Opening Bell: 10.18.13

Author:
Updated:
Original:

HSBC Is Fined $2.46 Billion in Securities Fraud Case (Reuters)
A unit of the British bank HSBC was hit on Thursday with a record $2.46 billion final judgment in a securities class-action lawsuit in Chicago against a lender formerly known as Household International. The judgment, by Judge Ronald Guzman of Federal District Court, was the largest in a securities fraud class-action suit that went to a trial, according to a statement from the Robbins Geller Rudman & Dowd law firm, which represented investors.

Morgan Stanley to Face Class Suit by Singapore Investors (Bloomberg)
A group of Singapore investors who lost money on $154.7 million in credit-linked notes may pursue their suit against Morgan Stanley as a class, a federal judge in Manhattan ruled. U.S. District Judge Jesse Furman said today the investors may represent a class of all persons who bought any of seven series of Pinnacle Notes issued in 2006 and 2007. The investors sued in 2010, claiming the notes were a “bait and switch” scheme designed to benefit Morgan Stanley at the expense of customers.

Lenovo Approaches BlackBerry (WSJ)
Lenovo Group Ltd. is actively considering a bid for all of struggling Canadian smartphone maker BlackBerry Ltd., according to people familiar with the matter, the latest sign of the voracious appetite of Chinese companies for foreign acquisitions. The Chinese personal-computer maker has signed a "nondisclosure" agreement that allows it to look at BlackBerry's books, one of the people said, joining a list of potential bidders for the company, which has put itself up for sale.

GOP Civil War Erupts: Business Groups v. Tea Party (Bloomberg)
A battle for control of the Republican Party erupted Thursday as an emboldened Tea Party is moving to oust senators who voted to reopen the government, and business groups began mobilizing to defeat allies of the small-government movement. “We are going to get engaged,” said Scott Reed, senior political strategist for the U.S. Chamber of Commerce. “The need is now more than ever to elect people who understand the free market and not silliness.” The chamber spent $35.7 million on federal elections in 2012, according to the Center for Responsive Politics, a Washington-based group that tracks campaign spending. Meanwhile, two Washington-based groups that finance Tea Party-backed candidates said today that they’re supporting efforts to defeat Mississippi Senator Thad Cochran, a 35-year veteran who voted for the deal ending the 16-day shutdown and avoiding a government debt default.

Former Primary Global employee avoids jail in insider case (Reuters)
A former technology analyst at expert networking firm Primary Global Research LLC avoided jail time on Thursday after a judge praised his "very substantial assistance" in cooperating with a government insider-trading investigation. Bob Nguyen, 34, who pleaded guilty in January 2011 to leaking confidential corporate information to hedge funds, received two years of probation from U.S. District Judge Jed Rakoff in federal court in New York...Rakoff said Nguyen's sentence should not be seen as a suggestion that insider trading is a minor issue. Instead, he said, it was a reflection of the fact that such prosecutions frequently require cooperation to succeed.

Rex Ryan tells NY Jets players no messing around before Patriots game (NYDN)
Ryan, in a team meeting Wednesday, told the Jets they need to be well-rested when Tom Brady and Co. hit MetLife Stadium on Sunday, and, according to Josh Cribbs, added “Don’t do nothing for your wife.” To defensive lineman Sheldon Richardson, that not only meant avoiding things like taking out the garbage, it also included any activities in the bedroom. “Most definitely,” Richardson told the Daily News with an ear-to-ear grin, when asked if Rex’s message included hanky panky. Richardson’s comments sparked Jet mayhem reminiscent of the good old days, forcing Ryan to come into the press room and tell the gathered media that sex is not part of his no-no list for the weekend. It was good for a few laughs, but the message was clear: focus on the Patriots and nothing else. “He was like ... rest your legs, you go home, don’t do nothing for your wife,” Cribbs said. “Say baby, next week. You’ll take out the trash next week. I’ll take the kids to practice next week but I’ve got to rest for this game. I’m going to tell him to put it on paper so when I give it to my wife, I can be like, ‘Rex said that I don’t got to take out the trash.’ So he might get a call.”

After Pause, Resupplying Economic Data (NYT)
The most eagerly awaited number, the update from the Labor Department’s Bureau of Labor Statistics on unemployment and job creation in September, will come out Tuesday, Oct. 22, two and a half weeks after it was originally supposed to be released. And the October jobs report, originally set for a Nov. 1 release, will be delayed until Friday, Nov. 8.

'Taper talk' may be dead until next year (CNBC)
"One thing we know for sure, as much as we know anything, is that short-term interest rates are going to stay low for as far as the eye can see," DoubleLine CEO and chief investment officer Jeff Gundlach said on "Squawk on the Street." "Quantitative easing is not even going away. It seems with this budget wrangling, it's going to keep going up."

Goldman Sachs trims pay pool to $319K per employee (NYP)
The smaller pile of cash is enough to pay each of the firm’s 32,600 employees about $319,755 — down from $336,442 last year through nine month. That’s about $16,700 less per employee.

Illinois biker claims he was speeding to the bathroom — at 140 mph (NYDN)
A Pekin police officer clocked Adam Lester’s motorcycle at 140 mph — not that he needed the radar gun to know the bike was flying. “The blur was the first clue,” Detective Mike Eeten told the Daily News. Lester, 26, and a passenger screamed down the highway, slowing slightly before they blew through a red light and disappeared from sight, police said. The dogged cop kept going and spotted the highway racer and a girl hiding between a bar and a bowling alley, Eeten said. Lester was wearing a woman’s coat, and he told the officer he “had to pee.” “I’d have to go the bathroom, too, if I was going that fast,” Eeten said. The 16-year-old girl reportedly told the officer Lester saw the patrolman on the road before he ducked into his hiding spot. The chivalrous master of disguise then asked her to switch jackets with him, she said.

Related

Opening Bell: 07.20.12

Eurogroup approves Spanish banking sector bailout (Reuters) Euro zone finance ministers approved an agreement on Friday to lend up to 100 billion euros ($123 billion) to Spain so it can recapitalize its banks, but the exact size of the loan will probably only be determined in September. Yahoo To Pay Mayer $100 Million Over 5 Years (WSJ) Ms. Mayer is expected to receive around $5.4 million from Yahoo for the remainder of this year and around $20 million a year after that, though some of that amount is tied to performance targets set by the board...The Yahoo pay package includes restricted stock units valued at $14 million in order to "partially compensate" Ms. Mayer for forfeiting her compensation from Google. It also includes a one-time retention award that is valued at $15 million and will vest over five years. Morgan Stanley Joins Citigroup In Job-Cut Push Amid Slump (Bloomberg) Headcount at Morgan Stanley will decline by about 700 in the second half, bringing total 2012 staff reductions to 4,000, Chief Financial Officer Ruth Porat, 54, said yesterday in an interview. Deutsche Bank, Europe’s biggest lender by assets, is considering about 1,000 job cuts at its investment bank, while Citigroup plans to chop about 350, people with knowledge of the decisions said this week. London Fund-Raisers Put Romney in a Scandal’s Glare (NYT) The former chief executive and a top lobbyist for Barclays, the bank at the center of the scandal, helped organize a Romney fund-raiser. The former chief executive, Robert E. Diamond Jr., has since withdrawn his name as the event’s co-host. The bank’s lobbyist, Patrick J. Durkin, remains a co-chairman: he has bundled $1.1 million for Mr. Romney from friends and business associates, more than any other lobbyist, according to federal records. Nasdaq to Release Compensation Plan for Investors Hurt by Facebook IPO Mess (FBN) Nasdaq is looking to release next week the compensation plan for investors who lost out on the bungled IPO of Facebook...Sources say the deal being discussed will be all in cash, and likely above the $40 million originally proposed...Nadsaq had proposed a $40 million deal in which $27 million of it involved trading credits--a move that outraged investors and market makers who may have lost a combined $200 million or more on the botched IPO. Because of that one source says the new Nasdaq proposal could be as high a $100 million and all of it in cash. Insider Traders Face Longer Sentences As Judges Get Tough (Bloomberg) Since Jan. 1, 2011, the judges have sent the average violator to prison for more than 22 months, according to an analysis of sentencing data by Bloomberg News. That was a 20 percent increase from the average term of 18.4 months during the previous eight years. Boxer’s Bloody Nose Leads to Bank Robbery Charges (AP) Martin Tucker won his latest boxing match, but a bloody nose in the ring could send him to prison for bank robbery. The FBI said it obtained a swab used to stop the bleeding and found that DNA matched Tucker's DNA on other evidence from a 2009 robbery at Monroe County Community Credit Union in Temperance, near the Michigan-Ohio border. In a court filing, agent Robert Schmitz said he was aware of Tucker's bout in April in Toledo, Ohio, and obtained the "discarded" Q-tips swab. Tucker's DNA matched DNA from a mask believed to have been used in the robbery and from the steering wheel of the getaway car, the FBI said...Detroit FBI spokesman Simon Shaykhet declined to discuss how Schmitz got the bloody swab. Defense attorney Haytham Faraj said there seems nothing illegal about acquiring it. "We leave our fingerprints, bits of hair and skin all over the place. If you're a boxer, sometimes you leave your blood around," Faraj said in an interview Thursday. Bank of England Says New York Fed Gave No Warning on Rate-Rigging (Dealbook) The call for a review into Libor in 2008 came after Mr. King and Mr. Geithner had talked about potential problems with the rate during a meeting in Basel, Switzerland, in early May 2008. This discussion was followed by a flurry of e-mails a month later in which Mr. Geithner, who is now the Treasury secretary, recommended changes to the rate, which is used as a benchmark for more than $360 trillion financial products worldwide. The suggestions included ‘‘strengthen governance and establish a credible reporting procedure’’ and ‘‘eliminate incentive to misreport,’’ according to documents released by the New York Fed. Mr. King told Mr. Geithner that he supported the suggestions. Yet the New York Fed did not make any allegations of wrongful behavior connected to Libor, according to documents released on Friday. Mr. King told a British parliamentary committee on Tuesday that Mr. Geithner’s suggestions did not represent a warning about the potential manipulation of Libor. Geithner-Led Fed Didn’t Do Enough in Libor Scandal: Sheila Bair (CNBC) "Looking at those emails, it looks like they had pretty explicit notification of some very bad behavior, and I don't understand why they didn't investigate," Bair said today. Banks in Libor probe consider group settlement (Reuters) A group of banks being investigated in an interest-rate rigging scandal are looking to pursue a group settlement with regulators rather than face a Barclays-style backlash by going it alone, people familiar with the banks' thinking said...Barclays Plc was the first to settle with U.S. and British regulators, paying a $453 million penalty and admitting to its role in a deal announced June 27. Its chief executive, Bob Diamond, abruptly quit the next week, bowing to public pressure and erosion of the bank's reputation. The sources told Reuters that none of the banks involved now want to be second in line for fear that they will get similarly hostile treatment from politicians and the public. Rex Ryan's Biggest Loss (NYP) “My surgeon told me one time, ‘How many tacos do you eat?’ because I told him how much I love Mexican food,” Ryan recalled. “I said, ‘I probably can eat about 12 tacos.’ He’s like, ‘OK.’ Never flinched. He said by the time this is really working, you’ll eat about a half or three-quarters of a taco and that’s it. I was like, ‘Why would I want to do that?’ And he said, no, you’ll be satisfied. That’s exactly where I’m at now...I have no clothes that fit. Socks are the only things that fit. Even a hat, underwear, I’ve got to change everything.”

Opening Bell: 11.09.12

RBS, UBS Traders Said to Face Arrest in Libor Probe (Bloomberg) U.K. prosecutors are poised to arrest former traders and rate setters at UBS, Royal Bank of Scotland Group and Barclays within a month for questioning over their role in the Libor scandal, a person with knowledge of the probe said. The arrests will be made by police under the direction of prosecutors at the Serious Fraud Office within the next month, said the person, who declined to be identified because the matter isn’t public. Arrests in the U.K. are made at an early stage of the investigation, allowing police and prosecutors to question people under caution and may not lead to charges. The SFO has 40 people working on the probe into manipulation of the London interbank bank offered rate, a benchmark for financial products valued at $360 trillion worldwide, and has involved the City of London Police, said David Green, the agency’s director. “Significant developments” in the case are coming “in the near future,” Green said yesterday in an interview at his office in London without giving further details and declining to comment on any possible arrests. Pressure Mounts On Fiscal Crisis (WSJ) The CBO on Thursday detailed its view that if Washington policy makers don't act before the end of the year, the economy would contract by 0.5% in 2013. The unemployment rate would jump from 7.9% to 9.1% by the end of 2013, according to the CBO—a nonpartisan arm of Congress. Ex-Goldman Bankers See Crisis Opportunity in Greek Insurance (Bloomberg) Alexis Pantazis and Emilios Markou are on a three-year odyssey to become next-generation car insurance executives in Greece that’s a million miles from their previous incarnation as bankers for Goldman Sachs. “One of our investors says you cannot wipe out a country,” said Pantazis, 36, a consultant at Boston Consulting Group before working as an executive director at Goldman Sachs from 2005 to 2008. “A country like Greece has 11 million people and these people need basic services. They need bread, they need milk, they need car insurance.” As French banks Credit Agricole and Societe Generale sell their Greek units to exit the only euro area country that’s in need of a second rescue package, Pantazis and Markou see an opportunity. After swapping business-class lounges and sushi for budget flights and sandwiches, the pair began pitching their Internet-based vehicle policies to Greeks two months ago. SEC Left Computers Vulnerable to Cyberattacks (Reuters) Staffers at the U.S. Securities and Exchange Commission failed to encrypt some of their computers containing highly sensitive information from stock exchanges, leaving the data vulnerable to cyberattacks, according to people familiar with the matter. While the computers were unprotected, there was no evidence that hacking or spying on the SEC's computers took place, these people said. The computers and other electronic devices in question belonged to a handful of employees in an office within the SEC's Trading and Markets Division. That office is responsible for making sure exchanges follow certain guidelines to protect the markets from potential cyber threats and systems problems, one of those people said...The security lapses in the Trading and Markets Division are laid out in a yet-to-be-released report that by the SEC's Interim Inspector General Jon Rymer. The Last Days Of Romneyland (NBC) From the moment Mitt Romney stepped off stage Tuesday night, having just delivered a brief concession speech he wrote only that evening, the massive infrastructure surrounding his campaign quickly began to disassemble itself. Aides taking cabs home late that night got rude awakenings when they found the credit cards linked to the campaign no longer worked. "Fiscally conservative," sighed one aide the next day. In conversations on Wednesday, aides were generally wistful, not angry, at how the campaign ended. Most, like their boss, truly believed the campaign's now almost comically inaccurate models, and that a victory was well within their grasp. (Outside Republicans and donors are another story. Some are angry over what they felt was an overly rosy picture painted by the campaign, and at what amounts to the loss of their investment.) New York Subway Repairs Border ‘on the Edge of Magic’ (NYT) There were some hiccups. At West Fourth Street, unexpected third-rail and switch problems delayed the return of the D, F and M trains. As the authority prepared to bring the G train back this week, a transformer blew, keeping the train offline for the morning rush hour on Wednesday. There were still service gaps on the N train, the A train in Far Rockaway and the R line, among others. On Thursday morning, inside his office, Joseph Lhota, the chairman of the transportation authority, checked his BlackBerry often, hoping for an update on the L train. Moments later, he placed a call to Howard B. Glaser, Mr. Cuomo’s director of state operations, whom he wanted to brief on the Queens-Midtown Tunnel. The tunnel could open Friday, he told Mr. Glaser, remarking that Mr. Bloomberg, “like an idiot,” had predicted publicly that the tunnel might open over the weekend. “He’s making it up,” he said, after a brief hail of profanity in which Mr. Lhota wondered aloud who, exactly, Mr. Bloomberg had been talking to. “It’s wrong,” he told Mr. Glaser. “It’s just wrong.” Mr. Lhota also spoke of the L line’s importance, as if his audience needed convincing. “You know who knows where the L train goes?” he barked into the phone. “All the hipsters in Williamsburg.” The BlackBerry buzzed on the table in front of him. He grabbed it quickly, then put it back. No good news yet on the L, he said. Hours later, that would change. “Ladies and Gentlemen,” he wrote on Twitter. “The L train is back. Enjoy your trip home tonight.” Whistleblower To Get Big Payment In Bank Of New York-Virginia Deal (WSJ) Bank of New York Mellon Corp. has reached an agreement with the state of Virginia to resolve accusations the bank charged hidden markups on currency transactions to Virginia's employee pension fund, in a deal that will also involve a $1.1 million payment to a whistleblower group, according to a person familiar with the negotiations. The whistleblower group includes Grant Wilson, who spent two years as a secret informant while sitting on the bank's Pittsburgh trading desk. Mr. Wilson's identity was disclosed in a page-one article in The Wall Street Journal last year. As part of the agreement, Virginia won't pursue litigation against BNY Mellon, and the bank will offer reduced fees in the future under a new custodial deal, according to people familiar with the negotiations. Nearly Half Of Britons Want EU Exit (Reuters) Nearly half of Britons would vote in a referendum to leave the European Union and less than a third to stay in, according to a poll highlighting divisions facing Prime Minister David Cameron. Polling company YouGov said on Thursday 49 percent favoured leaving the EU, 28 percent would vote to stay in the 27-nation bloc, 17 percent were undecided and the rest would not vote. Crédit Agricole Posts Record Loss After Greek Sale (WSJ) The Paris-based lender, France's third-largest bank by market value, posted a third-quarter net loss of €2.85 billion ($3.63 billion), well below analyst forecasts of a €1.76 billion net loss. The bank reported a €258 million profit in the same quarter a year earlier. Rochdale Traders Await Rescue (NYP) Sixteen days after a rogue trader rocked Stamford, Conn.-based Rochdale Securities, the broker-dealer, still hasn’t reached a deal with a deep-pocketed investor, sources said. Fla. principal resigns after offering promotions for sex (WPBF) A Florida high school principal who offered teachers' promotions in exchange for sex has resigned from his position. Steve Van Gorden's resignation comes after a 300-page investigative report by Pasco County school officials into allegations of sexual harassment. Several teachers claim Van Gorden, who is also the mayor of Zephyrhills, sent text messages offering career boosts in exchange for sex and threatened them if they refused. Van Gorden said he's sorry. "The bottom line is I'm truly sorry for what occurred, and it's not going to happen again," Van Gorden said. Van Gorden has a year and a half left on his term as mayor.