Opening Bell: 06.10.13

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AstraZeneca in Deal for Pearl Therapeutics Worth Up to $1.15 Billion (DealBook)
The European drug maker AstraZeneca agreed on Monday to buy the American respiratory drug manufacturer Pearl Therapeutics for up to $1.15 billion. Under the terms of the deal, AstraZeneca will pay an initial $560 million for Pearl Therapeutics, based in Redwood City, Calif., whose products treat a number of respiratory diseases, including asthma. AstraZeneca will pay an additional $590 million if Pearl hits certain regulatory and sales targets, according to a statement from AstraZeneca.

Schwab Topping Goldman Sachs Presages Return to Stocks (Bloomberg)
Charles Schwab Corp., TD Ameritrade Holding Corp. and E*Trade Financial Corp. have climbed 38 percent on average in 2013, beating the S&P 500 by 23 percentage points and eclipsing returns in financial shares from Goldman Sachs Group Inc. to Bank of America Corp., according to data compiled by Bloomberg. The last times that happened, equity mutual funds received about $91 billion, 24 percent more than the annual average in the two decades before the financial crisis, the data show. Bulls say a rally in brokers that serve private investors means individuals are preparing to embrace shares after they pulled almost $400 billion from stock funds in the last four years. Bears say buying by individuals who missed the rally shows gains are close to peaking as another pool of untapped demand gets absorbed.

Accord Reached Over SEC Firing (WSJ)
The Securities and Exchange Commission agreed to pay $580,000 to a former employee who said the SEC retaliated against him for reporting wrongdoing at the agency. David Weber, a former supervisor in the SEC's internal watchdog office, sued the agency for $40 million in damages last fall after he was fired for carrying a handgun on a work trip, according to his lawsuit, which is resolved by the settlement. The agency earlier had placed him on leave because some employees said they felt physically threatened by him, according to a report by the Inspector General for the U.S. Postal Service, which was requested by the SEC.

SEC counsel faces whistleblower’s claims (FT)
The new chief counsel to the Securities and Exchange Commission chairman is the subject of a discrimination complaint from a former colleague at Deutsche Bank, who claims he was fired for blowing the whistle on fraud. Robert Rice joined the SEC last week, working directly for Mary Jo White, the new SEC chairman. He moved from Deutsche where he was head of governance, litigation and regulation for the Americas. Eric Ben-Artzi, a former Deutsche risk manager, filed a discrimination complaint with the US Department of Labor last year, alleging he was fired after telling the SEC that Germany’s biggest bank had hidden billions of dollars of losses with mismarked derivatives positions. ... At one meeting in May 2011, the complaint alleges that Mr Rice told Mr Ben-Artzi he would be provided “with no additional information regarding his concerns” and “admonished [him] for having put in written form (an email) that bank managers . . . appeared to be concealing information”.

Leaker’s Employer Became Wealthy by Maintaining Government Secrets (NYT)
Edward J. Snowden’s employer, Booz Allen Hamilton, has become one of the largest and most profitable corporations in the United States almost exclusively by serving a single client: the government of the United States. Over the last decade, much of the company’s growth has come from selling expertise, technology and manpower to the National Security Agency and other federal intelligence agencies. Booz Allen earned $1.3 billion, 23 percent of the company’s total revenue, from intelligence work during its most recent fiscal year.

Euro bailout Troika nears end of road with patchy record (Reuters)
An IMF source, speaking on condition of anonymity because he is still involved with the bailout programs, said the real problem with the Troika was that no one was in charge. "It's more like a soccer team with no manager and no clear definition of who plays where on the field," he said.

Ex-Goldman Sachs janitor sues for being forced into post-Hurricane Sandy destruction (NYDN)
A former janitor at the Goldman Sachs building who helped the company batten down the hatches during Hurricane Sandy claims a drunken supervisor tossed him out the lower Manhattan headquarters — and into the aftermath of the storm. That, Mefit “Mike” Zecevic claims, was the start of a terrifying odyssey through the darkness and floodwaters back home to storm-shattered Staten Island — an ordeal that left him shivering for days and unable to function for weeks. Zecevic says Goldman Sachs’ janitorial firm, ABM Industries, then fired him for allegedly stealing $100 from the discarded shirt of a co-worker who now has his job — a charge he denies. Now Zecevic, 42, is suing ABM for $10 million and fighting to get his job back.

Obama to name Furman as chief economist (Reuters)
President Barack Obama on Monday will nominate longtime adviser Jason Furman to be his new chief White House economist, an administration official said. Furman, who will replace economist Alan Krueger as chair of the White House's Council of Economic Advisers (CEA), has a Ph.D. in economics from Harvard University and has advised Obama since his 2008 election campaign. Furman has been instrumental in formulating administration policies on taxes, the response to the U.S. recession, the formulation of a sweeping healthcare overhaul and efforts to avoid a "fiscal cliff" at the end of last year.

SoftBank and Sprint Weigh Alternatives to a Deal (DealBook)
SoftBank has staunchly defended its bid for Sprint, repeatedly assailing Dish’s offer as unworkable, and won the conditional support of an influential shareholder advisory firm. The Japanese company has argued that it can close its deal by next month, while its rival would need much more time, costing Sprint shareholders money. But SoftBank has been laying the groundwork for a potential backup plan: It has been in talks with Deutsche Telekom about potential options for the German telecommunication concern’s majority stake in T-Mobile US, according to a person briefed on the matter.

Activist investor sends Alere letter calling for unit sales (Reuters)
Coppersmith Capital Management, which holds a 5.8 percent stake in the company, has been pressuring the company to make changes since last month. The hedge fund has nominated a slate of three directors to Alere's board. The hedge fund sent the letter days after Alere put its own slate of new nominees up for election to its board, replacing all four of the board members who were expected to stand for reelection this year. Coppersmith said in the letter - which has been reviewed by Reuters - that Alere should exit non-core businesses including its health care management business, called Health Information Solutions; its consumer products joint venture with Procter & Gamble; and, possibly, its toxicology unit.

National Envelope Prepares Bankruptcy Filing (WSJ)
The envelope business is just one of many, from newspapers to books to yellow-page directories, that have had to adjust as the Internet upends habits. Email and online bill payments are some of the methods that have rendered envelopes unnecessary.

Battle Scars May Help Explain Risk Averse Corporate America (FBN)
A study from the Universities of Michigan and Washington found that cash-to-asset ratios were 3.2 to 5.4 percentage points higher for non-financial companies run by CEOs who were previously employed by a firm that experienced financial difficulties.“These findings collectively support the view that professional experience of financial difficulties pushes managers to be overly conservative and save too much,” professors Amy Dittmar and Ran Duchin wrote in the paper, which was released this month.

39-year-old ex of retired 83-year-old Wall Street exec is now on welfare — and thinks she deserves more $$$ (NYP)
Christine Jensen, 39, knew G. Bruce Leib, 83, was too old for her when they married in 2007. But she was taken by the former Wall Street exec’s apparently deep pockets. They rode horses together, and he wined and dined her at top Manhattan restaurants, including the Park Avenue Union Club. ... Now the former medical receptionist is living on the $1,000 a month the retired Morgan Stanley vice president sends her. But she’s convinced she’s owed more from their five-year union. ... Leib said he lost it all in the 2008 market crash. “She thinks I have money hidden away, but I don’t,” he said. “It’s been a very rough time for me also.”

Erin Brockovich arrested while boating in Nevada (AP)
Environmental activist Erin Brockovich, portrayed by Julia Roberts in a 2000 movie about her fight over the pollution of a California town, was arrested on suspicion of boating while intoxicated at Lake Mead near Las Vegas, authorities said Sunday. ... A game warden noticed she was struggling and needed assistance while trying to moor her motor boat at the Las Vegas Boat Harbor, he said. Brockovich had been out on the boat with a male companion but was alone when she tried to dock it. "She was not sure how to maneuver the boat into the dock," Lyngar told The Associated Press. "It's a simple thing if you can think clearly. But if you add alcohol and unfamiliarity of the area, it can all cause serious problems."

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Citigroup Profit Beats Analysts’ Estimates On Investment Bank (Bloomberg) Citi reported a 12 percent drop in second-quarter profit that beat analysts’ estimates on revenue from advising on mergers and underwriting stocks and bonds. Net income declined to $2.95 billion, or 95 cents a share, from $3.34 billion, or $1.09, a year earlier, the New York-based bank said today in a statement. Excluding accounting adjustments and a loss from the sale of a stake in a Turkish bank, earnings were $1 a share, compared with the average estimate of 89 cents in a Bloomberg survey of 18 analysts. HSBC Seeks To Evict Occupiers In Hong Kong (WSJ) HSBC said Monday it is seeking the right to evict an encampment of protesters that has been occupying the ground floor of the bank's Hong Kong headquarters since October, drawing inspiration from the Occupy Wall Street protests in New York last year. Libor Flaws Allowed Banks To Rig Rates Without Conspiracy (Bloomberg) FYI: “It is far easier to manipulate Libor than it may appear,” Andrew Verstein, a lecturer at Yale Law School, said in a paper to be published in the Winter 2013 issue of the Yale Journal on Regulation. “No conspiracy is required.” States Join Libor Probe (WSJ) Prosecutors in New York and Connecticut are investigating whether their states incurred losses as a result of interest-rate manipulation by banks, a probe that could lead to a wider multistate enforcement action, according to New York officials. The joint probe by New York Attorney General Eric Schneiderman and Connecticut Attorney General George Jepsen could lead to civil enforcement action, including possible breaches of antitrust and fraud laws, the officials said. Libor Probe May Yield Criminal Charges By September (Bloomberg) Barclays traders involved in allegedly manipulating Libor rates between 2005 and 2007 may be charged by U.S. prosecutors before the Labor Day holiday on Sept. 3, said a person familiar with the Justice Department investigation in Washington. Zuckerberg’s Loan Gives New Meaning To The 1% (Bloomberg) The Facebook founder refinanced a $5.95 million mortgage on his Palo Alto, California, home with a 30-year adjustable-rate loan starting at 1.05 percent, according to public records for the property. Missteps Doomed Barclays Leaders (WSJ) Mr. Diamond's downfall may have been hastened because the U.S.-born investment banker, who became chief executive at the start of 2011, had never won acceptance by Britain's political and financial establishment. When the rate-fixing scandal erupted, Mr. Diamond had few allies. It wasn't for lack of trying. Mr. Diamond enthusiastically embraced British culture and tried to overcome his reputation as a brash American. Mr. Diamond, a native of Concord, Mass., supported the Chelsea Football Club, handing out trophies himself when the team won England's premier soccer league in 2010. A month before the Libor settlement, Mr. Diamond hosted British aristocrats and Barclays' clients at the annual Chelsea Flower Show, providing Champagne and canapés as his guests inspected elaborate gardens and floral arrangements...But Mr. Diamond, age 60, was criticized for his lofty pay packages, as well as perceived risks in the investment-banking business he built. He sometimes appeared tone deaf in a country still angry about the role of banks in the financial crisis. "There was a period of remorse and apology," he told Parliament last year. "That period needs to be over." Activists Go After Big Game (WSJ) William Ackman's $2 billion bet that he can boost the value of consumer-products giant Procter & Gamble Co. reflects a new era of activist investing, in which no company is too big a target and restless institutional investors are more willing to rock the boat. Mr. Ackman's Pershing Square Capital Management LP owns a little more than 1% of P&G's shares. A few years ago, that would have been considered too small a stake in too big a company to exert much influence on management, the board or other investors. Tax Cuts Perpetuate Inequality, Should End: Summers (CNBC) The United States should not extend Bush-era tax cuts for the wealthiest Americans even as the so-called ‘fiscal cliff’ looms because it will perpetuate income inequality, says Larry Summers, former U.S. Treasury Secretary. Instead, these revenues should go towards strengthening public education and ensuring that low-income students are presented with equal opportunities as their wealthy counterparts so that they can participate in the economy. Tax breaks for the wealthy cannot continue to exist because it leads to a “perpetuation of privilege”, Summers said in the editorial in the Financial Times on Sunday. Unless steps were taken to “responsibly” increase the burden on those with high income and redistribute the proceeds, the trend toward inequality will continue, he said. Devils On The (B)rink (NYP) New Jersey Devils owner Jeff Vanderbeek is talking to private-equity firms and hedge funds about buying into his financially strapped team, according to sources close to the situation Vanderbeek is looking to sell a majority stake, but keep operating control, sources said. The talks, coming three weeks after the 55-year old former Wall Street executive seemed close to inking a deal with an investor to save the team, are leading some in the financial world to believe the deal has fallen apart. If that’s so, it would be a terrible break for Vanderbeek, who is facing an Aug. 14 deadline to get the Devils’ financing in order...Creditors are owed $80 million. Downgrade Anniversary Shows Investors Gained Buying U.S. (Bloomberg) When Standard & Poor’s downgraded the U.S. government’s credit rating in August, predictions of serious fallout soon followed. Republican presidential candidate Mitt Romney described it as a “meltdown” reminiscent of the economic crises of Jimmy Carter’s presidency. He warned of higher long-term interest rates and damage to foreign investors’ confidence in the U.S. U.S. House Budget Committee Chairman Paul Ryan said the government’s loss of its AAA rating would raise the cost of mortgages and car loans. Mohamed El-Erian, chief executive officer of Pacific Investment Management Co., said over time the standing of the dollar and U.S. financial markets would erode and credit costs rise “for virtually all American borrowers.” They were wrong. Almost a year later, mortgage rates have dropped to record lows, the government’s borrowing costs have eased, the dollar and the benchmark S&P stock index are up, and global investors’ enthusiasm for Treasury debt has strengthened. Woman tells police man sucked her toe at Grovetown Walmart (AC) The 18-year-old said she was shopping when a man, who looked to be in his late 30s or early 40s, walked up and asked if her toenails were painted, according to a Columbia County Sheriff’s Office incident report. After replying yes and questioning why he wanted to know, the woman was asked if she’d watched America’s Funniest Home Videos. The man told her he was with the TV show and if she complied with his requests, everything she purchased that day would be free. She said she reluctantly agreed to let him take a photo of her foot. He asked if he could kiss her foot as part of the prank and she agreed. The man guided her to an area behind a clothing rack, dropped to the floor, grabbed her ankle and told her, “Don’t worry. I don’t bite.” He then started sucking on her big toe. The woman said she screamed at him to stop. Before the man ran from the store, he told her, “It tasted so good, though.”