Steve Cohen is just an appeals court ruling away from fulfilling his most deeply held desire: to pay $602 million to settle allegations of insider-trading whose veracity he does not accept. Read more »
Remember when Sandy Weill decided to sell all his belongings? Included in the fire sale was a 200-foot yacht called April Fool, which the former Citigroup CEO was trying to unload for $69.5 million, before slashing the price at least a couple times. Read more »
For the last number of years, private equity firms and hedge funds slowly moved up the time at which they recruit that gotta-have-it talent, junior banking analysts, until it got to the point that they were making offers of employment to people who had graduated college and started working on Wall Street but months earlier, and still had a year and half of servitude left at their respective banks. While employers were used to having second years check out vis-à-vis doing any kind of productive work a couple months before moving on, they finally decided enough was enough. Feet were put down, expectations (that people would stop interviewing shortly after their first day on the job) communicated.
Knowing it’s one thing to smile, nod, and then tell Apollo HR that you look forward to seeing them on Monday and another to put your name on a contract promising you’ll do no such thing or risk getting canned, Morgan Stanley sought to get a little extra assurance its worker-bees would fall in line, requiring them last summer to put it in writing or beat it.
To get in trouble for insider trading, the information you trade on has to be “inside” information in some sense. Just standing outside a company’s offices and seeing who walks in, and extrapolating from that, is probably not insider trading. Seeing where corporate jets land is mostly not insider trading, to the point that it was once a feature of Dealbreaker, though in general my advice to you is never to use “well Dealbreaker does it” as a rationale for anything. Certainly there are gray areas.
Here’s a delightful new SEC insider trading case. Richard Bruce Moore, a managing director in the private equity coverage group at CIBC’s investment bank, spent a lot of time with his buddy and client, a managing director and LBO deal manager at the Canada Pension Plan Investment Board. In addition to golf and such, “Moore contacted the CPPIB Managing Director at least once a month about deal opportunities and about the possibility of CIBC providing financing for those deals.” In early 2010 Moore noticed that his buddy was becoming less available, which set his sponsor-coverage-spidey-sense a-tingle, and so he did what any good coverage banker would do:
Sometime in March 2010, Moore asked how the CPPIB Managing Director’s other deals were going. The CPPIB Managing Director told Moore that he was working on something interesting and active. Moore then inquired about the possibility of assisting the CPPIB as an investment banker on the deal.
This got a soft ding – “The CPPIB Managing Director did not disclose the parties to the deal, but responded that, as far as CBIC participation, they would have to wait and see how it went” – and so he followed up a few days later with an email asking if CPPIB needed any debt on that deal. This got a little more information: Read more »
If you went into finance for the love of pulling 15-hour days, more power to you. But if working in anticipation of that fateful day in February when your bonus hits your bank account, let’s just say that you aren’t alone.
When your monthly paycheck arrives, you might get stars in your eyes. You forget about that massive student loan and nagging credit card bills. Suddenly bottle service every weekend seems like a great idea. Who doesn’t love those sparklers? If you’re not careful, those morning hangovers could have a lasting effect on your bank balance. Here’s a quick crash course in how to divide up your earnings like a boss—ahem, managing director so that you can still afford the life you want without busting your budget.
Let’s discuss some general guidelines, which make up what we like to call the 50/20/30 Rule:
Honestly bank earnings week has been a little boring, no? It’s been quarters since anyone announced a six billion dollar trading loss, and the recent news is pretty much modest beats from a diverse mix of businesses and where is the fun in that I ask you. Financial-market memories are short and … have negative serial correlation, or something … which might explain why Goldman is down today despite announcing a $4.29 EPS vs. analysts’ $3.87, with strength in principal investments and debt underwriting making up for so-so FICC revenues.
The call: variations on boring. Goldman CFO Harvey Schwartz painted a picture of Goldman clients who are deterred from strategic activity by macro uncertainty – “oh we can’t do that merger, because, uh, Cyprus” – and so spend their time refinancing their loans every six months to get lower interest rates.1 I suppose their bankers have to make fees somehow. And there don’t seem to be many conclusions to draw from the numbers: FICC revenues are down because there is noise in FICC revenues, not due to any change in business mix or performance. VaR is down because market vols are down, not because of any change in risk appetite. Private equity gains in investing & lending reflect stronger public equity markets because private equity is just beta. I guess.
Nor is Harvey your go-to guy to fulminate about regulation, though these days really no one is. He said various nice things about how the regulators are working hard and getting it right, and how Goldman doesn’t act in anticipation of regulations but only responds to them when they’re final. Others have phrased this less charitably. Thus Goldman’s new BDC is not a preemptive effort to fit prop traders into the Volcker Rule, but just a client-driven part of Goldman’s asset management strategy – “deploying our competencies into opportunities we feel like our clients would benefit from.”
So what’s left? There’s comp, of course: comp accruals were 43% of revenue ($4.34bn), versus 44% in 1Q2012 ($4.38bn), and headcount is down 1%. Analysts tried to push Schwartz to extrapolate a trend there, but again he mostly resisted. Keep enough people to serve clients, etc. Read more »
Goldman Sachs’s First Quarter Profit Beats Estimates (DealBook)
Goldman Sachs on Tuesday reported a first-quarter profit of $2.2 billion, or 4.29 a share, up from the year-ago period and driven by investment banking and investment and lending. It was well of analysts’ expectations of $3.89 a share, according to Thomson Reuters. Earnings per share were up 9 percent when compared to the same quarter in 2012. … Net revenue in Goldman’s powerful division that trades bonds, currencies and commodities was $3.2 billion, down 7 percent from the year-ago period. … The firm’s investing and lending division however did quite well, posting revenue of $2.07 billion, up 8 percent from year-ago levels.
BlackRock profit jumps on ETF demand (FT)
Buoyant stock markets and strong demand for BlackRock’s exchange traded funds pushed profits for the world’s largest money manager up by a tenth from the year before. Net income rose 10 per cent to $632m from $572m in the first quarter of 2012. Assets under management of $3.94tn were up 7 per cent on the same period last year to their highest-ever level.
Dell reaches deal with activist investor Icahn (Reuters)
Dell Inc said it struck a deal with billionaire Carl Icahn to limit his investment in the company, while in return allowing him to enter agreements with other shareholders on a potential bid for the PC maker. The agreement with Icahn states that the activist investor would not make purchases that would cause him to own over 10 percent of Dell’s shares or sign deals with other shareholders who, together with the Icahn entities, would collectively own more than 15 percent, Dell said on Tuesday.
Paschi Prosecutors Seizing $2.4 Billion of Nomura Assets (Bloomberg)
Italian prosecutors are seizing about 1.8 billion euros ($2.4 billion) of assets from Nomura Holdings Inc. as part of a probe into Banca Monte dei Paschi di Siena SpA’s use of derivatives to hide losses. … The seizures are linked to allegations of fraud and usury, prosecutors said. Monte Paschi has claimed Nomura colluded with its former managers to devise one of two derivatives in 2008 and 2009 that hid total losses of much as 557 million euros. Nomura reaped at least 88 million euros from the transaction, dubbed Alexandria, according to Italian lender.
Gold Makes Tentative Recovery (WSJ)
The shaky recovery has been stimulated by thin physical buying, as some buyers return to the market, although the metal failed to regain the key psychological $1,400/oz level. Gold rose 2.8% in midmorning European trading to trade around $1,389/oz.
Boston Seeks Answers in Deadly Blasts (NYT)
President Obama, speaking at the White House, vowed to bring those responsible for the blasts to justice. “We will get to the bottom of this,” the president said. “We will find who did this, and we will find out why they did this. Any responsible individuals, any responsible groups will feel the full weight of justice.”
Read more »
$$$ Gold: The fear bubble bursts [Reuters / Felix Salmon]
$$$ SAC Capital’s Steven Cohen Had a Profitable 2012 [Bloomberg]
$$$ Ex-Full Tilt Poker CEO Pleads Guilty [WSJ]