Opening Bell: 04.20.10

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Goldman Sachs Profit Doubles (MarketWatch)
Goldman's first-quarter net income rose to $3.3 billion, or $5.59 a share, from $1.66 billion, or $3.39 a share, in the year-ago period. The investment bank's revenue rose to $12.78 billion from $9.43 billion. Wall Street analysts expected earnings of $4.16 a share and revenue of $11 billion, according to a survey by FactSet Research. "Our performance in the first quarter reflects more signs of growth across the economy and the strength of our client franchise," said CEO Lloyd C. Blankfein. "In light of recent events involving the firm, we appreciate the support of our clients and shareholders, and the dedication and commitment of our people."

Goldman Employees Rally Around Blankfein (NYT)
GS say step off, bitches: "Goldman employees are shocked, even angry, that the Securities and Exchange Commission has filed a civil fraud suit against their bank. Goldman is ready for a fight, and Mr. Blankfein, his defenders insist, will prevail."

Mortgage Deal Got Rapid Approval By Goldman Panel (WSJ)
The SEC complaint doesn't name any of the members of the mortgage committee at the time. But it alleges that a memorandum by the committee the day it approved the deal shows it had full knowledge of Mr. Paulson's role in selecting the deal's investments. The March 12, 2007, memo by the committee said: "Goldman is effectively working an order for Paulson to buy protection on specific layers of the [deal 's] capital structure."

AIG Eyes Action on Goldman over $2 Billion CDO Losses (CNBC)
If AIG and others discover that their transactions had disclosure issues similar to those alleged in the SEC charges, they would be able to complain to the SEC, file a private lawsuit, or both, lawyers said.

Lehman Brothers Lashes Out At Goldman, SAC (NYP)
In addition to Goldman and SAC Capital, Lehman, which remains in bankruptcy, issued subpoenas to Citadel, Och-Ziff Capital Management and Greenlight Capital. The firms have until the middle of May to respond re: whether or not they're interested in taking the blame for Lehman's failure.

Larry King may talk his way out of divorce: Calls two-week truce with estranged wife Shawn Southwick (NYDN)
Asked Sunday if he and Southwick were reconciling, King said "you never know," TMZ reported. King admitted in a 1997 TV Guide interview that the couple didn't sign a prenup.

Citi’s Parsons To Meet ‘Vocal’ Shareholders Diluted by 81% (Bloomberg)
It's Evelyn Davis's favorite day of the year!

FSA Statement On Goldman Sachs (FSA)
"Following preliminary investigations the FSA has decided to commence a formal enforcement investigation into Goldman Sachs International in relation to recent SEC allegations."

CalPERS To Examine Goldman Practices (NYT)
''We're very disturbed about the SEC charges,'' said Joe Dear, CalPERS' chief investment officer. ''We'll follow that closely.''

Magnetar Denies Creating Faulty CDOs (Dealbook)
“It was not a ‘bet’ that any C.D.O., any group of C.D.O.’s, or the housing or mortgage markets as a whole would fail either in the short term or the long term,” the firm wrote in a letter to investors.

Fuld: SEC, Fed Knew All (WSJ)
"The SEC and the Fed were privy to everything as it was happening," Mr. Fuld plans to say today on Capitol Hill, according to a copy of his prepared remarks. "I am not aware that any data was ever withheld from them, or that either of them ever asked for any information that was not promptly provided."

Related

Opening Bell: 07.17.12

Goldman Sachs Profit Falls 11%, Beating Estimates (Bloomberg) Net income slid 11 percent to $962 million, or $1.78 a share, from $1.09 billion, or $1.85, a year earlier, the New York-based company said today in a statement. Earnings surpassed the highest estimate among 25 analysts surveyed by Bloomberg. Goldman Sachs’s second-quarter revenue from asset management rose 5 percent to $1.33 billion, exceeding the $1.18 billion average estimate of seven analysts. Chief Executive Officer Lloyd C. Blankfein, 57, who has run the company for six years, last month blamed a temporary reaction to the financial crisis for a slowdown that reduced Goldman Sachs’s first-half revenue to the lowest since 2005. Goldman Builds Private Bank (WSJ) The New York securities firm, known for its aggressive trading and big corporate deal-making, is ramping up its activities to become a private bank to serve wealthy customers around the world. The new unit will also lend more directly to corporations, some of whom already make investments and do business with Goldman. Executives have set a goal of $100 billion in loans, up from $12 billion at the end of March. Gross Says U.S. Nearing Recession (Bloomberg) The U.S. is “approaching recession when measured by employment, retail sales, investment, and corporate profits,” Gross, who manages the $263 billion Pimco’s Total Return Fund, wrote on Twitter yesterday. Senate Probe Faults HSBC (WSJ) Executives of HSBC ignored warnings for years that the bank's far-flung operations were being used by money-launderers and potential terrorist financiers, according to a Senate investigation. King Defends BOE Libor Role After Scrutiny On Geithner Memo (Bloomberg) King told Parliament’s Treasury Committee today in London that the e-mail sent by the then president of the Federal Reserve Bank of New York included recommendations rather than allegations at a time when global regulators were expressing concern on the quality of the borrowing benchmark. “Mr. Geithner was sending that to us as a suggestion for how these rules should be constructed and we agreed with him, but neither of us had evidence of wrongdoing,” King said. “The first I knew of any alleged wrongdoing was when the reports came out two weeks ago.” Jonah Falcon, Man With World's Largest Penis, Frisked By TSA At California Airport (HP) Jonah Falcon was stopped and frisked by the TSA at the San Francisco International Airport on July 9 because of a bulging package hidden in his pants. But the 41-year-old New Yorker wasn't packing a dirty bomb, drugs or a Costco-sized tube of toothpaste. The New Yorker has the world's largest recorded penis. "I had my 'stuff' strapped to the left. I wasn't erect at the time," said Falcon, whose penis is 9 inches flaccid, 13.5 inches erect. "One of the guards asked if my pockets were empty and I said, 'Yes.'" Falcon said he knew that his interview was about to get a lot more personal when he was led through one of the X-ray body scanners and passed a metal detector. "Another guard stopped me and asked me if I had some sort of growth," Falcon said, laughing. By the age of 18, Falcon knew he had something special when his manhood reached a whopping 12 inches. His family jewel was hailed as the world's largest on record after an HBO documentary featured him in 1999. S&P 500 Nears ‘Ultimate’ Death Cross: SocGen (CNBC) The S&P 500 index is on the verge of hitting an “ultimate” death cross, where the market’s 50-month moving average falls below the 200-month average, according to a research note by Societe Generale...In the Societe Generale note, published on Monday, strategist Albert Edwards said the last time the S&P 500 came close to a monthly death cross was in 1978, “towards the end of the 1965-82 secular bear market.” CFTC's Gensler acknowledges failure in Peregrine's oversight (Reuters) The U.S. futures regulator acknowledged on Tuesday that the regulatory system "failed" the customers of Peregrine Financial Group, which collapsed last week as its founder admitted he had committed a $100 million fraud that spanned two decades...The stunning downfall of Peregrine Financial Group, or PFGBest, and its founder Russell Wasendorf Sr is another blow to the futures industry after regulators estimated that roughly $200 million in customer money might be missing. It comes just months after MF Global Holdings Ltd's bankruptcy, which left customers with a $1.6 billion shortfall and which is still being investigated. For Olympic Athletes, 45 Minute Bus Trip Turns Into Fiasco (NYT) By the end of the day, organizers were struggling to explain how three buses carrying dozens of athletes, officials and journalists to the Olympic Village from Heathrow Airport lost their way in the maze of London’s streets, causing one American medal hopeful, the 400-meter hurdler Kerron Clement, to post a Twitter message in desperation after four hours aboard a bus that should have made the distance in 45 minutes. “Athletes are sleepy, hungry and need to pee. Could we get to the Olympic Village please,” Mr. Clement wrote as the driver, struggling to understand the route given by the bus’s GPS device, finally abandoned repeated forays up dead-end streets and pulled out a map. “Um, so we’ve been lost on the road for 4hrs. Not a good first impression London,” he added.

Opening Bell: 01.04.13

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.

Opening Bell: 03.05.13

Senate Report Said To Fault JPMorgan (NYT) A report by the Senate Permanent Subcommittee on Investigations highlights flaws in the bank's public disclosures and takes aim at several executives, including Douglas Braunstein, who was chief financial officer at the time of the losses, according to people briefed on the inquiry. The report's findings — scheduled to be released on March 15 — are expected to fault the executives for allowingJPMorgan to build the bets without fully warning regulators and investors, these people said. The subcommittee, led by Senator Carl Levin, could ask Mr. Braunstein and other senior executives to testify at a hearing this month, according to the people. The subcommittee does not currently intend to call the bank's chief executive, Jamie Dimon, but Congressional investigators interviewed Mr. Dimon last year. Citi CEO Is Keeping Score (WSJ) At a gathering of 300 executives last month at a Hilton Hotel in East Brunswick, N.J., Mr. Corbat proposed a slate of new, more-rigorous ways to track both the performance of individual executives and the third-largest U.S. bank as a whole, said people who were there. His approach includes score cards that will rate top managers across the New York company in five categories. "You are what you measure," Mr. Corbat told the gathering. Report Faults FSA Over Rate Rigging (WSJ) The report, commissioned by the FSA in the wake of the Barclays BARC.LN +1.48%PLC £290 million ($436.1 million) settlement with regulators over attempted rate-rigging, shows the regulator either ignored or failed to follow up on a series of red flags highlighting problems with the rates. Between 2007 and 2009, the FSA said it found 26 pieces of correspondence citing direct references to "lowballing"—where banks understated their borrowing costs to make their funding positions look stronger. These include two telephone calls from Barclays managers flagging problems with rate-setting process. The regulator also said it overlooked an article in The Wall Street Journal highlighting problems with the London interbank offered rate because the article wasn't widely read within the FSA. Heinz CEO's Golden Exit Deal (WSJ) The total would consist of a $56 million "golden parachute" including bonus payments and other items, $57 million in pension and deferred compensation and $99.7 million of Heinz shares that Mr. Johnson owns or controls, according to a Securities and Exchange Commission filing Monday. EU Said To Weigh Extra Years For Irish Rescue Loans (Bloomberg) The European Union is weighing whether to extend Ireland’s rescue loans by five years or more, buttressing the government’s efforts to become the first country to exit a bailout since the euro-region debt crisis began. Hotel boots rowdy Rodman over Kim Jong Un scene (NYP) Dennis Rodman, just back from visiting Kim Jong Un, was escorted out of the Time Hotel in Midtown on Sunday after spending hours at the restaurant bar loudly telling anyone who would listen what a great guy the North Korean dictator is. “He was at the bar at Serafina for three hours,” says a spy. “He kept saying what a nice guy Kim is, and how Kim just wants to talk to President Obama about basketball. He was waving around a signed copy of the dictator’s huge manifesto, telling everyone they should read it.” Added the witness, “Dennis was making a total jerk of himself. He wouldn’t leave, and he wouldn’t let anyone talk to him about shutting up, or what an oppressive country North Korea is. Eventually he had to leave the bar because the bartender was starting to get [bleep]ed-off.” Ikos Co-Founder Coward Sues Ex-Wife Over Hedge-Fund Software (Bloomberg) Martin Coward, the co-founder of Ikos Asset Management Ltd., sued his estranged wife, Elena Ambrosiadou, in a U.K. court over the copyright ownership of computer software that runs the hedge fund’s trading platform. Coward was the “architect” of the “bedrock of the family business,” his lawyers said at the start of a three-week trial in London today. “Practically all of the financial markets expertise at Ikos resided in Coward himself,” said Michael Bloch, Coward’s lawyer. Ikos, which uses computer algorithms to spot profitable trades in futures markets, has been embroiled in lawsuits involving Coward and other former employees around the globe. The estranged couple, who started divorce proceedings in Greece in 2009, have filed more than 40 lawsuits against each other in at least four countries. Sequester Leaves US In 'Fantasy' World: Analyst (CNBC) Stephen King, chief global economist at HSBC, said that the U.S. was living in a"fantasy world" over its growth forecasts. "If you look at the projections from the Congressional Budget Office (CBO) they assume that growth goes back to between 4 to 5 percent in real terms between 2014 and 2018. Their numbers suggest that the U.S. will post the fastest rate of productivity growth of any decade in the last 50 or 60 years," King told CNBC's "European Closing Bell." Former Lehman Derivatives Banker Helps Paschi Unravel Contracts (WSJ) Riccardo Banchetti, whose work packaging derivatives at Lehman Brothers Holdings Inc. got him the top European job at the firm a week before it failed, is now making a living unraveling the kind of deals he once developed. Banchetti worked with Banca Monte dei Paschi di Siena SpA to uncover 730 million euros ($955 million) of losses that the world’s oldest bank hid through the use of derivatives. The Italian banker, who also advised JPMorgan Chase & Co. (JPM) on its defence against fraud charges over swaps with Milan, has scrutinized more than 10 billion euros of transactions since leaving Lehman, according to a person with knowledge of his activities who asked not to be identified because they weren’t authorized to speak publicly. Drugs found in Florida suspects' orifices, deputies say (WPBF) According to the Charlotte County Sheriff's Office, a deputy who initiated a traffic stop on a car without brake lights found cocaine in a man's prosthetic leg. The deputy also found morphine and hydromorphine pills in a woman's bra and a hypodermic needle hidden in another woman's buttocks.