The Latest

Opening Bell: 10.27.14

brian_moynihan_bofaECB List of Failing Banks Shrinks If You Read Small Print (Bloomberg)
Most of the lenders that failed the European Central Bank’s balance-sheet test have been let off for good behavior. Only eight banks haven’t already plugged capital gaps or satisfied the ECB with plans to shrink, out of 25 found with a shortfall. That means just 6.35 billion euros ($8 billion) remains from a 25 billion-euro hole, and half of that is in Italy. The ECB, releasing results of its year-long bank audit yesterday, said investors should focus on the insight they’ve gained into lenders’ books instead.

Monte dei Paschi’s Stress-Test Failure Opens Door to Possible Merger, Sale (WSJ)
Banca Monte dei Paschi di Siena SpA has emerged as one of Europe’s most troubled banks after a health check by European regulators found it needs €2.1 billion ($2.66 billion) in fresh capital…Shares in the bank tumbled around 15% in Milan on Monday before trading was suspended amid the heavy losses. Trading in the stock was initially delayed amid a surge in sell orders. Shares in Italy’s other big loser from the stress tests, Banca Carige , also tanked, falling 17% before trading was suspended. Later Monday morning Italy’s market regulator Consob banned short selling of Monte dei Paschi shares until Tuesday evening.

Greece Puts a Happy Face on Stress Test Results (Dealbook)
As Greece continues trying to claw its way out of its debt hole, the results of the European Central Bank’s review of the country’s lenders were hailed in Athens on Sunday — because they were not worse. The review indicated that two big Greek banks have capital needs of 2.69 billion euros, or $3.4 billion, in additional capital to be sufficiently able to weather any likely financial storm or economic crisis. The calculations were based on the state of the lenders at the end of 2013. Coming up with additional capital might be achievable, and Athens officials said the relatively small amount was a sign that their country’s fragile economy was on course to recovery after a six-year recession and €240 billion in international bailouts. The bank review ‘‘surpassed all expectations,’’ Prime Minister Antonis Samaras said Sunday, adding, ‘‘Step by step, on stable foundations, we are emerging from the crisis.’’

Hedge-Fund Manager’s Combative Style Pays Off (WSJ)
Keith Meister takes things personally. The burly and at times combustible hedge-fund manager, tipped off that his expensive coup d’état of the board of corporate landlord CommonWealth REIT could be imperiled by a proposed last-minute tweak to Maryland state law, didn’t just send one of his 24 employees: He flew down to Annapolis himself last April to lobby against it. Months later, mired in related shareholder lawsuits there and in Delaware, Mr. Meister appeared in court himself for nearly every hearing. Mr. Meister’s eventual triumph at CommonWealth—as well as quieter efforts to transform companies ranging from the energy-pipeline operator Williams Cos. to lender Fidelity National Financial Inc. —is earning the former right-hand man to Carl Icahn a reputation of his own. The 41-year-old’s hedge-fund firm, Corvex Management LP, bankrolled partly by about $1 billion from George Soros, is also outperforming nearly all of its activist-investor peers.

BofA Mortgage Settlement Stalls Over SEC Political Fight (Bloomberg)
In the Bank of America case, two Democratic commissioners are balking at granting the firm’s request for relief, said the people, who asked not to be named because SEC negotiations with companies aren’t public. SEC Chair Mary Jo White, the swing vote, isn’t participating in the discussions due to a conflict, they said. With the two Republicans on the other side, the commission is locked in a stalemate.

Man Allegedly Wanders Drunk To Wrong Home, Gets In Bed With Stranger (AP)
A Connecticut man was arrested after police say he wandered into the wrong home drunk and got in bed with a stranger, who woke up startled and called 911. Police say the incident happened early Saturday morning at an apartment complex in Clinton. Officers say 26-year-old Tyler Sullivan of Haddam told officers he thought he was at his mother’s apartment, which is in the same complex. A man in the home said he told Sullivan to leave, but Sullivan refused. Police say Sullivan was still there when officers arrived. Sullivan was charged with trespassing and disorderly conduct. He was released on $1,000 bail and ordered to appear in Middletown Superior Court on Nov. 4. It’s not clear if Sullivan has a lawyer. Read more »

Write-Offs: 10.24.14

$$$ About 25 Eurozone Banks to Fail ECB Stress Tests [WSJ]

$$$ Fed’s $4 Trillion Holdings to Boost Growth Beyond End of QE [Bloomberg]

$$$ Two bullet-proof doors and one small sign are the only clues that this is the control center of a financier who’s helped turn some of Vladimir Putin’s closest allies into multibillionaires. For a man who honed his trade in the hushed back rooms of Vienna and Zurich during the Cold War and who is now, as friends say, the most secretive banker in a country run by a former spy, this is how it should be. [Bloomberg]

$$$ Deutsche Bank braces for $1.3 billion in U.S., UK Libor fines: sources [Reuters]

$$$ Fisherman: ‘Tunicorn’ tuna had horn on its head [UPI] Read more »

Workshop it, damnit!Eight years ago, there was much handwringing over the plan. Such as, won’t this violate the Foreign Corrupt Practices Act and lead to an extremely embarrassing criminal investigation one day? And, how we will make sure that the brain-dead progeny of the people we need don’t lose us too much money? Read more »

He's ba-ack.For more than a year, Herbalife’s biggest booster got his kicks kicking Bill Ackman while he was down, gleefully touting how he had been proven right about the world’s favorite diet shakes time and time again, while the Pershing Square founder had been proven the opposite, also over and over again. But at the beginning of the year, it occurred to Tim Ramey that repeatedly sticking his finger in Bill Ackman’s eye is really no way to live, and that he should try to do something constructive with his life, like corporate consulting.

But as he’s watched Ackman’s hopes get up and then dashed once again, Tim realized it is foolish to deny one’s passions. And so while he’s keeping his office over at Post Holdings, he’s ready to publicly sing the praises of his favorite multi-level marketing company once again, giddily predicting just how much more money Ackman is going to lose. Read more »

Don't get too comfortable, Mel.The embattled Yahoo! chief, in the wake of the first good news she’s gotten in the past two years, told activist hedge funds where to stick it this week. Well, one such hedge fund manager is returning the favor. Read more »

ray-dalioBridgewater Associates sued Howard Wang and Wenquan “Robert” Wu in federal court in Manhattan on Tuesday, saying they tried to publicize their newly-formed hedge fund, Convoy Investments, by lying about their former roles at Bridgewater. Bridgewater claims that Wang and Wu tried to pass themselves off as “former key figures responsible for core aspects of Bridgewater’s business,” but “they were nothing of the sort.” Bridgewater is asking a federal judge to order Wang and Wu stop misrepresenting their role at Bridgewater and pay the hedge fund firm damages…Bridgewater says that Wang joined Bridgewater in 2008 as an entry-level junior analyst in the client services department that is responsible for managing the hedge fund’s relationships with clients. Wang left in 2012 and Bridgewater says he told the hedge fund “that he intended to pursue ballroom dancing ‘full time as a competitor.’” Wu joined Bridgewater’s internal finance department in 2007 as a software developer, coding software that calculated Bridgewater’s fees. Wu was later transferred to the core tech department at the hedge fund and dealt with discrete coding projects until he left the hedge fund firm in 2010, telling Bridgewater that he was unemployed and traveling, the hedge fund claims. [Forbes]

hsbcEarlier this week, we learned that two HSBC employees had sued the bank, claiming that they had been demoted and had their bonuses cut by more than 60 percent after reporting a superior’s conduct– which allegedly included strongly encouraging an underling to have sex with various male employees, attempting to pull her top down in public, and so on and so forth. Then on Tuesday, the firm scored a rare trifecta when a third employee filed suit against it, claiming that he’d been fired for complaining about a colleague touching him in places no one wants to be touched by their colleagues, and also requesting favors of the sexual variety. Read more »

Bill AckmanIt’s a burden, really. Read more »