US And New York Sue BNY Mellon (WSJ)
The Justice Department and New York's attorney general filed separate civil lawsuits alleging that the bank fraudulently charged clients for currency transactions. Filed within hours of each other late Tuesday, the suits allege that BNY Mellon defrauded or misled state and public pension funds, private companies, universities and banks in a decade-long scheme of overcharging for foreign exchange. The move by the U.S. attorney in Manhattan is the first time federal prosecutors have filed a legal action in the mushrooming currency case, though it wasn't a criminal complaint—something no major U.S. bank has ever survived.
At S&P, A Crusader For Tough Ratings (WSJ)
Under Mr. Adelson's guidance, S&P has made it more difficult for many issuers to receive Triple-A ratings, its coveted highest score. The top rating should be "sacrosanct," Mr. Adelson has told colleagues, adding it should be tested as rigorously "as jet engines on an airplane." S&P downgraded nearly 17% of its Triple-A-rated structured finance securities in 2010. That's almost double the amount downgraded by Fitch Ratings and nearly triple the amount downgraded by Moody's Investors Service during the same period, though each firm's ratings express slightly different measurements of a bond's safety. Among sovereign government bonds that are rated by both S&P and Moody's as of September, S&P had lower ratings in 25 cases, and Moody's in 21.
Announced US Job Cuts Rise 212% In Year (Bloomberg)
Announced firings jumped 212 percent, the largest increase since January 2009, to 115,730 last month from 37,151 in September 2010, according to Chicago-based Challenger, Gray & Christmas Inc. Cuts in government employment, led by the Army’s five-year troop reduction plan, and at Bank of America accounted for almost 70 percent of the announcements. While the bulk of firings are not “directly related” to economic weakness, they “could definitely be a sign of more cuts to come,” John A. Challenger, chief executive officer of Challenger, Gray & Christmas, said in a statement. “Bank of America is not the only bank still struggling in the wake of the housing collapse, and the military cutbacks are probably just the tip of the iceberg when it comes to federal spending cuts.”
Obama Prods Cantor To Get House Jobs Vote (Bloomberg)
“I mean, what’s the problem?” Obama said yesterday at a Texas rally to boost the economy and reduce unemployment for everyone from teachers to construction workers. “Do they not have the time? They just had a week off! I -- is it inconvenient?”
On Way To Wall Street, Confronting A Protest (BusinessWeek)
On Sunday, Jennifer Berg, a former senior executive at the investment banks Morgan Stanley and UBS, boarded a subway heading downtown and took a seat across from three protesters holding signs. "American Spring," one sign proclaimed. "Down with Wall Street," read another. The veteran Wall Streeter figured she might as well introduce herself. "I just said what exactly are you protesting?" One of the protesters told her he was upset with the marketing of subprime mortgages. Berg countered by asking if homebuyers who took on too much debt shouldn't share some of the responsibility. Another explained that she wanted more control over the economy. Berg said she told them that if they tried to close down Wall Street, it would choke the flow of money that sustains the world economy. "We had a really decent chat. These guys were disgruntled. I think they were unemployed. They felt like they were making a difference," Berg says. "They listened to what I had to say and then they shook my hand. They said it was a great pleasure to have this conversation."
Geithner: We Will 'Prevail' Over Banks (Erin Burnett/CNN)
Treasury Secretary Tim Geithner on Tuesday joined a chorus of Democratic officials hitting back at bank fees, saying the administration "will prevail" in the battle over banking reforms. "There are no surprises, nothing strange about the fact that banks are resisting it -- are pushing back," Geithner told CNN's Erin Burnett. "They are trying to weaken those reforms." Geithner said that banks are blaming the government for everything -- including problems they helped create. But the administration won't back down. "We are going to push back harder," he said. "And in the end, we are going to prevail because what we are doing is a reasonable, sensible thing."
IMF: $266 Billion Needed For European Banks (Reuters)
Europe needs between 100 billion and 200 billion euros to recapitalize its banks to win back investor confidence and should put in place a comprehensive plan across the continent, the International Monetary Fund's European Department Director Antonio Borges said on Wednesday. "We are talking about figures of between 100 and 200 billion euros, which in our view is very, very small compared to the size of the European capital markets and compared to the resources of the new, enhanced EFSF," Borges told Reuters during a visit to Brussels, referring to Europe's bailout fund.
Ackman May Sell Shares in Hedge Fund in 2012 for Stable Capital (Bloomberg)
Ackman told an audience late yesterday at the Harmonie Club in New York that he plans to sell shares in a closed-end fund, which trades on an exchange. “We will pick our moment, probably sometime in 2012,” Ackman said. By selling shares in a listed fund, Ackman is trying to avoid a repeat of 2009, when investors redeemed about 27 percent of the firm’s capital. The redemptions made it harder for him to take advantage of opportunities created by the global financial crisis, he said in an hourlong interview. Pershing Square itself would not be going public.
Raj's Last Stand (NYP)
Raj Rajaratnam’s legal team went head to head with prosecutors yesterday in a final effort to reduce the disgraced billionaire’s pending jail term after his conviction on insider-trading charges earlier this year. During a two-hour hearing in Manhattan federal court, the Galleon Group founder’s defense team told judge Richard Holwell that their client only made $7.5 million on his illegal trading and that he never lied to the Securities and Exchange Commission in 2007. A person close to the case said that if Rajaratnam is successful in convincing the judge to knock off these claims, his sentence could be reduced to only 6 1/2 years.
Hooters Lawsuits Claims Rival Restaurant Stole Trade Secrets (HP)
In their lawsuit, Hooters claims that Joseph Hummel, former Hooters vice president, jumped ship to help develop the similarly themed Twin Peaks restaurants (motto: “Eats, Drinks, Scenic Views”) in July and took “sensitive business information” with him...In the lawsuit, Hooters says their “iconic” Hooters Girls are the “cornerstone of the [Hooters] concept,” and notes that “Twin Peaks directly competes with [Hooters] in the market of casual dining restaurants with an all female waitstaff.” Peaks currently has 15 restaurants in five states, but last month it announced plans to open 35 franchises throughout the Southeast over the course of the next decade. Judging from the company’s website, the restaurants share many similarities with the better-known Hooters -- namely, chicken wings in the fryer, Ultimate Fighting Championship fights on the big screen, and precious little clothing on the servers. But whereas Hooters waitresses don the trademark white tank tops and orange short shorts, Twin Peaks servers tend to wear a mountain-themed ensemble of flannel bikini-like tops paired with tan hiker shorts.