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Insider Trading Watch ’13: Not On Steve Cohen’s Watch!

Of all the hedge funds affected by the government’s crackdown on insider trading, SAC Capital has topped the field in both fines paid and traders charged (can’t give you an exact figure at the moment but it’s “requires spreadsheets to keep track of all the cases” big). And while recognition of peerless achievement is always nice, Steve Cohen has gotten a little tired of waking up to find out another one of his employees chopped up evidence of wrongdoing and scattered it through Manhattan, or (allegedly!) sold stock based on material, non-public information passed on by friends in the medical profession.

Although one would have thought a simple “cool it with the securities fraud, you idiots” or a diagram of a foot in an ass would have sufficed re: sending a message that SAC has had it up to here with people trading in the sort of way the SEC frowns upon, apparently some hard and fast policy changes were necessary. They include:

1. Compensation clawbacks for employees “facing criminal or civil cases,” for whom the possibly of prison is not enough of a deterrent.
2. Requiring portfolio managers to get permission from compliance before taking calls with expert network analysts, after the first four freebies. Read more »

Man, the resistance to this Dell deal is crumbling pretty fast isn’t it? Blackstone dropped its bid two weeks ago, Icahn and Southeastern have been relatively quiet since Icahn defended his right to a free exchange of ideas just before Blackstone dropped out, and the stock is at $13.33, ~2% below the $13.65 deal price, after being as high as $14.51 in the hopes of a better deal.

Dell filed its revised merger proxy today, with revisions presumably mostly driven by the SEC’s comments on its first draft from March. It doesn’t look like the SEC put up much resistance either; here’s a crappy redline and the changes are smallish. Here’s my favorite piece of SEC nitpicking:

Get it? That’s: Read more »

  • 02 May 2013 at 3:30 PM

Centaur (Hedge Funds) Go Extinct

Just a year ago, investors had two Centaurus Capitals to choose from. And even after John Arnold’s retirement at the ripe old age of 37 last May, those with a penchant for half-man, half-horse hedge funds still had a place to put their money, albeit in a totally different strategy.

Well, no more: The other, less-successful and less-well-known Centaurus is taking its event-driven strategy and going home, because it is sick and tired of the bellyaching and second-guessing. You’ll have to find another hedge fund named for a human-animal hybrid. Read more »

If you’re a Morgan Stanley shareholder on the fence about whether to give the bank your non-binding vote in favor of its executive-compensation plan this year, and would like a proxy firm to make your non-decision for you, you are out of luck. Read more »

  • 02 May 2013 at 2:26 PM

Bonus Watch ’13: Macquarie

The Aussies have some angry junior mistmakers on their hands. Read more »

This is getting tiresome. Read more »

  • 02 May 2013 at 12:09 PM

Lehman’s Bankruptcy Worked Out Well For Intel, Anyway

One possible reaction to Apple’s gigantic tax-optimized share repurchase program is to think that spending a lot of time fiddling with how to optimize your share repurchase program might mean you’re out of better ideas. You can ponder whether this Intel share repurchase trade described in a Lehman Brothers bankruptcy lawsuit filed yesterday supplies any evidence on that question. Intel decided to buy back $1bn of its stock in August and September of 2008, and rather than just buy it in the market it entered into a pretty fiddly forward contract with Lehman like so:1

  • Intel gives Lehman $1bn on August 29.
  • Lehman hands the $1bn back to Intel for safekeeping – it’s Lehman’s money, but Intel keeps it as collateral.
  • On September 29, Lehman gives Intel some shares, based on the average price of Intel stock from August 29 to September 26.2
  • The dollar amount of shares Intel buys is $1bn, if the average price is $21 or below, or $250mm, if the average price is $25 or above, or some amount linearly in between if the average price is between $21 and $25:

  • If the dollar amount Intel buys is less than $1 billion, Lehman gives back the extra money.
  • So in other words as the stock price goes up Intel buys fewer shares, and vice versa, which is kind of wrong-way for them3 but right-way for Lehman.
  • In exchange for that risk Lehman agrees to give them a discount of 10.6 cents per share.4
  • The number of shares Intel buys is equal to the dollar amount divided by the average price minus 10.6 cents:

Read more »

Diamond talked the situation through with Jennifer, his wife of 26 years. “What is the best thing right now I can do for the firm?” he asked. His answer: “Step aside and shut up.” His daughter, Nell, a recent graduate of Princeton, wasn’t quite so discreet. The morning after Diamond announced his resignation, she tweeted: “George Osborne and Ed Miliband you can go ahead and #HMD” — referring to a slang term that can’t be reprinted in these pages. (Google it.) She immediately called her father. “ ‘Dad, I think I did something really bad. I think I’m in trouble,’ ” Diamond recalled her saying. He told her: “Sweetie, I love you. That’s so nice. I think we’re probably all in trouble.” [NYT, earlier]