Opening Bell

Opening Bell: 03.12.14

Ackman Says Investigation Finds Herbalife Violates Chinese Laws (Bloomberg)
Billionaire Bill Ackman, renewing his attack on the nutrition and weight-loss company Herbalife Ltd., said its investigation into the business’s Chinese operations found that they violate direct-selling laws. Ackman’s firm, Pershing Square Capital Management LP, hired OTG Research to evaluate Herbalife within China, he said yesterday during a more than two-hour webcast. Pershing said Herbalife pays people illegally based on the number of recruits they amass. The company’s “hourly consulting pay” is key to showing that it violated laws, Pershing said, citing the OTG probe. “They defraud millions of people,” Ackman said during the presentation. “Their portrayal of their China business in their SEC filings is materially false and misleading.”

Plan for Mortgage Giants Takes Shape (WSJ)
The plan, by Senate Banking Committee leaders Tim Johnson (D., S.D) and Mike Crapo (R., Idaho), calls for replacing Fannie and Freddie with a new system of federally insured mortgage securities in which private insurers would be required to take initial losses before any government guarantee would be triggered. The agreement, which faces a long road to approval, represents the most concrete step so far to resolve the last major piece of unfinished business from the 2008 financial collapse.

Puerto Rico Buys Some Time With Bond Sale (WSJ)
Completing Puerto Rico’s largest-ever bond sale affords the government some breathing room after the prices of its outstanding bonds tumbled last year, sending yields sharply higher amid investor fears that the island faced a cash squeeze. Puerto Rico officials have said they intend to honor all the island’s obligations. The commonwealth has been fighting to break a string of budget deficits by cutting spending, boosting taxes and making changes to pension programs. “We’re looking to get a year to a year-and-a-half of liquidity” from Tuesday’s bond sale, said David Chafey, chairman of the Government Development Bank for Puerto Rico, or GDB, the island’s financing arm.

Singapore Broker Exodus Seen Quickening (Bloomberg)
The number of stockbrokers in Singapore fell 8.4 percent percent to 3,973 at the end of last year from 4,336 in 2011, according to data from the bourse, as the industry was buffeted by declining trading volumes and commissions as well as competition from online trading platforms. The city’s benchmark Straits Times Index trailed all its major developed-market peers in the past 12 months and slid 1.8 percent this year.

Pope’s Popularity a Blessing for Media (WSJ)
As Pope Francis approaches the first anniversary of his election this week , his popularity is generating a boom for a media niche that rarely gathers much notice. “We are just working night and day to satisfy demand,” said Monsignor Dario Vigano, head of the Vatican’s broadcaster, Vatican Television Center, or CTV, which shadows the pope and supplies papal newscasts and images for both Catholic and lay broadcasters. Revenue at CTV leaped 40% in 2013, as broadcasters as far afield as Tanzania now want the recordings of the pope’s weekly audiences. The windfall has allowed CVT to splash out on more modern cameras and a new €1.8 million ($2.45 million) control room. Last week—on Ash Wednesday, the start of Lent — Mondadori SpA, the publishing house controlled by the family of media magnate-turned-politician Silvio Berlusconi, launched a new weekly dedicated to the pope. The magazine, Il Mio Papa, which will initially cost 50 euro cents a copy, will include a pullout centerfold with Francis quotes and will print three million copies for its first month of publication.

Justin Bieber believes deposition video was a ‘set up’ (NYP)
Justin Bieber believes he was set up in his videotaped deposition by lawyers who baited him with insulting questions and planned all along to leak the tape to humiliate him. The pop superstar was shown acting insolent and angry during the taped deposition in the California lawsuit over his bodyguard allegedly beating up photographer Jeffrey Binion. Just two days after the deposition, the tape was leaked to TMZ, and Bieber’s outraged team is demanding to know if a payment was made in exchange for the tape. A source exclusively tells Page Six: “The video was leaked so quickly that Justin’s legal team believes it was all a setup. The questions Justin was being asked, including questions about Usher, had nothing to do with the case…Bieber was seen behaving like a brat as he was being grilled in the bodyguard-beatdown case. He appeared to be disrespectful of Usher, the man who made him a superstar. When quizzed if he even knew Usher, Bieber was nonchalant: “Yeah, Usher. That [name] sounds familiar.” Then, asked directly if Usher discovered him and was “instrumental” to his career, Bieber took all the credit, with one slip-up: “I was found on YouTube. I think I was detrimental to my own career.” At another point, Bieber almost lost it when asked about off-again, on-again flame Selena Gomez. With a stone-cold, angry glare, he said, “Don’t ask me about her again.” Read more »

Opening Bell: 03.11.14

Hedge funds look to put strategies into ETFs to lure more investors (Reuters)
More client-hungry hedge fund managers are looking to put their investment strategies to work in exchange-traded funds, a move that could exponentially expand their pool of investors but requires them to slash investment management fees. That is a tradeoff many managers of smaller hedge funds are willing to make, hoping Mom and Pop investors can fuel their growth. Smaller funds are often less able to attract assets from large pension funds and institutions that prefer the biggest hedge funds with billions in assets and long track records. “It’s a matter of access,” said Mebane Faber, chief investment officer at California-based Cambria Investments, whose global tactical hedge fund was shuttered and reinvented as the Global Tactical ETF in October 2010.

NYSE, Nasdaq Join to Push for Trading Rule (WSJ)
The two firms are pushing for a controversial rule to be added to a pilot program under consideration by the Securities and Exchange Commission to widen tick sizes, or the increments between price quotes, for certain companies. The proposed rule, known as “trade at,” would mandate that trades for those stocks take place on the exchanges unless other venues offer significant price improvements. Many big players in the brokerage industry and exchange operator BATS Global Markets Inc. oppose the provision.

White House has optimistic growth forecast for 2014, 2015 (Reuters)
Under a White House projection, the U.S. economy is expected to expand by 3.1 percent this year, faster than last year’s 1.7 percent. Growth would pick up to 3.4 percent in 2015, the White House said. The administration also forecast that unemployment would ease to an average of 6.9 percent in 2014. The jobless rate, which reached a high of 10 percent in 2009, fell to a five-year low of 6.6 percent in January.

Chiquita and Fyffes to Merge, Creating New Global Top Banana (WSJ)
Chiquita Brands International Inc. agreed to merge with Irish tropical-fruit company Fyffes PLC to create the world’s largest banana company, catapulting it past Dole Food Co. In a $1.07 billion all-stock deal, the new company—to be called ChiquitaFyffes—would have 32,000 employees and $4.6 billion in annual revenue from sales of more than 160 million boxes of bananas. The deal reunites two companies that previously were together: Chiquita’s predecessor company, United Brands, owned Fyffes until 1986.

Blackstone Said to Plan $5.5 Billion Gates Global Bid With TPG (Bloomberg)
Bids for Gates Global, which is being sold by Onex Corp. and Canada Pension Plan Investment Board, are due later this week, said the person, asking not to be identified discussing confidential information. Gates Global’s owners have been working with banks on a sale or IPO and could fetch $6 billion, people familiar with the matter told Bloomberg in December. The company filed for a U.S. IPO later that month.

Colorado makes nearly $2 million in pot taxes (AP)
Colorado made roughly $2 million in marijuana taxes in January, state revenue officials reported Monday in the world’s first accounting of the recreational pot business. The tax total reported by the state Department of Revenue indicates $14.02 million worth of recreational pot was sold. The state collected roughly $2.01 million in taxes. Colorado legalized pot in 2012, but the commercial sale of marijuana didn’t begin until January. Washington state sales begin in coming months.

Real-life Popeye’s huge arms from oil injections (NYP)
Arlindo de Souza, a 43-year-old weightlifter, believes he’s grown the largest arms in his native Brazil. The bodybuilder’s biceps measure a staggering 29 inches around and are the product of a self-administered cocktail of mineral oil and alcohol. But while his biceps may look the part, they don’t act it. The bricklayer hasn’t gained any strength and is only able to lift normal weights. De Souza injected himself with the mixture for two months two years ago in his attempt to become the top dog at his gym in Olinda, a city on the country’s northeastern coast. Read more »

Opening Bell: 03.07.14

Exclusive: Pimco’s Gross declares El-Erian is ‘trying to undermine me’ (Reuters)
Gross told Reuters that he had “evidence” that El-Erian “wrote” a February 24 article in the Journal, which described the worsening relationship between the two men as Pimco’s performance deteriorated last year, including a showdown in which they squared off against each other in front of more than a dozen colleagues at the firm’s Newport Beach, California headquarters. Gross, who oversaw more than $1.91 trillion in assets as of the end of last year and who is known on Wall Street as the ‘Bond King’, said in a phone call to Reuters last Friday: “I’m so sick of Mohamed trying to undermine me.” When asked if Reuters could see the evidence about El-Erian and the allegation he was involved in the article, Gross said: “You’re on his side. Great, he’s got you, too, wrapped around his charming right finger.” He said he knew that El-Erian, who had been widely seen as the heir apparent to Gross but is now due to leave in mid-March, had been in contact with Reuters as well as the Wall Street Journal. Gross indicated he had been monitoring El-Erian’s phone calls…A Pimco spokesman said in an emailed statement: “Mr. Gross did not make the statements Reuters attributes to him. He categorically denies saying this firm ever listened in on Mr. El-Erian’s phone calls or that Mr. El-Erian ‘wrote’ any previous media article.”

Putin Sparking Worst Stock Rout Since Moscow Crackdown (Bloomberg)
The last time Russian stocks fell as much as they have this week was when President Vladimir Putin cracked down on protesters following his election in May 2012. Putin’s incursion into Ukraine’s Crimea region, like the imprisonment of demonstrators following his return to the presidency two years ago, is sparking investor concern that Russia’s economic growth will falter as the U.S. and Europe threaten the country with sanctions. The Bloomberg Russia-US Equity Index of the most-traded Russian companies in the U.S. has fallen 5.1 percent this week, the most since the measure dropped 11 percent in the five days to May 18, 2012.

Man called Bitcoin’s father denies ties, leads LA car chase (Reuters)
In the afternoon, the silver-haired, bespectacled Nakamoto stepped outside, dressed in a gray sport coat and green striped shirt, with a pen tucked in his shirt pocket. He was mobbed by reporters and told them he was looking for someone who understood Japanese to buy him a free lunch. Newsweek estimates his wealth at $400 million. “I’m not involved in Bitcoin. Wait a minute, I want my free lunch first. I’m going with this guy,” Nakamoto said, pointing at a reporter from AP. “I’m not in Bitcoin, I don’t know anything about it,” he said again while walking down the street with several cameras at his heels. He and the AP reporter made their way to a nearby sushi restaurant with media in tow, before leaving and heading downtown. Los Angeles Times reporter Joe Bel Bruno followed the pair and described the chase in a running stream of tweets. Eventually, the pair dashed into the Associated Press offices in downtown Los Angeles.

Washington state issues first legal-marijuana business license (AP)
Sean Green, who has operated medical marijuana dispensaries in Spokane and the Seattle suburb of Shoreline, proclaimed the document “beautiful” as it was handed to him at a state Liquor Control Board meeting in Olympia. The license will allow him to grow 21,000 square feet of cannabis at his Spokane facility — the first pot that will be grown for sale under the highly taxed system approved by voters in 2012. The possession of marijuana became legal for adults over 21 soon after the vote, but it’s still illegal to grow or sell it for recreational use until pot shops open in the state later this year. Green plans to start by raising marijuana starter plants to sell to other growers, and later expand to growing buds for retail pot shops. “Cannabis prohibition is over,” Green declared to applause from a room packed with his supporters. “I’m coming home with jobs, Spokane.”

Martha Stewart Gives Sex Advice, Says She Had a Prison Name in Reddit Ask Me Anything (USW)
Stewart’s fans didn’t waste any time, asking her about bedroom secrets to abide by. “Always take a bath before and after,” Stewart said. When one suggested to just do the dirty during a bath, she quipped: “That’s good too, and don’t forget to brush your teeth.” She added: “What’s a d*ldo?” when asked how to clean the bed sheets afterward. Stewart’s AMA had its TMI moments, but she also chatted about her famous pals. “I wish I were closer friends with Snoop Dogg,” she admitted…Stewart braved the slew of questions, but also seemed to reach her limit when asked of her 2004 stint in jail. “I think I did, but I can’t remember,” she said on whether or not she had a prison name. “I don’t think about the past.” Read more »

Opening Bell: 03.05.14

Ballmer Says Microsoft a ‘Two-Trick Pony,’ Working on Third (Bloomberg)
“You’re pretty genius in our business if you’re a one-trick pony,” Ballmer said. “In our company, I’m very proud of the fact that we’ve done at least two tricks. Tricks are worth billions and billions of dollars.”

Pimco Gets Brush Off Close To Home (WSJ)
When the county pension fund serving cities and towns including Pacific Investment Management Co.’s headquarters of Newport Beach, Calif., met in November to decide how to put $100 million in new funds to work in the bond market, members of the investment committee made a surprising decision: They chose Swiss fund-management firm GAM Holding AG. The choice by the $11 billion Orange County Employees Retirement System shows how smaller fund managers are benefiting from Pimco’s loosening grip on the bond business, said GAM portfolio manager Jack Flaherty. The pension system regularly invests with other asset managers, but Pimco was its largest bond manager in November, public documents show…Until recently, GAM never considered going after customers in Pimco’s backyard, Mr. Flaherty said. But now, the Swiss asset-management firm is using turmoil at Pimco to get in the door with major potential customers.

Lehman Europe creditors in line for extra $8 billion payday (Reuters)
Hedge funds, asset managers and other creditors of Lehman Brothers’ European arm will next month be fully paid out from money recovered from the carcass of the bank and could get an extra 5 billion pounds ($8.4 billion). PwC, the administrator of Lehman Brothers International Europe (LBIE), is paying a fourth dividend of 7.8 pence in the pound to unsecured creditors on April 30, which will lift payouts to 100 percent after three bigger dividends in the past 15 months. PwC estimated another 5 billion pounds of surplus cash could be paid to creditors, but any extra cash cannot be paid until there is agreement on how it is shared.

Moelis IPO Filing Shows Rise of Small Advisers (WSJ)
The planned filing—and indeed Mr. Moelis’s founding of the firm seven years ago—represent a bet that big corporate clients will continue handing more lucrative M&A assignments to firms such as Moelis that have a narrower focus than their larger Wall Street peers and are perceived to be freer of potential conflicts of interest. Last year, 80% of the 10 largest M&A deals had independent advisers, up from 30% just 10 years earlier, the filing said. In Tuesday’s filing, Moelis said it has advised on more than $1 trillion of deals, including three of the 10 biggest announced global mergers in 2013. They include H.J. Heinz Co.’s $23 billion takeover by Berkshire Hathaway Inc. and Brazilian private-equity firm 3G Capital, and the $35.1 billion pending merger of Omnicom Group Inc. and France’s Publicis Groupe SA…Helping encourage Moelis to move on the share sale now, according to people familiar with the firm’s planning: Shares of other small investment banks that already are public have gained sharply over the past year. Evercore Partners Inc. shares, for example, have risen 38% in the past year.

Red Flags Amid Citi Losses (WSJ)
Oceanografía SA, the Mexican oil-services firm that Citigroup Inc. alleges is responsible for duping the bank out of $400 million, was well known in energy and investor circles as being behind on its bills despite a steady stream of contracts with state oil firm Petróleos Mexicanos. Operating out of this oil town on the Gulf of Mexico, Oceanografía had a history of late payments to bondholders, suppliers and even employees, according to workers, investors and legal filings. Investors say Oceanografía frequently leaned on its 30-day grace period to pay bond coupons late. “The traditional emerging market investor didn’t have the best image of the company,” said Jim Harper, director of corporate research at BCP Securities in Greenwich, Conn. Workers claiming they haven’t been paid have been protesting sporadically for more than a year outside the company’s headquarters, but the protests intensified in recent weeks. In a September bond prospectus, Oceanografía said it faced 352 labor disputes, which it estimated would cost less than $3 million to settle.

Prized Corvettes rescued after falling into massive sinkhole (AP)
Two classic Corvettes re-emerged Monday from a giant sinkhole that gobbled up those and six other prized vehicles still trapped beneath the National Corvette Museum in Kentucky. Workers in a cage painstakingly hooked straps around the cars before a crane slowly hoisted them one by one from the enormous pit that opened up last month. Onlookers cheered after each car was rescued, but the joy was more subdued for the second car, which had more extensive damage. The first car hoisted out — a 2009 ZR1 Blue Devil — showed only minor damage that included cracks on lower door panels, a busted window and an oil line rupture that oozed oil, said Chevrolet spokesman Monte Doran. Workers were able to get that car running. Cheers went up as the engine revved at the Bowling Green museum. “It sounded awesome, just like before,” said museum executive director Wendell Strode. Doran said the car was in “remarkably good shape. You could have that car back on the road in a couple of days.” Not so for the other car retrieved Monday, a 1993 Ruby Red 40th Anniversary Corvette. The body panels and window glass need replacing, but the vehicle is salvageable, Doran added. Read more »

Opening Bell: 03.04.14

Singapore named the world’s most expensive city (BBC)
Singapore has topped 131 cities globally to become the world’s most expensive city to live in 2014, according to the Economist Intelligence Unit (EIU). The city’s strong currency combined with the high cost of running a car and soaring utility bills contributed to Singapore topping the list. It is also the most expensive place in the world to buy clothes. Singapore replaces Tokyo, which topped the list in 2013. Other cities making up the top five most expensive cities to live in are Paris, Oslo, Zurich and Sydney, with Tokyo falling to sixth place…However, not all Asian cities are tough on the wallet. India’s major cities – including Mumbai and New Delhi – were found to be among the least expensive in the world.

Japan finance minister: Gathering facts on bitcoin, unsure whether crime involved (Reuters)
Japanese Finance Minister Taro Aso said on Tuesday that the government is still trying to figure out what has led to the collapse of the Tokyo-based bitcoin exchange Mt. Gox and is not sure whether crime is involved. “We still have not had a clear grasp of the situation,” Aso said in response to a reporter’s question after a cabinet meeting. “(We) don’t know if it was a crime or just a bankruptcy.” Mt. Gox, once the world’s biggest bitcoin exchange, filed for bankruptcy protection in Japan on Friday, saying it may have lost nearly half a billion dollars worth of the virtual currency due to hacking into its faulty computer system.

Mt Gox collapse could help Bitcoin, says US regulator (Telegraph)
“It’s on the one hand a setback, on the other hand it will cause further improvements in this industry and some more regulatory involvement,” Benjamin Lawsky, superintendent of New York’s Department of Financial Services, told Reuters. “It’s part of [a] shaking out,” he said on the sidelines of a banking conference in the US.

Citigroup: U.S. Sought Information From Mexico Unit (WSJ)
The New York bank said Monday it received subpoenas from the Federal Deposit Insurance Corp. and U.S. prosecutors, three days after the bank disclosed it had found allegedly fraudulent billings at its Mexico unit that cost it up to $400 million. A regulatory filing Monday disclosed that Citigroup and related parties—including the U.S. unit of its Mexico business, Banco Nacional de Mexico, or Banamex—have received grand-jury subpoenas issued by the U.S. Attorney’s Office for the District of Massachusetts tied to anti-money-laundering requirements. Meanwhile, Citigroup’s exposure to Russia and Ukraine came under the spotlight. The instability in the region hammered stocks and bank stocks in particular. Of major U.S. banks, Citigroup shares fell the most Monday, losing 2.1% to $47.61. So far this year, they are down 8.6%, also last among the big six U.S. banks.

Citigroup Joins JPMorgan in Seeing Trading-Revenue Drop (Bloomberg)
Citigroup finance chief John Gerspach said yesterday his firm expects trading revenue to drop by a “high mid-teens” percentage, less than a week after JPMorgan Chief Executive Officer Jamie Dimon said revenue from equities and fixed income was down about 15 percent. If trading at the nine largest firms slumps that much, it would extend the slide from 2010’s first quarter to 36 percent. “It sounds like more bloodletting on Wall Street,” said Jeff Davis, a managing director for the financial-institutions group at advisory firm Mercer Capital in Nashville, Tennessee. “What we are seeing is a function of investors being scared of bonds because the math is bad. No one I talk to wants to take a chance adding bonds to the portfolio.”

Australia: Snake eats crocodile after battle (BBC)
The incident at Lake Moondarra, near Mount Isa (Australia), was captured on camera by local residents on Sunday. The 10-ft snake, thought to be a python, coiled itself around the crocodile and the two struggled in the water. The snake later brought the dead crocodile onto land and ate it. Tiffany Corlis, a local author, saw the fight and took these pictures, which have been widely used in the Australian media. “It was amazing,” she told the BBC. “We saw the snake fighting with the crocodile – it would roll the crocodile around to get a better grip, and coil its body around the crocodile’s legs to hold it tight.” “The fight began in the water – the crocodile was trying to hold its head out of the water at one time, and the snake was constricting it.” “After the crocodile had died, the snake uncoiled itself, came around to the front, and started to eat the crocodile, face-first,” she added. Ms Corlis said it appeared to take the snake around 15 minutes to eat the crocodile. The snake was “definitely very full,” when it finished, she said. Read more »

Opening Bell: 03.03.14

Losses Mobilize The Bitcoin Police (WSJ)
So far, U.S. financial regulators have avoided stepping into the fray. But they are trying to determine whether their oversight extends to bitcoin, according to government officials. Some, like the Federal Reserve, have indicated they can’t oversee bitcoin without legislative action. Fed Chairwoman Janet Yellen said at a Senate hearing last week that the central bank doesn’t have the authority to regulate bitcoin as long as the currency remains separate from the banking system the Fed oversees. Other regulators, including the Federal Trade Commission, appear more inclined to act. “Consumer protections with virtual currencies, to the extent they exist at all, are in no way comparable to the protections” for credit cards or other traditional payment methods, said Lois C. Greisman, associate director of the Federal Trade Commission’s division of marketing practices, in an interview.

Britain to scrap VAT on Bitcoin trades (FT)
Britain’s tax authority plans to ditch value added tax on Bitcoin trading only days after the collapse of Mt Gox, one of the virtual currency’s leading exchanges, losing almost $500m of customer deposits. The UK’s welcoming approach to Bitcoin contrasts with the approach of other countries, amid concerns about its use for tax evasion and money laundering as well as its notoriety for wide fluctuations in value.

Mexican Police Question Citigroup Employee Over Alleged Fraud (WSJ)
Mexican police questioned a Citigroup Inc. C -0.12% employee suspected of participating in the alleged theft of $400 million from the bank, according to a person familiar with the matter. The employee, described by the person familiar with the matter as junior at the company, worked for the bank’s Mexico unit, Banco Nacional de Mexico, or Banamex. The employee isn’t currently in police custody, the person added. It wasn’t clear whether the person is still working for Citigroup or when the questioning occurred.

Buffett Sets Fresh Goal as Berkshire Misses Five-Year Target (Bloomberg)
Warren Buffett said his performance at Berkshire Hathaway Inc. should be measured over the course of stock market cycles after missing a five-year target for the first time. Berkshire’s net worth failed to rise as much as the Standard & Poor’s 500 Index from the end of 2008 through 2013, the company’s annual report showed yesterday. It was the only five-year period that happened since Buffett took control in 1965. Still, the billionaire Berkshire chairman and chief executive officer said he can beat the index over equity market cycles, like he did in the six-year period that ended Dec. 31. “Through full cycles in future years, we expect to do that again,” Buffett wrote in the report. “If we fail to do so, we will not have earned our pay.”

Warren Buffett admits to $873 million mistake (CNBC)
Unlike the contents of its stock portfolio that must be filed with the SEC four times a year, Berkshire doesn’t have to publicly disclose its debt holdings. In his letter to shareholders released Saturday, however, Buffett admitted to a money-losing bond buy involving Energy Future Holdings. “Most of you have never heard” of the company, he wrote. “Consider yourselves lucky; I certainly wish I hadn’t.” Buffett said he decided to buy about $2 billion of EFH’s debt when it was created in 2007 as part of a leveraged buyout of Texas electric utility assets. He made that decision “without consulting with (business partner) Charlie (Munger). That was a big mistake.” Buffett wrote that unless there’s a big increase in natural gas prices, the company will “almost certainly” file for bankruptcy protection this year. Last year, Berkshire sold the bonds for $259 million. Adding back the $837 million received in cash interest, Buffett’s decision produced a pre-tax loss of $873 million. “Next time,” Buffett promised, “I’ll call Charlie.”

‘Flushable’ wipes clogging up drains citywide (NYP)
Sales of wipes have soared to $6 billion a year, with advertisers claiming the products are the best way to get clean — and safe to toss in the toilet. But the messy truth, say consumers like Dr. Joseph Kurtz of Flatbush, who is suing the makers of Cottonelle and Costco-brand wipes in Brooklyn federal court, is that “flushable” wipes aren’t really flushable. “They do not break down as manufacturers advertise,” according to the class-action suit filed by Kurtz. The 35-year-old, who used the products in his Brooklyn and New Jersey homes last summer, was forced to spend $600 on plumbers to clear his backed-up pipes, lawyer Mark Reich said. Read more »

Opening Bell: 02.28.14

Bitcoin Derivatives Sprout as Regulators Play Catch-Up (Bloomberg)
The closing of a major Bitcoin exchange in Japan not only focused attention on the digital currency’s risks, it also rattled a still-newer market that regulators are just starting to monitor: Bitcoin derivatives. George Samman, a former Wall Street investment adviser who in May helped start a platform for betting on Bitcoin’s price swings, saw trading on his BTC.sx website grow to more than $35 million by Jan. 21. After the shutdown at Mt. Gox, the Tokyo-based exchange for buying Bitcoins, BTC.sx suspended trading — because it had to find another exchange partner for its customers. “It is semi-Wild West, but that’s only because it’s new,” Samman said before the Mt. Gox shutdown.

Bitcoin owners find safe place for digital currency: on paper (Reuters)
Canadian mortgage broker and bitcoin enthusiast Chung Cheong writes out his secret number by hand and puts it in a safety deposit box. “The only way to ever access that address and those bitcoins is that piece of paper,” said Cheong. “I pray that there isn’t a big fire and the bank burns down. Because if that happens, I’m out of luck.”

Third Point’s Loeb Ramps Up Fight with Sotheby’s (WSJ)
Mr. Loeb nominated himself and two others to Sotheby’s board of directors early Thursday, setting up a potentially distracting fight for shareholder votes. The move came hours before the company said its profit jumped 37% in the fourth quarter amid strong sales of Asian and Impressionist art. The two sides are battling over Mr. Loeb’s arguments that Sotheby’s needs to improve its performance online and expand its presence in contemporary art. In a scathing letter to the board in October, Mr. Loeb criticized Sotheby’s as an “old master painting in desperate need of restoration.”

State Street Enters Fray as Corporate-Bond Broker (WSJ)
As Wall Street banks pull back from some corporate bond trades with clients, other large financial institutions are looking to step in. A State Street Corp. unit has begun handling corporate-bond trades between large investment firms as an intermediary, company officials said. That job is often done by a bank-owned broker-dealer. Rival Bank of New York Mellon Corp. is considering offering a similar service, said people familiar with the matter. The move marks the latest effort to profit from a gradual shift in how trades are handled in the $9.6 trillion corporate-bond market. As banks have retreated from acting as middlemen for bond trades, citing tough new regulations on their capital and risk-taking, a host of financial firms, including some small regional dealers, have looked to cash in on the void they leave behind.

Microsoft Chairman Says Company Must Focus Under Nadella (Bloomberg)
“The issue for us is, quite frankly, about focus,” Thompson said in an interview with Bloomberg Television. “One of the reasons we chose Satya Nadella is he has a strong technology background. He understands exactly what needs to happen to move Microsoft forward.”

The Battle to Cheer Up Africa’s Last Polar Bear (WSJ)
Wang was sprawled on his back in the sweltering heat, when veterinarian Katja Koeppel approached with apple slices and the daunting task of cheering up Africa’s last polar bear. “Wang!” she called. “Here, Wang!” Ms. Koeppel threw the sliced green apples 30 feet down into his rock-and-grass enclosure. Wang ambled toward the apples, ate them and went back to lying listlessly on the grass. Ms. Koeppel looked resigned. It was another dreary day for one skinny, dirt-covered and depressed polar bear. Wang has been on his own since Geebee, his companion at the Johannesburg Zoo for nearly three decades, died of heart failure in January. Wang’s keepers fear grief on top of liver trouble and a summer heat wave in the Southern Hemisphere could combine to kill the 29-year-old bear. So they’re ramping up his behavior enrichment with a full regimen of toys, treats and psychological intervention aimed at lifting his spirits. On Valentine’s Day, keepers wrote “We love you, Wang” on a cardboard box filled with treats and lowered it into his enclosure. As couples watched from above, Wang nosed the package into a dark room, delicately opened the lid and devoured the fruit and heart-shaped beef steak within. “Wang is pining for Geebee,” says Ms. Koeppel, the zoo’s manager of veterinary services, “and is understandably very stressed.” As was true of Geebee, Wang is nearing the limits of polar-bear life expectancy, so the zoo says it’s too late for him to adjust to a new partner. Read more »