FBI Tried To Flip Trader Against Cohen (WSJ) A year before the government charged Mathew Martoma with insider trading, it tried to get him to turn against his former boss, Steven A. Cohen. Federal agents, including Federal Bureau of Investigation case agent Matthew T. Callahan, turned up at the Boca Raton, Fla., home of Mr. Martoma, a former portfolio manager at an affiliate of SAC Capital Advisors L.P. Agents tried and failed to persuade him to be a cooperating witness in the government's effort to build a criminal case against Mr. Cohen, the founder of SAC and one of the biggest names in the hedge-fund world, said people close to the case...The government's attempt to engage Mr. Martoma as a cooperating witness shows the high level of focus placed on Mr. Cohen, whose $14 billion fund has posted some of the best returns on Wall Street. It also demonstrates how the government has been unable so far to implicate Mr. Cohen in Mr. Martoma's alleged wrongdoing...Each of the two securities fraud charges against Mr. Martoma carry a maximum of 20 years in prison; federal sentencing guidelines, based on the amount of the alleged illegal profits, recommend a sentence of 15 to 19 years. By contrast, most people who have pleaded guilty to insider trading and cooperated with the government have been sentenced to little or no jail time. Mr. Martoma is married with children. "Twenty years is a very long time in prison," said Thomas Gorman, a partner at Dorsey & Whitney LLP in Washington, referring to the sentence Mr. Martoma could serve if convicted. "There will be an enormous amount of pressure to earn a cooperation credit to try to mitigate that." Cohen’s ’Elan Guy’ Martoma Dropped Ethics for Hedge Fund (Bloomberg) Martoma got his undergraduate degree at Duke University in Durham, North Carolina, according to the university registrar. During his first year, he was inducted into Phi Eta Sigma, an honors society for freshmen who attain at least a 3.5 grade point average, according to the university registrar. He graduated in December 1995. Less than two years later, he went off to Harvard Law School in Cambridge, Massachusetts. He wrote two medical-ethics papers, one of which identifies him as a member of Harvard Law’s class of 2000 and as the former deputy director of the National Human Genome Research Institute’s Office of Genome Ethics. He left Harvard in December 1998 without attaining a degree, according to the school’s registrar, and attended Stanford Business School, where he joined three alumni groups including MBA Class of 2003, according to university records. In 2001, he changed his name from Ajai Mathew Mariamdani Thomas...Former colleagues, who asked not to be named because the fund is private, said the Martoma, who stood almost six feet tall, had a quiet demeanor and left little impression except for an outsized trade that earned him the name “the Elan guy.” Trading Case Casts a Deeper Shadow on a Hedge Fund Mogul (NYT) Thus far, any potential evidence against Mr. Cohen is entirely circumstantial. The government's complaint includes e-mails about secretly selling the Elan and Wyeth shares through esoteric methods like algorithms and dark pools. But that is common practice among large, sophisticated funds that do not want to alert competitors or move the stock too much. Moreover, while SAC dumped its large positions in the two stocks quickly - raising the question of what prompted it to do so - Mr. Cohen is known for a rapid-fire trading style. He frequently moves aggressively in and out of stocks while processing gobs of information fed to him by his underlings. It would be difficult for a jury to infer anything incriminating just from the way these trades were executed. The government in this case also lacks the powerful wiretap evidence that it has used to convict dozens others, including Raj Rajaratnam, the head of the Galleon Group. Greek Bond Buyback In Doubt (WSJ) The rally in outstanding Greek bonds has made any buyback plan more expensive, eroding the impact it would have on Greece's debt. It raises the challenge for euro-zone finance ministers to seal a deal at their next meeting on Monday that would both plug holes in Greece's €246 billion ($316.95 billion) bailouts and bring the country's debt load to a more manageable level. S&P Confirms France's AA-Plus Rating (WSJ) The decision removes the immediate threat of another downgrade of France, though S&P kept a negative outlook on the country's debt. That indicates a one-in-three chance of a cut in France's credit rating during 2013. Diamond, Dimon’s Early Risks Made Them Better: Adoboli (Bloomberg) Adoboli, who was jailed Nov. 20 for causing the largest unauthorized trading loss in British history, said in an e-mail exchange with Bloomberg News that Jamie Dimon, Bob Diamond and Yassine Bouhara, the former co-head of global equities at UBS, all lost large amounts of money at some point in their careers. The more senior you are the easier it is to avoid getting slammed to the wall,” Adoboli wrote in a Nov. 14 e-mail. “Funny thing is though, losing money seems to make you better at making money. Perhaps that’s why traders who lose money always get rehired, as long as they still have their risk appetite.” Canada Police Arrest Man Who Told Kids Santa Isn't Real (Star) As Christmas-themed floats slowly rolled down Princess St. during Kingston’s annual Santa Claus parade, an intoxicated man shouted blasphemous lies to shocked children: Santa doesn’t exist. The man, whose gelled hair “looked like a set of devil horns protruding from his head,” was reported to Kingston police, Const. Steve Koopman said. Police arrested a 24-year-old man around 6 p.m. “It was pretty despicable that someone, during this time of the year, would tell kids Santa isn’t real — which of course we would argue,” Koopman said. Higher Gas-Tax Idea Joins Fiscal-Cliff Talks (WSJ) Other industries also are moving to have initiatives attached to a budget deal—as part of either a short-term agreement this year or a longer-term plan reached next year to overhaul spending and taxes. Casinos are pushing a measure to legalize Internet poker games nationally. Small banks are pressing to extend a program that gives unlimited federal guarantees to certain bank deposits. Governors want additional aid to cover destruction wrought by Hurricane Sandy. The financial industry is pushing to loosen regulations on complex financial derivatives. "Basically, you've got a bunch of people waiting in the wings to stick the collection plate out and grab whatever they can grab," said Dan Kish, senior vice president for policy at the Institute for Energy Research, which advocates for free-market energy policies. Jain Gets Silent Treatment as Bankers Eat Humble Pie (Bloomberg) Deutsche Bank co-Chief Executive Anshu Jain says telling people he works in banking is a conversation-killer at parties, as the industry fails to convince the general public that it’s changing. “If you go to a party these days, you’re asked what you do and you say you’re a banker, people go all quiet,” Jain said before a conference on Europe’s finance industry began in Frankfurt. “We’re still the subject of anger.” Judge Rules For Singer (Reuters) A federal judge has ordered Argentina to pay holders of defaulted bonds, including Paul Singer’s Elliott Management, immediately, a blow to the country’s efforts to overcome a 2002 debt crisis that has raised fears of another default. In a ruling Wednesday, Judge Thomas Griesa lifted a previous order stalling payments to so-called holdout investors who refused to take part in two swaps of defaulted debt. Argentina’s president, Cristina Fernandez, has said her government will not pay “one dollar,” and Griesa’s ruling cited threats by Argentina’s leaders to defy his rulings in the decade-old dispute. Germany Halts Swiss Tax Deal (WSJ) The bilateral treaty was vetoed by the left-leaning Social Democrat and Green opposition parties in the Bundesrat, which represents Germany's 16 states. The treaty's opponents argue that it is too lenient on tax evaders. We want a treaty that is "more painful to Swiss banks and German tax evaders," Norbert Walter-Borjans, the Social Democrat finance minister of the German state North Rhine-Westphalia said in a debate in the upper house preceding the vote Friday. A ‘Whale’ of a Chase is on (NYP) JPMorgan Chase turned its chief investment office into a proprietary-trading unit that caused more than $6.2 billion in losses, pension funds said in a revised complaint in their suit against the bank. JPMorgan contended the unit’s primary role was managing risk when in fact it was engaging in trades to generate profit for the bank, the funds said in an amended complaint filed in Manhattan federal court. CEO Jamie Dimon “secretly transformed the CIO from a risk management unit into a proprietary-trading desk,” the plaintiffs said. The pension funds allege they incurred losses in their holdings because of trades by the chief investment office and Bruno Iksil, known as “the London Whale.” Porn star vows night of passion if Barcelona wins (NYDN) Colombian-born Janeira Ventura said she would give "any Barca fan who dares" the "night of their lives" if Lionel Messi, Andres Iniesta and co. fire them to the top of La Liga by the end of the season. The adult actress told Mundo Deportivo, "If we win the league this year, I pledge publicly to spend a night of passion with any Barcelona member or supporter who dares. "How can they prove they support the team? It's easy, by showing me the membership card or photos and tickets to a game. They just have to contact me on my website." The 27-year-old was born in Barranquilla, moved to Spain when she was a baby and now lives in Toronto. She added, "I've been a Barcelona fan since I was little, I love the team, the way they play, and above all I love the players. The most sexy ones? Messi, Xavi and Puyol." Her obsession extends to having two cats, who are called Leo and Messi, and plans to tattoo the Argentine striker's name "in a secret place" when she returns to Spain in 2013. She also wants to convince Barcelona bosses to let her be their "official club porn star."

Hedge funds say good riddance to 2015; Putin's bank needs a bailout; KaloBios appeals delisting; Drunk driving charges dropped against woman with 'brewery' stomach condition; and more.

SAC Capital Advisors Trader Charged With Fraud (WSJ) Early Friday morning, Federal Bureau of Investigation agents arrested a longtime SAC Capital portfolio manager on insider-trading charges, making him the most senior employee of one of the nation's most prominent hedge funds to be snared in the government's sprawling probe. Michael Steinberg, 40 years old, was led out of his building on New York's Park Avenue in handcuffs around 6 a.m. Mr. Steinberg has worked at Stamford, Conn.-based SAC since 1997 and at its Sigma Capital Management unit in New York since 2003, dealing closely with SAC's billionaire founder Steven A. Cohen. "Michael Steinberg did absolutely nothing wrong," his lawyer, Barry H. Berke, said in a statement Friday. "His trading decisions were based on detailed analysis" and information "he understood had been properly obtained through the types of channels that institutional investors rely upon on a daily basis." Mr. Steinberg was charged Friday with conspiracy to commit securities fraud and four counts of securities fraud, alleging that he made illegal trades in Dell and Nvidia Corp. based on information relayed to him by a Sigma Capital analyst. He faces as much as 20 years in prison on each fraud charge. He is expected to appear in Manhattan federal court later Friday. The Securities and Exchange Commission also separately filed a civil lawsuit against him in Manhattan federal court on Friday. "Mike has conducted himself professionally and ethically during his long tenure at the firm. We believe him to be a man of integrity," a SAC spokesman said Friday. SAC’s Steinberg Arrested as Probe Gets Closer to Cohen (Bloomberg) Jon Horvath, who worked for Steinberg, pleaded guilty in September, admitting that he provided illegal tips to his portfolio manager, who then traded on them...Two days before Dell was set to report second-quarter 2008 earnings, Horvath e-mailed Steinberg and another portfolio manager to warn that the computer maker would miss earnings estimates. “I have a 2nd hand read from someone at the company,” Horvath said in the Aug. 26 e-mail, which provided details on gross margins, expenditures and revenue. “Please keep to yourself as obviously not well known.” Steinberg replied, “Yes normally we would never divulge data like this, so please be discreet. Thanks.” Judge Sullivan concluded in December that e-mail and instant messages he reviewed showed that Steinberg could have known information he used for trades came from insiders. “The e-mails that were relayed to Steinberg do indicate to me that he understands the source of the information that he’s getting and he’s trading on it,” Sullivan wrote. “All of that indicates this is inside information from the company that’s not available anywhere else.” Cypriots Cast Blame As Banks Open (WSJ) President Nicos Anastasiades on Thursday ordered the creation of a three-member committee to investigate the roots of the economic malaise engulfing the island. The committee will be chaired by three former judges from Cyprus's supreme court, including Georgios Pikis, the court's former president and a former member of the International Criminal Court in The Hague. Cyprus Says Threat Contained, No Plan to Leave Euro (Reuters) FYI. BofA Tops Financial-Complaint List (WSJ) Bank of America accounted for the largest share of consumer complaints lodged with the Consumer Financial Protection Bureau over the past 16 months, highlighting the challenges the nation's second-largest bank faces as it tries to simplify its sprawling operations. Illinois Man Charged In 21-Ton Cheese Heist (ABC) Veniamin Balika, 34, of Plainfield, Ill., was accused of stealing 42,000 pounds of Muenster cheese from a Wisconsin cheese company. He was arrested at a Bergen County rest area on the New Jersey Turnpike on Monday, the result of a joint investigation with the Saddle Brook New Jersey Police Department and the New Jersey State Police. “He was charged with receiving stolen property and fencing,” New Jersey State Police Sergeant Adam Grossman told ABCNews.com. Balika allegedly attempted to sell the load of 1,135 cases of cheese at the rest area. Morgan Stanley's Porat Passes On Treasury Post (NYP) Morgan Stanley’s chief financial officer has taken herself out of the running for the No. 2 job at the Treasury Department after months of speculation that she was all but certain to join the Obama administration. The 56-year-old high-profile Wall Streeter, who had been the top candidate to work alongside Treasury Secretary Jack Lew, called the White House late Wednesday to remove her name after fretting about possibly being raked over the coals during a Senate confirmation hearing, sources told The Post. Putin May Cap Golden Parachutes After $100 Million Payout (Bloomberg) President Vladimir Putin proposed limiting severance payments to Russian executives, after a former KGB colleague was granted about $100 million when he stepped down as the head of OAO GMK Norilsk Nickel. While so-called golden parachutes should “stimulate top- class managers” to work efficiently, “sensible limits” are needed, Putin said at a meeting of his People’s Front movement in Rostov-on-Don today. Capping such payments would comply with global standards, Putin said. France's Hollande Hits Companies With 75% Wealth Tax (Reuters) French President Francois Hollande declared on Thursday that companies would have to pay a 75 percent tax on salaries over a million euros after his plan for a "super-tax" on individuals was knocked down by the constitutional court. Deutsche Bank probe finds incomplete data given to prosecutors (Reuters) An internal investigation at Deutsche Bank has found that incomplete data related to a carbon tax fraud probe were handed over to prosecutors, German magazine Der Spiegel said on Friday. The probe is one of several legal headaches with which Germany's biggest lender is grappling. For CEOs, Buyout Game Can Be Second Act (WSJ) Less than two months after agreeing to leave Chesapeake under pressure from shareholders over his free-spending ways, Aubrey McClendon is meeting with private-equity investors and others to discuss potentially teaming up for new ventures, according to several people familiar with the discussions. Mitt Romney Thinks His Grandkids’ Names Are Ridiculous (Daily Intel) "A few months ago we had twins come in, and you can't believe what they're named: Winston and Eleanor. [Laughs.] I mean, it's going back to the glorious days of the thirties and forties, I guess. But these are just darling little infants, and to have such big names on them is really something, although they call them Ellie and Win ... When I heard Winston and Eleanor, I thought, It sounds like two English bulldogs, but they're adorable children."

Budget Talks Cloud Outlook (WSJ) Lawmakers returning to town this week will see whether they can agree on a plan to avoid the full brunt of the fiscal cliff, the combined $500 billion in tax increases and spending cuts set to begin next week. Little if any progress was made in the talks before Congress and President Barack Obama left town last Friday for Christmas. The president plans to leave his vacation in Hawaii late Wednesday night, returning to Washington on Thursday, the White House said. Aides in both parties say they expect a potential solution to start taking shape by the end of the week. But with so little time, hopes are dimming for anything other than a partial agreement, which would prolong the uncertainty and leave in place some tax or spending measures that act as a serious drag on the weak recovery. This could even trigger another recession, exacerbating the global economic slowdown. Grand Bargain Shrinks as Congress Nears U.S. Budget Deadline (Bloomberg) “At this point there’s zero percent chance of a big deal and maybe a 10 percent chance of a small deal before Jan. 1,” said Stan Collender, a former staff member of the House Ways and Means Committee and the House and Senate Budget committees who is now at Qorvis Communications in Washington. He has predicted a no-deal scenario since before Memorial Day, and said the past two weeks of inaction reinforced his projection. At this point, Collender said, whether the Senate moves first won’t matter. “Nothing will move House Republicans if they don’t feel like getting moved,” he said. “They’ve never been swayed by the Senate before.” The remaining option for averting the cliff, he said, would be if Boehner risks his House speakership to put to the floor a tax deal that would get a majority of Democrats to support it and few -- perhaps less than 50 -- Republicans. “The Republican caucus would never forgive him,” he said. “The statesmanlike thing to do would be to say I’m the speaker of the House, not the head of the Republican party. That is the equivalent of never running for speaker again.” Some 'Cliff' With Your Coffee? Starbucks Urges Unity (Reuters) Chief Executive Howard Schultz is urging workers in Starbucks' roughly 120 Washington-area shops to write "come together'' on customers' cups on Thursday and Friday, as U.S. President Barack Obama and lawmakers return to work and attempt to revive fiscal cliff negotiations that collapsed before the Christmas holiday. Herbalife Goes On Offensive (WSJ) Herbalife Ltd. said it has hired a strategic adviser and will hold an analyst and investor meeting next month in an effort to thwart a wave of criticism reignited by investor William Ackman. In addition, Herbalife is working with law firm Boies, Schiller & Flexner LLP in connection with the dispute, according to people familiar with the matter. It wasn't immediately clear what kind of counsel Boies Schiller might provide...The company's moves, announced Monday, come after Mr. Ackman last week revealed that his firm has been betting against Herbalife shares for months in a negative wager that he characterized as "enormous." He also said the nutritional-supplement maker operates as a "pyramid scheme." He said distributors, or salespeople, for the Los Angeles-based company make more money by recruiting other distributors than by selling the company's diet and nutritional products. Herbalife last week called Mr. Ackman's stance "a malicious attack on Herbalife's business model based largely on outdated, distorted and inaccurate information." NJ Pension Fund Sues NYSE-Euronext on ICE Deal (Reuters) The New Jersey Carpenters Pension Fund on Friday filed a complaint in New York State Supreme Court in Manhattan contending that NYSE-Euronext breached its duty to maximize returns for shareholders. The lawsuit seeks class-action status on behalf of other NYSE-Euronext shareholders and aims to block the sale. Titan to Withdraw Money From SAC (WSJ) Titan Advisors LLC recently told clients that it had decided to withdraw its entire investment from SAC, said clients who received phone calls from Titan. "They've told us they still think SAC is a good firm but Titan doesn't need the headline risk, and we sure don't," said Tom Taneyhill, executive director of the Fire & Police Employees' Retirement System of the City of Baltimore, on Friday...Titan's departure is significant given SAC's long-standing relationship with one of Titan's founders. Titan co-founder George Fox began investing in SAC in the mid-90s, several years after Mr. Cohen started what became the firm in 1992. Madoff, in Christmas Eve Letter, Says Insider Trading Has Gone on 'Forever' (CNBC) In a Christmas Eve letter from the medium security federal prison in North Carolina where he is serving a 150-year sentence for running a massive Ponzi scheme, Madoff tells CNBC that insider trading has been around "forever." He also rails against what he calls a lack of transparency in the financial markets, and says the growth of hedge funds is forcing market players to take outsized risks in order to earn decent returns. [...] "(O)ne would be led to believe that with the recent spate of insider trading prosecution that insider trading is a new development," Madoff writes. "This is false. It has been present in the market forever, but rarely prosecuted. The same can be said of front running of orders." Venture Capital to Suppress Its Appetite for Risk in 2013 (WSJ) Internet entrepreneurs have had the upper hand over venture capitalists in recent years but that balance of power is now showing some signs of shifting, a trend that could accelerate in 2013. Spurring the change is a dramatically lower appetite for risk from venture capitalists. Many investors rushed to get into Web startup deals in 2010, 2011 and in the early part of this year, often acceding to entrepreneurs' demands for rising valuations in order to snag a stake in their companies. But following the disappointing stock market performances of recently public Web companies Facebook, Zynga, and Groupon venture capitalists are reining in their spending in areas like the consumer Internet. Israel Hedge Funds Defy Iran Threat Multiplying in Tech Center (Bloomberg) Tal Keinan, an Israeli fund manager, was ready for the question he’s always asked when he met with investors in New York in October: Why put your money with a manager whose country Iran has threatened to obliterate. “We tell them ‘if the Iranians attack, the worst thing that can happen is you lose your money manager not your money’,” Keinan, chief executive officer of Tel Aviv-based KCPS & Company, which oversees $1 billion in assets, said in an interview on Oct. 14. “The notion is trade global markets with global assets and clients, but just do it from Israel because of the concentration of talent here.” The country is becoming a magnet for hedge fund managers as lower operating costs, the world’s highest number of Ph.D.s and hi-tech startups per capita overshadow concern that Israel may be attacked by missiles from Tehran. The number of funds has grown to 60 overseeing about $2 billion from 13 in 2006, according to a survey of the local industry published in July by Tzur Management. Israel may be on track to replicate the growth that propelled Singapore’s industry from fewer than 20 managers in 2001 to 320 overseeing $48 billion in 2009, Yitz Raab, founder and managing partner of the Tel Aviv-based fund administration company, said in an interview on Nov. 11. Even Cupid Wants To Know Your Credit Score (NYT) The credit score, once a little-known metric derived from a complex formula that incorporates outstanding debt and payment histories, has become an increasingly important number used to bestow credit, determine housing and even distinguish between job candidates. It’s so widely used that it has also become a bigger factor in dating decisions, sometimes eclipsing more traditional priorities like a good job, shared interests and physical chemistry. That’s according to interviews with more than 50 daters across the country, all under the age of 40. Report: Hedgies prime for comeback (NYP) Banking giant UBS says so-called active investing could be making a comeback after several years of lagging performance, according to a recent report sent to clients. “Although the recent market environment has been difficult for active managers, conditions appear to be improving,” according to the report by UBS’s wealth-management group, which advises clients on their investment strategies. “We expect this to lead to better manager performance.” London VC Spared Jail After ‘Groin Thrusting’ Sexual Assault On Tube During Olympics (TechCrunch) Stefan Glaenzer, a partner in London VC firm Passion Capital has been spared jail after pleading guilty to, and being convicted of, sexual assault on the London underground during the Olympics period...In November, the former chairman of Last.fm admitted sexually assaulting an American tourist on a packed Central Line train by thrusting his groin into her back, Westminster Magistrates’ Court heard. His defence was that he was under the influence of cannabis. Programming Note: We’re on an abbreviated, vacation-esque schedule this week (opening news roundups and limited updates whenever the urge to reach out and touch you moves us). We still want to hear from you, though, so if anything happens that you think might tickle our fancy, do not hesitate to let us know.