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Opening Bell: 03.23.10

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Treasury’s Geithner Urges End to Fannie, Freddie ‘Ambiguity’ (Bloomberg)
“Private gains can no longer be supported by the umbrella of public protection, capital standards must be higher and excessive risk-taking must be appropriately restrained,” Geithner said in testimony prepared for the House Financial Services Committee.

Buffett May Pursue Liquor Distributors After Purchase of Empire's Parent (Bloomberg)
Have some Schnapps with your Oreo Blizzard.

Broke? Buy a few warships, France tells Greece (Reuters)
"No one is saying 'Buy our warships or we won't bail you out', but the clear implication is that they will be more supportive if we do what they want on the armaments front," said an adviser to Prime Minister George Papandreou, speaking on condition of anonymity because of the diplomatic sensitivity.

NY is newest Madoff victim (NYP)
Bernie Madoff is number 68 on the list of deadbeats who owe Albany tax money ($984,280 to be exact). Number one is former Scores strip club owner Irving Bilzinsky, who owes $15.3 million.

Taxi Scheme Might Be Smaller Than Commission First Thought (NYT)
After announcing that tens of thousands of cabbies had cheated passengers by improperly flipping on an out-of-town meter rate, the chairman of the Taxi and Limousine Commission said on Monday that “a fairly significant number” of the incidents resulted in no additional charges, suggesting they might have been simple mistakes. “We have been vindicated,” said Bhairavi Desai, the executive director of the New York Taxi Workers Alliance, a drivers’ group.

'Enormous' adviser fees spark warning (FT)
The "enormous" fees paid to investment banks for advising companies on deals might be skewing the outcome of take-overs, the UK's leading group of institutional shareholders has warned. The Association of British Insurers said companies and regulators needed to take a close look at the advisory arrangements. The fees were a "deadweight cost" on shareholders that could swallow a significant part of savings derived from mergers and acquisitions, it said.

How Much Money Is Your Dead Body Worth? (CNBC)
An "intact" head will score you $6,000. That kidney will go for $300-$500.

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SEC Drops Case Against Ex-Berkshire Exec Sokol (Reuters) The U.S. securities regulator has decided not to take action against David Sokol, once considered a possible candidate for the top job at Warren Buffett's Berkshire Hathaway, Sokol's lawyer told Reuters. In 2011, Buffett said Sokol violated the company's insider trading rules to score a $3 million windfall profit on shares of U.S. chemicals maker Lubrizol, which rose by nearly a third after Berkshire Hathaway announced it would buy the company. The U.S. Securities and Exchange Commission began investigating Sokol's investment in Lubrizol shortly after Sokol resigned from Berkshire Hathaway. Sokol's lawyer Barry Wm. Levine told Reuters late on Thursday that he was informed that the SEC had wrapped up its probe and decided not to take action against Sokol. "SEC has terminated its investigation and has concluded not to bring any proceedings against Sokol," said Levine, a lawyer at legal firm Dickstein Shapiro. Sokol has been "completely cleared" as there was no evidence against his client, Levine said. Cohen’s SAC Tops Most Profitable List Amid Insider Probes (Bloomberg) SAC Capital International, Cohen’s flagship fund, was the world’s most-profitable hedge fund in the first 10 months of 2012, earning $789.5 million for Cohen, 56, and his managers, according to Bloomberg Markets’ annual ranking of hedge funds...SAC Capital International is No. 1 not because of performance; it ties for No. 86 on that measure, with a 10 percent return in the Markets ranking of the 100 top-performing funds. Rather, the fund earned the most money because Cohen charges some of the highest fees on Wall Street. While most funds impose a 1 to 2 percent management fee and then take 15 to 20 percent of the profits, Cohen levies 3 percent and as much as 50 percent, according to investors. Geithner's Planned Departure Puts Obama In A Tough Spot (Reuters) The Treasury Department said Geithner would stick to his previously announced schedule to stay until sometime around the Jan. 21 inauguration. Obama chose Geithner to lead the just-ended negotiations with Congress to avert the Dec. 31 fiscal cliff of spending cuts and tax hikes that threatened to push the economy back into recession. But the deal, which preserved most of the Bush-era tax breaks for Americans, sets up a series of crucial fiscal deadlines by delaying automatic spending cuts until March 1 and not increasing the government's borrowing limit. That puts Obama in the tough spot of nominating another Treasury secretary and asking the Senate to approve his choice when lawmakers are in the middle of another budget battle. Egan Jones Says Further US Downgrades Unlikely (CNBC) "This latest round (of negotiations) indicates a sign of health. You have a major ideological clash going on in Congress and many people uncomfortable with it, but it is part of democracy. The more positive light is that we actually have a deal and can move forward," Sean Egan, managing director of Egan-Jones told CNBC on Friday. "We've gotten a lot more comfortable about the U.S. and we probably won't take additional negative actions for the foreseeable future," he added. Almost All of Wall Street Got 2012 Market Calls Wrong (Bloomberg) From John Paulson’s call for a collapse in Europe to Morgan Stanley’s warning that U.S. stocks would decline, Wall Street got little right in its prognosis for the year just ended. Paulson, who manages $19 billion in hedge funds, said the euro would fall apart and bet against the region’s debt. Morgan Stanley predicted the Standard & Poor’s 500 Index would lose 7 percent and Credit Suisse foresaw wider swings in equity prices. All of them proved wrong last year and investors would have done better listening to Goldman Sachs Chief Executive Officer Lloyd C. Blankfein, who said the real risk was being too pessimistic. The ill-timed advice shows that even the largest banks and most-successful investors failed to anticipate how government actions would influence markets. Unprecedented central bank stimulus in the U.S. and Europe sparked a 16 percent gain in the S&P 500 including dividends, led to a 23 percent drop in the Chicago Board Options Exchange Volatility Index, paid investors in Greek debt 78 percent and gave Treasuries a 2.2 percent return even after Warren Buffett called bonds “dangerous.” Fed Divided Over Bond Buys (WSJ) A new fault line has opened up at the Federal Reserve over how long to continue bond-buying programs aimed at spurring stronger economic growth. Minutes released Thursday of the Fed's Dec. 11-12 policy meeting showed that officials were divided. Some wanted to continue the programs through the end of 2013, others wanted to end them well before then and a minority wanted to halt the programs right away. Swiss Bank Pleads Guilty In Probe (WSJ) In the latest blow to Switzerland's centuries-old banking practices, the country's oldest bank pleaded guilty to a criminal conspiracy charge in the U.S. on Thursday and admitted that it helped wealthy Americans for years avoid tens of millions of dollars in taxes by hiding their income from secret accounts abroad. Wegelin & Co., founded in 1741, is the latest Swiss bank to reach a deal with U.S. prosecutors as they crack down on Americans who kept their money in secret accounts overseas and the entities which helped them. Three Wegelin bankers also were charged criminally in the U.S. last year. Subway worker tells customer to 'fight me like a man,' during confrontation over ketchup (WFTV) Luis Martinez said he stopped by a Subway shop in a Walmart on South Semoran Boulevard late Tuesday night to get something to eat. He said he ordered a Philly cheese steak the way he always does. "American cheese, onions and ketchup," said Martinez. Lawrence Ordone was working behind the counter. "He wants ketchup on the Philly cheese steak and I have never put -- we don't even have ketchup at Subway -- I've never put ketchup on anybody's sandwich," said Ordone. Martinez said he didn't want the sandwich without the ketchup and that a man next to him in line offered to buy the sandwich. Ordone said that Martinez mouthed off at the man. Martinez denied saying anything, but neither he or Ordone disputed what they said happened next. "That's when I flew off the handle," said Ordone. "He shoved a chair to the side, like knocked it down to come at me, and I said, 'This is going to be serious,'" said Martinez. "I said, 'Let's go, fight me like a man,'" said Ordone. "I was scared. Next thing, I'm thinking a gun's going to come out," said Martinez. Ordone said he blocked the customer so he couldn't get out. "He threatened to kill me in front of my wife," said Martinez. Martinez called 911, but by the time police got there the Subway worker had already left. Ordone said he was fired from his job Wednesday, and that he is baffled the confrontation started over something as simple as ketchup. "There's ketchup three aisles down. You can go buy your own ketchup, and I promise to God, you can put as much as you want on it and nobody's going to say nothing," said Ordone. Economy Adds 155,000 Jobs (WSJ) Rebuilding following superstorm Sandy, which struck the Northeast in late October, likely added to job growth last month. Nationally, employment in the construction sector advanced by 30,000 jobs. Meanwhile, manufacturing payrolls increased by 25,000 and health-care jobs grew by 45,000. JPMorgan Faces Sanction for Refusing to Provide Madoff Documents (Bloomberg) The Treasury Department’s inspector general has threatened to punish JPMorgan Chase for failing to turn over documents to regulators investigating the bank’s ties to Bernard Madoff’s Ponzi scheme. Inspector General Eric Thorson gave the largest U.S. bank a Jan. 11 deadline to cooperate with the Office of the Comptroller of the Currency probe or risk sanctions for impeding the agency’s oversight. JPMorgan, according to the Dec. 21 letter, contends the information is protected by attorney-client privilege. Rich Catch a Break With Budget Deal Providing Deductions (Bloomberg) “The increases in taxes and limits to deductions are more favorable than expected,” said Christopher Zander, partner and head of wealth planning at Evercore Partners Inc. (EVR)’s wealth management unit. “They could have been worse for high net-worth taxpayers.” Regulators to ease up on banks to get credit flowing (Reuters) Banks will get more time to build up cash buffers to protect against market shocks under a rule change that could help free up credit for struggling economies, a European regulatory source said. The Basel Committee, made up of banking supervisors from nearly 30 countries, is expected to announce the revision on Sunday to its "liquidity coverage" ratio or LCR, part of efforts to make banks less likely to need taxpayer help again in a crisis. The change comes after heavy pressure from banks and some regulators, who feared Basel's original version would suck up too much liquidity at a time when ailing economies are badly in need of a ready supply of credit to finance growth. 'Stripper' arrested after performance art leads to ruckus in Hallandale (SS) According to police and witnesses, Mena, 25, was first spotted standing and yelling in the middle of A1A outside her condo building along the 1800 block of South Ocean Drive about 10:45 a.m. on Wednesday. Noel von Kauffman, 40, said he was walking along the street when he noticed Mena trying to direct traffic while wearing a tank-top, cut-off jean shorts and tall boots...At some point, Mena picked up a traffic cone and threw it at a car driven by Dieter Heinrich, 49, of Dania Beach, according to an arrest report. The cone broke the car's side mirror, causing about $300 in damages, the report indicated. When Heinrich got out of his car, Mena allegedly spat in his face. Von Kauffman said he jumped in to help Heinrich, who had children in the back seat of his car. Mena scratched von Kauffman's wrist as the two men tried to restrain her and move her away from the busy roadway, according to the police report. After pinning her to the ground, von Kauffman said the woman first tried to say the incident was part of a television show and that everything was being caught on camera. Then she claimed she was a federal agent. Then she said she was friends with Hallandale Beach Mayor Joy Cooper and everyone involved would be in trouble, von Kauffman said.

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Austerity Strikes Sweep Across Europe (WSJ) Unions in Spain, Portugal and Greece went on strike Wednesday to protest government austerity plans amid a wide economic contraction across Europe's periphery, but questions remained about the unions' ability to influence economic policy. The general strike led to minor violent incidents in Spain, even though morning business activity seemed to remain relatively normal. Spain's government said 32 people had been arrested since midnight, and national TV showed small clashes with police, as well as rallies held by union members in transportation hubs like train and subway stations. The Spanish unions are protesting austerity cuts and an unemployment rate at 25% of the workforce. Geithner Warns Against Delaying Solution to US Fiscal Crisis (Reuters) With lawmakers and the White House bickering over how to put the country on a sustainable fiscal path, a number of lawmakers and think tanks have argued for more time. "That will leave all the uncertainty you don't like on the table," Geithner said at an event sponsored by the Wall Street Journal in his first public comments on the looming fiscal crisis since President Barack Obama won re-election last week. Facebook Investors Brace For Big Round Of Unlocked Shares (Bloomberg) Restrictions lift today on 804 million shares held by former employees and those who sold at the initial public offering, almost doubling the total available for trading, according to a regulatory filing. Geithner’s Money Fund Overhaul Push Sparks New Opposition (Bloomberg) Geithner, heading a Washington meeting of the Financial Stability Oversight Council, a group formed by the Dodd-Frank Act to address systemic financial risks, won unanimous approval for a draft recommendation to the SEC spelling out three ways to overhaul the $2.6 trillion industry. A new option would require capital buffers of as much as 3 percent of assets, while two other solutions he offered were opposed earlier by the fund industry and rejected in August by an SEC majority. Representatives for the fund industry, who last month put forth their own plan, immediately denounced the proposals as stale and unhelpful. While Geithner has said the SEC is best positioned to address money funds, he has also said that the regulators’ panel, often referred to as FSOC, might intervene and subject funds to oversight by the Federal Reserve if the SEC fails to act. SEC Expands Knight Probe (WSJ) The Securities and Exchange Commission has deepened its probe into whetherKnight Capital Group Inc. did enough to police its trading systems before computer errors nearly destroyed the brokerage. The inquiry, which began after Knight's errant Aug. 1 trades saddled it with more than $450 million in losses, initially focused more narrowly on what caused the errors. The probe has broadened to look further at the company's risk-control procedures and Knight's compliance with a rule implemented last year—called the market-access rule—that requires brokerages to guard against these sorts of problems, say people familiar with the investigation. Blankfein Warns Over Cuts (FT) The financial industry should not go “overboard” in cutting costs in reaction to current market conditions, the chief executive of Goldman Sachs said yesterday. “Our industry has a long history of letting too many people go at the bottom of the cycle and hiring too many at the top,” Mr. Blankfein told an industry conference in New York. Pepsi's New Fat Blocking Soda Unleashed On Japanese Consumers (Forbes) Up until recently, soda manufacturers have at least tacitly acknowledged that their carbonated swills aren’t healthy options. Up until recently. [Then] yesterday, Pepsi-Cola in Japan launched a fiber-infused iteration of its cola drink. According to Suntory, the sole distributor of Pepsi in Japan, the beverage contains “indigestible dextrin,” more commonly known as dietary fiber. This magic ingredient, Suntory’s website claims, helps reduce the amount of fat that’s absorbed into the body, hence the tagline of the new drink as a “fat-blocking soda.” Suntory also proffers that the drink quells the rise in triglycerides in the blood that normally follows a meal. Rochdale May Be At The End Of Its Rope (NYP) Stamford, Conn.-based Rochdale Securities is struggling to secure a deep-pocketed buyer three weeks after a former trader, identified as David Miller, saddled the firm with $1 billion in “unauthorized” Apple trades that it wasn’t able to cover. CEO Dan Crowley has been working around the clock to identify a “white knight” willing to save the 55-person broker dealer, according to sources. But staffers of the 37-year old firm worry ongoing investigations will turn off suitors and impede the firm’s ability to operate as a broker dealer. BNY Mellon Unit Settles Madoff Suits (WSJ) The Ivy Asset Management unit will pay $210 million to resolve a series of lawsuits claiming that it concealed doubts about the business operated by convicted Ponzi schemer Bernard L. Madoff. Shareholders To Citi: Break This Company Up (AP) Trillium Asset Management, a shareholder advisory firm with more than $1 billion in assets under management, effectively renewed call made recently by Sandy Weill, Citigroup’s former CEO and one of the founding fathers of the “financial supermarket” concept that helped turn Citi into a global banking behemoth. Siewert In Line For Goldman Partnership (NYP) Hired only last March, Richard “Jake” Siewert, the head of corporate communications, could be among the 70 or so new partners the 144-year-old bank is set to announce this morning...Siewert’s predecessor, Lucas Van Praag, made partner in 2006 — five years after joining the firm. Paula Broadwell Warned Gen. Allen Against "Seductress" Jill Kelley (CBS) A senior official has told CBS News correspondent David Martin the vast majority of the emails between Allen and Tampa socialite Jill Kelley were "completely innocuous," and the general believes many of the 20-30,000 pages under scrutiny are duplicates. The official said that in some of the emails, Kelley would say things like, "saw you on television and you were terrific," and Allen would write back with "thanks, sweetheart." The official said the two never discussed sex and that Allen had never been alone with Kelley. Nonetheless, CBS News correspondent Bob Orr says Pentagon and FBI sources describe the communications as "potentially inappropriate" and "flirtatious," and another source says they were likely more than just innocent exchanges -- noting that the Pentagon's Inspector General is involved for a reason. Among the hundreds of emails exchanged between Allen and Kelly - Orr reports that investigators are focusing on one from several months ago. In it, Allen told Kelley he'd just received an anonymous email warning him to stay away from her. Sources say that the anonymous email came from Broadwell, Petraeus' mistress, who allegedly warned Gen. Allen that Kelley was "a seductress." Broadwell allegedly sent similar warnings to other military officers at the U.S. Central Command, located near Kelley's Tampa home. Broadwell, who had been out of sight since the scandal emerged on Friday, was spotted Tuesday night preparing dinner and drinking a glass of wine inside her brother's Washington home.

Opening Bell

Opening Bell: 10.05.11

Opening Bell

Opening Bell: 03.20.13

JPMorgan Bosses Hit By Bank Regulator (WSJ) JP Morgan was downgraded in a confidential government scorecard over concerns about the company's management and its board, a blow to a firm that has long been considered one of the best-run on Wall Street. The New York company's management rating from the Office of the Comptroller of the Currency fell one notch last July to a level that signifies oversight "needs improvement," following the revelation of what are known as the "London whale" trading losses, said people familiar with the regulatory assessment. Grading is on a scale of 1 to 5, with 5 being worst. J.P. Morgan had been at level 2, indicating "satisfactory management." The people said the downgrade to level 3 wasn't solely related to a London employee's large trades—in indexes tracking the health of a group of companies—that led to losses exceeding $6 billion. BlackRock’s CEO Fink Says Cyprus Is Not a Major Problem (Bloomberg) Laurence D. Fink, chief executive officer of BlackRock, the world’s largest asset manager, said Cyprus is not a major problem and U.S. equities will rise 20 percent this year as the economy rebounds. “It has some symbolism impact on Europe, but it’s not a really major economic issue,” Fink said of Cyprus in a Bloomberg Television interview in Hong Kong today. “It’s a $10 billion issue. It does remind us of the frailty of Europe. It does remind us that the European fix will be multiple years.” Freddie Mac Sues Big Banks (WSJ) sued more than a dozen of the world's biggest banks for alleged manipulation of interest rates, in the first government-backed private litigation over the rate-rigging scandal. The lawsuit, filed in U.S. District Court for the Eastern District of Virginia, by the mortgage-finance giant joins scores of other suits piling up in U.S. courts, seeking billions of dollars in damages from banks that allegedly manipulated the London interbank offered rate and other crucial financial benchmarks. Freddie Mac sued the British Bankers' Association alongside the banks, putting the private association of large British banks for the first time in the cross hairs of a Libor lawsuit. A probe by U.S. and U.K. regulators has uncovered evidence of widespread rate rigging by some traders. Three banks have agreed to pay penalties totaling about $2.5 billion, and about a dozen companies remain under investigation. The BBA has agreed to transfer its responsibility for overseeing Libor to a new operator. Litigation Forces Deutsche Bank to Restate Profits (Reuters) Deutsche Bank cut its previously reported 2012 pretax profit by 600 million euros ($773 million) on Wednesday, hit by new charges related to mortgage-related lawsuits and other regulatory investigations. Europe's biggest bank by assets declined to say why it had increased litigation provisions to 2.4 billion euros, forcing it to correct its Jan. 31 earnings report which already showed the worst quarterly loss in four years. Yoga-Pants Supplier Says Lululemon Stretches Truth (WSJ) A Taiwanese supplier to Lululemon Athletica was bent out of shape on Tuesday after the yoga-clothes retailer blamed it for producing a shipment of pants that were unacceptably see-through. The supplier, Eclat Textile Co. of Taiwan, hit back at Lululemon, saying the clothes it shipped weren't "problematic." "All shipments to Lululemon went through a certification process which Lululemon had approved," Eclat Chief Financial Officer Roger Lo said in an interview. "All the pants were manufactured according to the requirements set out in the contract with Lululemon." Bernanke Seen Keeping Up Pace of QE Until Fourth Quarter (Bloomberg) The Fed chief will probably halt the unprecedented easing in the first half of next year after expanding central bank assets to a record of about $4 trillion, according to median estimates by 46 economists surveyed March 13-18 before a two-day meeting of policy makers ending today. Unemployment will have fallen to 7.3 percent from its current 7.7 percent when the Fed starts to pull back on its buying, the economists said. Supreme Court Sacks Goldman (NYP) The Supreme Court yesterday refused to hear the bank’s appeal of a federal court ruling in a lawsuit alleging it misled investors about dicey mortgage-backed securities. SEC Digging Into Fund Fees (WSJ) The Securities and Exchange Commission is closely scrutinizing the fees and expenses, including travel and entertainment, that hedge funds and private-equity firms charge to their investors. As part of the Dodd-Frank financial law, the SEC now oversees more than 1,500 additional such advisers that were required to register with the agency. In that capacity, the SEC is checking to ensure they are charging their investors reasonable expenses. "Exotic" expenses like travel, entertainment and consulting arrangements are more likely to attract the agency's attention than routine charges like legal and accounting fees, say compliance consultants who advise funds on registration and reporting requirements. A Volatile Investor Buys Into a Softer Approach (WSJ) It has been a long slog for Mr. Hohn, whose fund bets big on a small number of out-of-favor stocks and often holds on for several years. It lost 43% in 2008, among the worst losses by a hedge-fund that year, according to industry-tracker HFR. Hedge funds on average lost 19% that year. Even the Standard & Poor's 500-stock index, which plunged as the economy descended into the worst financial crisis in decades, did better. But with a 30% return in 2012 and a 14% gain this year, TCI has crossed its high-water mark, or the point at which investment gains make up for losses and managers can begin collecting performance fees again, according to clients. "A lot of people wrote me off," Mr. Hohn said in an interview last month. "A lot of people fired us, a few people stuck by us, and we've worked and worked and made it all back for them." JPMorgan, MF Global Trustee Reach $546 Million Settlement (Reuters) As part of a settlement reached with James Giddens, the trustee who is tasked with liquidating MF Global Inc, JPMorgan will pay $100 million that will be made available for distribution to former MF Global customers. JPMorgan will also return more than $29 million of the brokerage's funds held by the bank, while releasing claims on$417 million that was previously returned to Giddens. Man, 18, forbidden from saying 'bingo' for 6 months (NKY) As part of 18-year-old Austin Whaley’s punishment, Kenton District Judge Douglas Grothaus recently ordered the Covington man not to say the word “bingo” for six months. “Just like you can’t run into a theater and yell ‘fire’ when it’s not on fire, you can’t run into a crowded bingo hall and yell ‘bingo’ when there isn’t one,” said Park Hills Police Sgt. Richard Webster, the officer who cited Whaley. On Feb. 9, Webster was working an off-duty security detail at a Covington bingo hall on West Pike Street when Whaley entered the hall with several other youths and yelled “bingo,” Webster said. “This caused the hall to quit operating since they thought someone had won,” Webster wrote on his citation. “This delayed the game by several minutes and caused alarm to patrons.” Webster said the crowd of mostly elderly women did not take kindly to Whaley’s bingo call. “At first, everybody started moaning and groaning when they thought they’d lost,” Webster said. “When they realized it wasn’t a real bingo, they started hooting and hollering and yelling and cussing. People take their bingo very seriously.” Had Whaley apologized for his actions, Webster said he probably would have sent him on his way with a warning. “But he refused to say he was sorry,” Webster said...WhenWhaley appeared in Kenton District Court last week, the judge ordered Whaley: “Do not say the word ‘bingo’ for six months.” The youthful defendant could have faced up to 90 days in a jail and a $250 fine on the misdemeanor charge. So long as Whaley, who had no prior criminal record, doesn’t get into any more trouble within six months, though, the charge will be dismissed.