Opening Bell: 08.13.13

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Activist investor Ackman resigns from J.C. Penney board (Reuters)
Struggling department store operator J.C. Penney Co said activist investor William Ackman, who has been pressuring the company to oust its chairman and chief executive, has resigned from the board effective August 12. The company also said it has elected retail industry veteran Ronald Tysoe to its board.

Paulson makes rival offer for Steinway (FT)
US hedge fund manager John Paulson has entered into a bidding war for grand piano maker Steinway Musical Instruments, leaving private equity group Kohlberg & Co three days to sweeten its prior offer. It is rare for funds run by Mr Paulson, who is famous for betting against securities backed by US mortgages during the financial crisis, to seek to buyout a listed company. The cash offer on Monday of $38 a share, or $475m, tops the offer Kohlberg made on July 1 of $35 a share and represents a premium of almost 5 per cent to the stock’s Friday closing price.

Fed's Yellen Says Stance on Banks Hardened (WSJ)
Janet Yellen, a top contender to lead the Federal Reserve, has evolved—in her own words—from a slightly "docile" regional bank regulator into a proponent of hard and clear rules designed to make banks less risky. The change was prompted by her six years as president of the Federal Reserve Bank of San Francisco during a torrid period in financial history. As part of that job, which she held through 2010, Ms. Yellen oversaw scores of banks, some of which failed as the housing market collapsed. An examination of her record suggests she pre-emptively warned colleagues about problems in the real-estate market but didn't take aggressive action to address them.

Suit Accuses Online Lender of Violating New York Rate Caps (DealBook)
New York State’s top prosecutor filed suit on Monday against an online lender that offers short-term loans at interest rates of more than 300 percent, the latest warning shot in a sweeping battle by state authorities to enforce local interest rate caps. Eric T. Schneiderman, the New York State attorney general, sued Western Sky Financial and its affiliates, which claim connections to American Indian tribes — ties that the lenders have argued immunize them from federal and state laws.

Mooring madness devolves into porn accusation (Greenwich Time)
Days after First Selectman Peter Tesei endorsed Harbormaster Ian MacMillan's order to remove the badly placed mooring of a former Greenwich cop, a notice of violation has been served and ignored, accusations of child pornography have materialized and the mooring in question continues to bob in the middle of a public channel. "What should be a very routine process of mooring removal has developed into a theatrical circus and there are many stars," said Selectman Drew Marzullo. "It's become `The Wild Wild West' show on the waters of Greenwich. It's `Pirates of the Caribbean' on Windrose Way." ... On Sunday, MacMillan set out by boat to see whether Silbereisen had moved the mooring. He brought with him a camera. When he arrived at the site, MacMillan said Silbereisen and several other boaters were gathered around the mooring, though not tied up to it. He started snapping pictures. The boaters in Silbereisen's group waved. Some snapped pictures of MacMillan with their cellphones. A man in pastel swim trunks flashed a hang loose sign. MacMillan said he was holding the camera to his eye when he heard Silbereisen's voice requesting police assistance on the marine radio. "What he said was that I was taking pornographic pictures of small children swimming in the water," MacMillan said. "He made a false report. The purpose of my photos was to document the illegal mooring and the vessels around it." He added, "I have no interest in any kind of porn at all."

Summer Lull Draws Investors to Riskier Debt (WSJ)
Subdued summer trading and signs that some of Europe's fiscally frail countries are slowly emerging from recession are increasingly luring investors to riskier euro-zone debt, narrowing the gap in yields between Spanish and Italian bonds over German Bunds to its tightest in more than two years. ... The 10-year yield spread between Spanish debt and Bunds—the extra yield demanded by investors to hold Spanish bonds over their ultrasafe German equivalents—stood at 2.72 percentage points Tuesday, according to Tradeweb. For Italian bonds, the 10-year spread is 2.41 percentage points—the tightest spread in just over two years for both countries.

Blackstone Said to Acquire GE Apartments for $2.7 Billion (Bloomberg)
Blackstone Group LP agreed to buy 80 apartment properties for about $2.7 billion in one of its largest forays into the U.S. multifamily market, a person with knowledge of the deal said. The biggest manager of private-equity real estate funds is acquiring the properties from General Electric Co.’s GE Capital unit, said the person, who asked not to be identified because the transaction isn’t public. GE has been paring its property holdings as part of a strategy to shrink its finance division.

London Whale Resurfaces in Potential U.S. JPMorgan Case (Bloomberg)
Bruno Iksil, the former JPMorgan Chase & Co. trader whose bets caused more than $6.2 billion in losses last year, is now central to any U.S. charges against his former colleagues. Iksil, the Frenchman who became known as the London Whale because of his trading book’s size, has been cooperating with the Federal Bureau of Investigation and the Manhattan U.S. Attorney’s Office for months in their probe of the New York-based bank’s biggest trading debacle ever, said three people with direct knowledge with the matter. Iksil won’t face charges as long as he cooperates and testifies, the people said.

Wall St. Debates Who Should Pay Legal Bills (DealBook)
In the case of Mr. Tourre, his lawyers reviewed the defense team’s plans with Goldman several times before the trial and Goldman sent a representative to watch the trial and take notes, these people said, though none said that Goldman sought to influence the strategy. Surprisingly, Goldman does not have a written contract with Mr. Tourre to support his defense, nor does the firm have insurance to pay such bills for its employees, these people said.

Revealed: Elon Musk Explains the Hyperloop, the Solar-Powered High-Speed Future of Inter-City Transportation (BW)
In Musk’s vision, the Hyperloop would transport people via aluminum pods enclosed inside of steel tubes. He describes the design as looking like a shotgun with the tubes running side by side for most of the journey and closing the loop at either end. These tubes would be mounted on columns 50 to 100 yards apart, and the pods inside would travel up to 800 miles per hour. Some of this Musk has hinted at before; he now adds that pods could ferry cars as well as people. “You just drive on, and the pod departs,” Musk told Bloomberg Businessweek in his first interview about the Hyperloop. ... The critics of California’s high-speed rail may be dismayed to learn that Musk does not plan to commercialize the Hyperloop technology for the time being. He’s posting the plans and asking for feedback and contemplating building a prototype. “I’m just putting this out there as an open source design,” he says. “There are sure to be suggestions out there for making this better, correcting any mistakes, and refining the design.” Musk maintains that he has too much on his plate to deal with bringing the Hyperloop to fruition. “I wish I had not mentioned it,” he says. “I still have to run SpaceX and Tesla, and it’s fucking hard.”

Round Two of Spitzer vs. Stringer Was Just as Nasty (NYM)
The debate focused less on the comptroller's duties, and more on character bashing (though their barbs still weren't as nasty or personal as the Post's average "Love Gov" cover). Stringer told the former governor he had to step down, "because you were under federal investigation, because you laundered money. And that’s the truth," adding, "you just don't know right from wrong." "Mr. Stringer, you’re throwing terms around which you do not understand and where you misstate the facts, and I think you should be better than that," Spitzer responded. "This campaign should be better than that." ... They split again when asked, "Is controller the most exciting job you think you'll ever have?" Stringer gave an enthusiastic "Yes!" After a pause, Spitzer answered, "You know, I don't think I can answer that question. It's a very exciting job. I'll leave it at that."

Police: Man robbed bank after asking about negative balance (Bay News 9)
Police arrested a man they said robbed a Bank of America branch after asking the teller why he had a negative balance in his checking account. James Patrick Andrews, 43, entered the branch at 2335 34th Street North last Friday morning and tried to use his ATM card in the bank. When he learned there was no money in his account, police said, he approached a teller and asked her why. According to the arrest report, Andrews then passed a note to the teller demanding $1,000. He told her not to walk away from her window or press any alarm button or people in the lobby would be hurt. No weapon was implied or seen, police said. The teller complied, and Andrews left the bank with an undisclosed amount of money and got into a Hyundai Sonata driven by another man, the report said.

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