Opening Bell: 03.18.13

Cypriot Outrage Over Tax Could Derail Euro-Area Bailout (Bloomberg) While demanding that the levy raise the targeted 5.8 billion euros ($7.6 billion), finance officials said easing the cost to smaller savers was up to Cyprus. A vote on the tax, needed to secure 10 billion euros in rescue loans, was delayed for a second day. Banks may not reopen tomorrow after a holiday today, state-run broadcaster CYBC reported. “If the government wants to change the structure of the solidarity levy for the banking sector, the government can decide as such,” European Central Bank Executive Board member Joerg Asmussen said today in Berlin. “What’s important is that the planned revenue of 5.8 billion euros remain.” Cyprus Can't Put 'Genie Back in the Bottle': O'Neill (CNBC) "I'm still trying to get my head around [it]," O'Neill said in a "Squawk Box" interview. He added that Cyprus won't be able to "put the Genie back in the bottle" despite whether or not the depositor hair-cut gets approval. "This is a biggie, in my opinion," O'Neill said. "I think my biggest concern with this is not whether or not this ultimately gets done, not that the idea that Cyprus would come up with something like this, but that the EU (European Union) would back it and go along these things." 'Wash Trades' Are Scrutinized (WSJ) U.S. regulators are investigating whether high-frequency traders are routinely distorting stock and futures markets by illegally acting as buyer and seller in the same transactions, according to people familiar with the probes. Such transactions, known as wash trades, are banned by U.S. law because they can feed false information into the market and be used to manipulate prices. Intentionally taking both sides of a trade can minimize financial risk for the trading firm while potentially creating a false impression of higher volume in the market. Anti-Euro Party Mobilizes In Germany (WSJ) A prominent group of anti-euro German economists and business leaders has formed a political party to challenge Germany's support for euro-zone bailouts, a move that could test the ruling center-right coalition's hold on conservative votes in the fall general election. With just six months until the election, the new party, which calls itself Alternative for Germany, is unlikely to gain enough traction to win seats in Parliament, analysts say. Yet even if the party comes in below the 5% threshold needed to win representation, it could still attract enough conservative votes to prevent a return of the current coalition government, a combination of Angela Merkel's Christian Democrats, their Bavarian sister party, and the pro-business Free Democrats. Woman Busted In Alleged Deer Head Heist (NWFDN) The story begins when a man and woman were evicted from their apartment on James Lee Boulevard and temporarily moved in with another woman, according to an arrest report. On Jan. 24 the couple argued with the woman and moved out, taking most of their belongings with them. They left behind two mounted deer heads the woman was storing in her motor home. Divided Views of SAC Capital Settlement (NYT) Inside SAC's Stamford, Conn., headquarters, the resolution of the civil actions — announced Friday by the Securities and Exchange Commission — was seen as a victory. In a statement, the fund, which neither admitted nor denied wrongdoing, called the settlements "a substantial step toward resolving all outstanding regulatory matters."...Friday's settlements — for $602 million and $14 million — were criticized by a number of rival hedge fund managers and securities lawyers as not tough enough. Despite the S.E.C.'s trumpeting the $602 million payment as the largest settlement of an insider trading case, critics said that the commission could have sought a harsher punishment. "While $616 million would normally be a massive penalty, for Cohen this is basically a drop in the bucket," said Bradley D. Simon, a criminal defense lawyer and former federal prosecutor in New York. "There is also no debarment or admission of wrongdoing." HSBC Set to Cut Thousands More Jobs (FT) HSBC is gearing up for thousands more job cuts, with Europe's biggest bank by market value set to outline the next stage in its strategic overhaul at an investor day in two months' time. "There is no fantastical new strategy out there," said one person familiar with the bank's planning. "But there's still huge potential to be more efficient." Number Of Cases Filed By SEC Slows (WSJ) The Securities and Exchange Commission is filing significantly fewer civil fraud cases this year, as its efforts to punish misconduct related to the financial crisis start to ebb. The agency is likely to fall short this fiscal year of its record-breaking number of enforcement actions in the previous two years, said people familiar with the matter. Road Rage on I-78: Shot Fired at Woman's Car (Patch) According to troopers: The victim, who troopers did not identify by name, encountered a silver-colored, compact, four-door SUV with New Jersey license plates that was traveling about 40mph in the left lane and swerving close to a tractor-trailer in the right lane. The 39-year-old Bethlehem woman blew her car horn at the compact silver SUV. The SUV driver responded by flipping her the middle finger, then taking off “at a high rate of speed.” The silver SUV then got into the right lane and slowed down. The Bethlehem woman continued driving east in the left lane and started to pass the silver SUV as they passed the Route 33 interchange. But as that happened, the woman heard a loud bang. The SUV then “sped off again at a high rate of speed.” The victim pulled over a short time later to call 911. Arriving troopers found a single bullet hole in the passenger side rear door. The victim was not injured.
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Cypriot Outrage Over Tax Could Derail Euro-Area Bailout (Bloomberg)
While demanding that the levy raise the targeted 5.8 billion euros ($7.6 billion), finance officials said easing the cost to smaller savers was up to Cyprus. A vote on the tax, needed to secure 10 billion euros in rescue loans, was delayed for a second day. Banks may not reopen tomorrow after a holiday today, state-run broadcaster CYBC reported. “If the government wants to change the structure of the solidarity levy for the banking sector, the government can decide as such,” European Central Bank Executive Board member Joerg Asmussen said today in Berlin. “What’s important is that the planned revenue of 5.8 billion euros remain.”

Cyprus Can't Put 'Genie Back in the Bottle': O'Neill (CNBC)
"I'm still trying to get my head around [it]," O'Neill said in a "Squawk Box" interview. He added that Cyprus won't be able to "put the Genie back in the bottle" despite whether or not the depositor hair-cut gets approval. "This is a biggie, in my opinion," O'Neill said. "I think my biggest concern with this is not whether or not this ultimately gets done, not that the idea that Cyprus would come up with something like this, but that the EU (European Union) would back it and go along these things."

'Wash Trades' Are Scrutinized (WSJ)
U.S. regulators are investigating whether high-frequency traders are routinely distorting stock and futures markets by illegally acting as buyer and seller in the same transactions, according to people familiar with the probes. Such transactions, known as wash trades, are banned by U.S. law because they can feed false information into the market and be used to manipulate prices. Intentionally taking both sides of a trade can minimize financial risk for the trading firm while potentially creating a false impression of higher volume in the market.

Anti-Euro Party Mobilizes In Germany (WSJ)
A prominent group of anti-euro German economists and business leaders has formed a political party to challenge Germany's support for euro-zone bailouts, a move that could test the ruling center-right coalition's hold on conservative votes in the fall general election. With just six months until the election, the new party, which calls itself Alternative for Germany, is unlikely to gain enough traction to win seats in Parliament, analysts say. Yet even if the party comes in below the 5% threshold needed to win representation, it could still attract enough conservative votes to prevent a return of the current coalition government, a combination of Angela Merkel's Christian Democrats, their Bavarian sister party, and the pro-business Free Democrats.

Woman Busted In Alleged Deer Head Heist (NWFDN)
The story begins when a man and woman were evicted from their apartment on James Lee Boulevard and temporarily moved in with another woman, according to an arrest report. On Jan. 24 the couple argued with the woman and moved out, taking most of their belongings with them. They left behind two mounted deer heads the woman was storing in her motor home.

Divided Views of SAC Capital Settlement (NYT)
Inside SAC's Stamford, Conn., headquarters, the resolution of the civil actions — announced Friday by the Securities and Exchange Commission — was seen as a victory. In a statement, the fund, which neither admitted nor denied wrongdoing, called the settlements "a substantial step toward resolving all outstanding regulatory matters."...Friday's settlements — for $602 million and $14 million — were criticized by a number of rival hedge fund managers and securities lawyers as not tough enough. Despite the S.E.C.'s trumpeting the $602 million payment as the largest settlement of an insider trading case, critics said that the commission could have sought a harsher punishment. "While $616 million would normally be a massive penalty, for Cohen this is basically a drop in the bucket," said Bradley D. Simon, a criminal defense lawyer and former federal prosecutor in New York. "There is also no debarment or admission of wrongdoing."

HSBC Set to Cut Thousands More Jobs (FT)
HSBC is gearing up for thousands more job cuts, with Europe's biggest bank by market value set to outline the next stage in its strategic overhaul at an investor day in two months' time. "There is no fantastical new strategy out there," said one person familiar with the bank's planning. "But there's still huge potential to be more efficient."

Number Of Cases Filed By SEC Slows (WSJ)
The Securities and Exchange Commission is filing significantly fewer civil fraud cases this year, as its efforts to punish misconduct related to the financial crisis start to ebb. The agency is likely to fall short this fiscal year of its record-breaking number of enforcement actions in the previous two years, said people familiar with the matter.

Road Rage on I-78: Shot Fired at Woman's Car (Patch)
According to troopers: The victim, who troopers did not identify by name, encountered a silver-colored, compact, four-door SUV with New Jersey license plates that was traveling about 40mph in the left lane and swerving close to a tractor-trailer in the right lane. The 39-year-old Bethlehem woman blew her car horn at the compact silver SUV. The SUV driver responded by flipping her the middle finger, then taking off “at a high rate of speed.” The silver SUV then got into the right lane and slowed down. The Bethlehem woman continued driving east in the left lane and started to pass the silver SUV as they passed the Route 33 interchange. But as that happened, the woman heard a loud bang. The SUV then “sped off again at a high rate of speed.” The victim pulled over a short time later to call 911. Arriving troopers found a single bullet hole in the passenger side rear door. The victim was not injured.

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Opening Bell: 03.27.13

Cyprus Sets Bank Restructuring (WSJ) Cyprus's central bank chief said Tuesday that large depositors at the island's biggest lender, Bank of Cyprus Pcl, could lose as much as 40% on their deposits. In a television interview later, the finance minister said large uninsured deposit holders at the second-biggest, Cyprus Popular Bank Pcl, might only see one-fifth of their money returned and could wait several years before being paid back. Central banker Panicos Demetriades said at a news conference that a special administrator would be appointed to oversee both the winding down of Cyprus Popular, also known as Laiki, and the merger of its healthy assets with Bank of Cyprus. Plans for the move prompted Bank of Cyprus Chairman Andreas Artemis to submit his resignation earlier in the day. UK Banks Facing Capital Shortfall (WSJ) U.K. banks must come up with £25 billion in fresh capital by the end of the year to start plugging an estimated £50 billion ($75.8 billion) capital shortfall across the sector, the Bank of England's Financial Policy Committee said Wednesday. Banks Looking At $100 Billion Legal Tab (WSJ) The largest U.S. banks—Citigroup, J.P. Morgan Chase & Co., Bank of America Corp. and Wells Fargo—together have paid $61.3 billion to settle credit-crisis and mortgage claims over the past three years, according to SNL Financial, Charlottesville, Va. Research firm Compass Point Research & Trading LLC estimates that U.S. banks will wind up owing a further $24.7 billion related to the repurchase of faulty mortgage loans. From Finance to Sex Therapy: London Bankers Escape (CNBC) Mike Lousada, an investment banker turned sex therapist, told CNBC that City workers should "follow their passion" and find an interest they could even develop into their own business. Having worked for two decades at Nomura, JP Morgan, Barclays and Societe Generale "amongst others," Lousada told CNBC that his change of career from banking to sexual healing was a life choice. "I felt my City career no longer had meaning for me and I wanted to pursue something which gave my life meaning and purpose. As I grew, emotionally, I realized how unfulfilled I felt and I knew that there was something else calling me which would be more fulfilling," he told CNBC. Called the "orgasm guru" among London's chattering classes, Lousada has built up a reputation as a talented sex therapist with a long waiting list of clients paying 300 pounds ($454) for a therapy session with him. Woman Attempts To Hide Tadpoles In Her Mouth At The Airport (UPI) When airport security found a bottle of liquid in the woman's carry-on luggage, they informed her that she'd either have to immediately drink or dispose of the liquid. The woman tipped back the small bottle and drank its contents, but security became suspicious when she refused to swallow. The woman eventually spit out was she was holding in her mouth: tadpoles. Lehman plans to distribute $14.2 billion to creditors (Reuters) The distribution includes about $9.4 billion to third-party creditors and affiliates, $4.4 billion among other debtors, and $370 million for newly-allowed claims. Berkshire Set To Get Big Goldman Stake (WSJ) The billionaire chief executive of Berkshire Hathaway accepted the stake in exchange for giving up his company's right to purchase a larger number of Goldman shares at a below-market price, according to terms of the deal announced Tuesday. The pact, worth about $1.5 billion after Tuesday's close, puts an exclamation point on the Omaha, Neb. company's financial-crisis lifeline to Goldman. Berkshire's realized and paper winnings on the 2008 preferred-stock investment now exceed $3 billion, making it one of Mr. Buffett's most lucrative bets in recent years. G4S Readies Guards as Cypriot Banks Prepare to Open (Reuters) The world's largest security firm, G4S, moves cash and will provide guards for Cypriot lenders including Bank of Cyprus and Cyprus Popular Bank, the two biggest, which are to be combined and see large depositors' accounts frozen under a bailout agreed at the weekend. Cypriot banks have been shut for more than a week while the government worked out the bailout and will stay closed until Thursday to prevent a run. Meanwhile, Cypriots have been queuing to withdraw cash from automatic teller machines, with limits at some shrinking down to 100 euros a day. John Arghyrou, managing director of the Cyprus business for G4S, said its 750 employees have been working through the night, going out to replenish cash machines with police guard. Licensing rules prevented the firm from bringing in extra staff to handle the unprecedented workload. Man charged with assault after roommate drew on him (WJLA) A 31-year-old Arlington man is in jail after he was accused of assaulting his roommate when he realized he had drawn male genitalia on him. The alleged assault happened at about 5:30 a.m. Saturday inside a home in the 3100 block of North 17th Street. The accused, James Denham Watson, woke up to find that his roommate drew on his face. Watson then allegedly assaulted his roommate, leaving him with serious, extensive injuries to the face. He was taken to Virginia Hospital Center to be treated for his injuries. The suspect was subsequently arrested and charged with malicious wounding. He's being held without bond. The drawing on Watson's face was still present when he was booked.

Opening Bell: 11.07.12

Obama Wins Re-Election With Romney Defeated In Key States (Bloomberg) Obama defeated Republican Mitt Romney, winning at least 303 electoral votes in yesterday’s election with 270 needed for the victory. With one state -- Florida -- yet to be decided, Romney had 206 electoral votes...Obama won the battleground states of Ohio, Virginia, Iowa, New Hampshire, Wisconsin, Nevada and Colorado. He also carried Pennsylvania, where Romney made an 11th-hour bid for support to try to derail the president’s drive for re-election. North Carolina was the only battleground Romney won. Romney Campaigns To The End (WSJ) Hours before Mitt Romney lost his six-year quest to win the presidency, he said he had prepared only one speech—a victory speech...Until the final hour, Mr. Romney and his aides expressed confidence that he would win. The candidate, who prefers data and metrics to chitchat, appeared to be caught off guard by the loss even though he trailed in polls in crucial battlegrounds such as Ohio. Triumph Of The Nerds: Nate Silver Wins In 50 States (Mashable) The Fivethirtyeight.com analyst, despite being pilloried by the pundits, outdid even his 2008 prediction. In that year, his mathematical model correctly called 49 out of 50 states, missing only Indiana (which went to Obama by 0.1%.) This year, according to all projections, Silver’s model has correctly predicted 50 out of 50 states. A last-minute flip for Florida, which finally went blue in Silver’s prediction on Monday night, helped him to a perfect game. Loser Ryan Also A Winner (NYP) The Republican vice-presidential hopeful hedged his bet by running for re-election to his congressional seat in Wisconsin — where last night, he was declared the winner for an eighth straight time. Goldman Partners Pocket $22 Million (WSJ) More than 30 executives, including Chief Executive Officer Lloyd C. Blankfein, recently cashed in stock options awarded in the afterglow of the company's initial public offering in 1999. According to a securities filing, the executives, all Goldman partners, pocketed a total of $21.8 million by exercising options and selling the underlying shares in the three days after the firm reported third-quarter results in mid-October. The options expire at the end of November, and cashing in produced instant profits because Goldman's share price is more than 50% higher than when the options were awarded in 2002. "By exercising 10-year-old options before they expired later this year, executives captured some of the value we have built for shareholders over that period," said a spokesman for the securities firm. In contrast, many of the executives' remaining options are worthless, at least for now, because they were granted from 2005 to 2008. The stock peaked in October 2007 at about $239, or 89% higher than Tuesday's closing price of $126.25 in New York Stock Exchange composite trading at 4 p.m. The biggest gain went to Michael S. Sherwood, a Goldman vice chairman and the firm's top executive in Europe, who received $5.2 million from exercising options on 115,211 shares. Mr. Blankfein collected $3.1 million, while departing Chief Financial Officer David A. Viniar got $2.3 million, the filing shows. JPMorgan Nears SEC Settlement (WSJ) JPMorgan is close to a settlement with the Securities and Exchange Commission that would end one probe into how the company's Bear Stearns Cos. unit packaged and sold home loans to investors, according to people familiar with the case. A pact with the nation's largest bank by assets would be the first tangible victory in a wide-ranging SEC investigation into Wall Street's sale of mortgage-backed securities before the onset of the financial crisis. Since 2010, the SEC has issued more than 300 subpoenas or document requests related to the probe and collected more than 30 million pages of documents, enforcement chief Robert Khuzami said earlier this year. BNP Paribas Third Quarter Net Doubles On Trading Gains (Bloomberg) Pretax profit at BNP Paribas’s corporate- and investment- banking unit, or CIB, rose 7.3 percent to 732 million euros, beating analysts’ estimate of 686 million euros. Revenue from equity and advisory operations climbed 51 percent to 444 million euros, while fixed-income sales more than doubled to 1.13 billion euros. After Obama Victory, Donald Trump Rants On Twitter (ABC) “We can’t let this happen. We should march on Washington and stop this travesty,” Trump Tweeted. “Our nation is totally divided! Lets fight like hell and stop this great and disgusting injustice! The world is laughing at us. This election is a total sham and a travesty. We are not a democracy! And then: “Our country is now in serious and unprecedented trouble…like never before. Our nation is a once great nation divided! The electoral college is a disaster for a democracy. Hopefully the House of Representatives can hold our country together for four more years…stay strong and never give up! House of Representatives shouldn’t give anything to Obama unless he terminates Obamacare.” And finally: “This election is a total sham and a travesty. We are not a democracy!” Fitch: No Fiscal Honeymoon For President Obama (CNBC) President Barack Obama will need to quickly secure agreement on avoiding the "fiscal cliff" and raising the debt ceiling following Tuesday's elections, Fitch Ratings said. The economic policy challenge facing the president is to put in place a credible deficit-reduction plan necessary to underpin economic recovery and confidence in the full faith and credit of the U.S., according to Fitch. Resolution of these fiscal policy choices would likely result in the U.S. retaining its triple-A status from Fitch, the firm said. Failure to avoid the so-called fiscal cliff and raise the debt ceiling in a timely manner, as well as securing agreement on credible deficit reduction, would likely result in a rating downgrade in 2013, Fitch said. The New Haven For Investors (WSJ) Treasurys have a new rival for safe-haven status: U.S. companies. Bonds of Exxon Mobil and Johnson & Johnson are trading with yields below those of comparable Treasurys, a sign that investors perceive them as a safer bet. It is a rare phenomenon that some market observers said could be the beginning of a new era for debt markets. It could ultimately mean some companies will borrow at lower rates than the U.S. government. Swiss, Greeks Begin Talks On Tax Deal (WSJ) Switzerland has begun formal talks on a deal to tax assets stashed in secret Swiss bank accounts by Greek citizens, in line with similar agreements struck with other European countries, the Swiss government said Wednesday. Woman Wearing MIT Shirt Nearly Banned From Voting In Boca Raton (BNN) A woman attempting to vote in West Boca Raton yesterday was initially prohibited from entering the polling place because she was wearing a t-shirt with the letters MIT. BocaNewsNow.com heard from multiple sources that an election supervisor at the polling place ultimately realized that MIT stands for “Massachusetts Institute of Technology” — a school where students tend to know how to spell — and was not a campaign shirt for the Republican candidate, who spells his name MITT. Campaigning is not permitted within several yards of a polling place. The woman was ultimately allowed to vote.

Opening Bell: 02.04.13

UK Regulators Could Split Banks (WSJ) U.K. Treasury chief George Osborne on Monday will announce new powers for regulators to split up banks that flout rules designed to ring-fence retail banking from riskier investment-banking activity. In a wide-ranging speech on banking in Bournemouth, England, Mr. Osborne is expected to say the new powers are needed so that taxpayers will never again be on the hook when banks fail, as they were during the financial crisis. "We're not going to repeat the mistakes of the past. In America and elsewhere, banks found ways to undermine and get around the rules," Mr. Osborne will say, according to the extracts of his speech. "We could see that again—so we are going to arm ourselves in advance. In the jargon, we will "electrify the ring fence." New Details Suggest a Defense in SAC Case (NYT) In bringing its charges, the government said that SAC not only sold out of its position, but also bet against — or shorted — the drug companies' stocks before the public announcement of the bad news. The SAC short position, according to prosecutors, allowed it to earn big profits after shares of the companies, Elan and Wyeth, plummeted. "The fund didn't merely avoid losses, it greedily schemed to profit further by shorting Elan and Wyeth stock," said April Brooks, a senior F.B.I. official in New York, during a press conference on Nov. 20, the day Mr. Martoma was arrested. Internal SAC trading records, according to people directly involved in the case, indicate that the hedge fund did not have a negative bet in place in advance of the announcement of the drug trial's disappointing results. Instead, the records indicated that SAC, through a series of trades, including a complex transaction known as an equity swap, had virtually no exposure — neither long nor short — heading into the disclosure of the drug data. Blackstone To Become Investment Bank? (FT) Blackstone, one of the world's largest alternative asset managers, has quietly secured a securities underwriting licence as its expanding capital markets operation strays into investment banking territory. The licence marks the latest stage in the transformation of big listed private equity groups as they become more broadly based alternative asset managers. Apollo and KKR , two of Blackstone's biggest rivals, also have securities underwriting licences. The move highlights the pressure listed private equity groups are under to generate new sources of fee income to satisfy their public shareholders. "The private equity business is lousy for shareholders," says the head of capital markets for one buyout firm that is not listed. Obama: more tax revenue needed to address deficit (Reuters) President Barack Obama said on Sunday more tax revenue would be needed to reduce the U.S. deficit and signaled he would push hard to get rid of loopholes such as the "carried interest" tax break enjoyed by private equity and hedge fund managers. Herbalife Is The Subject Of 'Pending' Probe (NYP) The Los Angeles-based distributor of nutritional products is the subject of a law enforcement investigation, The Post has learned. The existence of the probe emerged after the Federal Trade Commission, responding to a Freedom of Information Law request by The Post, released 192 complaints filed against Herbalife over the past seven years. New Orleans Braces From Fallout From Blackout (AP) The outage, blamed on an unspecified "abnormality" in the Superdome's power system, was an embarrassment for New Orleans, which was hosting its first Super Bowl since 2002 and was eager to show off how it has been rebuilt since Hurricane Katrina. Mayor Mitch Landrieu called Sunday night's outage "an unfortunate moment in what has been an otherwise shining Super Bowl week for the city of New Orleans." He said he expected to receive "a full after-action report from all parties involved" in the coming days...For 34 minutes, the players tried to stay loose, the fans milled about in darkened corridors, and stadium officials scrambled to figure out what went wrong. The Ravens barely hung on for a 34-31 victory over the San Francisco 49ers, needing a goal-line stand in the closing minutes to preserve the championship. "It really hurt us," Baltimore fullback Vonta Leach said. "We had lot of momentum." There is sure to be some fallout for the city and the Superdome — especially since New Orleans plans to bid for the title game in 2018, in conjunction with the 300th anniversary of its founding. Escalators stopped working and credit-card machines shut down, though auxiliary power kept the playing field and concourses from going totally dark. "We sincerely apologize for the incident," Superdome spokesman Eric Eagan said. Most fans seemed to take the outage in stride, even starting up the wave to pass the time. "So we had to spend 30 minutes in the dark? That was just more time for fans to refill their drinks," said Amanda Black of Columbus, Miss. Question of Aiding Cyprus Places Germany in a Bind (NYT) In recent days, Germany has signaled that it is reluctantly edging toward a bailout for Cyprus, a haven for Russian cash, after lifelines have been extended to Greece, Ireland and Portugal to prevent potentially calamitous defaults. While Cyprus makes up just a sliver of the euro zone economy, it is proving to be a first-rate political headache. "I don't think that Germany has ever in the history of the euro zone crisis left itself so little wiggle room," said Nicholas Spiro, the managing director of Spiro Sovereign Strategy in London. "But Germany wants the euro to succeed and survive, and they are saying we can't afford a Cyprus bankruptcy." BlackRock Sued by Funds Over Securities Lending Fees (Bloomberg) BlackRock is accused in a lawsuit by two pension funds of reaping “grossly excessive” compensation from securities- lending returns associated with iShares Inc. “Defendants have systematically violated their fiduciary duties, setting up an excessive fee structure designed to loot securities lending returns properly due to iShares investors,” the funds, which invest in iShares, said in a complaint in federal court in Nashville, Tennessee. Two Top Barclays Executives Resign (WSJ) Barclays, whose chairman, chief executive and chief operating officer all resigned last summer in the wake of a series of controversies, said Sunday evening that finance chief Chris Lucas and Mark Harding, its general counsel, will both be retiring in coming months...Messrs. Lucas and Harding were longtime Barclays veterans who worked closely with former CEO Robert Diamond, who resigned last summer after the bank admitted that it had tried to rig benchmark interest rates and paid a roughly $450 million penalty. Youngest American Woman Billionaire Found With In-N-Out (Bloomberg) Lunchtime at the flagship In-N-Out Burger restaurant in Baldwin Park, California, is a study in efficiency. As the order line swells, smiling workers swoop in to operate empty cash registers. Another staffer cleans tables, asking customers if they’re enjoying their hamburger. Outside, a woman armed with a hand-held ordering machine speeds up the drive-through line. Such service has helped In-N-Out create a rabid fan base -- and make Lynsi Torres, the chain’s 30-year-old owner and president, one of the youngest female billionaires on Earth. New store openings often resemble product releases from Apple, with customers lined up hours in advance. City officials plead with the Irvine, California-based company to open restaurants in their municipalities. “They have done a fantastic job of building and maintaining a kind of cult following,” said Bob Goldin, executive vice president of Chicago-based food industry research firm Technomic Inc. “Someone would love to buy them.” That someone includes billionaire investor Warren Buffett, who told a group of visiting business students in 2005 that he’d like to own the chain, according to an account of the meeting on the UCLA Anderson School of Management website. Mint officially ends distribution of Canadian penny (CP) The phasing-out of the penny will lurch ahead today with the Royal Canadian Mint officially ending its distribution of one-cent coins to Canada's financial institutions. The move comes nearly a year after Finance Minister Jim Flaherty announced the demise of the penny, whose production cost came to exceed its monetary value. But as it faces extinction in the pockets and tills of most Canadians, the humble penny is still in demand in some artistic circles where it retains significant value. Renee Gruszecki, a Halifax-based academic and archivist, has spent the past year making a living through a jewelry business devoted primarily to preserving the country's stray cents. About 30,000 strategically sorted pennies fill Gruszecki's home and eventually find their way into the accessories produced at Coin Coin Designs and Co. Gruszecki, a long-time collector of lucky pennies, believes her pieces will help preserve a symbol that is both an object of superstition and a Canadian icon. "The maple leaf is synonymous with everything Canadian. We all identify with it," she said in a telephone interview. "Now it's just no longer going to be present among us, so I'm saddened by that." The Bank of Canada's Currency Museum has already taken steps to preserve the penny's place in Canadian culture. A mural consisting of nearly 16,000 one-cent pieces has been assembled at the museum to commemorate the coin's history, said assistant curator Raewyn Passmore. The mosaic, which depicts a giant penny measuring about two square metres, is comprised of coins ranging from the lustrous to the tarnished.

Opening Bell: 06.27.12

Germany's Credit Rating Slashed By Egan-Jones (Reuters) The credit ratings agency on Tuesday downgraded its credit rating for Germany to "A+" with a negative outlook from "AA-," noting the need to watch for fallout should Greece exit the euro zone. Whether or not Greece or other euro-zone members exit the monetary union, Germany will be left with "massive" additional, uncollectible receivables, Egan-Jones said in a statement. Spain Considers Sweeping Tax Hikes to Please EU (Reuters) Spain's current VAT rate is 18 percent, one of the lowest in Europe, but many products are charged at a reduced 8 percent or a "super-reduced" 4 percent. "The ministry is studying reclassifying certain products and services that have reduced or super-reduced VAT," a spokesman for the ministry said. Madrid is also considering eliminating tax breaks on housing after reintroducing the measure as one of the first decrees the center-right government announced after being sworn in December. It is also considering introducing a so-called "green tax" on gasoline, following recommendations by the European Union, Treasury Secretary Marta Fernandez Curras said. New Plan Sees Closer Euro-Zone Ties (WSJ) Several of the proposals—such as joint bond issuance and the effective veto powers on national budgets—raise red flags for many governments. If all 27 EU leaders, or at least those from the euro zone, accept the report's basic principles at their summit scheduled for Thursday and Friday, the decision will set the currency union off on what is likely to be a long period of wrangling. Accused Manhattan 'madam' posts bail (NYP) Pattis and Gristina faced the microphones briefly before the family sped off to her 200-acre pig rescue farm in upstate Monroe. Singapore Pastor Charged For Funds For Wife’s Pop Career (Bloomberg) The founder and senior pastor of Singapore’s City Harvest Church was charged with three counts of dishonestly using the charity’s funds to finance his wife’s singing career. Kong Hee, whose wife Ho Yeow Sun has performed with artists like Wyclef Jean, conspired with others to conceal the diversion of the funds, prosecutor Christopher Ong told a Singapore Subordinate Court today. Financial irregularities of at least S$23 million ($18 million) from the charity’s funds were discovered, Singapore’s Commissioner of Charities said in a statement on its website yesterday. Wedding Party Soaked After Dock Breaks (WTV) A bride, groom and their entire wedding party fell into Gun Lake after the dock on which they were having photos taken gave way. It happened Saturday at Bay Pointe Inn at the wedding reception of Eric Walber and Maegan McKee (now Walber) of Bryon Center..."We were out there for probably 30 seconds, standing on the dock, and it started to lean and tilt," groom Eric told 24 Hour News 8. "We went right under." Eric said he knew just a split second before the dock collapsed what was about to happen. "I saw the thing starting to tilt, and I'm like, 'Oh, yup, this is going to happen,'" he said. Wall Street Analysts Give Facebook A Cautious Nod (Reuters) Barclays Capital, Stifel Nicolaus and Citi Investment Research & Analysis set a "hold" or equivalent rating on the stock, while Morgan Stanley and RBC Capital Markets began coverage of Facebook with their top ratings. Barclays in Libor settlement (Reuters) The bank is poised to secure a $200 million deal with U.S. regulators to settle a probe into allegations staff manipulated a key interbank lending rate known as Libor, one source familiar with the matter said. SEC And Falcone Set For Showdown (WSJ) Mr. Falcone's pledge sets the stage for a legal battle that may decide the fate of an investor who seemed poised to become a Wall Street star as recently as four years ago, when a series of winning bets propelled his fund to $26 billion in assets. The New York-based fund managed $3 billion in March, after several years of client withdrawals and steep losses, including those tied to a troubled venture to set up a nationwide wireless network. Mayor Cools SUV (NYP) Mayor Bloomberg wants to maintain his politically correct credentials on global warming — but hates to get into a hot car when he leaves an air conditioned building. The solution his aides came up with? In full view of bemused tourists and other passers-by yesterday, workers hoisted a standard room air conditioner to a side window of one of the mayor’s SUVs parked in the City Hall lot to see if it would fit. “This is an experiment to be used on extremely hot days like the types we saw last week,” said mayoral spokesman Stu Loeser.

Opening Bell: 03.21.13

ECB Threatens To Cut Off Cypriot Banks (WSJ) The European Central Bank ramped up pressure on Cyprus to seal a bailout agreement with the European Union and the International Monetary Fund by Monday, making further funding for the island's ailing banks contingent on a deal. The ECB said it would extend emergency funding that has kept the island's banks in operation while the bailout plan was being negotiated in recent months only until Monday. "Thereafter, Emergency Liquidity Assistance (ELA) could only be considered if an European Union/International Monetary Fund program is in place that would ensure the solvency of the concerned banks," the ECB said in a statement. Italy's Five-Star Party Reiterates Demand for Euro Referendum (WSJ) Representatives of Italy's Five-Star Movement reiterated their anti-establishment party's demands for a referendum on the country's membership of the euro, and insisted that they should form the country's next government. Italian President Giorgio Napolitano is consulting political leaders on forming a government after last month's inconclusive election result. Deustche Bank Legal Bill Mounts (WSJ) Deustche Bank revised fourth-quarter earnings downward, setting aside about €600 million ($773 million) in legal provisions for U.S. mortgage litigation in another sign that mounting legal liabilities are cutting into investment -bank profits. The bank updated its fourth-quarter net loss to 2.54 billion euros, wider than the originally reported loss of €2.17 billion. This compared with a profit of €147 million a year earlier. The bank also reiterated that it would make first-quarter targets for a key measure of the bank's health known as the capital ratio, indicating a strong first quarter, analysts said. Deutsche Bank has now set aside €2.4 billion for litigation, with additional identified non-provisioned legal risks of €1.5 billion. The bank's legal provisions were nearly 10 times net profit of €237 million for 2012, compared with a profit of €4.1 billion in 2011. Total legal risk is likely much higher than what the bank has publicly identified, analysts said. Lululemon Sees Sheerness Issue Hitting Profits (WSJ) Lululemon Athletica said Thursday its fourth-quarter profit climbed 48%, but said it expects the transparency issue related to some of its yoga pants to reduce first-quarter earnings by 11 to 12 cents a share. Bernanke Saying He’s Dispensable Suggests Tenure Ending (Bloomberg) Federal Reserve Chairman Ben S. Bernanke said he’s “spoken to the president a bit” about his future and that he feels no personal responsibility to stay at the helm until the Fed winds down its unprecedented policies to stimulate the economy. “I don’t think that I’m the only person in the world who can manage the exit,” Bernanke said when asked at a news conference in Washington if he’s discussed his plans with President Barack Obama. His term expires at the end of January. Personal assistant pleads guilty to embezzling 821G from hedge funder Todd Meister (NYP) After a year of denials, glamorous Ukranian embezzler Renata Shamrakova admitted in Manhattan Supreme Court yesterday that she stole nearly $1 million while working as the personal assistant to hedge funder Todd Meister. Under the plea deal, she will serve no jail time but must repay what she took within two years. “Yes, your honor,” Shamrakova told the judge, when asked if she had committed grand larceny in the second degree by stealing from Meister, 42, a Harvard-educated money man who famously married Nicky Hilton for just six weeks in 2004. Shamrakova, 28, wore a gray cashmere sweater over a short, floral-print skirt and spoke in a quiet, girlish voice as she sat at the defense table and admitted her crimes. In addition to ripping off Meister, she tried to dodge a search warrant by hiding financial records. Dell Walks Fine Line in Pitch for Buyout (WSJ) Mr. Dell needs to persuade Dell Inc. investors that the prospects for the company he founded in his dorm room in 1984 and has been running for the past six years are anything but rosy if he is to succeed with his plan to take the computer maker private. Friday marks the end of a 45-day window to flush out alternative offers to the $24.4 billion buyout deal that Mr. Dell and private-equity firm Silver Lake Partners reached last month. The $13.65-a-share offer has sparked derision from some shareholders who believe the price undervalues the Round Rock, Texas, company. No alternative bid has been offered, but late Wednesday Blackstone Group LP was working on a few scenarios for a potential bid that would see the private-equity giant team with a partner to buy all or part of the computer maker, according to people familiar with the matter. JPMorgan To Return Money To MF Global Customers (AP) JPMorgan Chase has agreed to a deal that will return $546 million to former customers of trading firm MF Global Holdings Ltd., which collapsed in 2011 with $1.6 billion missing from its accounts. Initial Jobless Claims in U.S. Rise Less Than Forecast (Bloomberg) Applications for jobless benefits increased by 2,000 to 336,000 in the week ended March 16, Labor Department figures showed today. Economists projected 340,000 claims, according to the median estimate in a Bloomberg survey. The monthly average, which smoothes the week-to-week volatility, dropped to the lowest level since February 2008. Regulator finds flaws in Deutsche Bank's Libor supervision (Reuters) German markets watchdog Bafin is set to tell Deutsche Bank of "organizational flaws" in how it supervised its contribution to the setting of inter-bank lending rates at the heart of the international rate-rigging scandal, sources familiar with the watchdog's investigation said. Wis. limits use of nude beach to reduce sex, drugs (AP) Wisconsin authorities announced Tuesday they will shut down one of nation's most popular nude beaches on weekdays after struggling for years to curtail sex and drugs on the sandbar and surrounding woods. Nudists from around the country have been traveling to the public beach on the Wisconsin River near Mazomanie, about 25 miles northwest of Madison, for decades as word spread that prosecutors in ultra-liberal Dane County wouldn't go after anyone for showing skin. But visitors haven't stopped at just stripping down. They've been slipping off into the woods for trysts and drugs. Authorities say that's crossing the line, but they haven't been able to stop the shenanigans. Their frustration reached a tipping point Tuesday, when the state Department of Natural Resources announced it will close the beach, the islands immediately off it and the surrounding woods to the public on weekdays, when wardens say troublemakers tend to operate unseen. The closures begin immediately. The area will remain open on weekends, though. Bob Morton, executive director of the Austin, Tex.-based Naturist Action Committee, which lobbies on behalf of nudists, has visited the beach several times. He criticized the DNR for not consulting with beachgoers before closing the area. "Honestly, we're on their side when it comes to enforcing things that are lewd and lascivious," Morton said. "There's something to be said about consulting the users of the place. There's got to be more to this somewhere."

Opening Bell: 04.10.13

Trading Case Embroils KPMG (WSJ) Scott London, the partner in charge of audits of Herbalife Ltd. and Skechers USA Inc. until KPMG fired him last week, told The Wall Street Journal Tuesday that "I regret my actions in leaking nonpublic data to a third party." Mr. London said his leaks "started a few years back," adding that KPMG bore "no responsibility" for his actions. "What I have done was wrong and against everything" he believed in, said Mr. London, who was based in Los Angeles for the accounting firm...Neither KPMG nor Mr. London named the recipient of Mr. London's tips. The recipient isn't associated with a hedge fund or other professional investor, said one person familiar with the matter. Obama Proposes $3.77 Trillion Budget to Revive Debt Talks (Bloomberg) Obama’s budget for fiscal 2014 proposes $50 billion for roads, bridges and other public works, $1 billion to spur manufacturing innovation and $1 billion for an initiative to revamp higher education, according to administration officials who briefed reporters and asked to not be identified. It renews his request to raise $580 billion in revenue by limiting deductions and closing loopholes for top earners. Obama again seeks adoption of the Buffett rule, named for billionaire investor Warren Buffett, to impose a 30 percent minimum tax on households with more than $1 million in annual income. The administration projects the deficit for fiscal 2014 would be $744 billion, or 4.4 percent of the economy. That would mark the first budget shortfall of less than $1 trillion since Obama took office. Soros Tells Germany It Should Leave The Euro (CNBC) "The financial problem is that Germany is imposing the wrong policies on the euro zone. Austerity doesn't work. You can't shrink the debt burden by shrinking the budget deficit," Soros, the founder and chairman of Soros Fund Management,said during a speech in Germany's financial center of Frankfurt on Tuesday. Ackman Expected To Stick With JCPenney (NYP) The New York hedge-fund tycoon is expected to stay put as JCPenney’s biggest investor, with a nearly 18 percent stake, and back the retailer’s scramble to repair the damage done by ousted CEO Ron Johnson, sources told The Post. That’s despite the fact that it was Ackman who installed Johnson at the helm of the company 17 months ago with an ambitious but doomed plan to overhaul the aging department-store chain. “The priority right now is stabilizing the company and finding a permanent CEO,” according to an insider close to the situation, adding that Ackman appeared to be playing a key role in the process. Blackstone Solicits Partners For Dell Bid (WSJ) Blackstone Group LP is talking to several technology companies about potentially joining its bid to take computer maker Dell private, people familiar with the matter said. Any technology firm that joins the private-equity giant's potential bid for Dell would likely be involved in the company's strategic direction as well as having a financial role, the people said. Blackstone has discussed a number of scenarios with prospective partners, including an equity stake, debt financing or a combination of the two, one of the people said. City officials say they're powerless to stop Time Square's growing hoard of costume-wearing hustlers (NYP) The city used to tell the furry fiends where they could set up. But a court decision last year ruled the characters could not be treated like vendors because they are entertainers who work for tips. “Our ability to treat these characters as vendors was eliminated,” said city lawyer Gabriel Taussig. “And, absent of vending laws, there is no other law that comes close to dealing with where they can be located.” The most recent trouble came when Osvaldo Quiroz-Lopez, who was dressed as Cookie Monster, got into a tussle with the toddler son of Bollywood star Parmita Katkar after the mom said she didn’t have the money to tip for a picture. His bust followed a slew of similar cases, including a man dressed as Super Mario who was accused of groping a woman and an Elmo who went on an anti-Semitic rant. Some Fed Members Fear Monetary Policy Effects (CNBC) Minutes from the most recent Fed meeting suggest that members have grown increasingly concerned that things could get messy if it continues its policies too far into the future. Among those concerns are instability to the financial system, a sudden rise in interest rates and inflation. Bill Gross Raises Holdings of Treasuries to Highest Since July (Bloomberg) Gross raised the holdings of Treasuries held in his $289 billion flagship fund at Pacific Investment Management Co. to 33 percent of assets last month, the highest level since July. JPM On A Whale Of A Roll (NYP) Jamie Dimon is hoping another solid performance from his sprawling bank can finally sink the London Whale. JPMorgan Chase will kick off bank earnings as it nears the anniversary of the embarrassing trading scandal, which Dimon famously dismissed back on April 13 of last year as a “tempest in a teapot.” The bank is expected to benefit from the continuing stabilization of the US economy that could allow it to release capital reserves again — a move that will have the effect of helping boost its overall earnings. Barclays analyst Jason Goldberg estimates that JPMorgan will report earnings of $1.33 a share — 6 cents less than consensus estimates of $1.39 a share. Some analysts believe that the bank will beat the consensus by a few cents after buying back shares and hiking its dividend to 38 cents. Soup heist ends with Tamarac turnpike arrest (Sun Sentinel) A Florida Highway Patrol trooper tracking the rig's GPS signal arrested the driver for the alleged soup heist on Florida's Turnpike in Tamarac about 12:30 a.m. Sunday. Eusebio Diaz Acosta, 51, of Orlando, was charged with two counts of grand theft — one for the tractor trailer and one for the cargo, with a combined value of $350,000. "These are very unusual facts," Broward County Judge John "Jay" Hurley said as he read from Acosta's arrest report Monday morning. "The court has seen many things stolen. … This is the first time the court's ever seen $75,000 worth of soup stolen."

Opening Bell: 02.22.13

AIG Swings to Loss on Sandy Costs, Sale of Unit (WSJ) AIG posted a loss of $3.96 billion, or $2.68 a share, compared with profit of $21.5 billion, or $11.31, a year earlier. Its life-insurance and retirement-services business earned $1.09 billion, up 20% from a year earlier. The company also said it would take a loss of about $4.4 billion on the planned sale of a 90% stake in the plane unit, International Lease Finance Corp. AIG's full-year net income of $3.4 billion marked a sharp decline from the $20.6 billion profit the company posted for 2011, when it adjusted its balance sheet to reflect its expected use of more than $18 billion in tax benefits. CFTC Sues CME Group, Alleging Trade-Data Leaks (WSJ) U.S. regulators took aim at the world's largest futures-exchange operator, accusing CME Group Inc. and two former employees of allegedly sharing details on clients' trades with a commodities broker. The civil charges, leveled Thursday by the Commodity Futures Trading Commission, mark the first time the agency has sued CME in federal court. The case also highlights how regulators have responded to flagging confidence in the financial markets by scrutinizing more closely some of Wall Street's central pillars: the exchanges. The CFTC charged a unit of Chicago-based CME and two former employees with disclosing private information about trading in its big energy markets to an outside party between 2008 and 2010 in return for meals and entertainment. CME said Thursday it would contest the charges. "Markets are too important for this [type of allegation] to be taken lightly," Bart Chilton, a CFTC commissioner, said in an interview. Citigroup bows to shareholder pressure, overhauls pay (Reuters) Citigroup said on Thursday it has overhauled an executive pay plan that shareholders rejected last year as overly generous, revising it to tie bonus payments more closely to stock performance and profitability. The company also said it will pay new Chief Executive Mike Corbat $11.5 million for his work in 2012, in line with remuneration for his peers at other major banks. The new plan was crafted after board Chairman Michael O'Neill and other directors met with "nearly 20" shareholders representing more than 30 percent of Citigroup stock, Citi said in a filing. Watchdog Says LinkedIn paid no federal income tax over past three years (NYP) The Mountain View, Calif., social network for professionals escaped the tax man because of a rule that allows companies to deduct expenses from employee stock awards, the watchdog, the Center for Tax Justice, told The Post. It’s a longstanding accounting trick that has spared many tech firms — including Amazon and Yahoo from 2009 to 2011 — from sharing any of their profits with the IRS, the CTJ said. “On $160 million profits over the last three years, LinkedIn paid zero federal income taxes,” said the CTJ’s Rebecca Wilkins. “The stock option deduction was big enough to wipe out all their taxes.” Unemployment applications up 20,000 last week to 362,000 (AP) The Labor Department said Thursday that thefour-week average, a less volatile measure, rose 8,000 to 360,750, the highest in six weeks. Trump Twitter Mystery! Who Hacked the Donald? (CNBC) In what appears to be the latest in a minor wave of attacks on Twitter accounts belonging to out-sized corporate entities, an out-of-character tweet from Donald Trump's verified account set the Internet abuzz, and then disappeared, shortly before noon ET on Thursday. "These hoes think they classy, well that's the class I'm skippen," read the suspect remark issued from @realDonaldTrump. It was a glaring non sequitur following tweets such as "Republicans must be careful with immigration—don't give our country away," and "Wow, Macy's numbers just in-Trump is doing better than ever — thanks for your great support!" "Yes, obviously the account has been hacked and we are looking for the perpetrator," Rhona Graff, senior vice president, assistant to the president of the Trump Organization, told NBC News via email. This confirmation was quickly echoed by Trump himself, in a tweet that read, "My Twitter has been seriously hacked — and we are looking for the perpetrators." UBS to Trade Equity Swaps in China in Structured-Product Push (Bloomberg) Chinese regulators last month decided to allow UBS to trade total return swaps, Thomas Fang, the bank’s managing director for equities derivatives sales for Asia, said in a phone interview. The bank will use the derivatives to create structured products tied to local stocks, with plans to boost the size of its staff in the country for the business, Fang said. The China Securities Regulatory Commission’s press office didn’t immediately respond to a faxed request for confirmation. A Tax That May Change The Trading Game (NYT) The tax would be tiny for investors who buy and hold, but could prove to be significant for traders who place millions of orders a day. Under the proposal, a trade of shares worth 10,000 euros would face a tax of one-tenth of 1 percent, or 10 euros. A trade of a derivative would face a tax of one-hundredth of 1 percent. But that tax would be applied to the notional value, which can be very large relative to the cost of the derivative. So a credit-default swap on 1 million euros of debt would have a tax of 100 euros, or about 0.4 percent of the annual premium on such a swap. On Currencies, What's Fair Is Hard to Say (WSJ) What's the fair value of a euro? That depends on whether the answer comes from Berlin or Paris. German Chancellor Angela Merkel on Wednesday weighed in on what the currency should be worth, saying the euro's exchange rate is "normal in the historical context." French Finance Minister Pierre Moscovici had a different take earlier this month, calling the euro "perhaps too strong." Economists say Ms. Merkel is right—technically. The euro's buying power is roughly where it should be, according to the Peterson Institute for International Economics, which judges currencies based on countries' current-account balance. But others caution Germany's relatively robust economy props up the euro's value; if weaker countries like Spain or Italy still had their own currencies, they'd be worth much less. Singapore GDP Growth Beats Initial Estimate as Asia Recovers (Bloomberg) Gross domestic product rose an annualized 3.3 percent in the three months through December from the previous quarter, when it shrank a revised 4.6 percent, the Trade Ministry said in a statement today. That compares with a January estimate of 1.8 percent and the median in a Bloomberg News survey for a 2 percent expansion. KFC employee fired for making out with boob-shaped mashed potatoes (DD) A KFC employee in Tennessee is out of a job after photos of the culprit making out with a plate of mashed potatoes ended up on Facebook. The mashed potatoes, which were apparently not served to some unknowing customer, had been arranged into the shape of a woman's boob. In the photos, the former employee can be found licking what we'd have to consider the underboob of the mashed potato mammary before throwing it into an oven. The photo became public information when it showed up on the Facebook page for Johnson City, Tenn., news channel WJHL, where it was shared 2,000 times and received more than 700 comments. Once the news organization was able to determine its locational origin—the KFC on North Roan Street—the suspected employee was terminated. KFC spokesman Rick Maynard confirmed the firing but would not name the culprit because that "wouldn't be appropriate." He stressed that the employee who took the photos is no longer with the company. "Nothing is more important to KFC than food safety," he wrote to WJHL. "As soon as our franchisee became aware of the issue, immediate action was taken.

Opening Bell: 02.19.13

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