After five years under investigation for insider trading, Steven Cohen is considering proposing a deal to prosecutors that would shut his $15 billion hedge-fund firm to outside investors, according to a person familiar with his thinking. Cohen has discussed an agreement under which his SAC Capital Advisors LP would admit wrongdoing but wouldn’t be prosecuted unless it broke the law again, said the person, who asked not to be named because the talks are private. As part of the deal, known as a deferred prosecution agreement, Cohen would close the Stamford, Connecticut-based firm to outside investors and make it a family office that manages his personal fortune. SAC Capital probably would also pay fine. [Bloomberg]
If you’ve seen the internet today you know that everyone wants to talk about their feelings regarding the union of Yahoo! and Tumblr, those icons of two different generations of internet orthography. Do you prefer the florid olden style of Extraneous Punctuation! or the sleek postmodern vibe of Mssng Lttrs?1 Let us know in the comments or, of course, on your Tumblr. Here’s Goldman’s note:
Management cited the “uncanny” fit between Tumblr, with its fast-growing but largely unmonetized usage, and Yahoo, with its strengths in monetization but declining engagement.
Many people would think “avaricious widely disliked company” and “well-liked nonprofit, more or less,” would not be a good fit for each other, but I guess “uncanny” doesn’t actually mean “good.”
The press release is … terrible? Unspeakable. “Per the agreement and our promise not to screw it up, Tumblr will be independently operated as a separate business,” begins the second paragraph. Are you encouraged? If you’re a Tumblr user? (Not really, right?2 ) If you’re a Yahoo! shareholder? I drew you a picture:
Etc., etc., there is this: Read more »
Hedge Fund Owner Gets Subpoena to Testify (DealBook)
By subpoenaing Mr. Cohen, the government indicated that it was pursuing a case against SAC itself. Federal guidelines discourage prosecutors from soliciting grand jury testimony from the target of an investigation, which suggests that Mr. Cohen was being treated as if he were a potential witness against his own fund. While the authorities have not settled on a strategy, according to the lawyers and executives briefed on the case, they are pursuing an avenue that could possibly lead to an indictment against SAC, accusing it of allowing traders to carry out illicit activity over years.
Yahoo Is Planning to Buy Tumblr for $1.1 Billion (NYT)
For Yahoo and its chief executive, Marissa Mayer, buying Tumblr would be a bold move as she tries to breathe new life into the company. The deal, the seventh since Ms. Mayer defected from Google last summer to take over the company, would be her biggest yet. It is meant to give her company more appeal to young people, and to make up for years of missing out on the revolutions in social networking and mobile devices. Tumblr has over 108 million blogs, with many highly active users.
Enron No Lesson to Traders as EU Probes Oil-Price Manipulation (Bloomberg)
Shell, London-based BP and Statoil ASA, three of Europe’s biggest oil explorers, are under investigation for potential manipulation of prices in the $3.4 trillion-a-year global crude market. The involvement of McGraw Hill Financial’s Platts, which publishes pricing data, hearkens back to other pricing scandals including Enron, and more recently, Libor. “We’re making exactly the same mistakes we did with Enron, just with a different commodity,” Robert McCullough, an energy consultant, said by telephone from Portland, Oregon. “The same manipulation we saw in electricity and gas pricing is what we’re seeing in oil.”
Gold Slump Hits Silver (WSJ)
Falling appetite for the safe haven of gold has pushed the metal down 20% since the start of the year as inflation fears faded and global growth improved. In Asia, investors have zeroed in, especially on Japan where the central bank’s aggressive easing measures have kick started an economic recovery and pulled up shares. The biggest moves on Monday were felt in silver, which dropped 9% in the first 10 minutes of Asian trading, touching its lowest level since September 2010. It later recouped some losses to trade down 3.9%. Silver is less liquid than gold and therefore more susceptible to such sharp moves. Spot gold fell 1.2% to $1,344 a troy ounce, and is off 8.9% since the beginning of May.
Barbie eyeing a Manhattan penthouse in search for new dream home (NYP)
Barbie is moving from her California mansion and embarking on a quest for new digs that could land her in a posh penthouse with Central Park views, makers of the doll say. Toymaker Mattel has hired a team of top-notch interior designers to create three “dream houses” — in New York, California and India — and will announce its choice in August. … Barbie’s VP of marketing, Lori Pantel, said the story reflects the doll’s evolution as an independent woman. “As a workingwoman with over 135 careers, Barbie is proud to have a Manhattan home,” Pantel said. “It’s a glamorous work space to host movers and shakers.”
Read more »
$$$ Regulators Take Hard Line On Exchanges [WSJ]
$$$ Is Ticket for $600 Million Powerball Jackpot a Good Bet? [Real Time Economics]
$$$ “Mother Nature often works in mysterious ways, but the recent birth of a baby anteater has the staff at a Greenwich conservation center stumped. The mystery begins in August, when Armani, a female giant anteater at the LEO Zoological Conservation Center in Greenwich, gave birth to baby Alice. It was a joyous occasion for all involved, except perhaps for Alf, baby Alice’s father. Male anteaters are known to commit infanticide, so Alf had to go. He remained at the center, but was kept away from mom and baby for several months. Fast forward to one morning in April. A tender went into Armani’s enclosure and received quite a shock. Armani, sometime during the previous night, had given birth to another baby. The sudden appearance of little Archie was a surprise, to say the least. The gestation period for anteaters is six months. Armani and Alf had not been back together long enough to do what they needed to do to put the cycle of life into gear a second time. The staff at the conservation center immediately got to wondering. Either this was a case of immaculate anteater conception, or Alf had somehow gotten the keys to Armani’s pen one night in October.” [Greenwich Time] Read more »
Are you as puzzled as I am by the mild brouhaha over the CFTC’s new swap execution facility rules? Basically the rules require that most swaps be traded on pseudo-exchange-y-type things called “swap execution facilities,” which are run either by an order-book system or a “request for quote” system. The RFQ system would require anyone wanting to trade to send an RFQ to at least 3 (2 for “an initial phase-in period”) potential counterparties. The original proposal was for that to be five counterparties. The revised proposal has caused a striking amount of rage, as various people have confused themselves into thinking that of course it’s obvious that every transaction should be an auction among five potential counterparties. Presumably few of those people orient their daily life that way. I don’t, anyway; I get lunch at Chipotle every day because it’s next door to Dealbreaker HQ.1
On the other hand people who think that customers should choose how many quotes to get don’t like the 3-quote compromise either. Here’s a SIFMA guy whining about it, and he doesn’t seem all that wrong:
SIFMA’s Asset Management Group continues to believe that any minimum-bid requirement will tie the hands of portfolio managers who already have a fiduciary obligation to serve the best interests of their clients. Requiring portfolio managers to broadcast their trading position more widely than they would otherwise choose could negatively impact the prevailing price of their trades, making it more expensive and difficult to hedge their clients’ risk. SIFMA strongly believes that professional investment managers, and not the government, should determine appropriate trading strategy.
The thing that trading is is, deciding how broadly to expose your order. Wider exposure gets you more and potentially better bids, but at the risk of getting front-run or picked off or otherwise abused.2 I realize that I won’t persuade everyone by quoting a trading textbook but here: Read more »
SAC Capital Will No Longer Provide Investors With Updates On Its Unconditional Cooperation With The Government’s Investigation, Which Oh, By The Way, Ain’t So Unconditional AnymoreBy Bess Levin
SAC Capital Advisors, the hedge fund owned by the billionaire investor Steven A. Cohen, told its investors on Friday that it was no longer cooperating unconditionally with the government’s insider trading investigation. “In the past we have tried to be as transparent with you as possible about the state of the investigation while balancing our desire for transparency with the need to keep the details of a sensitive investigation confidential,” said the letter. “While we have in the past told you of our cooperation with the government’s investigation our cooperation is no longer unconditional and we do not intend to give updates in this area going forward.” [Dealbook]
Hedge fund managers: Are you full of great, bold, interesting trade ideas? Haven’t gotten enough money from Blackstone (or anyone else) and/or have an annoyingly restrictive prospectus that won’t allow you to let it all ride on one of them? Need a little extra scratch?
Everybody, stop what you are doing: Jim Cramer is talking.
I spend an awful lot of time trying to figure out what makes sense to cover in terms of trying to help people — and what doesn’t make sense. I do it because one of the things that makes me valuable is the perspective I bring as a former hedge fund practitioner. I particularly like to highlight when something is irrelevant or confusing when you hear it.
But enough about me, kinda. Read more »
For many people, prison is a terrible place that breaks their spirit and turns them into a shell of the person they once were. They grow bitter. They harden. Their looks take a hit. Two people for whom time in a correctional facility actually seems to have served them quite well? The currently incarcerated Raj Rajaratnam, who is said to be in quite “good spirits” and looking fantastic, to boot, and the recently released (early for good behavior) Danielle Chiesi, who looks GOOD and feels GREAT. Read more »