Opening Bell: 11.04.13

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BlackBerry Takeover Bid Collapses; CEO Heins Ousted (Bloomberg)
Fairfax Financial Holdings, BlackBerry’s largest investor, walked away from its bid for the company, opting instead for a $1 billion bond deal and a management shakeup. Fairfax will invest $250 million in the convertible debentures, according to a statement today. CEO Thorsten Heins will step down, while former Sybase Inc. CEO John Chen becomes executive chairman, putting him in charge of the company’s strategy.

‘Resolution’ reached in SAC Capital insider trading case (AP)
A proposed resolution has been reached in the insider trading case and related civil charges against Connecticut-based hedge fund giant SAC Capital Advisors, a federal prosecutor said Monday. A news conference was scheduled for 1 p.m. in Manhattan to announce details of the deal, according to a notice sent by the office of U.S. Attorney Preet Bharara. The deal follows a separate agreement by SAC to pay a $615 million penalty to settle an insider trading claim by the Securities and Exchange Commission.

Twitter Boosts IPO Range (Reuters)
Twitter Inc raised the price range for its initial public offering on Monday as it seeks to raise up to $1.75 billion, signaling strong demand for the most closely watched IPO since Facebook Inc's in 2012. The float comes during a red-hot market for IPOs, which have benefited as equity markets continue to climb and uncertainty has largely subsided around the debt ceiling crisis and political gridlock in Washington. The microblogging network expects to sell 70 million shares at $23 to $25 each, up from a prior estimate of $17 to $20, it said in a filing with the U.S. Securities and Exchange Commission.

Country’s most affluent opting for Teslas over Bentleys (NYP)
The top 1 percenters aren’t buying Bentleys, Lamborghinis or Ferraris.
Instead, the country’s most affluent car buyers are driving off in a Tesla or a Jeep. Two of the five most popular cars among residents in 15 of the 25 wealthiest US zip codes — where median home prices range from $3.4 million to $6.7 million — include those typically associated with middle-income buyers. Even buyers with plenty of disposable income to spare — think Silicon Valley — are opting for a luxury car that’s more of a social statement than a financial one. The Tesla Model S, the first luxury all-electric vehicle, accounted for the most car sales in eight of the 25 most expensive zip codes, according to the latest Edmunds report.

Feds: Navy secrets sold for hookers, Gaga tickets (AP)
Nicknamed “Fat Leonard,” the gregarious Malaysian businessman is well known by U.S. Navy commanders in the Pacific, where his company has serviced warships for 25 years. But prosecutors in court papers say Leonard Francis worked his connections to obtain military secrets by lining up hookers, Lady Gaga tickets and other bribes for a U.S. commander, in a scandal reverberating across the Navy...Navy commander Michael Vannak Khem Misiewicz passed confidential information on ship routes to Francis’ Singapore-based company, Glenn Defense Marine Asia Ltd., or GDMA, according to the court documents...Misiewicz would refer to Francis as “Big Brother” or “Big Bro” in emails from a personal account, while Francis would call him “Little Brother” or “Little Bro,” according to the complaint. The company bilked the Navy out of $10 million in just one year in Thailand alone, U.S. Attorney Laura Duffy said...After Francis offered Misiewicz five tickets to a Lady Gaga concert in Thailand in 2012, Francis wrote: “Don’t chicken out bro we need u with us on the front lines,” according to court documents.

Muddy Waters Seen Right on NQ Mobile Payments, Wrong on Cash (Bloomberg)
Research firm Muddy Waters LLC was correct to focus on NQ Mobile Inc. (NQ)’s delays in collecting customers’ payments as part of an 81-page report that labeled the Beijing-based mobile service provider a “massive fraud,” according to three accounting experts. At the same time, accountants, professors and a lawyer interviewed by Bloomberg News said the report’s criticism of NQ’s cash accounting and the way the Chinese company got funds from its U.S. public offering may be unfounded. On other points Muddy Waters raised in its Oct. 24 report, it’s still hard for observers to gauge their validity.

U.S. justices decline to review Facebook 'Beacon' settlement (Reuters)
The U.S. Supreme Court on Monday let stand Facebook Inc's $9.5 million class action settlement over allegations the social networking company's defunct "Beacon" service violated its members' privacy rights. Although the court declined to hear the case, Chief Justice John Roberts issued a statement raising concerns about the particular type of settlement in the case and said the Supreme Court might take up another case in the future to clarify the law. The court's decision not to hear the case means the settlement is final.

Wall Street gets a sharp 20% cut for year-end bonuses (NYP)
The financial spiral could send overall 2012 bonuses down as much as 20 percent from a year ago, as industry profits are forecast to plunge by more than one-third from last year...The losers this year include fixed-income, currency and commodity traders. Their bonuses could be down as much as 15 percent, according to compensation consultant Johnson Associates.

Ohio zoo using beagle to detect bear pregnancies (AP)
Zoos around the country will soon find out whether a beagle named Elvis can let them know when their polar bears are pregnant. The 2-year-old has been specially trained for a year by a Kansas handler who has taught dogs to sniff out everything from explosives to bed bugs. A Cincinnati Zoo animal conservation scientist had the idea after reading about studies on using dogs to detect cancer. Confirming pregnancies of the massive bears, a threatened species, has been difficult, and zoo officials say knowing can help make sure they and the mama bears are ready for birthing and raising cubs. They separate them from males, get them into dens with extra bedding, step up video-camera monitoring, and line up staff and volunteers for 24-hour “cub watches” later. “It’s always nice to know in advance,” said Randi Meyerson of the Toledo Zoo, who coordinates polar bear species survival planning for the Association of Zoos and Aquariums. She praised the beagle project as “thinking outside the box” to provide a potentially important new tool. It’s non-invasive and simple for zookeepers, who pick up fecal samples for Elvis to check out...Rewarded with food and getting to play with his favorite squeaky duck toy, Elvis trained for months and was alerting to samples of previously pregnant bears with near-perfect accuracy before Curry drove out a cooler full of current samples last week. She watched as Elvis reacted to a control sample of a bear that had already delivered. “He sat right down. I thought, ‘Whew, this works!’” Curry said.

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Opening Bell: 01.14.13

Goldman May Delay UK Bonuses Until Top Tax Rate Falls (Reuters) Goldman Sachs is considering delaying bonus payments in the U.K. until after April 6, when the top rate of income tax in the country will drop to 45 percent, from 50 percent, a person familiar with the bank's operations said on Sunday. The strategy relates to bonuses that were deferred from 2009, 2010 and 2011, the person said. The Financial Times reported the news earlier today. JPMorgan Said to Weigh Disclosing Whale Report Faulting Dimon (Bloomberg) JPMorgan's board will consider releasing an internal report this week that faults Chief Executive Officer Jamie Dimon’s oversight of a division that lost more than $6.2 billion on botched trades, said two people with direct knowledge of the matter. The final report, which builds on a preliminary analysis released in July, is critical of senior managers including Dimon, 56, former Chief Financial Officer Doug Braunstein, 51, and ex-Chief Investment Officer Ina Drew, 56, for inadequately supervising traders in a U.K. unit that amassed an illiquid position in credit derivatives last year, the people said. The report, which isn’t complete, will be presented to the board when it meets tomorrow. The directors will then vote on whether to disclose it when the bank announces fourth-quarter results the following day, said the people, who asked not to be named because the report isn’t yet public. Morgan Stanley to trim Dubai staff amid global cuts (Reuters) "The Dubai cuts are part of the bank's global plan. Obviously, the bank is trying to focus on growth opportunities in the region and there has been little growth on the equities side barring Saudi," one of the sources said, speaking on condition of anonymity as the matter has not been made public. Morgan Stanley's equities business will now focus on Saudi Arabia, the source said, adding that planned cuts at other divisions in the Middle East were minimal. Hedge-Fund Leverage Rises to Most Since 2004 in New Year (Bloomberg) The rising use of borrowed money shows that everyone from the biggest firms to individuals is willing to take more risks after missing the rewards of the bull market that began in 2009. While leverage means bigger losses should stocks decline, investors are betting that record earnings and valuations 9.8 percent below the six-decade average will help push the Standard & Poor’s 500 Index toward the record it set in October 2007. “The first step of increasing risk is just going long, the second part of that is levering up in order to go longer,” James Dunigan, who helps oversee $112 billion as chief investment officer in Philadelphia for PNC Wealth Management, said in a Jan. 8 telephone interview. “Leverage increasing in the hedge-fund area suggests they’re now getting on board.” Goldman: Insurer Knew Paulson Was 'Shorting' (WSJ) Goldman Sachs on Friday fired back at a bond insurer suing it over a soured mortgage-linked deal, arguing in a court filing that ACA Financial Guaranty Corp. "cherry-picked" evidence to bolster its case. ACA in 2011 filed suit against Goldman in New York State Court, alleging Goldman misled it about a 2007 mortgage deal. ACA alleges that Goldman told it that one of Goldman's hedge-fund clients, Paulson & Co., was betting on the deal, when in fact Paulson was betting against it, according to an amended complaint the insurer is seeking to file. Had ACA known Paulson's true position, it never would have insured the deal, according to the amended complaint. Goldman countered in the Friday filing that ACA insured the deal knowing Paulson was betting against residential mortgage-backed securities at the time. ACA analyzed and chose the investments in the deal and should have been alerted by various "red flags" that Paulson wasn't betting on the investment, according to the filing. Primate found to be addicted to porn (NYDN) Gina, a resident of the Seville Zoo in Spain, chose to solely watch adult entertainment channels when a television and remote control was placed in her enclosure. Primatologist Pablo Herreros, writing in Spanish newspaper El Mundo, claimed he made the discovery some years ago on a tour of the nation's chimpanzee enclosures. During his research trip he conducted surveys on the behavior of the animals. Herreros wrote, “What I could never imagine were the surprises prepared for me by a female of this species called Gina who inhabited Seville Zoo.” To enliven Gina's nights, officials apparently decided to install a television, protected behind glass, and gave her a remote control so she could change the channels herself. And enliven herself she did. “The surprise was when they found that within a few days, Gina was not only using the remote control perfectly well, but that she also used to choose the porn channel for entertainment, as many of us would have done, ” Herreros wrote. “Although a small study estimated that porn films are only watched for about 12 minutes on average, the truth is that human and non-human primates possess an intense sexual life.” AIG Sues New York Fed... To Secure Right To Sue Bank Of America (Reuters) American International Group Inc has filed a lawsuit against a vehicle created by the Federal Reserve Bank of New York to help bail out the insurer, in a bid to preserve its right to sue Bank of America Corp and other issuers of mortgage debt that went sour. The complaint filed in the New York State Supreme Court in Manhattan seeks a declaration that AIG has not transferred billions of dollars of "litigation claims" to Maiden Lane II, including many related to the insurer's $10 billion lawsuit against Bank of America. UK court approves ex-Credit Suisse trader's extradition to U.S. (Reuters) A British court on Monday approved the extradition of a former Credit Suisse trader to the United States, where he is wanted over a $540-million fraud dating back to the subprime mortgage crisis. The case of Kareem Serageldin will now be sent to Home Secretary Theresa May, the interior minister, who under British law has the final say over extraditions to the United States. She is expected to give the green light for the transfer to take place. Serageldin, 39, the Swiss bank's former global head of structured credit, is accused of artificially inflating the prices of mortgage-backed bonds between August 2007 and February 2008, when their real value was plummeting. Equities Bear Brunt of Wall Street Job Cuts on Volume (Bloomberg) Employees on stocks desks fell by 8.5 percent globally in the first nine months of last year, according to a survey by Coalition Ltd., an industry analytics firm. That compares with a 6.6 percent drop in fixed-income workers and a 5.8 percent decrease for origination and advisory functions, the data show. Banks Find Promise Unfulfilled in China Forays (WSJ) Global firms sold about US$44 billion worth of shares in Asian financial institutions in 2012 to institutional investors or other strategic buyers, up from US$32.7 billion in 2011, according to data provider Dealogic. The retreat is gathering pace as a host of new regulations, including the so-called Basel III capital rules, make holding minority stakes in financial institutions more expensive. Thousands Participate In Annual No Pants Subway Ride (CBS) Organizers arranged that starting at 3 p.m., people got on trains at six different stops across the city, took off their pants and put them into their backpack. Participants then acted as if everything was completely normal as they rode on to Union Square. Participants are asked to don typical winter wear such as coats, hats and gloves and act as if they don’t know other pantsless riders, according to organizers. The group said it was just all in good fun. “People are willing to give basically their Sunday afternoon to take off their pants; to do something silly and fun, and you know, a good time,” one participant said. “It makes you feel invincible; superior, because nobody else has any idea what’s going on,” another said. There were no-pants subway rides in dozens of cities in 17 countries Sunday. In New York City, participants were happy it was rather warm. In prior years, the cold has bummed them out.

Opening Bell: 03.06.13

EU Fines Microsoft $732 Million (WSJ) The European Commission said it was imposing the fine after the U.S. software giant became the first company to break a voluntary agreement with regulators, which would have allowed at least 15 million consumers to pick alternatives to its Internet Explorer browser. The penalty is the latest episode in over a decade of wranglings between the EU and Microsoft, which has already seen the commission fine Microsoft €1.6 billion for failing to provide rivals with information at fair prices and for tying its media player to its operating system. Fed Holds Ground On Stress Tests (WSJ) The first component of the release, data on how banks will fare in an economic downturn, is slated for after U.S. stock markets close on Thursday. The second part, the Fed's response to buyback-and-dividend requests, is scheduled for publication a week later. Some executives warn that the delay could boost volatility in bank shares, as traders speculate on what the first round of results might mean for bank capital plans. Others warn of shareholder lawsuits if banks fail to disclose any information they receive, even informally, from regulators on the capital plans. Stress Tests Seen Boosting U.S. Bank Shareholder Payouts (Bloomberg) The six largest U.S. banks may return almost $41 billion to investors in the next 12 months, the most since 2007, as regulators conclude firms have amassed enough capital to withstand another economic shock. Lenders including Citigroup and Bank of America will buy back $26.4 billion in shares, up from $23.8 billion, according to the average estimate of three Wall Street analysts. An additional $14.5 billion will be paid out in dividends, $3.4 billion more than 2012, separate estimates show. The payouts are contingent on approval by the Federal Reserve. Forbes Hits Back at Saudi Prince Over Rich List (CNBC) A spat between Saudi billionaire Alwaleed Bin Talal and Forbes over the exact fortune of the prince has taken another bizarre twist. After the prince announced a severing of ties due to what he argued were flawed valuation methods, Forbes has now responded with an in-depth investigation, hitting back by describing his estimates as an "alternate reality". Forbes went on to say that the valuation of Kingdom Holding, the publicly traded company of Prince Alwaleed, gyrated for reasons "that, coincidentally, seem more tied to the Forbes billionaires list than fundamentals". In the lengthy piece published on Wednesday, the magazine also details its relationship with Prince Alwaleed since it began in 1988, recounting what it classified as "intermittent lobbying, cajoling and threatening" to influence his net worth listing over the years. AIG to Start Loan Investment Unit as Housing Rebounds (Bloomberg) AIG plans to buy loans backed by its United Guaranty Corp. unit, the largest seller of traditional private mortgage insurance last year, according to Donna DeMaio, 54, the unit’s chief executive officer. The debt will be held as long-term investments by AIG insurance companies. “You’re cutting the middle man out of the securitization process,” DeMaio said, referring to bonds that package home loans. The yield on an individual mortgage “is better than if you just bought the paper backed by the whole loan.” Two Hedgies Top The Field (NYP) Stephen Mandel and David Tepper earned more money for clients than any other hedge-fund manager in 2012, LCH Investments said. Mandel’s Lone Pine Capital made about $4.6 billion; Tepper’s Appaloosa Management made $3.3 billion. Traders Flee Asia Hedge Funds as Job Haven Turns Dead End (Bloomberg) Asian hedge-fund assets are 28 percent below their 2007 peak, according to data provider Eurekahedge Pte. Globally, money overseen by the funds increased 21 percent since 2007 to a new high of $2.3 trillion as of December, data from Chicago- based Hedge Fund Research Inc. show. A total of 296 Asian hedge funds liquidated in the two years to December, 33 more than the number that started. On a global basis, 1,839 new funds outnumber those that shut by 371, according to Eurekahedge. Ikea recalls cakes in 23 countries after sewage bacteria found (Telegraph) The furniture giant admitted on Tuesday that coliform bacteria had been found in two batches of almond cake from a supplier in Sweden. It comes after Chinese customs officials announced that they had destroyed a batch of 1,800 cakes after finding it contained high levels of coliforms which failed to meet hygiene standards. Coliforms, common bacteria which are found in faeces as well as soil and water, do not normally cause serious illness but are a sign of contamination which can indicate the presence of more harmful bacteria such as E.coli. It comes after Ikea recalled meatballs and sausages from 24 countries due to fears they could have been contaminated with horse meat. Oil Trader Ex-Wife Shouldn't Get Offshore Assets: Lawyers (Bloomberg) An oil trader’s ex-wife shouldn’t have any claim to properties held by offshore companies in which he invested as part of a 17.5 million-pound ($26.4 million) divorce settlement, lawyers said at a hearing in the U.K.’s highest court. The three Isle of Man-based companies, including Petrodel Resources Ltd., are “not relevant as a party to the litigation,” Tim Amos, the lawyer representing the companies, said today. The firms have asked the seven-judge panel of Britain’s Supreme Court to dismiss the wife’s claim. Yasmin Prest appealed an earlier ruling that denied her access to properties held and controlled by her ex-husband to cover part of the 2011 divorce settlement, which Michael Prest hasn’t paid, according to court documents at the U.K. top court. Her ex-husband isn’t a party to the litigation. ADP Says Companies in U.S. Added 198,000 Workers in February (Bloomberg) The 198,000 increase in employment followed a revised 215,000 gain the prior month that was more than initially estimated, figures from the Roseland, New Jersey-based ADP Research Institute showed today. The median forecast of 41 economists surveyed by Bloomberg called for an advance of 170,000. Madoff Trustee ‘Unlikely’ to Win Merkin Suit, N.Y. Says (Bloomberg) The judge shouldn’t allow trustee Irving Picard to block the deal because “in the unlikely event” that Picard can win part of his suit, Merkin’s funds would be able to pay him, Schneiderman said in a filing with U.S. District Judge Jed Rakoff yesterday. The attorney general made his filing saying Picard’s “unusual” request for an injunction -- to give him time to proof his own $500 million case -- required an additional response. Zoo shuts in panic as male and female escape from cage because cleaner forgot to lock the door (DM) A zoo in China was forced to close after two lions escaped from their unlocked cages. Riot police, snipers and zoo workers armed with tranquiliser guns worked to capture the ferocious animals after theyescaped at the zoo in Chongqing, south west China. According to reports, the lion and lioness were given free run of the zoo when a keeper who was cleaning their enclosure forgot to lock the gate. The zoo was completely evacuated following the escape at 8am. While the lionness was caught within the hour, the male was at large for almost four hours before he was recaptured. A zoo spokesman said: 'We found the female first and subdued her with a tranquiliser gun but the male took longer to find and bring back. 'They both recovered quickly and are no worse off for their adventure.' Officials have issued an apology to visitors for the panic caused. One said: 'You can't blame the lions. It was human error and they naturally took advantage of it.'

Opening Bell: 02.01.13

Barclays CEO Gives Up Bonus For 2012 (WSJ) Mr. Jenkins, who was named Barclays CEO last year, said in a statement that it was "only right" he give up his pay in light of the various problems that have beset the U.K. bank in recent months. Mr. Jenkins's predecessor, Robert Diamond, quit the bank following allegations that the bank tried to rig interbank lending rates. Barclays is wrestling with other industrywide issues, including the misselling of payment-protection insurance and interest-rate hedging products. "I have concluded that it would be wrong for me to receive a bonus for 2012 given those circumstances," Mr. Jenkins said. Worst Not Over for Spain Banks After Big Writedowns (CNBC) "The problems for Spanish banking are far from over," Ashok Shah, chief investment officer at wealth management firm London & Capital, told CNBC on Friday. "The underlying real estate market is only half-corrected,so when it fully corrects over the next year of two, the non-performing loans are going to keep spiking up which will keep eating into the tier-one capital so the need to raise more equity is going to be enormous and very, very pressing indeed." 'London Whale' Sounded an Alarm on Risky Bets (WSJ) In one instance, Mr. Iksil told another trader that the size of his bets was getting "scary," according to emails in a Jan. 16 report by J.P. Morgan and to the people familiar with the emails. Mr. Iksil's emails, according to people familiar with them, show there was concern within J.P. Morgan's chief investment office before Chief Executive James Dimon dismissed as a "tempest in a teapot" reports on the whale trades, including an April 6 article in The Wall Street Journal. The New York company first disclosed the trading losses in May, and Mr. Dimon subsequently said he was wrong to have played down concerns raised by the news report. $3.8 Million Bonus For Gorman (NYP) Morgan Stanley reduced pay by 7.1 percent for Chairman and CEO James Gorman, giving him a $9.75 million package that included a $3.75 million long-term incentive award. The bank almost doubled Gorman’s base salary to $1.5 million from $800,000, according to a regulatory filing yesterday. Edward Koch, Brash New York Mayor in 1980s Boom, Dies at 88 (Bloomberg) Serving from 1978 through 1989, Koch presided over the Wall Street-fueled economic boom of the 1980s, turning a $1 billion budget deficit into a $500 million surplus in five years. He restored the city’s credit, doubled the annual budget to $26 billion and oversaw $19 billion in capital improvements. His subsidized housing plan produced more than 156,000 new and renovated units. “Through his tough, determined leadership and responsible fiscal stewardship, Ed helped lift the city out of its darkest days and set it on course for an incredible comeback,” Mayor Michael Bloomberg said today in a statement. He called Koch “an irrepressible icon, our most charismatic cheerleader and champion.” Koch’s in-your-face style, straight talk and catchphrase “How’m I doing?” endeared him to New Yorkers wracked by the lingering fiscal crisis, the Son of Sam serial killings and the arson and looting that erupted after a blackout in July 1977. Geraldo Rivera considering run for U.S. Senate (NYDN) "Fasten your seatbelt," the mustachioed Fox News host said on his radio show Thursday. "I've been in touch with some people in the Republican Party in New Jersey. I am truly contemplating running." The Brooklyn native is eyeing a 2014 bid for the seat currently held by aging Democrat Sen. Frank Lautenberg, who may not seek reelection. Newark’s Democrat mayor, Cory Booker, is exploring a run. Stifel Stalks Faltering Firms as Wall Street Retrenches (Bloomberg) Stifel Financial Chief Executive Officer Ron Kruszewski paused in mid-sentence and asked an employee for the list, a chart showing in red which of the St. Louis-based firm’s rivals have closed or sold out. “There’s this huge consolidation,” Kruszewski, 54, said in an interview in his office, referring to the once crowded field of U.S. regional and local brokerages that vied to serve mid-size companies. “What’s left is very few firms that ever were in the middle market. We’re one of them.” About a dozen golf putters lean against a table. Nine floors down, the lobby is being remodeled with glass and white stone, while a bronze bull and bear statue is planned for outside. The way Kruszewski views it, St. Louis is now the No. 2 U.S. brokerage hub after New York... Economy Adds 157,000 Jobs (WSJ) Economists surveyed by Dow Jones Newswires expected nonfarm payrolls to rise by 166,000 and that the unemployment rate would hold steady at 7.8%. U.S. Sues to Block Big Beer Merger (WSJ) The surprise lawsuit seeks to block Bud Light maker Anheuser-Busch InBev NV's deal with the Mexican company that owns the Corona brand, and comes just a day after concession talks with the government broke down. U.S. authorities said they want to prevent any overcharging by the global giants that dominate mass-market brews. Burger King admits it has been selling beef burgers and Whoppers containing horsemeat (DM) The fast food chain, which has more than 500 UKoutlets, had earlier given a series of ‘absolute assurances’ that its products were not involved. However, new tests have revealed these guarantees were incorrect in a revelation that threatens to destroy the trust of customers. The contamination has been going on since at least last May and potentially for up to one year, according to evidence presented earlier this week. Tonight Burger King abandoned its earlier denials, saying: ‘Four samples recently taken from the Silvercrest plant have shown the presence of very small trace levels of equine DNA. Burger King vice president, Diego Beamonte, said: ‘We are deeply troubled by the findings of our investigation and apologise to our guests, who trust us to source only the highest quality 100per cent beef burgers. Our supplier has failed us and in turn we have failed you. We are committed to ensuring that this does not happen again.' He added: ‘We will dedicate ourselves to determining what lessons can be learned and what additional measures, including DNA testing and enhanced traceability controls, can be taken to ensure that we continue to provide you with the quality products you expect from us.'