Opening Bell

Opening Bell: 08.06.14

Bankers Called Up for Ukraine War as Rolls-Royce for Sale (Bloomberg)
A knock on the door for Andriy Gerus came on a Monday morning in July. Fresh from getting his MBA in London, a managing director at Ukrainian investment company Concorde Capital was preparing to go for a stroll with his baby in Holosiyiv, a leafy district of Kiev, when a surprise visitor handed him a military summons. “I imagined myself with a gun, marching,” Gerus, 32, said at a cafe in central Kiev. “Everyone has two choices: to comply with Ukrainian law, go with your conscience and prepare for mobilization or avoid joining the army by relocating and risk three to five years in prison. I prefer the former.” The war is coming home for thousands of Ukrainians as part of the latest wave of mobilization ordered last month by President Petro Poroshenko to defeat a pro-Russian insurgency simmering since April in the easternmost regions of Donetsk and Luhansk. By putting professionals like Gerus near the frontline of the country’s bloodiest battles since World War II, Ukraine is trying to offset a mismatch in military capability in a conflict that’s pitted it against neighboring Russia, which it accuses of backing the rebels and whose defense spending is about 56-fold Ukraine’s outlays on the army.

BATS to Settle High-Speed Trading Case (WSJ)
BATS Global Markets Inc. is in advanced talks with regulators to settle allegations that one of its units gave unfair advantages to high-speed traders, according to people close to the negotiations. The expected pact is a major reason that BATS, the second-largest exchange operator in the U.S. by volume, last month forced out its former president, William O’Brien, the people said. Any deal would mark the first regulatory action out of a nearly three-year investigation into whether some exchanges offered certain types of orders that gave sophisticated traders an edge over investors in their markets. The settlement would cover allegations related to conduct at Direct Edge Holdings LLC, the company Mr. O’Brien led before it merged with BATS last year.

Hedge Funds Betting Against Banco Espírito Santo in Line for Big Gains (WSJ)
One of the biggest funds to bet the bank’s shares would fall was Marshall Wace LLP, which initially made the wager on May 15, according to a filing with the Portuguese regulator. The shares were then trading at around 99 euro cents. The London-based hedge fund would have made a profit of around €27 million ($36 million) from the position if it closed the position at 12 cents, the price when the shares were suspended. The firm, which manages $18 billion in assets and is headed by founders Paul Marshall and Ian Wace, increased its position from 0.51% of the bank’s share capital to 0.85% by mid-June, before slowly reducing it to 0.51% as of July 30. Trading in Espírito Santo’s shares was finally halted from trading last Friday at 12 euro cents.

Standard Chartered Faces More U.S. Fines as Profit Drops 20% (Bloomberg)
Standard Chartered Plc said it faces further U.S. fines over the British bank’s flawed efforts to block money laundering and posted a 20 percent earnings decline on losses in Asia. Adjusted pretax profit, which excludes adjustments to the value of the company’s own debt, fell to $3.3 billion in the first half from $4.1 billion in the year-earlier period, the London-based bank said in a statement today, matching the average of 11 analysts’ estimates in a Bloomberg survey. Standard Chartered said it’s likely to face more penalties after New York’s banking regulator found “certain issues” with its anti-money laundering systems. That adds to the pressure from disgruntled investors on Chief Executive Officer Peter Sands, 52, as he navigates faltering economies in Asia, where the bank gets about three-quarters of its earnings. The bank posted a $127 million loss in Korea for the period, and said it made provisions for a fraud in China.

Fox Rationale for Time Warner Unraveled With Share Drop (Bloomberg)
While the buyout plan unraveled, yesterday’s abandonment of the bid sent Fox shares rocketing. Time Warner, meanwhile, lost most of the gain it enjoyed while CEO Jeff Bewkes fought off Fox’s bid. No one event changed Fox’s thinking, the people said — rather a gradual realization over several days that there wasn’t going to be a deal that would benefit investors of Fox. Large and small shareholders of both companies, especially arbitrage or event-driven market participants, assumed the deal would get done in the upper $90-a-share range and traded accordingly, said one of the people.

This Man Is An Athlete In The Sport Of ‘Cloud Chasing’ (HP)
With e-cigarettes gaining popularity and dedicated vape shops popping up in cities all across the country, perhaps it won’t come a shock that there are so-called “professional vapers” out there who compete against one another to blow the biggest, baddest clouds of smoke. The activity is known in the vape world as “cloud chasing.” […] During the event, dubbed the “X-Games of vaping” by an attendee, contestants took turns exhaling clouds of epic proportions. To win the competition, a vaper had to create the biggest and densest cloud. According to Mashable, the professional vapers at the event weren’t smoking e-cigarettes, per se. Instead they used modified devices to burn vegetable glycerol and liquid nicotine…The “sport” apparently started as a West Coast trend, but cloud competitions have popped up in recent months in New Jersey, Illinois and New Mexico. Earlier this year, an International Cloud Championship was held in California; and in March, vapers competed against one another at Vape Blast 2014, described as “the first Texas vape convention.” Some people have given the sport a thumbs-up. “It’s kind of impressive,” wrote Digg.com. Read more »

Opening Bell: 08.05.14

Argentina launches investigation into holdouts’ investments (Reuters)
Argentina’s markets watchdog on Monday launched an investigation into what it believes may have been unlawful speculation by holdout creditors whose litigation against the country for repayment of their defaulted bonds pushed it into a new default last week. The government also reiterated its fierce criticism of the mediator in debt talks with the holdout hedge funds for being “biased” and a “spokesman of the vulture funds”…The head of Argentina’s Securities Commission Alejandro Vanoli said it had asked its U.S. counterpart for information on trade of Argentina’s sovereign debt and credit default swaps (CDS), derivatives used to insure against default.

AIG Posts Rise in Profit, Settles Crisis-Era Suit (WSJ)
Outgoing American International Group Inc. Chief Executive Robert Benmosche left parting gifts for his successor, delivering strong earnings and settling a large piece of crisis-era litigation. In the last earnings report overseen by Mr. Benmosche, the New York-based insurer on Monday posted a 13% jump in second-quarter profit, aided by solid results in its core operations and a gain from the last of a series of divestitures prompted by its 2008 government bailout. Separately, AIG agreed to pay $960 million to settle claims that it misled investors about its financial health from 2006 to 2008, in one of the largest settlements of investor litigation stemming from the financial crisis.

Golf Resorts Change Course to Attract Younger Generation (NYT)
“Meeting people my own age, they end up being surprised that I golf,” said T. C. Green, a New York City business analyst who organizes golf outings for young professionals. Mr. Green, 31, said participants had told him they were glad to find a group of like-minded people their own age. “I get that all the time,” he said. “Now people have a venue to meet other people who golf.” Mr. Green acknowledged that he was in the minority, though. “I’ve been looking for different ways to get people to come out,” he said. Resorts are pondering that question, too, making changes that would have been unthinkable even a decade ago, adding speakers to golf carts and Wi-Fi access on the course, building high-tech training centers and miniature golf putting courses, and peppering corporate golf events with tangentially related activities like using golf clubs to hit marshmallows or throwing Frisbees around the course.

Credit Agricole Net Falls 98% on Banco Espirito Santo (Bloomberg)
Net income fell 98 percent to 17 million euros ($23 million) from 696 million euros a year earlier, France’s third-biggest bank said in a statement. Ignoring the 708 million euros in costs related to its 14.6 percent Banco Espirito Santo stake and some one-time charges, profit rose to 1 billion euros.

Murdoch’s Fox expected to push for Time Warner deal on Wednesday (Reuters)
Rupert Murdoch’s Twenty-First Century Fox is expected to make an aggressive case for merging with Time Warner during its quarterly earnings call on Wednesday, though people familiar with the company’s plans have said it would not use that forum to raise its bid…Though Fox is expected to raise its offer it will not rise beyond the range of $90 to $95 per share, a person familiar with Fox told Reuters on July 25. The timing of another offer is unclear. Some analysts have said that an even higher bid would be needed to win over Time Warner management and shareholders.

Gator Knocks On Florida Couple’s Door (HP)
A Coral Springs, Florida, couple were perplexed when they heard a knock on their door early Thursday morning. But their confusion soon turned to shock when they found a 9-foot alligator camped out on their doorstep. “It was nuts, I couldn’t believe it,” resident Luann Alonso said, according to NBC Miami. “I thought it was not real.” Her husband, Jorge, heard a racket outside and thought it was a raccoon. He turned the porch lights on to scope out the scene and saw the huge gator. “As soon as I turned the light on, I saw that big gator right in front of the door,” Alonso told WFOR. “The tail was facing the front window and his body was against the door and we couldn’t get out.” Alonso, who usually walks the family dog early in the morning, said he’s lucky he didn’t stumble across the animal. The couple called police, who had a trapper get rid of the gator. The 9-foot reptile is considered a nuisance and will not be returned to the wild, according to CBS Miami. Read more »

Opening Bell: 08.04.14

Exclusive: Goldman group set to buy message system as alternative to Bloomberg (Reuters)
Wall Street firms led by Goldman Sachs Group Inc are close to buying a stake in chat and instant messaging startup Perzo Inc in pursuit of an alternative to a similar application from Bloomberg LP, sources familiar with Goldman’s plans said. Banks are trying to cut costs as sluggish trading volumes and higher regulation weigh on revenues. Bloomberg has dominated messaging on Wall Street for years, but its application is part of a data, trading and news terminal that costs about $20,000 a year. The Perzo applications are free. Several banks and asset managers are considering an investment in Perzo, including Morgan Stanley, JPMorgan Chase & Co, Bank of America Corp, Deutsche Bank AG, HSBC Holdings PLC, BlackRock Inc and the hedge fund Maverick Capital Ltd, said two sources briefed on the matter who declined to comment publicly…Goldman Sachs has been looking at alternatives to Bloomberg’s messaging program for years, and launched a project internally called “Babel” in early 2013 to develop a competitor, according to two sources. As that project was underway, the bank learned that reporters in Bloomberg’s news division had access to information about bank professionals that it assumed had been private, such as when an employee had last logged into his or her terminal, the sources said.

London Banker Jobs Decrease as Large Firms Slow Hiring (Bloomberg)
Job vacancies at London’s financial-services companies fell by 8 percent in July from the previous month as hiring by large securities firms slowed, according to a survey by a recruitment firm. The number of openings in the City and Canary Wharf financial districts decreased to 2,000 in July from 2,190 in June, London-based Astbury Marsden said in a statement today. However, smaller companies such as high-frequency and algorithmic trading firms, are “actively” creating new positions and adding employees, according to the recruiter.

TPG Is Said to Seek $12 Billion Fund After Boom-Era Busts (Bloomberg)
The total amount for TPG’s seventh buyout pool would include $2 billion the firm already obtained for a bridge fund, according to the people, who asked not to be identified because the information is private. The predecessor fund raised $19.8 billion in 2008, just before the bankruptcy of Lehman Brothers Holdings Inc. triggered a global financial meltdown. TPG gathered $15.4 billion for its fifth fund in 2006 at the peak of the buyout boom.

BofA’s 2 Hour Rosneft Trade Halt Shows Sanction Confusion (Bloomberg)
Bank of America Corp. and Nomura Holding Inc. (8604)’s electronic-trading unit Instinet temporarily banned trading in Russian energy stocks OAO Rosneft and OAO Novatek last month after the U.S. sanctioned the firms over Russia’s policy on Ukraine, four people with knowledge of the matter said. Bank of America suspended trading in both stocks for about two hours as a precautionary measure after the U.S. Treasury issued sanctions on July 16, said two people, who asked not to be identified because the information hasn’t be made public. Nomura placed a ban on both companies’ shares for 24 hours on July 28, one of the people said. “The first reaction for risk managers will be to cut trading when these sanctions occur,” Chris Weafer, a senior partner at Moscow-based consulting firm Macro Advisory and former chief strategist at Sberbank CIB, said in an interview. “We will see this trend of voluntary prohibitions repeated because there are no medals for bravery, and risk managers will err on the side of caution.”

German schoolboy drops phone on fishing trip, drains entire pond to look for it (Metro)
A boy enjoying a fishing trip with a group of friends accidentally dropped his iPhone over the side of the boat – so he decided to drain the entire pond. The 16-year-old took matters into his own hands after the angling club refused to let him use his diving suit to retrieve the device, sneaking back later that night armed with a powerful pump and two hoses. ‘I thought two pumps would drain enough of the water from the pond so I could find my cellphone,’ he told his local paper in Cologne. ‘I knew the phone was probably dead but wanted to get the data card back with the numbers, pictures and videos of my friends.’ The youngster thought that if he directed the water into the angling club toilet he may get away with his plan – but he failed to notice that the toilet wasn’t attached to a sewage system. When the owner arrived to a flooded car park he quickly found the cause and called police. The boy was ordered to pay for the damage for the toilet, the clean-up operation and the water to refill the pond. And though he didn’t recover his phone, he was unapologetic. ‘It almost worked,’ he insisted. Read more »

Opening Bell: 08.01.14

Argentina Unopposed to Bank Deal With Hedge Funds (Bloomberg)
Argentina’s Economy Minister Axel Kicillof said the government wouldn’t oppose a third-party solution to its dispute with a group of hedge funds who successfully sued the country for $1.5 billion. A U.S. judge has blocked Argentina from paying its debt — including an interest payment due July 30 on $13 billion of bonds — until the hedge funds led by Elliott Management Corp. get their money. Standard & Poor’s declared the country in default while Moody’s Investors Service placed its rating on negative outlook.

Gross Left Behind in Pimco Return to Top as Deputies Rise (Bloomberg)
Bill Gross promised in May that funds managed by his Pacific Investment Management Co. would be back on top by the end of the year. So far, his prediction is looking good — unless you count the funds that Gross himself runs. Nine of Pimco’s 15 largest mutual funds are beating at least 75 percent of peers so far this year, according to data compiled by Chicago-based research company Morningstar Inc. None of those top performers are managed by Chief Investment Officer Gross. Of the four funds trailing more than half their rivals, three including the Pimco Total Return Fund are run by the 70-year-old investor known as the bond king.

Tax-Averse French Seek Shelter in Portugal (BusinessWeek)
Under Portugal’s so-called non-habitual-resident program, foreign pensioners who come to live in the country have their pension income exempt from taxes as long as the income is paid from a foreign source. A foreigner has to live at least 183 days a year in Portugal to qualify as a tax resident. France only taxes citizens who live in the country—not French who live abroad. “This means that the pension income may end up not being taxed at all,” says Luis Filipe Sousa, a tax manager at PricewaterhouseCoopers in Lisbon.

SEC probes its own leak but can’t find culprit (CNBC)
The inspector general of the Securities and Exchange Commission conducted an intensive, months-long dragnet in 2013 and 2014 involving phone, email and security searches to determine who inside the agency allegedly leaked information to the media about a closed commission meeting discussing the massive JPMorgan “London Whale” settlement, CNBC has learned. Investigators at the Office of the Inspector General produced a 16-page report detailing their findings in March, but that report has never been made public. A copy of the report was obtained by CNBC on Thursday. The document paints a picture of an SEC in which commission members are at odds with one another and investigators scrutinize their colleagues, staff and the media. It also details just how far the inspector general went to learn how information about a Sept. 12, 2013, executive session commission meeting about JPMorgan had apparently been given to a Reuters reporter, Sarah Lynch.

Fired Miami Beach cop gets job back after blaming cocaine test on sex-aid cream (MH)
After Miami Beach police Detective Reinaldo Casas tested positive for cocaine, he insisted that the drug had been unwittingly absorbed into his blood through an erection-enhancing cream he applied to his genitals. His defense worked. An arbitrator this week ordered Casas, who was fired last year because of the positive drug test, be reinstated with complete back pay. “There is no evidence in the record to show that [Casas] was aware the cream contained a controlled substance,” according to the arbitrator’s report, which was released Thursday. Read more »

Opening Bell: 07.31.14

BNP Paribas Reports Record $5.79 Billion Quarterly Loss (WSJ)
The French lender said on Thursday that a provision of €5.75 billion ($7.70 billion) set aside to help cover a nearly $9 billion U.S. fine—the largest-ever paid by a bank in a sanctions case—had pushed the group deep into the red in the second-quarter. BNP Paribas, France’s largest listed bank by assets, reported a €4.32 billion net loss in the three months through June, compared with a €1.77 billion net profit a year ago. “The group has learned lessons from these past events and is implementing a major reinforcement of its internal control,” said Chief Executive Jean-Laurent Bonnafé in a statement. Despite the substantial size of the penalties, which also include a one-year ban on certain dollar-clearing transactions, BNP Paribas said it had enough cash set aside with central banks and capital to absorb any potential future losses.

Argentina’s Default Clock Runs Out as Debt Talks Collapse (Bloomberg)
The nation missed a deadline yesterday to pay $539 million in interest after two full days of negotiations in New York failed to produce an accord with creditors from its last default in 2001. A U.S. judge ruled that the payment couldn’t be made unless those investors, a group of hedge funds led by Elliott Management Corp., got the $1.5 billion they claimed. As Economy Minister Axel Kicillof returns to Buenos Aires with no set plans for further discussions with the hedge funds he described as “vultures,” other creditors must decide whether to invoke a clause that entitles them to demand their money back. While an 11th-hour attempt last night by a group of Argentine banks to avert a crisis by purchasing the securities from Elliott fell through, bondholders probably will give the parties more time to reach a settlement, according to Bank of America Corp.

First round of Buffalo Bills bids tops $1 billion (NYP)
A Pennsylvania fracking mogul bid more than $1 billion for the Buffalo Bills on Tuesday — making it likely the team will attract a record sales price for an NFL team, The Post has learned. Terrence Pegula, who owns the NHL Buffalo Sabres, is one of only two known bidders for the storied football franchise, which was put on the block last spring following the March 25 death of owner Ralph Wilson Jr. Donald Trump also made a first-round bid for the Bills — bids were due by 5 p.m. Tuesday. It could not be learned whether other bids were received by Morgan Stanley, which is running the auction. A bidding group fronted by rocker Jon Bon Jovi that includes Larry Tanenbaum, chairman of Maple Leaf Sports & Entertainment, owner of the NBA Toronto Raptors and the NHL Maple Leafs, and the Canadian telecom titan Rogers family, which controls Rogers Communications, was expected to bid. The Bon Jovi group is expected to try to move the team to Toronto. That has made Bon Jovi Public Enemy No. 1 in the western New York city, which loves its NFL team. “Man, f–k Bon Jovi,” legendary Bills receiver Andre Reed, who will be inducted into the Hall of Fame this weekend, told New York Magazine. “You might as well just take this city, throw it in the river, and let it go down Niagara Falls.”

Barclays Under U.S. Pressure (WSJ)
On Wednesday, the British bank presented better than expected second quarter earnings, with its shares rallying over 4% on the news that its investment bank performed well. But the numbers were partly overshadowed by a number of litigation and conduct issues which rather than fading, seem to be getting worse. Barclays said it had to put aside another £900 million ($1.5 billion) to cover potential claims from customers who were wrongfully sold insurance products. It also disclosed that U.S. authorities extended for one more year an agreement that essentially puts the bank on probation while the government looks into allegations that the bank rigged foreign-exchange markets.

Buyout Shops Look to Rivals for Deals (WSJ)
Private-equity firms have all but stopped buying public companies, retreating from a cornerstone of their business as rising stock prices push acquisition targets out of reach. Public companies taken private accounted for 3.5% of the $89 billion of U.S. leveraged buyouts in the first half of this year, the lowest share on record, according to data tracker S&P Capital IQ LCD. In the first half of 2008, at the apex of a buyout boom, these types of deals represented about 68% of all buyouts by dollar volume. Instead, private-equity firms are buying companies from one another, a shift driven in part by the relative simplicity of completing an acquisition of a private company compared with a publicly traded one. Transactions between private-equity firms have made up 60% of U.S. leveraged buyout volume through June, according to S&P. That is a higher percentage than the ratio for any full year tracked by the firm, whose data date to 2002.

Greenspan Says Stocks to See ‘Significant Correction’ (Bloomberg)
“The stock market has recovered so sharply for so long, you have to assume somewhere along the line we will get a significant correction,” Greenspan, 88, said Wednesday in an interview on Bloomberg Television’s “In the Loop” with Betty Liu. “Where that is, I do not know.”

Flight Attendant Warns Travelers To Flush Their Drugs Before Landing (AP)
An Australian airline apologized on Wednesday for a warning a flight attendant gave passengers who might have been flying high that there were drug-sniffer dogs awaiting them at Sydney airport. Many of the 210 passengers aboard the Jetstar flight from Gold Coast city on Sunday night had attended the Splendour in the Grass weekend music festival at Byron Bay and were returning home. “We have been told there are sniffer dogs and quarantine officers waiting in the domestic terminal,” Sydney’s The Daily Telegraph newspaper on Wednesday quoted the attendant as telling passengers via the Airbus A320’s public address system. “If you need to dispose of anything you shouldn’t have, we suggest you flush it now,” he added. The newspaper said the warning prompted passengers to rush for the toilets. Jetstar spokesman Stephen Moynihan confirmed the newspaper report was accurate. He said the public response to the announcement had been “mixed.” The airline said it routinely makes quarantine announcements on such flights that cross state borders. “The crew member’s words were poorly chosen and are plainly at odds with the professional standards we’d expect from our team,” Jetstar said in a statement. “We apologize to customers offended by the comments.” Read more »

Opening Bell: 07.30.14

Argentine Bond Standoff Puts U.S. Judge in Focus (WSJ)
As Argentina hurtles toward a second default in 13 years, the local press has lit upon a convenient villain: 83-year-old U.S. District Judge Thomas Griesa. Cartoons in Argentine newspapers have shown the judge with a vulture perched behind him, accusing him of cozying up to the bondholders that Argentine government officials call “vulture funds.” A journalist appearing on Argentine television said Judge Griesa is “not right in the head.” A newspaper ad placed by the Argentine government blamed the judge, who has presided over the government’s disputes with bondholders for more than a decade, for pushing the country toward default. Judge Griesa is squarely in the spotlight as Argentina faces a Wednesday deadline for more than $500 million in debt payments. Argentina is seen as unlikely to make the payments, bringing to a head a standoff with holdout hedge funds that have refused the country’s two debt-restructuring offers over the past decade. At the center of the dispute is Judge Griesa’s 2012 ruling that Argentina isn’t allowed to pay its restructured bondholders until it pays the holdouts—a decision that legal analysts call unprecedented and that the Argentine government contends puts it in a costly legal bind. A default could keep Argentina out of international credit markets and dent a struggling economy.

As Talks Falter, Bond Default by Argentina Appears Likely (Dealbook)
On Tuesday, a group of investors of Argentina’s euro-denominated exchange bonds urged the judge to issue an emergency stay on his ruling. But this is unlikely to be granted unless the holdouts request it, analysts said, or the court-appointed mediator, Daniel Pollack, recommends it…last week, Judge Griesa ordered the Argentine delegation and the holdouts to meet with Mr. Pollack and talk “continuously” until an agreement was reached. The response from Argentina was tepid; the delegation met twice with Mr. Pollack last week before returning home to Buenos Aires for the weekend to consult with the government. When a group of lawyers returned to Mr. Pollack’s offices on Tuesday, they arrived more than 15 minutes late. And despite Mr. Pollack’s insistence that they engage in “face-to-face conversations with the bondholders,” as of Tuesday evening, the Argentines had yet to sit down across the table from the holdouts.

Schneiderman probes Credit Suisse’s ‘dark pool’ (NYP)
New York Attorney General Eric Schneiderman has launched an investigation into whether Swiss bank giant Credit Suisse misled investors about its “dark pool” trading platform, The Post has learned. The probe comes a month after Schneiderman sued Barclays for allegedly lying about the presence of predatory traders in its dark pool. The British bank denied wrongdoing and has asked a judge to dismiss the suit. Regulators are taking a closer look at dark pools — lightly regulated alternative trading systems — because of concerns that high-frequency traders are leveraging them to their advantage. Credit Suisse is the operator of the largest bank dark pool in the US, accounting for about 14 percent of all trades, according to data from the Financial Industry Regulatory Authority.

Icahn cuts stake in Family Dollar (Reuters)
Activist investor Carl Icahn cut his stake in Family Dollar Stores Inc (FDO.N), a day after the company agreed to be bought by rival discount chain Dollar Tree Inc (DLTR.O) for $8.5 billion. Icahn said he was “determined” to dispose part of his stake rather than wait for the deal to close or for higher offers to emerge. Icahn, who had threatened a proxy war against the struggling discount chain if it did not put itself up for sale, said on Monday there were “a handful of potential buyers” who could be a better fit to buy Family Dollar.

Wall Street Bids Farewell to Alan Greenberg, Head of Bear Stearns (Dealbook)
The service began on time at 11 a.m. and lasted just about an hour, honoring the no-nonsense style of Mr. Greenberg, who was known as Ace. The mourners recalled his idiosyncratic business advice, his love of big-game hunting and his magic tricks. A representative of the Society of American Magicians, as is customary, snapped Mr. Greenberg’s magic wand in two.

Man Lied About Pen!s Amputation During Circumcision: Doctors’ Lawyer (AP)
An attorney for two Alabama doctors accused in a lawsuit of amputating a man’s penis in what was supposed to have been a routine circumcision filed a motion Tuesday seeking to dismiss the claims. Attorney Mike Florie says his clients, Dr. Michael Bivins and Dr. Alan Aikens, never performed a circumcision on Johnny Lee Banks Jr. that involved the removal of tissue or the amputation of the man’s penis. He said the suit’s claims are false. Banks’ attorney, John Graves, filed the lawsuit on July 22, accusing the doctors and their medical groups of malpractice, negligence and other wrongdoing. It seeks an unspecified amount of money. Graves says he stands firmly by the allegations but would not comment on specifics of the case. “I don’t file frivolous lawsuits,” he said. Read more »

Opening Bell: 07.29.14

Meet the SEC’s 6,500 Whistleblowers (WSJ)
Retirees were the largest group with 365 tips. Investors were second with 290 complaints. Engineers came in third. But whistleblowers come from all walks of life. They include a diesel mechanic, an antiques dealer and a longshoreman; there’s an agronomist, two people who listed themselves as “ex-wife” and a veterinarian. There are also a number of current and retired military servicemen and enough hospitality and service employees to suggest executives should watch what they say in restaurants, bars, hotels and taxis…Engineers, at first blush, might seem to be an odd profession for informants, but honesty, integrity and fixing errors are drilled into them during training, said Norman Fortenberry, executive director of the American Society for Engineering Education. “It’s fundamental in our code of ethics,” he said. The code states, among other virtues, that engineers “must be dedicated to the protection of public health, safety and welfare.” “It is a matter of both personal and professional pride,” Mr. Fortenberry said. The adult-entertainment industry, however, operates under an entirely different code. Among prostitutes, secrecy is sacrosanct, said Dennis Hof, proprietor of the Moonlight Bunny Ranch and other legal brothels in Nevada. “We have a sacred bond with our clients,” he said. “Money can’t take precedence.” Mr. Hof said any of his employees would be fired and disavowed if they were to release privileged information about any of the brothels’ clients. Air Force Amy, a popular Bunny Ranch mainstay whose real name is Deanne Salinger, said clients constantly reveal material, nonpublic information. At first she said she would approach Mr. Hof to see if they should invest based on any of the tips, but they agreed that it wouldn’t be wise. “I dummy up a lot, I really do,” she said. “I’ve been around a long time and you just don’t talk.”

BofA Deal With U.S. Is Hung Up Over Penalties Tied to Countrywide, Merrill (WSJ)
Bank of America has offered $13 billion to end the government’s mortgage-securities probe, including a combination of fines and consumer assistance, which could include credit for measures such as writing down the values of mortgages for struggling homeowners. But the Justice Department is demanding billions more—and wants a bigger chunk in fines, these people said. Bank of America, which has already shelled out some $60 billion for crisis-era legal problems, has told the Justice Department it is willing to pay for the past misdeeds of Countrywide and Merrill Lynch—but not at levels it considers overly punitive, according to people familiar with the talks. Bank of America scooped up Countrywide and Merrill with the encouragement of regulators after housing troubles nearly sank both firms. It wants the penalty related to the firms’ past misconduct to come in the form of consumer assistance or other so-called soft money that has a less severe impact on Bank of America’s bottom line than a cash fine, these people say. The Justice Department has so far rejected Bank of America’s proposal, and the U.S. could file a lawsuit within weeks if the two sides don’t reach a deal, according to people familiar with the matter.

Former Goldman Options Trader Becomes Argentina Taxi King (Bloomberg)
After 23 years trading stock options at Goldman Sachs Group Inc., Merrill Lynch & Co. and his own hedge fund, Russell Abrams is piling into his most exotic gamble yet: as a Buenos Aires taxi impresario. Abrams, 48, plans to invest as much as $100 million of his own money to build a fleet of Buenos Aires cabs, undaunted by the prospects for Argentina’s second default in 13 years, the fallout from the peso’s devaluation in January, inflation of about 40 percent and the economy’s first quarterly contraction since 2012.

Startups Uber and Airbnb Court Business Travelers (WSJ)
The fast-growing technology startups this week each announced new versions of their apps geared toward booking business trips. Both companies also struck deals with Concur Technologies Inc., the expense-reporting software used by more than 20,000 companies. Appealing to corporate clients would give the young technology companies a toehold in the business travel industry, which is expected to generate $1.21 trillion in revenue world-wide this year, according to the Global Business Travel Association.

New Venture Fund Binary Capital Focuses on Mission, Not Just Metrics (Dealbook)
Binary Capital closed its first fund on July 17, raising $125 million — a hard cap — in just three and a half months. It turned away nearly half as many dollars. The goal of the fund is relatively straightforward: invest in 15 to 20 very early-stage consumer technology companies that have the potential to have a global impact. The partners plan to contribute to that impact by giving a portion of their carried interest to charitable organizations chosen by their entrepreneurs. Eventually, they also hope to team up with global nonprofit groups to use their technology and resources for causes in the developing world.

Marijuana Is a Welcome Wedding Guest in Colorado and Washington State (NYT)
Earlier this month, when Ellen Epstein arrived at the Devil’s Thumb Ranch in Tabernash, Colo., for the wedding of her friends Lauren Meisels and Bradley Melshenker, she, like the other guests, found a gift bag waiting for her in her hotel room. But rather than a guide to activities in the area or a jar of locally made honey, the canvas bag contained a rolled joint, a lighter and lip balm infused with mango butter and cannabis, along with this note: “We wanted to show you some of the things we love the best.” […] All of the floral arrangements, including the bride’s bouquet, contained a variety of white flowers mixed with marijuana buds and leaves. Mr. Melshenker and his groomsmen wore boutonnieres crafted out of twine and marijuana buds, and Mr. Melshenker’s three dogs, who were also in attendance, wore collars made of cannabis buds, eucalyptus leaves and pink ribbons. Before going into dinner, the guests were given a baby marijuana plant in a ceramic pot with their name and table assignment written on a card in green ink, in the kind of stylish script you might find on a container of artisanal goat cheese. The tables were named after different strains of marijuana, like Blue Dream, Sour Diesel and Skywalker (the groom’s favorite strain). Ms. Epstein, who was seated at Skywalker, said that everyone at her table, where the ages ranged from 40 to 70, passed around a device similar to an electronic cigarette — except that it contained hash oil instead of nicotine. “It didn’t feel weird or bizarre,” she said. “It kind of becomes a new cocktail.” Read more »

Opening Bell: 07.28.14

Argentine Default Drama Nears Critical Stage (WSJ)
Argentina could make unfortunate history this week if it defaults on its foreign debt for the second time in 13 years as a showdown with creditors comes to a head. When Argentina last defaulted on this debt, in 2001, it was the biggest sovereign default ever. It led to a debt restructuring and the country’s deepest recession since the Great Depression. The political turmoil was so bad that the country had five presidents in just over a week. The seeds of the current drama were sown not long after that, when investors bought the country’s defaulted bonds but never accepted its terms for restructuring the debt. Now they are standing in the way of payouts that would avoid a default this week. Although there is little fear of contagion for other emerging markets and minimal concern Argentina would suffer the kind of economic implosion of 13 years ago, a default still could cost one of Latin America’s biggest economies dearly, keeping it shut out of international credit markets and crimping credit to companies. It also could complicate the transition to a new government after next year’s presidential election.

No meeting scheduled on Monday between Argentina and court mediator (Reuters)
Argentina does not have a meeting scheduled for Monday with a court-appointed mediator in New York in its debt dispute with creditors but talks continue, a government source said on Sunday, as the country looks to avoid a possible debt default next Thursday. Argentina, Latin America’s third-largest economy, has for years fought the “holdout” hedge funds which snapped up its junk bonds after its $100 billion default in 2002 and then refused the restructuring terms, suing for repayment in full. “There is no meeting scheduled for Monday. Talks are continuing,” the government source told Reuters.

J.P. Morgan Questioned for Conflicts of Interest (WSJ)
Regulators have questioned J.P. Morgan Chase & Co. executives in recent months about whether the firm steers private-banking clients to its own investment products, according to people familiar with the matter. The queries helped prompt J.P. Morgan to spell out more clearly to private-banking clients the differences between its own products and outside offerings, and how much of clients’ assets were invested in each, these people said. The latest changes were set in motion several months ago when the Office of the Comptroller of the Currency, one of J.P. Morgan’s primary regulators, began asking officials at the firm about the percentage of clients’ assets that were being directed to J.P. Morgan’s own funds and products instead of third-party options, these people said.

Deutsche Bank, HSBC Accused of Silver Fix Manipulation (Bloomberg)
Deutsche Bank, HSBC Holdings, and Bank of Nova Scotia were accused in a lawsuit of rigging the price of billions of dollars in silver, an allegation similar to earlier suits involving the London gold fix. The banks unlawfully manipulated the price of the metal and its derivatives, an investor claims in a complaint filed yesterday in federal court in Manhattan. The banks abused their position of controlling the daily silver fix to reap illegitimate profit from trading, hurting other investors in the silver market who use the benchmark in billions of dollars of transactions, according to the suit. “The extreme level of secrecy creates an environment that is ripe for manipulation,” according to the complaint. “Defendants have a strong financial incentive to establish positions in both physical silver and silver derivatives prior to the public release of silver fixing results, allowing them to reap large illegitimate profits.”

Goldman mortgage deal with federal agency could reach $1.25 billion: source (Reuters)
A deal to resolve a U.S. regulator’s claims against Goldman Sachs Group Inc over mortgage-backed securities sold to Fannie Mae and Freddie Mac leading up to the financial crisis could cost the bank between $800 million and $1.25 billion, according to a person familiar with the matter. The person said Goldman Sachs is discussing a settlement with the Federal Housing Finance Agency (FHFA), which filed 18 lawsuits against Goldman and other banks in 2011 over about $200 billion in mortgage-backed securities that later went sour.

Doughnut-Wielding Vandals Terrorize Neighborhood (AP)
There’s mischief afoot in one suburban Portland neighborhood, but police say it doesn’t involve the typical spray paint or broken windows. No, we’re talking pastry here — maple bars smeared on cars, doughnuts left atop windshield wipers, pastries littering a yard. One woman told officers she’s seen more than a dozen incidents of food smeared on cars. Not just pastry, but yogurt, cakes and eggs. She alerted police July 11. The next day, another woman told police her vehicle had been hit six times — twice with a maple bar, once with a cinnamon doughnut, once with pink yogurt, once with “bread soaked in a white slimy liquid” and once with red potato salad. The crime wave in a northeast Hillsboro neighborhood has been going on for six weeks, The Oregonian reported. Police think the victims of the night-time vandalism are chosen at random and kids are likely behind it. Lt. Mike Rouches says officers are investigating and extra patrols have been added. Still, he adds, “In my 25 years in police services, I have never investigated or seen a criminal mischief involving pastries.” Read more »