Opening Bell

Opening Bell: 04.28.14

Ackman Documentary Stars Alleged Herbalife Victims (NYP)
In his quest to bring down Herbalife, activist investor Bill Ackman will publicly showcase a documentary about former Herbalife distributors who say they were defrauded by the company. Ackman, who has bet more than $1 billion that Herbalife’s stock will collapse, is offering the film as his latest evidence that the controversial nutrition products company is a pyramid scheme. He said his Pershing Square hedge fund commissioned the 15-minute documentary last year to get alleged victims before regulators and the public. Herbalife has denied it is a pyramid scheme. The documentary will be shown at an event Friday in New York City. Members of the press, government, community and consumer organizations are invited to attend the showing, which will be simultaneously webcast. The specific time and place is undisclosed to prevent any interference at the actual event, according to Ackman.

Treasuries Irresistible to America’s Banks Awash in Record Cash (Bloomberg)
After culling Treasuries and bonds issued by federal agencies last year for the first time since 2007, commercial lenders such as Bank of America Corp. (BAC) have boosted their holdings every month this year, Federal Reserve data compiled by Bloomberg show. Banks now own $1.85 trillion of the debt, within 2 percent of the record amount held at the end of 2012.

Finra investigating E*Trade for potentially rigged markets (NYP)
Finra opened the probe well before the latest public flare-up over high-frequency trading, or HFT, but the investigation hits many of the same hot buttons. Finra is determined to find out how E*Trade has priced and electronically routed customer orders to G1 Execution Services, a business it bought for a reported $173 million and sold this year to Susquehanna for about $75 million. “Finra notified E*Trade Securities LLC and G1 Execution Services LLC that it is conducting a probe of both firms’ routing practices,” E*Trade disclosed in a footnote in its latest 10-K annual regulatory filing.

Happy Birthday To Greenwich’s Richard ‘Dick’ Severin Fuld Jr. (GDV)
Fuld, who has owned a home in Greenwich, turn[ed] 68 on Saturday. The banker was born April 26, 1946, in New York City. His first career as an Air Force pilot came to an end when he got into a fistfight with a commanding officer. He then began his career with Lehman Brothers in 1969, as a commercial paper trader and rose rapidly.

Flight crews can’t stop taking mile-high selfies (NYP)
Sexy flight attendants across the world have started an underground network of mile-high selfies that they post on Instagram. In one photo, five beautiful Emirates Airlines attendants are seen in uniform draped over each other inside an aircraft in the style of a Vanity Fair spread. “Best crew ever #galley #cabincrew #airhostess #flightattendant #emiratescrew #emiratescabincrew #crewlife #flight” reads the picture’s tag line. Another selfie features an exotic-looking airline hostess posing in a crew locker room, wearing a pilot’s hat and with her lips puckered, with the tagline “#flywithme.” Some flight attendants say the photos create camaraderie and allow them to keep up with one another. “Aviation is a very close-knit community,” said flight attendant and “Rants of a Sassy Stew” blogger Shawn Kathleen, who doesn’t use her last name. “We get each other, because we’re living the same lifestyle.” Kathleen said she’s in the process of trademarking the phrase #crewlife. She’s already encouraged other flight attendants to vent their frustrations at passengers who behave badly by posting embarrassing photos of the fliers with the hashtag #passengershaming. Read more »

Opening Bell: 04.25.14

Alibaba Puts IPO Record in Sight (WSJ)
No final decision has been made, but the addition of new Alibaba shares could help push the IPO beyond $20 billion, potentially topping Agricultural Bank of China Ltd.’s record $22.1 billion offering in Shanghai and Hong Kong in 2010, according to Dealogic, which tracks IPO data. The largest IPO in the U.S. was Visa Inc.’s $19.7 billion offering in 2010.

Former KPMG Partner Scott London Gets 14 Months for Insider Trading (WSJ)
Federal prosecutors argued Mr. London’s actions weren’t purely to help a friend, but also for personal gain. The judge said the amount of that gain – about $70,000 — was “a drop in the bucket” relative to Mr. London’s $900,000 annual salary. But Assistant U.S. Attorney James Bowman emphasized what he said was the serious nature of the crime, saying “any time you’re a vice president of KPMG and you’re on a street corner accepting bags of cash you’re part of a corrupt arrangement.”

KKR and Nasdaq Plan Market to Trade Shares in Private-Equity Funds (WSJ)
KKR & Co. plans to allow its investors to sell portions of their stakes in buyout funds through a private market run by Nasdaq OMX Group Inc., thought to be the first time pieces of these exclusive vehicles have been traded this way in the U.S., said people familiar with the matter.

Tech giants settle wage-fixing allegations for a reported $324M (Reuters)
Four major tech companies including Apple and Google have agreed to pay a total of $324 million to settle a lawsuit accusing them of conspiring to hold down salaries in Silicon Valley, sources familiar with the deal said, just weeks before a high profile trial had been scheduled to begin. Tech workers filed a class action lawsuit against Apple Inc, Google Inc, Intel Inc and Adobe Systems Inc in 2011, alleging they conspired to refrain from soliciting one another’s employees in order to avert a salary war. They planned to ask for $3 billion in damages at trial, according to court filings. That could have tripled to $9 billion under antitrust law.

Woman Jailed In Altercation Over Corn Dogs (HP)
Workers at a Midland, Texas business said Charmelle Henry threw 75 cents at them and demanded a corn dog, according to News West 9. When the 45-year-old wasn’t happy with the corn dog she received, she threw that at them as well and demanded a dog that was not microwaved. After giving her a second corn dog, the workers noticed that Henry had a knife in her hand. She allegedly told the workers that she would “stab [them] in cold blood” unless she got another corn dog. She also began stabbing the counter with her pocketknife, according to an arrest report obtained by MRT.com. One employee called police, who subdued the “extremely agitated” woman with a K-9 unit after she refused to follow their orders. Read more »

Opening Bell: 04.24.14

‘Flash Boys’ Resonates as Survey Finds High-Frequency Concerns (Bloomberg)
More than two-thirds of financial industry participants, 70 percent, say the U.S. equity markets aren’t fair for all, according to a survey conducted by ConvergEx Group LLC, which provides brokerage and trading-related services. Just over half, 51 percent, also said high-frequency trading is harmful or very harmful.

Facebook CFO Ebersman to Step Down Two Years After IPO (Digits)
Mr. Ebersman is leaving June 1 and being replaced by David Wehner, who joined Facebook in 2012 from Zynga to become the company’s vice president of corporate finance and business planning. Mr. Ebersman joined Facebook in 2009, leading the company into its initial public offering in May 2012. The former Genentech finance chief says he is returning back to the healthcare industry, without disclosing where.

Ratings Firms Ride Bond Resurgence (WSJ)
Six years after getting a failing grade for their role in the financial crisis, credit-rating firms are at the top of the class. Riding a global bond boom, the two biggest U.S. firms, Standard & Poor’s Ratings Services and Moody’s Investors Service, this month are expected to post record first-quarter profits. Fitch Ratings said in its annual filing this month that 2013 was “one of its best years ever.”

Investors Embrace ‘Catastrophe Bonds’ (WSJ)
With the U.S. hurricane season about a month away, insurers are issuing “catastrophe bonds” at the fastest clip since before the financial crisis. Insurers sell the bonds to help cover potential claims from hurricanes, tornadoes, earthquakes and other major insured risks. While losses on so-called cat bonds have been rare over the years, investors can forfeit both interest payments and their principal if disaster costs exceed designated levels, which gives insurers the right to tap the funds. The bonds have floating interest rates and are usually paid off upon maturity in three or four years. Cat-bond issuance in the first quarter more than doubled from the year-earlier period, to $1.2 billion, and second-quarter issuance is expected to hit an all-time high above $3.5 billion, according to Willis Capital Markets & Advisory. More than $2 billion of deals have closed or been announced this quarter, Willis said.

America’s First Cat Café is Popping Up in NYC This Week (Eater)
Pet food brand Purina ONE is opening a pop-up cat café at 168 Bowery this Thursday. For those unfamiliar, a cat café is a coffee shop populated with cats for customers to play with. It’s all the rage in Japan and Europe, and enterprising cat-lovers in San Francisco, Oakland, Portland, LA, Vancouver, and Toronto are racing to open cafés of their own. But with this pop-up, New York will become the very first North American city to actually get a cat café. Read more »

Opening Bell: 04.22.14

Williams Urges Fed to Avoid Stoking Risk as It Boosts Jobs (Bloomberg)
“We’re exactly on the right track” with current policy, Williams said in an interview yesterday in San Francisco, predicting unemployment will fall to 5.5 percent by the end of next year and inflation will accelerate to about 1.7 percent. Trying to achieve the Fed’s goals sooner “would take policy actions that might have more negative effects,” he said.

Dawn raid makes comeback via activist drone strike (Reuters)
Remember the dawn raid, when a would-be acquirer built up a stake before the target realized it was under attack? Activist investor Bill Ackman has come up with a kind of drone strike version. His Pershing Square Capital Management hedge fund and Valeant Pharmaceuticals have teamed up to grab a potential 9.7 percent stake in Allergan, with a hostile takeover by Valeant ready for deployment. The acquisitive Valeant has reasons to be receptive to such an arrangement. For one thing, it’s essentially the creation of an activist hedge fund, ValueAct Capital, which set it on the path of serial dealmaking. Slashing research and development costs and applying its low tax rate to acquired businesses has served investors well. Its stock is up more than tenfold since it started buying rivals in 2008. The prospect of another deal kicked its shares 10 percent higher after regular market hours on Monday, taking its market capitalization up to $46 billion.

HK regulator reprimands, fines RBS over emerging-markets rates trades (Reuters)
Hong Kong’s Securities and Futures Commission (SFC) said on Tuesday it reprimanded Royal Bank of Scotland (RBS.L) for internal control failures, fining the bank HK$6 million ($773,800). The SFC said in a statement RBS failed to detect and prevent unauthorized trades in its emerging markets rates business in the city in 2011, following the discovery of unauthorized trades by former trader Shirlina Tsang. Tsang was sentenced last year to 50 months in jail after pleading guilty to fraud after was she caught falsifying records of her trades, Reuters previously reported.

Worker sends 1,000 ducklings to boss’s home in wages dispute (Metro)
Builder Chiu Xiang arranged for the 1,130 live ducklings to be dropped in the home of his employer, Hung Bin, in a dispute over wages. The 60-year-old, who worked for Bin for three years, said he was owed £300 in unpaid wages after quitting his job in China’s Sichuan province last year, according to the Shanghaiist. ‘It was all he deserved,’ he said. ‘I hope the ducks drove him quackers.’ Xiang organised for a contact who runs a poultry business to drop the ducks off, telling him they would be paid for on delivery. Police were called to the scene after Bin refused to pay for the duck delivery. ‘It was drastic but necessary,’ said Xiang, who has been promised a negotiated settlement with the local labour authorities. Read more »

Opening Bell: 04.21.14

Barclays to Exit Most Commodities Trading in Bid to Bolster Profit (WSJ)
The U.K. bank will pull back from trading in base metals, energy and agricultural products and fold its precious metals business into its currency trading unit, people familiar with the plans said Monday. The move comes as Barclays prepares to tell investors on May 8 how it will reshape its investment bank, where the commodities business is housed, to adapt to costly new regulations and a slowdown in some business areas.

SEC Weighs Making Brokers Disclose Where Trades Are Sent (Bloomberg)
The proposal could give investors more insight into whether they are getting the best price when they buy and sell large numbers of shares, according to three people familiar with the matter. Brokers entrusted with orders in the U.S. stock market can choose from dozens of exchanges and private venues. Some money managers such as T. Rowe Price Group Inc. (TROW) have told regulators that incentives offered by exchanges for attracting orders can put a broker’s financial interest at odds with the customer’s.

TPG-Led Group Closes $450 Million Investment in Airbnb (WSJ)
A group led by private-equity firm TPG has finalized an agreement to invest more than $450 million in Airbnb Inc., valuing the home-rental site at $10 billion, according to people familiar with the situation. The funding round makes Airbnb one of the world’s most valuable startups, matching investors’ price tags for file-storage company Dropbox Inc. and Chinese smartphone maker Xiaomi Inc. Airbnb, which lets people rent their homes to travelers, is also now valued higher than large publicly traded hotel chains Wyndham Worldwide Corp. and Hyatt Hotels.

Ice Cream Turf War Breaks Out On Easter (Fox2)
A ice cream truck turf war broke out Easter morning in north St. Louis County on Parker Road, near Highway 367. Just after 1 pm, two ice cream trucks got into a dust up, when the driver of one truck cut off another truck, threatening the driver of the first truck. The driver of the second truck then proceeded to damage the first truck, music siren and merchandise. The driver of the damage truck says he’s had the same route for seven years and the second driver wanted to take over his route. But the real kicker here is that both drivers work for the same company. The victim says he plans on keeping his route, and that other driver may lose his job. Read more »

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 »