Opening Bell

Opening Bell: 06.24.14

Allergan Rejects Latest Offer from Valeant (WSJ)
Allergan again rebuffed advances from Valeant Pharmaceuticals International Inc., saying Monday that its board has unanimously determined that the unsolicited exchange offer to acquire all of the Botox maker’s shares outstanding is “grossly inadequate.” Allergan said its board strongly recommends that Allergan shareholders not tender any Allergan shares to Valeant, adding that the offer substantially undervalues the company, creates significant risks and uncertainties for Allergan shareholders, and isn’t in the best interests of the company and its shareholders. A representative for Valeant said Allergan’s rejection of the proposal is based on assumptions about the business that aren’t supported by the facts. Pershing Square didn’t immediately respond to requests for comment.

Dean Foods Subpoenaed in Icahn Insider-Trading Case (WSJ)
Federal authorities have sought information from two companies in connection with an insider-trading investigation of activist investor Carl Icahn, sports bettor William T. Walters, and golfer Phil Mickelson, according to people familiar with the matter. Dean Foods Co. in recent weeks received a subpoena from criminal authorities ordering the company to produce information, said a person familiar with the matter. Clorox Co. and Mr. Icahn received requests for information from the Securities and Exchange Commission in 2011 related to trading in the company’s shares, according to a person familiar with the matter. Neither of those developments has been previously reported. In the case of Dean Foods, authorities are probing whether Mr. Walters provided stock tips to Mr. Mickelson, said people familiar with the matter. In the case of Clorox, investigators are looking into whether Mr. Icahn tipped Mr. Walters about his actions involving Clorox, the people said.

Ex-Millennium Fund Manager Gets Four Years in Prison (Bloomberg)
Former Millennium Global Investments portfolio manager Michael Balboa was sentenced to four years in prison for defrauding investors by inflating the value of Nigerian sovereign debt by $80 million. Balboa, convicted in December in a retrial in Manhattan federal court, had faced a possible life sentence because of the size of his fraud. The U.S. said investors lost more than $390 million based on Balboa’s misstatements…Balboa, a London-based investment manager, was convicted of providing fake valuations to inflate month-end market prices on Nigerian warrants. The scheme generated millions of dollars in management and performance fees for which he earned as much as $6.5 million, prosecutors said.

American Apparel: Charney’s Bad Behavior Was Very, Very Expensive (BusinessWeek)
Dov Charney’s behavior has never been a secret. For starters, as the chief executive of American Apparel (APP), he occasionally walked around the Los Angeles headquarters in his underwear. He was open about his libertine attitudes toward sex in general and sex in the workplace in particular, at one point “putting on a show” for a journalist on assignment for Jane magazine. So when Charney was fired last week “for cause,” it was reasonable to wonder “why now?” In his termination letter, posted on BuzzFeed yesterday, the board accuses him of sexually harassing employees, paying off some of them with “significant” severance packages, and refusing to participate in sexual harassment training…It is true that Charney’s antics are not new, but apparently they have grown unacceptably expensive. The [termination] letter to Charney eventually comes around to this point: “Your conduct has required the Company to incur significant and unwarranted expenses, including expenses associated with litigation and defense costs, significant settlement payments, substantial severance packages that were granted to employees, and unwarranted business expenses that you incurred for personal reasons. The Company’s employment practices liability insurance retention has grown to $1 million from $350,000. … The resources American Apparel had to dedicate to defend the numerous lawsuits resulting from your conduct, and the loss of critical, qualified Company employees as a result of your misconduct cannot be overlooked.”

How Marissa Mayer Fell Asleep and Kept Ad Executives Waiting For Hours (CMO Today)
Last Tuesday evening, Interpublic Group arranged a private dinner at the swanky L’Oasis for Ms. Mayer to meet executives from marketers such as Mondelez International , brewer MillerCoors and Greek yogurt maker Chobani. It was supposed to be a chance for Interpublic and some of its clients to get a first hand update from Ms. Mayer on what Yahoo has to offer. But Ms. Mayer was nearly two hours late, and several dinner attendees including IPG Chief Executive Michael Roth ended up leaving before she arrived, people familiar with the matter said. Ms. Mayer told some attendees that she had fallen asleep, some of the people said.

Crash captain left helm for ‘drunken 3-way sex romp’ (NYP)
Craig Gallo…was busy messing around with a pal and a woman they’d just met when his 28-foot Wellcraft boat crashed early Sunday into runway approach lights at La Guardia Airport, sources told The Post. Gallo later admitted to cops that he’d been drinking and was involved in a boating accident, prosecutors said.“I was driving, I had a few beers,” Gallo told cops, who noticed he reeked of booze. Gallo, who was arrested in 1999 for urinating in public, refused a Breathalyzer test…The boat captain and friend James Benenato, 60, were boozing it up from 9 pm to 11:30 pm at a tiki party at the Arrow Yacht Club in College Point, when they picked up Mary Ann Belson, sources said. Gallo docks his 1981 fishing boat at Skyline Marina next door. The crash happened at 11:47 pm, cops said. Both Gallo and Belson, 60, suffered facial injuries in the crash, while Benenato, 60, was not hurt. Photos taken after the crash showed a dozen or so Budweiser beer cans overflowing a bucket and strewn about the deck and cabin, with sheets and clothing strewn about the ship’s cramped cabin. Read more »

Opening Bell: 06.23.14

BNP Paribas nears up to $9 billion settlement with U.S. authorities: source (Reuters)
French bank BNP Paribas SA is likely to pay $8 billion to $9 billion as part of a potential settlement with U.S. authorities over violations of sanctions, according to a person familiar with the matter. U.S. authorities are probing whether BNP Paribas evaded U.S. sanctions relating primarily to Sudan between 2002 and 2009, and whether it stripped out identifying information from wire transfers so they could pass through the U.S. financial system without raising red flags, sources have said.

Insider-Trade Probe Eyes Call With House Aide (WSJ)
About an hour before stock trading closed April 1, 2013, a lobbyist at the center of a federal insider-trading probe spoke on the phone with a senior House health-care aide. The disclosure of that conversation represents the latest twist in a long-running federal investigation into whether congressional aides or other federal officials leaked word of a change in health-care policy to traders or anyone seeking information on behalf of investors. The conversation between the lobbyist, Mark Hayes, and Brian Sutter, staff director of the House Ways and Means Committee’s health-care subpanel, was revealed Friday in court filings by the Securities and Exchange Commission. The SEC has taken the unusual step of seeking to enforce subpoenas for documents and testimony from Mr. Sutter and the committee led by Rep. David Camp (R., Mich.). The agency on Friday said for the first time it believes Mr. Sutter could have been a source for Mr. Hayes. According to a series of articles by The Wall Street Journal, Mr. Hayes sent an email predicting the change to a Washington-based investment-research firm shortly before the announcement on April 1, 2013, citing “very credible sources.” Health-insurance stocks jumped moments before the government announced the news, a surge prompted by an alert the research firm sent to its clients on Wall Street.

Harvard Seeks Fund Chief for the Long Haul (WSJ)
Jane Mendillo, 55, told Harvard Management Co. board members months ago that she was leaving, before a succession plan was in place, according to a person familiar with the matter. At least two directors tried to convince her to stay on longer but she agreed to remain only through the end of the year, according to people familiar with the conversations. Ms. Mendillo’s decision leaves Harvard Management, which oversees the world’s largest endowment, searching for its fourth chief executive in nine years.

Banks speed up shift to forex automation (FT)
Banks including Barclays and UBS are accelerating a shift towards automation in foreign exchange and rates trading as they move to slash costs and reduce the risk of further price manipulation scandals.
Senior bankers are aiming to minimise human intervention because traditional trading over the phone has come under an intense regulatory spotlight. Authorities around the globe are investigating alleged manipulation of benchmarks such as currency fixes and interbank lending rates.

Inflation Is Back on Wall Street Agenda (WSJ)
If inflation returns to more normal levels and stays there, that could signal a stronger economy, which could be good for stocks. But an inflation uptick also could mark the end of the decadeslong bond rally that has kept bond prices up and yields down since the early 1980s. It would mean higher interest rates, which are bad for home buyers, businesses and holders of existing, low-yielding bonds. Fed Chairwoman Janet Yellen played down the news last week, saying the data were distorted by statistical “noise.” She reiterated that the Fed intends to keep interest rates exceptionally low for a long time.

Sexy mugshot guy’s wife ‘furious’ over social media fervor (NYP)
Sexy mugshot felon Jeremy Meeks has set hearts aflutter on social media but his wife isn’t quite so happy with the attention he is receiving. CBS Sacramento reports that she is furious people can only talk about his chiseled good looks while he is languishing in prison away from his family. The father appeared in court last week after he was arraigned on 11 felony counts. A friend, Simon Johnson, said Meek’s wife was “upset and furious.” “Her man’s in there, and people are taking it as a joke. I wouldn’t be surprised if you don’t see her at all in the cameras, because she’s upset.” Meeks internet fame began after police posted his mug shot on their Stockton Police Department Facebook page. His good looks and piercing blue eyes quickly attracted thousands of likes, appreciative comments, lustful memes and sent #JeremyMeeks trending on Twitter. Meeks has a long rap sheet and is an alleged gang member, although his family say he has turned his back on gang life and discovered religion…There are already plans afoot by his internet fans to free Meeks. His Facebook page has more than 120,000 fans. Read more »

Opening Bell: 06.20.14

Star-Struck Bankers Return to Hollywood to Finance Movies (Bloomberg)
When Jay Cohen sought funding for a new independent film company, Wing and a Prayer Pictures, he had bankers falling over themselves to finance it. “We had seven banks call and offer us lines of credit,” says Cohen, head of film financing and distribution at Gersh Agency in Beverly Hills, California, and an executive producer of the 1994 comedy “Swimming With Sharks.” “They had never met anyone involved in the company,” he says. From big banks like JPMorgan Chase & Co. (JPM) to billionaires like John Paulson, investors are putting their money into movies again after pulling back during the financial crisis, Bloomberg Businessweek reports in its June 23 edition. Filmmakers are able to borrow at the lowest rates since 2008, bankers say. “There is a lot more activity than I have seen in a long time,” says David Shaheen, head of JPMorgan’s entertainment industries group in Los Angeles. “There is increased comfort in the future of the business relative to a few years ago.”

Mexico’s Drug Cartels Scare Oil and Gas Investors (BusinessWeek)
Lawmakers in Mexico City are preparing rules that will allow foreign companies to drill in the country for the first time since 1938. But the violence may keep wildcatters away from the area, which is rich in oil and gas deposits. “Shale will not take off in Mexico like it did in Texas in the near future,” says Dwight Dyer, a Mexico City-based senior analyst for consulting firm Control Risks. “Unless the security situation along the northeastern border improves significantly, smaller companies will probably take their time before jumping in.”

Argentina’s comments put U.S. lawyers in awkward spot (Reuters)
At a hearing Wednesday afternoon in Manhattan, Argentina’s lawyer, Carmine Boccuzzi of Cleary Gottlieb Steen & Hamilton, informed U.S. District Judge Thomas Griesa that Argentine officials “will be in New York next week” in order to begin negotiations with the hedge funds whose bond litigation has forced the country to the brink of a sovereign debt crisis. The very next morning, at a press briefing, Argentine Cabinet Chief Jorge Capitanich appeared to contradict Cleary’s representations to Griesa: “There is no delegation prepared for a possible trip to the United States,” he said, according to a Reuters report from Buenos Aires.

Toppled American Apparel CEO plots to retake helm (NYP)
The board of the struggling clothing chain has hired boutique investment bank Peter J. Solomon as a financial adviser as it braces for blowback from its surprise move to oust Charney as CEO, The Post has learned. Charney is looking to corral shareholder support to seize back the reins, according to sources. While he can’t oust current directors, he’s angling to gain a voting majority by packing the seven-member board with additional seats. “Dov isn’t going down without a fight, and there’s an argument to be made that the board has overreached,” said a source close to the situation. The board blitzed Charney at a Wednesday board meeting, citing personal-conduct issues. The board offered Charney, who has weathered sex-harassment allegations from female employees for years, a four-year consulting contract that he turned down, according to insiders.

Regulatory Scrutiny Transforms Washington’s Political-Intelligence Business (WSJ)
Alex Vogel spent the last decade building a Washington lobbying business with a successful practice feeding investors information about potentially market-moving changes in policy. But with federal investigators scrutinizing Washington’s interactions with hedge funds and other traders, Mr. Vogel is quitting his firm. His new venture, VogelHood Research, will make all its predictions based on computer algorithms using publicly available information—without ever talking to members of Congress or other policy makers. Mr. Vogel’s shift shows how Washington’s political-intelligence business is going through a wrenching transformation in the face of heightened legal and regulatory scrutiny, including insider-trading probes. In recent months, a number of lobbyists have left the political-intelligence business, and several lobbying and law firms have created new internal procedures and protocols to guard against violating insider-trading rules. Some hedge funds and other Wall Street firms have, meanwhile, scaled back their own information-gathering activities in the capital, and others are conducting reviews of their Washington operations, according to people familiar with the political-intelligence industry. The Wall Street Journal profiled the political-intelligence practice at New York broker-dealer JNK Securities in 2011. It later exited the business. A company official declined to comment for this article.

Kanye West wants to ‘redo’ Instagram (Guardian)
Kanye West has offered to redesign Instagram, suggesting that it would be “a simple task” for him to beautify the popular photo app. Speaking at a seminar at the Cannes Lions International Festival of Creativity, West cited the success of his instagrammed wedding kiss with Kim Kardashian, which is already the most-liked photo in the history of the app. “The world as a whole is fucking ugly,” West said on Tuesday, during an appearance at the festival. “The internet as a whole is fucking ugly, too.” West said he asked Instagram co-founder Kevin Systrom: “Why don’t you let us redo Instagram? Now, you know, Instagram is nice. It’s nice looking – I’m not knocking it. But in general, everyone spends all of their time looking at their screens or their phones. And just as a simple task, we could clean that up.” [...] Although he doesn’t have a public account, he follows Kardashian’s posts and took an active role in refining the couple’s famous photo clinch. “Can you imagine telling someone [like Kim], who wants to just instagram a photo, who’s then number-one person on Instagram, ‘We need to work on the colour of the flower wall?'” he said. “[But] the fact that the number-one most-liked [photo] has a kind of aesthetic was a win for what the mission is, which is raising the palette.” West said he worked on the photo for four days. Read more »

Opening Bell: 06.17.14

Study Asserts Startling Numbers of Insider Trading Rogues (Dealbook)
A quarter of all public company deals may involve some kind of insider trading, according to the study by two professors at the Stern School of Business at New York University and one professor from McGill University. The study, perhaps the most detailed and exhaustive of its kind, examined hundreds of transactions from 1996 through the end of 2012. The professors examined stock option movements — when an investor buys an option to acquire a stock in the future at a set price — as a way of determining whether unusual activity took place in the 30 days before a deal’s announcement. The results are persuasive and disturbing, suggesting that law enforcement is woefully behind — or perhaps is so overwhelmed that it simply looks for the most egregious examples of insider trading, or for prominent targets who can attract headlines. The professors are so confident in their findings of pervasive insider trading that they determined statistically that the odds of the trading “arising out of chance” were “about three in a trillion.” [...] But, the professors conclude, the Securities and Exchange Commission litigated only “about 4.7 percent of the 1,859 M.&A. deals included in our sample.”

Deutsche Bank Entertained 45 Japan Pension Funds, Document Shows (Bloomberg)
Deutsche Securities Inc. spent 22.1 million yen ($217,000) wining and dining fund officials from 2010 to 2012, according to the document prepared by the investigative arm of Japan’s financial regulator and Germany’s biggest bank. Deutsche Securities Chief Operating Officer Bret Dandoy approved expenses for two overseas trips, and Chairman Norimichi Kanari joined in the entertaining on one occasion, the report showed…Japanese criminal law prohibits companies from providing benefits to public servants with the intention of obtaining business from them. Company officials who oversee public retirement funds as part of their assets under management are defined as civil servants.

Morgan Stanley’s Valeant E-Mails Call Client a ‘House of Cards’ (Bloomberg)
A few weeks ago, Morgan Stanley pitched its defense services to Allergan Inc., which was fighting a hostile takeover bid from Valeant Pharmaceuticals International Inc. Valeant was a “house of cards” with an unsustainable business model, Morgan Stanley bankers wrote in the e-mails to Allergan, which released them yesterday. Allergan decided not to hire Morgan Stanley — while Valeant recently did. The unusual disclosure of the e-mails was intended to bolster Allergan’s argument that Valeant is a flawed buyer — and shows how antagonistic the battle between the two pharmaceutical companies has become. Mary Claire Delaney, a spokeswoman for Morgan Stanley, declined to comment on the release of the e-mails. Valeant Chief Executive Officer Michael Pearson said in an e-mail that Allergan’s release “is a sign of desperation, and we look forward to proving the naysayers wrong.”

Fernandez says Argentina will not default on restructured debt (Reuters)
President Cristina Fernandez said on Monday that Argentina would honor its payments to holders of its restructured debt and to avoid a default despite suffering a setback in its long-running legal battle against “holdout” investors. The U.S. Supreme Court earlier on Monday declined to hear Argentina’s appeal over its battle with hedge funds that refused to take part in its debt restructurings. The court’s decision was unexpected and risks toppling Latin America’s No 3 economy into a new default.

IMF Cuts U.S. Growth Outlook, Sees More Scope for Zero Rates (Bloomberg)
The Washington-based IMF now sees the world’s largest economy growing 2 percent this year, down from an April estimate of 2.8 percent. The IMF left a 2015 prediction unchanged at 3 percent, and said it doesn’t expect the U.S. to see full employment until the end of 2017, amid low inflation.

New Hampshire woman busted for prostitution at Massachusetts library (NYDN)
A New Hampshire woman has been busted selling sex at a suburban Massachusetts library, police said. Brittany Macintyre, 20, was allegedly caught offering her services at the quiet public lending house in Tewksbury on Tuesday. Cops said they went undercover after a receiving a tip-off about her sleazy deeds. An officer said that, within moments of entering the building, he was approached by the suspected hooker. To respect the peaceful ambiance, the duo started passing written notes between each other, reports CBS Boston. Macintyre is said to have eventually offered to perform a sex act on the officer in exchange for $60. She was arrested on charges of prostitution, reports Nashua Patch, and was arraigned Wednesday in Lowell District Court. Read more »

Opening Bell: 06.16.14

‘Bitcoin Jesus’ Calls Rich to Tax-Free Tropical Paradise (Bloomberg)
He’s known as Bitcoin Jesus in the world of cyber-currencies. Though he can’t promise you heaven, he is offering a haven: a condo in the Caribbean that comes with a new passport and almost zero taxes. Meet Roger Ver, ex-U.S. citizen, ex-convict, millionaire investor, self-described libertarian and founder of Passports for Bitcoin.com. The ever-expanding universe of what you can buy with bitcoins includes a hotel stay in Rome, a kimono in Tokyo, and cable TV in the U.S. Ver, a pioneer investor in bitcoin startups, now says he can add citizenship to the list. Specifically, that’s the right to live in the Federation of St. Kitts and Nevis, two sun-kissed islands a three-hour flight from Miami. St. Kitts has run an invest-and-become-a-citizen program since 1984, making it the oldest of its kind, says the country’s website. Plunk down $400,000 for real estate and you get a passport that allows visa-free travel to 120 countries. There are no taxes on personal income or capital gains and the islands’ restrictive disclosure laws offer shelter from outside scrutiny, according to the Tax Justice Network, a think tank that studies secrecy jurisdictions. Ver’s website, in English, Russian and Chinese, offers a way to purchase a piece of that paradise with bitcoins. He says it will help people who are hemmed in by government restrictions on cash transactions.

Wells Fargo Nears Market-Value Milestone (NYP)
A rally in its stock has put Wells Fargo on the cusp of becoming the most valuable U.S. bank of all time, eclipsing the record held by Mr. Kovacevich’s long-ago employer, the bank now known as Citigroup Inc. Wells Fargo shares closed at $51.90 on Friday, up more than 14% for the year. Larger rivals J.P. Morgan Chase JPM 0.00% & Co., Bank of America Corp. BAC +0.13% and Citigroup are down in 2014. Wells Fargo’s stock-market value of $272.36 billion is the most of any U.S. bank now and about $10 billion shy of the record among banks of $282.75 billion set by Citigroup in 2001. The lesson in Wells Fargo’s rally: It is better to be a large Main Street bank than a big Wall Street firm. Tough rules on risk-taking and a slowdown in trading are weighing on investment banks’ profits. Wells Fargo, never a big trading firm, has focused on generating revenue from its bread-and-butter businesses of commercial and consumer lending and mortgages as rivals pulled away after the financial crisis.

Allergan Defending Its Fort Botox (NYT)
…on the same day that Allergan’s board unanimously rejected Valeant’s latest bid, [Allergan's chief executive David E. I.] Pyott was in Manhattan putting his case directly to Allergan’s investor base. More than once, he reminded people that he is Glaswegian, of a tribe infamous for its toughness — a message that he was prepared for a protracted battle. “The other side is in a hurry because they have to keep buying,” Mr. Pyott told me during his visit last week. “But we are in control of our own destiny.”

Prosecutors Face New Hurdles in Insider-Trading Trial (WSJ)
Prosecutors will face a new test in their insider-trading push when the trial of Raj Rajaratnam’s brother starts Tuesday. The trial marks the first insider case for Manhattan federal prosecutors following signals from a federal appeals court that they may have taken too broad a view of insider trading. Rengan Rajaratnam, who worked at his older brother’s hedge fund Galleon Group, is accused of trading on confidential information related to wireless broadband company Clearwire Corp. and chip maker Advanced Micro Devices Inc. in 2008 after being tipped by his brother. The alleged scheme reaped about $800,000 in profits. In recent months, the judge presiding over the case called some of the charges “inconsistent,” and prosecutors have whittled down the case against Mr. Rajaratnam from seven insider-trading-related counts filed in an indictment last year to two counts of securities fraud and one count of conspiracy—without explaining why.

Interest Wanes At Harvard (NYP)
…returns on the august institution’s $32 billion tax-sheltered endowment fund came in dead last among the Ivy Leaguers for the latest five-year period.

Giant wedding tent for elites infuriates wealthy town (NYP)
A wealthy New York couple who built a giant wedding tent at the foot of Aspen Mountain has outraged the area’s locals, who are blasting the structure as a garish monstrosity. Alexandra Steel, 31 — daughter of former New York City Deputy Mayor Robert Steel — and her groom, James Scott, 37, custom-built a 27,000-square-foot tent, chapel and dance floor in a meadow for their wedding on Saturday. But the setup — which took 50 large trucks hauling heavy scaffolding to build — is bad for the environment and causes traffic jams, locals say. “What’s happening right now is over the top concerning anything that’s ever happened on the Little Annie Basin,” Glenn Horn, of the Little Annie Homeowners Association told The Aspen Times…The tent was built on private land belonging to wedding planner John Miller, allowing the couple to skirt the area’s zoning rules, residents claimed…County planning staffers initially rejected the request, citing the “scale and intensity of the operation.” But a month later, Miller successfully petitioned the county, saying the wedding was no longer “commercial.” He said he wouldn’t be charging the couple — after learning the bride’s father was Robert Steel, a chair of The Aspen Institute and former deputy mayor for economic development in New York City. Now the pristine natural area could take years to recover, locals charged. Read more »

Opening Bell: 06.12.14

Mickelson Role Said to Be Overstated in Insider Inquiry (Dealbook)
Phil Mickelson, the famed golfer, did not trade in the shares of Clorox just as the billionaire investor Carl C. Icahn was mounting an unsolicited takeover bid for the company in 2011, say four people briefed on the matter. Recent reports in The New York Times and other news organizations said that Clorox was among the stocks that federal authorities were examining as part of a two-year investigation into well-timed trades made by Mr. Mickelson and the sports gambler William T. Walters. Initially, authorities pursued a theory that Mr. Icahn shared private details of his Clorox bid with Mr. Walters, who then traded on the information and passed on the tip to Mr. Mickelson. Although Mr. Icahn and Mr. Walters remain under investigation over Clorox, the F.B.I. and the Securities and Exchange Commission have found no evidence that Mr. Mickelson traded Clorox shares. The overstated scope of the investigation came from information provided to The Times by other people briefed on the matter who have since acknowledged making a mistake.

Activist Funds Dust Off ‘Greenmail’ Playbook (WSJ)
More companies are resorting to an old tactic to get rid of activist investors: Pay them to go away. The practice, which involves buying back shares from activist hedge funds, has raised concerns among some investors because it bears similarities to “greenmail,” a controversial strategy popular in the 1980s. Back then, aggressive investors such as Carl Icahn and the late Saul Steinberg bought company shares and threatened a hostile takeover. Eager to avoid a battle, companies including Walt Disney Co. and Goodyear Tire & Rubber Co. bought back their stakes above market price, giving the activists a quick profit. The practice, widely criticized as corporate blackmail, largely died out by the early 1990s as companies beefed up defenses and lawmakers took steps to discourage it. But in the past 12 months, at least 10 companies have repurchased blocks of shares from activist investors, including Daniel Loeb and William Ackman, according to FactSet SharkWatch. That is more than in the previous six years combined. The practice differs from greenmail in two crucial aspects. The share buybacks aren’t at a premium to the market but typically at or slightly below the last trading price. They also don’t follow threats of hostile takeovers.

Europe Bankers Cringe at Rising U.S. Fines Amid BNP Probe (Bloomberg)
HSBC Holdings Plc (HSBA) Chairman Douglas Flint had some advice for bank executives meeting in London last week: Read up on how the U.S. uses financial warfare against its enemies in a foreign-policy shift that’s entangling lenders…At a June 4 meeting of the Institute of International Finance’s board, Flint, 58, advised participants including Barclays Plc Chief Executive Officer Antony Jenkins to read former U.S. deputy national security adviser Juan Zarate’s “Treasury’s War: The Unleashing of a New Era of Financial Warfare,” according to two people who were present. In his book, Zarate recounts how U.S. foreign policy is increasingly targeting financial activity by criminals, enemy states and individuals in sanctioned regimes. Caught in the middle are international lenders, whose desire to avoid business and reputational risk assures their cooperation.

Treasury Secretary Lew Warns of Lower Potential Economic Growth (WSJ)
In a speech to the Economic Club of New York, Mr. Lew said the U.S. growth rate is now projected to run a little above 2% a year, down from a 3.4% average from the end of World War II until 2007. If America can’t maintain stronger growth, the country could face deepening challenges from sluggish labor market and widening inequality, he said. “The choices we make over the years to come can alter this projection,” he said.

SEC Says Investor Accused of Fake Gold Bid Fled to China (Bloomberg)
The U.S. Securities and Exchange Commission said the man behind a fake $750 million bid for Allied Nevada Gold Corp. (ANV) profited from selling an undisclosed stake in the mining company and has fled the country. Luis Chang and Everbright Development Overseas Ltd., a company he controls, “furtively” bought Allied Nevada stock while disseminating false information about the company, the SEC said in a complaint filed June 9 in federal court in New York. Everbright then sold the shares into a “falsely inflated market” for a profit of more than $7 million, the SEC said.

Florida John Offered Salad In Return For Sex (TSG)
Liverman was arrested Monday morning during a reverse sting that netted nine other men for soliciting a prostitute. The hookers in question were actually undercover Daytona Beach Police Department officers. While negotiating a liaison with a female officer, Liverman–who was “operating a bicycle”–revealed that he did not have any money. “I’m hungry, you got food?” the undercover asked. Liverman replied, “I got a salad,” according to a booking affidavit. “I’ll give you a bl0w j0b for a salad,” the cop declared. Liverman replied, “You ready to go?” The document does not detail the location of Liverman’s salad (or its street value). Liverman was busted because he and the cop “agreed upon the sexual act in exchange for food,” investigators reported. Read more »

Opening Bell: 06.11.14

Bank of America Mortgage Settlement Is Said to Be Deadlocked (Dealbook)
Bank of America and the Justice Department have reached an impasse in negotiations over a multibillion-dollar settlement deal, raising the stakes in an investigation into the bank’s role at the center of the mortgage crisis. The talks stalled on Monday after the bank’s latest offer — more than $12 billion to resolve state and federal investigations into its sale of mortgage investments that later imploded — fell far short of prosecutors’ demands, according to people briefed on the matter. The Justice Department, which had imposed a Monday evening deadline for the bank to deliver its near-final offer, has sought a settlement worth roughly $17 billion, which would be the largest payout by any bank to date.

Detroit Denies Last-Minute Reprieve for Goats (Dealbook, earlier)
The hedge fund manager Mark Spitznagel has been denied a last-minute reprieve for his guerrilla urban farming project. And now, the 18 baby goats that he brought to the Brightmoor section of Detroit, to help clean up the overgrown area blighted by the city’s financial crisis, will now be sold to the butchers…The city’s decision signals the end of a campaign by Mr. Spitznagel, which began last Thursday, to bring as many as 60 goats from his farmstead in Northport, Mich., to Brightmoor to promote urban farming.The Idyll Farm Detroit plan, named after Mr. Spitznagel’s farm, was to enlist the help of local residents, paying previously unemployed adults to help herd the goats. Mr. Spitznagel and his team had not sought preapproval for the project from Mayor Mike Duggan’s office. Instead, they hoped to persuade the local government by moving ahead with their plan. The goats, however, were not well received by some local officials, and by Saturday, the goats were back on a truck heading out of Detroit.

Gross Raises Government-Related Debt to 50% of His Flagship Fund (Bloomberg)
Pacific Investment Management Co.’s Bill Gross raised his holdings of Treasuries and government-related debt in May to half his flagship fund’s total as the securities gained the most in four months. The proportion of the securities in the $229 billion Total Return Fund (PTTRX) was 50 percent last month, up from 41 percent in April, data on the company’s website showed. It was the highest since 54 percent in July 2010 for the world’s biggest bond fund. Gross, 70, is seeking to stanch 13 straight months of redemptions, saying the fund that’s trailed 62 percent of peers during the past 12 months, according to data compiled by Bloomberg, will again rank at the top by the end of the year. Pimco is betting on a “new neutral” era characterized by global growth converging toward lower, more stable speeds and interest rates that remain below their pre-crisis equilibrium.

World Bank Cuts Global Growth Forecast After ‘Bumpy’ 2014 Start (Bloomberg)
The Washington-based lender predicts the world economy will expand 2.8 percent this year, compared with a January projection of 3.2 percent. The U.S. forecast was reduced to 2.1 percent from 2.8 percent while outlooks for Brazil, Russia, India and China were also lowered. The setbacks may be temporary: the 2015 estimate for world economic growth was unchanged at 3.4 percent.

Venture capitalist guru eyes bitcoin boon (CNBC)
Saul Klein played a key role in starting up Lovefilm International, which has been dubbed the “Netflix of Europe”, becoming the company’s original CEO before it was acquired by Amazon in 2011 for a reported $317 million. He’s also held a position at Skype, acquired by eBay, and was co-founder at startups Kano and Seedcamp. But now, Klein told CNBC, he is being increasingly drawn to the world of virtual currencies and the potential they have for disrupting the mainstream with the advent of the smartphone. “It’s very, very transformational,” he said of bitcoin – the virtual currency which has already received attention from central banks, policymakers and regulators from around the globe. “Bitcoin has its own ecosystem…(and) is light years ahead of the other (payment) networks.”

Cops locate, ticket driver in Lamborghini crash-and-burn near GWB (NJ)
Police, unraveling the mysterious crash-and-burn of an expensive Lamborghini sports car near the George Washington Bridge early Monday, have located and charged its owner and driver in the incident. Deankarte E. Ditchfield-Agboh, a 33-year-old Palisades Park resident, has been issued summonses for abandoning a vehicle and leaving the scene of an accident, said Joe Pentangelo, an agency spokesman. Ditchfield-Agboh was interviewed by Port Authority police and is due in Fort Lee Municipal Court on Aug. 6, Pentangelo said. The Port Authority had been investigating the crash since finding the pricey, rare vehicle burning about 2 a.m. near Bridge Plaza North on the Turnpike westbound, meaning the car would have been leaving New York City, Pentangelo said. It was “burned extensively,” he said. Pentangelo initially said the car “showed evidence of a collision, but it’s unclear where the collision took place.” Efforts to reach Ditchfield-Agboh for comment at his home were to no avail. And an employee at his business, East Coast Auto Group in Lodi, said Tuesday afternoon that he was gone for the day. Read more »