It did not take long for plaintiffs’ lawyers to realize that there was good money to be made by complaining about the Facebook IPO – there are at least two class actions against the company and underwriters so far, not to mention other class-action lawsuits against NASDAQ for screwing up trades.
The securities-fraud lawsuits are the bigger tickets; the one filed in New York today claims $2.5bn in losses though I guess that number is down slightly today. The legal theory here is that Facebook lied in its prospectus, which would entitle buyers in the IPO to “rescission,” that is, to the right to hand their shares back to Facebook in exchange for the price they paid for them. This is a problematic theory in that the only lies that the plaintiffs point to are along the lines of: Read more »
How people smile when they're plotting cutting your brake lines.
Earlier this week, it was announced that Zoe Cruz would be closing her hedge fund, Voras Capital Management. Cruz started the fund in 2010, a few years after she was famously fired by John Mack at Morgan Stanley (where she was co-President), for reasons that remain unclear to this day but include theories like: a) the belief that she was responsible for losing the firm a few billion dollars b) a lot of people disliked her– including this guy named Vikram Pandit who was “not a fan“– and told Mack they would leave if he made Cruz CEO c) Mack had to blame either himself or Cruz for some losses and he chose her. d) She was, you know, a girl, and the boys didn’t like that. Regardless, the ousting was probably mildly to majorly humiliating for ZC and since Mack– who she was extremely close with prior to the personnel change– was the one who told her to hit the bricks, it would have been fair to assume she spent a least a little time fantasizing about sticking pins in a Mack voodoo doll and/or slashing his tires.
In 2009, though, Mack and Zoe had lunch and she told him she wanted to start a hedge fund. And maybe it was it was the fact that he was feeling nostalgic, maybe it was the fact that tragedy + time = comedy, maybe it was the fact that he was still riding high from “saving” Morgan Stanley, maybe it was the wine, maybe it was that he was feeling bad about the unceremonious canning and thought “Oh, why not just give the poor girl some money” but Mack went back to the office and “told bank executives that he would like to help her start her new investment business, according to people familiar with the matter.” And when they said, “But John, didn’t you fire her for supposedly taking on too much risk and losing the firm $4 billion,” he said “[Well], her track record was a very good track record.” So Morgan Stanley gave Cruz $20 million and she was on her way. And while we can’t say for sure, and we’re not suggesting money necessarily heals all wounds, the $20 million and the stamp of approval and the fact that she could say to investors she was trying to raise money from ,”Hey look, even the guy who fired me wants in” probably helped smooth things over and improve MS’s standing in the Cruz-missile’s eyes. She likely even had nice things to say about her former employer at social gatherings! And then this happened: Read more »
World champion rower Michael Blomquist valued the chance for an Olympics gold medal in London more than an analyst job at Morgan Stanley. He said the decision wasn’t easy. “It’s always going to be a difficult proposition to walk away from good money and from something that is comfortable and straightforward,” Blomquist said. “I’m loving every day, but of course sometimes I do feel like I made a terrible decision. I walked away at a point where I felt like I was on an upward track at work.” The 30-year-old — who won a world title with the U.S. men’s eight in Japan in 2005 — quit his analyst job with Morgan Stanley in 2010 to try to get into the U.S. boat for the Olympic Games in London, which start July 27…Blomquist is based in Oakland, California. He’s covering his living costs out of his savings, passing up the chance to be earning 69,850 pounds ($112,000), the average salary of a London-based analyst with two to four years of experience, according to recruitment agency Reed Global. He declined to give his salary at the bank. [Bloomberg]
Gasparino: Let’s get something straight right off that bat– 6 months ago, someone at your firm wanted to kill me…you don’t want to kill me, correct?
Gorman: Charlie…I don’t want to kill you…I don’t think they did either.
Gasparino: I don’t blame them if they did…given my reputation with PR people. So thank you for coming here, checking your guns at the door. Read more »
“I think Morgan Stanley will allow you to buy that house on the coast of Spain. I think that stock is so cheap right now, it’s overwhelming. It should be bought and bought very aggressively, right now.” [Bloomberg TV]
One way I like to imagine the world is that there’s sort of a constant amount of financial risk and entropy tends to increase, so that as time goes by everyone increasingly ends up facing the same financial risks as everyone else (though quantities and leverage vary) and idiosyncratic risk is a rare and beautiful flower and so I dropped a good portion of my net worth on Mega Millions this morning because what else can you do? Entropy increasers could include index funds, or converging bank business models, and I guess you could profitably ponder the fact that the big banks are now living on DCM fees until M&A comes back and what that could mean for a model of “we need to split up the big banks to avoid too-big-to-fail risk.”*
One thing it could mean is get the hell away from banks. So for instance you could quite reasonably be worried about putting all of your money in collateral accounts with the banks who are your derivatives counterparties because hey MF Global just lost all the collateral you put with them, and so you are, reports the Journal based on the Fed’s Senior Credit Officer Opinion Survey on Dealer Financing Terms: Read more »
Earlier today, KKR announced that former Morgan Stanley Chairman and CEO John Mack will be joining the private equity firm as a senior adviser, “supporting new investing activities and providing counsel to KKR portfolio companies.” Including the new gig, Mack is now working three jobs, the others being “part-time adviser” to Morgan Stanley and author (as previously noted, he’s working on a book). And while it’s nice to see him keeping busy, you know what these little diversions don’t leave a lot of time for? Manning up and going after his dream. Read more »
Except for double-teaming clients, which was huge. Read more »
You can read the Jamie Dimon “Don’t gloat about how bad Goldman is. Did you hear me? Don’t gloat about how BAD GOLDMAN IS. The fact that GOLDMAN is BAD is of no interest to our clients. Or the press. Don’t leak this to the press!” memo two ways. One is, y’know, what it sounds like: Dimon gets to score some easy/meta points by spreading it around that his business practices are so superior that he doesn’t even need to spread it around that his business practices are superior. The other is that making money off of clients isn’t something invented at Goldman Sachs and anyone at JPMorgan who throws stones is likely to be clonked on the forehead by a ricochet. (Or possibly by a deranged fictional whistleblower!*)
The latter interpretation is probably right for James Gorman’s more full-throated defense of Goldman because whoops: Read more »
Since being arrested nine days ago, accused madam Anna Gristina/Scotland has made a bunch of claims vis-à-vis charging people between $1000 and $2000/hour to be set up with hookers who bring other things to the table besides a hideously decorated fuck pad. 1) That a meeting with Morgan Stanley employee David Walker on the day of her arrest was not about expanding her brothel business on the internet (Anna maintains the duo was discussing financing for a “dating site to rival Match.com”) 2) That the apartment she rents on East 78th Street, which various escorts have already claimed to entertain customers in, is not a whorehouse and 3) That she will not give up any of the names of her clients, which allegedly include “wealthy, powerful politicians, top-law enforcement, lawyers, and bankers.” These statements likely came as a relief to anyone who spent time in Gristina’s Upper East Side headquarters but, unfortunately, things often change after a few nights spent on Riker’s Island. According to reports, Anna is “considering a plea bargain,” and, perhaps as alarmingly to the “plenty of people she had at Morgan Stanley,” et al, the DA is examining who might have left some of his/her DNA behind at 304 East 78th Street. Read more »