Opening Bell: 08.07.12

Probe May Hit UK Bank's Clean Image (WSJ) Last week, Standard Chartered PLC Chief Executive Peter Sands told analysts that "our culture and values are our first and last line of defense." On Tuesday, allegations by a New York financial regulator that Standard Chartered hid illegal Iranian transactions seemed to breach that line, sending the lender's shares down and wiping £7.65 billion ($11.9 billion) off its market value. In the U.K., Mr. Sands has long been heralded as a voice of reason in the country's turbulent banking sector. The former consultant, who was named Standard Chartered CEO in 2006, regularly espoused the importance of sound governance and sensible investment. While several of its British peers were being bailed out by taxpayers, Mr. Sands was guiding the Asia-focused bank to record profits boosted by growing trade between emerging nations. The executive stressed the fact that Standard Chartered doesn't have an investment bank and didn't need European Central Bank cheap loans to keep its business ticking over. Italian's Job: Premier Talks Tough in Bid to Save Euro (WSJ) During an all-night European summit in June, Mario Monti, the Italian prime minister, gave German Chancellor Angela Merkel an unexpected ultimatum: He would block all deals until she agreed to take action against Italy's and Spain's rising borrowing costs. Ms. Merkel, who has held most of the euro's cards for the past two years, wasn't used to being put on the defensive. "This is not helpful, Mario," Ms. Merkel warned, according to people present. Europe's leaders were gathered on the fifth floor of the European Union's boxy glass headquarters in Brussels, about to break for dinner. "I know," Italy's premier replied. Bill Gross: Stay Away From Europe (CNBC) “Investors get distracted by the hundreds of billions of euros in sovereign policy checks, promises that make for media headlines but forget it’s their trillions that are the real objective,” Gross wrote. “Even Mr Hollande in left-leaning France recognizes that the private sector is critical for future growth in the EU. He knows that, without its partnership, a one-sided funding via state-controlled banks and central banks will inevitably lead to high debt-to-GDP ratios and a downhill vicious cycle of recession.” “Psst…investors: Stay dry my friends!” Gross said. Richest Family Offices Seeing Fastest Growth As Firms Oust Banks (Bloomberg Markets) They call it “money camp.” Twice a week, 6- to 11-year-old scions of wealthy families take classes on being rich. They compete to corner commodities markets in Pit, the raucous Parker Brothers card game, and take part in a workshop called “business in a box,” examining products that aren’t obvious gold mines, such as the packaging on Apple Inc.’s iPhone rather than the phone itself. It’s all part of managing money for the wealthiest families, says Katherine Lintz, founder of Clayton, Missouri- based Financial Management Partners, which runs the camp for the children of clients. Supplying the families with good stock picks and a wily tax strategy isn’t enough anymore. These days, it’s about applying the human touch, she says. Lintz, 58, is on to something. Her 22-year-old firm was No. 2 among the fastest-growing multifamily offices in the second annual Bloomberg Markets ranking of companies that manage affairs for dynastic clans, Bloomberg Markets magazine reports in its September issue. The assets that FMP supervises grew 30 percent to $2.6 billion as of Dec. 31, just behind Signature, a Norfolk, Virginia-based family office that expanded 36 percent in 2011 to $3.6 billion. MS Takes Trading Hit (NYP) Morgan Stanley, which had the largest trading-revenue drop among major US banks last quarter, lost money in that business on 15 days in the period, up from eight days a year earlier. Morgan Stanley traders generated more than $100 million on three days in the period, compared with seven days in the second quarter of 2011, the company said in a regulatory filing yesterday. None of the daily losses exceeded the firm’s value-at-risk, a measure of how much the bank estimates it could lose on 95 percent of days. Morgan Stanley had a 48 percent year-over-year decrease in trading revenue, excluding accounting gains, led by a 60 percent drop in fixed-income revenue. Former Lloyds Digital Security Chief Admits $3.76 Million Fraud (Bloomberg) Lloyds Banking Group's former head of digital banking fraud and security pleaded guilty to submitting false invoices totaling more than 2.4 million pounds ($3.76 million)...Jessica Harper admitted to submitting fake invoices between 2007 and 2011 and then laundering the proceeds, the CPS said. She will be sentenced on Sept. 21, and faces as long as 24 years in prison for the two charges, a CPS spokesman said, although she will get credit for the guilty plea. Ex Lehman Exec Requests Rehab To Avoid Jail Time (NYP) Former Lehman Brothers Co-Chief Operating Officer Bradley H. Jack, arrested twice in less than a year on charges of prescription forgery, said he is willing to undergo a program for drug and alcohol treatment to avoid prosecution. Jack applied for the program at a hearing yesterday in Connecticut Superior Court in Norwalk. Judge Bruce Hudock ordered a doctor’s report to determine if he is eligible for the new program, which the judge said would be “a rare event.” Fed Official Calls For Bond Buying (WSJ) Eric Rosengren, president of the Federal Reserve Bank of Boston, called on the Fed to launch an aggressive, open-ended bond buying program that the central bank would continue until economic growth picks up and unemployment starts falling again. His call came in an interview with The Wall Street Journal, the first since the central bank signaled last week that it was leaning strongly toward taking new measures to support economic growth. Mr. Rosengren isn't currently among the regional Fed bank presidents with a vote on monetary policy. Although all 12 presidents participate in Fed deliberations, only five join the seven Fed governors in Washington in the formal committee vote. Tokyo Exchange Glitch Halts Derivatives Trading (WSJ) The Tokyo Stock Exchange on Tuesday temporarily suspended all derivatives trading soon after the morning open due to an unidentified system problem, the second significant trading glitch on the exchange this year. Amazon Exec Swindled By Tom Petty Con Artist (NYDN) Brian Valentine simply wanted to give his wife the wedding present of a lifetime - a performance by Tom Petty and the Heartbreakers. The senior vice president of Amazon, instead, fell victim to fraud, losing a whopping $165,000 to a Las Vegas man who pretended to be a concert booking agent, the Smoking Gun reported. FBI agents arrested the fraudulent agent, Chad Christopher Lund, on Aug. 2 in Illinois, after a private investigator Valentine had hired found that Lund had skipped town. But the ordeal began almost ten months before in late 2011, a year after Valentine, 52, popped the question to fellow Amazon employee, Gianna Puerini, 39, according to a wire fraud complaint unsealed by the U.S. District Court. Valentine decided that he wanted the "Won't Back Down" singer to perform a set at the couple's wedding reception since he proposed to Puerini at a Petty concert in Seattle. He turned to the Internet, where he found the website of Lund's firm, lundlive.com, boasting to have booked acts like Petty, Run-DMC and Ludacris. Lundlive.com no longer exists. Valentine connected with Lund over email and by October 2011, Lund told the Amazon exec that he had negotiated with Petty's representatives "down to a price of $330,000 for the performance." Later in the month, Lund sent Valentine a contract with the forged signature of Petty's manager, Tony Dimitraides. Valentine sent Lund a $165,000 down payment in return. Valentine finally uncovered the fraud in early April 2012, when the wedding was just three months away. He contacted Petty's management to discuss the performance only to find out that they had no idea about the planned appearance. "We have never heard of Chris Lund or his agency," Dimitraides wrote in an email to Valentine. "We are not aware of any deal for Tom Petty to play Seattle in July and I have never signed a contract for any such." "It looks like you have been defrauded."
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Probe May Hit UK Bank's Clean Image (WSJ)
Last week, Standard Chartered PLC Chief Executive Peter Sands told analysts that "our culture and values are our first and last line of defense." On Tuesday, allegations by a New York financial regulator that Standard Chartered hid illegal Iranian transactions seemed to breach that line, sending the lender's shares down and wiping £7.65 billion ($11.9 billion) off its market value. In the U.K., Mr. Sands has long been heralded as a voice of reason in the country's turbulent banking sector. The former consultant, who was named Standard Chartered CEO in 2006, regularly espoused the importance of sound governance and sensible investment. While several of its British peers were being bailed out by taxpayers, Mr. Sands was guiding the Asia-focused bank to record profits boosted by growing trade between emerging nations. The executive stressed the fact that Standard Chartered doesn't have an investment bank and didn't need European Central Bank cheap loans to keep its business ticking over.

Italian's Job: Premier Talks Tough in Bid to Save Euro (WSJ)
During an all-night European summit in June, Mario Monti, the Italian prime minister, gave German Chancellor Angela Merkel an unexpected ultimatum: He would block all deals until she agreed to take action against Italy's and Spain's rising borrowing costs. Ms. Merkel, who has held most of the euro's cards for the past two years, wasn't used to being put on the defensive. "This is not helpful, Mario," Ms. Merkel warned, according to people present. Europe's leaders were gathered on the fifth floor of the European Union's boxy glass headquarters in Brussels, about to break for dinner. "I know," Italy's premier replied.

Bill Gross: Stay Away From Europe (CNBC)
“Investors get distracted by the hundreds of billions of euros in sovereign policy checks, promises that make for media headlines but forget it’s their trillions that are the real objective,” Gross wrote. “Even Mr Hollande in left-leaning France recognizes that the private sector is critical for future growth in the EU. He knows that, without its partnership, a one-sided funding via state-controlled banks and central banks will inevitably lead to high debt-to-GDP ratios and a downhill vicious cycle of recession.” “Psst…investors: Stay dry my friends!” Gross said.

Richest Family Offices Seeing Fastest Growth As Firms Oust Banks (Bloomberg Markets)
They call it “money camp.” Twice a week, 6- to 11-year-old scions of wealthy families take classes on being rich. They compete to corner commodities markets in Pit, the raucous Parker Brothers card game, and take part in a workshop called “business in a box,” examining products that aren’t obvious gold mines, such as the packaging on Apple Inc.’s iPhone rather than the phone itself. It’s all part of managing money for the wealthiest families, says Katherine Lintz, founder of Clayton, Missouri- based Financial Management Partners, which runs the camp for the children of clients. Supplying the families with good stock picks and a wily tax strategy isn’t enough anymore. These days, it’s about applying the human touch, she says. Lintz, 58, is on to something. Her 22-year-old firm was No. 2 among the fastest-growing multifamily offices in the second annual Bloomberg Markets ranking of companies that manage affairs for dynastic clans, Bloomberg Markets magazine reports in its September issue. The assets that FMP supervises grew 30 percent to $2.6 billion as of Dec. 31, just behind Signature, a Norfolk, Virginia-based family office that expanded 36 percent in 2011 to $3.6 billion.

MS Takes Trading Hit (Bloomberg)
Morgan Stanley, which had the largest trading-revenue drop among major US banks last quarter, lost money in that business on 15 days in the period, up from eight days a year earlier. Morgan Stanley traders generated more than $100 million on three days in the period, compared with seven days in the second quarter of 2011, the company said in a regulatory filing yesterday. None of the daily losses exceeded the firm’s value-at-risk, a measure of how much the bank estimates it could lose on 95 percent of days. Morgan Stanley had a 48 percent year-over-year decrease in trading revenue, excluding accounting gains, led by a 60 percent drop in fixed-income revenue.

Director, 73, Sues Ex-Love Dancer For Using Him (NYP)
In papers filed in Manhattan Supreme Court, Antonio Calenda, 73, says Martha Graham dancer Natasha Diamond-Walker, 26, seduced him into giving her “lavish gifts” and a $775,000 interest-free loan so she could buy an apartment on the Upper West Side — and then exited stage right as soon as she closed on the one-bedroom apartment. Calenda wants his $775,000 back — plus $1 million in punitive damages for her “wanton, willful and malicious behavior.”

Ex Lehman Exec Requests Rehab To Avoid Jail Time (NYP)
Former Lehman Brothers Co-Chief Operating Officer Bradley H. Jack, arrested twice in less than a year on charges of prescription forgery, said he is willing to undergo a program for drug and alcohol treatment to avoid prosecution. Jack applied for the program at a hearing yesterday in Connecticut Superior Court in Norwalk. Judge Bruce Hudock ordered a doctor’s report to determine if he is eligible for the new program, which the judge said would be “a rare event.”

Former Lloyds Digital Security Chief Admits $3.76 Million Fraud (Bloomberg)
Lloyds Banking Group's former head of digital banking fraud and security pleaded guilty to submitting false invoices totaling more than 2.4 million pounds ($3.76 million)...Jessica Harper admitted to submitting fake invoices between 2007 and 2011 and then laundering the proceeds, the CPS said. She will be sentenced on Sept. 21, and faces as long as 24 years in prison for the two charges, a CPS spokesman said, although she will get credit for the guilty plea.

Fed Official Calls For Bond Buying (WSJ)
Eric Rosengren, president of the Federal Reserve Bank of Boston, called on the Fed to launch an aggressive, open-ended bond buying program that the central bank would continue until economic growth picks up and unemployment starts falling again. His call came in an interview with The Wall Street Journal, the first since the central bank signaled last week that it was leaning strongly toward taking new measures to support economic growth. Mr. Rosengren isn't currently among the regional Fed bank presidents with a vote on monetary policy. Although all 12 presidents participate in Fed deliberations, only five join the seven Fed governors in Washington in the formal committee vote.

Tokyo Exchange Glitch Halts Derivatives Trading (WSJ)
The Tokyo Stock Exchange on Tuesday temporarily suspended all derivatives trading soon after the morning open due to an unidentified system problem, the second significant trading glitch on the exchange this year.

Amazon Exec Swindled By Tom Petty Con Artist (NYDN)
Brian Valentine simply wanted to give his wife the wedding present of a lifetime - a performance by Tom Petty and the Heartbreakers. The senior vice president of Amazon, instead, fell victim to fraud, losing a whopping $165,000 to a Las Vegas man who pretended to be a concert booking agent, the Smoking Gun reported. FBI agents arrested the fraudulent agent, Chad Christopher Lund, on Aug. 2 in Illinois, after a private investigator Valentine had hired found that Lund had skipped town. But the ordeal began almost ten months before in late 2011, a year after Valentine, 52, popped the question to fellow Amazon employee, Gianna Puerini, 39, according to a wire fraud complaint unsealed by the U.S. District Court. Valentine decided that he wanted the "Won't Back Down" singer to perform a set at the couple's wedding reception since he proposed to Puerini at a Petty concert in Seattle. He turned to the Internet, where he found the website of Lund's firm, lundlive.com, boasting to have booked acts like Petty, Run-DMC and Ludacris. Lundlive.com no longer exists. Valentine connected with Lund over email and by October 2011, Lund told the Amazon exec that he had negotiated with Petty's representatives "down to a price of $330,000 for the performance." Later in the month, Lund sent Valentine a contract with the forged signature of Petty's manager, Tony Dimitraides. Valentine sent Lund a $165,000 down payment in return. Valentine finally uncovered the fraud in early April 2012, when the wedding was just three months away. He contacted Petty's management to discuss the performance only to find out that they had no idea about the planned appearance. "We have never heard of Chris Lund or his agency," Dimitraides wrote in an email to Valentine. "We are not aware of any deal for Tom Petty to play Seattle in July and I have never signed a contract for any such." "It looks like you have been defrauded."

Related

Opening Bell: 12.18.12

Dozens Likely Implicated In UBS Libor Deal (FT) bout three dozen bankers and senior managers will be implicated in the alleged rigging of Libor interest rates when UBS settles with global regulators later this week, according to people familiar with the matter. UBS is close to finalizing a deal with UK, US and Swiss authorities in which the bank will pay close to $1.5 billion and its Japanese securities subsidiary will plead guilty to a US criminal offence. Terms of the guilty plea were still being negotiated, one person familiar with the matter said on Monday, adding that the bank will not lose its ability to conduct business in Japan...Not all of the three dozen individuals will face criminal or civil charges and the level of alleged misconduct varies among them. While it also is not clear how many bankers will be criminally charged, people familiar with the investigation said the settlement documents will document an intercontinental scheme to manipulate the Yen-Libor interest rate over several years involving desks from Tokyo to London. Cerberus Seeks Sale of Gun Maker Freedom Group (WSJ) Private-equity firm Cerberus Capital Management LP said it is seeking to sell the company that manufactures a gun used in last week's shooting at Sandy Hook Elementary School in Newtown, Conn. "We have determined to immediately engage in a formal process to sell our investment in Freedom Group…We believe that this decision allows us to meet our obligations to the investors whose interests we are entrusted to protect without being drawn into the national debate that is more properly pursued by those with the formal charter and public responsibility to do so," Cerberus said in a statement Tuesday. Cliff Talks Narrow (WSJ) President Barack Obama backed away from his long-standing call for raising tax rates on households making more than $250,000 a year, a development that inches the White House and congressional Republicans closer to a budget deal. Mr. Obama's move, a counter to Republicans' recent proposal to raise tax rates on income over $1 million, further narrows the differences between the two sides. During a meeting with House Speaker John Boehner (R., Ohio) Monday the president proposed allowing Bush-era tax rates to expire for households making more than $400,000 in annual income, people familiar with the meeting said. Poland Finds It's Not Immune To Euro Crisis (NYT) During much of the region’s debt crisis so far, Poland has counted itself fortunate that the troubles began before the country had joined the euro currency union. By being part of the E.U.’s common market, but not bound by euro strictures, Poland has been one of the Continent’s rare economic good-news stories. But the deceleration in Polish growth, which has prompted the central bank to begin a series of interest rate cuts to stimulate the economy, has underscored the country’s exposure to slumping euro zone consumer markets. Hedge Fund Managers Convicted of Insider-Trading Scheme (Bloomberg) Level Global Investors LP co-founder Anthony Chiasson and former Diamondback Capital Management LLC portfolio manager Todd Newman were convicted of securities fraud and conspiracy for an insider-trading scheme that reaped more than $72 million. After deliberating a little more than two days, a federal jury in New York found both men guilty of conspiracy to commit securities fraud for a scheme to trade on Dell Inc. (DELL) and Nvidia Corp. (NVDA) using illicit tips. The panel found Chiasson, 39, guilty of five counts of securities fraud, earning Level Global $68.5 million on inside tips trading on the two technology company stocks. Newman, 48, was convicted of four counts of securities fraud related to trades on inside information that earned his fund about $3.8 million. “We had all the evidence we needed,” said Felicia Rivera, a juror from Westchester County near New York City, said after court. Credit unions sue JPM for $3.6B (NYP) The nation’s credit-union watchdog sued JPMorgan for a second time yesterday over $3.6 billion of Bear Stearns mortgage bonds that imploded in the wake of the financial crisis. The suit brought by the National Credit Union Administration accuses Bear Stearns, the failed bank acquired by JPMorgan in 2008, of peddling toxic securities to four credit unions that later collapsed. The same government agency sued JPMorgan last year over $1.4 billion in mortgage-backed securities that led to losses for credit unions. That suit is still pending. In the latest complaint, the credit union regulator said Bear Stearns conspired with at least 16 outfits that cranked out toxic mortgages and securities sold to unsuspecting buyers. Those included notorious subprime mortgage outfits such as Countrywide Financial, New Century and People’s Choice Home Loans. Man wears 70 items of clothing at airport to avoid baggage charge (DS) A man took to putting on 70 items of clothing to avoid an extra baggage charge at an airport. The unidentified passenger turned up at Guangzhou Baiyun International Airport in China, described as looking like a 'sumo wrestler'. According to Guangzhou Daily, the man's luggage exceeded the weight limit. He did not want to pay the extra baggage costs, and thus took out and wore more than 60 shirts and nine pairs of jeans. Wanting to board a flight to Nairobi, Kenya, he was stopped by the metal detector and had to undergo a full body search. AIG Raises $6.45 Billion as AIA Priced in Top Half of Range (Bloomberg) AIG sold 1.65 billion shares at HK$30.30 each, AIA said in a statement today. The shares were offered at HK$29.65 to HK$30.65 each. AIA fell 3.3 percent to close at HK$30.60 in Hong Kong, the most since July 23. It was the biggest decliner and most actively traded stock by both volume and value in the city’s benchmark Hang Seng Index (HSI) with HK$56.6 billion ($7.3 billion) worth of shares changing hands today. Probe Sparks Split On Trades (WSJ) A regulatory investigation into whether stock exchanges have given unfair advantages to high-speed traders has sparked complaints against the exchanges, fueling a broader debate about how the market operates and is regulated. The Investment Company Institute, trade group for mutual funds, complained in a recent letter to the Securities and Exchange Commission that U.S. stock exchanges "facilitate strategies" for rapid-fire trading firms "that can lead to disorderly markets or that can benefit market participants at the expense of long-term investors." Buybacks Rule The Day (WSJ) American companies bought back $274 billion more shares than they issued in the year through September, according to Ed Yardeni, president of investment advisory firm Yardeni Research. And the spending spree looks set to continue, a sign that companies have the cash to put to work but don't yet see an economic case for using it to expand their businesses or create jobs. Dog swallows a foot of Christmas lights (Mirror) Charlie, a seven-year-old crossbreed dog from Southampton, was saved by surgeons from veterinary charity PDSA after wolfing down his family's Christmas lights recently. And the dog has a track record for getting his paws, and teeth, on household objects, having once eaten his owner Sharon Fay's scarf. Ms Fay, who aptly refers to her dog as the "light of her life", became concerned when she noticed bits of wire sticking out of Charlie's faeces in the garden. The 45-year-old said: "I hadn't even noticed that the lights had been chewed at this stage but it quickly became clear what had happened. "Back in March he ate one of my scarves and needed an operation to remove it, but I thought it was just a one-off incident as he hadn't shown any signs that he was going to be a repeat offender. I've had dogs all my life and have never known a dog act like this before." An X-ray immediately cast a light on Charlie's problem - the tangled remains of the decorations clearly showed up in his stomach and would have proved fatal if they were not removed. Vets rushed Charlie to the operating table and removed the Christmas decorations, also finding a shoelace.

Opening Bell: 07.12.12

Fed Weighs More Stimulus (WSJ) A few Fed officials were ready to move aggressively when the Fed met in June and several others said they might want to take new measures if the recovery loses momentum or their growth and employment forecasts are cut once again. That is according to minutes of the central bank's June 19-20 meeting, which were released Wednesday with their usual three-week lag. Gold to Hit $2,000 by Year-End on More Fed Easing: Merrill (CNBC) "We think that $2,000 an ounce is sort of the right number,” Francisco Blanch, Head of Global Commodity & Multi-Asset Strategy Research at the investment bank, said Thursday. Regulators’ Shake-Up Seen as Missed Bid to Police JPMorgan (NYT) After the financial crisis, regulators vowed to overhaul supervision of the nation’s largest banks. As part of that effort, the Federal Reserve Bank of New York in mid-2011 replaced virtually all of its roughly 40 examiners at JPMorgan Chase to bolster the team’s expertise and prevent regulators from forming cozy ties with executives, according to several current and former government officials who spoke on the condition of anonymity. But those changes left the New York Fed’s front-line examiners without deep knowledge of JPMorgan’s operations for a brief yet critical time, said those people, who spoke on the condition of anonymity because there is a federal investigation of the bank. Forced to play catch-up, the examiners struggled to understand the inner workings of a powerful investment unit, those officials said. At first, the examiners sought basic information about the group, including the name of the unit’s core trading portfolio. Neb. Man Jailed for Bomb Threat on Job Application (AP) the Legacy 272 Lounge employee who reviewed 38-year-old Jason Dornhoff's application last Thursday called police when he read the threat that closed with: "If you be quiet and help me, you won't die." Police arrested Dornhoff, of Heartwell, Neb., at gunpoint and searched his truck, but didn't find any bomb. Court documents say Dornhoff told police he uses methamphetamines and went to the restaurant hoping to find a way to fulfill his sexual fantasies. Clock Is Ticking On Crisis Charges (WSJ) Federal laws under which the Securities and Exchange Commission usually goes after alleged fraud and other misdeeds have a five-year statute of limitations. The five-year limit is causing SEC officials to race to file lawsuits in some cases and ask lawyers representing the targets of certain investigations to give the agency more time, according to people close to the investigation. The SEC intends to file charges against firms and people involved in the creation of a $1.6 billion mortgage-bond deal called Delphinus CDO 2007-1, people close to the investigation said. Credit Suisse Clients Targets Of Tax Probe (WSJ) German tax inspectors in recent weeks have been raiding the homes of Credit Suisse Group AG clients suspected of evading taxes, according to bank and German government officials. The investigation is centering on about 5,000 clients who between 2005 and 2009 allegedly bought insurance policies at a Bermuda-based subsidiary of the Swiss bank. In These Knife Fights, Only Pride Gets Wounded (WSJ) Donavon Phillips windmilled his arms. He hopped a few times to get the blood flowing in his legs. A light sweat formed under his black-and-red jersey—just the right dew. "You can't go into this cold, because it's an all-out sport," said Mr. Phillips, pulling his right arm across his chest. He was warming up for a cutthroat event: the 10th annual World Championship Cutting Competition. It takes razor-sharp focus to be a cutting champ, along with a blade that resembles a bulkier, sharper version of a kitchen meat cleaver. Mr. Phillips is one of a few who have helped make a sport out of demonstrating they can swiftly, flawlessly slice through a dozen water bottles or chop a rolling tennis ball in half. Having won the national title in May, he is a favorite on the cutting circuit. SEC Votes To Require Consolidated Audit Trail For Markets (Bloomberg) “A consolidated audit trail that accurately tracks orders throughout their lifecycle and identifies the broker-dealers handling them will provide us with an unprecedented ability to effectively oversee the markets we regulate,” said SEC Chairman Mary Schapiro. The rule is a “great leap forward,” she said. BofA Execs Dodge A Bullet (NYP) Bank of America won a federal court ruling dismissing claims against former Chief Executive Officer Ken Lewis and others in a securities-fraud lawsuit over the bank’s use of an electronic mortgage registry. Buffett: US Economic Growth Slowing, US Slipping "Pretty Fast" (CNBC) Despite the slowdown, Buffett says the U.S. economy is still doing better than "virtually any other big economy" around the world. New York Fed to Release Libor Documents Friday, Official Says (Reuters) The Federal Reserve Bank of New York will release on Friday documents showing it took "prompt action" four years ago to highlight problems with the benchmark interest rate known as Libor and to press for reform, an official at the regional U.S. central bank said on Wednesday. 'Con artists' scammed Hamptons homeowners by turning rentals into teen party pads: officials (NYP) Two real-estate con artists made hundreds of thousands of dollars by renting homes in the Hamptons and using them as post-prom and graduation-party crash pads for raucous teens, authorities said. Officials and outraged homeowners said the front man, 25-year-old Lee Hnetinka, of Jericho, would rent the mansions saying he intended to use them for his own family reunions. “He said it was his aunt having a party at his house,” said Lucy Sachs, 64, who rented her family’s East Hampton home to Hnetinka for $30,000 a month. When a neighbor called on June 8 to tell her that a “party bus with a disco ball had arrived” at Sachs’ place in the middle of the night, she rushed over, confused. What Sachs found was a houseful of nearly 100 teens smoking and drinking in the century-old building. Hnetinka allegedly teamed up with Leslie Jennemann (both inset), a Hamptons real-estate agent who in 2002 was convicted of running over and killing a migrant potato picker on her way home from a party, Southampton officials said...The suspects charged students $355 each for three days at the house, homeowners said. Scarlato estimated that the pair brought in $60,000 to $80,000 a weekend and had as many as 10 rentals. Another East Hampton homeowner, Eli Braha, rented to Hnetinka and became suspicious after a landscaper called to ask about all the trash and as many as 30 inflatable beds in the home.

Opening Bell: 12.03.12

Fiscal Cliff Talks At Stalemate (WSJ) Leading figures on both sides doubled down on their positions in interviews that aired Sunday, and they blamed each other for the current standoff, reflecting the talks that House Speaker John Boehner (R., Ohio) told "Fox News Sunday" have gone "nowhere." Treasury Secretary Timothy Geithner, speaking on the same program for the Obama administration, suggested Republicans needed to take a breather from negotiations but would ultimately agree to raise tax rates—a key White House demand that is part of its push to raise $1.6 trillion in taxes over 10 years. "It's obviously a little hard for them now, and they're trying to figure out where they go next, and we might need to give them a little time to figure out where they go next," Mr. Geithner said. Geithner Joins Boehner to Trade Blame on Fiscal Cliff Talks (Bloomberg) “There’s not going to be an agreement without rates going up,” Geithner said in a taped interview that aired Sunday on CNN’s “State of the Union.” Republicans will “own the responsibility for the damage” if they “force higher rates on virtually all Americans because they’re unwilling to let tax rates go up on 2 percent of Americans.” Clock Ticks For SAC Investors (WSJ) Seventy-five days remain until Feb. 15, the date by which investors must tell SAC whether they want to pull money from the firm during the next redemption period...Some investors already decided to pull out. French bank Société Générale SA, which has client money in SAC through its Lyxor asset-management arm, has put in a request to pull its money from the firm, according to people familiar with the matter. It is unclear how much money Lyxor has in SAC. Many, however, said they would reserve judgment, at least for now. Ironwood Capital Management, a San Francisco-based investment firm with client money in SAC, has been in touch with investors about the position and is monitoring the situation, said a person familiar with the firm. Last week, a unit within Morgan Stanley's MS +0.06% asset-management arm that has client money with SAC sent a note telling employees it would monitor the situation and be in touch frequently with SAC, according to a person familiar with the bank...Greycourt & Co., Inc., a Pittsburgh-based firm that manages about $9 billion for wealthy families, says it is sticking with SAC. Greycourt cited the stellar long-term returns of the firm, what it says is a robust compliance staff at SAC, Mr. Cohen's promise to cover any penalties himself and a belief that the firm's investment portfolio would be well-protected, even if it eventually faces charges. "The SAC portfolio is liquid enough that I'm not terribly concerned," says Gregory Curtis, Greycourt's chairman. "I very much hope that [Mr.] Cohen hasn't been behaving badly, but either way I'm not too concerned about our client positions." UK’s Euro Trade Supremacy Under Attack (FT) The City of London should be deposed as the euro's main financial center so the single currency club can "control" most financial business in the euro zone, France's central bank governor has said. Christian Noyer of the Banque de France said there was "no rationale" for allowing the euro area's financial hub to be "offshore", in a blunt assessment that will fan UK concerns over EU rules being rigged against it. "Most of the euro business should be done inside the euro area. It's linked to the capacity of the central bank to provide liquidity and ensure oversight of its own currency," Mr Noyer told the Financial Times while touring Asia to promote Paris as a renminbi trading center. "We're not against some business being done in London, but the bulk of the business should be under our control. That's the consequence of the choice by the UK to remain outside the euro area." Zoe Cruz trying to make a return to high finance, has reconciled with John Mack (NYP, earlier) Sources say Cruz has reconciled with her former boss Mack, who helped fuel her rise within their firm before their falling out. He has been helping his one-time protégée in her efforts to land at a buyout firm such as KKR. Mack also has been a shoulder for Cruz to lean on as she copes with the split from her husband Ernesto Cruz...[who] was once reprimanded by his superiors in the mid-2000s for frolicking in a hotel pool in Midtown after a company Christmas gala with a group of female assistants, according to sources familiar with the situation. SEC Chief Delayed Rule Over Legacy Concerns (WSJ) Internal SEC emails, released to a congressional panel and reviewed by The Wall Street Journal, appear to show how a last-minute intervention by a consumer lobbyist might have helped persuade Ms. Schapiro to change her mind and delay one of the centerpiece measures of the Jumpstart Our Business Startups, or JOBS, Act. In Panicky Russia, It’s Official: End of World Is Not Near (NYT) There are scattered reports of unusual behavior from across Russia's nine time zones. Inmates in a women's prison near the Chinese border are said to have experienced a "collective mass psychosis" so intense that their wardens summoned a priest to calm them. In a factory town east of Moscow, panicked citizens stripped shelves of matches, kerosene, sugar and candles. A huge Mayan-style archway is being built — out of ice — on Karl Marx Street in Chelyabinsk in the south. For those not schooled in New Age prophecy, there are rumors the world will end on Dec. 21, 2012, when a 5,125-year cycle known as the Long Count in the Mayan calendar supposedly comes to a close. Russia, a nation with a penchant for mystical thinking, has taken notice. Last week, Russia's government decided to put an end to the doomsday talk. Its minister of emergency situations said Friday that he had access to "methods of monitoring what is occurring on the planet Earth," and that he could say with confidence that the world was not going to end in December. He acknowledged, however, that Russians were still vulnerable to "blizzards, ice storms, tornadoes, floods, trouble with transportation and food supply, breakdowns in heat, electricity and water supply." Similar assurances have been issued in recent days by Russia's chief sanitary doctor, a top official of the Russian Orthodox Church, lawmakers from the State Duma and a former disc jockey from Siberia who recently placed first in the television show "Battle of the Psychics." One official proposed prosecuting Russians who spread the rumor — starting on Dec. 22. Old testimony may bite Cohen in SEC case (NYP) Steve Cohen’s sworn testimony in another legal skirmish could come back to haunt his $14 billion hedge-fund empire...In 2011, Cohen gave several days of deposition testimony in the civil fraud case, in which Fairfax sued SAC and other firms for allegedly conspiring to drive down its share price. The case was dismissed due to a lack of evidence, but the testimony offers a rare look into Cohen’s views on illegal trading. In his testimony, Cohen called SEC rules on insider trading “vague” and said he doesn’t expect his employees to follow the company’s internal compliance manual to the letter. When asked whether it was “legal or illegal to trade on material nonpublic information,” Cohen said: “It depends on the circumstance.” “So there are circumstances, in your view, in which it is legal . . . to trade on the basis of material, nonpublic information?” asked Fairfax ’s lawyer, Michael Bowe. “Yes,” Cohen said. Among them, he said, is when employees trade in the opposite direction of the nonpublic information they receive. He also said he didn’t expect employees to adhere to the company’s compliance manual in every situation. “See, we don’t operate our firm in absolutes,” he said. “When I look at this manual, I see guidelines.” Morgan Stanley trader probed over trades made while at Goldman (Reuters) Morgan Stanley trader Edward Glenn Hadden is under investigation by regulators at CME Group over trades in Treasury futures four years ago while he was employed by Goldman Sachs, according to a regulatory filing. Hadden is a managing director and head of global interest rates products at Morgan Stanley. Prior to joining Morgan Stanley, Hadden was a partner at Goldman Sachs, and head of government bond trading. Hedge Funds Increase Bullish Bets Most Since August (Bloomberg) Hedge funds increased bullish bets on commodities by the most since August as evidence that China is accelerating outweighed concern that U.S. lawmakers have yet to resolve an impasse over automatic spending cuts and tax rises. Krawcheck, possible SEC head, raises Washington (Reuters) ...many who have worked with her say Krawcheck was a smart, analytical and competent executive who not only knew the business, but was good at building consensus among different units of companies. She helped restore brokerage Smith Barney's reputation at Citigroup and was popular with many of the financial advisers at Merrill Lynch. Schumer and other lawmakers contacted by Reuters did not return calls or requests for comment about meetings with Krawcheck or their thoughts about her. In the end, of course, Krawcheck may not land in Washington at all, two people who know her said. She has had discussions about a variety of roles with several companies, one source said. "She has lots of balls in the air," said the source, who asked not to be named because the conversations were private. "Sallie always has a plan." Bret Easton Ellis mistakenly asks for cocaine on Twitter (DJ) Bret Easton Ellis, famed author of "American Psycho," tweeted a request for cocaine Sunday morning, leaving many to speculate that it was supposed to be a private message...“Come over at do bring coke now,” he tweeted at 3:44AM, stranding his 360,000 followers in a state of bewilderment regarding what the cryptic tweet could possibly mean.

Opening Bell: 06.21.13

U.S. Weighs Doubling Leverage Standard for Biggest Banks (Bloomberg) The standard would increase the amount of capital the lenders must hold to 6 percent of total assets, regardless of their risk, according to four people with knowledge of the talks. That’s twice the level set by global banking supervisors. ... "The 3 percent was clearly inadequate, nothing really,” said Simon Johnson, an economics professor at the Massachusetts Institute of Technology and a former chief economist for the International Monetary Fund. “Going up to five or six will make the rule be worth something. Having a lot of capital is crucial for banks to be sound. The leverage ratio is a good safety tool because risk-weighting can be gamed by banks so easily.” China steps back from severe cash crunch (FT) China pulled back from the brink of a severe cash crunch on Friday, with money rates falling after reports that the People’s Bank of China, the central bank, had acted to alleviate market stresses. Nevertheless, interbank conditions remained tight and analysts said the PBoC would continue its hard line of recent days to compel financial institutions to pare back their leverage. Sprint Beats Dish’s Latest Bid for Clearwire (DealBook) Sprint Nextel raised its bid for Clearwire to $5 a share on Thursday, hoping to knock out a rival offer from Dish Network. The new offer, which values Clearwire at about $14 billion, is 47 percent higher than Sprint’s last proposal. It is also higher than Dish’s most recent bid of $4.40 a share. Banks Race to Increase Salaries to Beat EU Bonus Caps (IBT) Banks are racing to overhaul their remuneration structures by bumping up fixed salaries ahead of European Union-imposed bonus caps in 2015. According to a prominent employment partner at law firm Pinsent Masons, banks are stuck between having to overhaul remuneration procedures by a certain deadline but without concrete rules, which is likely to result in across-the-board increases in salary. FAA to Relax Rules for Gadgets in Flight (WSJ) The Federal Aviation Administration is expected to relax the ban on using some types of personal-electronic devices at low altitudes, allowing passengers leeway during taxiing and even takeoffs and landings, according to industry officials and draft recommendations prepared by a high-level advisory panel to the agency. For fliers, the new rules would likely mean an end to familiar admonitions to turn off and stow all electronic devices. Cellphone calls are expected to remain off limits, however. War of words erupts after wedding guests gift bride 'cheap and embarrassing' food hamper containing marshmallow fluff and croutons Kathy Mason from Hamilton, Ontario, and her boyfriend, who wished to remain anonymous, decided to create a food hamper for their friends' same-sex marriage and packed it with a mix of 'fun' treats including pasta, olive oil, croutons, biscuits, Marshmallow Fluff and Sour Patch Kids. They attached a carefully worded card to the parcel which read: 'Enjoy . . . Life is delicious.' However, the European newlyweds were less than impressed with the gesture and contacted the couple the next day via text message to ask if they had the receipt so they could get the money back instead. ... 'You ate steak, chicken, booze, and a beautiful venue . . . If anything you should be embarrassed for being so cheap and embarrassing,' the brides said in one message. Creeping mistrust stops euro zone banks lending to peers across bloc (Reuters) In a trend that could reignite fears about the euro and its banks, European Central Bank data shows the share of interbank funding that crosses borders within the euro zone dropped by a third, to just 22.5 percent in April from 34.5 percent at the beginning of 2008. Banks are now lending to other banks across euro zone borders at only about the same rate as when the single currency was first launched, 15 years ago. Greek markets rattled by political disarray (FT) The benchmark 10-year bond yield of Greece rose 75 basis points to 11.6 per cent by late morning in London, while the Athens stock exchange index fell 2.9 per cent to its lowest level since early April. ... Investor sentiment towards Greece is not helped by uncertainty over how to plug a funding gap in the country’s bailout programme. The FT reported on Thursday that the International Monetary Fund might suspend aid to Greece next month unless the eurozone stepped in. Losses loom for investors enmeshed in U.S. mortgage chaos (Reuters) A review of loan documents, property records and the monthly reports made available to investors show that mortgage servicers are reporting individual houses are still in foreclosure long after they have been sold to new buyers or the underlying mortgages have been paid off. ... In one case, Reuters found that Bank of America Corp had been collecting a monthlyservicing fee of $50.73 from investors on a loan that had been paid off nearly two years ago, investor reports show. Bank of America filed a document at a local county office on July 22, 2011 showing that the $162,400 loan on a cream-colored duplex in Greenacres, Florida, owned by a drywall hanger named Roman Pino, had been satisfied and "cancelled." But investors in Pino's loan and more than 6,700 other similar mortgages that are bundled together in a subprime mortgage bond still have not been informed that the loan no longer exists, according to the last investor report in May. Good and Evil Battle Volatility on Summer Solstice (CNBC) "Summer Solstice is upon us: the longest day of the year in the northern hemisphere where some religions in the western world believe the sun defeats the forces of evil." Also it's triple witching. Oracle to Leave Nasdaq for the Big Board (DealBook) Oracle, one of the most prominent technology companies listed on the Nasdaq, is defecting to a rival exchange. The company, which has been traded on the Nasdaq since 1986, has applied to be listed on the New York Stock Exchange, it said in a filing on Thursday. The transfer, among the largest ever between the exchanges, represents a significant gain for the Big Board, which has been trying to bolster its technology credentials. FINRA beefs up policing of arbitrators (Reuters) The Financial Industry Regulatory Authority's policy change comes after Reuters asked questions about the background of Demetrio Timban, a Medford, New Jersey-based arbitrator who has become a central figure in a lawsuit between Goldman Sachs Group Inc and a wealthy investor. Timban was indicted by the state of New Jersey for practicing law without a license, although charges were later dropped under a state program to deal with non-violent offences. He was also reprimanded by a Michigan regulator for the New Jersey incident and passing $18,000 in bad checks. Timban said in an interview he had closed his New Jersey office and the check-writing incident was "accidental," as a family member was supposed to wire funds to cover the check. But FINRA said it did not learn of the New Jersey indictment for five months and that Timban failed to tell it about the Michigan problems altogether, while he arbitrated the Goldman case. Brooklyn framer accuses former boss of firing him for being too fat (NYP) The owner of a picture-framing shop in Brooklyn fired a worker because he was too fat to fit in the aisles, a lawsuit claims. Seth Bogadanove, 52, of Bath Beach, is suing Frame It In Brooklyn, in Sunset Park, and owner Jerry Greenberg, claiming he was canned after gaining weight because of medication. “Oh, my God! What happened to you? You got so fat!” the suit says Greenberg told Bogadanove after he returned from a leave. ... But Greenberg told The Post he never hired Bogadanove back, only gave him an opportunity to work from home. He called Bogadonove’s story “ridiculous.” “He was sweating, and he couldn’t make it up stairs,” Greenberg recalled. “But that would never come out of my mouth in my wildest dreams.” Video shows woman tossing perceived rival off cliff (CBS) Surveillance video caught a brutal fight between a woman and her perceived romantic rival in Arequipa, Peru, but it's pretty one-sided. A woman caught her husband walking with a younger woman while they were out on a stroll by a cliff back in January. She is seen grabbing the younger woman by the hair and dragging her off a cliff, where she reportedly plunged about 20 feet. She is okay after the fall - she only sustained some cuts and bruises, was treated at a hospital and released.

Opening Bell: 03.29.12

Facebook Targeting May IPO (WSJ) The Menlo Park, Calif., social network halted trading of its shares on the secondary market this week, as it sets about nailing down its shareholder count, according to a person familiar with the matter...It's unclear which week in May Facebook is aiming to go public, cautioned the person, and the timing may still change. The timing depends in large part on the SEC and isn't in Facebook's control, this person added. Jobless Claims Near Four-Year Low (WSJ) Initial jobless claims fell by 5,000 to a seasonally adjusted 359,000 in the week ended March 24, the Labor Department said Thursday. Economists surveyed by Dow Jones Newswires had forecast that claims would increase by 2,000. Morgan Stanley’s Jennings Asks Court to Dismiss Stabbing Case (BusinessWeek) The motion to dismiss the case was filed yesterday in state court in Stamford, Connecticut, said Jennings’s lawyer, Eugene Riccio. “The motion speaks for itself,” Riccio said in a phone interview. “There are serious deficiencies in the application for the arrest warrant.” Jennings, 45, is accused of attacking the driver, Mohamed Ammar, on Dec. 22 with a 2 1/2-inch blade and using racial slurs after a 40-mile ride from New York to the banker’s home in Darien, Connecticut. SEC Said to Review Credit Suisse VIX Note (Bloomberg) U.S. Securities and Exchange Commission investigators are reviewing a Credit Suisse Group AG (CSGN) exchange-traded note that became unhinged from its benchmark and whipsawed investors, a person familiar with the matter said. The VelocityShares Daily 2x VIX Short-Term ETN (TVIX), which seeks to provide twice the daily return of the VIX volatility index, climbed almost 90 percent above its asset value after the Zurich-based bank stopped issuing shares in February. The value of the note, which had risen to almost $700 million from about $163 million at the end of 2011, plunged last week when Credit Suisse said it would begin creating shares again. Stock Market Flaws Not So Rare, Data Shows (NYT) The communication breakdown that blocked trading on parts of the BATS exchange for more than an hour has been seen in at least 110 instances across the nation’s 13 stock exchanges over the last year, a review of data from Nasdaq shows. That number has gone up every year since 2007. In one instance in January, BATS said it was unable to trade with the New York Stock Exchange for nearly 30 minutes. Meanwhile, exchanges have halted trading in company shares after sudden spikes or falls, as happened Friday with Apple, at least 265 times over the last year — more than one for every day of trading, according to data analyzed by the Tabb Group, a market research firm. These circuit breakers kick in after stocks experience 10 percent swings in a short period of time and can be caused by a technical error or waves of electronic trading on news developments. Espirito Santo Among Five Portugal Lenders Downgraded by Moody’s (BW) Espirito Santo, Portugal’s largest publicly traded bank by market value, had its debt rating lowered one level to Ba3, Moody’s said yesterday in a statement. It took the same action for Caixa Geral de Depositos SA and Banco BPI SA. (BPI) Banco Internacional do Funchal was downgraded to B1 from Ba3. Mark Zuckerberg meets Japan's prime minister (AP) Facebook CEO Mark Zuckerberg says Japan’s massive tsunami inspired him to seek more ways for his social network to help people hit by natural disasters. Zuckerberg, who is visiting Japan, told Prime Minister Yoshihiko Noda that he believes Facebook can be used to help people in disasters keep in touch and provide them with crucial information. He did not go into details during the brief meeting Thursday. Noda expressed his appreciation and said he felt odd meeting the young entrepreneur after seeing the hit movie “The Social Network,” which was based on Zuckerberg’s life and the legal problems he had with others during Facebook’s early days. Laughing, Zuckerberg said the Hollywood portrayal of him wasn’t completely on target. “Very different,” he said. What To Do After You Hit The Megamillions Jackpot (AP) "Q: Whom should I tell first? A: Contacting a lawyer and a financial planner would be a lot wiser than updating your Facebook status. Make sure it's someone you can trust and, it's hoped, dealt with before. If you don't have anyone in mind, ask a close family member or friend. Oklahoma City attorney Richard Craig, whose firm has represented a handful of lottery winners, says it's essential to assemble a team of financial managers, tax experts, accountants and bankers." Eddie Lampert quietly shopping Lands End (NYP) Lampert, who inherited Lands’ End when he took control of Sears in 2005 by merging it with Kmart, has approached a handful of private-equity firms as he looks to raise as much as $2 billion in cash, sources said. SocGen To Rejig Investment Bank (WSJ) Société Générale aims to better integrate the investment bank's different teams as it shifts its business model toward originating loans that it will then move off its balance sheet by selling to investors, a person said. French banks have traditionally kept the loans they issue on their books, but in light of new capital demands from regulators, they are moving toward selling them to investors to prevent them from swelling their balance sheets. Charlie Sheen saying 'sorry' to America for troubled time (NYP) Despite his fresh start, Sheen admitted that he still has "a little bit" of bitterness towards "Two and a Half Men," but he says he "just [has] to work through that." "I wish they'd taken better care of the child left behind," he said.

Opening Bell: 10.10.12

Banks Must Cut Deeper to Help Stock Prices, McKinsey Says (Bloomberg) Banks must make deeper and more sweeping cost reductions if they want to restore profitability levels that are acceptable to investors, McKinsey & Co. said in an annual review of the industry. “It has to go a lot further,” Toos Daruvala, a director in the consulting firm’s North American banking practice and a co-author of the report, said yesterday in a phone interview. “Banks have done quite a lot on cost-cutting but frankly the environment has deteriorated over the last year” because of economic weakness, he said. Argentina rejects Singer’s $20M in ransom for ship’s release (NYP) At a court hearing today in Ghana, where hedge fund manager Paul Singer’s lawyers are holding the ARA Libertad hostage, a lawyer for Argentina argued that Singer had no right to detain the ship because it’s a military vessel and immune from seizure. Lawyer Larry Otoo called the seizure — a move by Singer to force Argentina to repay a $1.6 billion debt he says he’s owed — an embarrassment to Ghana and demanded the ship’s immediate return. The court is expected to rule Thursday on whether to release the ship. Singer, the head of hedge fund giant Elliot Management, is seeking to recoup some of the $600 million in bonds he purchased as Argentina was headed for default in 2001. Elliot bought the bonds at steep discounts, paying as little as 15 cents on the dollar in some cases, but has since won judgments of as much as $1.6 billion. Elliot’s NML Capital unit is pursuing Argentina’s assets all over the world in an effort to collect on its debt. In Gupta Sentencing, A Judgment Call (WSJ) Former Goldman Sachs Group Inc. director Rajat Gupta is the highest-profile of more than 70 defendants convicted of insider trading in New York federal court in the past three years. But this month he will likely receive a more lenient sentence than the 11-year-prison term given to Raj Rajaratnam, to whom Mr. Gupta provided his illegal leaks, legal experts say. The sentence may have reverberations beyond the 63-year-old Mr. Gupta, a former chief of consulting giant McKinsey & Co. It will be widely watched in executive suites nationwide because it will be among the first handed down to a major corporate figure in the recent insider-trading crackdown. Previous sentences have largely involved traders, lawyers, lower-rung corporate employees and others. Mr. Gupta, who was convicted in June of three counts of securities fraud relating to tips about Goldman and one count of conspiracy, didn't trade or profit directly from his illegal tips. Before the conviction, he had a long and stellar career in corporate America and philanthropy. All this will be balanced against the nature of the crimes and the need to discourage others from similar offenses when U.S. District Judge Jed Rakoff hands down his sentence, scheduled for Oct. 24. Judge Rakoff often imposes sentences further below federal sentencing guidelines than some other judges do, according to a Wall Street Journal analysis...Since 2010, Judge Rakoff has imposed an average sentence of 21 months on insider-trading defendants who didn't cooperate with prosecutors—about 38% below the guideline minimum, according to the Journal analysis. By comparison, U.S. District Judge Richard Sullivan issued seven sentences in that period averaging 6.3% below the guideline minimum. U.S. District Judge Paul Crotty issued three sentences at 20.3% less than the minimum. Goldman Pushes On Limits In Volcker Rule (WSJ) Some executives at the New York company believe they have found a way to extricate the credit funds from proposed limits on how much can be invested in hedge funds and private-equity funds, according to people briefed on the efforts. The Volcker rule caps a bank's total investments in hedge funds and private-equity funds at 3% of its so-called Tier-1 capital. It also prevents any single bank from accounting for more than 3% of a fund's investments. Those limits are among the biggest components of the rule, named after former Federal Reserve Chairman Paul Volcker and designed to curtail risk-taking among financial firms. The rule is the most contentious part of the Dodd-Frank financial-overhaul law of 2010 but, like much of the rest of the legislation, the details of its implementation are still being worked out. Credit funds lend to companies that might not otherwise get financing, such as companies backed by private-equity firms, and tend to hold their investments to maturity while using a limited amount of leverage. Goldman has argued in meetings with regulators and in letters to them that these funds function like banks, just with a different structure, according to public records and the people familiar with the efforts. Report: 20% of US Firms Cook the Books During Earnings (CNBC) ...a new report by finance professors at Emory and Duke University raises questions about the quality of earnings in general. In an anonymous survey of CFOs last year, the study found that at least 20% of companies are "managing" earnings and using aggressive accounting methods to legally alter the outcome of their earnings reports. Of the 20% of companies that manipulated their earnings to hit a target, Graham says, a surprising 40% did so to the downside, not the upside, to pad and improve future quarters' earnings. Banks Chasing Asian Millionaires Create Singapore’s Canary Wharf (Bloomberg) Singapore’s Marina Bay area is emerging as the city’s new financial hub, with banks including Standard Chartered Plc and Barclays taking bigger offices as they pursue Asia’s expanding ranks of millionaires. Corrections & Amplifications (WSJ via Lauren Tara LaCapra) "Annie Hubbard, the woman appearing alongside Goldman Sachs's chief financial officer, Harvey Schwartz, in a photograph with a page-one article about Goldman on Tuesday, was incorrectly identified as his wife. Mr. Schwartz isn't married." Hulk Hogan ‘devastated’ by leak of sex tape filmed six years ago with friend’s wife Heather Clem (NYDN) The wrestling star tried to explain the kinky love triangle to Howard Stern Tuesday using a thinly veiled euphemism. “Let’s say I’ve been doing laundry, brother, for this person forever, and all of a sudden this person hates the way I do laundry. And that person says, ‘You suck. I hate you. F-you every single day. I hate the way you do laundry. I’m going to find somebody else to do laundry. Somebody younger, faster, stronger,’” he said, clearly taking a jab at his ex-wife, who he was still married to at the time of the taping. “But my buddy, you know, him and his girl say, ‘Hey, you can do our laundry any time you want!’ Both of them are saying that,” he told Stern. “Finally after the person I was doing laundry with for millions and millions of years left, and all of a sudden there was nobody there to do laundry, I was depressed… I go to my buddy’s house and he says, ‘Hey man you can do this other person’s laundry that I’m partners with.’ I said, 'Sure.’” Official Warmth And Public Rage For A German Leader In Athens (NYT) ...even as Ms. Merkel said that she had come as a “good friend and a real partner,” not a “taskmaster or teacher to give grades,” the approximately 40,000 Greeks who took to the streets in protest (a rather modest number, by Greek standards) treated the visit as a provocation by the arch-nemesis in the euro crisis whose austerity medicine is obliterating the Greek middle class. Some banners read “Don’t cry for us Mrs. Merkel” and “Merkel, you are not welcome here.” A small group of protesters burned a flag bearing the Nazi swastika, while a handful of protesters dressed in Nazi-style uniforms drew cheers of approval as they rode a small vehicle past a police cordon. Variety Being Sold To Penske, Third Point (Reuters) Variety, the century-old entertainment trade newspaper once considered the bible of the movie industry, is being sold to online publisher Jay Penske and Third Point LLC for about $25 million, two sources with knowledge of the deal told Reuters. Penske and Third Point have struck a deal to buy the money-losing, 107-year-old newspaper from medical and technical publisher Reed Elsevier, which put it up for sale in March, the sources said. IMF warns eurozone on capital flight (FT) In its global financial stability report, the IMF concluded that capital flight from the eurozone’s periphery to the bloc’s core, driven by fears of a break-up of the currency union, had sparked “extreme fragmentation” of the euro area’s funding markets. The fund said this was causing renewed pressure for banks to shrink their balance sheets, particularly those in countries with fiscal woes. A Fat, Mustachioed Orphan Finds a Home (NYT) How do you transport a 234-pound baby to New York City? If he’s a 15-week-old walrus rescued from the open ocean off Alaska, the answer is a jumbo-size crate aboard a FedEx cargo jet, accompanied by a veterinarian and a handler. “If he’s calm and comfortable, no worries,” said Jon Forrest Dohlin, director of the New York Aquarium, which will receive the walrus calf, named Mitik, on Thursday. “But his needs and comfort come first. So he may very well travel with his head in our keeper’s lap.” Since late July, Mitik and a second orphaned walrus, Pakak, have been nursed to health with bottle feedings and exercise at the Alaska SeaLife Center, an aquarium in Seward that conducts research and responds to strandings of marine mammals. (Pakak, nicknamed Pak, will arrive at the Indianapolis Zoo on Thursday.) Mitik — or Mit, for short — was weak from illness and considerably smaller than Pakak when he was found by a hunting vessel several miles offshore. Mit initially suffered from bladder problems and could not take a bottle, requiring both a catheter and feeding tube. But he is now sucking assertively from a bottle and putting on a pound a day...With his multiple chins and doleful expression, Mit is also exhibiting an undeniable pluck that should serve him well in his new surroundings. Martha Hiatt, the aquarium’s behavioral husbandry supervisor, traveled to Alaska in September to help care for him. At first, she said, Pakak totally dominated him, but no longer. “If Mit is resting with his head on my lap, sucking my fingers, looking sweetly into my eyes, and Pak comes anywhere near us, he pops up, yells at Pak and tries to head-butt him,” she said. “Then he’ll turn to me and be all cuddly again. We say he is small, but scrappy — the perfect New Yorker.”

Opening Bell: 10.04.12

France’s LBO Firms See ‘Death’ From Hollande’s 75% Carry Tax (Bloomberg) Hollande, who released his first annual budget on Sept. 28, plans to tax fund managers’ share of the profit from their investments, known as carried interest, at a rate of as much as 75 percent, part of a wider effort to increase taxes on the wealthy and narrow the country’s deficit. France also plans to as much as double taxes on capital gains and restrict the amount of debt interest payments a company can deduct from its taxable income, a measure that will reduce returns on leveraged buyouts. Facebook Test Turns Users Into Advertisers (FT) Facebook is testing a new product in the US that allows ordinary users to pay to promote their own status updates, marking a shift in the social network’s willingness to charge its users for a core service. The product has potential to generate revenues, analysts said, but could also threaten the organic feel of the site as people pay to market their own social lives. Mark Zuckerberg Confirms: 'I wear the same thing everyday' (DL) "I mean, I wear the same thing every day, right? I mean, it's literally, if you could see my closet," Zuckerberg starts to explain, as Lauer asks if he owns 12 of the same gray t-shirt. "Maybe about 20," Zuckerberg admits, somewhere between discussing the future of Facebook, his daily routine, the iPhone 5, and his wedding to college sweetheart Priscilla Chan last May. The Facebook CEO says that he doesn't really have much in his closet — it's mainly used by his wife, who graduated from medical school at the University of California at San Francisco shortly before their marriage. Instead, Zuckerberg's identical t-shirt collection lives in the one drawer he's allotted. Tiger Global Up 22.4 Percent (Reuters) Tiger Global, one of the world's best-performing hedge funds, ended the third quarter with strong gains, leaving the fund up 22.4 percent for the year, two people familiar with the numbers said on Wednesday. The roughly $6 billion fund, run by Chase Coleman and Feroz Dewan, has been the darling of the investment community for its string of strong returns at a time when the average hedge fund is delivering only low single-digit returns. In 2011, when most funds nursed losses, Tiger Global captured headlines with a 45 percent gain for the year after having made a good chunk of money on the short side, people familiar with the portfolio said. 'Dark Pool' And SEC Settle (WSJ) The Securities and Exchange Commission alleged in its order that Boston-based broker-dealer eBX LLC allowed the third-party operator of its trading platform, called LeveL ATS, to use details on client orders, including the stocks involved and whether they were buy or sell orders, to its own advantage. That operator is Lava Trading, an electronic-trading unit of Citigroup, according to eBX. eBX agreed to pay $800,000 to settle the SEC's allegations. It did so without admitting or denying wrongdoing. Mohamed El-Erian: No corner offices at PIMCO (Fortune) "It doesn't matter whether you're CEO or whether you're an associate, you have the same size office. No corner offices. Just a conference room. And then I knew that I had made the right decision when my very first outing with PIMCO, I had come from the IMF, 15 years working on emerging markets. I had a swagger, I thought I knew what I was talking about. I put forward my view, and this summer intern felt safe enough to get up and say, "You know what? Mohamed is wrong and this is why he's wrong." The fact that PIMCO had created this safe zone where a summer intern could get up and question someone who was supposed to be an expert confirmed to me that I was in the right place." Bank-Friendly U.S. Regulator Shifts Focus to Revamp Reputation (Bloomberg) In a stately hearing room stuffed with senators and bankers, Thomas Curry began his apologies. His agency should have stopped a major bank from helping drug cartels launder cash. The violations went on for years while his agency was overly passive. “I deeply regret we did not act sooner,” he said. Curry had been on the job for just over three months on that day in July, so the mistakes hadn’t been made on his watch. His apologies were less a confession than a signal the new Comptroller of the Currency -- long seen as the most bank- friendly of U.S. regulators -- was changing course. “I’m not interested in what people thought about in the past,” Curry said in an interview. “My focus is going forward.” Since he took over in March, at least two key staff members closely associated with the agency’s pro-industry stance have departed, notably chief counsel Julie Williams. Williams, a 19- year OCC veteran, was known for helping nationally chartered banks resist state regulation by arguing they were preempted by often less-stringent federal rules. Curry has also raised the profile of consumer protection and shifted focus toward “operational risk” -- the idea that bank practices and management can pose as much of a threat to safety and soundness as external forces. Argentine Navy Ship Seized In Asset Fight (FT) An Argentine naval vessel crewed by more than 200 sailors has been seized in Ghana as part of an attempt by the US hedge fund Elliott Capital Management to collect on bonds on which Buenos Aires defaulted in 2001. A Ghanaian court ordered an injunction and interim preservation order against the ARA Libertad, a 100-metre long tall ship, following an application by Elliott subsidiary NML Capital on Tuesday. The hedge fund, run by the US billionaire Paul Singer, has been closely monitoring the course of the Libertad, according to sources familiar with the firm. Elliott had been waiting for the ship to stop in a port where it would have a chance to enforce legal judgments previously awarded by UK and US courts. The hedge fund declined to comment. Argentina slammed the interception of the Libertad as a “trick which these unscrupulous financiers” had pulled, adding that it “violates the Vienna Convention on diplomatic immunity”. Morgan Stanley commodities talks with Qatar hit snag (Reuters) Morgan Stanley's talks with Qatar's sovereign wealth fund over the sale of its commodities business have run into difficulty, and the deal may need to be reworked if it is to go ahead, banking sources said. One of the top banks in commodity trading over the past 30 years, Morgan Stanley has been in discussion for more than a year with Qatar over the sale of at least a majority stake in the energy-focused trading business, the bankers said. "There have been some differences, and Qatar is a bit lukewarm about it," one said. "It's not dead yet but definitely not imminent." Maple syrup stolen in Quebec seized by police in New Brunswick (The Star) Quebec police have seized between 700 and 800 barrels of maple syrup from a New Brunswick exporter, linking the drums to August’s massive heist of the sweet stuff. Étienne St-Pierre, owner of S.K. Exports in Kedgwick, N.B., told the Star that police executed a search warrant Sept. 26 and hauled away the barrels. “They said they were searching to find some stolen drums from Quebec,” he said. “It was a surprise. That was the first news I received.” St-Pierre said each barrel weighs about 270 kilograms and holds 170 litres of syrup, meaning police seized at least 119,000 litres of gooey Quebec gold. A spokesperson for the Sûreté du Québec, Sgt. Bruno Beaulieu, confirmed a search warrant had been executed in Kedgwick but said he could not comment on the investigation. The Federation of Quebec Maple Syrup Producers has never revealed the amount of syrup stolen from its secure St-Louis-de-Blandford, Que. warehouse in August. The facility held about 3.75 million litres of syrup, enough to fill one and a half Olympic swimming pools. St-Pierre said he obtained the barrels from a regular Quebec supplier, who he refused to identify.

Opening Bell: 02.19.13

SAC’s Cohen May Face SEC Suit as Deposition Hurts Case (Bloomberg) U.S. investigators have subpoenaed a 2011 deposition of SAC Capital Advisors LP founder Steven Cohen, whose sworn statements on insider-trading compliance may hurt him as he tries to persuade regulators not to file a lawsuit with the potential to shut his $14 billion firm. The SEC told the hedge fund Nov. 20 that it planned to sue SAC for securities fraud and so-called control-person liability for failing to supervise employees. The same day, the agency accused an ex-SAC portfolio manager and his hedge-fund unit of insider trading for persuading Cohen, 56, to make $700 million in illegal trades. Prosecutors also indicted the manager. Cohen’s testimony, reviewed by Bloomberg News, establishes his personal control over the unit, CR Intrinsic, and records his unfamiliarity with his firm’s compliance and ethics policies on insider trading. “I’ve read the compliance manual, but I don’t remember exactly what it says,” Cohen said. Morgan Stanley Strives to Coordinate 2 Departments Often at Odds (Dealbook) Traditionally, traders and investment bankers think of themselves as the elite of Wall Street and look down on the retail business, seeing it as pedestrian...Yet since Morgan Stanley moved to acquire control of the Smith Barney brokerage business from Citigroup in 2009, the balance of power has shifted to wealth management, which now accounts for almost 52 percent of the company’s earnings, up from roughly 16 percent in 2006. Paulson Leads Funds to Bermuda Tax Dodge Aiding Billionaires (Bloomberg) A decade after the U.S. Internal Revenue Service threatened to crack down on what it said were abuses by hedge-fund backed reinsurers, more high-profile money managers are setting up shop in tax havens. Paulson, SAC Capital Advisors LP’s Steven A. Cohen and Third Point LLC’s Daniel Loeb have started Bermuda reinsurance companies since 2011, following a similar Cayman Islands venture by Greenlight Capital Inc.’s David Einhorn. Options Activity Questioned Again (WSJ) Over the past year, unusually large positions were established shortly in advance of news that moved shares of Nexen Inc., Youku Inc., Human Genome Sciences Inc., Constellation Brands Inc. and, most recently, CBS Corp. All turned profitable after the news. A spokeswoman for the SEC, which regulates stock and options trading, said the agency would neither confirm nor deny the existence of inquiries into trading tied to those companies. No charges have been filed in the Heinz case, which was linked to a Swiss trading account, but the move to freeze the assets is one of the fastest enforcement actions ever filed by the agency, according to officials. The SEC said Friday that the timing and size of the trades were highly suspicious given the account had no history of trading in Heinz securities in the last six months. Prosecutors, Shifting Strategy, Build New Wall Street Cases (Dealbook) Criticized for letting Wall Street off the hook after the financial crisis, the Justice Department is building a new model for prosecuting big banks. In a recent round of actions that shook the financial industry, the government pushed for guilty pleas, rather than just the usual fines and reforms. Prosecutors now aim to apply the approach broadly to financial fraud cases, according to officials involved in the investigations...The new strategy first materialized in recent settlements with UBS and the Royal Bank of Scotland, which were accused of manipulating interest rates to bolster profit. As part of a broader deal, the banks’ Japanese subsidiaries pleaded guilty to felony wire fraud. Russians Wade Into the Snow to Seek Treasure From the Sky (NYT) Ever since the meteor exploded somewhere over this impoverished Siberian town, Larisa V. Briyukova wondered what to do with the fist-size stone she found under a hole in the roof tiles of her woodshed. On Monday, a stranger knocked on her door, offering about $60, Ms. Briyukova said. After some haggling, they settled on a price of $230. A few hours later, another man pulled up, looked at the hole in the roof and offered $1,300. “Now I regret selling it,” said Ms. Briyukova, a 43-year-old homemaker. “But then, who knows? The police might have come and taken it away anyway.” On Friday, terror rained from the skies, blowing out windows and scaring people over an enormous swath of Siberia. But by Monday, for many people what fell from the sky had turned to pure gold, and it touched off a rush to retrieve the fragments, many buried in deep February snows. Many of those out prospecting looked a lot like Sasha Zarezina, 8, who happily plunged into a snowbank here in this village of a thousand, laughing, kicking and throwing up plumes of powdery snow. Then she stopped, bent over and started to dig. “I found one!” she yelled. A warm breath and a rub on her pants later, a small black pebble, oval like a river rock, charred and smooth, was freed of ice. While trade in material from meteorites is largely illegal, there is a flourishing global market, with fragments widely available for sale on the Internet, usually at modest prices. At least one from the recent meteor was available on eBay on Monday for $32, and there is a Web site called Star-bits.com devoted to the trade — much to the displeasure of scientists and the countries where the objects were found. UK's Lloyds fined $6.7 million for mis-sold insurance (Reuters) Britain's financial regulator on Tuesday fined Lloyds Banking Group 4.3 million pounds ($6.7 million) for failing to handle complaints relating to insurance sold on loans and mortgages properly. The Financial Services Authority (FSA) said failings in the bank's systems and controls resulted in up to 140,000 customers experiencing delays in receiving compensation for being mis-sold payment protection insurance (PPI). Horsemeat Scandal Draws in Nestlé (FT) Switzerland-based Nestle on Monday removed pasta meals from shelves in Italy and Spain and suspended deliveries of all processed products containing meat from German supplier, H.J. Schypke, after tests revealed traces of horse DNA above 1 per cent. Nestle said it had informed the authorities. Is Berlusconi Getting a Poll Bounce From Tax Evaders? (CNBC) The media mogul, who has been convicted of tax fraud, has promised to introduce a tax amnesty for evaders if elected and to abolish the real estate tax. Swelling U.S. Labor Force Keeps Fed at Ease (Bloomberg) In the short run, the larger labor force will have an unfortunate side effect: It will slow the fall in unemployment. Mellman sees the jobless rate dropping to 7.5 percent by year- end from 7.9 percent now. It fell 0.7 percentage point in 2012. In the longer run, a bigger supply of labor is good news because it swells the pool of Americans available and willing to work, enhancing the economy’s potential to grow, according to Julie Hotchkiss, a policy adviser at the Federal Reserve Bank of Atlanta. It also has a silver lining for investors. The gradual fall in unemployment will allow policy makers to keep monetary policy looser for longer without having to worry about igniting a wage- driven rise in inflation. Couple Getting Affectionate Drive Through Home (WO) "She told the investigating trooper that her and the boyfriend were getting a little amorous and the trooper suspects that's probably why she lost control of the vehicle," said Florida Highway Patrol spokeswoman Kim Montes. Walker lost control of the vehicle and slammed into an unoccupied home. The vehicle went all the way through the house. The impact was so dramatic, the pressure blew a window in another part of the house out. Florida Highway Patrol troopers said Walker was injured when debris fell inside the vehicle. She was taken to Halifax Medical Center to be checked out. Her boyfriend, Charles Phillips, was not hurt.