Opening Bell: 10.24.13

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Credit Suisse revamps rate trading after income slide (Reuters)
Credit Suisse said it would restructure its interest rate trading activities following a third-quarter slide in revenue at its investment bank. The Swiss bank said overall net profit rose on the year to 454 million Swiss francs ($509.1 million) from the year-ago period, where charges linked to its own debt ate into profits. The profit missed by far analyst estimates, which averaged 705 million francs. "Credit Suisse is restructuring and simplifying its rates business in order to increase returns," in a bid to lower risky assets and leverage, the Swiss bank said in a statement on Thursday.

Icahn Pushes Apple For $150 Billion Buyback (WSJ)
Activist investor Carl Icahn has boosted his investment in Apple by about 22% to 4.73 million shares, and continued to push for a massive $150 billion buyback at the company, according to a letter he sent to Apple Chief Executive Tim Cook. The billionaire investor suggests the company use a self-tender offer to buy back the stock, and pledges that he himself wouldn't sell the stock and take profits. "There is nothing short term about my intentions here," he said.

Fed Proposes Stricter Liquidity Rules for Largest U.S. Banks (WSJ)
The proposal outlined by Fed officials goes beyond international agreements, requiring the largest banks to hold enough safe assets—such as cash or those easily convertible to cash—to fund their operations for 30 days if other sources of funding aren't available. The rules are intended to prevent a repeat of the 2008 financial crisis, when financial markets froze due to a lack of liquidity. The proposal would ensure banks had access to cash and other assets in times of market dislocation.

Hamptons Sales Surge Fuels High-End Home Tear-Downs (Bloomberg)
Hamptons real estate deals are surging, fueling a boom in knockdowns, expansions and quick resales in the beachfront towns favored by Wall Street financiers and celebrities. Home purchases in the three months through September jumped 32 percent from a year earlier to 534, the most for a third quarter since 2005, appraiser Miller Samuel Inc. and brokerage Douglas Elliman Real Estate said in a report today. “Because of the scarcity of land in the Hamptons on which you can build there today, the land is worth more than the house,” said Mitchell Pally, chief executive officer of the Long Island Builders Institute, a regional trade group. “In most places, the bigger the house, the harder it is to sell. In the Hamptons the bigger the house, the easier it is to sell.”

Hedge fund mogul in nasty divorce battle with ex (NYP)
James Dondero, co-founder and president of the $18 billion asset manager Highland Capital Management, claimed in court that despite allegedly earning more than $36 million in 2010, several pending lawsuits against the firm have rendered him insolvent under the court’s accounting rules. The bitter, two-year divorce battle — which has seen his one-time partner testify for the 33-year-old wife, Rebecca Dondero — went to trial Wednesday. The battle has captured the attention of hedge-fund titans from coast to coast, not only because Dondero refused to settle short of a trial and risk embarrassing testimony in court — but because a casual conversation between him and Patrick Daugherty, the former partner, resulted in Dondero getting slammed at a hearing last year. Daugherty testified for the wife that Dondero told him he planned to try and hide assets just to stiff Rebecca on the pre-nup. Daugherty also claims in court papers that Dondero asked him to lie at an earlier hearing and tell the court Dondero was not hiding assets. “Dondero [attempted] to help Daugherty remember how he should testify regarding his wife, suggesting that it was Daugherty’s idea that he pay his wife nothing and that Daugherty referred to Dondero’s wife as a whore,” court papers claim. Daugherty hung up on Dondero when he made the request, court papers claim.

Lehman sues Giants Stadium over swap contracts gone sour (NYP)
The case goes back to 2008, when Lehman’s historic collapse served as a key catalyst to the global financial crisis...The lawsuit came about as Lehman and Giants Stadium could not agree on the settlement amount of two swap contracts after the investment bank filed for bankruptcy. The swap contracts, mostly underwritten by Lehman Brothers, were intended to hedge interest rate risks on about $650 million in bonds issued by the Giants entity. When the swaps were terminated in September 2008, at a time Lehman filed for bankruptcy, Giants Stadium “undertook a contorted plan” to avoid paying millions of dollars, the investment bank said in a lawsuit on Wednesday. Giants Stadium estimated that Lehman owed it about $301 million after the termination of the swaps contracts, a figure disputed by Lehman, the filing said. Later, Boston-based Baupost Group LLC, one of the world’s biggest hedge funds, bought the Giants Stadium claims against the Lehman estate and in turn sought to amend its claims to about $585 million for each contract, the lawsuit said. Lehman said the swaps were about $60 million in its favor just days before it filed for Chapter 11. On Wednesday, Lehman sought damages of no less than $94 million plus interest, after what is says was the “proper calculation” of the settlement amount of the swaps.

UBS Probed Over Disclosure of Restructuring, Settlement (WSJ)
UBS AG is being investigated over whether it breached disclosure rules last year when it announced a major restructuring and a 1.4 billion Swiss franc ($1.57 billion) settlement with regulators over interest-rate fixing, Switzerland's principal stock exchange said Thursday. The regulatory arm of the SIX Swiss Exchange said in a statement it had already conducted a preliminary investigation into whether Zurich-based UBS had met its obligations in disclosing the two decisions, which were made last year. The exchange deemed a continued probe was necessary.

Bonds Erase ’13 Losses as Three-Decade Rally Defies Bears (Bloomberg)
Borrowing costs for corporate, sovereign and securitized debt have fallen to 1.94 percent, within 0.5 percentage point of historic lows, five months after Pacific Investment Management Co.’s Bill Gross said that the rally had probably ended. BlackRock Inc. Chief Executive Officer Laurence D. Fink said a scaling back of quantitative easing could come as late as next June.

Lake Brantley High School teacher suspended for taping girl up (CO)
Greg Sims, a science teacher at Lake Brantley High School in Altamonte Springs, was suspended for five days without pay, according to a letter addressed October 8 from Superintendent Walt Griffin. His suspension runs through early November. According to the letter, Sims "taped a student’s hands together, attempted to tape her mouth closed as a means of addressing her disturbing class and taped her book bag to a pole in the classroom." "I have determined that your conduct in this situation does not conform to the Seminole County Public Schools Student Conduct and Discipline Code," Griffin wrote. "This is unacceptable conduct on the part of a professional educator and represents misconduct in office."

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Opening Bell: 4.15.15

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Opening Bell: 03.02.11

Financial Crisis Amnesia (WSJ) Tim Geithner: "My wife occasionally looks up from the newspaper with bewilderment while reading another story about people in the financial world or their lobbyists complaining about Wall Street reform or claiming they didn't need the Troubled Asset Relief Program. She reminds me of the panicked calls she answered for me at home late at night or early in the morning in 2008 from the then-giants of our financial system. We cannot afford to forget the lessons of the crisis and the damage it caused to millions of Americans. Amnesia is what causes financial crises. These reforms are worth fighting to preserve." IMF Says Threat Of Sharp Global Slowdown Has Eased (Reuters) So that's nice. Life as Libor Traders Knew It Seen as Abusive by Investigators (Bloomberg) Regulators probing the alleged manipulation of global interest rates are focusing on what traders involved in setting the benchmark say were routine discussions condoned by their superiors...“A few hundred people, mostly based in one city and sitting in close proximity to each other, set an index rate for trillions of dollars of securities with little or no oversight,” said Mark Sunshine, chief executive officer and chairman of Veritas Financial Partners, a Florida-based firm that provides loans to businesses and real estate companies. “That cannot continue. The mechanism itself, the oversight and the penalties if violated, are woefully inadequate.” Twitter's Slow Road To IPO (WSJ) In just six years Twitter Inc. has become the world's digital soapbox, amassing more than 100 million monthly users—from everyday people to Lady Gaga to Middle East protesters—who use the service to spread pithy updates and breaking news. Yet despite the service's growing influence on society and culture, the business behind it still has a ways to go until it's ready for an initial public offering. To understand why, travel to Cincinnati, where last June Twitter planted a staffer blocks from Procter & Gamble Co.'s headquarters and assigned him a critical task: Teach the country's biggest advertiser to use Twitter and buy its ads. But when P&G spent $150 million to promote the launch last month of a Tide laundry detergent, the company bought magazine pages, billboard spots and television commercials during the Academy Awards—and no Twitter ads. "All [P&G] brands are asking questions about what to do with Twitter and how to leverage it; nobody really had a clear, lean answer," said the staffer, J.B. Kropp. US Seeks Dismissal Of Lawsuit On AIG Takeover (Reuters) In November, Hank Greenberg's company, Starr International Co, sued the U.S. government for $25 billion, calling the 2008 federal takeover of the insurer unconstitutional. Starr sued the government in the U.S. Court of Federal Claims in Washington, D.C., which handles lawsuits seeking money from the government. It brought that lawsuit on behalf of itself and other AIG shareholders...In a filing with the U.S. Court of Federal Claims in Washington, D.C., on Thursday, the government said although Starr may disagree with the terms to which AIG agreed, any loss resulting from that agreement should be borne by AIG and its shareholders, and not the public. Obama Back On Wall Street (Politico Morning Money) Obama raised just north of $5 million for his re-election campaign and the DNC at four events in NYC last night including a swank dinner ($35,800 per person, $71,600 per couple) at Jean-Georges Vongerichten’s ABC Kitchen on East 18th Street. The dinner, the first Wall Street-heavy event since Obama doubled down on his proposed bank tax, was hosted by a handful of the President’s stalwart industry supporters including Robert Wolf, Blair Effron, Mark Gallogly, Marc Lasry and Orin Kramer. Sex Work Among Medical Students On the Rise? (ABC) Sex work among medical students is on the rise, claims a new editorial, published in the journal Student BMJ. The UK-based publication noted that students are likely seeking extreme measures to deal with their financial hardship. One in 10 students knows of another who participated in prostitution to pay their medical student loans, according to the editorial. "Mounting evidence suggests that more university students are engaging in prostitution as a means to pay increasing tuition fees, growing debts, and high living costs," Jodi Dixon, the author of the editorial, wrote. "With escalating debts, students in the United Kingdom may view prostitution as an easy way to get rich quick." Greek Swaps Headed Back to ISDA Committee (Bloomberg) Holders of credit-default swaps on Greek bonds shouldn’t tear up their contracts after yesterday’s ruling against a payout. The International Swaps & Derivatives Association said the swaps hadn’t been triggered by the European Central Bank’s exchange of Greek bonds for new securities exempt from losses taken by private investors. The group will now probably be asked to determine whether collective action clauses, or CACS, being used by Greece to impel investors to participate in a wider exchange of bonds that would trigger the swaps. Madoff moneyman Merkin near $400M AG deal (NYP) After a bitter three-year legal battle, Ezra Merkin, the Manhattan moneyman who funneled more than $2 billion to convicted Ponzi king Bernie Madoff, is nearing a settlement with the New York attorney general that could have him shell out as much as $400 million. Sources said the settlement with AG Eric Schneiderman would recover the bulk of the $470 million in fees the notorious middleman pocketed from investing his clients’ cash with Madoff. Game Changer For Zynga: No Facebook (WSJ) The San Francisco-based company, whose offerings have long been associated with Facebook as well as apps for mobile devices such as Apple Inc.'s iPhone, said a "beta," or prerelease version of what it calls the Zynga Platform, will initially allow customers to play five of its popular titles—"CityVille," "Hidden Chronicles," "Zynga Poker," "CastleVille" and "Words With Friends"—from its website. Zynga said more of its games will become available on the website over time. Cops Ticket Woman For Resting Injured Leg On Seat In Deserted Subway Train (Gothamist) Brooklyn resident Kate Wilson was riding the D train home to Sunset Park around 1 a.m. one morning in February when several police officers entered her subway car at 36th street. The subway car was mostly empty, with plenty of empty seats, and Wilson was resting her right leg—which she had injured in a race that day—on a corner of one seat. What followed was an absurd yet all too familiar encounter with overzealous, quota-filling transit cops and ended with a $50 summons.

Opening Bell: 03.05.13

Senate Report Said To Fault JPMorgan (NYT) A report by the Senate Permanent Subcommittee on Investigations highlights flaws in the bank's public disclosures and takes aim at several executives, including Douglas Braunstein, who was chief financial officer at the time of the losses, according to people briefed on the inquiry. The report's findings — scheduled to be released on March 15 — are expected to fault the executives for allowingJPMorgan to build the bets without fully warning regulators and investors, these people said. The subcommittee, led by Senator Carl Levin, could ask Mr. Braunstein and other senior executives to testify at a hearing this month, according to the people. The subcommittee does not currently intend to call the bank's chief executive, Jamie Dimon, but Congressional investigators interviewed Mr. Dimon last year. Citi CEO Is Keeping Score (WSJ) At a gathering of 300 executives last month at a Hilton Hotel in East Brunswick, N.J., Mr. Corbat proposed a slate of new, more-rigorous ways to track both the performance of individual executives and the third-largest U.S. bank as a whole, said people who were there. His approach includes score cards that will rate top managers across the New York company in five categories. "You are what you measure," Mr. Corbat told the gathering. Report Faults FSA Over Rate Rigging (WSJ) The report, commissioned by the FSA in the wake of the Barclays BARC.LN +1.48%PLC £290 million ($436.1 million) settlement with regulators over attempted rate-rigging, shows the regulator either ignored or failed to follow up on a series of red flags highlighting problems with the rates. Between 2007 and 2009, the FSA said it found 26 pieces of correspondence citing direct references to "lowballing"—where banks understated their borrowing costs to make their funding positions look stronger. These include two telephone calls from Barclays managers flagging problems with rate-setting process. The regulator also said it overlooked an article in The Wall Street Journal highlighting problems with the London interbank offered rate because the article wasn't widely read within the FSA. Heinz CEO's Golden Exit Deal (WSJ) The total would consist of a $56 million "golden parachute" including bonus payments and other items, $57 million in pension and deferred compensation and $99.7 million of Heinz shares that Mr. Johnson owns or controls, according to a Securities and Exchange Commission filing Monday. EU Said To Weigh Extra Years For Irish Rescue Loans (Bloomberg) The European Union is weighing whether to extend Ireland’s rescue loans by five years or more, buttressing the government’s efforts to become the first country to exit a bailout since the euro-region debt crisis began. Hotel boots rowdy Rodman over Kim Jong Un scene (NYP) Dennis Rodman, just back from visiting Kim Jong Un, was escorted out of the Time Hotel in Midtown on Sunday after spending hours at the restaurant bar loudly telling anyone who would listen what a great guy the North Korean dictator is. “He was at the bar at Serafina for three hours,” says a spy. “He kept saying what a nice guy Kim is, and how Kim just wants to talk to President Obama about basketball. He was waving around a signed copy of the dictator’s huge manifesto, telling everyone they should read it.” Added the witness, “Dennis was making a total jerk of himself. He wouldn’t leave, and he wouldn’t let anyone talk to him about shutting up, or what an oppressive country North Korea is. Eventually he had to leave the bar because the bartender was starting to get [bleep]ed-off.” Ikos Co-Founder Coward Sues Ex-Wife Over Hedge-Fund Software (Bloomberg) Martin Coward, the co-founder of Ikos Asset Management Ltd., sued his estranged wife, Elena Ambrosiadou, in a U.K. court over the copyright ownership of computer software that runs the hedge fund’s trading platform. Coward was the “architect” of the “bedrock of the family business,” his lawyers said at the start of a three-week trial in London today. “Practically all of the financial markets expertise at Ikos resided in Coward himself,” said Michael Bloch, Coward’s lawyer. Ikos, which uses computer algorithms to spot profitable trades in futures markets, has been embroiled in lawsuits involving Coward and other former employees around the globe. The estranged couple, who started divorce proceedings in Greece in 2009, have filed more than 40 lawsuits against each other in at least four countries. Sequester Leaves US In 'Fantasy' World: Analyst (CNBC) Stephen King, chief global economist at HSBC, said that the U.S. was living in a"fantasy world" over its growth forecasts. "If you look at the projections from the Congressional Budget Office (CBO) they assume that growth goes back to between 4 to 5 percent in real terms between 2014 and 2018. Their numbers suggest that the U.S. will post the fastest rate of productivity growth of any decade in the last 50 or 60 years," King told CNBC's "European Closing Bell." Former Lehman Derivatives Banker Helps Paschi Unravel Contracts (WSJ) Riccardo Banchetti, whose work packaging derivatives at Lehman Brothers Holdings Inc. got him the top European job at the firm a week before it failed, is now making a living unraveling the kind of deals he once developed. Banchetti worked with Banca Monte dei Paschi di Siena SpA to uncover 730 million euros ($955 million) of losses that the world’s oldest bank hid through the use of derivatives. The Italian banker, who also advised JPMorgan Chase & Co. (JPM) on its defence against fraud charges over swaps with Milan, has scrutinized more than 10 billion euros of transactions since leaving Lehman, according to a person with knowledge of his activities who asked not to be identified because they weren’t authorized to speak publicly. Drugs found in Florida suspects' orifices, deputies say (WPBF) According to the Charlotte County Sheriff's Office, a deputy who initiated a traffic stop on a car without brake lights found cocaine in a man's prosthetic leg. The deputy also found morphine and hydromorphine pills in a woman's bra and a hypodermic needle hidden in another woman's buttocks.