The Latest

Opening Bell: 1.20.15

close_up_knight_on_horseFed Officials on Track to Raise Short-Term Rates Later in the Year (WSJ)
Federal Reserve officials are staying on track to start raising short-term interest rates later this year, even though long-term rates are going in the other direction amid new investor worries about weak global growth, falling oil prices and slowing consumer price inflation. The Fed’s stance, as it prepares for a policy meeting later this month, is striking because European Central Bank officials are poised to take the opposite approach later this week.

Jefferies Reprises Role of Market White Knight (WSJ)
When foreign-exchange broker FXCM Inc. FXCM -15.06% was forced to seek a rescue last week following a surprise surge in the Swiss franc, a number of potential white knights surfaced, including private-equity firms and Leucadia National Corp. It soon became apparent, however, that the best-suited among them to pull off the lightning-fast cash infusion FXCM needed was Leucadia and its Jefferies Group LLC unit, which in recent years has honed its skills as a rescuer of firms succumbing to bouts of market turmoil. Jefferies bankers in about 36 hours put together a $300 million financing from its parent company that will keep FXCM in business. In addition to the 10% initial annual interest the loan commands, Leucadia stands to reap an outsize share of any dividends FXCM generates and of proceeds from any sale of the company or its parts. Jefferies’s role in bailing out FXCM is reminiscent of one it played in 2012, when Knight Capital Group Inc. needed an emergency infusion to stay afloat after a slew of accidental stock orders put the trading firm on the verge of collapse.

Wall Street titan’s son thrown out of NYC steakhouse (NYP)
The son of Wall Street titan Mario Gabelli caused a scene at hot new restaurant Hunt & Fish Club, bellowing “Do you know who my father is?” as Fox Business’ Charlie Gasparino tried to calm him down. Michael Gabelli was thrown out of the Midtown steakhouse after he started yelling when the bill arrived. A witness said, “He forcefully argued with the servers and managers. Gasparino tried to help. Charlie kept saying things like, ‘You’re embarrassing your father.’” After Gabelli calmed down, he tried to get a drink, but when the bartender refused to serve him, he flipped out. So he was thrown out, but not before dropping, “Don’t you know who my father is?…He runs this city.”

Swiss Franc Trade Is Said to Wipe Out Everest’s Main Fund (Bloomberg)
Marko Dimitrijevic made a smart bet in December. The hedge fund manager, wagering the Swiss franc would fall, profited after voters there rejected a plan to have the central bank hold a fifth of its assets in gold. For the $830 million Everest Capital Global, his Miami-based firm’s oldest and biggest fund, investments from Switzerland contributed 0.6 percentage points to gains that month. Last week, the wager had a far bigger impact. In less than a day, it wiped out the 24-year-old fund, according to a person familiar with Everest Capital, leaving the firm with about $2.2 billion in seven other funds. Dimitrijevic, an emerging market specialist who’s navigated at least five debt crises in those markets, was undone by the central bank of the country where he was raised. Last week, the Swiss National Bank unexpectedly let the franc trade freely against the euro, ending its three-year policy of capping the franc at 1.20 a euro.

Gleeful German Firms Target Switzerland on Franc’s Gains (Bloomberg)
“The first thought to cross my mind was that this would be great for me and my company’s deliveries in Switzerland,” Hartmut Neidlein said as he recalled hearing about the Jan. 15 decision. “It’s now cheaper for them to buy our products and that could increase demand.” Wurotec is one of the thousands of small and medium-sized companies that make up the German Mittelstand, which account for more than half of the country’s gross domestic product. Neidlein has now set up a meeting with his Swiss distributor to try to boost sales of his machines, which start at 2,000 euros ($2,320), beyond the current 10 percent of the total.

Woman steals flat screen between her legs (WTSP)
Captured on video, a woman shocked workers by stealing a flat screen TV by stuffing it up her dress, between her legs. The woman simply walked into the store, picked up the packaged TV, placed it between her legs and walked out along with an accomplice. According to reports, it all happened in 13 seconds. “She did it so quickly no one had time to notice or react,” said the shop assistant. Read more »

Write-Offs: 1.16.15

$$$ Russia Cut to Baa3 by Moody’s on Oil Plunge as Junk Rating Looms [Bloomberg]

$$$ FXCM, Brokerage Hit by Swiss Shock, Gets $300 Million From Jefferies Owner Leucadia [Bloomberg]

$$$ Inflation Slows Amid Plunge in Oil [WSJ]

$$$ Fitch Revises Greek Long-Term Outlook to Negative [WSJ]

$$$ Loose Pet Alligator May Have Been Eating Neighborhood Cats For 40 Years [Reuters] Read more »

Click Here
  • 16 Jan 2015 at 5:00 PM

Hedge Fund Lawyers Make Bank

Total cash compensation for general counsels at most hedge fund managers tends to range between $500,000 and $2 million. The average total cash package for a general counsel is close to $1.1 million. There are outliers at the top end of the range, however, and I know of several GC’s earning well north of $3 million.

This is welcome news for in-house counsel at the larger, more complex and better performing hedge fund managers. Read more »

Jim ThompsonJim Thompson, the founder and chairman of logistics giant Crown Worldwide, celebrated his 75th birthday this year by doing 75 pushups in just 47 seconds, according to The Jersey Journal. The feat was accomplished in front of Thompson’s cheering employees at the company’s headquarters in Hong Kong on Wednesday. “It’s become a tradition and creates quite a stir.” Thompson said in a press release. “I managed to get through 75 with no problems this time so we’ll have to see how long the tradition continues…I don’t know if I’ll be able to do 100 at 100 but I hope I’m around to try.” [CNBC]

Stealing From Ken Griffin For Three Years In The Joint

griffinAlthough ex-programmer Yihao Pu’s lawyer argued that her client was “guilty only of being an immature young man,” ripped Citadel off for a mere $2,000, and really didn’t need to do jail time, a judge saw things differently, on all counts. Read more »

Financial Analysis Of Litigation Funding Transactions

Lake WhillansEd. note: This article is part of a weekly column from Lake Whillans Litigation Finance devoted to addressing common questions that arise in connection with commercial litigation finance. Last time we discussed the doctrines of champerty and maintenance; this week, we will be discussing the analysis a CFO might undertake when considering whether to raise capital for a litigation. We hope you’ll find this article to be the beginning of an informative dialogue.

The emergence of litigation finance has enabled CFOs to better manage and finance a once dormant asset – potential litigations. Many of the companies that we finance are emerging businesses with promising new products that have the ability to transform an industry. Businesses such as these are often characterized by a high ROI (return on investment) and a constrained budget (often having recently raised capital from the venture community). Imagine that the wrongful conduct of a third party has damaged such a business, and the company now faces the prospect of an expensive and lengthy litigation if it is to secure compensation. Before litigation finance, the decision might well have been between bringing litigation or not – now the decision is between self-financing or third party financing.

Read more »

lloyd blankfein gary cohnDon’t want to get anyone upset over nothing or be unnecessarily alarmist but there is a slight possibility that shitty earnings may translate to shitty bonuses. Read more »