Knight Said To Get $400M Infusion In Sale Of Convertibles (Bloomberg)
Knight Capital stepping back from the brink of insolvency, secured a $400 million infusion through the sale of convertible preferred securities, according to a person with direct knowledge of the matter. The investors are Getco LLC, an automated trading firm that is backed by General Atlantic LLC; Blackstone Group LP; and brokerages Stifel Nicolaus & Co. and TD Ameritrade Holding Corp, according to the person, who asked not to be named because the agreements haven’t been made public. Knight, whose market-making unit executes about 10 percent of U.S. equity volume, has been fighting for survival since a computer breakdown spewed orders through the stock market Aug. 1 and spurred a $440 million trading loss.
SEC Nixed Knight's Plea For A Do-Over (WSJ)
Knight Capital Group officials raced over the weekend to negotiate a deal to save the crippled brokerage firm as new details emerged showing regulators rebuffed the company's pleas to be released from errant trades it had booked. Three hours after a software glitch unleashed a wave of erratic trades on Wednesday, leaving Knight holding at least $4.5 billion worth of securities it hadn't planned to buy, firm Chief Executive Thomas Joyce was on the phone with Mary Schapiro, chairman of the Securities and Exchange Commission. Mr. Joyce pressed the SEC chief to allow the firm to cancel many of the trades, according to people with knowledge of the discussions. The conversation helped seal Knight's immediate fate. From her vacation spot in Maine, Ms. Schapiro rejected Mr. Joyce's entreaties, setting in motion the firm's scramble. Knight was forced to unload the stock it had bought, incurring a $440 million loss that depleted the company's capital and leaving it facing a dire choice: seek a financial lifeline, a buyer, or file for bankruptcy.
Monti Warns Euro Crisis Threatens EU as a Whole (AP)
In case that was unclear.
As Libor Fault-Finding Grows, It Is Now Every Bank for Itself (Dealbook)
With billions of dollars and their reputations on the line, financial institutions have been spreading the blame in recent meetings with authorities, according to government and bank officials with knowledge of the matter. While acknowledging their own wrongdoing, institutions are pointing out actions at other banks that they believe are worse — and in some cases, extend to top executives. One official involved in the case said that banks are emphasizing that “we’re not as bad as the next guy.”
Vietnam To Ease Rules To Lure Stock Investors (Bloomberg)
Vietnam plans to ease rules on equity trading and accelerate initial public offerings of state-owned companies this year to attract investors to a market that’s valued almost 15 times less than Singapore’s. The State Securities Commission is preparing to cut the minimum holding period for stocks, Nguyen Doan Hung, vice chairman of the commission, said in an e-mailed response to questions from Bloomberg on Aug. 2. The regulator is also considering widening stock trading bands and starting an online auction system to boost volumes and speed up sales, he said, without specifying when the measures may be started.
Macro Funds Show Micro Returns (WSJ)
After many of these funds posted big gains during the financial crisis, money poured in. From the end of 2008 through the first quarter of this year, assets surged 66% to $462 billion, according to Hedge Fund Research Inc. Conditions last year, when markets were driven by uncertainty over Europe's debt crisis and broad policy decisions, seemed tailor-made for macro managers. But the funds lost an average of 4.2%, according to HFR, compared with the 2.1% gain by the Standard & Poor's 500-stock index, including dividends. In the first six months of 2012, such funds lost 0.5% on average compared with a 9.5% climb by the S&P 500. July appears to have been a better month, investors say, but not enough to brighten the broader picture much. Investors are showing signs of getting frustrated. They withdrew $3.5 billion from macro funds in the second quarter of this year, according to HFR.
Small Banks Are Blunt In Dislike Of New Rules (WSJ)
It was supposed to be a routine conference call where bankers could ask U.S. regulators about a proposed rule on capital levels. But then a man who identified himself as fourth-generation banker from central Minnesota started to complain about the possibility of having to set aside much more money when making nontraditional mortgage loans. As about 1,500 other bankers listened, the banker pressed officials at the Office of the Comptroller of the Currency to justify the proposed changes, saying he had made such loans for 40 years with almost no defaults. Then came an eight-letter barnyard epithet. OCC officials cut him off to take another question, but the next three bankers in line during the July 19 call said they agreed with him.
Guyana probes huge cocaine stash at airport — bound for NYC (AP)
Officials in Guyana say they plan to fire nearly a dozen baggage handlers and ramp attendants after police found 57 pounds of cocaine that was about to be loaded onto a flight headed for New York City. Airport Authority Chief Executive Ramesh Ghir said today that airport workers were clearly involved in yesterday's incident. Twelve employees were dismissed earlier this year after someone threw a bag with 50 pounds of cocaine over a perimeter fence at the South American country's international airport.
One Year Later, What US Downgrade? (WSJ)
One year ago, Standard & Poor's Ratings Services stripped the U.S. of its triple-A debt rating. Since then, demand for Treasury securities has only grown. Sunday marked the one-year anniversary of S&P's downgrade of long-term U.S. debt to double-A-plus, which came after Congress struggled to reach a deficit-reduction deal. The action sparked a flight into safe-haven assets, with U.S. debt still near the top of many investors' list of hiding spots. Another fiscal battle is brewing now, but investors aren't as worried about what this might mean for Treasurys. Even for investors worried about the long-term health of U.S. finances, last August's reaction showed that Treasurys have a stronghold on safe-haven seekers.
Romney wants 'something dramatic' to aid economy (AP)
Mitt Romney is calling for "something dramatic" to help the economy recover, but he's not saying exactly what. The Republican presidential candidate says he opposes another federal stimulus package and new government programs. He also says that if the Federal Reserve were to undertake another "massive" program of buying government bonds and mortgage-backed securities, with the goal of driving long-term interest rates even lower, it wouldn't help the recovery...Romney said repeatedly this past week that his economic policies would create 12 million jobs in his first term. Pushed to explain how, Romney said in the interview, "That's what happens in a normal process."
Las Vegas Sands Probed In Money Move (WSJ)
Federal authorities are investigating whether Las Vegas Sands Corp. and several of its executives violated money-laundering laws by failing to alert authorities to millions of dollars transferred to its casinos by two Las Vegas high rollers, according to lawyers and others involved in the matter. The U.S. attorney's office in Los Angeles is examining the casino company's handling of money received several years ago from a Mexican businessman later accused of drug trafficking and a former California executive subsequently convicted of taking illegal kickbacks, according to the people involved.
Snoop Dogg Heeds a Higher Calling As Snoop Lion (Speakeasy)
The new reggae album will be accompanied by a documentary also called “Reincarnated” in which Snoop explains his name change and his embrace of Jamaican music. “I’ve been on the top ever since I’ve been in it,” Snoop says in the trailer. “I’ve got rap songs that will never die. That ain’t with no disrespect but I’m tired of rapping.” In a clip from the coming movie, we see Snoop in the studio telling the folks around him, “F— Snoop Dogg. Don’t think of none of the sh– he rapped about, hustling and making money and drug dealing and shooting. All that sh– will be out of here.”