Bank of America Merrill Lynch
A whole bunch of mini Moynihans are said to have left the building. Read more »
Well this isn’t great:
The story behind that – more fully described here – is that Chesapeake issued $1.3 billion of seven-year bonds in February 2012, and those bonds were freely callable from November 2012 to March 2013, and thereafter not callable (except with a T+50 makewhole) until maturity. And in March Chesapeake tried to call them, and their trustee – BoNY Mellon – said, well, no, you needed to give notice of a call a month in advance, everyone knows that, so you’re outta luck and can’t call them except at the makewhole price (~129). And Chesapeake disagreed and so they sued. The dispute turned on some ambiguous language – some places the bond documents said you need to provide notice a month before you call, other places they say that the early call works as long as you provide notice before March 2013 – but I wasn’t particularly sympathetic to Chesapeake, based mostly on market-practice-y reasons, and gave them about 25% odds of winning.
I was wrong!1 Today Chesapeake won its lawsuit and so will be redeeming those bonds at par. To be fair The Market was wrong too, as the bonds were trading at 108ish (5.25%-ish), wider than Chesapeake’s non-callable bonds but still well north of the 100 that you’re now going to get for them. Read more »
Brian T. Moynihan, who endured record losses and public thrashings while cleaning up Bank of America Corp.’s mortgage mess, said he wouldn’t mind being chief executive officer of the lender forever. “It’s the best job there is,” Moynihan said yesterday in an interview scheduled for public television’s “Charlie Rose” program. “While there have been times when you sit there and say, ‘Jeez, this is a lot of pounding,’ you always keep your eye on the purpose you’re here. And that’s to help people with their financial lives — if you really keep focused on that, I could do this the rest of my life.” [Bloomberg]
Cuts are said to have gone down at the House ‘o Moynihan. Read more »
Would’ve been quite the gag but no, he was serious, in case there was a question in anyone’s mind. Read more »
The House of Moynihan has said goodbye to a bunch of employees down under. Read more »
Remember Project New BAC, i.e. Bank of America’s plan to transform itself from Ken Lewis’s house of fun, where everyone went home happy but the concept of making money was less of a focus than keeping the good times coming, to an institution that did things like post profits? The bank has said previously that PNBAC “will result in $8 billion in annual savings by 2015—$5 billion from the first phase and $3 billion from a second phase” and while it stands by those figures and remains committed to cutting as many employees as it takes, some people would like them to be a bit snappier about it. Read more »
For their roles in “The Wolf of Wall Street,” based on the memoir by Jordan Belfort, who spent 22 months in a federal prison for running a pump-and-dump scam out of brokerage firm Stratton Oakmont. Read more »
There are two competing theories of how companies should be governed; one says that management should have a lot of leeway to do what it thinks is best and shareholders should keep quiet and, if they’re unhappy, maybe sell their shares; the other says that shareholders own the company and anything that stands in the way of their replacing inept or corrupt management is bad. The pro-shareholder side has I guess been having a good run lately, what with Chesapeake bowing to Carl Icahn’s demands to be less evil, and with the performance of the Facebook IPO giving evil governance a bad name, but the let’s-say-anti-shareholder position is pretty well entrenched. And the leading exponents, or at least my favorite exponents,* of that view are the law firm of Wachtell Lipton, which invented the poison pill so that managers wouldn’t have to lose their jobs just because someone else wanted to buy their company and their shareholders wanted to sell it.
So let’s say you’re a CEO, and you want to buy a company, and you negotiate to buy that company for stock so your shareholders have to approve the merger. And let’s say juuuuuust hypothetically that, after you agree on the deal and mail the proxies and set up the vote and are about to complete your grand plan, you find out that the company you’re buying is sort of a piece of shit, and that you didn’t know that when you agreed to buy it. Embarrassing for you. What do you do?
Well presumably you ask your lawyers and when those lawyers happen to be Wachtell Lipton they tell you their favorite thing to tell you, which is, “you have lots of options but FOR GOD’S SAKE LEAVE THE SHAREHOLDERS OUT OF IT.” And if you were Ken Lewis in late November / early December 2008, that’s what you did. You can read here his [new lawyers'] defense of his decision not to tell Bank of America shareholders that Merrill had some massive upcoming losses before they voted to approve the acquisition of Merrill; it basically goes like this: Read more »
Remember in 2008, when Ken Lewis was all, “Oooh, wait, I don’t know about this Merrill Lynch thing, it looks kinda bad, I don’t think I want to buy it anymore, I’m nervous [bites nails, shifts weight from one foot to the other like he has to pee]” and tried to back out of the deal? And Hank Paulson threatened to stuff him in a meat locker if he did so Lewis said okay, fine, I’ll buy it and then did, without mentioning anything to shareholders about Merrill’s impending losses? Well 1) People are still upset about it but 2) Ken was under the impression shareholders were on a need to know basis. Read more »