Opening Bell: 10.19.12

Schapiro SEC Reign Nears End With Rescue Mission Not Done (Bloomberg) Admirers and critics agree Schapiro rescued the agency from the threat of extinction when she was appointed by President Barack Obama four years ago. Still, she hasn’t fulfilled her mission -- to overcome the SEC’s image as a failed watchdog by punishing those who steered the financial system toward disaster and by proving regulators can head off future breakdowns. “It was harder than I thought it was going to be,” Schapiro, 57, said during an interview in her office that looks out on the Capitol dome. “You have this nice little box of things you want to do all tied up with a bow, and you walk in the door and it’s very hard to keep at least one eye on that agenda while you’re dealing with the flash crashes and the new legislation and the whole range of things that happened,” she said. Morgan Stanley CEO Hints Of Commodity Arm Sale (Reuters) Morgan Stanley has an obligation to explore "different structures" for its commodities trading business because new regulations are limiting the unit's activities, Chief Executive James Gorman said on Thursday. The CEO's comments were the first time Morgan Stanley has publicly hinted at a possible sale of its multibillion-dollar oil and metals trading arm, which has been reported in the media for months. Morgan Stanley has been in discussions with OPEC member Qatar for more than a year over the sale of at least a majority stake in its energy-focused trading business, according to bankers. Speaking on a conference call with analysts after the firm reported better-than-expected quarterly results on Thursday, Gorman said changes under the U.S.' Dodd-Frank financial reform law restrict the kind of trading the firm can do in commodities. Europe Agrees On Banking Supervisor (WSJ) European leaders early Friday agreed to have a new supervisor for euro-zone banks up and running next year, a step that will pave the way for the bloc's bailout fund to pump capital directly into banks throughout the single-currency area. John Paulson Doubles Down On Housing (WSJ) Hedge-fund manager John Paulson famously made nearly $4 billion in 2007 correctly betting that the housing bubble, fueled by the subprime mortgage market, would pop. Then the billionaire investor somewhat reversed course, arguing that the housing cycle had hit a low point. "If you don't own a home, buy one," he said in a 2010 speech at the University Club in New York. "If you own one home, buy another one, and if you own two homes, buy a third and lend your relatives the money to buy a home." So far, that bet has been a loser: The Wall Street tycoon lost about $3 billion personally in 2011, according to people close to the hedge-fund manager, speculating that the economy would recover faster than it did. But through the downturn Mr. Paulson—whose net worth is estimated to be around $11 billion, according to people familiar with his situation—continued his real estate spending spree. Over the last eight years, he has spent more than $145 million on six properties, including two estates in Southampton, N.Y., two properties near Aspen, Colo., and two residences in Manhattan, where he is based, according to public records. (He later sold one of the Southampton properties, for $10 million in 2009, a year after buying a larger estate nearby). In June, Mr. Paulson snapped up a 90-acre Aspen ranch and an adjoining property from Prince Bandar bin Sultan for a total of $49 million, according to public records, one of the highest prices ever paid for property in the area. Ben Stein: Taxes Are Too Low (Mediaite) Author and economist Ben Stein joined Fox & Friends on Thursday where he stunned the hosts after he called for raising the tax rates on people making more than $2 million per year. He said that he did not think that the United States simply had a spending problem, and cited the early post-war period as an example of a time when you could have high tax rates and high growth. “I hate to say this on Fox – I hope I’ll be allowed to leave here alive – but I don’t think there is any way we can cut spending enough to make a meaningful difference,” said Stein. “We’re going to have to raise taxes on very, very rich people. People with incomes of, say, $2, $3, $4 million a year and up. And then slowly, slowly, slowly move it down. $250,000 a year, that’s not a rich person.” Stein said that the government has a spending problem, but they also have a “too low taxes problem.” “With all due respect to Fox, who I love like brothers and sisters, taxes are too low,” said Stein. “That sounds like Bowles-Simpson,” said Gretchen Carlson. “It is Bowles-Simpson,” Stein replied. Should've Left That At Home, Teacher Is Told On Jury Duty (NYT) Damian Esteban was qualified to teach students at a specialized New York City high school, and had just been deemed reasonable enough to judge a man’s fate in a murder trial. But passing through the metal detectors at a Manhattan courthouse may have been too tough a test. Mr. Esteban, 33, was arrested on Wednesday as he returned from a break in a trial in State Supreme Court in Manhattan, David Bookstaver, a spokesman for the state Office of Court Administration, said. As Mr. Esteban, a teacher at the Williamsburg School of Architecture and Design in Brooklyn, passed through a metal detector at the courthouse, it beeped. A court officer, Laura Cannon, found the culprit to be a cigarette box in Mr. Esteban’s pocket. Upon opening the cigarette box, Ms. Cannon reported that she found a much bigger problem: 18 small bags of heroin. A Daunting To-Do List For Citigroup's New CEO (BusinessWeek) Citigroup’s largest problem may be internal. The company, analyst Richard Bove says, “is a political swamp. It’s a snake pit.” Cleansing the culture must be a priority, says Mike Mayo, an analyst at Crédit Agricole Securities. “So whether it’s the inappropriate pay for subpar performance; the lack of adequate disclosure, such as returns by business line; the failure to properly oversee the many different businesses; or the poor tone set at the top of the firm for corporate governance, they all add up to the need to improve the culture,” Mayo says. Cooling The Pits: ICE Yelling Ends (WSJ) Augustine Lauria knew his 37-year career as a floor trader was over when he got a memo from IntercontinentalExchange in late July announcing the closing of the exchange operator's last trading pits. Friday will be the last chance the 61-year-old trader will get to put on his navy-blue and yellow trading jacket and badge. It will be the final day of rough-and-tumble "open-outcry" commodities trading on the ICE-owned pits in lower Manhattan where options on cotton, coffee, cocoa, sugar and orange juice are bought and sold. "What can I do? I can count fast and yell loud," says Mr. Lauria, who boards the Staten Island Ferry before sunrise to get to work in time for the 8:10 a.m. bell. Amanda Larrivee Speaks Out about Incident at Samuel’s (ABC) Amanda Larrivee and her brother Robert Larrivee were arrested at Samuels Sports Bar Sunday for allegedly stealing TV’s from the bathroom. Now, the woman involved is speaking out about what happened that night and the “immature” remark made by her brother. The legal case against Amanda has been dropped, but a comment made by her brother is getting all the attention. He told police that the two were in the bathroom having sex. Amanda says that was not the case. “The comment was taken out of context and it’s not what it looks like,” said Larrivee...“I just want to come out and really let people know that it’s not what it looked like. It’s humiliating and the comment having sexual relations with my brother was an impulse, immature comment made by him that is not the truth,” said Larrivee. Amanda says Robert wasn’t trying to steal the TV’s, but was upset over seeing his ex-girlfriend. “He had an outburst at the time you know it turned into you know touching the TV on the wall, turned into an ugly scene,” said Larrivee. “He took the televisions down. He had no intention of stealing. He’s not walking out with two televisions,” said Attorney Jack St. Clair.
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Schapiro SEC Reign Nears End With Rescue Mission Not Done (Bloomberg)
Admirers and critics agree Schapiro rescued the agency from the threat of extinction when she was appointed by President Barack Obama four years ago. Still, she hasn’t fulfilled her mission -- to overcome the SEC’s image as a failed watchdog by punishing those who steered the financial system toward disaster and by proving regulators can head off future breakdowns. “It was harder than I thought it was going to be,” Schapiro, 57, said during an interview in her office that looks out on the Capitol dome. “You have this nice little box of things you want to do all tied up with a bow, and you walk in the door and it’s very hard to keep at least one eye on that agenda while you’re dealing with the flash crashes and the new legislation and the whole range of things that happened,” she said.

Morgan Stanley CEO Hints Of Commodity Arm Sale (Reuters)
Morgan Stanley has an obligation to explore "different structures" for its commodities trading business because new regulations are limiting the unit's activities, Chief Executive James Gorman said on Thursday. The CEO's comments were the first time Morgan Stanley has publicly hinted at a possible sale of its multibillion-dollar oil and metals trading arm, which has been reported in the media for months. Morgan Stanley has been in discussions with OPEC member Qatar for more than a year over the sale of at least a majority stake in its energy-focused trading business, according to bankers. Speaking on a conference call with analysts after the firm reported better-than-expected quarterly results on Thursday, Gorman said changes under the U.S.' Dodd-Frank financial reform law restrict the kind of trading the firm can do in commodities.

Europe Agrees On Banking Supervisor (WSJ)
European leaders early Friday agreed to have a new supervisor for euro-zone banks up and running next year, a step that will pave the way for the bloc's bailout fund to pump capital directly into banks throughout the single-currency area.

John Paulson Doubles Down On Housing (WSJ)
Hedge-fund manager John Paulson famously made nearly $4 billion in 2007 correctly betting that the housing bubble, fueled by the subprime mortgage market, would pop. Then the billionaire investor somewhat reversed course, arguing that the housing cycle had hit a low point. "If you don't own a home, buy one," he said in a 2010 speech at the University Club in New York. "If you own one home, buy another one, and if you own two homes, buy a third and lend your relatives the money to buy a home." So far, that bet has been a loser: The Wall Street tycoon lost about $3 billion personally in 2011, according to people close to the hedge-fund manager, speculating that the economy would recover faster than it did. But through the downturn Mr. Paulson—whose net worth is estimated to be around $11 billion, according to people familiar with his situation—continued his real estate spending spree. Over the last eight years, he has spent more than $145 million on six properties, including two estates in Southampton, N.Y., two properties near Aspen, Colo., and two residences in Manhattan, where he is based, according to public records. (He later sold one of the Southampton properties, for $10 million in 2009, a year after buying a larger estate nearby). In June, Mr. Paulson snapped up a 90-acre Aspen ranch and an adjoining property from Prince Bandar bin Sultan for a total of $49 million, according to public records, one of the highest prices ever paid for property in the area.

Ben Stein: Taxes Are Too Low (Mediaite)
Author and economist Ben Stein joined Fox & Friends on Thursday where he stunned the hosts after he called for raising the tax rates on people making more than $2 million per year. He said that he did not think that the United States simply had a spending problem, and cited the early post-war period as an example of a time when you could have high tax rates and high growth. “I hate to say this on Fox – I hope I’ll be allowed to leave here alive – but I don’t think there is any way we can cut spending enough to make a meaningful difference,” said Stein. “We’re going to have to raise taxes on very, very rich people. People with incomes of, say, $2, $3, $4 million a year and up. And then slowly, slowly, slowly move it down. $250,000 a year, that’s not a rich person.” Stein said that the government has a spending problem, but they also have a “too low taxes problem.” “With all due respect to Fox, who I love like brothers and sisters, taxes are too low,” said Stein. “That sounds like Bowles-Simpson,” said Gretchen Carlson. “It is Bowles-Simpson,” Stein replied.

Should've Left That At Home, Teacher Is Told On Jury Duty (NYT)
Mr. Esteban, 33, was arrested on Wednesday as he returned from a break in a trial in State Supreme Court in Manhattan, David Bookstaver, a spokesman for the state Office of Court Administration, said. As Mr. Esteban, a teacher at the Williamsburg School of Architecture and Design in Brooklyn, passed through a metal detector at the courthouse, it beeped. A court officer, Laura Cannon, found the culprit to be a cigarette box in Mr. Esteban’s pocket. Upon opening the cigarette box, Ms. Cannon reported that she found a much bigger problem: 18 small bags of heroin.

Moody's Warns of Weakness in German Banking Sector (NYT)
In a report, Moody’s warned that German banks suffer from meager profits, rising risk and insufficient reserves to absorb losses. The rating agency reaffirmed the negative outlook it has assigned to German banks since 2008. The poor state of German banks seems surprising considering that the country’s economy has held up fairly well to the euro zone crisis. In addition, German banks benefit from the country’s status as a haven from the turmoil and are able to borrow money at much lower rates than counterparts in other European countries. There is no real estate bubble and households are not over-indebted. German banks did, however, invest heavily in countries like Spain and Italy before the crisis, because they could earn more profits there than at home. Four years after the financial crisis began, they remain exposed to problems in those countries, Moody’s said.

A Daunting To-Do List For Citigroup's New CEO (BusinessWeek)
Citigroup’s largest problem may be internal. The company, analyst Richard Bove says, “is a political swamp. It’s a snake pit.” Cleansing the culture must be a priority, says Mike Mayo, an analyst at Crédit Agricole Securities. “So whether it’s the inappropriate pay for subpar performance; the lack of adequate disclosure, such as returns by business line; the failure to properly oversee the many different businesses; or the poor tone set at the top of the firm for corporate governance, they all add up to the need to improve the culture,” Mayo says.

Cooling The Pits: ICE Yelling Ends (WSJ)
Augustine Lauria knew his 37-year career as a floor trader was over when he got a memo from IntercontinentalExchange in late July announcing the closing of the exchange operator's last trading pits. Friday will be the last chance the 61-year-old trader will get to put on his navy-blue and yellow trading jacket and badge. It will be the final day of rough-and-tumble "open-outcry" commodities trading on the ICE-owned pits in lower Manhattan where options on cotton, coffee, cocoa, sugar and orange juice are bought and sold. "What can I do? I can count fast and yell loud," says Mr. Lauria, who boards the Staten Island Ferry before sunrise to get to work in time for the 8:10 a.m. bell.

Amanda Larrivee Speaks Out about Incident at Samuel’s (ABC)
Amanda Larrivee and her brother Robert Larrivee were arrested at Samuels Sports Bar Sunday for allegedly stealing TV’s from the bathroom. Now, the woman involved is speaking out about what happened that night and the “immature” remark made by her brother...He told police that the two were in the bathroom having sex. Amanda says that was not the case. “The comment was taken out of context and it’s not what it looks like,” said Larrivee...“I just want to come out and really let people know that it’s not what it looked like. It’s humiliating and the comment having sexual relations with my brother was an impulse, immature comment made by him that is not the truth,” said Larrivee. Amanda says Robert wasn’t trying to steal the TV’s, but was upset over seeing his ex-girlfriend. “He had an outburst at the time you know it turned into you know touching the TV on the wall, turned into an ugly scene,” said Larrivee. “He took the televisions down. He had no intention of stealing. He’s not walking out with two televisions,” said Attorney Jack St. Clair.

Related

Opening Bell: 05.11.12

JPMorgan's $2 Billion Blunder (WSJ) The CEO emphasized that the bank remains profitable despite the trading loss. "While we don't give overall earnings guidance and we are not confirming current analyst estimates, if you did adjust current analyst estimates for the loss, we still earned approximately $4 billion after-tax this quarter give or take," he said on the call. The bank earned $5.38 billion in the first quarter. Drew Built 30-Year JPMorgan Career Embracing Risk (Bloomberg) JPMorgan Chief Investment Officer Ina R. Drew, head of the unit responsible for a $2 billion trading loss, built a 30-year career at the largest U.S. bank by embracing risk and avoiding the spotlight. “With everything she does, she thinks in terms of trading,” said Stephen Murray, head of CCMP Capital Advisors LLC, created from a JPMorgan private-equity unit in 2006. “There are risk-lovers, there are risk-haters, and the best traders will take the risk as long as they get paid for it.” Drew’s operation, which helps manage the bank’s risk, has been transformed under Chief Executive Officer Jamie Dimon to make bigger speculative bets with the firm’s own money, according to five former employees, Bloomberg News reported last month. Some bets were so big JPMorgan probably couldn’t unwind them without roiling markets, the former executives said. JPMorgan Holding Talks With UK Regulator (WSJ) JPMorgan has been holding discussions with U.K. regulators about the roughly $2 billion of trading losses incurred by the giant bank's investment office, according to people familiar with the matter. The talks with the Financial Services Authority don't represent a formal inquiry by the regulator, one person said, and it isn't clear whether it will result in any action by the regulatory agency. The FSA has been requesting information from J.P. Morgan about how the trading losses occurred and what steps the bank is taking to avoid such situations in the future, the people said. Volcker Rule Proponents Say JPMorgan Loss Bolsters Case (Bloomberg) Senator Carl Levin, the co-author of the so-called Volcker rule and chairman of the Permanent Subcommittee on Investigations, said the New York-based bank’s disclosure yesterday served as a “stark reminder” to regulators drafting the proprietary-trading ban required by the 2010 Dodd-Frank Act. “The enormous loss JPMorgan announced today is just the latest evidence that what banks call ‘hedges’ are often risky bets that so-called ‘too-big-to-fail’ banks have no business making,” Levin, a Michigan Democrat, said in a statement. Wall Street's Go-To Guy Trips Up (WSJ) "I am not sure how many times I can say this: It was bad strategy, executed poorly," Mr. Dimon said of the losses the company suffered in the past six weeks. The acknowledgment is a rare blow for Mr. Dimon, 56 years old, who has been on the top of the banking heap since joining J.P. Morgan Chase in 2004. He regularly extols J.P. Morgan's "fortress balance sheet" and has repeatedly lashed out against lawmakers and regulators who have slapped more rules on the banking industry. Italian man becomes mayor by accident (BBC) Though he had not given much thought to a political platform before the vote, now he is in office he has said that he will focus on promoting tourism to the area. EU Signs Of Recovery, Risks Remain (WSJ) "A recovery is in sight, but the economic situation remains fragile, with still large disparities across member States," Olli Rehn, Commissioner for Economic and Monetary Affairs said in a statement. "Without further determined action, however, low growth in the European Union could remain." Chesapeake Deals Carry $1.4 Billion In Undisclosed Liability (WSJ) Most of these costs will hit this year and next, at a time when the company needs to raise substantial cash to cover operating expenses and its move into the more lucrative oil business. Faber Sees '87-Type Crash If U.S. Stocks Rise Without QE3 (Bloomberg) “I think the market will have difficulties to move up strongly unless we have a massive QE3,” Faber, who manages $300 million at Marc Faber Ltd., told Betty Liu on Bloomberg Television’s “In the Loop” from Zurich today, referring to a third round of large-scale asset purchases by the Fed. “If it moves and makes a high above 1,422, the second half of the year could witness a crash, like in 1987.” Third masseur accuses John Travolta of inappropriate behavior (NYP) Fabian Zanzi, a Chilean-born cruise worker who worked in VIP services, said Travolta offered him $12,000 for the tryst. Zanzi says he refused. Travolta was on the five-day cruise in 2009 without wife Kelly Preston and hit on Zanzi with a cheesy pickup line, the cruise worker said. “He said that I had something on my neck. I thought it was lint,” Zanzi told the Chilean news show “Primer Plano.” “When he got close to me, he took off his white robe and he was naked.”

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: 04.11.12

Profit Drop at U.S. Banks Imperils Rally (Bloomberg) The six largest U.S. lenders, including JPMorgan Chase and Wells Fargo, may post an 11 percent drop in first-quarter profit, threatening a rally that has pushed bank stocks 19 percent higher this year. The banks will post $15.3 billion in net income when adjusted for one-time items, down from $17.3 billion in last year’s first quarter, according to a Bloomberg survey of analysts. Trading revenue at the biggest lenders is projected to fall 23 percent to $18.3 billion, according to Morgan Stanley analysts, who didn’t include their firm or Wells Fargo. Making Waves Against 'Whale' (WSJ) Dozens of hedge funds are believed to have placed bets in the derivatives markets that pit them against positions taken by Bruno Iksil, the French-born trader who works for the bank's Chief Investment Office in London, according to people familiar with the matter. Funds that traded against Mr. Iksil earlier this year recorded big paper losses as his trades helped push down one credit index. The losses made Mr. Iksil a target for some hedge funds, who felt they could capitalize on his outsize position, these people say. The funds' wagers against Mr. Iksil's positions have become increasingly profitable in recent weeks as prices in the credit-derivatives index that was at the center of one of Mr. Iksil's trades rose after his trades ceased. "I view the entire market as a chess match playing against this guy," said a person who is familiar with Mr. Iksil's positions and is trading against him. Carlyle nears road show for $8B IPO (NYP) A road show will start as early as next week for the initial public offering (IPO) of Carlyle Group that will value the private-equity firm at between $7.5 billion and $8 billion, according to a person familiar with the matter. Carlyle filed documents to the Securities and Exchange Commission earlier this month to sell a 10 percent stake. The offering is likely to generate as much as $800 million in proceeds, according to the person familiar with the matter. Germany Pays Record Low Yield (WSJ) "The modest demand is due to the historical low yields, where investors are very reluctant to buy long-dated German bonds at these low levels despite the fiscal slippage we see in Spain and the ongoing crisis in the periphery," said Jens Peter Sorensen, chief analyst at Danske Markets. But RBS analysts said poor bund auctions at these yield levels have never been a good predictor for future demand, and thus it recommended not to "overly" focus on the sale to gauge demand for bunds. Weighing SEC's Crackdown on Fraud (WSJ) SEC enforcement chief Robert Khuzami said the current total of 101 cases shows the agency is "highly effective in tackling financial-crisis wrongdoing." Of the 74 cases filed against individuals so far, the SEC went after 55 chief executives, finance chiefs or other top officers. In an interview, Mr. Khuzami said the number is "significant" and "sends a strong deterrent message." Meredith Whitney Muni Call Was 100% Wrong: Bond Pro (CNBC) High-grade municipal bonds remain a solid investment despite their sometimes-battered public image, according to fixed income expert Alexandra Lebenthal. "I have come up with a new measure of risk, which is knowledge risk," said the president and CEO of Lebenthal and Co. "Is the person who is talking about municipal bonds, corporate bonds, equities, what have you, knowledgeable and should people be listening to them?" "Yes, I have an axe to grind," continued Lebenthal, whose father, James, is one of the more prominent names in the bond business. "I am in the municipal bond business, I'm also in the wealth management business and trying to do the best for clients. But I do know what I'm talking about because I have spent over 20 years in this business and another 20 growing up listening to it." Facebook deal ‘surprised’ bankers (NYP) “People are wondering if [Facebook] couldn’t have waited until after the IPO [to purchase Instagram],” said one source, who declined to be identified. Although Facebook is still awaiting IPO clearance from regulators, underwriters led by Morgan Stanley are hoping to launch the company’s share sale next month, possibly the week of May 14. Bankers plan to start the investor marketing campaign, known as a “road show,” about two weeks prior its launch. Zuckerberg held discrete talks with Instagram’s founders and managed to keep underwriters in the dark about the sale until late in the process, sources said. Critics of the controversial deal say Facebook’s timing for the acquisition is questionable, while supporters argue that the Instagram purchase enhances Facebook’s platform and stymies rivals. Investors run scared of Spain's battered banks (Reuters) "Most are currently on liquidity life support from the ECB but asset quality continues to deteriorate as house prices keep falling and unemployment is still rising," said Georg Grodzki, head of credit research at Legal & General Investment Management. "Their funding remains constrained and competition for deposits intense," he told Reuters. Economy Minister Luis De Guindos told Reuters last week that all Spanish banks had met capital requirements set by the European Banking Authority under a 115-billion-euro recapitalization plan decided by European Union leaders in December. But fund managers remain skeptical due to the slow-burning property crash. They include Mark Glazener, head of global equities at Dutch asset manager Robeco, who sold off his exposure to Spain at the end of last year. "Given the scale of over-building over all these years, the present provisioning that the banks have made does not appear to be enough," he said. Zuckerberg Threatened to Disable Ceglia Site Amid Dispute (Bloomberg) Facebook cofounder Mark Zuckerberg threatened in 2004 to disable part of the website he was working on for Paul Ceglia, the New York man now suing him for part-ownership of the multibillion-dollar company, according to copies of e-mails filed by Facebook in federal court...“I must receive $5,000 by next Saturday at midnight, or the scroll search functionality will be removed from the site,” Zuckerberg wrote in a message to Ceglia on Feb. 21, 2004, about two weeks after he put “Thefacebook.com” online. Zuckerberg told Ceglia he owed him $10,500 of the $19,500 he’d been promised, according to the e-mails, filed by Facebook as part of the lawsuit in Buffalo, New York. Facebook last month asked the judge to throw out the lawsuit.

Opening Bell: 03.11.13

EU Chiefs Seeking to Stave Off Euro Crisis Turn to Cyprus (Bloomberg) European leaders grappling with political deadlock in Italy and spiraling unemployment in France will turn to a financial rescue for Cyprus in an effort to stave off a return of market turmoil over the debt crisis. European Union leaders will meet for a March 14-15 summit in Brussels to discuss terms for Cyprus, including the island nation’s debt sustainability and possibly imposing losses on depositors. That comes as Italy struggles to form a government after an inconclusive Feb. 24-25 election and as concern over the French economy mounts with unemployment at a 13-year high. Spain's Bailout Fund Said to Seek Help on Bank Strategy (WSJ) Spain's bank bailout fund is seeking to hire advisers to help shape a long-term strategy for dealing with its portfolio of nationalized lenders, a week after calling off an auction of one of the most troubled banks. People briefed about the plan said the fund, known by its Spanish acronym FROB, will make contact with strategic consultants, and possibly with investment banks, once the plan has been approved by the FROB's board of directors. Is There Life After Work? By Erin Callan (NYT) "I didn’t start out with the goal of devoting all of myself to my job. It crept in over time. Each year that went by, slight modifications became the new normal. First I spent a half-hour on Sunday organizing my e-mail, to-do list and calendar to make Monday morning easier. Then I was working a few hours on Sunday, then all day. My boundaries slipped away until work was all that was left...I have often wondered whether I would have been asked to be C.F.O. if I had not worked the way that I did. Until recently, I thought my singular focus on my career was the most powerful ingredient in my success. But I am beginning to realize that I sold myself short. I was talented, intelligent and energetic. It didn’t have to be so extreme. Besides, there were diminishing returns to that kind of labor. I didn’t have to be on my BlackBerry from my first moment in the morning to my last moment at night. I didn’t have to eat the majority of my meals at my desk. I didn’t have to fly overnight to a meeting in Europe on my birthday. I now believe that I could have made it to a similar place with at least some better version of a personal life. Not without sacrifice — I don’t think I could have “had it all” — but with somewhat more harmony. I have also wondered where I would be today if Lehman Brothers hadn’t collapsed. In 2007, I did start to have my doubts about the way I was living my life. Or not really living it. But I felt locked in to my career. I had just been asked to be C.F.O. I had a responsibility. Without the crisis, I may never have been strong enough to step away. Perhaps I needed what felt at the time like some of the worst experiences in my life to come to a place where I could be grateful for the life I had. I had to learn to begin to appreciate what was left. At the end of the day, that is the best guidance I can give. Whatever valuable advice I have about managing a career, I am only now learning how to manage a life." Paper Trail Goes Cold in Case Against S&P (Reuters) In early 2007, as signs of distress began appearing in securities backed by residential mortgages, executives at Standard & Poor's began advising analysts responsible for rating mortgage bonds that they should put the phrase "privileged and confidential" on emails to one another. Analysts working for the McGraw Hill Cos division also were discouraged from doodling on notepads and official documents during meetings to discuss pending deals and existing ratings, several former S&P employees said. That was not the first time S&P had tried to caution employees about paper trails. In 2005, a full two years before the housing market began to melt down, several top S&P managers attended an off-site meeting at hotel in Old Saybrook, Connecticut, to discuss ways to increase the fees it collected from Wall Street banks for rating mortgage bonds. A former S&P executive said that after the meeting, employees were instructed to discard any notes they had taken from the meeting. InTrade Shuts Down (WSJ) InTrade, the Ireland-based website that allows users to place wagers on non-sports-related upcoming events, announced on Sunday that it is shutting its site down. In an official statement, the company does not go into great detail as to why it is closing its doors, only that it is related to “financial irregularities which, in accordance with Irish law,” require InTrade to cease operations until resolved. “At this time and until further notice, it is not possible to make any payments to members in accordance with their settled account balance until the investigations have concluded,” the company said. Commodities Squeeze Banks (WSJ) The sharp fall in commodity revenue has already claimed some victims. UBS AG, the Swiss bank that has been under pressure to cut costs and improve its performance, last year closed all its commodities-trading desks aside from those dealing in precious metals. Goldman, UBS, Deutsche Bank, and Barclays have all suffered departures of senior commodity traders to hedge funds and independent trading companies over the last several months. Average staffing in commodities trading declined 5.9% last year at major banks, according to Coalition. Artist Teaches George W. Bush How To Paint (Fox5) An artist in Cumming, GA spent a month teaching former President George W. Bush how to paint. Bonnie Flood said that President Bush has a passion for painting and shows real potential as an artists. "He started off painting dogs. I think he said he painted 50 dogs," Flood said. "He pulled out this canvas and started painting dogs and I thought, 'Oh my God, I don't paint dogs!" Flood, who does most of paintings at her home in Cumming, occasionally conducts workshops in Florida. That's where the former President heard about her. The next thing she knew, she was packing up her paints to spend a month in Boca Grande with President Bush. She said that she spent about six hours a day with the President, mixing paints and teaching him proper brush strokes. She says she wasn't intimidated but admits she really didn't know what to call him until she found the magic number. "I called him '43' because that's the way he signed his paintings. "When I really wanted him to do something, I would say, 'Mr. President you know that you don't do it that way.'" She says the President learned quickly and soon started painting fewer dogs and more landscapes. "He has such a passion for painting, it's amazing," Flood said. "He's going to go down in the history books as a great artist." Hostess Creditor, Private-Equity Firms Show Interest in Twinkies Brand (Reuters) Hostess Brands creditor Silver Point Capital and hedge fund Hurst Capital have expressed interest in buying Hostess's snack cake brands, including Twinkies, the New York Post reported. Paulson Said to Explore Puerto Rico as Home With Low Tax (Bloomberg) John Paulson, a lifelong New Yorker, is exploring a move to Puerto Rico, where a new law would eliminate taxes on gains from the $9.5 billion he has invested in his own hedge funds, according to four people who have spoken to him about a possible relocation. More US Profits Parked Abroad (WSJ) A Wall Street Journal analysis of 60 big U.S. companies found that, together, they parked a total of $166 billion offshore last year. That shielded more than 40% of their annual profits from U.S. taxes, though it left the money off-limits for paying dividends, buying back shares or making investments in the U.S. The 60 companies were chosen for the analysis because each of them had held at least $5 billion offshore in 2011. Twitter, Social Media Are Fertile Ground For Stock Hoaxes (Reuters) "Twitter pump and dump schemes are obviously something for the market to be concerned about, even if they are just a new way for people to do schemes that have been done forever," said Keith McCullough, chief executive officer at Hedgeye Risk Management in New Haven, Connecticut. He uses Twitter and has more than 22,000 followers. In such hoaxes, anonymous users set up accounts with names that sound like prominent market players, issue negative commentary, and spark massive declines. The selling that follows shows how the rapid spread of information on social media can make for volatile trading, and is a warning to investors who trade on news before fully verifying the source. SEC: Goldman Cannot Ignore Proposal to Split Chairman, CEO Roles (Reuters) SEC staff sent a letter to Goldman internal counsel Beverly O'Toole this week, saying the agency is "unable to concur" with Goldman's view that the shareholder proposal does not warrant a vote. El Paso Sheriff's deputies arrest 2 ice cream men for possession of pot (EPT) Saturday afternoon, Sheriff's deputies spotted a purple ice cream truck with a cracked windshield and an expired registration sticker along the 8600 block of Alameda. During the traffic stop, one of the occupants left the vehicle and led deputies on a brief foot pursuit before being caught. Two tupperware bowls containing a green leafy substance, believed to be marijuana, was found on the man, who was identified as 19-year-old Elijah Sanchez. The second occupant, identified as 29-year-old Anthony Arellano, was also charged with possession of marijuana after deputies found marijuana inside the vehicle. Arellano has been arrested in the past for numerous felony charges and a previous possession of marijuana charge in 2006, deputies said.

Opening Bell: 01.09.13

UBS Says Cleaning Up Its Act After Libor 'Shocker' (Reuters) UBS has yet to fully purge itself of a global interest rate scandal that has cost the Swiss bank its reputation and put it at risk of a wave of costly civil suits, its investment banking chief said on Wednesday. The once-venerable institution was fined a record $1.5 billion last month for manipulating Libor interest rates, the latest in a string of scandals including a $2.3 billion rogue trading loss and a damaging tax avoidance row with the United States. "We are very focused on recovering the honor and standing the organisation had in the past," Andrea Orcel told Britain's Parliamentary Commission on Banking Standards, set up in the aftermath of the Libor scandal. "I am convinced that we have made a lot of progress. I am also convinced that we still need to do more." [...] Committee member Justin Welby, the incoming Archbishop of Canterbury, asked Orcel if he was the right man to turn UBS around. "I feel I have a high level of integrity," the banker said. Orcel said that UBS was working at simplifying the investment banking business to make it less risky and prone to scandal. The committee, a cross-party panel of lawmakers headed by Conservative MP Andrew Tyrie, is switching its focus to standards and culture after spending most of the past three months assessing structural reform. Tyrie on Wednesday described the Libor rigging as "a shocker of enormous proportions". Button-Down Central Bank Bets It All (WSJ) Switzerland, for decades a paragon of safety in finance, is engaged in a high-risk strategy to protect its export-driven economy, literally betting the bank in a fight to contain the prices of Swiss products sold abroad. The nation's central bank is printing and selling as many Swiss francs as needed to keep its currency from climbing against the euro, wagering an amount approaching Switzerland's total national output, and, in the process, turning from button-down conservative to the globe's biggest risk-taker. JPMorgan Overhaul Widens (WSJ) The shift of Mr. Maclin and the departure of Mr. Staley, who once was seen as a top candidate to succeed James Dimon as chief executive, are the latest steps in a drastic reshaping of J.P. Morgan's executive suite. Many of the new leaders—a group that includes corporate and investment-bank co-heads Mike Cavanagh and Daniel Pinto, co-chief operating officer Matthew Zames and Chief Financial Officer Marianne Lake—are in their 40s. Mr. Cavanagh and Mr. Zames, who were asked last May to unwind a series of botched bets placed by a trader in the bank's Chief Investment Office known as the "London whale," are viewed as front runners for the top job, said people close to the bank. Ackman Braces for Legal Battle Over Herbalife (FBN) If filed, the lawsuit could involve alleged “tortuous interference,” implying Ackman intentionally damaged Herbalife’s business relationships, people close to Ackman said. On Tuesday, a large Herbalife distributor said he was leaving the company and called on other distributors to join him amid the controversy. In a sign of the importance of its distribution channels, Herbalife says in regulatory filings its relationship with and ability to influence distributors are items that can “materially” affect its financial condition. As of late Tuesday, people with knowledge of the matter said no decision on timing or even if a lawsuit will actually be filed had been made. The company has told FOX Business it is weighing legal action against Ackman. Ackman declined to comment on the matter. Herbalife has hired famed attorney David Boies to launch possible litigation against Ackman as well as the investment bank Moelis & Co., as its financial adviser. Goldman Will Report Fund Values Each Day (WSJ) In a reversal of industry practice, Goldman Sachs Group will begin disclosing the values of its money-market mutual funds daily rather than monthly, according to people familiar with the company's plans. Some of the changes will take effect as early as Wednesday...According to people familiar with Goldman's thinking, the company is beefing up its disclosures to satisfy investors' calls for greater transparency on fluctuations in the price of their investments. Brazil prostitutes to learn English ahead of World Cup (AP) Prostitutes in one of Brazil's biggest cities are beginning to sign up for free English classes ahead of this year's Confederations Cup and the 2014 World Cup. The president of the Association of Prostitutes of the city of Belo Horizonte says by telephone that 20 have already signed up for the courses and she expects at least 300 of the group's 4,000 members to follow suit. The association is organizing the classes and seeking volunteer teachers. Prostitution is legal in Brazil. Belo Horizonte will host six World Cup matches and Vieira said Tuesday "it will be important for the girls will be able to use English to let their clients know what they are charging and learn about what turns them on." AIG Cites Duty to Weigh Suing U.S. as Lawmaker Criticism Mounts (Bloomberg, related) American International Group said it has a duty to weigh joining a suit by former Chief Executive Officer Maurice “Hank” Greenberg that claims the insurer’s 2008 U.S. bailout was unconstitutional. “The board of directors has fiduciary and legal obligations to the company and its shareholders to consider the demand served on us,” CEO Robert Benmosche said yesterday in a statement. The board is scheduled to meet today to hear arguments from representatives of Greenberg and the U.S. Lawmakers including Senators Elizabeth Warren and Robert Menendez and Representative Peter Welch said New York-based AIG shouldn’t join the suit. “Taxpayers are still furious that they rescued a company whose own conduct brought it down,” Welch said in a letter to AIG Chairman Steve Miller. “Don’t rub salt in the wounds with yet another reckless decision.” Vow of New Light For 'Dark' Trades (WSJ) Richard Ketchum, chief executive of the Financial Industry Regulatory Authority, said in an interview Tuesday that the regulator is expanding its oversight of the dark-trading venues, with an eye on whether orders placed in public exchanges are "trying to move prices or encourage sellers that may advance their trading in the dark market." The regulator also is boosting its surveillance of high-speed trading and is increasingly looking at rapid-fire trading across exchanges, he said. "You're going to see more [focus] in those areas in 2013," Mr. Ketchum said. Goldman, Morgan Stanley to Settle on Foreclosures (Reuters) Goldman Sachs and Morgan Stanley are among a group of banks expected to agree as soon as this week to a $1.5 billion settlement with federal regulators over botched foreclosure claims, two sources familiar with the matter said on Tuesday. The accord would come on the heels of a separate $8.5 billion settlement announced on Monday with 10 bigger mortgage servicers, including Bank of America, Citigroup, JPMorgan Chase, Wells Fargo...Goldman and Morgan Stanley's respective roles in the settlement stems from mortgage-servicing businesses that the two investment banks purchased in the run-up to the subprime mortgage crisis, and have since sold. Goldman had owned Litton Loan Servicing and Morgan Stanley owned Saxon Capital. Taco Bell responds to teen's request for a custom Speedo (LI) The week before Christmas, 15-year-old Ryan Klarner posted on Taco Bell’s Facebook page, introducing himself with a rundown of his swimming and diving achievements before making an offbeat request. “[I]s there any way you guys could make me a customized Speedo that says think outside the buns on the back of it? If you did, that would mean the world to me,” the Illinois teen asked...Klarner said he first came up with the idea a couple of years earlier and decided last month to go ahead and ask, even though he never had asked a company on Facebook for anything before. “I did not expect it to blow up as much as it has. I didn’t really expect to get the Speedo out of it, either,” he said. But last Wednesday, the social media team at Taco Bell wrote back. “What size do you wear? And what’s your address?” “He really wanted something and he went after it,” Tressie Lieberman, director of digital and social engagement, said. When we think people are really extraordinary...then we want to reward them.”

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."

Opening Bell: 12.04.12

Banks Rediscover Money Management Again As Trading Declines (Bloomberg) Global banks, forced by regulators to reduce their dependence on profits from high-risk trading, have rediscovered the appeal of the mundane business of managing money for clients. Deutsche Bank is now counting on the fund unit it failed to sell to help boost return on equity, a measure of profitability. UBS is paring investment banking as it focuses on overseeing assets for wealthy clients. Goldman Sachs, JPMorgan Chase and Wells Fargo, three of the five biggest U.S. banks, are considering expanding asset- management divisions as they seek to grab market share from fund companies such as Fidelity Investments. “Asset management is a terrific business,” said Ralph Schlosstein, chief executive officer of Evercore Partners Inc., a New York-based boutique investment bank that last month agreed to buy wealth manager Mt. Eden Investment Advisors LLC. “Asset managers earn fees consistently without risking capital. Compare that to other businesses in the financial services.” Hedge Funds Win as Europe Will Pay More for Greek Bonds (Bloomberg) Hedge funds drove up prices for Greek sovereign debt last week after determining that European finance ministers would back off a pledge to pay no more than about 28 percent of face value to retire the nation’s bonds. Money managers correctly wagered that not enough bondholders would participate at that level to get the deal done. That would put at risk bailout funds that Greece needs to stave off economic collapse. Transactions involving Greek bonds “increased by the day” after it became clear that the buyback was going to happen, with hedge funds accounting for most of the purchases, said Zoeb Sachee, the London-based head of European government bond trading at Citigroup Inc. “If all goes according to plan, everybody wins,” Sachee said. “Hedge funds must have bought lower than here. If it isn’t successful, Greece risks default and everybody loses.” GE's Swiss lending unit for sale, UBS to bid (Reuters) General Electric Co wants to sell its Swiss consumer lending business, two sources familiar with the matter said, with UBS one of the parties interested in a deal that could be worth up to 1.5 billion Swiss francs ($1.62 billion). The sources told Reuters that UBS was one of at least two parties who plan to submit bids in an auction process. "GE wants to finalize the sale of GE Money Bank by the end of the first quarter," said one of the sources. Brian Moynihan: 'Fiscal Cliff' Repercussions Could Stretch in 2014 (CNBC) "I'm more concerned about business behavior slowing down than I am about consumer behavior," Moynihan told "Squawk Box." "I think we're in danger if this thing strings out into 2013 that you could start to have problems of what 2014 would look like." Icahn Fails In Oshkosh Tender Offer (WSJ) The activist investor was tendered only a meek 22% of shares in an offer he used essentially as a proxy for whether shareholders would support his board nominees. Icahn, who had pledged to drop the offer and his proxy fight if he didn’t receive at least 25% of shares tendered, says he is indeed dropping the tender offer. Ex-baseball star Lenny Dykstra sentenced in bankruptcy fraud case (Reuters) Lenny Dykstra, the 1980s World Series hero who pleaded guilty earlier this year to bankruptcy fraud, was sentenced on Monday to six months in federal prison and ordered to perform 500 hours of community service. The 49-year-old former ballplayer - who is already serving time in state prison for grand theft auto, lewd conduct and assault with a deadly weapon - was also ordered to pay $200,000 in restitution. In the federal case, Dykstra pleaded guilty in July to bankruptcy fraud and other charges. According to the written plea agreement, he admitted defrauding his creditors by declaring bankruptcy in 2009, then stealing or destroying furnishings, baseball memorabilia and other property from his $18.5 million mansion. Teacher disciplined for receiving foot massages from students (SLT) A Taylorsville Elementary School teacher has returned to his third-grade classroom after being disciplined for violating professional standards after students reported they scratched his back, rubbed his feet and had other inappropriate contact while at school. Granite School District officials found no criminal conduct by elementary teacher Bryan Watts, 53, who has worked at the school since 2004, but the district claims to have taken "appropriate disciplinary action" following complaints about Watts...Granite District police Detective Randall Porter started an investigation into Watts’ conduct Oct. 9 after a mother expressed concern to the district after her daughter reported odd classroom behavior by Watts. "She complained that her daughter [name redacted] told her that Watts asks students to rub his feet and back during ‘movie time,’ that Watts told the class that they should not tell their parents about activities that happen in the classroom, and that Watts scared a student by hitting a hammer on the student’s desk," Porter wrote in his 19-page report...officials also said there were student statements about odd activities, including playing dodgeball in Watts’ classroom. Knight Capital May Go It Alone (NYP) Knight Capital’s board emerged from another meeting yesterday to review dueling takeover offers without making a decision. Both Getco and Virtu Financial have made bids for the Jersey City, NJ-based Knight, which had to be bailed out several months ago after a $460 million trading glitch nearly tanked the firm. “[Knight] can still decide to remain independent. That’s a real possibility,” said one source familiar with the bidding process. Top US Firms Are Cash-Rich Abroad, Cash-Poor At Home (WSJ) With billions of dollars overseas that may never come back, the Securities and Exchange Commission is concerned that companies haven't been presenting investors with an honest appraisal of their liquidity. As a result, regulators are pressing companies to more clearly lay out how much of their cash is in the U.S. and how much is overseas and potentially encumbered by U.S. taxes. UBS Near Libor Deal (Reuters) UBS is nearing a deal to settle claims some of its staff manipulated interest rates, and could reach agreement with US and British authorities by the end of the year, a source said yesterday. Britain’s Barclays was fined $453 million in June for manipulating Libor benchmark interest rates, and remains the only bank to settle in the investigation, which led to the resignation of the bank’s chairman and CEO. Calpers Crusader Takes Aim At Fees (WSJ) Mr. Desrochers, a 65-year-old native of Canada who last year became head of private-equity investing for the California Public Employees' Retirement System, has told buyout funds to reduce fees if they want cash from the $241 billion pension goliath, one of the nation's largest private-equity investors. He has pushed for Calpers to pay management fees below the industry's standard of 1% or more and asked for performance fees below the usual 15% to 20% of gains, according to people who have dealt with him. Mike Tyson: Brad Pitt Had Sex With My Wife (NYP) Mike Tyson claims that he caught Pitt having sex with his ex-wife, Robin Givens, while they were in the middle of their divorce in the late eighties. Tyson, who was shortly married to Givens from 1988 to 1989, said he and the actress were still sleeping with each other during their separation. "I was getting a divorce, but... every day, before I would go to my lawyer's office to say 'she's a pig and stealing,' I would go to her house to have sex with her," Tyson said on the Yahoo! Sports show “In Depth with Graham Bensinger.” "This particular day, someone beat me to the punch. And I guess Brad got there earlier than I did." How did the heavyweight boxer react? "I was mad as hell...You should have saw his face when he saw me," Tyson said.

Opening Bell: 04.12.12

Buffett Feasts On Goldman Scraps (WSJ) Details of one trade in particular have recently caused a stir in the market. In November, Goldman sold about $85 million of loans in troubled newspaper publisher Lee Enterprises Goldman sold the debt at about 65 cents on the dollar, having bought it months before at around 80 cents, resulting in a loss of at least $13 million. The buyer: a unit of Warren Buffett's Berkshire Hathaway Inc., according to several people familiar with the matter. Mr. Buffett has since made a tidy paper profit on the loans, which are now worth about 82 cents on the dollar, the people said. Jim Chanos: Chinese Banks ‘Great Shorts,’ Won’t Be Broken Up (CNBC) Chanos, the head of Kynikos Associates, has been betting against China — despite its role as a global economic leader — primarily because he believes the country is overbuilt and does not have the internal demand to support its ambitious growth plans. Nowhere has that trend been more apparent than in the banking system. "If you looked at the performance of the banks over the last two years...they have been great shorts," Chanos said. "They have been going down — they're down 30 percent over the last two years." George Soros: Exceptional Measures Needed to Save EU (FT) "Other countries have gone through similar experiences. Latin American countries suffered a lost decade after 1982, and Japan has been stagnating for a quarter of a century; both have survived. But the European Union is not a country and it is unlikely to survive. The deflationary debt trap threatens to destroy a still-incomplete political union," he wrote. Blackstone President To Raise For Obama (Morning Money) "Tony James, the president of Blackstone Group LP, has agreed to hold a fundraiser for... Obama’s re-election campaign, according to two people familiar...By agreeing to raise money for Obama, James has diversified Blackstone’s political bets for the November election. Blackstone Chairman Stephen Schwarzman has been raising money for former Massachusetts governor Mitt Romney, the likely Republican nominee." SEC, Goldman to Settle Research Case (Reuters) U.S. securities regulators are preparing to announce that Goldman Sachs will pay $22 million to settle allegations the bank did not have adequate policies to prevent research from being passed inappropriately to preferred clients, people familiar with the matter said on Wednesday. BlackRock's Street Shortcut (WSJ) BlackRock is planning to launch a trading platform this year that would let the world's largest money manager and its peers bypass Wall Street and trade bonds directly with one another. The electronic trading hub has the potential to reduce a lucrative revenue stream for investment banks at a time when their businesses are being squeezed by lackluster markets and new regulations put in place to curb risk in the aftermath of the financial crisis. The trading platform would be run by the New York-based company's BlackRock Solutions arm and offer 46 clients—including sovereign-wealth funds, insurance companies and other money managers—the ability to trade in corporate bonds, mortgage securities and other assets, company executives say. Under the plan, the platform would seek to match buyers and sellers of the same securities, in a process known as "crossing trades." BlackRock Solutions would charge a small fee for the service that would be much lower than Wall Street's trading commissions. New Yorker breaks up subway scuffle, snacks in hand (NYDN) Sonder, 24, played the role of hungry hero “two or three Thursdays ago” after hopping on an uptown 6 train at Spring St. The calm inside the subway car was shattered a minute later when a tussle broke out between a man and a woman. “I turned around and I saw these two kicking each other pretty viciously,” said the sturdy Sonder, who stands six-feet tall and weighs 200 pounds. “I stepped over and tried to see if I could help.” Mid Pringle, Sonder thrust himself between the pugilists. More chips were eaten, but no other punches or kicks were thrown. “I just got caught up in the moment,” said Sonder, who was also holding a bag of gummy bears during the incident. Dimon Vows Fight Moynihan Lost Over Claims From Mortgages (Bloomberg) “We are going to fight repurchase claims that pretend the steep decline in home prices and unprecedented market conditions had no impact on loan performance,” Dimon, chief executive officer of the New York-based lender, wrote in the April 4 letter. He’ll also oppose “securities claims brought by sophisticated investors who understood and accepted the risks.” Jobless Claims Post Jump; PPI Up, Trade Deficit Down (Reuters) Initial claims for state unemployment benefits increased 13,000 to a seasonally adjusted 380,000, the Labor Department said on Thursday. The prior week's figure was revised up to 367,000 from the previously reported 357,000. Fur Flies in High-Stakes Airlifts of Animals by Lufthansa (Bloomberg) An African white rhinoceros peers through the bars of its Frankfurt compound, while across the floor a Madagascan chameleon inches around its vivarium and an Andean alpaca plucks hay from a bale. It’s not a scene from the city’s zoo but from Deutsche Lufthansa AG’s Animal Lounge, a state-of-the-art complex that’s at the center of the German carrier’s plans to dominate the most specialized part of the $66 billion air-cargo industry. Lufthansa, Air France-KLM Group and Dubai-based Emirates, which transports thoroughbreds for Sheikh Mohammed bin Rashid Al Maktoum, horseracing’s leading owner, are competing in a high- stakes market. Premium profit margins come with the risk of an in-flight death involving a beloved family pet, top-ranked stallion or priceless panda. “It’s not like pharmaceuticals, where your main concern is the temperature,” said Animal Lounge Director Axel Heitmann. “If a bag of fish leaks it needs replacing with the right kind of water and the right oxygen. And if something goes wrong you can’t just hand a customer $1,000 and tell him to buy another pet. He wants the dog or cat he’s had for 10 years.” KKR Invests in China Cord Blood (WSJ) Kohlberg Kravis Roberts & Co. L.P. will invest $65 million into China Cord Blood Corp., the country's largest operator of services for umbilical cord blood that is rich in stem cells, to capitalize on China's fast growing healthcare services industry. Police: Dealer tied 89 bags to penis, peed at the station (Philly) Police Corporal Christopher Eiserman said another officer was on routine patrol Friday when he pulled Ray Woods over for a broken rear light and found marijuana in his car. When the officer searched Woods before placing him in the police cruiser, he discovered "a large bulge" in the front of his pants, Eiserman said. Police say Woods actually had the balls to deny that there was any contraband down there. “He stopped him for the traffic violation and one thing led to another," Eiserman said. Back at the station, Eiserman said, police discovered that Woods had tied a large plastic bag around his penis that contained a whopping 89 small bags of suspected heroin and cocaine. Then things got messy. “I tried to remove it. Unfortunately, and I don't know if it was nervousness or not, but he started urinating all over," Eiserman said. While it wasn't exactly what Eiserman had in mind when he started his shift Friday, he couldn't help but chuckle at the ingenuity, or lack thereof, of street-level drug dealers. “In 14 years, I’ve seen it down their pants, in their a--, but I've never seen it tied to their penis," he said.