Goldman Dances to the New Street Beat (WSJ)
The Wall Street company, which clung to its trading roots even after a regulatory overhaul drove rivals to change course, is now reining in riskier activities, shrinking its balance sheet and steering clear of trades that don’t produce the double-digit-percentage returns its shareholders crave, Goldman executives and people familiar with the company’s plans said…Goldman, which derives about half its revenue trading stocks, bonds and other securities, has begun moving away from trades that require it to set aside more capital. The company is demanding to be paid more from clients for the money it does commit. At the same time, it is shrinking the inventory of securities it holds for clients, a step that frees up capital and boosts its returns. The goal is to eke out more profit from its trading unit, which in recent quarters has struggled amid tepid client activity. The changes have been gradual, as Goldman waited for the regulations to take shape, and the company’s overarching strategy remains intact.
Jury Still Out On SAC’s Steinberg (NYP)
Jurors in the federal insider-trading trial of SAC Capital moneyman Michael Steinberg ended their first day of deliberations without a verdict. They will resume Wednesday at Manhattan federal court. Steinberg is the first of eight employees of Steve Cohen’s SAC Capital caught in the feds insider-trading probe to go to trial. Six others have pled guilty while the eighth, Mathew Martoma, is scheduled to go on trial in January.
Ex-SAC manager Martoma fails to end part of insider case (Reuters)
A federal judge on Tuesday rejected former SAC Capital Advisors LP portfolio manager Mathew Martoma’s request to dismiss some insider trading charges because they were based on transactions not covered under U.S. securities laws. U.S. District Judge Paul Gardephe in Manhattan said Martoma’s alleged trades in American depository receipts of Irish drugmaker Elan Corp (ELN.I) qualified as domestic transactions covered by U.S. securities laws. As a result, the judge rejected Martoma’s request to dismiss one of two securities fraud charges, as well as related allegations in a conspiracy count. The defendant has pleaded not guilty to the three counts, and faces a January 6 trial.
UBS, Credit Suisse Payout Hopes Ebb as Regulators Tighten Leash (Bloomberg)
Prospects for fatter dividend payouts from Switzerland’s biggest banks are receding as Swiss authorities ratchet up capital demands. UBS AG (UBSN), the nation’s largest bank, was told to hold more capital for legal risks this quarter, while the finance minister said last month leverage rules might be tightened. Credit Suisse Group AG (CSGN), the No. 2 bank, is in talks with the regulator that may also lead to a demand for more capital, though it would be much smaller in scope than for UBS, a person with knowledge of the matter who asked not to be identified said this month.The tighter requirements, on top of stricter rules implemented over the past five years, arrived as the banks were preparing to start paying higher dividends. UBS Chief Executive Officer Sergio Ermotti, 53, pledged to pay out more than half of profits to shareholders once the company reaches a common equity ratio of 13 percent — a level that probably would have been achieved this year without the fresh demands. “The message from regulators is very clear: ‘if you think you can pay dividends, forget it,’” Oswald Gruebel, who served as CEO of both Zurich-based UBS and Credit Suisse, said by phone. “They don’t want to let banks pay any dividend. It’s totally open how long this will last.”
Duck penis studies, lifecoaches for Senate staff: $30B in government spending questioned (NYP)
While the White House and Congress griped this year about the pain of automatic budget cuts, the federal government still managed to spend billions of dollars on seemingly frivolous projects – from a $384,989 grant for Yale University to study the duck penis to $1.9 million for “lifestyle” lessons for Senate staffers. Nearly $30 billion in questionable federal spending is detailed in the “Wastebook” that was released Tuesday by the Sen. Tom Coburn (R-Okla.), who annually compiles the report…Taxpayers also got stuck with the bills for: $17.5 million for special tax exemptions for Nevada brothels, including tax deductions for groceries, wages for prostitutes, rent and utilities…$630,000 spent by the State Department to buy followers on its Facebook and Twitter accounts…$325,525 for a National Institutes of Health study that found wives would be happier if they could calm down faster during arguments with their husbands…$150,000 to support the Puppets Take Long Island festival in Sag Harbor. Read more »