Opening Bell: 08.02.13

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Former Trader Is Found Liable In Fraud Case (DealBook)
“He was the one that didn’t get away,” one of the nine jurors, Beverly Rhetts, said after the verdict. “The decision-making was a slow and arduous process,” said Ms. Rhetts, a retired teacher who was juror No. 2. “We went over each item with a fine-tooth comb. We looked into the semantics and tried to understand them as best as we could.” “We never felt there was anything that was cut and dry,” she added. ... Juror No. 9, Leonel Lopez, 27, who works in advertising, said, “I found Mr. Tourre’s testimony to be genuine and the defense’s case solid, but the evidence suggested that a number of S.E.C. violations had occurred.” As the verdict was read on Thursday, Mr. Tourre sat emotionless, briefly glancing at the jury before fixing his stare elsewhere. When the jury shuffled from the courtroom, few made eye contact with him. Minutes later, he departed the building, carrying a copy of “The History of the Decline and Fall of the Roman Empire” by Edward Gibbon.

Case Against SAC Is Aided by Hiring of Fired Trader (DealBook)
[Richard S.] Lee, who has pleaded guilty and is cooperating with investigators, proved crucial to the government’s case — not so much because of his illicit trading, but because of how he landed a job at SAC despite his earlier misstep. Mr. Lee’s interview process added to questions about SAC’s hiring practices and controls. His cooperation, as well as evidence suggesting that SAC recruited employees with sources inside publicly traded companies, provided ammunition for the government’s claim that SAC and its units permitted a “systemic” decade-long insider-trading scheme.

BofA faces potential mortgage-related civil charges (FT)
Bank of America is facing new legal troubles from US authorities, it disclosed on Thursday, including potential civil charges from the Department of Justice over securitisations of mortgages lent to wealthy borrowers. The bank has settled lawsuits over mortgages in the past year, helping to improve investor confidence that it is gradually escaping the legacy of the financial crisis when it wrote bad loans to borrowers who could not repay them. However, in a regulatory filing, BofA announced new threats and the development of existing cases. It said it had “been advised by the staff of the DoJ that it intends to file civil charges against Bank of America entities arising from one or two jumbo prime securitisations”.

Swaps Probe Finds Banks Manipulated Rate at Expense of Retirees (Bloomberg)
Recorded telephone calls and e-mails reviewed by the Commodity Futures Trading Commission show that traders at Wall Street banks instructed ICAP Plc brokers in Jersey City, New Jersey, to buy or sell as many interest-rate swaps as necessary to move the benchmark rate, known as ISDAfix, to a predetermined level, according to a person with knowledge of the matter. By rigging the measure, the banks stood to profit on separate derivatives trades they had with clients who were seeking to hedge against moves in interest rates.

Man Pays Settlement With 600,000 Quarters (WSJ)
On Wednesday, [Dr. Roger Herrin] delivered the money to the other parties, complying with a court-ordered settlement. But to their astonishment, he paid $150,000 of it in quarters. An armored Brink’s truck drove 150 bags of loose quarters from the Federal Reserve Bank of St. Louis to a Marion, Ill., bank. The bags were then piled on flatbed trucks that the doctor had borrowed from a friend. The trucks then rumbled through a busy downtown square, parked outside of two law firms, where the bags were dumped in the lobbies. “We blocked traffic,” Dr. Herrin told Law Blog. The 76-year-old doctor said his coin trick — reported by the Southern Illinoisan newspaper — was a “protest against the ruling.”

US bankruptcy court to shed light on Detroit case timeline (CNBC)
A court hearing on Friday may provide a roadmap for how Detroit's historic bankruptcy filing will unfold as the judge overseeing the case could set a speedy schedule, appoint a mediator and rule on other matters. The hearing in U.S. Bankruptcy Court is a key step toward Detroit Emergency Manager Kevyn Orr's effort to see the city emerge from the largest U.S. municipal bankruptcy filing in history by September 2014. But Detroit must first prove it qualifies to file for bankruptcy and then file a reorganization plan.

Brazil backs IMF aid for Greece and recalls representative (FT)
Brazil reversed its hardline stance on Greece’s bailout on Thursday, saying it had not authorised its representative to the International Monetary Fund to withhold support for the latest aid to Athens. Guido Mantega, the country’s finance minister, said it was a “mistake” for Brazil’s representative, Paulo Nogueira Batista, to abstain on the €1.8bn tranche of aid. Mr Mantega said he fully supported the IMF’s efforts to supply financial aid to Greece. “[Mr Nogueira Batista] did not consult the government, nor was he authorised by us to vote in this manner and the finance minister has ordered him to return to Brazil immediately to explain himself,” Brazil’s finance ministry said. “The finance minister spoke to the managing director of the IMF, Christine Lagarde, just now over the phone, expressing his support for the [financial aid] programme,” it said.

Dell Deal Close but Not Final (WSJ)
Michael Dell and Silver Lake are nearing a new deal with Dell Inc.'s special board committee that would increase the price they would pay for the computer maker in exchange for a modification to the voting rules expected to ease passage of the deal, according to people familiar with the discussions. The per-share price would be $13.75, up from an earlier $13.65, and the deal would also include a special dividend for shareholders, one of the people said. The new deal isn't done yet, the people cautioned. Any new pact would delay the process for a vote by Dell shareholders likely by about another month. After two earlier delays, the vote had been set for Friday morning.

LinkedIn membership and revenue soar, mobile outlook promising (Reuters)
LinkedIn Corp sailed passed Wall Street's expectations with second-quarter revenue jumping 59 percent, as its efforts to become a highly trafficked website and popular mobile app paid off with robust membership growth. The company's shares surged 7 percent to record levels after the bell. It also raised its full-year guidance, although it gave a lower-than-expected forecast for the third quarter. The money-making outlook for social media companies has brightened considerably with inroads made by sponsored ads, and the mobile-friendly format of LinkedIn's update stream, which includes sponsored ads, has begun to show serious promise as a new revenue source for the company.

FBI busts 2 Montauk resort owners who allegedly fleeced investors for $96 million in Ponzi scheme (NYDN)
A pair of fraudsters desperate to make keep their oceanfront resort in Montauk afloat fleeced dozens of investors in a $96 million Ponzi scheme, authorities said. Brian Callahan, an investment fund manager, and his brother-in-law Adam Manson, a real estate developer, were arrested Thursday by the FBI. They are charged with conning their clients — including the Montauk Fire Department — into thinking their money was being invested in a hedge fund. Instead, Manson and Callahan allegedly diverted millions of dollars into their unprofitable Panoramic View resort as well as fancy cars for themselves and homes in Old Westbury.

'Toffs' in red trousers a turn-off for nearly half of Britons (Reuters)
Britain's class-conscious public have voiced their dislike of men in red trousers, associating them with elitism and garish buffoonery, according to a survey this week. Just under half the respondents (46 percent) to a survey released by market research firm YouGov said they don't like men in red trousers. ... But socialite and fashion journalist Henry Conway launched a defense of them in the Guardian on Thursday, citing their illustrious history from stylish 15th century scarlet breeches in Britain to Napoleonic army uniforms. "I have to admit, I have a delicious pair in bold blood," he wrote. "I know they make me look like a total rah, but they are soft and beautiful..."

BBC apologises after it broadcasts music video picture of Prince William with a penis, comedy glasses and a moustache drawn on his head (Daily Mail)
The BBC has apologised after broadcasting a picture of Prince William with a doodle of comedy glasses, a moustache and a penis drawn on his head. The unusual picture of the Duke of Cambridge was broadcast as part of a trailer used on BBC Breakfast for a feature on musical theatre group Barbershopera. The clip, shown shortly before 8.30am today, was taken from the group's comedy song I Could Have Married Kate. It appears that BBC producers failed to spot the image, which also featured William missing several front teeth. ... One Twitter user, Amanda Morrell, wrote: 'Just watching BBC Breakfast and they showed a pic of prince William with a drawn on willy on his head'.

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Opening Bell: 11.13.12

Wall Street Damps Pay Expectations After 2011 Bonus Shock (Bloomberg) Almost 20 percent of employees won’t get year-end bonuses, according to Options Group, an executive-search company that advises banks on pay. Those collecting awards may see payouts unchanged from last year or boosted by as much as 10 percent, compensation consultant Johnson Associates Inc. estimates. Decisions are being made as banks cut costs and firms including UBS AG (UBSN) and Nomura Holdings Inc. (8604) fire investment-bank staff. Some employees were surprised as companies chopped average 2011 bonuses by as much as 30 percent and capped how much could be paid in cash. That experience, along with public statements from top executives, low trading volumes in the first half and a dearth of hiring has employees bracing for another lackluster year, consultants and recruiters said. “A lot of senior managers won’t have to pay up because they’re saying, ‘Where are these guys going to go?’” said Michael Karp, chief executive officer of New York-based Options Group. “We’re in an environment where a lot of people are just happy to have a job. Expectations have been managed so low that people will be happy with what they get.” Goldman Pares Back Partner Picks (WSJ) The New York company is expected to announce this week the promotion of about 70 employees to partner, said people familiar with the situation. The likely total is roughly one-third smaller than the 110 employees named partner by Goldman in 2010...As of Monday, the Goldman partnership committee hadn't finished the list of new partners, said people familiar with the matter. Greece Avoids Defaults (WSJ) Cash-strapped Greece on Tuesday raised the money it needs to avoid default when a Treasury bill matures later this week, but investor nerves are unlikely to be calmed as negotiations for the next slice of much-needed aid continue. The rift among Greece's official lenders over how to pare the country's growing debt pile spilled into the open late Monday, complicating efforts for an agreement that will free up a long-delayed aid payment to the country. The European Central Bank's reluctance to provide additional money to Greek banks poses a risk to the government, which in order to keep afloat has depended on support from local banks to sell its debt. Greece Needs Another 80 Billion Euros: Goldman Sachs (CNBC) The authors of the report, economists Themistoklis Fiotakis, Lasse Holboell Nielsen and Antoine Demongeot, note that the IMF’s target is “unlikely” without such a “drastic debt stock reduction.” “To increase the likelihood that the Greek debt-to-GDP ratio approaches its 120 percent by 2020 target under realistic assumptions, a much more drastic debt stock reduction (possibly north of 80 billion euros in total) will be required,” the report states. Japan Lawmakers Agree To Avert 'Fiscal Cliff' (Reuters) Japan's ruling and opposition parties agreed on Tuesday to quickly pass a deficit funding bill in parliament, in a move that will keep the country from falling off its version of a 'fiscal cliff' as the prime minister eyes elections as early as next month. The bill is needed to borrow some $480 billion and fund roughly 40 percent of this fiscal year's budget. Without it, the government could run out of money by the end of this month and would have to stop debt auctions next month, just as the economy teeters on the brink of a recession. Marc Faber: Prepare For A Massive Market Meltdown (CNBC) “I don’t think markets are going down because of Greece, I don’t think markets are going down because of the “fiscal cliff” – because there won’t be a “fiscal cliff,” Faber told CNBC’s “Squawk Box.” “The market is going down because corporate profits will begin to disappoint, the global economy will hardly grow next year or even contract, and that is the reason why stocks, from the highs of September of 1,470 on the S&P, will drop at least 20 percent, in my view.” FBI Agent in Petraeus Case Under Scrutiny (WSJ) A federal agent who launched the investigation that ultimately led to the resignation of Central Intelligence Agency chief David Petraeus was barred from taking part in the case over the summer due to superiors' concerns that he was personally involved in the case, according to officials familiar with the probe. After being blocked from the case, the agent continued to press the matter, relaying his concerns to a member of Congress, the officials said. New details about how the Federal Bureau of Investigation handled the case suggest that even as the bureau delved into Mr. Petraeus's personal life, the agency had to address conduct by its own agent—who allegedly sent shirtless photos of himself to a woman involved in the case prior to the investigation. Trial to Open in $68 Million Insider Trading Case (Dealbook) On Tuesday, Mr. Chiasson, 39, a co-founder of the now-defunct Level Global Investors, and Mr. Newman, 47, a former portfolio manager at Diamondback Capital Management, are set to stand trial in Federal District Court in Manhattan. Prosecutors say they were part of a conspiracy that made about $68 million illegally trading the computer company Dell and the chip maker Nvidia. MF Report Coming (Reuters) A US House of Representatives panel will release a long-awaited report that will dissect the collapse of failed commodities brokerage MF Global. The House Financial Services Committee said its Subcommittee on Oversight and Investigations will post the report online Thursday. A Dose of Realism for the Chief of J.C. Penney (NYT) Andrew Ross Sorkin: "You should know you have a problem when sales at your stores fall 26.1 percent in one quarter. That was the surprising decline J.C. Penney reported last week, when it disclosed that it had lost $123 million in the previous three months...Here's the good news: In the stores that have been transformed, J.C. Penney is making $269 in sales a square foot, versus $134 in sales a square foot in the older stores. So the model itself is working. And Mr. Johnson has the support of the company's largest shareholder, Pershing Square's Bill Ackman, who personally recruited Mr. Johnson. If Mr. Johnson were starting with a blank slate, it might be a great business." China Banker Sees Lower Bar for Yuan Globalization (WSJ) "Renminbi internationalization can be realized based on a partial opening of the capital-account and partial convertibility of the currency," said Mr. Li, a delegate to the 18th Communist Party Congress and longtime advocate of a greater global role for the yuan. The Eximbank is a major arm of the Chinese government for financing trade and investment overseas. Finally, a Place in Brazil Where Dogs Can Go for Discreet Sex (NYT) Heart-shaped ceiling mirror: check. Curtains drawn against the bright day: check. Red mattress: check. The establishment that opened here this year has features that demanding clients naturally expect from a love motel. Brazil, after all, is a world leader in these short-stay pleasure palaces, which beckon couples for trysts away from prying eyes with names like Swing, Absinthe and Alibi, and design motifs like medieval castles or of the American Wild West. But Belo Horizonte’s newest love motel stands apart from the crowd in one crucial aspect. It is for dogs. “I adore the romantic feel of this place,” said Andreia Kfoury, 43, a manager at a technology company who peeked inside the Motel Pet one recent morning while she and her husband were on a clothes-buying spree for their Yorkshire terrier, Harley. The couple, who are motorcycle enthusiasts, bought about $500 worth of imported Harley-Davidson brand items for their dog. “I’m definitely bringing Harley back here when it’s time for him to breed,” a smiling Ms. Kfoury said. “He is very macho, and would be a hit in this place.” Whether dogs like Harley actually need a romantic curtained-off suite to breed seems beside the point. Some dog owners simply like the concept of a love motel for their amorous pets and are willing to pay about $50 for each session, which Animalle will happily arrange.