Opening Bell: 05.20.11

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Goldman Braces for Federal Subpoenas (WSJ)
Goldman Sachs executives expect to receive subpoenas soon from U.S. prosecutors seeking more information about the securities firm's mortgage-related business, according to people familiar with the situation. Officials at the New York company believe the Justice Department will demand certain documents and other information, possibly within days, these people said.

FrontPoint Partners to Close Funds After Redemption Requests (Bloomberg)
FrontPoint Partners LLC will close some of its hedge funds after clients asked to withdraw money amid charges a manager benefited from an illegal stock tip. “We have received capital redemption requests from some of our clients,” Steve Bruce, a spokesman for Greenwich, Connecticut-based FrontPoint said in a statement today. The firm “will be winding down select strategies.” FrontPoint oversaw $7 billion at the start of November before Chip Skowron, a co-portfolio manager of its health-care funds, was tied to claims by prosecutors that the firm got advance notice on drug-trial results. U.S. officials are pursuing a crackdown on insider-trading at hedge funds, with more than 40 people pleading guilty or facing criminal charges or civil lawsuits for benefiting from non-public information.

Flood of Fees Flows Into Bank Coffers (WSJ)
Fees from IPOs already total $1 billion this year, double the level of last year, and are on pace to hit $2.5 billion, said Richard Peterson, an analyst at Standard & Poor's Corp. Except for 2006, it would be the biggest year for IPOs in the U.S. since the tech boom ended in 2000.

At I.M.F., Men on Prowl and Women on Guard (NYT)
The laws of the United States do not apply inside its walls, and until earlier this month the I.M.F.’s own rules contained an unusual provision that some experts and former officials say has encouraged managers to pursue the women who work for them: “Intimate personal relationships between supervisors and subordinates do not, in themselves, constitute harassment.” “It’s sort of like ‘Pirates of the Caribbean’; the rules are more like guidelines,” said Carmen M. Reinhart, a prominent female economist who served as the I.M.F.’s deputy director for research from 2001 to 2003. “That sets the stage, I think, for more risk-taking.”

Long-Ago Affair Might Damage Turkish Candidate’s Chances to Lead I.M.F. (NYT)
But, [Kemal] Dervis, it turns out, has a secret that could disqualify him from being considered for the job. Years ago, while a senior executive at the World Bank, he had an affair with a female subordinate who now works at the I.M.F., according to a person with direct knowledge of the affair.

Contrarian Investor Shuns Hot Idea for Bigger Picture (DealBook)
Mr. Thiel is shunning the most popular Internet start-ups because they are not “taking civilization to the next level.” Instead, he’s placing bets in health care, biotechnology and artificial intelligence companies — areas most of his peers have shied away from…According to Mr. Thiel, not enough energy is spent tackling big, challenging problems, like space exploration. Instead, many people are chasing incremental progress and short-term gains.

Fed Sells Out Latest AIG Bond Offering (WSJ)
The Federal Reserve Bank of New York on Thursday sold all 29 subprime mortgage bonds on offer in its latest sale from a portfolio of securities acquired from American International Group. The securities, held in a legal entity called Maiden Lane II, sold for what the Fed had estimated their fair current value to be, $878.6 million. The debt was part of a clutch of so-called toxic bonds the central bank acquired when it rescued the failing insurer in 2008.

Citigroup Adds Wolfe to Lead Venture Capital in Tech, Media (Bloomberg)
Wolfe is taking a newly created position at the New York- based bank after working at Union Square Advisors LLC, where he managed venture capital and private equity sponsor coverage, according to a memo to Citigroup employees obtained by Bloomberg News. Citigroup added Union Square co-founder Ethan Topper in April to head global technology banking.

Bank of Japan Refrains From Adding Stimulus (Bloomberg)
The Bank of Japan’s policy board unanimously voted to maintain monetary policy even after a report yesterday showed the country slipped into a recession following a record earthquake. Governor Masaaki Shirakawa and his eight colleagues decided to maintain a 30-trillion yen ($370 billion) credit program and a 10-trillion yen asset-purchase fund that represent the bank’s main policy tools.

Bundesbank Says German Economy to Weaken (Bloomberg)
“Growth is likely to ease somewhat in the foreseeable future,” the Frankfurt-based Bundesbank said in its monthly bulletin published today. The economy’s 1.5 percent growth rate in the first quarter from the previous three months “considerably overstates the underlying economic momentum. Output growth was clearly lifted during the reporting period by backloading and catching-up effects.”

Senate Democrats won’t release their spending plan (WaPo)
Senate Democrats decided Thursday not to release their spending plan to counter the budget blueprint approved last month by House Republicans, saying they will wait to see whether talks at the White House produce a compromise plan for reining in the national debt.

Tepco chief quits after $15 billion loss on nuclear crisis (Reuters)
Tokyo Electric Power Co reported a net loss of $15 billion on Friday to account for the disaster at its Fukushima nuclear power plant, marking Japan's biggest non-financial loss, and it warned its future was uncertain.

Liberty Media Bids for Barnes & Noble (WSJ)
John Malone's Liberty Media Corp. made an offer Thursday to acquire Barnes & Noble Inc. for $1.02 billion, a dramatic turn for the nation's largest bookstore chain—which put itself up for sale last summer but struggled to find a buyer as the outlook for traditional booksellers soured. The proposed deal represents a 20% premium over Barnes & Noble's share price in 4 p.m. New York Stock Exchange trading Thursday.

Ex-Teammate: I saw Lance Armstrong use EPO (CBS 60 Minutes)
A former teammate of perhaps the world's greatest cyclist, Lance Armstrong, says he used banned performance-enhancing substances with Armstrong to cheat in pro races, including the Tour de France, the sport's ultimate event…[Tyler] Hamilton says Armstrong used EPO, a drug that boosted endurance by increasing the amount of red blood cells in his body, to win the 1999 Tour de France, the race he won an astonishing seven times. "I saw [EPO] in his refrigerator...I saw him inject it more than one time like we all did, like I did many, many times."

Harold Camping: The Man Behind 'Judgment Day,' May 21, 2011 (HuffPo)
He made a similar prediction in the 1990s but later said he didn't look close enough at the Book of Jeremiah. This time around, he’s absolutely certain.

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