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Opening Bell: 08.09.12

J.P. Morgan Cites 'Material Weakness' In Restated First-Quarter Results (WSJ) JPMorgan admitted to a "material weakness" in the bank's internal controls in filing restated first-quarter results, which included the loss resulting from ill-placed investment hedges. The company's restated first-quarter profit of $4.92 billion, down $459 million from the original report, matched what the company announced last month. n a filing Thursday with the Securities and Exchange Commission, J.P.Morgan said it "determined that a material weakness existed in the firm's internal control over financial reporting as of March 31, 2012." The bank reiterated that remedies had been taken but that "management's internal review" of the matter is continuing. Ex-UBS Traders Offered Deal By US In Interest Probe (WSJ) U.S. prosecutors have agreed to shield several former UBS employees from criminal charges in return for their cooperation with the escalating investigation of suspected interest-rate manipulation, according to a person close to the probe. The leniency deal was offered to former traders and other employees who had relatively junior-level jobs at the Swiss bank, the person said. In U.K., a Backlash Over Standard Chartered Probe (WSJ) U.K. officials moved Wednesday to defend Standard Chartered PLC, stoking the controversy over charges that it broke New York state banking rules in a decadelong campaign to hide its financial dealings with Iran. The company lashed out at the state's top banking regulator, saying a threat this week to strip the U.K.'s fifth-biggest bank of its New York state banking license was based on a "factually inaccurate" assessment. In an unusual public counterattack, some U.K. political figures accused the regulator of seeking to undermine London as a financial center, and Bank of England governor Mervyn King urged against a rush to judgment. StanChart Could Countersue US Regulator (FT) The bank’s legal advisers believe “there is a case” for claiming reputational damage, according to two people close to the situation, although Standard Charter is conscious of the delicacy of taking an aggressive stance towards its regulators. U.S. Jobless Claims Unexpectedly Fall As Labor Market Mends (Bloomberg) Jobless claims unexpectedly dropped by 6,000 to 361,000 in the week ended Aug. 4, Labor Department figures showed today in Washington. The median forecast of 43 economists surveyed by Bloomberg News called for an increase to 370,000. A spokesman for the agency said there was nothing unusual in the data. Goldman Sachs Leads Split With Obama (Bloomberg) Four years ago, employees of New York-based Goldman gave three-fourths of their campaign donations to Democratic candidates and committees, including presidential nominee Barack Obama. This time, they’re showering 70 percent of their contributions on Republicans. Black bear carefully raids Colorado candy shop; dirt left on counter but nothing broken (AP) A black bear went in and out of a Colorado candy store multiple times early one July morning, but he used the front door and didn’t break a thing. The bear did, however, steal some treats from the Estes Park store, including English toffee and some chocolate-chip cookies dipped in caramel and milk chocolate called “cookie bears.” Surveillance video at the Rocky Mountain Chocolate Factory showed the bear prying open the door and grabbing some candy near the registers. He took the treats outside and ate them, then returned for more. The bear made seven trips in about 15 minutes, finally leaving after a passing car apparently scared him away. Store owner Jo Adams said Wednesday the bear managed to pop open the door because the deadbolt wasn’t completely secured. She said the only evidence her mindful visitor left behind was some dirt on a counter and some paper on the ground. There weren’t even any wrappers, so she assumes he ate those too. “He was very clean and very careful. He ate a lot of candy,” said Adams of the bear break-in, first reported by the Estes Park News. Knight Held $7 Billion Of Stocks Due To Glitch (WSJ) Knight Capital was holding about $7 billion of stocks at one point on Wednesday last week—a far bigger figure than previously known—as a result of errant trades that forced it to seek emergency funding, according to people familiar with the matter. Knight's traders worked frantically Aug. 1 to sell shares while trying to minimize losses due to a software problem, ultimately paring the total position to about $4.6 billion by the end of the trading day, the people said. The position led to a $440 million loss that forced Knight to seek a rescue, agreeing on a $400 million funding package this past weekend from a group of investors. The higher exposure shows that Knight's problems could have been worse. Still, the $4.6 billion position would have prevented Knight from opening for business the next day. The brokerage firm would have lacked the capital required by regulators to offset risks from holding the stocks, said the people. Monti Takes Off Gloves In Euro Zone Fight (Reuters) No more Mr. Nice Italian Prime Minister. Competitive eater ‘Furious Pete’ chows down on 2012 Olympic swimmer Michael Phelps’ daily diet - in 30 minutes (NYDN) Michael Phelps consumes over 12,000 calories a day. Can you imagine if he did it in 30 minutes? Competitive eater "Furious Pete" set out to do just that in a video making the rounds on the Internet that is as jaw-dropping as it is nausea-inducing. Pete Czerwinski chows down on an impressive array of dishes: three fried-egg sandwiches, three chocolate chip pancakes, a five-egg omelet, three sugar-coated slices of French toast, a bowl of grits, pasta with sauce, two ham and cheese sandwiches on white bread (with mayo), a pepperoni pizza, and cans upon cans of energy drinks. The massive meal - which closely matches the Olympic gold medalist's alleged daily diet - comes to a whopping total of 12,300 calories. Many YouTube users, however, say they're not completely convinced by Furious Pete's video, which was cut down from 30 minutes to four minutes, "so that you wouldn't get bored," Czerwinski explained. "Look at the clothes in the corner, they are moved during the video, so it wasn't done in one take. sloppy editing ;)" user Kristaps Straumens wrote. Others defended the Canadian consumer, who's achieved viral fame over the past several years for videos such as "Most Ferrero Rocher Chocolates Eaten in One Minute" and "Eating the World's Hottest Pepper." "The guy has eaten an 8 pound burger. You think? he would fake this?" user xJDKx wrote. Czerwinski's career as a competitive eater began in an unlikely way. He was admitted to hospital at age 16 for complications stemming from anorexia. Over the next five years, he slowly recovered, building up his weight and getting fit through body building. It wasn't until 2007, when Czerwinski sat down with several of his pals at a restaurant and realized that he could out eat them all in record time, that the idea of “Furious Pete” started to take form.
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J.P. Morgan Cites 'Material Weakness' In Restated First-Quarter Results (WSJ)
JPMorgan admitted to a "material weakness" in the bank's internal controls in filing restated first-quarter results, which included the loss resulting from ill-placed investment hedges. The company's restated first-quarter profit of $4.92 billion, down $459 million from the original report, matched what the company announced last month. n a filing Thursday with the Securities and Exchange Commission, J.P.Morgan said it "determined that a material weakness existed in the firm's internal control over financial reporting as of March 31, 2012." The bank reiterated that remedies had been taken but that "management's internal review" of the matter is continuing.

Ex-UBS Traders Offered Deal By US In Interest Probe (WSJ)
U.S. prosecutors have agreed to shield several former UBS employees from criminal charges in return for their cooperation with the escalating investigation of suspected interest-rate manipulation, according to a person close to the probe. The leniency deal was offered to former traders and other employees who had relatively junior-level jobs at the Swiss bank, the person said.

In U.K., a Backlash Over Standard Chartered Probe (WSJ)
U.K. officials moved Wednesday to defend Standard Chartered PLC, stoking the controversy over charges that it broke New York state banking rules in a decadelong campaign to hide its financial dealings with Iran. The company lashed out at the state's top banking regulator, saying a threat this week to strip the U.K.'s fifth-biggest bank of its New York state banking license was based on a "factually inaccurate" assessment. In an unusual public counterattack, some U.K. political figures accused the regulator of seeking to undermine London as a financial center, and Bank of England governor Mervyn King urged against a rush to judgment.

StanChart Could Countersue US Regulator (FT)
The bank’s legal advisers believe “there is a case” for claiming reputational damage, according to two people close to the situation, although Standard Charter is conscious of the delicacy of taking an aggressive stance towards its regulators.

U.S. Jobless Claims Unexpectedly Fall As Labor Market Mends (Bloomberg)
Jobless claims unexpectedly dropped by 6,000 to 361,000 in the week ended Aug. 4, Labor Department figures showed today in Washington. The median forecast of 43 economists surveyed by Bloomberg News called for an increase to 370,000. A spokesman for the agency said there was nothing unusual in the data.

Goldman Sachs Leads Split With Obama (Bloomberg)
Four years ago, employees of New York-based Goldman gave three-fourths of their campaign donations to Democratic candidates and committees, including presidential nominee Barack Obama. This time, they’re showering 70 percent of their contributions on Republicans.

Black bear carefully raids Colorado candy shop; dirt left on counter but nothing broken (AP)
A black bear went in and out of a Colorado candy store multiple times early one July morning, but he used the front door and didn’t break a thing. The bear did, however, steal some treats from the Estes Park store, including English toffee and some chocolate-chip cookies dipped in caramel and milk chocolate called “cookie bears.” Surveillance video at the Rocky Mountain Chocolate Factory showed the bear prying open the door and grabbing some candy near the registers. He took the treats outside and ate them, then returned for more. The bear made seven trips in about 15 minutes, finally leaving after a passing car apparently scared him away. Store owner Jo Adams said Wednesday the bear managed to pop open the door because the deadbolt wasn’t completely secured. She said the only evidence her mindful visitor left behind was some dirt on a counter and some paper on the ground. There weren’t even any wrappers, so she assumes he ate those too. “He was very clean and very careful. He ate a lot of candy,” said Adams of the bear break-in, first reported by the Estes Park News.

Knight Held $7 Billion Of Stocks Due To Glitch (WSJ)
Knight Capital was holding about $7 billion of stocks at one point on Wednesday last week—a far bigger figure than previously known—as a result of errant trades that forced it to seek emergency funding, according to people familiar with the matter. Knight's traders worked frantically Aug. 1 to sell shares while trying to minimize losses due to a software problem, ultimately paring the total position to about $4.6 billion by the end of the trading day, the people said. The position led to a $440 million loss that forced Knight to seek a rescue, agreeing on a $400 million funding package this past weekend from a group of investors. The higher exposure shows that Knight's problems could have been worse. Still, the $4.6 billion position would have prevented Knight from opening for business the next day. The brokerage firm would have lacked the capital required by regulators to offset risks from holding the stocks, said the people.

Monti Takes Off Gloves In Euro Zone Fight (Reuters)
No more Mr. Nice Italian Prime Minister.

Competitive eater ‘Furious Pete’ chows down on 2012 Olympic swimmer Michael Phelps’ daily diet - in 30 minutes (NYDN)
Michael Phelps consumes over 12,000 calories a day. Can you imagine if he did it in 30 minutes?
Competitive eater "Furious Pete" set out to do just that in a video making the rounds on the Internet that is as jaw-dropping as it is nausea-inducing. Pete Czerwinski chows down on an impressive array of dishes: three fried-egg sandwiches, three chocolate chip pancakes, a five-egg omelet, three sugar-coated slices of French toast, a bowl of grits, pasta with sauce, two ham and cheese sandwiches on white bread (with mayo), a pepperoni pizza, and cans upon cans of energy drinks. The massive meal - which closely matches the Olympic gold medalist's alleged daily diet - comes to a whopping total of 12,300 calories. Many YouTube users, however, say they're not completely convinced by Furious Pete's video, which was cut down from 30 minutes to four minutes, "so that you wouldn't get bored," Czerwinski explained. "Look at the clothes in the corner, they are moved during the video, so it wasn't done in one take. sloppy editing ;)" user Kristaps Straumens wrote. Others defended the Canadian consumer, who's achieved viral fame over the past several years for videos such as "Most Ferrero Rocher Chocolates Eaten in One Minute" and "Eating the World's Hottest Pepper." "The guy has eaten an 8 pound burger. You think? he would fake this?" user xJDKx wrote. Czerwinski's career as a competitive eater began in an unlikely way. He was admitted to hospital at age 16 for complications stemming from anorexia. Over the next five years, he slowly recovered, building up his weight and getting fit through body building. It wasn't until 2007, when Czerwinski sat down with several of his pals at a restaurant and realized that he could out eat them all in record time, that the idea of “Furious Pete” started to take form.

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Opening Bell

Opening Bell: 08.16.12

No Criminal Case Is Likely In Loss At MF Global (NYT) A criminal investigation into the collapse of the brokerage firm MF Global and the disappearance of about $1 billion in customer money is now heading into its final stage without charges expected against any top executives. After 10 months of stitching together evidence on the firm's demise, criminal investigators are concluding that chaos and porous risk controls at the firm, rather than fraud, allowed the money to disappear, according to people involved in the case...In the most telling indication yet that the MF Global investigation is winding down, federal authorities are seeking to interview the former chief of the firm, Jon Corzine, next month, according to the people involved in the case. Authorities hope that Corzine, who is expected to accept the invitation, will shed light on the actions of other employees at MF Global. Standard Chartered's Deal Rankles Regulators (WSJ) Officials at the U.K. Financial Services Authority complained afterward to the New York regulator, which oversees Standard Chartered's U.S. unit, that the sudden move could have damaged the stability of the bank and that the lack of advance notice breached long-standing protocol among bank regulators, these people said. The New York case ended Tuesday when Standard Chartered agreed to pay the regulator $340 million to settle allegations it broke U.S. laws in handling transactions for Iranian customers...The New York office's success in pursuing a case without the help of the U.S. Justice Department and U.S. Treasury Department could embolden other state regulators, while adding to pressure on federal regulators who have been criticized for a perceived failure to confront large banks. "Holding a bank accountable for past misconduct doesn't need to take years of negotiation over the size of the penalty," said Sen. Carl Levin (D., Mich.). "It simply requires a regulator with backbone to act." Knight Puts Fate In Familiar Hands (WSJ) At about 9 p.m. on Aug. 1, Knight Chief Executive Thomas Joyce called Carlos Hernandez to seek emergency funding from J.P. Morgan, the lead bank on a primary credit line, to plug losses from errant trades caused by a software upgrade, according to people familiar with the conversation. Mr. Hernandez, J.P. Morgan's global head of equities, had just returned from business meetings in Mexico. "We've had these issues," the Knight chief, known as T.J., told his longtime acquaintance, the people said. "We're looking for help." J.P. Morgan executives have been on the receiving end of similar pleas for help in some of Wall Street's biggest meltdowns. Jobless Claims In U.S. Little Changed As Market Stable (Bloomberg) Jobless claims climbed by 2,000 to 366,000 in the week ended Aug. 11, Labor Department figures showed today in Washington. The median forecast of 45 economists surveyed by Bloomberg News called for an increase to 365,000. The four-week moving average, a less volatile measure, dropped to 363,750, the fewest since the week ended March 31. Chocolate Losing To Cocaine On Colombia Cocoa Slump (Bloomberg) Cocaine is proving a more resilient commodity than chocolate in Colombia, the largest supplier of the narcotic to the U.S. Prices of cocoa beans, used to make chocolate, have dropped 40 percent this year in Colombia, South America’s third-largest supplier, as the cost of leaves processed into cocaine holds steady, according to data compiled by police and growers. Morgan Stanley Unit Fined Over Trader’s $1.3 Billion Bet (Bloomberg) Morgan Stanley Smith Barney, the brokerage venture of Morgan Stanley and Citigroup, was fined $450,000 after a trader amassed a $1.3 billion bet in 2009, Financial Industry Regulatory Authority records show. The brokerage didn’t have enough controls in place to detect that Jared Weinryt, 31, had breached his $116 million trading limit as he made overnight bets on futures, Finra said this month. The trades led to losses for Morgan Stanley Smith Barney of about $14.9 million, according to Finra. MF Global Trustee to Join Existing Suits Against Executives (WSJ) The move Wednesday by James Giddens could accelerate a morass of lawsuits that seek money from former MF Global executives, directors and other people accused in the suits of failing to protect customer money. As a result of the agreement, Mr. Giddens will give lawyers in those cases access to documents and other evidence gathered in his probe. Facebook Freeing 60% More Shares Seen Weighing On Stock (Bloomberg) Early Facebook investors such as DST Global Ltd., Goldman Sachs, Elevation Partners and Accel Partners get a green light today to start selling part of their holdings, Menlo Park, California-based Facebook has said in filings. That’s after the lifting of restrictions designed to prevent a flood of shares immediately after an IPO. The prospect of more stock sales means Facebook will need to work even harder to convince investors that it deserves a higher valuation, compared with earnings, than all but two of its closest competitors including Google. The shares freed up today make up only 14 percent of the 1.91 billion that will be available for sales in the coming nine months. “Buckle your seatbelts for the next couple of months until they make it through all these shares coming unlocked,” said Tom Forte, an analyst at Telsey Advisory Group in New York.

Opening Bell

Opening Bell: 06.14.12

Geithner Seeks More Euro-Zone Measures (WSJ) Treasury Secretary Timothy Geithner called the bailout of Spain's banking system "a good, concrete signal" of the euro-zone commitment to financial integration, but said the currency union must act quickly with more measures to quell its crisis. "This is a very challenging crisis for them still," he said Wednesday in a discussion at the Council on Foreign Relations. "They recognize they're going to have to do a bunch more to…restore a bit of calm and to convince people they're going to do what's necessary to make this work." Spanish Crisis Deepens (WSJ) The financial crisis threatening the Spanish government deepened Thursday as Spain's borrowing costs surpassed their euro-zone record, touching levels that previously forced other euro-zone countries to seek sovereign debt bailouts. The move followed yet another sovereign credit downgrade and coincided with fresh evidence Thursday of economic and financial stress as the decline of Spanish housing prices accelerated to a 12.6% annual rate in the first quarter and Spanish banks increased their reliance on European Central Bank funding. Spain Credit Rating Slashed by Moody's, Egan-Jones (Reuters) Moody's Investors Service cut its rating on Spanish government debt by three notches on Wednesday From A-3 to to Baa-3, saying the newly approved euro zone plan to help the country's banks will increase the country's debt burden. Moody's, which said it could lower Spain's rating further, also cited the Spanish government's "very limited'' access to international debt markets and the weakness of the country's economy. Greek Banks Under Pressure (WSJ) In a sign of heightened nervousness within the country, depositors have been steadily increasing their withdrawals from Greek banks. The withdrawals, according to senior bankers in Athens, approach the level of deposit flight seen when government coalition talks collapsed after inconclusive elections on May 6, forcing the new vote. "Why I'm Betting Big On Europe" (Fortune) David Herro seems awfully relaxed for a man who has more than $1 billion invested in European banks. It's a sunny morning in late May, and I'm sitting across from the boyish 51-year-old fund manager in his downtown Chicago office. He's giving me his full attention, but I can't stop glancing at the headlines blinking on the Bloomberg terminal behind him. The euro is about to hit a two-year low. Greece is on the brink of disaster. Spain's real estate market is in shambles, and Italian sovereign debt is as fragile as stained glass. The global economy is roiling, and Herro is positively beatific. "Eventually they're going to get these problems solved," he says. "If you look at the economic history of the world, problems come and problems go. There are problems, and they do have to be dealt with. And our view is that all these problems are manageable." Large Institutions Discuss New Marketplace for Bonds (WSJ) In recent weeks, senior traders at investment managers and big Wall Street banks have been discussing how the financial industry can set up a centralized electronic market that would let all participants trade bonds freely with one another, according to people involved in the talks. BofA Beating JPMorgan As BNP Leads French Lenders Retreat (Bloomberg) Bank of America overtook JPMorgan Chase as the biggest lender to the commodities industry in the first five months as French lenders led by BNP Paribas retreated amid the debt crisis. Commodity loans arranged by Charlotte, North Carolina-based Bank of America totaled $14.71 billion, and New York-based JPMorgan’s $14.41 billion ranked it second, according to syndicated-loan data compiled by Bloomberg. Citigroup was the third biggest with $13.68 billion of financing, rising from fourth last year. BNP Paribas slipped to 17th from second. Lazard elects former Citigroup chairman Richard Parsons to board (NYP) Financial advisory and asset management firm Lazard Ltd. said Wednesday that it elected former Citigroup chairman Richard Parsons to its board, effective immediately. Parsons served as chairman of Citigroup Inc. from February 2009 until his retirement in April 2012. He had served as a director on its board since 1996. Before that, he was chairman and chief executive of the media and entertainment company Time Warner Inc. Montreal teacher suspended with pay for showing students ‘Canadian Cannibal’ Luke Magnotta murder video (NYDN) A Canadian teacher was fighting for his job after he was suspended for showing students a gory video allegedly showing Maple Leaf man-eater Luke Magnotta killing his Chinese lover. The Cavelier-De LaSalle High School 10th grade teacher appeared before a labor board on Wednesday to explain himself, and Montreal police were mulling whether to slap him with criminal charges, The Canadian Press reported. School officials said the teacher, who is in his 20s, polled students about whether they wanted to watch the grisly snuff video during class on June 4. The yays outweighed the nays, according to the Press. In the 11-minute video, Magnotta, a porn actor and sometime escort, allegedly tortured Jun Lin, 33 — beheading and dismembering his body, eating his flesh with a knife and fork and performing sex acts on the corpse.

Opening Bell

Opening Bell: 12.28.12

Blackstone seen sticking with SAC despite insider trading probe (Reuters / Matthew Goldstein) Three sources said the asset management arm of Blackstone, which has $550 million invested with SAC Capital, is in no rush to redeem money from the Stamford, Connecticut-based hedge fund. Blackstone has had at least three discussions with the $14 billion hedge fund's executives about the insider trading investigation and talked to its own investors, which include state pension funds, endowments and wealthy individuals. Hitler parody leaves French bank BNP red-faced (IN24) French banking giant BNP was left red-faced this week after it emerged managers were shown a motivational video featuring a parody of a famous scene from the film "Downfall" in which Adolf Hitler is portrayed as the boss of Germany's Deutsche Bank. It’s a scene that has been parodied thousands of times before to comic effect. But it appears not many people have seen the funny side of one particular version made by executives of French bank BNP Paribas...In the video, which was shown to around 100 managers from around the world at a seminar in Amsterdam last year, Hitler is turned into a fuming boss of Germany’s Deutsche Bank reacting furiously to news that BNP has gained an edge in the foreign exchange market. But far from being motivated, many of the managers who saw the video were outraged. “We could not believe the bank had actually dared to do that – make an analogy between our competitors and the Nazi regime. It took us a few minutes to take it in,” one BNP employee told French daily Liberation, who revealed the story this week. “We were shocked. Nobody knew how to react. Some Jewish employees from the United States did not find it funny at all,” another employee told the paper. “If this video had been shown by an American bank it would have been a major scandal,” an angry BNP source added. Rather surprisingly the video is believed to have been uploaded to the bank’s internal Intranet site before the management realised it might prove embarrassing and quickly removed it. A spokeswoman for BNP told FRANCE 24 on Friday that the bank’s senior management were totally unaware the video had been made until they were contacted by Libération this week. The spokeswoman said BNP’s CEO Jean Laurent Bonnafé had called his counterpart at Deutsche Bank Jürgen Fitschen to personally apologise for the stunt. In a statement in Libération the bank added that the message in the video was “contrary to the values of BNP." Obama Summons Congress Leaders as Budget Deadline Nears (Bloomberg) Obama, who had been negotiating one-on-one with House Speaker John Boehner, will meet today with Republicans Boehner and Senate Minority Leader Mitch McConnell, and Senate Majority Leader Harry Reid and House Minority Leader Nancy Pelosi, both Democrats. Cliff Talks Down To The Wire (WSJ) It is still possible the two sides can reach a deal, especially with the leaders meeting Friday. Any resolution would be a scaled-back version of the package Mr. Obama and congressional leaders had anticipated passing after the November election. The White House is pressing for the Senate to extend current tax rates for income up to $250,000, extend unemployment benefits, keep the alternative minimum tax from hitting millions of additional taxpayers and delay spending cuts set to take effect in January. The 11th-hour strategy carries enormous risk because it leaves no margin for error in Congress's balky legislative machinery. Senate Majority Leader Harry Reid (D., Nev.) said the prospects for passage of a bill before the last day of the year are fading rapidly. "I have to be very honest," he said. "I don't know time-wise how it can happen now." Spain's PM does not rule out asking for European aid (Reuters) Spanish Prime Minister Mariano Rajoy said on Friday he did not rule out tapping the European Central Bank's bond-buying program for troubled euro zone governments but said Spain did not expect to have to ask for aid for now. "We are not thinking of asking the European Central Bank to intervene and buy bonds in the secondary market," he said at a news conference in Madrid. "But we can't rule it out in the future." Banks pay $4.5M for muni charges (NYP) Citigroup and Bank of America’s Merrill Lynch are among five firms that will pay $4.48 million to settle regulatory claims they used funds from municipal and state bond deals to pay lobbyists. Local authorities were unfairly asked to reimburse payments that the firms made over five years to the California Public Securities Association, a lobbying group, to help influence the state, the Financial Industry Regulatory Authority, which oversees securities firms, said yesterday. The firms inadequately described the fees, wrapping them into bond-underwriting expenses, Finra said...The banks, also including Goldman Sachs, JPMorgan and Morgan Stanley, agreed to pay $3.35 million in fines and reimburse certain California bond issuers $1.13 million. Porsche Wins Dismissal of US Hedge Fund Lawsuit Over VW (Reuters) A five-justice panel of the New York State appeals court in Manhattan unanimously found that Porsche had met its "heavy burden" to establish that the state was the wrong place in which to bring the lawsuit. That panel reversed an Aug. 6 ruling by New York State Supreme Court Justice Charles Ramos that let the case by hedge funds including Glenhill Capital LP, David Einhorn's Greenlight Capital LP and Chase Coleman's Tiger Global LP proceed. The funds accused Porsche of engineering a "massive short squeeze" in October 2008 by quietly buying nearly all freely traded ordinary VW shares in a bid to take over the company, despite publicly stating it had no plans to take a 75 percent stake. IPOs Slump To Lowest Levels Since Financial Crisis (Bloomberg) IPOs have raised $112 billion worldwide this year, the least since 2008, according to data compiled by Bloomberg. Initial sales in western Europe dropped to one-third of last year’s level, while concern about China’s economy helped cut proceeds in Asia by almost half. U.S. offerings raised $41 billion, little changed from last year, as Facebook’s IPO spurred a monthlong drought in U.S. deals. Avery Johnson Jr. vents on Twitter after dad, Avery Johnson, is fired by Brooklyn Nets (NYDN, RELATED) The ex-Nets coach’s teenage son took to Twitter to vent after news broke that his dad had been given a pink slip by billionaire Mikhail Prokhorov and the Nets. “This is a f------ Outrage. My dad is a great coach, he just got coach of the month and they Fire him. #Smh. Completely new team he had,” Johnson Jr. wrote on Twitter. “The expectations were way to high for this team. We didn’t even have a losing record.... Didn’t even give my dad a full season. #OUTRAGE,” Johnson Jr. continued. Johnson was fired a day after the new-look Nets fell to .500 following a listless road loss to the Bucks. The canning comes on the heels of Deron Williams saying he’s never been comfortable playing in Johnson’s offense. Williams, who did not play in Wednesday night’s loss, is mired in a season-long shooting slump with field goal and 3-point percentages at career-worst levels. “I’m sorry (our) best players couldn’t make open shots. Yeah that’s my dad’s fault totally,” Johnson Jr. tweeted. 'Whale' Capsized Banks' Rule Effort (WSJ) Wall Street banks entered 2012 confident they could stall a wave of rules that they feared would hurt profits. But they are ending the year largely resigned that their activities will be constrained and monitored more closely by the government. One big reason for the change: J.P. Morgan Chase JPM -0.76% & Co.'s "London whale" losses. The bad trades, ultimately resulting in about $6 billion in losses, disrupted the banks' campaign against the Dodd-Frank financial overhaul, according to regulators, lawmakers and close observers of policy debates in Washington. The trades damaged the reputation of J.P. Morgan, which suffered less than other banks from the financial crisis, and its chief executive, James Dimon, during a crucial period of policy debate in Washington, putting critics of Dodd-Frank on the defensive. Before news of the whale losses emerged, banks were arguing, with some success, that too-tight regulations were crimping lending during a time of slow growth. Michael Greenberger, a finance professor at the University of Maryland and an advocate of regulations aimed at reining in bank trading, said that in early 2012 his allies' "backs were against the wall." "Then the London whale blew all of that out of the water," he said. Mortgages Fueled Hedge Funds To 13.9 Percent Gain (NYP) Hedge funds that invest in mortgage-backed securities gained 13.9 percent through November to make them the industry’s best-performing strategy, according to the Absolute Return index. Top players that did even better included Metacapital Management, Pine River, Axonic Capital, and Greg Lippman's LibreMax Capital. High-Speed Traders Race to Fend Off Regulators (WSJ) Defenders say high-frequency trading keeps markets lubricated with a constant supply of buy and sell orders that enables all participants to trade more efficiently and get better pricing. High-speed traders, supporters add, have helped foster competition among exchanges and other trading venues, lowering commission-based fees for small investors and helping bring down overall costs for mutual-fund managers. Another benefit some cite: Technology innovations spurred by high-speed traders serve to connect more investors to more trading venues, broadening their options in the markets. Critics, for their part, worry that the traders' order torrent makes markets more opaque, less stable and ultimately less fair. Will 'Fiscal Clif' Accelerate Millionaire Deaths? (NetNet) John Carney: "...it at least seems likely that some deaths that might otherwise have occurred shortly after January 1 will occur shortly before." Man gets DUI after driving on AA co-founder's lawn (AP) Vermont State Police say a man faces a drunken driving charge after driving onto the lawn of a historic home once owned by the co-founder of Alcoholics Anonymous. Police say 55-year-old Donald Blood III of Marlborough, Mass., was ordered to appear in court in Bennington on Jan. 14. Police say Blood thought he was driving into a parking lot, but actually it was the lawn of the Wilson House, built in 1852 in Dorset, the birthplace of AA co-founder Bill Wilson. The Wilson House's website describes it as a "place of sanctuary where people can come to give thanks to God for their new lives." It still hosts several AA meetings each week. Programming Note< : We’re on an abbreviated, vacation-esque schedule this week (opening news roundups and limited updates whenever the urge to reach out and touch you moves us). We still want to hear from you, though, so if anything happens that you think might tickle our fancy, do not hesitate to let us know.

Opening Bell

Opening Bell: 10.23.12

Barney Frank cries foul in government's lawsuit against JPMorgan (Reuters) Democratic Congressman Barney Frank defended the largest U.S. bank on Monday, saying in a statement that the government was wrong to go after JPMorgan Chase & Co for the alleged misdeeds of Bear Stearns. Frank, who served as chairman of the House Financial Services Committee during the Bear Stearns acquisition, said federal and state officials should reconsider holding financial firms liable for the wrongdoing of institutions they absorbed at the government's urging. "The decision now to prosecute J.P. Morgan Chase because of activities undertaken by Bear Stearns before the takeover unfortunately fits the description of allowing no good deed to go unpunished," said Frank, who was also the co-author of the 2010 Dodd-Frank financial reform law. New York Attorney General Eric Schneiderman sued JPMorgan, the nation's largest bank by assets, on October 1 over mortgage-backed securities packaged and sold by Bear Stearns. Hedge Funds Hot For Ailing Greece's Debt (WSJ) Ever since Greece completed a debt restructuring in March that turned €200 billion in bonds into about €60 billion, distressed-debt investors—many at U.S. hedge funds—have been picking them over. Hedge-fund analysts have flooded Greek finance officials with requests for information. Prices have climbed. Third Point LLC, based in New York, crowed about Greece in its investor letter earlier this month, citing the resilience of the bonds of fellow bailout-recipient Portugal. "We expected Greece to keep its head up and undergo a similar metamorphosis," the letter said. Ever since Greece completed a debt restructuring in March that turned €200 billion in bonds into about €60 billion, distressed-debt investors—many at U.S. hedge funds—have been picking them over. Hedge-fund analysts have flooded Greek finance officials with requests for information. Prices have climbed. Third Point LLC, based in New York, crowed about Greece in its investor letter earlier this month, citing the resilience of the bonds of fellow bailout-recipient Portugal. "We expected Greece to keep its head up and undergo a similar metamorphosis," the letter said. Billionaire Wilbur Ross Interested In Buying Spanish Bank Assets (Bloomberg) Ross’s WL Ross & Co., which holds about 10 percent of Bank of Ireland and teamed up with Richard Branson to buy part of Northern Rock Plc, is in talks “almost every week” with representatives of the large Spanish banks, he said in an interview in Abu Dhabi, without naming potential targets. “Maybe next year will be the year for Spain,” he said. “We’ve been doing a lot of work in Spain. We’ve put a lot of time and effort into Spain but haven’t put any money in yet.” Doom Heralded at Hayman by Widening Trade Deficit (Bloomberg) Japan’s worsening trade gap will make it harder to service the world’s largest debt, fulfilling part of the doomsday scenario that Hayman Capital Management LP is betting on. The nation’s 10-year note yield may rise toward 10 percent from the world’s third-lowest of 0.79 percent, while the yen weakens, said Richard Howard, who oversees Dallas, Texas-based Hayman’s Japan-focused fund with J. Kyle Bass. That would represent the developed world’s second-highest borrowing costs after Greece, and a surge to that level by the end of 2013 would cause losses of 42 percent for investors purchasing the securities now, data compiled by Bloomberg show. Regulators Crash Over Volcker Definitions (WSJ) The SEC and a trio of banking regulators are butting heads over how to define the buying and selling of securities on behalf of clients, known as market-making, as well as over banks' ability to invest in outside investment vehicles such as hedge funds, according to officials close to the discussions. Since brokers, which are overseen by the SEC, conduct market-making activities, the SEC is pushing for more influence over the issue, these people said. Police: Woman fakes her own kidnapping to get day off work (WOAI) An officer on patrol went to check out a car parked near Ray Ellison and Five Palms around 6:30 p.m. on October 10th. When the officer looked inside the car, he spotted 48-year-old Sheila Bailey Eubank bound with rope. An arrest warrant affidavit states Eubank told police a man jumped into her car around 6:15 a.m. while she was at a Security Service Federal Credit Union ATM near Loop 1604 and Bandera Road. Eubank said the man held her an knife point and forced her to drive him to various locations for what she believed were drug deals. She told officers he then assaulted her, tried to choke her with a rope, and then tied her up and left her in her car. However, officers discovered a lottery ticket in Eubank's purse that was purchased that day during the hours she claimed she was being held. Investigators reviewed surveillance video from the store where the lottery ticket was purchased and found out she had entered the store by herself and appeared "healthy, unhurried, and pleasant with the clerk." Investigators then reviewed video from the Security Service Federal Credit Union where Eubank claimed she was abducted. The video showed withdrawing money from the motor ATM, but there were no signs that anyone else was with her. Police say when Eubank was confronted by investigators, she eventually admitted her story was false and that she simply wanted a day off from work and wanted attention. BofA CEO Moynihan Declares Victory Over Capital Doubters (Bloomberg) Bank of America now has the “top capital” among peers and is capable of paying a bigger dividend, said Chief Executive Officer Brian T. Moynihan. The bank has fulfilled a goal Moynihan drilled into subordinates since his first day on the job: building a “fortress balance sheet,” he said in an Oct. 17 staff meeting at the company’s Charlotte, North Carolina headquarters. “We’re going to officially declare victory on one of those operating principles,” Moynihan said in the town-hall style meeting. “The reason why is, we have the top capital in the industry, the top liquidity in the industry.” People have stopped asking if the bank needs more funds to absorb losses and now want to know when investors will get the excess, he said. Word-Smith: Greg's Book Has 0 Sachs Appeal (NYP) Among the mistakes in the book, sources noted, was Smith’s description of a town-hall meeting last year hosted by Goldman’s co-heads of investment banking — South African Richard Gnodde and Michael “Woody” Sherwood...Smith said one question from a Goldman employee during the 2011 meeting was: “What is the firm doing to address the fact that the culture is dying and our reputation is deteriorating?” According to Goldman, a female referenced in Smith’s book as a “power-hungry” managing director — identified as “Georgette” — was the individual who posed the question about culture. Georgette presented the question as: How is the firm addressing “the perception of the deteriorating culture,” according to a recording of the event, reviewed yesterday by The Post. Smith also writes about a follow-up question demanding “what specifically” the bank was doing — and that it was followed with uncomfortable laughter before some fumbling about over which executive should field the query. There was no follow-up question in the recording of the meeting. Smith embellished that aspect of the book and omitted that “Georgette” — a woman whom Smith worked with and dubbed the “Black Widow” for her cutthroat manner — was the source of the question about values because it undermined his narrative, a source inside the company said. Low Rates Pummel Bank Profits (WSJ) "The longer the Fed stays down at these levels the more it will hurt banks," said Scott Lied, the chief financial officer of ENB Financial Corp, an Ephrata, Pa., institution that has eight branches and 225 employees. "It's painful." Gupta Sentencing Set For Tomorrow (NYP) Prosecutors say Gupta, convicted by a jury in June, deserves as long as 10 years in prison. Gupta seeks probation. Gary Naftalis, a lawyer for Gupta, argued his client’s crime was an “aberrational” event in a “lifetime of good works” that merited a punishment for a man who has suffered an extraordinary fall from grace. He asked Rakoff to impose a term of community service, suggesting Gupta work with troubled youth in New York or with the poor in Rwanda. Theater Thief Costs Movie-Goers Tens of Thousands In Credit Card Fraud (Courant) A man who may have stolen as much as $70,000 a week by slithering beneath theater seats while movies were playing and lifting credit cards from women's' pocketbooks was convicted Monday of fraud and identity theft crimes. Anthony Johnson, 49, and a string of accomplices used the stolen cards to collect thousands of dollars in cash advances from Connecticut's gambling casinos and to make tens of thousands of dollars more in retail purchases in Connecticut and elsewhere, authorities said. On a "good" weekend, Johnson collected $50,000 to $70,000 from the scheme, one of his accomplices testified last week at his trial at U.S. District Court in Hartford. He had to settle for $30,000 or $40,000 on a bad weekend, the accomplice said. The accomplice, who agreed to cooperate with authorities, said Johnson, of Philadelphia, typically worked with women accomplices. They bought tickets to motion pictures likely to be popular with female audiences and chose seats from which they could watch how women in the audience stored their pocketbooks. "Once the movie started, Johnson crawled on the floor, removed credit cards from the stored purses, and returned the wallet to the purses," according to an FBI affidavit. "Johnson crawled in this manner around the theater until he was done…"

Opening Bell

Opening Bell: 10.01.12

British Banks Face Heat From On High (WSJ) The Right Reverend Justin Welby, Bishop of Durham, is grilling top bankers as part of a new parliamentary inquiry into "banking standards" that represents the U.K. government's latest attempt to shake up the industry. The inquiry was established in July on the heels of news that several banks allegedly sought to rig interest rates such as the London interbank lending rate, known as Libor. Bishop Welby, a former oil executive who sits in Britain's House of Lords, has joined nine other lawmakers in assembling a report that will consider new rules on everything from corporate governance to conflicts of interest. The inquiry also involves a series of public hearings already under way. Sitting in a castle in his diocese in northern England, Bishop Welby said the inquiry isn't about digging into the details of banks' alleged failings in the Libor scandal and other matters. Rather, it is an attempt to determine more broadly the future role of the industry. "It's an existential question," he said. "It's about why the bankingindustry is here." Spain To Borrow $267 Billion Of Debt Amid Rescue Pressure (Bloomberg) Spain’s debt will widen to 90.5 percent of gross domestic product in 2013 as the state absorbs the cost of bailing out its banks, the power system and euro-region partners Greece, Ireland and Portugal. This year’s budget deficit will be 7.4 percent of economic output, Budget Minister Cristobal Montoro said at a press conference. Spain’s 6.3 percent target will be met because it can exclude the cost of the bank rescue, he said. Euro Leaders Face October of Unrest After ECB’s September Rally (Bloomberg) With the first of three summit meetings that European Union President Herman Van Rompuy has called “crucial” taking place in Brussels on Oct. 18-19, investor sentiment toward the euro area that surged in September is on the wane. “People are beginning to look at this in a more sober way” after the ECB bond-buying plan and a German high-court decision releasing bailout financing spurred optimism over the past month, Clemens Fuest, an economist at Oxford University’s Said Business School, said in an interview yesterday. October, which marks the third anniversary of the debt crisis, will showcase euro-area leaders fighting out their differences. The discord underscores the inadequacy so far of ECB President Mario Draghi’s bid to calm the crisis through a pledge on sovereign-debt purchases. Graduates Turn Away From Wall Street (FT) MBA statistics show a steady decline in the number of graduates taking jobs at investment banks. The Wharton school at the University of Pennsylvania, which bankers consider the “conveyor belt of Wall Street”, sent 16.6 percent of its class to investment banks in 2011 compared with more than one in four in 2008. The pattern is similar at other large business schools. “The number of students going into financial services has remained steady but what’s changed has been the types of roles,” said Maryellen Lamb, director of MBA career management at Wharton. “We’ve seen more opportunity for students in private equity and hedge fund roles.” Yield hunt pushes funds into CLOs, CDOs (Reuters) Fund managers are increasingly eyeing riskier exotic assets, some of which haven't been in fashion since the financial crisis, as yields on traditional investments get close to rock bottom. Returns from investments in "junk" bonds, government guaranteed mortgage securities and even some battered euro-zone debt are plunging in the wake of global central bank policies intended to suppress borrowing costs. In particular, the Federal Reserve's latest move to juice the U.S. economy by purchasing $40 billion of agency mortgage-backed securities every month is forcing some money managers who had previously been feasting on those securities to get more creative. The only problem is they may be getting out of their comfort zones and taking on too much risk. "I would not be surprised if some managers are reaching outside of their expertise for a few extra basis points," said Bonnie Baha, a portfolio manager for DoubleLine's Global Developed Credit strategy. Arnold Schwarzenegger 60 minutes interview video: admits habit of keeping secrets, affairs (CNN) While he did not specify how many affairs he'd had before Shriver filed for divorce in July 2011, Schwarzenegger admits two women he was involved with include "Red Sonja" co-star Brigitte Nielsen (while he and Shriver were dating, according to Schwarzenegger) and his family's longtime housekeeper, Mildred Patricia Baena. Nine months after Schwarzenegger and Baena had their affair, she gave birth to a son -- less than a week after he and Shriver's fourth child, Christopher, was born. Baena remained the family's housekeeper for years, with her son sometimes around the house as well. But Schwarzenegger said in the "60 Minutes" interview that he didn't have any suspicions he was the father until the boy was 7 or 8 years old and he began to notice "that he started looking like me." "It was never discussed, but I put things together," said Schwarzenegger, whose autobiography "Total Recall" hits bookshelves Monday. After that realization, he said he began sending Baena extra money for her and her son, without talking about his being the boy's father. Schwarzenegger also denied to Shriver that he'd had an affair and that Baena's child was his son -- until Shriver confronted him during a marriage counseling session a few months before their break-up. "She said, 'Am I off on this or am I not?' And I said, 'You are absolutely correct.'" More Wall Street Layoffs Coming (NYP) Nomura analyst Glenn Schorr said in a recent report warns that many banks, which are still overstaffed, need a more liberal wielding of the ax to squeeze out more profits in the coming years, amid a global market that continues to look sluggish. “While overcapacity is weighing on returns under the current environment, most bank managements have been in the camp that the industry is currently experiencing a cyclical rather than secular downturn,” Schorr writes. “So they’ve been slow to do too much on the head-count front,” the bank analyst said regarding layoffs. According to Schorr’s research, big banks like JPMorgan, Credit Suisse, UBS and Barclays have actually added jobs over the past three years. Goldman Sachs and Morgan Stanley have only slashed about 1 and 2 percent of their work forces, respectively. Orange Juice Gets Squeezed (WSJ) Since the start of the current hurricane season, futures prices have climbed as high as $1.4095 a pound. Traders and analysts said the possibility of storm damage fueled much of the rise. But since no such storm has materialized, investors are taking profits or cutting their losses, they added. Vikram's Housing Woes (NYP) Pandit is on track to lose money on the sale of his Greenwich, Conn. home, which he bought in June 2001 for $4.1 million. Pandit, 55, put the two-story Colonial on the market for $4.3 million in April. Now he has lowered the price to $3.9 million, according to Trulia.com. South Florida Man Inherits 13,000 Clown Items (SS) Richard Levine is now trying to wrap his head around the unusual pickle he inherited when his father-in-law and business partner died two years ago and left him essentially a warehouse full of curated items of buffoonery. There are clown dolls with faces of joy and sorrow. Clown paintings, some more colorful than others. Clown figurines and clown puppets, some tiny, some huge, some very disturbing. There are clown photographs, clown books and clown costumes...Levine, who runs the same Waterboy Sprinklers business his father-in-law started in the 1970s, said he barely has had the time to go through all of the items. He hopes to inventory all of it, sell most of it, keep some of it and donate the rest to a local charity group. "I am slowly starting to like them and getting enthusiastic about them. I can see how Jack was into them," Levine said. "I don't go for the sad clowns much though, but I really enjoy the happy ones."

Opening Bell

Opening Bell: 02.15.13

SEC Looks At Trades A Day Before Heinz Deal (NYT) Regulators are scrutinizing unusual trading surrounding the planned $23 billion takeover of the food company H. J. Heinz, raising questions about potential illegal activity in one of the biggest deals in recent memory, a person briefed on the matter said. The Securities and Exchange Commission opened an insider trading inquiry on Thursday as Berkshire Hathaway and the investment firm 3G Capital agreed to pay $72.50 a share for Heinz, this person said. Regulators first noticed a suspicious spike in trading on Wednesday. Deferred Pay Draws Fed's Scrutiny (WSJ) U.S. banks and securities firms would have to step up their compensation disclosures under rules being considered by the Federal Reserve, said a person familiar with the central bank's regulatory efforts. The rules are in the formative stages and wouldn't take effect for some time. But an early draft has circulated internally at the Fed, this person said, marking a step on the path toward a public proposal. The Fed's push ultimately could give investors sheaves of new data on how and when companies pay their employees—including scarce numbers on how much compensation has been promised but not yet paid out. Shifting Blame Muddles S&P Suit (WSJ) The Delphinus deal, which means "dolphin" in Latin and is the name of a small constellation in the Northern Hemisphere, was one of more than 30 CDOs included in the federal government's lawsuit against Standard & Poor's Ratings Services last week. Federal prosecutors say that S&P, a unit of McGraw-Hill Cos., disregarded its own standards when rating Delphinus and the other CDOs, misled investors and should cover losses suffered by federally insured banks and credit unions that bought the securities, which included bundles of subprime mortgages. The discrepancy could give S&P a way to counterattack the Justice Department as the two sides gird for a battle that legal experts say will be grueling. U.S. Attorney General Eric Holder is seeking more than $5 billion in damages from S&P, which claims the allegations are "meritless." The U.S. government's conflicting opinions about the Delphinus deal might be a problem if the civil-fraud suit goes to trial. The ratings firm probably will argue that "these banks aren't victims," says Samuel Buell, a former federal prosecutor who now is a law professor at Duke University. Ackman: Herbalife Short Unaffected By Icahn Stake (CNBC) In his first public comments following the disclosure of activist investor Carl Icahn's stake in Herbalife, hedge fund manager Bill Ackman, who made $1 billion short bet against the stock, told CNBC he remains convinced that "Herbalife is a pyramid scheme." Ackman's statement read, "We invest based on a careful analysis of the facts. After 18 months of due diligence, we have concluded that it is a certainty that Herbalife is a pyramid scheme. Our conclusions are unaffected by who is on the other side of the investment. Our goal was to shine a spotlight on Herbalife. To the extent Mr. Icahn is helping achieve this objective, we welcome his involvement." G-20 Seeks Common Ground on Currencies After Yen Split (Bloomberg) Group of 20 finance ministers and central bankers begin talks in Moscow today with investors seeking clarity on how comfortable they are with a sliding yen. Questions are being asked after the Group of Seven united around a pledge not to target exchange rates only to divide over its meaning for Japan. “We have to get to the bottom of this, of course, listen to our Japanese colleagues and how they explain this and what decisions they will take and what exchange-rate policy they will follow,” Russian Finance Minister Anton Siluanov said in an interview yesterday before hosting the meeting. He said the G-20 should adopt more “specific” language opposing exchange-rate interference in a statement to be released tomorrow. Corvette's stick shift thwarts Orlando man (OS) Orlando police said the 20-year-old tried to carjack a man inside a Corvette near Orlando Regional Medical Center late last month, but couldn't steal the car because he didn't know how to use the clutch or stick-shift. He and his accomplice ran away from the car, but not before stealing the victim's wallet and cell phone, police said. Soon after the failed carjacking, the victim's credit card was used at a McDonald's on Kirkman Road. Surveillance video inside the restaurant showed Sayles at the register, placing an order at about 12:15 a.m. Jan. 28. Not long after, the stolen cellphone's internal GPS registered with the phone company. Authorities tracked the phone to a home on Grandiflora Drive in a neighborhood off Kirkman Road. On Feb. 8, police went to the home, and Sayles answered the door. Officers noted in their arrest report that they immediately recognized him from the surveillance video inside the McDonald's. When asked why the victim's stolen cellphone would detect at his house, the report said, Sayles said a lot of people come to his residence and they could have brought it. One-Man Bank Keeps German Village Business Running (Reuters) The Raiffeisen Gammesfeld eG cooperative bank in southern Germany is one of the country's 10 smallest banks by deposits and is the only one to be run by just one member of staff. Small banks like this dominate the German banking landscape. Rooted in communities, they offer a limited range of accounts and loans to personal and local business customers. While numbers have shrunk from around 7,000 in the 1970s to around 1,100 now, cooperative banks like Raiffeisen Gammesfeld provide competition for Germany's two largest banks - Deutsche Bank and Commerzbank. A typical day's work for Breiter involves providing villagers with cash for their day-to-day needs and arranging small loans for local businesses. Not to mention cleaning the one-story building that houses the bank, which is 200 meters from his own front door. Moving from a bigger bank, where it was all "sell, sell, sell", Gammesfeld-born Breiter says taking up this job in 2008 was the best decision he ever made. The advertisement required someone to work by hand, without computers. The typewriter and the adding machine bear the signs of constant use, although Breiter, in his standard work outfit of jeans and jumper, does now have a computer. "It's so much fun," Breiter, a keen mathematician, says as he deals with a steady stream of lunchtime customers. He knows his customers by name and regularly offers advice on jobs, relationship and money woes. Ex-Analyst At SAC Felt Pressured For Tips (WSJ) The Federal Bureau of Investigation and the Manhattan U.S. Attorney's office now are using the statements from the analyst to try to build a case against the SAC portfolio manager, Michael Steinberg, and others that could result in charges in the coming months, these people said. Authorities currently are preparing to present evidence to a grand jury against Mr. Steinberg, according to a person familiar with the investigation. The development ramps up the legal pressure on the big hedge fund, highlighting that the previously reported insider-trading investigation of SAC and its founder, Steven A. Cohen, is proceeding on multiple fronts. Blackstone Keeps Most Of Its Money With SAC (NYT) The Blackstone Group, the largest outside investor in the hedge fund SAC Capital Advisors, said it would keep most of its $550 million with the hedge fund for three more months while it monitors developments in the government's insider trading investigation. Performance Tops Pedigree in Money Managers’ Fortunes (Bloomberg) Virtus Investment Partners Inc. and Artio Global Investors Inc. set out on their own in 2009 within nine months of one another. The paths of the two money managers couldn’t have been more different. Virtus, which started as a virtually unknown money manager, has surged 18-fold since its public debut as assets have soared, with its shares hitting a record on Feb. 14. Artio, which listed in September 2009 after spinning out from Switzerland’s 122- year-old wealth manager Julius Baer Group Ltd., saw its life as an independent firm come to an abrupt end with its Feb. 14 acquisition by Aberdeen Asset Management Plc after assets slumped and shares plunged about 90 percent. Banks Warned Not To Leave Libor (WSJ) The Financial Services Authority recently sent letters to a handful of major banks—including France's BNP Paribas SA and the Netherlands' Rabobank Group—warning them not to pull out of the panel that sets the London interbank offered rate, or Libor, these people said. The letters came after executives at those banks privately informed the British Bankers' Association, the trade organization that oversees Libor, that they planned to exit the rate-setting panel. Australian couple get married in IKEA (DM) Lynne said: 'We wanted to get married in IKEA for a very simple reason - we adore IKEA. 'It felt right to be able to show our commitment to one another by getting married somewhere we both love and to show the world that romance can be alive anywhere, even in the aisles of IKEA. Our visits to IKEA over the years have actually brought the two of us closer!' Every element of the special day featured IKEA products handpicked by the happy couple, including crockery, lighting, dining furniture, decorations, glassware and meatballs.

Opening Bell

Opening Bell: 09.11.12

Before Scandal, Class Over Control Of Libor (WSJ) At an April 25, 2008, meeting with officials at the Bank of England, Angela Knight, head of the British Bankers' Association, argued that the London interbank offered rate had become too big for her organization to manage, according to minutes of the meeting and a person who was there. Her suggestion went nowhere. Even as Libor's deep flaws became apparent, regulators resisted a greater oversight role, the BBA's member banks clung to control of Libor, and BBA executives bickered with one another over whether to hang onto the lucrative business, according to people who were involved and a Wall Street Journal review of hundreds of pages of emails, meeting minutes and other documents. Treasury Sells Big Chunk Of AIG Stock (WSJ) The Treasury sold about 554 million shares to the public at $32.50 apiece for a total of $18 billion in one of the biggest global follow-on stock offerings since the financial crisis. The offering was the Treasury's fifth sale of AIG stock since early last year and reduced the government's stake in the company to about 22% from 92% in early 2011. The price set Monday was above the government's cost basis of $28.73 a share, meaning taxpayers will earn a profit on the sale. New iPhone could boost U.S. GDP by up to 0.5 percent, JP Morgan says (Reuters) "Calculated using the so-called retail control method, sales of iPhone 5 could boost annualized GDP growth by $3.2 billion, or $12.8 billion at an annual rate," Feroli wrote. That 0.33 percentage-point boost, he added, "would limit the downside risk to our Q4 GDP growth protection, which remains 2.0 percent." Feroli laid out his math. J.P. Morgan's analysts expect Apple to sell around 8 million iPhone 5s in the fourth quarter. They expect the sales price to be about $600. With about $200 in discounted import component costs, the government can factor in $400 per phone into its measure of gross domestic product for the fourth quarter. Feroli said the estimate of between a quarter to a half point of annualized GDP "seems fairly large, and for that reason should be treated skeptically." But, he added, "we think the recent evidence is consistent with this projection." Geithner Holds His Own on Triathlon Front (Dealbook) Geithner participated in the 7th annual Nation’s Triathlon to Benefit the Leukemia & Lymphoma Society on Sunday, swimming, biking and running his way through the nation’s capital. The race involved a 1.5-kilometer swim in the Potomac River, a 40-kilometer bike ride through the city and a 10-kilometer run. And Mr. Geithner, 51, can boast of a pretty good finish to his race, completing the course in 2:33:07. He placed ninth in his division, men aged 50 to 54, according to the race’s Web site. Individually, he completed the swim in 29:10, the bike ride in 1:13:52 and the run in 45:51. New Yorker Cartoon Dept Temporarily Banned From Facebook For Violating ‘Nudity And Sex’ Standards (Mediaite) In a post entitled “Nipplegate,” the New Yorker‘s cartoon editor, Robert Mankoff, detailed how the magazine’s cartoon department became temporarily banned on Facebook: a particular Mick Stevens cartoon violated the social networking site’s community standards on “Nudity and Sex.” Stevens redrew the cartoon, he said, “but the gain in clothes caused too great a loss in humor.” He then noted that Facebook has different standards when it comes to males and females. As “the guidelines say, ‘male nipples are ok.’ It’s the ‘female nipple bulges’ that are the problem.” Big Banks Hide Risk Transforming Collateral for Traders (Bloomberg) JPMorgan and Bank of America are helping clients find an extra $2.6 trillion to back derivatives trades amid signs that a shortage of quality collateral will erode efforts to safeguard the financial system. Starting next year, new rules designed to prevent another meltdown will force traders to post U.S. Treasury bonds or other top-rated holdings to guarantee more of their bets. The change takes effect as the $10.8 trillion market for Treasuries is already stretched thin by banks rebuilding balance sheets and investors seeking safety, leaving fewer bonds available to backstop the $648 trillion derivatives market. The solution: At least seven banks plan to let customers swap lower-rated securities that don’t meet standards in return for a loan of Treasuries or similar holdings that do qualify, a process dubbed “collateral transformation.” That’s raising concerns among investors, bank executives and academics that measures intended to avert risk are hiding it instead. Soros: Germany going into depression in 6 months (MarketWatch) The recession in Europe will spread to Germany, the euro-zone's largest economy, within six months, said George Soros, chairman of Soros Fund Management. "The policy of fiscal retrenchment in the midst of rising unemployment is pro-cyclical and pushing Europe into a deeper and longer depression," Soros said in prepared remarks for a speech in Berlin Monday. "That is no longer a forecast; it is an observation. The German public doesn't yet feel it and doesn't quite believe it. But it is all too real in the periphery and it will reach Germany in the next six months or so." Lindsay Lohan encourages President Obama to slash taxes for 'Forbes millionaires' (DM) In a tweet fired off on Friday, the 26-year-old actress encouraged President Barack Obama to consider lowering taxes for the one-percenters listed on the Forbes Magazine’ millionaires’ list. Lohan, who has been very active on Twitter recently, was responding to a message posted by the Obama campaign following his Thursday speech at the Democratic National Convention. ‘I’ve cut taxes for those who need it: middle-class families, small businesses,’ the tweet read. About 10 minutes later, the star of the upcoming Elizabeth Taylor biopic ‘Liz and Dick’ put in her two cents on the issue of tax cuts: ‘We also need to cut them for those that are listed on Forbes as "millionaires" if they are not, you must consider that as well,’ her late-night message read. Gross Says Age of Credit Expansion Led Fund Returns Over (Bloomberg) Gross’s outlook follows his commentary last month, which sparked debate among investors and analysts after he declared that the “cult of equity” was dying. In his August comments, he compared long-term returns from equities to a “Ponzi scheme” and said returns of 6.6 percent above inflation, known as the Siegel Constant, won’t be seen again. “Our credit-based financial system is burdened by excessive fat and interest rates that are too low,” Gross wrote. “Central banks are agog in disbelief that the endless stream of” liquidity pumped into the banking sector has not stimulated lending, Gross wrote. Queen's Corgi Buried At Balmor (TDB) The dog, Monty was involved in a fight recently when he was one of a number of dogs which attacked Princess Beatrice's terrier Max over the summer, but it appears the fight - Max came off worst and nearly lost an ear in the fracas - was not a contributory cause of death. Buckingham Palace is not officially revealing how or when the corgi, named Monty (after the American horse whisperer Monty Roberts who has advised the queen on dogs and horses) met his end, but palace sources told the Royalist the animal passed away of old age over the summer. The animal died at the Royal Scottish residence of Balmoral, where, in accordance with tradition, he has been buried in the Royal pet cemetery opened by Queen Victoria when her beloved Collie, Noble, died there in 1887...the Queen is known to take the deaths of her pets hard: Lady Pamela Hicks, the mother of India Hicks once wrote a note when one of the Queen’s corgis died and received a six-page letter back.

Opening Bell

Opening Bell: 08.24.12

New York Fed Profits On AIG Bonds (WSJ) The Federal Reserve Bank of New York on Thursday sold the last toxic assets it acquired from the bailout of American International Group Inc., closing the book on its most controversial intervention during the financial crisis with a large gain to taxpayers. The regional Fed bank said it reaped $6.6 billion in profits from selling complex mortgage securities that it took on in late 2008 to stem AIG's cash bleed. Merkel Reiterates Greek Stance (WSJ) "The euro is more than a currency, it's an idea, and that's why it's so important," Ms. Merkel said at a news conference in Berlin, where she earlier met with Greek Prime Minister Antonis Samaras. "I want Greece to remain a part of the euro zone and that's what I am working on." Morgan Stanley Funds In Big Facebook Bet (WSJ) U.S. mutual funds run by Morgan Stanley, the lead underwriter in Facebook Inc.'s $16 billion initial public offering, have disproportionately high investments in the social-media company, leaving fund shareholders exposed to the stock's big drop since its May 18 IPO. New data show that eight of the top nine U.S. mutual funds with Facebook shares as a percentage of total assets are run by Morgan Stanley's asset-management arm, according to fund tracker Morningstar Inc. Don't Be Fooled By Short-Selling Bans (FT) ...the conclusions from the research are clear; these economists do not think short selling bans work. For there is precious little evidence that the ban in US markets truly halted share price declines; on the contrary, the impact was (at best) neutral, they claim. However, the ban hurt market mechanisms, as liquidity dried up. HSBC In Settlement Talks With U.S. Over Money Laundering (Bloomberg) HSBC, which is under investigation by U.S. regulators for laundering funds of sanctioned nations including Iran and Sudan, is in talks to settle the matter, two people with knowledge of the case said. The bank, Europe’s largest by market value, made a $700 million provision in July for any U.S. fines after a Senate Committee found it had given terrorists and drug cartels access to the U.S. financial system. That sum might increase, Chief Executive Officer Stuart Gulliver has said. Night of drinking, sexting and a well-placed bullet leads to prison for Oregon City man (OL) The couple drank at home and at two Oregon City area bars before their late night stop at the KC's Midway, a neighborhood watering hole where Lisa Nunes played video poker and enjoyed her 10th beer -- by her count -- of the day. Lisa Nunes spoke with a man she described as a friend, who left the bar but soon began bombarding her phone with text messages and pictures of his genitals. "I'm 54 years old. I have a relationship with my husband that's non-existent," Lisa Nunes testified. Flirting with a younger man "was exciting, she said. "I was just sexting a guy. It was no big deal," she said. Thomas Nunes, 61, said he was stunned when he saw a few of the messages and a photo. He left briefly then returned, grabbed the phone and went home. He read the all text messages and combed his wife's Facebook account looking for proof of infidelity. "I couldn't believe she was doing it right in front of my face," Nunes said. "I felt betrayed." Shaken, he said he smoked marijuana and talked to his cats for about 20 minutes to calm himself and "reason out a plan." Mitt: I’d give Fed boss the heave-ho (NewsCorp) Republican presidential candidate Mitt Romney said yesterday that if elected, he would select a new Federal Reserve chairman, replacing Ben Bernanke, countering advice Tuesday from top economic adviser Glenn Hubbard that Bernanke should be considered for a third term. Return to Gold Standard Is Seen By Some as 'Ludicrous' (CNBC) The Financial Times reported on Friday that the Republican Party plans to set up a commission to look into re-establishing the link between the dollar and gold as part of its platform to be unveiled at the party convention in Tampa Bay, Fla., next week. But analysts told CNBC that the idea would not work. “I think it’s absolutely nonsensical,” Moorad Choudhry, head of treasury at the corporate banking division of the Royal Bank of Scotland told CNBC Friday. “There’s a very good reason they unhooked it in 1971, because their deficit didn’t enable them to maintain it with the supply of gold. In fact, is there enough gold in the world to back the U.S. debt?” Money Funds Test Geithner, Bernanke As Schapiro Defeated (Bloomberg) Money-market mutual funds, an alternative to bank accounts for individuals and companies, will test the resolve of the U.S. Federal Reserve and Treasury Department to prevent another financial crisis after the $2.6 trillion industry successfully lobbied against more regulation by the Securities and Exchange Commission. Fed Governor Daniel Tarullo has said the central bank could tighten rules on banks’ borrowing from money-market funds, and Boston Fed President Eric Rosengren has said officials have the option to force banks to back their money funds with capital. The Fed and the Treasury could also work through the Financial Stability Oversight Council, a new regulatory panel formed under the Dodd-Frank Act, to seize oversight of money funds from the SEC and grant that power to the Fed. Ryan Lochte Discusses Racing Prince Harry (NBC) Lochte had never met the prince until the royal's entourage approached him that night. "His people came over to my table and said, 'Prince Harry wants to meet you,'" he said. "I was like, 'Lets meet him.' I went over there. I was fully clothed, and he says, 'You want to race me in the pool?' I took off my shirt, jumped in and we started racing." Only hours later, all of the prince’s clothes came off in a now-infamous strip-billiards incident that took place in a hotel suite. Lochte did not get the invite to play strip billiards with the prince and his friends. “He never said anything like that,’’ Lochte said. “After our race and everything, we went our separate ways. I’m kind of happy. I don’t need that.’’