Opening Bell: 11.10.09 - Dealbreaker

Opening Bell: 11.10.09

Author:: Dealbreaker
Updated:: Jan 14, 2019
Original:: Nov 10, 2009

SAC Said To Tell Investors A Review Found No Suspicious Trading (Bloomberg)
Despite what this Choo Beng Lee character may claim, it is all good at 72 Cummings Point Road. SAC has conducted its own investigation of the situation and cleared itself of any wrongdoing: "SAC Capital reviewed its buying and selling of stocks cited in the Galleon Group LLC insider-trading cases and found nothing suspicious, according to one of its investors. "
Barclays Remarkable Bargain (NYT)
According to creditors, Barclays bought Lehman for $5 billion less than it was worth.
Spherix Sought Money, 'Edge' From Silicon Valley Executives (Bloomberg)
Which makes sense, since the founder of the tech fund, Choo Beng Lee, has admitted to insider trading.
Lazard Eying New Leadership Structure (NYP)
The firm may split the chairman and CEO role, the former going to interim CEO Steve Golub, the latter Ken Jacobs. Gary Parr might have some responsibilities thrown his way, as well.
Loan Star Cuts Fees To Seed Up New Funds (WSJ)
Distressing news of the morning: John Grayken, the head of Lone Star Funds, wants to raise $20 billion to buy pools of troubled mortgages and other kinds of distressed debt. To get the money, Mr. Grayken is doing what once would have seemed outlandish for a brand-name deal maker like Lone Star: He is cutting some of his fees by more than 50%.

Davos Money Men Say World Emerges From Doldrums Fretting Relapse (Bloomberg) “Optimism, but with a sober tone,” was how Bank of America Chief Executive Officer Brian T. Moynihan characterized the mood pervading the World Economic Forum’s annual meeting, even as investors were lifting the Standard & Poor’s 500 Index above 1,500 for the first time since 2007. Fed To Keep Money Spigot Open (WSJ) Federal Reserve officials are likely to continue their easy-money policies when they gather this week to weigh a mixed economic outlook and a recent run of low inflation. The Fed has said it would maintain its $85 billion bond-buying programs, aimed at boosting the economy by lowering long-term interest rates, until it sees substantial progress in labor markets. It has also said it would keep short-term interest rates near zero until the jobless rate drops to at least 6.5%, as long as inflation remains steady. Beneath the Calm, SAC Works to Contain Fallout From Inquiry (NYT) "This has always been a stressful place to work," said an SAC employee who requested anonymity because he was unauthorized to speak publicly about the fund. "Now it's just more stressful." Mr. Cohen's fund was dealt a blow last week when a Citigroup unit that manages money for wealthy families disclosed that it was withdrawing its $187 million investment. The move by the bank was the most prominent client departure since November, when the multiyear investigation into SAC's trading practices entered a more serious phase. Citigroup's withdrawal represents a tiny percentage of SAC's $14 billion in assets under management. The fund has said it expects total investor redemptions for the first quarter of up to $1 billion, a number that an SAC spokesman has said will not adversely affect its business...Still, the Citigroup decision stung, say peopleclose to SAC's business, because of the longstanding and lucrative relationship between the bank and the fund. Another concern, said these people, is that the move could influence other large SAC investors currently weighing whether to keep their money at the fund. For Citigroup, its withdrawal of money from SAC carries substantial business risk. The bank has a vast relationship with SAC, earning revenue by providing the fund with financing and trading services. SAC could exact retribution on Citigroup by terminating, or at least scaling back, its broader relationship with the bank. An SAC spokesman declined to comment. Credit Suisse Could Owe $2 Billion Over Fraud (Reuters) Credit Suisse Group faces a potential $2 billion of exposure over fraud that occurred a decade ago at National Century Financial Enterprises, a result of a federal judge's determination on how to apportion responsibility. Friday's decision by U.S. District Judge James Graham could expose the Swiss bank to hundreds of millions of dollars of added liability over the activities of Lance Poulsen, who co-founded National Century in 1990 and was its chief executive. He is now serving a 30-year prison term and is presumed insolvent. Goldman Raising $1 Billion From ICBC Share Sale (WSJ) The Wall Street company is selling the Hong Kong-listed shares in a block trade at 5.77 Hong Kong dollars (US$0.74) each, the people said, without disclosing the number of shares. The price represents a 3.0% discount to ICBC's HK$5.95 closing price Monday. A person familiar with the situation said the sale reflects prudent risk management on Goldman's part to reduce the size of its ICBC investment. MBA's Salary Enhancing Power Slashed (FT) Students on the top US MBA programs in the mid-1990s saw their salaries triple in five years, but those who graduated from the same schools in 2008 and 2009 saw that increase halved, according to data collected for the FT's annual Global MBA rankings. At the same time, MBA fees have risen by 7 percent a year. MBA students who enrolled in 2012 paid 62 percent more in fees - up 44 percent in real terms - than those who began their programs in 2005, even though the increases in post-MBA salaries remained in line with inflation. Beyonce has yet to apologize to Chuck Schumer for lip-syncing at inauguration (NYP) The New York senator angrily admitted yesterday that the pop queen has not called him to say sorry after she turned last week’s inaugural bash into an unexpected Milli Vanilli concert by lip-syncing “The Star-Spangled Banner.” “I have not heard from her before, during or after,” a testy Schumer told The Post after he was asked if Beyoncé had called him to give a musical mea culpa. “She did not talk to me at all. I didn’t say any words to her, period.” Schumer has been credited with drawing the pop diva and her hubby Jay-Z to the inauguration, where many said they stole the show from the president and first lady walking hand-in-hand on the steps of Capitol Hill. Schumer was seen beaming with pride just steps behind Beyoncé while she appeared to be belting out the National Anthem. Obama administration insiders and inauguration planners were in the dark about Beyoncé’s decision to use a prerecorded tape of her singing with the Marine Band during the swearing in. They were later left fuming over the embarrassment, according to reports. Some on Capitol Hill have even placed the blame on Schumer for the Star-Spangled sham. There’s a Twinkie in the eye of Apollo (NYP) Hostess Brands is expected to name Leon Black’s Apollo Global Management as the preferred bidder for Twinkies and its other snack brands, The Post has learned. The announcement from the bankrupt baker could come as soon as today, sources said. The selection of Apollo would give Manhattan buyout billionaire Leon Black the inside track to buying one of the country’s most well-known consumer brands. Black’s Apollo and co-bidder C. Dean Metropoulos, a veteran food exec, were vying with Grupo Bimbo, the Mexico-based baker, for the right to be the preferred, or stalking horse, bidder for Twinkies, Ho Ho’s, Ding Dongs and other Hostess snacks. Bank of America Moves $50 Billion of Derivatives to UK (FT) Bank of America has begun moving more than $50bn of derivatives business out of its Dublin-based operation and into its UK subsidiary, according to people close to the operation. The move, part of the group's global drive to rationalize its operations, has been encouraged by regulators but will also allow BofA to benefit from tax breaks stemming from the accumulated losses in its UK business. Singer Backs Off Aggressive Stance In Dealings With Buenos Aires (NYP) After a decade of aggressively pursuing $1.44 billion he claims the country owes him and a group of bondholders, including successfully pressing Ghana to seize a locally docked Argentine naval vessel to help pay down the debt, the billionaire New York hedge fund mogul is sounding like Bobby McFerrin in “Don’t Worry, Be Happy.” Singer’s Elliott Management now feels Argentina will do the right thing, according to recent court filings. It’s quite a change from last fall’s legal arguments, in which Singer urged a federal judge to hurry up and force Buenos Aires to put some of the monies owed into escrow, citing the country’s president’s plot to avoid the debt payment. Italians Have a New Tool to Unearth Tax Cheats (NYT) Despite the government's best efforts, tax evasion remains something of a pastime in Italy, where, famously, more than a few of the Ferrari-driving set claim impoverishment when it comes to declaring their incomes. So this month, not without controversy, the National Revenue Agency decided to try a new tack. Rather than attempting to ferret out how much suspected tax cheats earn, the agency began trying to infer it from how much they spend. The new tool, known as the ''redditometro,'' or income measurer, aims to minimize the wiggle room for evasion by examining a taxpayer's expenditures in dozens of categories, like household costs, car ownership, vacations, gym subscriptions, cellphone usage and clothing. If the taxpayer's spending appears to be more than 20 percent greater than the income he or she has declared, the agency will ask for an explanation. Traders Make Peace With Computers (WSJ) On a recent day on Barclays PLC's stock-trading desk in Manhattan, an electronic platform posted a notice that Barclays was selling a large block of Pfizer shares. In recent years, a computer typically would have swiftly matched such an order with a buyer, sidestepping trading floors altogether. But soft trading volume has left many traders unable to move stock as quickly as they might like. That is one reason why Barclays connected its recently launched DirectEx platform to its trading floor. The move paid off when a client who was buying 150,000 shares on the electronic network decided, after chatting with a Barclays salesman, to take an additional 150,000 shares. Woman Found with 92 Pounds of Marijuana in N. Bellmore (Patch) According to detectives, around 6 p.m., an unmarked First Precinct police car observed Mizzie Artis, 27, of Bellport, operating a 1999 Hyundai eastbound on Columbus Avenue while talking on a cell phone and not wearing a seat belt. Police then observed Artis drive to Armand Street where she met with a male subject in a minivan. As officers drove by both vehicles to further observe, the male subject fled the scene in the van, police said. Artis drove away and failed to stop at a stop sign and did not signal when turning, police said. Officers stopped Artis and, upon approaching the car, observed two large cardboard boxes in the auto. Officers also detected an odor of marijuana emanating from the vehicle. K-9 officers responded to the scene and performed a narcotic search of the vehicle. The cardboard boxes in the front seat had a positive alert for narcotics, police said. Two additional boxes were recovered from the trunk containing marijuana, bringing the total approximate weight to 92 pounds.

U.S. authorities probe SAC for Weight Watchers (Reuters) U.S. authorities are investigating Steven A. Cohen's SAC Capital Advisors hedge fund for possible insider trading in the shares of the popular diet company Weight Watchers International Inc, according to people familiar with the matter. The investigation focuses on trading in Weight Watchers shares in the first half of 2011, when SAC Capital had taken a sizeable position in the stock, and potentially could implicate the billionaire hedge fund manager, the sources said on Friday. Regulatory filings show that Cohen's $14 billion fund briefly held 2.1 million shares in Weight Watchers during the period under scrutiny by authorities - at which time the diet company's stock price roughly doubled. The inquiry is in its early stages and it is not clear whether anything improper was done either by SAC Capital or Cohen himself, said the people familiar with the matter, who requested anonymity. The trading in Weight Watchers would be permissible as long as it was based on fundamental research or derived from individuals who did not have access to non-public corporate information. Big Money Bets On Housing Rebound (NYT) A flurry of private-equity giants and hedge funds have spent billions of dollars to buy thousands of foreclosed single-family homes. They are purchasing them on the cheap through bank auctions, multiple listing services, short sales and bulk purchases from local investors in need of cash, with plans to fix up the properties, rent them out and watch their values soar as the industry rebounds. They have raised as much as $8 billion to invest, according to Jade Rahmani, an analyst at Keefe Bruyette & Woods. The Blackstone Group, the New York private-equity firm run by Stephen A. Schwarzman, has spent more than $1 billion to buy 6,500 single-family homes so far this year. The Colony Capital Group, headed by the Los Angeles billionaire Thomas J. Barrack Jr., has bought 4,000. Wall Street workers expecting worst bonus season since 2008 (NYP) State Comptroller Thomas DiNapoli estimates that the average bonus this year will be $101,000 — a 16.5 percent decline from last year and almost a 50 percent decline since 2006, when the average was $191,360. ‘‘I don’t think this year’s bonuses are going to be very good,’’ said Dan Shaffer, CEO of Shaffer Asset Management. ‘‘I don’t believe the typical bonuses, as we used to know them, exist anymore.’’ Obama Meets with Boehner Privately at White House (Bloomberg) The meeting was the first known face-to-face conversation between the two leaders since Nov. 16, when Boehner and other congressional leaders sat down with Obama at the White House. They have talked on the telephone since then. Obama met with Nancy Pelosi, the House Democratic minority leader, on Dec. 7. Investors offer about $38.8 billion in Greek debt buyback (Reuters) Greece is set to purchase back about half of its debt owned by private investors, broadly succeeding in a bond buyback that is key to the country's international bailout, a Greek government official said on Saturday. Hefner Husband Takes Insider Trading Into Playboy Bedroom (Bloomberg) Christie Hefner, [daughter of Hugh and] former chief executive officer of Playboy Enterprises Inc., said she was shocked as her husband of 15 years, William Marovitz, confessed to her that he was being investigated for suspicious trading in Playboy shares. They were in their apartment atop a 42-story Lincoln Park tower overlooking the glittering Chicago skyline and Lake Michigan on a March evening in 2010. “He told me he had been contacted by the SEC,” Hefner said later in testimony before the U.S. Securities and Exchange Commission, which didn’t accuse her of any wrongdoing. “And when did you learn your husband owned shares of Playboy?” she was asked. “In that conversation,” she replied. Hefner's husband is just one of more than 400 persons the SEC and the U.S. Department of Justice have accused of insider trading in a crackdown in the last five years, according to data compiled by Bloomberg. All involved betrayal -- of clients, employers, relatives or friends. The Hefner episode and a handful of cases like it include an especially cruel breach of trust: betrayal of a wife by a husband. Tennis star Novak buys up world's supply of donkey cheese at £400 a pound for new restaurant chain (DM) The cheese, known as pule, will be one of the key attractions at a chain of restaurants the Wimbledon champion and world number one is opening in his Serbian homeland...The Zasavica farm, which lies 50 miles west of the Serbian capital Belgrade, boasts a herd of 130 and is said to be the only place in the world where donkeys are milked for cheese. Banking Industry Squirms Over European Rate Probe (WSJ) The scandal over banks' attempted manipulation of interest rates has mostly centered on the London interbank offered rate. But Libor's lesser known cousin, the euro interbank offered rate, or Euribor, is facing mounting attacks. The European Union is expected soon to accuse multiple banks of attempted collusion in the setting of Euribor, according to people briefed on the probe. Barclays has already acknowledged trying to rig the rate, and other banks are likely to be pressed by regulators in the U.S., U.K. and elsewhere into similar admissions, according to industry and regulatory officials. Mortgage Crisis Presents a New Reckoning to Banks (NYT) Regulators, prosecutors, investors and insurers have filed dozens of new claims against Bank of America, JPMorgan Chase, Wells Fargo, Citigroup and others, related to more than $1 trillion worth of securities backed by residential mortgages. Estimates of potential costs from these cases vary widely, but some in the banking industry fear they could reach $300 billion if the institutions lose all of the litigation. Depending on the final price tag, the costs could lower profits and slow the economic recovery by weakening the banks’ ability to lend just as the housing market is showing signs of life. Crisis Measure Nears End (WSJ) Barring action by Congress, the FDIC on Dec. 31 will stop providing an unlimited guarantee on zero-interest bank accounts used by businesses and municipalities for payroll and other services. The guarantee would then revert to the normal $250,000 in insurance per depositor at any given bank. If the guarantee isn't extended, FBR Capital Markets estimates as much as $250 billion in deposits could flow out of smaller banks to large banks or big money-market mutual funds. Stylish primate charms Toronto shoppers (The Star) A North York Ikea store attracted an unusual customer Sunday afternoon, when a tiny monkey dressed in a fitted faux shearling coat and diapers appeared in the store’s upper parking garage around 2 p.m. “It was just running around screaming,” said shopper Bronwyn Page...“It was really cute,” said Lisa Lin, another shopper. “It was smaller than a cat.” But if the monkey had hoped to stock up on Billy bookcases or Swedish meatballs, its plans were thwarted. The diminutive shopper never made it into the store, said manager Alvaro Carmona. No one was hurt in the incident, which lasted no more than half an hour, he added. Animal Services identified the monkey as a rhesus macaque, an Asian species that is prohibited in Ontario. The monkeys are known for their ability to live in diverse habitats – although Canadian winters obviously require a warm coat. The owner of the primate turned himself in to Animal Services just after 5 p.m. He was charged with owning a prohibited animal, an offence that carries a $200 fine. The seven-month-old monkey has somehow managed to escape his owner’s car in the Ikea parking lot, said animal control officer David Behan.

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Witness Adds Thread To SAC Probe (WSJ) A government informant has implicated a prominent former trader at SAC Capital Advisors, telling federal investigators the two swapped confidential stock tips for years, according to people briefed on the matter. The connection between ex-SAC portfolio manager Dipak Patel and the undercover mole, a California-based former portfolio manager at an investment fund, hasn't previously been disclosed. Mr. Patel and his lawyer didn't respond to requests for comment...Mr. Patel, who hasn't been charged with any wrongdoing, was a technology-stock manager who worked under Mr. Cohen for years before leaving in 2010. Obama To Name White As SEC Chief (WSJ) President Barack Obama on Thursday will name Mary Jo White, a former star prosecutor who pursued terrorists and mobsters in New York, to lead the Securities and Exchange Commission, a White House official said. Barclays CEO Says Bank Was Too Aggressive, Too Self-Serving (CNBC) The bank which paid a fine of 290 million pounds for manipulating Libor and was caught up in the payment protection insurance scandal, has been trying to turn a new leaf. Jenkins, who took over as CEO in August, said the company was addressing its past mistakes. "We were too aggressive, we were too short-term focused and too self-serving," Jenkins told CNBC at the World Economic Forum in Davos. "The industry, and Barclays, got it wrong on occasions," he added. Merkel Says Europe Must Persist With Reforms (CNBC) German Chancellor Angela Merkel urged European nations to continue the economic reforms they have begun and argued that the debt crisis offered an opportunity for the bloc to become more competitive. "The political experience is that often you need pressure for political structural reforms," she told delegates at the World Economic Forum in Davos, Switzerland. "If Europe is in a difficult situation today we need to implement structural reforms now so that we may live better tomorrow," she said. Knight Capital's Profit Slides 84% (WSJ) Profit in the quarter to Dec. 31 fell to $6.5 million from $40.2 million a year earlier, with per-share earnings sliding to a penny from 43 cents, below the three-cent consensus among analysts polled by Thomson Reuters. Revenue fell 16% to $287.7 million. Jobless Claims Fall To 5-Year Low (WSJ) Initial jobless claims, a measure of layoffs, fell by 5,000 to a seasonally adjusted 330,000 in the week ended Jan. 19, the Labor Department said Thursday. Economists surveyed by Dow Jones Newswires expected 360,000 new applications for jobless benefits last week. Two men charged with robbery, assault and battery after stealing $400 from Girl Scouts selling cookies (NYDN) Two men are being held on charges they stole nearly $400 from a group of Girl Scouts selling cookies at a store in Massachussetts. An adult supervising the Scouts suffered a broken nose and arm injuries trying to stop the men. Authorities say 22-year-old Nicholas Taverna of Greenfield and 25-year-old Cassidy Michalski of Deerfield were held on $5,000 bail each at their arraignment Tuesday on charges of unarmed robbery, assault and battery with a dangerous weapon and shoplifting. Police say the suspects stole two cellphones from the Walmart in Northampton on Saturday and tried to trade them for drugs in Holyoke. When that failed, they returned to Northampton where they had seen the 11- and 12-year-old Scouts earlier, and stole their cash box. US Lawmaker Set to Unveil Financial Revamp (Reuters) The proposal, expected as early as this week, will come from House Ways and Means Committee Chairman Dave Camp, whose panel has been exploring a broad tax code overhaul for more than a year. Camp wants to slash the top corporate tax rate to 25 percent from 35 percent and simplify the code.Critics of the current corporate tax system note that the United States has one of the steepest corporate tax rates in the world. Commerzbank to Cut 6,000 Jobs (WSJ) The cuts, representing up to 12% of the bank's 49,215 full-time staff, will affect all group levels and units, in Germany and abroad, although online bank Comdirect AG and Polish unit BRE Bank will be excluded, according to an internal memo to staff. Japan Posts Record Trade Deficit (WSJ) Japan's trade deficit nearly tripled to a record ¥6.927 trillion ($78.3 billion) last year and few expect a drastic improvement anytime soon, leaving Tokyo no choice but to carry on with efforts to boost the economy. Citigroup’s Corbat Says Environment to Stay ‘Challenging’ (Bloomberg) “People recognize the times we are in, these are challenging times,” Corbat, 52, said in an interview with with Bloomberg Television’s Erik Schatzker at the World Economic Forum in Davos today. “Things will remain challenging going forward for a period of time. Our people recognize that.” Corbat replaced the ousted Vikram Pandit as CEO at the third-biggest U.S. bank in October. He has since announced plans to fire about 11,000 employees and pull back from certain markets as he seeks to cut Citigroup’s costs and boost rewards for shareholders. Profit at the lender’s ongoing businesses slid 8 percent last year while costs rose. Citigroup cut investment bankers’ bonuses by 10 percent to 20 percent globally after a revenue slump, people with knowledge of the matter said last week. Corbat said the firm can still be “absolutely competitive,” on banker pay. “I think morale is good,” he said, without saying whether the company plans to cut more jobs. “Our employees are very confident around the strategy if you think about what’s going on in the world today.” N.J. men sue Subway, claim they've been shorted on footlong sandwiches (AP) The suit, filed Tuesday in Superior Court in Mount Holly, may be the first legal filing aimed at the sandwich shops after an embarrassment went viral last week when someone posted a photo of a footlong and a ruler on the company's Facebook page to show that the sandwich was not as long as advertised. At the time, the company issued a statement saying that the sandwich length can vary a bit when franchises do not bake to the exact corporate standards. Stephen DeNittis, the lawyer for the plaintiffs in the New Jersey suit, said he's seeking class-action status and is also preparing to file a similar suit in Pennsylvania state court in Philadelphia. He said he's had sandwiches from 17 shops measured — and every one came up short. "The case is about holding companies to deliver what they've promised," he said.

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