Robert Buckhannon was doing just fine when he was (allegedly!) ripping investors off to the tune of $45 million. Now that he’s settled for adjusting spinal cords in Las Vegas and Battle Creek, Mich., things have been tougher, even before the prosecutors suggested he pony up 100,000 times what his lawyers say he’s got in the bank. Read more »
Secret Goldman Sachs Tapes Put Pressure on New York Fed (Dealbook)
Lawmakers are scrutinizing allegations that the Federal Reserve Bank of New York went easy on one of the most prominent banks under its watch, Goldman Sachs, despite concerns voiced by those inside the Fed that a deal Goldman was pursuing was “legal, but shady.” Now committees in the Senate and House of Representatives are looking at whether to hold hearings or conduct more extensive investigations into the Fed’s oversight of Goldman and other banks. The renewed interest in the Fed’s role came after the release of secret recordings detailing interactions between employees of the New York Fed and Goldman, which were made public by the investigative news organization ProPublica and the radio program “This American Life.” The former Fed employee, Carmen M. Segarra, who made the recordings had previously sued the New York Fed, arguing that she had been fired for being too hard on Goldman. While Ms. Segarra’s suit was dismissed, the newly released recordings suggest that her supervisor at the New York Fed went easy on Goldman, even after saying he wanted “to put a big shot across their bow” on a deal in which Goldman was suspected of helping make Banco Santander look financially stronger than it was.
Activist Funds Aren’t Sharing the Ties They Have to Advisers (WSJ)
Some activist investors have agreed to share trading profits with small-fry players who bring them stock ideas—but they aren’t always disclosing these financial ties. Consider the activist campaign involving Cliffs Natural Resources Inc., an iron-ore miner. Activist consultant Michael McNamara last year pitched the idea of launching a Cliffs campaign to Casablanca Capital LP, according to people familiar with the matter. Casablanca is an activist hedge fund co-run by Donald Drapkin, a former lawyer of high-profile investor Ronald Perelman. Casablanca built a stake of about 5.2% it disclosed in January. In exchange for his idea, Casablanca agreed to pay Mr. McNamara’s firm as much as one-third of the hedge fund’s profits on the stake, according to people familiar with the matter and a regulatory filing by Mr. McNamara’s firm. Casablanca didn’t disclose these ties in the Cliffs case, according to a review of its regulatory filings. A regulatory rule requires investors that acquire a stake of 5% or more in a company to describe any arrangement with another party that includes guarantees of profits, divisions of profits or losses, or other understandings related to the company’s securities.
Pimco CEO says ‘our DNA is fundamentally unchanged’ after Gross (Reuters)
Pimco CEO Doug Hodge played defense on Thursday, reiterating that Bill Gross’s departure has not affected the way the U.S. bond giant functions. “With Bill’s recent decision to resign, the perception has been that there has been a dramatic shift at Pimco,” Hodge said in a letter to clients on Pimco’s website. “However, the reality is that while Pimco has evolved into a globally diversified investment company, our DNA is fundamentally unchanged.”
You Know It’s a Tough Market When Ben Bernanke Can’t Refinance (Bloomberg)
Ben S. Bernanke said the mortgage market is so tight that even he is having a hard time refinancing his own home loan. The former Federal Reserve chairman, speaking at a conference in Chicago yesterday, told moderator Mark Zandi of Moody’s Analytics Inc. — “just between the two of us” — that “I recently tried to refinance my mortgage and I was unsuccessful in doing so.” When the audience laughed, Bernanke said, “I’m not making that up.” “I think it’s entirely possible” that lenders “may have gone a little bit too far on mortgage credit conditions,” he said.
French court to begin Airbus insider trading trial (Reuters)
A long-awaited French corporate trial involving allegations of insider trading in the shares of Airbus Group gets under way on Friday, marking the climax of an eight-year investigation. Seven current and former managers at Europe’s largest aerospace group, and two former industrial shareholders, are accused of trying to profit from inside knowledge of problems with two jet developments and a deteriorating financial outlook when they sold shares in what was then EADS in 2006. All deny the charges and are expected to argue that the trial should not be taking place because they have already been cleared by the French stock market regulator, highlighting a growing debate about “double jeopardy” rules.
South Daytona man charged with molesting vending machine (UPI, related)
Daytona Beach police have arrested a man they say is a suspect in several cases related to the robbery of coin-operated machines. On Wednesday, Daytona Beach police officers responded to Crystal’s Car Wash on South Nova Road to investigate a theft and vandalism. Video surveillance captured parts of the crime, and left police with enough evidence to pursue a suspect. On the video, the suspect was seen using a sledge hammer and ax to force open the coin-operated vending machines. After reviewing the footage, detectives identified Jason Joslyn as the suspect. Joslyn was arrested four months ago for similar crimes police say he committed at Melissa’s Car Wash on Beville Road. On Friday, detectives located and arrested Joslyn. He’s now facing charges of felony criminal mischief, and molesting a vending machine. Read more »
$$$ High-Speed Trader Accused of Commodity Market ‘Spoofing’ [Bloomberg]
$$$ “Merrill, 44, sees himself as a rebel in the world of finance. He looks the part, with shoulder-length hair, a tattoo with peacock feather patterns on his left arm and black fingernail polish on his left hand. He’s one of dozens of entrepreneurs tapping the vast new storage and analytical capabilities of the Internet in a quest to modernize — and perhaps take over — the credit-scoring decisions that are at the heart of consumer finance.” [Bloomberg]
$$$ As bond traders began what they thought would be a quiet day last Friday, a simple headline crossed their screens: “William H. Gross joins Janus Capital.” Confusion ensued. Several asset managers and traders wondered whether the news was about Pimco’s co-founder, known to most on Wall Street simply as Bill Gross, or someone else with the same name. “The question was, ‘Is it THAT William H. Gross?'” said Lou Brien, a veteran market strategist at DRW Trading, a 22-year-old trading firm in Chicago active in futures markets. [Reuters]
$$$ A judge tossed a $100 million lawsuit against Nike filed by an Oregon pimp who blamed the athletic wear giant for failing to warn him its shoes could be used to inflict bloody damage. Sirgiorgiro Clardy, 27, wore Air Jordan kicks when he stomped a john who failed to pay one of his prostitutes in June 2012. Sentenced to 100 years in prison for the bloody Portland beating, the desperate pimp tried to pin his troubles on Nike, the behemoth headquartered in Beaverton, Ore. [NYDN] Read more »
The firm, which manages $2 trillion in assets, said on Thursday that its Pimco Enhanced Short Maturity exchange-traded fund had taken in $71 million in new investor money since the firm’s co-founder, Bill Gross, resigned abruptly last week. The fund, traded under the ticker symbol “MINT,” is managed by Jerome Schneider and has $3.7 billion in assets under management, according to the firm. Pimco trumpeted the intake of new investor money into the fund a day after it reported that investors had pulled a record $23.5 billion from its flagship Pimco Total Return Fund in September, with much of that coming on the day Mr. Gross announced he had left Pimco to take a job as a portfolio manager with Janus Capital. [Dealbook]
Josh Gordon is an Fordham business school grad and entrepreneur with a product he’s about to bring to the marketplace. His father is an former Morgan Stanley employee and “conservative guy,” who was probably hoping his son would follow his footsteps onto Wall Street. Maybe the fact that Josh didn’t even affected their relationship. Maybe there was tension at Thanksgiving. Awkward silences that were reminiscent of the feeling in the air after, as a kid, Josh would turn down invitations from his old man to have a catch or go fishing. No matter: father and son have clearly connected now, in their bid to offer people a classier option than whatever they’ve been using to this point to stash their joints and various other vehicles for weed. Read more »