criminal Action Is Expected for JPMorgan in Madoff Case (Dealbook)
JPMorgan Chase and federal authorities are nearing settlements over the bank’s ties to Bernard L. Madoff, striking tentative deals that would involve roughly $2 billion in penalties and a rare criminal action. The government will use a sizable portion of the money to compensate Mr. Madoff’s victims. The settlements, which are coming together on the anniversary of Mr. Madoff’s arrest at his Manhattan penthouse five years ago on Wednesday, would fault the bank for turning a blind eye to his huge Ponzi scheme, according to people briefed on the case who were not authorized to speak publicly.

For No. 2 at Fed, White House Favors Central Banker in the Bernanke Mold (NYT)
Stanley Fischer, the former governor of the Bank of Israel and a mentor to the Federal Reserve’s chairman, Ben S. Bernanke, is the leading candidate to become vice chairman of the Fed, according to former and current administration officials. If nominated, and then confirmed by the Senate, Mr. Fischer, 70, would succeed Janet L. Yellen, whom President Obama nominated to succeed Mr. Bernanke as the Fed’s leader when his term ends in January. Mr. Fischer is at once a surprising choice and a popular pick among economists and investors. He is a highly regarded economist with significant policy-making experience, yet many had considered his selection improbable because of his recent service in a foreign government.

Manchester United Faces Doubter in the Market (Dealbook)
The British soccer team Manchester United has made a poor showing on the field this season. Now the British hedge fund manager Crispin Odey is making a multimillion-dollar bet that the club’s New York-listed shares are destined for a similar trajectory. Odey Asset Management, Mr. Odey’s fund, has taken a $22 million short position against Manchester United shares. Mr. Odey’s bet pits him against several investors who remain strong supporters of the team. George Soros has a 5.3 percent stake, and GLG, a division of the world’s biggest hedge fund, Man Group, has a 2.2 percent stake.

Kama Sutra cookie cutters set to raise bakers’ temperatures (Daily Mail)
The £17.99 set includes four raunchy positions to recreate in dough, including the naughtily-named ‘Baking From Behind’ and ‘Very Well Risen’ designs. Each cookie cutter depicts two gingerbread men/women positioned in a different sex act found in the ancient erotic manual the Karma Sutra…The instructions read: ‘Simply prepare your favourite type of cookie dough, cut out your shapes and then turn your oven into a sordid little dungeon of carnal pleasure. Whilst you furiously beat the dough, squirt the icing and grab yourself a nice big rack to cool your cookies on, you can think up all sorts of hilarious baking double entendres.’ Read more »

Opening Bell: 12.11.13

Deal Brings Stability to U.S. Budget (WSJ)
House and Senate negotiators, in a rare bipartisan act, announced a budget agreement Tuesday designed to avert another economy-rattling government shutdown and to bring a dose of stability to Congress’s fiscal policy-making over the next two years. Sen. Patty Murray (D., Wash.) and Rep. Paul Ryan (R., Wis.), who struck the deal after weeks of private talks, said it would allow more spending for domestic and defense programs in the near term, while adopting deficit-reduction measures over a decade to offset the costs. Revenues to fund the higher spending would come from changes to federal employee and military pension programs, and higher fees for airline passengers, among other sources. An extension of long-term jobless benefits, sought by Democrats, wasn’t included.

Regulators Vote To Back Volcker Rule (WSJ)
A broad new government rule to limit risk-taking by Wall Street will force banks to rethink virtually every aspect of their trading activities, setting the stage for more tumult at the largest U.S. financial institutions. The so-called Volcker rule, approved by five financial regulatory agencies on Tuesday, could lop as much as $10 billion total in yearly pretax profit from the eight largest U.S. banks through lower revenue and higher compliance costs, according to estimates from Standard & Poor’s. The 953-page edict, part of the 2010 Dodd-Frank financial overhaul, codifies and restricts the way banks trade securities. It curbs banks’ ability to bet with their own capital and forces them to draw bright lines separating trades for clients from trades to limit their risks and so-called proprietary bets.

Late Summer Meeting Gave Urgency To Regulators On Volcker Rule (Dealbook)
Gathered in the Roosevelt Room on a late summer afternoon, the regulators outlined their progress in carrying out the Dodd-Frank financial overhaul law, save for one crucial element: the Volcker Rule. The rule, a centerpiece of Dodd-Frank and a symbol of the Obama administration’s effort to rein in risk-taking after the financial crisis, was mired in delays, a victim of internal regulatory squabbling and fierce lobbying from the financial industry. But when Treasury Secretary Jacob J. Lew spoke up, people briefed on the meeting recalled in recent interviews, he declared that the rule was too important to delay and that he wanted the deal done by the end of 2013.

Era of Lucrative Debt Traders Fades as Credit Suisse Sees Exits (Bloomberg)
At least six senior members of the firm’s U.S. credit team have departed its New York office this year as top pay for high-yield debt traders and salespeople fell to about $3.5 million in 2012 from as much as $5 million three years earlier, according to two people with knowledge of the matter. The bank has scrapped monthly commissions it had paid as part of efforts to retain a DLJ junk-bond team led by an associate of Michael Milken, who created the market in the 1980s, the people said.

Witness Describes Madoff’s Effort to Save Firm in Last Days (WSJ)
Frank DiPascali Jr. choked up while telling jurors in Manhattan federal court Tuesday that Mr. Madoff finally revealed to him the scope of the fraud during a late-night meeting in Mr. Madoff’s office just days before his arrest. “He turned to me and said, crying, ‘I’m at the end of my rope,’” said Mr. DiPascali, a high-school-educated, Queens, N.Y., native who worked for Mr. Madoff for 30 years. “What do you mean?” Mr. DiPascali said he responded. “I mean I have no more…money,” Mr. Madoff responded, according to his former employee. “Don’t you get it? The whole…thing was a fraud.”

Tacos or death, sword-wielding robber demands (Chron)
A San Antonio man threatened a waitress with a sword he had holstered on his waist last week after he was told he would indeed have to pay for the tacos he ordered at a South Side restaurant, according to an arrest warrant affidavit. Adam Kramer, 28, has been charged with aggravated robbery and remains in the Bexar County Jail with a bail amount of $50,000. Kramer ordered six tacos at Alondras De Jalisco on South Loop 1604 at about 2:30 p.m. on Dec. 2, according to documents released Friday. When the waitress told Kramer how much he owed, he responded that he was going to take them for free, officials said. When the waitress told Kramer that he had to pay for his food, he allegedly started sliding what is described as a large sword in and out of a black sheath on his waist, the affidavit says. The waitress asked the cook to come talk with Kramer, who left the building when the phone rang, according to the affidavit. Kramer went to his vehicle before walking back to the restaurant, still allegedly carrying the large sword, so the waitress locked the door, documents state. “Mr. Kramer was yelling that he wanted his free tacos or somebody was going to die,” the affidavit says. Read more »

Opening Bell: 12.09.13

Deutsche Bank creates new post to tighten controls (Reuters)
Deutsche Bank on Monday named 43-year-old Thomas Poppensieker as head of a new effort to tighten controls at Germany’s flagship lender, reporting directly to co-Chief Executives Juergen Fitschen and Anshu Jain. The move comes as Deutsche Bank pursues an ambitious cultural transformation plan led by Fitschen and Jain, and as it works through a long list of scandals, investigations and fines that came in the wake of the financial crisis.

Paulson Extends Comeback With Merger Bets as Stocks Rally (Bloomberg)
After wrong-way bets on the U.S. recovery, the euro crisis and gold had helped cut assets by about half from the 2011 peak, his main hedge funds are posting double-digit returns. The New York-based firm’s Advantage strategy, which suffered record losses in 2011, is up 30 percent this year through November, and the Recovery fund surged 55 percent, according to two people briefed on the returns, who asked not to be identified because the information is private.

Big Investors Change U.S. Trading (WSJ)
Some of the world’s biggest investors are changing the way they trade in U.S. markets in response to what they say are rising risks for institutions of their size. The strategies include conducting more “upstairs trades,” in which deals are executed among big institutions, bypassing the broader market, as well as other sophisticated order-routing techniques designed to avoid pitfalls that have become increasingly apparent to investment managers. Investors say such measures are increasingly necessary because the proliferation of algorithmic trading and other structural issues, including thefragmentation of the market, are hurting their ability to get the best prices and execute large trades quickly.

My Interview With Madoff (WSJ0
The 75-year-old, dressed in beige polyester pants and shirt with a matching canvas belt, showed no signs of stress. He told the occasional joke and said he was lucky to be in Butner, as it had a reputation of being “very laid back” and is kind of like a “camp.” “This is as good as it gets,” said Mr. Madoff.

Domestic Battery Rap Dropped In Water Pistol Case (TSG)
Giovanna Borge was busted in September following a confrontation with her beau in a Port St. Lucie apartment. Borge told officers that her boyfriend “said something to her that she did not like,” so she “took a water pistol and squirted him with water.” Following the pistol dripping, the pair tussled, with Borge claiming that her boyfriend struck her with a pillow and dumped a container of water on her head. But since Port St. Lucie Police Department officers decided that Borge was the “primary aggressor” during the September 27 incident, she was collared for “squirting water” on the victim to “antagonize and agitate him against his wishes.” Read more »

Opening Bell: 12.06.13

Bankers Balk at Bitcoin as Obstacles Mount (Bloomberg)
“Banks are scared to deal with Bitcoin companies, even if they really want to,” said Stephen Pair, co-founder and chief technical officer of BitPay Inc., an Atlanta-based company that processes payments for merchants in Bitcoin. Pair said BitPay has relationships with banks in the U.S., Canada and Europe; he declined to name them at the banks’ request.

Lampert’s Investors Check Out (WSJ)
Mr. Lampert’s hedge fund is returning billions to clients of Goldman Sachs Group Inc. who had invested with ESL Investments Inc. in 2007, according to people with knowledge of the matter. Under that deal, Goldman’s clients, such as corporate pension plans, put roughly $3.5 billion with Mr. Lampert, and they have asked for it back.

Luxury Homeowners Hope to Score Big During Super Bowl (WSJ)
Planning on attending Super Bowl XLVIII in style? Almost every five-star hotel in Manhattan is already booked. But Brian Krauss’s four-bedroom manor in Saddle River, N.J., its fridge stocked with beer, can be yours for $5,000 a night. Located 18 miles from New Jersey’s MetLife Stadium and a half-hour’s drive from New York City, the upscale suburb is home to rap royalty such as Wyclef Jean, Mary J. Blige and Ja Rule, who lives “just around the corner” from Mr. Krauss’s 5,700-square-foot house with its imposing stucco facade, the homeowner says. Mr. Krauss, chief executive of Praxis Footwear and a 49-year-old divorced father of two, has transformed his home into a luxe bachelor pad. There is a professional-grade home gym, a basketball court and a sprawling media room complete with a 70-inch TV, a baby-grand piano and three vintage pinball machines. Daily maid service is included, and you can play his acoustic-electric guitar—all for $35,000, the cost of one week’s minimum stay. “I priced it for what I thought was reasonable. What would it cost for eight people in a nice hotel?” said Mr. Krauss, who purchased the house for $1.375 million in 2011, then spent $300,000 on renovations and landscaping. Renting it out was his business partner’s idea. “At first, I was really against it,” he said. “Then I thought of all the times I’ve been a renter, in St. Barts, Malibu…..Here was an opportunity.”

Key Witness Lying About SAC Facts: Steinberg Lawyer (NYP)
“We think [Jon Horvath] is a witness who will say things either he knows [are] false or says whatever he thinks the government wants to hear,” Steinberg’s lawyer, Barry Berke, in a contentious showdown with prosecutor Antonia Apps, told Judge Richard Sullivan. In an exchange outside earshot of the jury, Berke claimed Horvath, a former SAC research analyst, lied to prosecutors to cut a deal. Horvath, who confessed to being part of a corrupt circle of inside traders on Wall Street, is the government’s main witness against his former boss Steinberg, a portfolio manager at SAC.

SEC browsing JCPenney’s liquidity, debt (NYP)
The SEC is also probing the retailer’s Sept. 26 stock offering that raised $810 million in cash in a bid to ease concerns about its liquidity, according to a Penney regulatory filing.

Mike Tyson says he used a fake penis to pass drug tests (NYDN)
The former heavyweight champion claims he used a prosthetic penis when he had to submit a urine sample before a fight, saying the fake member worked “really effectively” in masking his substance abuse. “You take it out – it has somebody else’s urine in it, of course – you hope it’s not a woman’s urine and they take a pregnancy test,” Tyson said on “Chelsea Lately” while promoting his autobiography, Undisputed Truth. “You just make noise, and normally if you’re a guy and you pull it out in front of them (the drug tester), they’re like, ‘Whoa, whoa,’” he said. “And then you do it.” “It’s connected to a jock strap.” Just in case a drug tester caught a glimpse of the fake penis, Tyson made sure it wasn’t too obvious a disguise. “(It was) Tan, brown, cream-colored.” Read more »

Write-Offs: 12.05.13

$$$ Ex-Dell employee avoids prison for help in insider trading probe [Reuters]

$$$ BofA: Bitcoin can become ‘major means of payment’ for e-commerce [CNBC]

$$$ Poker-playing hedgie may have overplayed hand [NetNet]

$$$ Securities trade group urges hardware revamp after Nasdaq August halt [Reuters]

$$$ Shareholders, say Icahn, deserve a bigger share. And Cook, he says, has been willing to consider his views. Icahn told TIME: “We’ve discussed a lot of things, and he asked a lot of questions, and really listened.” Icahn says his most recent conversation with Cook was a 20-minute phone call Nov. 21—which Cook’s assistant initially tried to schedule at 5 a.m. Pacific Time. “That’s usually when I go to bed! This guy’s tougher to get than the President,” laughs Icahn. [Time] Read more »

Opening Bell: 12.05.13

Grant Hill’s Wall Street Whirlpool Chats Pave Way to John Mack (Bloomberg)
Grant Hill spent much of his tenure with the Orlando Magic in the trainer’s room, where to the chagrin of him and teammate Pat Garrity, control of the television remote was governed by majority rule. “Most of the guys wanted to watch SportsCenter or the Cartoon Network,” said Garrity, a former players’ union treasurer who earned a Master of Business Administration from the Fuqua School of Business at Duke University, Hill’s alma mater, after retiring from the National Basketball Association in 2008. “Everyone would leave the room and then we could switch to CNBC.” Hill, whose 18-year injury-saddled career ended after last season, had an insatiable appetite for learning, particularly about finance, Garrity said in a telephone interview. Their whirlpool chit-chat often focused on hedge funds and private equity.

Volcker Rule Won’t Allow Banks to Use ‘Portfolio Hedging’ (WSJ)
In a defeat for Wall Street, the “Volcker rule” won’t allow banks to enter trades designed to protect against losses held in a broad portfolio of assets, according to people familiar with the rule. The practice, known as portfolio hedging, has become a focal point of regulators drafting the rule, a controversial plank of the 2010 Dodd-Frank financial law that seeks to prevent banks from putting their own capital at risk in pursuit of trading profits. The rule, named after former Federal Reserve Chairman Paul Volcker, is expected to be approved next week, ending a three-year period of regulatory uncertainty for some of the securities industry’s most-profitable businesses. But it won’t contain language permitting portfolio hedging, which has been “expunged” from earlier drafts of the rule, according to a person familiar with the matter. Regulators decided to remove portfolio hedging from the rule after J.P. Morgan Chase disclosed billions of dollars in losses from its so-called London whale trades in 2012.

Lew Says Reforms Making Financial System Safer (WSJ)
Mr. Lew, in prepared remarks for a speech Thursday morning at the Pew Charitable Trusts, said while efforts to implement the 2010 Dodd-Frank law have “taken longer than we hoped” the rules are largely falling into place and helping to bolster the financial system. He said more needs to be done, including ensuring that U.S. regulators have resources to enforce the rules and the adoption of robust protections by global counterparts to fortify the international financial system.

Memory Fails Top Witness In SAC Case (NYP)
Confessed inside trader Jon Horvath couldn’t remember which of his recommendations at hedge fund SAC Capital Advisors were based on illegal information — and which were not. In fact, some of Horvath’s best calls came “the old fashioned way” — by doing “legitimate, proper research analyst work,” defense lawyer Barry Berke told jurors Wednesday, as he continued to hammer away at Horvath in a second day of brutal cross-examination…The crux of Horvath’s testimony is that his illegal stock tips from another hedge fund analyst, Jesse Tortora, were fed to Steinberg, who knew they weren’t kosher. But on Wednesday, even Horvath didn’t seem to recall when Tortora’s information crossed the line into criminality. Berke honed in on information Horvath got from Tortora toward the end of 2007. “Do you believe you were getting illegal inside information in December of 2007?” Berke asked, rephrasing the question and repeating it at least a half-dozen times — eliciting different responses each time. “I don’t know exactly when it started,” Horvath said once. “I don’t remember how I viewed it at the time,” he said another.

Landmark Custody Battle Over Dog In Divorce (NYP)
A pair of divorcing women are about to fight it out in court over a miniature dachshund named Joey in what will be New York’s first matrimonial pet-custody case. “People who love their dogs almost always love them forever,” Manhattan Justice Matthew Cooper opines in his ruling granting the women oral arguments. “But with divorce rates at record highs, the same cannot always be said for those who marry.” That’s the case with Washington Heights residents Shannon Louise Travis, 32, and her soon-to-be ex-wife Trisha Bridget Murray. The only bone of contention in their divorce is who will get sole custody of their 2-year-old pet. Travis bought Joey as a 10-week-old puppy from a pet store and gave him to her then-girlfriend as a gift and “a consolation for her having to give away her cat at Travis’ insistence,” according to court papers. Murray is fighting to keep her best friend, who always slept on her side of the bed. “I consider this puppy, my little angel Joey, the love of my life,” Murray told The Post. “He is my little soul mate, and there was no way in this lifetime I could ever live without him.” Judge Cooper says it’s surprising that, in a “canine-centric city where dogs play an ever more important role in our emotional lives,” he is in uncharted territory. He notes that New York law lags behind other states’ legal standing of their pets, and that “most pet owners would not trade their pets for even $1 million in cash.” Instead of regarding Joey like a piece of property, the judge — who gives the full disclosure that he owns a 12-year-old rescued pit bull mix named Peaches — will schedule a hearing to determine his fate. Read more »