Bank of America Corp. and former Chief Executive Kenneth Lewis took big steps to put the financial crisis behind them by paying state and federal agencies to settle lawsuits over the acquisitions of Countrywide Financial Corp. and Merrill Lynch & Co…Mr. Lewis agreed to pay $10 million and accept a three-year ban from work at any public company as part of the New York settlement. Bank of America will cover Mr. Lewis’s penalty, according to people familiar with the deal. Mr. Lewis neither admitted nor denied wrongdoing. [WSJ]
For the first time in more than a month, Carl Icahn has written about something other than eBay. Kind of*. “A Watershed Moment for Stockholder Participation” celebrates the fact that institutional investors have begun to stand up for themselves, and in Icahn’s lifetime, to boot, at least in between digs at and rehashings of his case against, you guessed it, eBay. Read more »
S&P wants to split up $5 billion U.S. ratings lawsuit (Reuters)
Standard & Poor’s asked a federal judge to split up the U.S. government’s $5 billion civil fraud lawsuit accusing it of lying about its credit ratings, saying it would be unfair to have to defend against a case of such “unmanageable scope” all at once. In a court filing on Tuesday, the McGraw Hill Financial Inc unit proposed holding a trial in two phases, with the first focusing on just the 17 securities where Citigroup Inc is alleged to have suffered losses. S&P said this would cover over 30 percent of alleged losses suffered by financial institutions on the 158 securities in the February 2013 lawsuit, and limit the risk of juror confusion. In contrast, a single trial would force jurors to balance government claims that S&P’s ratings lacked “independence” and “objectivity” against “an overwhelming amount of information regarding the actual securities at issue and the detailed process by which S&P determined its ratings,” S&P said.
Activist Investors Often Leak Their Plans to a Favored Few (WSJ)
Shares of Rino International Corp. sank 28% in the two days after investment firm Muddy Waters LLC put out a report attacking the Chinese company’s accounting. Three investment firms were ready for the news. The firms had been tipped beforehand by Muddy Waters about the scathing November 2010 report, according to a person close to the matter, who said one of them made a bet against Rino stock that produced a $1 million-plus profit. “We sold advance copies of our report,” said Muddy Waters’s founder, Carson Block, adding that since then he has tried to limit advance knowledge of his firm’s research. For a new breed of “activist” investors, tipping other investors is part of the playbook. Activists, who push for broad changes at companies or try to move prices with their arguments, sometimes provide word of their campaigns to a favored few fellow investors days or weeks before they announce a big trade, which typically jolts the stock higher or lower. In doing so, they build alliances for their planned campaigns at the target companies. Those tipped—now able to position their portfolios for price moves that often follow activist investors’ disclosures—benefit in a way that ordinary stockholders who are still in the dark don’t.
Citigroup’s Mexico situation ‘a horror show’: Dick Bove (CNBC)
“The situation in Mexico is, in my view, a horror show because basically, at this stage, seven years after the big crisis which almost—which did make them bankrupt—this company finds that it doesn’t have controls in Mexico and lets $400 million walk out the door,” he said. “This company is not a ‘buy.’ I don’t care what the price to tangible book is. It is not a ‘buy.’ ”
White House’s Sell Russian Stocks Recommendation Flopping (Bloomberg)
White House press secretary Jay Carney’s debut as a short-selling tout is off to a rough start. Since Carney said March 18 that the only investments worth making in Russian equities are wagers the market will decline, short sellers have been pulling out as the Micex gauge rebounded 1 percent. The percentage of borrowed shares in the biggest U.S. ETF tracking Russia’s market — a barometer of short selling — has fallen to 14 percent of the total stock, from 17 percent the day Carney spoke and a record 21 percent on March 3, according to financial data provider Markit.
Ergen says LightSquared could be worth $8.9 billion (Reuters)
LightSquared, owned by Phil Falcone’s Harbinger Capital Partners, went bankrupt in 2012, when the Federal Communications Commission revoked its license to operate spectrum out of concern it could interfere with GPS systems. Ergen then acquired about $1 billion of the company’s senior loan debt, giving him a controlling stake in LightSquared’s capital structure.
North Korean men must get Kim Jong Un’s haircut (NYDN)
Supreme Leader Kim Jong-Un, in a bizarre bit of tonsorial tyranny, decreed that his 12 million countrymen adopt his decidedly retro high-and-tight ’do. The diminutive despot delivered his “fashion guideline” about two weeks ago, likely ensuring that Dennis Rodman and his multi-hued mop will never return to the nation. The “Un and only” haircut, once popularized by ’90s boy bands, was unimaginatively dubbed “The Dear Leader Kim Jong-Un” — more of a mouthful than “a little off the sides.” The 31-year-old’s look is simple: Short and slicked back on top, buzzed to the skin above both ears. North Korea’s citizens were not too keen on the government-ordered grooming, griping that it’s not the right look for everyone. “Our leader’s haircut is very particular, if you will,” one source told the Korea Times. “It doesn’t always go with everyone since everyone has different face and head shapes.” Read more »
$$$ ‘Candy Crush’ Maker Tumbles in Debut [WSJ]
$$$ Optimism runs deep with young Wall Street [CNBC]
The bull, who has been surrounded by barricades for nearly three years in order to keep him safe from Occupy Wall Street protesters, finally got the room to stretch out today when Police Commission Bill Bratton ordered his staff to remove the barriers. After keeping his fans at arms length for so long, the bull celebrated by allowing tourists and one “Wall Street veteran” to pat his head and rub him where the sun don’t shine for good luck, and will presumably be mounted by someone before nightfall. [CBS via DI]
Not-so-poor old Warren Buffett is taking a beating: First, Marc Andreessen went for the low blow re: bitcoin. Perhaps staggered by the epithet, or perhaps unable to see the “Welcome to New York City” signs on the Outerbridge Crossing from the top of Berkshire Hathaway HQ in Omaha, or perhaps having failed to memorize all 6,000 Dairy Queen locations, or perhaps thinking (correctly) that Staten Island doesn’t look much like New York City, or perhaps taking sides in a contentious non-debate about whether in fact Staten Island should make like the Crimea and secede, a position supported by dozens of Staten Islanders and many more beyond its shores, for whom the city’s fifth borough lost its utility upon the closing of the Fresh Kills Landfill in 2001, or perhaps simply making a minor mistake, the Blizzard purveyor has committed a faux-pas tailor-made for the modern outrage industry. Read more »
Citigroup Inc.’s capital plan was among five that failed Federal Reserve stress tests, while Goldman Sachs Group Inc. and Bank of America Corp. passed only after reducing their requests for buybacks and dividends. Citigroup, as well as U.S. units of Royal Bank of Scotland Group Plc, HSBC Holdings Plc and Banco Santander SA, failed because of qualitative concerns about their processes, the Fed said today in a statement…Regulators seeking to prevent a repeat of the 2008 financial crisis have run annual tests on how the largest banks would fare in a similar recession or economic shock…Citigroup, which last year asked for the least capital return among the five largest U.S. banks after having its plan rejected in 2012, would have passed this year’s test on quantitative grounds alone…The central bank identified multiple deficiencies in Citigroup’s planning practices, including areas the Fed had flagged previously. [Bloomberg]