Opening Bell: 10.26.12
Citi Chairman Is Said to Have Planned Chief’s Exit Over Months (NYT)
Vikram Pandit’s last day at Citigroup swung from celebratory to devastating in a matter of minutes. Having fielded congratulatory e-mails about the earnings report in the morning that suggested the bank was finally on more solid ground, Mr. Pandit strode into the office of the chairman at day’s end on Oct. 15 for what he considered just another of their frequent meetings on his calendar. Instead, Mr. Pandit, the chief executive of Citigroup, was told three news releases were ready. One stated that Mr. Pandit had resigned, effective immediately. Another that he would resign, effective at the end of the year. The third release stated Mr. Pandit had been fired without cause. The choice was his. The abrupt encounter, described by three people briefed on the conversation, included a terse comment by the chairman, Michael E. O’Neill: “The board has lost confidence in you.” A stunned Mr. Pandit chose to resign immediately. Even though Mr. Pandit and the board have publicly characterized his exit as his decision, interviews with people close to the board describe how the chairman maneuvered behind the scenes for months ahead of that day to force Mr. Pandit out and replace him with Michael L. Corbat, the board’s chosen successor. Once he became chairman this year, Mr. O’Neill, 66, meticulously built a case for the chief executive’s ouster, they say, first meeting privately with less-satisfied board members and then drawing in others until Mr. Pandit had virtually no allies left.
9 More Banks Subpoenaed Over Libor (WSJ)
The subpoenas, which were issued in August and September but haven't been previously reported, bring the total number of subpoenas in the case to 16. The banks involved in the probe include most members of the panel that helps set the dollar London interbank offered rate. The investigation by the state prosecutors is part of a global probe, in which more than a dozen federal and other regulators across three continents are looking into allegations that several banks rigged Libor. The nine banks that received subpoenas in August and September were: Bank of America, Bank of Tokyo Mitsubishi UFJ, Credit Suisse, Lloyds Banking Group, Rabobank Groep NV, Royal Bank of Canada, Société Générale, Norinchukin Bank and West LB AG, according to the person familiar with the investigation.
CEO Dead Pool (Bronte Capital)
The job is to pick CEOs of large companies (more points for larger companies) who will in the next 18 months either be sacked or forced to resign in disgrace. Extra points if the CEO had a fine reputation or if the company was very large. Double-points if you can predict the thing that causes the disgrace. [People who play this game get very interested in which CEOs are having affairs whilst espousing moral-conservative values...] This game is a way of telling which hedge-fund managers really know the companies and management they are invested in. For us it is work - but it has a nice non-monetary way of keeping score. It is highly equalizing between the lowly analyst and the big-name manager. (Some managers excuse their lack of specificity by complaining that there are just too many candidates...) This is a formal invite for suggestions/entries.
Credit Suisse Seeks To Run Exchange (WSJ)
Daniel Mathisson, Credit Suisse's U.S. stock-trading chief, has held preliminary talks with federal securities regulators and policy consultants, according to people involved in the discussions. Mr. Mathisson and other bank executives confirmed the talks. The Swiss bank's plan centers on a trading platform called Light Pool, started last year. Light Pool is small, handling just a fraction of 1% of average U.S. daily stock-trading volume.
Hedge Fund Boxers Bloodied Amid Bikini Models in Hong Kong (Bloomberg)
“It was just so quick,” said Danielle “Steely” Midalia after defeating Andrea “Glynn- sanity” Glynn in the only women’s bout at last night’s sixth annual Hedge Fund Fight Nite in Hong Kong. “You have no time to think, you just have to rely on your training and what your corner men tell you,” the creative manager at The Cat Street Gallery said, red-faced and covered with sweat just minutes after the bout that had bloodied her and her rival’s noses. “In some ways it was easier than training -- as they say, train hard, fight easy.” The pair, 12 other pugilists, and 600 guests were greeted by bikini-clad models and black-tie waiters bearing trays of beer and wine at the Indian Recreation Club in Happy Valley. Festivities opened when four women in hooded boxing robes stepped into the ring, stripped off to reveal red bikini tops and hot pants, and began a choreographed dance routine under multicolored strobe lights.
Lawyer Denounces Wiretaps In Appeal Of Galleon Case (Dealbook)
A lawyer for the former hedge fund manager Raj Rajaratnam asked a panel of federal appeals court judges on Thursday to set aside his conviction, arguing that the government had used deceptive methods to obtain permission to wiretap his cellphone. The lawyer, Patricia A. Millett, told the judges that the government’s application to a federal judge seeking authorization to secretly record Mr. Rajaratnam’s conversations had been riddled with problems. “You had cascading errors, paragraph after paragraph after paragraph,” she said, arguing before the United States Court of Appeals for the Second Circuit in Manhattan.
A tale of money, sex and power: The Ellen Pao and Buddy Fletcher affair (Fortune)
Amid this embarrassing turn of events for Fletcher, Pao dropped a bombshell that would introduce even more scrutiny into their family life. On May 10, three weeks after the judge ordered her husband to liquidate one of his funds, Pao filed her jaw-dropping lawsuit against Kleiner, which became public 12 days later. Salacious tidbits in Pao's complaint included her acknowledgment that she had "succumbed" to Ajit Nazre's sexual advances "on two or three occasions" and that Pao had knowledge of "another female junior partner" who had been harassed by Nazre. She also claimed that Book of Longing, given to her by Randy Komisar, a senior Kleiner partner, contained "many sexual drawings and poems with strong sexual content." In its response to Pao's allegations, Kleiner said she had "twisted facts and events" to make a harmless gift seem menacing.
Hang Up the Phone, Swaps Traders (WSJ)
Swaps trading is one the last bastions of Wall Street where brokers arrange deals over the phone. That clubby way of doing business could go the way of the rest of Wall Street, where trading takes place on computers, under a roughly 500-page draft set of rules designed to push the market away from the opaque world of over-the-counter, phone-based trading, into more transparent electronic venues. Swaps trading is one the last bastions of Wall Street where brokers arrange deals over the phone. That clubby way of doing business could go the way of the rest of Wall Street, where trading takes place on computers, under a roughly 500-page draft set of rules designed to push the market away from the opaque world of over-the-counter, phone-based trading, into more transparent electronic venues.
Court Returns Stolen Cash To Bank Robbers (ON)
An Austrian court has ordered a bank robber be given back £51,000 that he stole 19 years ago. Bank manager Otto Neuman stole £150,000 in cash as well as gold bars and gold coins from his own branch in 1993. After getting into financial difficulties, he recruited two accomplices to stage a fake robbery at the Erste Bank in Vienna's Doebling district. By the time police caught up with them, only £51,000 and the gold could be recovered. The rest of the money had gone. The gold went to the insurance company which had already paid the bank for its loss but the cash has been sitting at the Austrian Justice Ministry ever since. Neuman's lawyer, Herbert Eichenseder, confirmed he been recently been contacted by court officials and asked to help return the stolen money to his client. The bank felt it had no claim on the money because it had been compensated in full by its insurance company. And the insurers said they didn't want it as they had not lost out either. They stolen gold had increased in value so much that it covered all of the money paid to the bank. Mr Eichenseder said: "I really didn't believe what the court were telling me but I checked it and it was correct.
