The Latest

Opening Bell: 07.07.14

A Mad Scramble for Young Bankers (NYT)
This summer, dozens of junior bankers in their early to mid-20s will start jobs in private equity after spending their first two years out of college working at investment banks. Private-equity firms use billions of dollars of cash and plenty of debt to buy entire companies. They are seen by many young strivers as the next rung on an elite career ladder, promising higher status and more pay — around $300,000 a year, including salary and bonus, roughly double what a second-year banker might earn at Goldman. But for junior bankers, who are known as analysts, securing such a job means stepping into the middle of a Wall Street struggle that has intensified since the financial crisis. The whirlwind process of interviews, which this year started in February, far earlier than many in private equity had expected, requires analysts to sneak around and often miss work. It bears little resemblance to the orderly on-campus career fairs they attended in college. “It is not a normal search process — that, certifiably, everyone would agree with,” said Adam Zoia, the chief executive of Glocap Search, one of the recruiting companies involved.

Lion Capital Said to Want Return of American Apparel CEO (Bloomberg)
Lion Capital LLP is threatening to call in a $10 million loan to American Apparel Inc. unless the retailer reinstates ousted Chief Executive Officer Dov Charney, according to a person familiar with the situation. Barring an investigation that finds illegal or immoral activities by Charney, the hedge fund believes his return would be best for American Apparel because it would stabilize the chain in the short term, said the person, who asked not to be named because the matter isn’t public.

IEX Pricing Aims to Drain ‘Dark Pools’ (WSJ)
The upstart firm will allow broker-dealers, including most Wall Street banks, to trade for free when their buy and sell orders match up on the exchange, Chief Executive Brad Katsuyama said in an interview. The desire to avoid trading fees is a primary reason many banks established dark pools in the first place. All other trades at IEX would be charged the same flat fee—nine cents per 100 shares for each buyer and seller—rather than be subject to the complex system of rebates in place at existing exchanges. As part of its “broker priority” pricing system, IEX will let broker-dealers jump to the front of the trading queue. This would put other groups, including retail investors, mutual-fund firms and high-frequency traders, at a disadvantage as it means there will be a greater chance their orders would go unfilled. IEX, which currently operates as a relatively small dark pool, is looking to make a bigger splash in the markets by becoming a stock exchange registered with the Securities and Exchange Commission. Mr. Katsuyama said IEX intends to “imminently” submit its application. With the pricing plan, Mr. Katsuyama—a protagonist of Michael Lewis’s best-selling book “Flash Boys” and a prominent critic of the current U.S. market structure—said he is trying to give the operators of dark pools an incentive to shut those trading venues down. If that happens, he said, most investors would benefit more from the reduced fragmentation in the market than they would lose by ceding the first spot in line to broker-dealers. It isn’t clear if the SEC will approve the company’s pricing structure, or if big banks will abandon their dark pools. The SEC declined to comment.

DoJ vows financial sector crackdown (FT)
The US Department of Justice will be “appropriately aggressive” and seek to bring “timely” cases, including against financial institutions, the chief of its criminal division told the Financial Times. Leslie Caldwell, who was confirmed as chief of the DoJ’s criminal division in May, is returning after a decade spent helping defend corporations against civil and criminal investigations. She said it is no accident that financial institutions are facing inquiries across their business units. “The government has gotten more sophisticated and more willing to investigate complicated fraud. We’ve learned a lot from cases that we’ve done. We have more knowledge in how to do these cases in a more timely way,” Ms Caldwell said. “We’ve seen evidence of criminal activity at a lot of financial institutions. We don’t decide which types of things we investigate. We follow the evidence where it leads.”

France not worried about U.S. probe of other banks: minister (Reuters)
France’s finance minister said on Sunday he was not worried about French banks being investigated by U.S. authorities after a record fine was imposed on BNP Paribas for violating U.S. sanctions against several countries. On Tuesday, BNP pleaded guilty in the United States to two criminal charges and agreed to pay almost $9 billion to settle accusations it violated U.S. sanctions against Sudan, Cuba and Iran. According to U.S. sources, French banks Societe Generale and Credit Agricole and Germany’s Deutsche Bank are being investigated for having potentially violated U.S. economic sanctions. Asked if he was worried about the French banks being probed, Finance Minister Michel Sapin said: “No.”

Finnish Couple Wins Wife-Carrying Race (AP)
A Finnish couple has narrowly won the 19th World Wife Carrying Championships – a quirky competition in which men race to be the fastest while carrying a female teammate. Ville Parviainen and Janette Oksman cleared the grueling 253.5 meter (278-yard) obstacle course in 63.75 seconds on Saturday, less than a second ahead of Britain’s Rich Blake Smith and Anna Marguerite Smith. Thirty-six couples from a dozen countries including Australia, Japan, and the United States took part in the race, which was held in the central Finnish municipality of Sonkajarvi, north of the capital, Helsinki. The rules stipulate that the woman must be over 17 years of age and weigh at least 49 kilograms (108 lb). Despite the event’s name couples don’t have to be married, and organizers say male contestants could “borrow a neighbor’s wife” if they didn’t have a female companion. The men can carry their teammate in various ways, though a popular method is for the woman to hang upside-down with her legs around the male contestant’s shoulders. Read more »

Write-Offs: 07.03.14

$$$ Ackman’s Pershing Square Said to Gain 25% in First Half [Bloomberg]

$$$ Bernanke Joins Obama for Lunch With Economy on Menu [Bloomberg]

$$$ Other World Cup-related insurance products aimed at the special hazards facing extreme fans are still for sale. “Drunk” insurance is still available on Tmall by Shanghai-based Zhong An Insurance. It helps those soccer lovers who happen to imbibe too much. For a 3-yuan ($0.48) policy, one is covered if he or she gets blotto: 200 yuan is provided for an emergency call, and 2,000 yuan if a hospital visit is necessary. “Night owl” insurance, also for 3 yuan and offered by Zhong An, covers emergency expenses for those who get acute respiratory infections. With most of the games showing after midnight in China, fans indeed must stay up late—how that might lead to a respiratory infection is less clear. And then there’s “soccer hooligan” insurance, for those who get robbed or perhaps end up on the wrong side of a brawl during the late hours of the games. [BusinessWeek]

$$$ BoNY caught in the middle of Argentina’s bond debacle [NYP]

$$$ Ford, who just this week returned to work after a stint in rehab, admitted Wednesday he dabbled with cocaine, hallucinogenic mushrooms and crack — the last he still claims he wasn’t addicted to. But he never tried heroin, he said. And while Ford said he drank at work, he never did drugs within City Hall. [NYDN]

$$$ That’s it for us today! Have a great holiday and we’ll see you back here on Monday! Read more »

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Argentina doesn’t want it back, and the bank would rather not be (a) held in contempt of court or (b) sued by the people who Argentina says the money now belongs to. So it’s going to ask the judge who put it in this situation to expand on his rather glib suggestion that “the money should be returned to the republic, simple as that.” Read more »

This was a problem for many IT departments, one helpfully solved by the Belgian national team on Tuesday. Read more »

Because it’s just so much harder to inherit a fully-functioning operation than to start one from scratch, and because a top-flight business school knows a lucrative opportunity when it sees one, you can now receive academic qualification in the art and science of taking over the family business. Courses available include: Fraternal Conflict Resolution, Social Dynamics of Filial Employment Relations, Keeping Daddy Happy (While Keeping Yourself Sane), Swallowing Your Pride and Easing the Old Man Out. Read more »

Marijuana sales are spreading across the nation thanks to the growing legalization of the drug. Now a new financial firm, KindBanking, wants to be the financial backbone for the hemp and cannabis industry. “Think of us as the GE Capital of this under-served, but potential multi-billion dollar industry,” said KindBanking’s founder and CEO David Dinenberg…KindBanking, which launched in April, already has nearly a dozen deals, and is talking to start-ups in the U.S. and around the world, including Amsterdam and Panama. The West Hollywood firm provides equity financing in states that allow pot, plus alternative capital like debt, convertible debt and other venture capital or angel investments. In return, KindBanking becomes a partner and owns a portion of the company. “We’re doing deals for dispensaries, growers, equipment companies, edible products makers, even a weed-based online news network” Dinenberg said. [CNBC]

Opening Bell: 07.03.14

Goldman says Google has blocked email with leaked client data (Bloomberg)
Goldman Sachs Group on Wednesday said Google Inc has blocked access to an email containing confidential client data that a contractor sent to a stranger’s Gmail account by mistake, an error that the bank said threatened a “needless and massive” breach of privacy. The breach occurred on June 23 and included “highly confidential brokerage account information,” Goldman said in a complaint filed on Friday in a New York state court in Manhattan. Goldman did not say how many clients were affected. It has been seeking a court order compelling Google to delete the email, which it said on Wednesday had yet to occur. “Google complied with our request that it block access to the email,” Goldman spokeswoman Andrea Raphael said. “It has also notified us that the email account had not been accessed from the time the email was sent to the time Google blocked access. No client information has been breached.” A Google spokeswoman declined to comment. According to Goldman, the outside contractor had been testing changes to the bank’s internal processes in connection with reporting requirements set forth by the Financial Industry Regulatory Authority. Goldman said the contractor meant to email her report, which contained the client data, to a “gs.com” account, but instead sent it to a similarly named, unrelated “gmail.com” account.

Exclusive: SEC official dissented on BNP Paribas waiver (Reuters)
An official at the U.S. Securities and Exchange Commission (SEC) broke ranks with other commissioners, and voted against granting BNP Paribas a critical waiver to continue operating several investment advisory units in the United States. Kara Stein, a Democratic SEC commissioner who has recently demanded more accountability for big banks who break the law, was the sole dissenting vote on Monday on the temporary waiver, according to a document made public this week. BNP’s application was granted the same day that BNP, France’s largest bank, pleaded guilty to criminal charges it violated U.S. sanctions. The temporary waiver will become permanent, unless an “interested person” in the matter is granted a hearing. The deadline for requesting a hearing is July 25.

Barclays Probe Casts Ugly Light on Dark Pools (BusinessWeek)
The ultimate promise of a dark pool, however, was that no matter who was invited inside, prices weren’t immediately reported—in theory, at least, limiting the impact a large trade can have on the market. In public exchanges, by contrast, bids and offers are displayed (often at varying speeds depending on which feeds you buy) and prices are reported immediately after a trade is executed. This information can create ripples across the market, allowing faster firms to trade ahead of a big order and make a profit. This was the problem that dark pools sought to fix. By keeping orders in the dark, effectively blinding traders to what was happening around them, there were no ripples. Or if there were, they went unnoticed. The picture Schneiderman paints is much worse. There’s still a room filled with blindfolded traders buying and selling to each other. But now there’s a speed trader or two lurking in the corner, secretly watching everything that’s going on.

JPMorgan Investors Show Support for Dimon in Cancer Fight (Bloomberg)
The bank has deep contingency and succession plans, and Dimon’s illness may serve as no more than a valuable “fire drill,” said Michael Farr, president of Farr Miller & Washington LLC, a Washington-based asset manager that oversees more than $1.1 billion, including JPMorgan shares. “The good news is that every indication is that they will never be needed and that Jamie Dimon has many years to work and that he’ll retire on his own schedule as a much older man,” Farr said. “It feels unfair to watch someone who has really been through so much have to suffer through this.”

Owners send dogs to ‘fat farms’ as more pets become obese (AP)
Growing rates of obesity in pets have led to the emergence of fat farms offering ‘‘pawlates,’’ ‘’doga’’ and ‘‘Barko Polo,’’ doggie versions of Pilates, yoga and Marco Polo to help slim down man’s best friend. In the U.S., 53 percent of dogs are overweight or obese, up from 45 percent four years ago. In cats, the figure is almost 58 percent, said Dr. Ernie Ward, a veterinarian and founder of the Association of Pet Obesity Prevention in Calabash, North Carolina. Overweight pets can suffer diabetes, joint problems, heart disease and decreased life expectancy, just like obese people, he said. Most luxury pet hotels and spas nationwide will customize a fitness program for a pudgy dog or cat, but only a few facilities have fat camps for large groups. For golden retriever Ceili, it was easy to fatten up when living with a boy who pushed tasty morsels over the edge of his high chair. The extra weight led Eileen Bowers of Bedminster, New Jersey, to sign up the more than 100-pound pooch for a five-day fitness camp last month at Morris Animal Inn. Besides the ‘‘pawlates,’’ the camp was filled with swimming, nature hikes, treadmill trots, facials, massages and healthy treats like organic granola, string beans and carrots. It was designed to give Ceili and 40 other dogs a head start on a healthier life, said Debora Montgomery, the New Jersey facility’s spokeswoman…the ‘‘Barko Polo’’ pool game varies from its human inspiration: A staffer will shout ‘‘barko’’ and whichever dog-paddling pooch yelps first gets a toy. Read more »

Write-Offs: 07.02.14

$$$ Yellen Leery of Using Rates to Address Risk [WSJ]

$$$ Venture Capitalist Tim Draper Wins Bitcoin Auction [Dealbook]

$$$ Stan O’Neal wants to be scrubbed from Google [BBC]

$$$ World Cup Fans Ditch Work for N.Y. Bars as Team USA Falls [Bloomberg]

$$$ World Cup drunkenness shocks FIFA official [AP] Read more »

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