Opening Bell

Opening Bell: 09.12.14

Treasury Is Weighing Action on Hedge-Fund Tax ‘Loophole’ (Bloomberg)
The U.S. Treasury Department said it’s considering ways to end a “loophole” that allows hedge-fund managers to avoid taxes by routing their investments through an insurance company in low-tax countries like Bermuda. The Treasury, in an Aug. 9 letter obtained by Bloomberg News today, told Senate Finance Committee Chairman Ron Wyden that it’s concerned about such arrangements and is weighing legislative and administrative responses. Among the hedge-fund managers who have set up Bermuda insurance vehicles in recent years are John Paulson’s Paulson & Co. and Steven A. Cohen’s SAC Capital Advisors LP. Cohen has since cut ties with his insurer.

IMF warns of fallout from Scottish split (FT)
The International Monetary Fund has waded into the debate over Scottish independence, saying that a Yes vote in next week’s referendum could lead to market turbulence. “The main immediate effect is likely to be uncertainty over the transition to potentially new and different monetary, financial and fiscal frameworks in Scotland,” William Murray, an IMF spokesman, told reporters. “While this uncertainty could lead to negative market reactions in the short term, longer-term effects would depend on the decisions being made during the transition.” His comments highlight the questions over which currency an independent Scotland would use, the regulation of its banks, and its budget position after negotiations to separate from the UK.

Facebook’s latest innovation: Copying Snapchat (Fortune)
Facebook is testing a new feature that lets users set a time to make their posts disappear – anywhere from an hour to a week in the future…A Facebook spokesperson confirmed with Fortune that the social media giant is “running a small pilot of a feature on Facebook for iOS that lets people schedule deletion of their posts in advance.”

Chained to your smartphone? Maybe try the NoPhone (CNBC)
The NoPhone, as described on its Kickstarter page is the “technology-free alternative to constant hand-to-phone contact that allows you to stay connected with the real world.” The NoPhone is exactly what it looks like. It’s a black piece of plastic in the shape of an iPhone that does absolutely nothing, except act as a phone surrogate for those addicted to their smartphones. “With a thin, light and completely wireless design, the NoPhone acts as a surrogate to any smart mobile device, enabling you to always have a rectangle of smooth, cold plastic to clutch without forgoing any potential engagement with your direct environment. Never again experience the unsettling feeling of flesh on flesh when closing your hand,” the NoPhone Kickstarter page states.

Salt the Pasta Water: Starboard Value’s Suggestions for Olive Garden (WSJ)
When cooking pasta, use salt. And go easy on the breadsticks. Those are two of many steps Starboard Value LP said late Thursday it would take to boost the value of Darden Restaurants Inc., owner of Olive Garden, if the activist hedge fund was to win control of the entire board. Among the other moves Starboard detailed in nearly 300-pages of slides: Improve Olive Garden’s food quality and alcohol sales, introduce technology to reduce waiting times at restaurants and cut millions in costs. And Starboard is sticking with its suggestion, which Darden has rejected as value-destroying, of separating the company’s brands apart and putting its real estate into a third public company. Starboard said those separations and improvements could put Darden shares between $67 and $86, up to 78% above Thursday’s $48.29 close.

Dollar General waiting on feds for Family Dollar deal (NYP)
Dollar General plans to delay a decision whether to go “hell or high water” with its hostile offer for rival Family Dollar until it gets feedback from regulators on its proposal by mid-October, sources told The Post. Dollar General, which this week announced an $80 a share, or $9.1 billion, hostile tender for Family Dollar will stick with its public commitment to divest 1,500 stores until the Federal Trade Commission issues a second request for information, sources said. That second request is expected to give a sense of how seriously the FTC is scrutinizing Dollar General’s deal. “They’ll know in 30 days if it will be a long slog,” an anti-trust lawyer said.

Boy Charged For Desecration Of Jesus Statue (TSG)
A Pennsylvania teenager has been charged with desecrating a statue of Jesus after he posted Facebook photos that showed him simulating a sex act with the statue. According to State Police officials, the boy posed for the photos in late-July in front of Love In the Name of Christ, a Christian organization in Everett, the boy’s hometown…one of the photos posted to the teenager’s Facebook page shows him with his crotch in the face of the kneeling statue. Read more »

Opening Bell: 09.11.14

SEC Targets Timing of Insiders’ Trade Notices (WSJ)
The Securities and Exchange Commission is stepping up its scrutiny of corporate executives who sell shares in their own companies, announcing a raft of cases Wednesday against insiders for allegedly breaking rules on disclosing stockholdings and trades. The action, on an unprecedented scale for such offenses, is part of the “broken windows” strategy SEC Chairman Mary Jo White announced almost a year ago. She said the strategy—named for policing tactics used in New York that sought to reduce serious crime by not tolerating minor violations—will mean “even the smallest infractions” are pursued. SEC investigators decided to step up their focus on insider transactions because of concerns about poor levels of compliance, enforcement chief Andrew Ceresney said. The agency filed civil charges Wednesday against 36 individuals and companies, with none of them involving a penalty of more than $375,000.

Senators urge Burger King to ditch move to Canada (Reuters)
Dick Durbin, the No. 2 Senate Democrat, and four other lawmakers argue that move is unfair because many Burger King workers count on programs such as Medicaid and food stamps that rely on taxpayer funding. They also said, in a letter to Burger King Chief Executive Officer Daniel Schwartz that was dated Thursday, that the burger chain uses taxpayer-supported roads, food safety inspectors and other perks of doing business in the United States. “Now, after profiting from these taxpayer-funded benefits, Burger King intends to move its tax address overseas to avoid paying its fair share for these benefits,” the group said in the letter, which was viewed by Reuters. “Many of your loyal customers may choose to spend their hard-earned money at one of your many competitors, instead of supporting a company that wants all the benefits of America but refuses to pay its fair share to support our nation,” they said. In addition to Durbin, Senate Democrats Jack Reed, Sherrod Brown, Carl Levin, and Independent Bernie Sanders signed on. At least nine U.S. companies are in the final stages of inversions, which involve buying a competitor in a lower-tax country and basing the combined business there. Democrats, worried the moves will erode the U.S. corporate tax base, have called the deals “unpatriotic” and floated a number of proposals to crack down on them.

Berkshire Official Calls Those Seeing Burger King Move as a Tax Inversion ‘Mad’ (WSJ)
Charles T. Munger defended recent decisions by his business partner, Berkshire Hathaway Inc. Chairman Warren Buffett, and predicted that Berkshire would grow robustly. Mr. Munger, 90 years old and known for his bluntness, took on critics of the so-called tax-inversion deal, partly financed by Berkshire, in which Burger King Worldwide Inc. is planning to relocate to Canada in the wake of its proposed merger with Tim Hortons Inc. Mr. Munger, who is Berkshire’s vice chairman, said that Ontario-based Tim Hortons is the larger of the two companies and, because “the bigger company should get the headquarters,” anyone who thinks the deal is motivated purely by tax considerations is “stark raving mad.”

Twitter Seeks Up to $1.5 Billion in Debt Offering (Bloomberg)
The San Francisco-based microblogging company is selling the convertible bonds in two $650 million pieces, one maturing in five years and one coming due in seven years, according to a regulatory filing today. The offering size may increase to $1.5 billion if the banks involved exercise an overallotment option. Twitter, which isn’t projected to be profitable this year, has been investing to build up its advertising business and add engineers who can help tweak its product to appeal to a broader audience. Executives see an opportunity in the debt market to raise more cash cheaply with little immediate dilution of their shareholders’ ownership, according to a person familiar with the matter. The company was inspired by technology leaders, including Google Inc. and Netflix Inc., successfully offering debt while borrowing remains inexpensive, the person said.

Chipotle Near Penn State Closes After Workers Quit (Bloomberg)
A Chipotle restaurant near Pennsylvania State University temporarily closed after workers quit, citing “borderline sweatshop conditions.” A sign in front of the restaurant, which was posted on Twitter, blamed the walkout on Chipotle’s pursuit of profit over people. While the sign said almost all of the management and crew resigned, the Denver-based company said that it was a minority of the staff. “Our Penn State restaurant was closed when a few employees quit, locking out a majority of others who are enthusiastic to return to work,” Chris Arnold, a spokesman for Chipotle Mexican Grill Inc., said in an e-mail. The store reopened this afternoon, he said.

Argentina says U.N. vote vindicates its debt fight against ‘vultures’ (Reuters)
The Argentine government said on Wednesday that its refusal to repay a group of U.S. hedge funds that stand to profit on the country’s defaulted debt was vindicated by the United Nations’ support for a multilateral plan handling bond restructurings. The lengthy legal battle between Argentina and the funds that snapped up its bonds on the cheap after its record 2002 default and are suing for 100 cents on the dollar led to the Buenos Aires government defaulting again in July. Cabinet Chief Jorge Capitanich’s comments came on the same day the lower house of Congress held a marathon debate over a draft law proposing to remodel the country’s debt to enable it to skirt U.S. court rulings in support of the hedge funds. The lower house is expected to vote in favor of the bill in the early hours of Thursday. But the law may not achieve much if legal hurdles and investor scepticism prevent the proposed restructuring measures from being implemented. President Cristina Fernandez says her country is the victim of “vulture funds” that are prepared to wreck its finances in their pursuit of huge profits. She wants a global framework that would prevent a minority of investors from scuppering debt restructuring agreements. Prompted by Argentina and its ally Bolivia, the U.N. General Assembly voted overwhelmingly in favor of such a convention. “If 124 countries in the United Nations support the Republic of Argentina, it means that Argentina is right in its claims,” Capitanich told reporters in Buenos Aires.

Naked Satan Statue Has Vancouver Locals Asking, ‘What The Devil?’ (HP)
The 9-foot-tall statue was a representation of the devil, complete with red skin, a pointed tail and horns atop his head. The statue also holds one hand up in a devil-horn salute familiar to heavy metal fans the world over. But what has aroused controversy is the statue’s prominent, erect phallus, CTV News reports…The satanic statue was erected on Tuesday on a pedestal that previously was home to a bronzed — and clothed — Christopher Columbus commemorative statue installed in 1986, according to Straight.com. The statue was moved to the Italian Garden in Hastings Park 10 years ago. No one has claimed responsibility for the naked Satan, according to CTV News. But the bulging Beelzebub was quickly removed because city officials weren’t exactly nuts about it. “The statue was not a piece of city commissioned artwork and consequently it has been removed,” Sara Couper, a City of Vancouver spokeswoman, told GlobalNews.ca. City officials haven’t said what they plan to do, but a man named Mike Granger has started a petition on Change.org asking it be given to him for inclusion in an “Odditorium” he runs, according to the Winnipeg Sun. One of the lines in the petition warns the city: “By removing the statue of Penis Satan, you are taking from us our freedom of expression, restricting our sexuality, and stigmatizing our religious beliefs. Please return him immediately.” Read more »

Opening Bell: 09.10.14

Dollar General Takes Family Dollar Offer to Shareholders (Bloomberg)
Dollar General, based in Goodlettsville, Tennessee, has commenced an offer for all Family Dollar shares at $80 each, according to a statement today. The move follows Family Dollar’s rejection of an acquisition proposal at that price last week. The takeover target has accepted a lower bid from Dollar Tree Inc. (DLTR) instead, saying that deal will more easily gain regulatory clearance. The hostile offer ratchets up a three-way takeover battle that has grown increasingly rancorous. Dollar General has suggested that Family Dollar would prefer the Dollar Tree transaction in part because it includes a management role for Chief Executive Officer Howard Levine. Family Dollar, meanwhile, has said that Dollar General hasn’t sufficiently dealt with antitrust concerns for a merger that would create a massive retail chain with almost 20,000 locations.

Currency Markets Jolted After Months of Calm (WSJ)
“A confluence of different factors is provoking or fueling the rising volatility,” said Mitul Kotecha, head of foreign-exchange strategy at Barclays in Singapore. “In the U.K., the Scottish referendum, in Europe, the anticipation around the European Central Bank’s next moves and in the U.S., the realization that the market may be mis-pricing the path of the federal-funds rate; in Japan, the renewed speculation around the Bank of Japan’s actions.”

Trump Entertainment begins race to save Atlantic City casino (Reuters)
Trump Entertainment Resorts received U.S. Bankruptcy Court approval on Wednesday for an agreement that gives it 30 days to craft a cost-cutting turnaround plan to save its Taj Mahal casino-hotel from liquidation. A lawyer for Trump Entertainment said after the hearing in Wilmington, Delaware, that the company could present a plan to end operations. “It could be a liquidating plan, but we hope not,” said Kristopher Hansen, an attorney with Stroock & Stroock & Lavan who represents Trump Entertainment. The company plans to close the smaller of its two casinos, the Trump Plaza, next week. It will become the fourth casino-hotel to close in the New Jersey seaside resort this year.

Dartmouth’s Fall in Rankings Hampers Effort on Reputation (Bloomberg)
Dartmouth College’s fall from the Top 10 in a national university ranking is the latest setback for the Ivy League school that’s trying to repair its image after controversies about hazing, drinking and sexual assault. Dartmouth dropped to 11th place from a tie for 10th in the U.S. News & World Report rankings of top U.S. academic research institutions released yesterday…Dartmouth, ranked ninth by U.S. News four years ago, has been in the spotlight for more than a year for tales of fraternity hazing and a federal sexual harassment probe. The Hanover, New Hampshire-based college has introduced initiatives to address a student behavior. It now needs to adjust its message and present a plan for Greek life that’s more appealing to parents of prospective students, marketing and admissions consultants said.

Ana Botin Succeeds Father at Santander, Now Top Female Banker in Europe (Bloomberg)
Santander’s board today named Botin, 53, to the top executive post at Europe’s second-biggest bank by market value in a unanimous vote. Botin, who is giving up her post as chief executive officer of Santander’s U.K. business, replaces her father Emilio who died of a heart attack at the age of 79.

Man Stabs Coworker Who Ate His Meatball: Cops (HP)
A 31-year-old employee at a Fallston, Maryland business is accused of attacking a fellow employee who ate one of his meatballs, the Baltimore Sun reports. Cops say they were called to the scene at around 11:10 a.m. Thursday, after they say the man stabbed his lunch-pilfering coworker in the arm. The victim was taken to a hospital but has since been discharged. Harford County Sheriff’s Office spokesperson Cristie told The Baltimore Sun that charges are pending. Read more »

Opening Bell: 09.09.14

Alibaba Begins Wooing Wall Street (Dealbook)
The day formally began at 6 a.m., when Alibaba executives met with the combined sales teams from its six lead underwriters for a teach-in. Held at Citigroup’s investment banking headquarters in downtown Manhattan, the discussion focused on teaching the sales staff about the company and how to best pitch it to potential investors. But the highlight was the lunch presentation, held on the 18th floor of the Waldorf-Astoria in Midtown Manhattan. Starting midmorning, investors lined up for a half-hour or more simply to take the elevator up to the registration desk. At least one potential buyer criticized the setup — completed last week when company executives finally selected the location — which left a long line of people snaking across the cavernous Waldorf lobby and out the door.

Facebook’s Value Tops $200 Billion on Mobile-Ad OptimismFacebook shares rose 0.8 percent to $77.89 at yesterday’s close in New York, valuing the company at $201.6 billion, according to data compiled by Bloomberg. That made it the 22nd-largest company in the world, behind Verizon Communications Inc. and ahead of Toyota Motor Corp.

S&P Faces Squeeze After $1.3 Billion Countrywide Fine (Bloomberg)
Standard & Poor’s (MHFI)’ chances of settling the government’s lawsuit over mortgage-bond ratings for less than $1 billion may have slipped away after Bank of America Corp.’s Countrywide unit was socked with a $1.3 billion fine. The Countrywide ruling was the first to lay out what penalties financial institutions could face under a 1989 bank-fraud law the Obama administration is using against alleged culprits of the subprime mortgage crisis. It has boosted the government’s hand against McGraw Hill Financial Inc.’s S&P, said Peter Henning, a law professor at Wayne State University. “If the starting negotiation point for the Justice Department to settle was $1 billion before, that number has just gone up,” Henning said in a phone interview.

Dave & Buster’s Files for IPO (WSJ)
Dave & Buster’s Entertainment Inc., the arcade and restaurant chain that received buyout interest earlier this year, has filed for an initial public offering. Dave & Buster’s will use proceeds to repay term-loan debt. The Wall Street Journal reported in May that the company, owned by Oak Hill Capital Partners, received an offer worth nearly $1.1 billion from Roark Capital Group. The Journal reported that an IPO launch after Labor Day was also possible. Wellspring Capital Management took the company private in 2006 and sold it to Oak Hill in 2010. A previous IPO plan was called off in late 2012 due to market conditions. Moody’s Investors Service upgraded Dave & Buster’s in July, noting improved operating performance and higher earnings, and same-store sales growth that outpaced peers. Jefferies and Piper Jaffray are joint book-running managers. Dave & Buster’s plans to raise up to $100 million, but that is a placeholder amount used in deciding registration fees and will likely change.

Jimmy Choo Said Near IPO to Value Shoemaker at $1 Billion (Bloomberg)
Jimmy Choo, the luxury shoemaker owned by JAB Holdings, may begin its initial public offering in London as soon as this month amid rising demand for expensive footwear, according to people with knowledge of the situation. JAB could announce plans to sell a 25 percent stake in the maker of $1,995 Lust peep-toe sandals, said the people, who asked not to be identified because the matter is confidential. The company has hired Bank of America Corp (BAC). to manage the sale and is seeking a valuation of about $1 billion, the people said. HSBC Holdings Plc has also been hired, one of the people said. No final decision has been made and JAB may decide not to proceed with an IPO, they said.

Wall St investor who hoarded designer clothes in a filthy two-bedroom… (DM)
A Wall Street investor who hoarded designer clothes and expensive silverware in his disheveled rent-controlled upper east side apartment left behind a massive $18 million fortune when he died last year. But his widow of 10 years says she still can’t find the documents that detail the fortune’s whereabouts because they’re buried under piles of paperwork and boxes. Lewis David Zagor, who died in December at the age of 77, made millions on Wall Street investing in cash and mutual funds but chose to live modestly in a relatively small, two-bedroom, rent-stabilized apartment on Park Avenue and 96th Street East, for which he paid $1,641 a month…While he saved on flat expenses, Zagor spent the sizable dividend checks he received from his investments going on shopping sprees at Saks Fifth Avenue and traveling around the globe, according to DNAinfo New York. ‘You have no idea the amount of wealth that is in the apartment,’ Valentina Phillips-Zagor, his third wife who was with him for the last 10 years of his life, told the website. ‘The most important are the financial documents.’ Read more »

Opening Bell: 09.08.14

Alibaba Takes IPO Sales Pitch on the Road (WSJ)
Alibaba Group Holding Ltd. and its bankers have been talking with investors about the Chinese e-commerce giant’s potentially $24 billion initial public offering for over a year. But this week, as they begin the formal sales pitch, they will seek to resolve a crucial question: How much stock do investors want to own, and what will they pay for it? After setting a price range Friday that values the company around $155 billion at the midpoint, Alibaba on Monday is set to start a two-week roadshow to pitch its stock to investors. Some portfolio managers and analysts at asset-management firms said worked through the weekend to prepare for the meetings. They viewed an online video pitch to investors and weighed their estimates for Alibaba’s valuation against those of peers such as Tencent Holdings Ltd., Baidu Inc.. and JD.com Inc. Alibaba has attracted global attention for its market dominance in China, its impressive profitability and the potentially historic nature of its IPO; the deal could prove to be the biggest ever. Yet selling more than $20 billion in stock isn’t expected to be easy, people familiar with the process have said. It isn’t enough for the company merely to find interested investors: It wants to identify fund-management companies and pension funds who will buy more than $1 billion worth of shares, the people said.

Method in the madness of the Alibaba cult (FT)
The Chinese company’s 22,000 employees, known as Aliren or Ali fellows, appear to be fuelled by adrenalin and inspired by Kung Fu novels. Alibaba employees are encouraged to take Kung Fu nicknames. “When they ran out of names from Kung fu novels, they made up their own,” said Zhang Yi, chief of iMedia, a China based ecommerce consultancy. Mr Ma created Alibaba 15 years ago with friends in his apartment. Since then, his quirky personality has created headlines and fosters what one former employee calls a “slightly crazy” atmosphere at the company. Mr Ma practices Kung Fu and dresses in outlandish costumes for the company’s annual Chinese new year festival – one year he was a punk rocker with a silver mohawk, another year he was Snow White, wearing a dress and bonnet. Last October, he sent an internal message to employees exhorting them to “invade Antarctica” in order to “kill penguins” in their duel with rival internet giant Tencent – whose mascot is a Penguin. “Alibaba is not a group of civilised gentlemen, or men who nicely play by the rules,” said Mr Li. “They are reckless with ambition, they are radical and aggressive. Everyone walks out of a meeting room beet red from shouting, that’s how we held meetings – with our voices raised. Its very intense,” he said.

ECB’s Draghi Takes a Gamble on QE-lite (WSJ)
Although the ECB will buy only asset-backed securities and covered bonds for now, the market understood that a taboo had been broken. Mr. Draghi’s statement that the ECB’s aim was to restore its balance sheet to its size in early 2012, signaling a possible €1 trillion ($1.29 trillion) expansion, showed that the bank has shifted its focus to money-printing. The euro tumbled, bond yields fell and stocks rallied on the news.

Paris court sets date for Airbus insider trading case: Der Spiegel (Reuters)
More than half a dozen current and former managers at European plane maker Airbus will face a criminal court hearing in Paris next month in a long-running insider trading case, Der Spiegel magazine reported. The managers are alleged to have known about delays to the A380 superjumbo project when they sold shares in former Airbus parent EADS in early 2006. The announcement of delays prompted a sharp fall in the EADS stock price. All the accused parties have denied wrongdoing. The Paris court is due to begin hearing the case on Oct. 3, Der Spiegel said.

John Paulson Bids Good Riddance to Summer (Dealbook)
…this summer has not been kind to Mr. Paulson. In July, his $23 billion Paulson & Company suffered across-the-board losses. August was marginally better, according to the latest numbers, disclosed in a monthly update letter sent to investors on Friday. Mr. Paulson’s Advantage and Advantage Plus funds were down 1.5 percent and 1.2 percent during August, bringing losses to 4.8 percent and 3.9 percent so far this year, according to the update. Among the worst-hit sectors for the firm were hotels, telecommunications and energy. Meanwhile, his Recovery fund, which made nearly $1 billion through its stake in OneWest Bank after the CIT Group bought it in July, managed to claw back marginally from a 4.9 percent loss in July to bring its losses to 1.6 percent this year. Mr. Paulson’s largest fund, called the Credit fund, gained 0.5 percent in August. The Enhanced fund was flat but still remains up 8.9 percent so far this year.

Insider Martoma’s Sentencing Highlights White-Collar Crime Debate (WSJ)
When Mathew Martoma faces a federal judge on Monday to be sentenced for insider trading, a punishment that could reach 20 years in prison, he will become a flash point in the debate over the severity of white-collar sentences. The former manager at hedge fund SAC Capital Advisors LP was found guilty in February of making illicit trades in pharmaceutical stocks, generating some $275 million in profit and avoided losses for the firm. Under federal guidelines, that number figures prominently into sentencing recommendations. It led the probation department, an office within the Manhattan federal courthouse that prepares pre-sentence reports, to recommend up to two decades in prison for Mr. Martoma. But defense lawyers and some judges are increasingly questioning the big role of profits at sentencing. Last month the U.S. Sentencing Commission, which sets the federal guidelines, announced it was considering changes to its policies on white-collar sentences, specifically addressing the issue of profit and considering whether “there are ways the economic crime guidelines could work better.” U.S. District Judge Paul Gardephe will be the final arbiter and will consider the guidelines, which aren’t binding, along with several other factors, including recommendations by prosecutors and Mr. Martoma’s lawyers, as well as sentences in similar cases.

Drunk woman on trampoline curses at neighbors (WYFF4)
Deputies say a 55-year-old woman is facing charges after she got on a neighbor’s trampoline and shouted obscenities and refused to stop even after officers told her to. Deputies were called to a home on Taylor Colquitt Road about a disturbance. A woman said her neighbor, Debbie Robinson, had been knocking on her door and was in her yard laying on her trampoline yelling obscenities. Deputies said that Robinson was continuing to shout obscenities at neighbors who were on their front porches. The deputies said Robinson told them she had been drinking. They said they encouraged her to get off the trampoline and to go to her home next door and go to bed, but she refused and continued to yell. Eventually, two deputies dragged Robinson off the trampoline and arrested her for public disorderly conduct. Read more »

Opening Bell: 09.04.14

Trader Brings NFL Algorithms Back to Defend Betting Title (Bloomberg)
By day, David Frohardt-Lane puts his math skills to use as an algorithmic trader for 3Red Group in Chicago. Away from work, he uses them to cash in on the National Football League. Frohardt-Lane is seeking a repeat title in the Las Vegas Hotel SuperBook’s SuperContest, a season-long NFL betting competition that drew about 1,200 entrants this season. The winner earns more than $600,000, and the total prize pool approaches $2 million. The tournament begins with the NFL opener tonight, when the Green Bay Packers visit the champion Seattle Seahawks. “I enjoy my job quite a bit, but nothing compares to an unexpected breakaway touchdown just when you’ve given up on a game,” Frohardt-Lane said in a telephone interview. “For that rush, nothing compares to sports gambling.”

Apple Celebrity Nude-Photo Hack Shows Risk in Security Questions (Bloomberg)
Apple yesterday said that a spate of nude photos from actresses including Jennifer Lawrence that were recently posted online were individually stolen from Apple accounts. The celebrity accounts were “compromised by a very targeted attack on user names, passwords and security questions, a practice that is all too common on the Internet,” the Cupertino, California-based company said in a statement. The incident underscores how techniques adopted by companies to step up security are far from foolproof, exposing a risk for everyday Internet users. As people post more sensitive information to social networks, it has become easier for criminals to obtain the answers to security questions. That means consumers can rarely rely on just one set of defenses and have to add more layers, even if it makes online accounts less convenient. That’s especially true for famous people, who have long been ripe hacking targets because security questions protecting their online accounts from intruders are trivial to answer. Based on the public information available about them, basic questions such as where somebody went to high school or what their birthday is can be easily figured out — and don’t end up being much of a security barrier.

Investment Technology Group to Launch Dark Pool for Bond Trading (WSJ)
The New York-based brokerage and technology firm said Wednesday that it is planning to launch a trading venue known as a dark pool, a private platform in which buyers and sellers remain anonymous. While most bond trading takes place over the telephone between dealer banks and customers, ITG and a host of others are trying to tap into increasing demand from fixed-income investors to trade more cheaply and through electronic networks. The credit market has, until recently, resisted the incursion of fully electronic trading more so than markets for currencies, stocks and some derivatives. Similar efforts by firms such as Goldman Sachs Group Inc. and BlackRock Inc. have faltered, but ITG is betting it can leverage its track record in stock trading and technology to make inroads into credit markets. One of its chief rivals, Liquidnet Holdings Inc., announced in March it would open its own credit-trading network in the fall.

Regulators Propose Rule to Reduce Risk of Derivatives (Dealbook)
The Federal Reserve and the Office of the Comptroller of the Currency, as well as three other agencies, proposed a rule that would apply to over-the-counter derivatives, the financial instruments that banks and other financial entities use to speculate or hedge their risks. American banks have nearly $280 trillion of derivatives on their books, and they earn some of their biggest profits from trading in them. But the 2008 crisis revealed how flaws in the market had allowed for dangerous buildups of risk at large Wall Street firms and worsened the run on the banking system. Since then, regulators have been trying to make the derivatives market less risky. The rule proposed on Wednesday focuses on margin payments, which traders in derivatives make to each other to protect against the risk that they don’t get paid what they are owed. Such margin payments add discipline to a high-octane trading activity and make it more likely that derivatives traders can bear losses if one large entity collapses. But the industry, seeking to minimize its costs, has not applied margin requirements evenly across the system. The proposed rule aims to change that.

Police: Roommate stabbed birthday boy for loud threesome (MSA)
Antonio Flores Narcisso, 42, was arrested Tuesday and charged with burglary of a habitation with the intent to commit felony force, according to an arrest warrant affidavit. On May 8, Narcisso allegedly kicked down his roommate’s door while the roommate was having sex with two women and told them they were being too loud, according to the affidavit. When the roommate told Narcisso to get out, Narcisso allegedly grabbed a knife from the kitchen and stabbed the roommate a number of times in the head, back and hands, the affidavit states. The roommate, who turned 35 that day, was taken to University Hospital with non-life threatening injuries, according to the affidavit. Read more »

Opening Bell: 09.03.14

Credit Suisse Said to Be Investigating Two Equities Traders (Bloomberg)
Zoe Henderson and Andrew Davis, who runs the desk, are being probed, said the person, who asked not to be identified because they weren’t authorized to speak publicly. Both remain employees of the bank, the person added. Henderson has been listed as inactive on the Financial Conduct Authority’s register since Feb. 13 and Davis since Aug. 4. Henderson was accused by the bank of improperly sharing client communications with her husband, an equities trader at Royal Bank of Canada, through electronic chat rooms, the Wall Street Journal reported earlier today, citing unidentified people with knowledge of the matter. Henderson has told Credit Suisse her actions didn’t penalize clients and were normal practice, the newspaper said. Her husband, Toby Henderson, remains in his job and hasn’t been accused of wrongdoing, the Journal said.

Former NSA Chief Says JPMorgan Hack May Be a Warning (Bloomberg)
Keith Alexander, the NSA director from 2005 until last March, said he had no direct knowledge of the attack though it could have been backed by the Russian government in response to sanctions imposed by the U.S. and EU over the crisis in Ukraine. “How would you shake the United States back? Attack a bank in cyberspace,” said Alexander, a retired U.S. Army general who has started his own cybersecurity company to sell services to U.S. banks. “If it was them, they just sent a real message: ‘You’re vulnerable.’”

IEX, Upstart Trading Platform, Raises $75 Million in New Financing (Dealbook)
Until March, few outside of Wall Street had heard of IEX, an upstart stock-trading platform aimed at tempering the advantages of big financial firms and their superfast computers. Then Michael Lewis came along. Thanks in part to attention brought in by Mr. Lewis’s book “Flash Boys,” which profiled the team behind IEX, the trading platform has raised $75 million in a new round of financing. That money will help the start-up become a full-fledged stock market. Several investors — the venture capital firms Spark Capital and Bain Capital Ventures; Massachusetts Mutual Life Insurance and the mutual fund manager Franklin Templeton; and the Netscape co-founder James H. Clark and the casino billionaire Steve Wynn — participated in the round.

Celebrity hacking clouds Apple’s upcoming product launch (Reuters)
Apple has often displayed uncanny timing, with its well-orchestrated end-of-year iPhone releases. But the leak of racy celebrity photos in the past few days put the company in the unusual position of having to mend its image just days before a highly anticipated Sept. 9 product launch. Nude photos of Hollywood celebrities, including Oscar-winning actress Jennifer Lawrence, posted on Internet forums by unknown hackers has sparked condemnation from stars and their publicists, and prompted an investigation by the Federal Bureau of Investigation. In the wake of the breach, cybersecurity experts and mobile developers have called out inadequacies in Apple’s and, more generally, cloud-services security. Thousands have taken to Twitter to express their frustrations with the company. Some security experts faulted Apple for failing to make its devices and software easier to secure through two-factor authentication, which requires a separate verification code after users log in initially. The process requires several steps and more than rudimentary knowledge of a phone’s workings.

2 Economic Reports Point to Strengthening 3rd Quarter (NYT)
American manufacturing activity hit its highest point in nearly three and a half years last month and construction spending rebounded strongly in July, providing further signs that the economy entered the third quarter on strong footing. The upbeat data, released on Tuesday, added to reports on employment and housing that have suggested growth remains sturdy, despite a slowdown in consumer spending in recent months. “Things continue to fall into place for our view that growth should accelerate in the year’s back half,” said Dan Greenhaus, chief strategist at BTIG, an institutional brokerage firm.

Passion on the Playa: The Best Burning Man Missed Connections (Daily Intel)
I lost you at burning man, w4m – w4m – 30: Your name is David, your playa name goblin? You said you chose it yourself. You live in SF, you grew up as Christian. We met at the bar in the deep playa- they ran out of cocktails. We rode to robot heart together and then you went to get a smoke and I couldn’t find you again. Me: dressed in a belly dancing outfit and something on top to warm me up. Long wavy hair. Please find me again. Read more »

Opening Bell: 09.02.2014

Heady U.S. IPO Market Rolls Into Autumn (WSJ)
Chinese e-commerce giant Alibaba Group Holding Ltd. plans this month to begin a marketing roadshow for what could be the largest IPO ever, potentially raising more than $20 billion. New York office landlord Paramount Group Inc. filed preliminary paperwork last week for what may be the largest-ever debut by a real-estate investment trust. Online-storage startup Box Inc. and consumer-credit upstart LendingClub Corp. also are expected to price offerings in coming months. The anticipated flood would cap off the busiest period for new U.S. share listings in decades. Companies this year have raised $46.4 billion, the most in the first eight months of any year since 2000, according to data provider Dealogic. “We still have a ton in the hopper, and I think people are optimistic about being able to execute deals after Labor Day,” said Marc Jaffe, co-chair of the global capital-markets practice at law firm Latham & Watkins LLP.

Bootcamp For Bankers (Dealbook)
Robert Vickers struggled not to grin, but the camouflage-clad drill sergeant caught him anyway. “Get down and beat your face. Start pushing!” Air Force Technical Sgt. Elbert Fish shouted, sweat beading on his chiseled face as the sound of combat — gunfire, incoming mortar shells, air sirens and helicopter rotors — punctuated the early morning air from speakers around a grassy field here. “You call that a push-up?” After counting out 20 push-ups, Sergeant Fish yelled, “Get up. I don’t want to see that smile on your face again.” Mr. Vickers volunteered for this treatment, but not for the military. He was one of about 300 employees of USAA, the financial services firm that primarily caters to military veterans and service members, who were doing push-ups, situps and jumping jacks before work at the company’s 280-acre corporate campus. Each of them had signed up for this taste of military basic training and spent months attending seminars and extensive workouts to prepare. They spent the predawn hours running several miles in formation, exercising and marching together. Zero Day PT, named after the first day of Army basic training, is one of many things USAA does to better educate its employees about the armed services. “You serve the military best when you understand the military,” said Josue Robles Jr., the chief executive and president of USAA, who is a retired Army major general.

Can the New York Stock Exchange Be Saved? (WSJ)
The day after Jeffrey Sprecher, the chairman and chief executive of Atlanta’s Intercontinental Exchange Inc., took control of the New York Stock Exchange, he sent trusted lieutenant Thomas Farley to size up the 222-year-old icon of capitalism. On a crisp November morning, the 38-year-old Mr. Farley arrived alone at the corner of Wall and Broad streets in lower Manhattan. After walking beneath the building’s majestic colonnade and past its storied trading floor, he found signs of an institution that was showing its age. Mr. Farley says he got lost in a “rabbit warren” of hallways and wood-paneled offices. He saw little interaction among employees, and some longtimers said they had never heard of colleagues who worked a few floors away. Within minutes, Mr. Farley made a decision: gut the place. Since then, Mr. Farley and his boss have launched a bruising, top-to-bottom renovation of the former NYSE Euronext, acquired for $8.2 billion. They want to shrink the company, simplify its operations and reshape its culture.

Carlyle’s $115M ends private equity ‘collusion’ case (NYP)
Carlyle Group is the last of the private-equity giants to settle civil charges that it colluded with rivals on tens of billions of dollars worth of deals. The Washington, DC-based firm, led by David Rubenstein, agreed over the weekend to pay $115 million to settle the federal court case brought by shareholders in the target companies. Seven PE firms agreed not to step into a rival’s takeout deal, thus cheating the shareholders out of a possible robust bidding and a higher takeover price, the suit alleged. Carlyle, Goldman Sachs, KKR, Bain Capital, Silver Lake Partners, Blackstone Group and TPG Capital neither admitted nor denied guilt.

Russia Said to Prepare Transfer of $10 Billion Fund Out of Sanctions’ Reach (Bloomberg)
Russia is preparing to transfer the ownership of a $10 billion sovereign wealth fund to the central bank from a sanctioned state-development lender, according to two people with knowledge of the plan. Russian Direct Investment Fund’s co-investors, which include sovereign funds in Europe and Asia, are concerned that sanctions may affect their investments in Russia if the state lender controls the assets, according to one of the people, who asked not to be identified because the information is private.

Private jet: The new way to get to college (CNBC)
…one company is attempting to put the bling into university travel by offering a £25,000 ($41,562) package to students wanting to arrive by private jet and fast cars. Uni Baggage – an Irish company that transports student belongings across the U.K. and worldwide – has upped its game, looking to tap wealthy students who want to arrive at their new place of study in style. “Our customers are constantly asking us for the full service. Rather than just book a shipping order they want us to look after the whole process of getting to uni, so we went the extreme and did it in luxury,” Paul Stewart, founder of Uni Baggage, told CNBC by phone. Stewart said he had already received two enquiries from students wanting to take a Rolls Royce Phantom to university since launching the service on Monday morning. He could not disclose the name of the institution the students were going to, but said the package would cost them £15,000.

Sad News for Zero-G Sex Study: The Geckos Are Dead (NBC)
Russia’s troubled experiment to study how geckos, fruit flies and other organisms reproduce in weightlessness ended with a huge downer: When the Foton M-4 satellite containing the creatures returned to Earth on Monday and the hatch was opened, researchers found that all five geckos had died. “We can’t say yet at which stage of Foton’s space flight it happened,” the RIA Novosti news agency quoted a source at the Russian Academy of Sciences as saying. Interfax quoted an unnamed source as saying the geckos were mummified and may have frozen to death. The mission has had more than its share of troubles: Foton-M4 stopped responding to commands shortly after its July 19 launch, and although full contact was restored, the satellite was left in an orbit that was more elliptical than intended. More communication problems reportedly cropped up last week. As a result, mission managers brought back the satellite earlier than planned. The news isn’t all bad, though: Scientists say the fruit flies thrived. Read more »