Opening Bell: 10.26.12

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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.

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US Probes Gold Pricing (WSJ) The Commodity Futures Trading Commission is examining the setting of prices in London, in which a handful of banks meet twice daily and set the spot price for a troy ounce of physical gold, the people said. The CFTC is looking at issues including whether the setting of prices for gold—and the smaller silver market—is transparent. No formal investigation has been opened, the people said. US And UK Tussle Over Trader (WSJ) Officials in the U.S. Justice Department and the U.K. Serious Fraud Office clashed late last year in their mutual pursuit of Tom Hayes, the former UBS trader who is viewed by prosecutors in both countries as a ringleader of banks' attempts to rig the London interbank offered rate, or Libor, these people said. While jurisdictional disputes among law enforcement agencies aren't unusual, some U.S. officials worry that the friction on this case will jeopardize trans-Atlantic cooperation on future financial-fraud investigations. The spat revolves around a sequence of events that played out in rapid succession last December. The trouble began, the people said, when the U.K. government unexpectedly blocked a Justice Department request to interview Mr. Hayes, who is British and lives outside London. Then, without notifying the U.S., British fraud prosecutors on Dec. 11 arrested Mr. Hayes and two others in connection with their own probe—infuriating American officials, according to people familiar with the U.S. investigation. The U.S. prosecutors punched back the next day by filing sealed criminal fraud charges against Mr. Hayes. Banks Bow To New York On Clawbacks (WSJ) Three more top banks, including Citigroup, will broaden their clawback policies to cover more executives, increase disclosures or add potential triggers. The moves increase to six the number of leading financial companies that have bowed to pressure from the New York City's Comptroller's Office. Lehman Judge Allows 'London Whale' Subpoena in JP Morgan Fight (Dow Jones) A judge on Wednesday said Lehman Brothers Holdings Inc. creditors can subpoena Bruno Iksil in its lawsuit against J.P. Morgan, ensuring the phrase "London Whale" will stay in the lexicon for at least a bit longer. Judge James Peck of U.S. Bankruptcy Court in Manhattan said Mr. Iksil, who is in France, can be questioned over the alleged mismarking of $273.3 million in derivatives when he worked at J.P. Morgan in the days leading up to Lehman's bankruptcy. "I consider it inappropriate except for in a clear case of abuse to cut off discovery of a witness that has fingerprints all over a transaction," Judge Peck said. "And in this case, Mr. Iksil's fingerprints are on the $273.3 million transaction that took on some significance in the case." Lehman U.K. Wins $1 Billion Appeal on Hedging Contracts (Bloomberg) The ruling may result in London-based Lehman Brothers International Europe and its administrators PricewaterhouseCoopers LLP receiving an extra $1 billion, according to a written decision handed down this morning by Judge Mary Arden in the U.K. Court of Appeals. Jobless Claims Unexpectedly Fall as Labor Market Improves (Bloomberg) First-time jobless claims fell by 10,000 to 332,000 in the week ended March 9, the fewest since mid January, according to data today from the Labor Department in Washington. The median forecast of 49 economists surveyed by Bloomberg called for an increase to 350,000. The four-week average declined to a five- year low. JPMorgan exec sued over 'bullying' behavior (NYP) Plaintiff Walter Suarez, a former financial adviser, was banished to the company’s Delancey Street outpost when he complained about colleague Michael Quach, and the move cost Suarez an $80 million client list, $20 million of which was taken by JPMorgan, his lawyers claim. According to Suarez, Quach was a bully who resorted to physical violence to intimidate colleagues. Suarez, who is Hispanic, says Quach, an Asian-American, got away with the behavior because bosses preferred Asian employees. “Eventually, it got to the point of being ridiculous. This isn’t the corner bodega,” Suarez told The Post. “We’re investment people. This is a professional setting. That’s when I spoke up. “He just wasn’t a very professional person from the get-go, and I don’t think that I was the only person who felt that way.” Suarez told superiors that Quach had manhandled several staffers, including one woman who was “physically assaulted during working hours on the banking floor,” according to the lawsuit filed in Manhattan Supreme Court by attorneys Matthew Blit and Amanda Gudis. Suarez said Quach even threatened to punch him out in front of clients. 'Canada's Warren Buffett' Interested in Greece's Top Bank (Reuters) Greece's biggest lender, National Bank (NBG), said on Wednesday that Canadian investment fund Fairfax Holdings was interested in acquiring a stake in it by taking part in a planned recapitalization. Under the terms of cash-strapped Greece's international bailout, its top four lenders must issue new shares by the end of April to replenish their capital after the losses they suffered in the debt crisis from bad loans and bond writedowns. The European Union and the International Monetary Fund have set aside 27.5 billion euros ($37 billion) in bailout funds to invest in the new bank shares. But private investors must buy at least 10 percent of them or the lenders will be nationalized. NBG said in a bourse filing that Fairfax was among other investors who had expressed an interest, without giving details. Fairfax is controlled by investment guru Prem Watsa, known as the "Warren Buffett of Canada." SandRidge Gives In, Settling Proxy Fight (WSJ) SandRidge Energy agreed to fire its chief executive or give control of its board to an activist shareholder, settling a closely watched proxy battle amid an outbreak of investor unrest in the oil patch. SandRidge, an oil-and-gas producer with a stock-market value of about $3 billion, immediately appointed four directors to its board who were nominated by hedge fund TPG-Axon Capital LP, which owns 7.3% of its shares. Bofa Battles Credit Suisse for 50% Markups on State Loans (Bloomberg) The firms are among at least five lenders in talks to loan five states at least $6.5 billion this year -- more than double last year’s total -- as local governments seek to chop debt costs by replacing loans from a 1997 federal bailout that average 14.4 percent in reais. Credit Suisse is lending Mato Grosso, an agricultural state in western Brazil, $1 billion for 15 years. The loan, with a rate equal to 11.2 percent in reais and guaranteed by Brazil if Mato Grosso defaults, compares with 7.35 percent for yields of similar-maturity government debt. Private Equity Could Trigger Another Crisis: Bank of England (CNBC) The amount of leverage in the U.K. corporate sector poses a risk to the stability of the financial system and could produce the next big financial crisis over the coming years, the U.K.'s central bank has warned. White Rock woman holds 'Lying Cheating Sale' to sell all her husband's stuff while he's 'gone with his floozie' (The Province) A scorned White Rock woman held a yard sale on the weekend to get rid of her husband's stuff while he was "gone with his floozie," according to a Craigslist ad. "Husband left us for a piece of trash, selling everything while he is gone this weekend with his floozie," read the text of the ad, which was posted early Friday afternoon to the free classifieds site. The Province dropped by the yard sale on Saturday and, sure enough, bargain-hunters were sifting through the goods which included office chairs, camping gear and other offerings. The lady in charge of the sale declined to speak on the record. Her colourful Craigslist ad, however, said she was selling everything and moving after 10 years of marriage. The featured items included his favourite red leather reclining theatre-seating sofas, and "lots of tools which he didn't have a clue how to use." "I want the house empty on Monday when he returns because that will be a shock for him to see. So come pick out what you would like Saturday and Sunday at 8 a.m. "Don't come too early (like he did) because I will be thoroughly enjoying some wine with my girlfriends this evening as we clean out all this stuff and likely be nursing hangovers in the morning. So please speak softly to the ladies wearing the sunglasses." The ad discouraged clothes-buyers, "as we will have already burned those in the driveway," but it did offer to let visitors see the pile of ashes.