A new thesis from a Columbia professor says our banking system would be way better off if we had started off as a French colony. Or if we weren’t so populist. Or if we hadn’t gotten so peeved over taxes 238 years ago and just stuck with the British Empire for a little longer. Or something. Read more »
If you’re an activist investor your job is to (1) think of an idea for how to make a company’s stock go up, (2) buy stock in the company, (3) convince them to do your idea, and (4) sell high. Step 3 tends to involve lots of attention-seeking – it’s easier to wear a company down into doing your idea if they’re constantly hearing about it from other shareholders and reporters and stuff – but steps 1 and 2, importantly, don’t.1 If you tell everyone about your great idea for Apple to issue GO-UPS,2 then they’ll all realize that Apple will certainly do it and unlock tens of billions of dollars of value, so they’ll bid up the stock before you can buy it and you’ll lose the opportunity to benefit from all those gains. That may be a bad example but just work with me here.
There’s another way of putting that, which is: if you secretly conceive of an idea to make Apple a better company, and then secretly buy up a bunch of Apple stock, and then announce to the world “surprise! I have 12% of Apple’s stock, and a brilliant idea that starts with a thematically appropriate lowercase i!,” and the stock goes up, and you make a lot of money – isn’t that unfair? You got to buy stock at the low, pre-publication-of-your-idea price; the people who sold to you were bamboozled into selling out too low because they didn’t know about your great idea. It almost “smacks of insider trading.”
Or something. I may not be doing this theory justice because I think it’s silly: that great idea is your idea; why shouldn’t you be able to make money off of it? (And why should anyone else?) The money is your incentive to come up with the idea in the first place, and do the hard ego-stroking work of pitching it to CNBC and the target company; if you had to share it with free-riders why would you take on the responsibility? We talked about this a little last year when there were vague rumors that the SEC was buying into it, and that they might require investors to disclose 5% stakes within 1 day of acquiring them (instead of the current 10 days), and include synthetic share ownership in computing the 5%, in order to make it harder for activists to secretly accumulate shares. I have not heard much about that proposal since, though I hesitate to assign any causality.
Today is not a great day for the American government, people, economy and reputation. But that doesn’t mean a good dose of schadenfreude can’t lift the gloom some. Read more »
So here’s a little story about a man named Peter Beck. Once upon a time, he ran a day-trading operation with 5,000 traders in places like China, Nicaragua, Romania and, worst of all, Canada. And he used that network to manipulate markets, regulators say; at the very least, he knew his charges in 30 countries were doing so, it is alleged. Read more »
From: RBC US Capital Markets COO
Sent: 2012, February, 03 2:43 PM
Subject: Superbowl Sunday
As I’m sure you are aware, this Sunday is the Superbowl, one of the cornerstones of the sporting calendar. Despite being a Canadian bank, this is one event that many of us in the U.S. take pretty seriously.
Jamie Dimon of JPMorgan Chase launched a tirade at Mark Carney, Bank of Canada governor, in a closed-door meeting in front of more than two dozen bankers and finance officials, underscoring mounting tensions between bankers and officials over financial regulation. The JPMorgan chief executive’s remarks to Mr Carney, who is touted as a potential next head of the Financial Stability Forum, the international group of regulators, were focused on a capital surcharge for the largest banks, according to several people who attended the meeting of about 30 bank chiefs…Mr Dimon told Mr Carney that many of the rules discriminated against US banks and he was going to continue to use the phrase “anti-American” because it seemed to resonate with people who might be able to modify the reforms. The atmosphere was so bad after the meeting that Lloyd Blankfein, chief executive of Goldman Sachs and head of the Financial Services Forum bankers’ group which arranged the session, emailed the central banker to try to smooth relations, people familiar with the matter said. [FT via BI]
John Taft, the Chairman of the Securities Industry and Financial Markets Association and the CEO of RBC U.S. Wealth Management, said he’s hearing firms are planning to cut back due to the skittish market and softening economy…He said staff reductions will likely affect all levels—even those with years of experience and expensive MBA degrees. “I think the paper value of an MBA might be overstated,” said Taft. “For it to be useful, it needs to form part of a wider package of skills and attributes, and more than a mere credential next to your name.” Taft said on the job experience in the capacity to perform in the workplace is more important than whether or not you have your MBA. [CNBC]
The province’s tar sands cover an area larger than the United Kingdom and contain most of the world’s supply of bitumen, a particularly sticky form of petroleum that must be heated or diluted before it can be pumped. Because it’s so unwieldy, it’s only been in recent years that large-scale development of the tar sands have taken place. The steep rise in global oil prices has set off a boom in the region, with all that naturally follows (prostitutes have reported incomes as high as $15,000 a week). [TNR via BI]
Uncertainty Over Greece Weighs on Financial Markets (NYT)
Financial markets remained jittery Thursday amid concerns about the stability of the government in Athens, uncertainty over the fate of a second Greek bailout and suggestions by Ireland that it would require investors to pay for part of the bailout of its indebted financial institutions.
Paulson Funds Struggle as Big Bets Backfire; Gold Works (WSJ)
Mr. Paulson’s $9 billion Advantage Plus fund lost more than 13% in the early part of this month, through June 10, leaving it down 19.65% for the year, according to two investors briefed on the performance. The Enhanced Partners fund, which had been a big winner this year, lost nearly 7% in the first 10 days of June, and now is up less than 4% in 2011, according to the investors.
Referrals on SAC Disclosed (WSJ)
The SEC has received 65 referrals of suspicious trading at hedge-fund firm SAC Capital Advisors LP over the last decade, or 46 more than previously disclosed, according to Sen. Charles Grassley…Sen. Grassley, the top Republican on the Senate Judiciary Committee, said “many” of the referrals involved trades older than the five-year legal time limit on bringing civil actions for insider trading. The older trades “would not appear to trigger any concerns regarding ongoing investigations,” he said in a letter to SEC Chairman Mary Schapiro on Wednesday. SAC said it was “not surprised” that it has been the subject of 65 referrals since 2000. “Referrals by Finra are the result of surveillance of market-wide trading activity and they are neither findings nor allegations of insider trading,” a spokesman for SAC said in a statement. “Given the size of our firm, our active investment style, and the period covered, we are not surprised by the number of referrals. SAC has always cooperated fully with regulators and will continue to do so,” the spokesman said.
Falcone’s Venture Runs Into Static (WSJ)
The most recent evidence of complications surfaced this week in disclosures tied to a report expected to detail potential interference problems with the network…The report is expected to warn federal regulators that recent tests showed LightSquared’s network can knock out global positioning system, or GPS, receivers, according to people familiar with the report.
Och-Ziff May Profit From Market Turbulence (Bloomberg)
Daniel Och’s hedge-fund group bought options on almost $12 billion of U.S. stocks during the first quarter, a move that may generate profits if markets turn more volatile this year.
Wall Street Mind Meld: Obama Struggles? (Morning Money)
M.M. spoke with several senior Wall Street executives about recent efforts by the Obama campaign to reignite the financial industry support that generated a huge money edge over John McCain in 2008…One executive said he did not believe next week’s $38K per head event at Daniel had sold out, though another said that may have changed in the last few days.
Europe Faces ‘Lehman Moment’ As Greece Unravels (Bloomberg)
“The probability of a eurozone Lehman moment is increasing,” said Neil Mackinnon, an economist at VTB Capital in London and a former U.K. Treasury official. “The markets have moved from simply pricing in a high probability of a Greek debt default to looking at a scenario of it becoming disorderly and of contagion spreading to other economies like Portugal, like Ireland, and maybe Spain, Italy and Belgium.” Read more »
Specifically its not so hot US-based RBC Bank unit? Because the Canadians want to get rid of this thing and fast. Read more »