Opening Bell: 12.06.13

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Bankers Balk at Bitcoin as Obstacles Mount (Bloomberg)
“Banks are scared to deal with Bitcoin companies, even if they really want to,” said Stephen Pair, co-founder and chief technical officer of BitPay Inc., an Atlanta-based company that processes payments for merchants in Bitcoin. Pair said BitPay has relationships with banks in the U.S., Canada and Europe; he declined to name them at the banks’ request.

Lampert's Investors Check Out (WSJ)
Mr. Lampert's hedge fund is returning billions to clients of Goldman Sachs Group Inc. who had invested with ESL Investments Inc. in 2007, according to people with knowledge of the matter. Under that deal, Goldman's clients, such as corporate pension plans, put roughly $3.5 billion with Mr. Lampert, and they have asked for it back.

Luxury Homeowners Hope to Score Big During Super Bowl (WSJ)
Planning on attending Super Bowl XLVIII in style? Almost every five-star hotel in Manhattan is already booked. But Brian Krauss's four-bedroom manor in Saddle River, N.J., its fridge stocked with beer, can be yours for $5,000 a night. Located 18 miles from New Jersey's MetLife Stadium and a half-hour's drive from New York City, the upscale suburb is home to rap royalty such as Wyclef Jean, Mary J. Blige and Ja Rule, who lives "just around the corner" from Mr. Krauss's 5,700-square-foot house with its imposing stucco facade, the homeowner says. Mr. Krauss, chief executive of Praxis Footwear and a 49-year-old divorced father of two, has transformed his home into a luxe bachelor pad. There is a professional-grade home gym, a basketball court and a sprawling media room complete with a 70-inch TV, a baby-grand piano and three vintage pinball machines. Daily maid service is included, and you can play his acoustic-electric guitar—all for $35,000, the cost of one week's minimum stay. "I priced it for what I thought was reasonable. What would it cost for eight people in a nice hotel?" said Mr. Krauss, who purchased the house for $1.375 million in 2011, then spent $300,000 on renovations and landscaping. Renting it out was his business partner's idea. "At first, I was really against it," he said. "Then I thought of all the times I've been a renter, in St. Barts, Malibu…..Here was an opportunity."

Key Witness Lying About SAC Facts: Steinberg Lawyer (NYP)
“We think [Jon Horvath] is a witness who will say things either he knows [are] false or says whatever he thinks the government wants to hear,” Steinberg’s lawyer, Barry Berke, in a contentious showdown with prosecutor Antonia Apps, told Judge Richard Sullivan. In an exchange outside earshot of the jury, Berke claimed Horvath, a former SAC research analyst, lied to prosecutors to cut a deal. Horvath, who confessed to being part of a corrupt circle of inside traders on Wall Street, is the government’s main witness against his former boss Steinberg, a portfolio manager at SAC.

SEC browsing JCPenney’s liquidity, debt (NYP)
The SEC is also probing the retailer’s Sept. 26 stock offering that raised $810 million in cash in a bid to ease concerns about its liquidity, according to a Penney regulatory filing.

Mike Tyson says he used a fake penis to pass drug tests (NYDN)
The former heavyweight champion claims he used a prosthetic penis when he had to submit a urine sample before a fight, saying the fake member worked "really effectively" in masking his substance abuse. "You take it out - it has somebody else's urine in it, of course - you hope it's not a woman's urine and they take a pregnancy test," Tyson said on "Chelsea Lately" while promoting his autobiography, Undisputed Truth. "You just make noise, and normally if you're a guy and you pull it out in front of them (the drug tester), they're like, 'Whoa, whoa,'" he said. "And then you do it." "It's connected to a jock strap." Just in case a drug tester caught a glimpse of the fake penis, Tyson made sure it wasn't too obvious a disguise. "(It was) Tan, brown, cream-colored."

Bundesbank Raises Growth Forecast for Germany (WSJ)
Germany's central bank raised its 2014 growth forecast for Europe's largest economy, citing robust private consumption, but lowered its inflation forecast. "The German economy is in good shape: the unemployment rate is low, employment is rising, and wage growth is returning to normal," Jens Weidmann, president of the Deutsche Bundesbank, said Friday. Those factors combined with low interest rates "are supporting private consumption and driving housing construction," he added.

World's Biggest Pension Fund Urged to Cut Japan Bond Holdings (Bloomberg)
The 124 trillion yen ($1.22 trillion) Government Pension Investment Fund should pare domestic debt immediately to 52 percent of assets, its lower limit, in part by selling to the Bank of Japan, said Takatoshi Ito, chairman of the advisory group. The investments comprised 58 percent of the fund’s holdings as of Sept. 30. “GPIF needs to start reducing bonds as soon as possible,” Ito said in an interview in Tokyo today. “Now is the right time to sell, while the BOJ is buying.”

LA sues Citi, Wells Fargo over discriminatory mortgage lending (Reuters)
The city of Los Angeles has filed a lawsuit against Citigroup and Wells Fargo, seeking damages for a loss in tax revenue due to discriminatory mortgage lending to the city's minority communities, a court filing showed. In complaints filed in the U.S. Federal Court, LA City attorney Mike Feuer said that Citigroup and Wells Fargo "engaged in a continuous pattern and practice of mortgage discrimination in Los Angeles since at least 2004 by imposing different terms or conditions on a discriminatory and legally prohibited basis."

U.S. judge weighs penalties after Bank of America fraud verdict (Reuters)
A U.S. judge is considering an alternative that could result in Bank of America Corp paying much less than the $863.6 million the government is seeking as a penalty for the sale of defective mortgages before the financial crisis. At a hearing on Thursday, U.S. District Judge Jed Rakoff in Manhattan asked the bank and the Justice Department to brief him on the alternative, which is based on the gains rather than the losses resulting from the sales. The hearing followed a jury verdict on October 23 in which a federal jury found Bank of America liable for fraud for selling substandard mortgage to government sponsored mortgage finance companies Fannie Mae and Freddie Mac. The verdict was a big win for the government in its efforts to hold Wall Street accountable for the financial crisis, and the Justice Department has requested a penalty based on the gross losses Fannie Mae and Freddie Mac incurred. But at Thursday's hearing Rakoff said he wanted a "more full presentation" on how to calculate the penalty based instead on how much Countrywide gained through the fraud, calling it a simpler approach.

Engagement ring for sale, as worn by 'Satan herself' (NYDN)
A bitter - and somewhat superstitious - ex has posted a Craigslist ad in Pennsylvania for a pretty diamond engagement ring with one small flaw: it used to belong to 'Satan herself.' Along with a 1.5 carat diamond ring in a white gold setting, buyers should be aware when purchasing, writes the poster, that they also risk biblical plagues and a broken heart. The poster concludes that if he is not successful in selling the ring by Christmas, he plans to throw the ring 'into the fires of Mordor.' The ring is for sale with a price tag of $1,800, which the poster writes is significantly less than he paid for it from Littman's. Purchase of the ring must be made at your own risk though, warns the the seller, documenting a trail of destruction left in its wake. 'Possible events associated with this ring include but are not limited to: damage sustained to house, vehicle, heart, downed powerlines, fallen trees, and swarms of locus [sic],' reads the ad. It is unclear whether the ring or 'Satan herself' was responsible for these catastrophes, but the poster recommends covering your bases. 'I would highly recommend taking action to counter the whirlwind of bad mojo that surround this piece of jewelry,' he writes, suggesting a voodoo priest may be able to exorcise the 'curse.' It seems the ring is the product of a broken engagement, as the woman to whom it belonged only wore it for 'a short period of time.' The ad was placed last week and is still active - so if Satan herself having been a previous owner is not a problem, buyers should nab it before Christmas when it will meet a fiery fate.

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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: 07.25.12

Sandy Weill: Break Up The Big Banks (CNBC) “What we should probably do is go and split up investment banking from banking, have banks be deposit takers, have banks make commercial loans and real estate loans, have banks do something that’s not going to risk the taxpayer dollars, that’s not too big to fail,” Weill told CNBC’s “Squawk Box.” He added: “If they want to hedge what they’re doing with their investments, let them do it in a way that’s going to be market-to-market so they’re never going to be hit.” Bank Of England Spotted Risks At JPMorgan (WSJ) More than a year before JPMorgan racked up billions of dollars in losses from bad trades in its London investment office, Bank of England officials raised concerns internally about potential risks arising from some of the office's activities, but didn't formally alert other regulators, according to people involved in the central bank's talks. In late 2010, employees at the central bank worried that the London arm of J.P. Morgan's Chief Investment Office had come to dominate some important corners of the city's financial markets—including residential mortgage-backed securities—and they were concerned about the potential impact that could have on the stability of U.K. markets, these people said. The concerns were relayed to a top central-bank oficial. But the Bank of England doesn't appear to have acted on the concerns or flagged them to regulators responsible for supervising J.P. Morgan. Private-equity bigs: no proof of bid-rigging (NYP) A handful of the country’s wealthiest and most powerful private-equity firms have asked a federal judge to toss an explosive investor lawsuit that claims the group conspired to rig the bids on $270 billion in deals over four years. The firms — including KKR, Bain Capital, Blackstone Group and Apollo Global Management — agreed not to bid on specific deals headed by a rival, thus fraudulently depressing the value of the deal. As a result, investors in those publicly-traded companies were short-changed. The group of 11 financial giants named in the suit, including Goldman Sachs and JPMorgan Chase, claim there is no evidence of a vast bid-rigging conspiracy. New York Fed Faces Questions Over Policing Wall Street (Dealbook) In recent years, the New York Fed has beefed up oversight. Under the president, William C. Dudley, the regulator has increased the expertise of its examiners and hired new senior officials. Even so, the JPMorgan debacle and the interest-rate investigation have raised questions about the New York Fed. They highlight how the regulator is hampered by its lack of enforcement authority and dogged by concerns that it is overly cozy with the banks. Fed Moves Closer To Action (WSJ) Amid the recent wave of disappointing economic news, conversation inside the Fed has turned more intensely toward the questions of how and when to move. Central bank officials could take new steps at their meeting next week, July 31 and Aug. 1, though they might wait until their September meeting to accumulate more information on the pace of growth and job gains before deciding whether to act. Sidekick of Soccer Mom Madam to court: It's not prostitution if you just pay to watch (NYDN) Jaynie Mae Baker, the woman busted with accused Manhattan brothel operator Anna Gristina, revealed in court papers filed Tuesday that the undercover cop who arrested her watched two women have sex but didn’t participate in any. Baker’s lawyer, Robert Gottlieb, says the only recorded conversation in evidence that includes Baker took place July 19, 2011, at a Manhattan restaurant where his client, Gristina and the cop had lunch. The cop tells Baker and Gristina he is “looking for a little adventure" and to “please corrupt me," but there's no talk of arranging payment, Gottlieb says in the filing. Six days later in the sting operation, the cop is secretly videotaped in a room with two other women at Gristina's alleged brothel on E. 78th St., but he does not participate in the sex. “The undercover officer apparently remains fully clothed and merely observed the two women perform for him,” Gottlieb writes...Gottlieb says there “was not a scintilla of evidence that was produced ... establishing Ms. Baker’s involvement in arranging payment in exchange for any kind of sexual activity.” What occurred not prostitution because the undercover cop was not a participant, Gottlieb says. If watching is prostitution, then every strip club and porno director is guilty, too, he said. Germans React Coolly To Moody's Warning (WSJ) Wolf Klinz, a German member of the European Parliament from the pro-business Free Democrats, Ms. Merkel's junior coalition partner, said he doesn't dispute Moody's conclusions about Germany's risks, but rather the timing of the announcement. "There are no hard facts yet" about Germany's ultimate price tag, Mr. Klinz said. "Why come out with this right now? It may have political implications" even if that wasn't the intention, he said. Preet hit with suit by law student (NYP) Second-year law student Benula Bensam sued Bharara, along with the US Marshals Service and the Justice Department, in Manhattan federal court for “unreasonable search and seizure” after the marshals took her cell phone away during the trial of ex-Goldman Sachs director Rajat Gupta. The 25-year-old Bensam, who is representing herself, said the marshals kept her phone overnight after she refused to answer their questions about letters she wrote to Judge Jed Rakoff during Gupta’s insider-trading trial. Bensam, who attends law school at Yeshiva University and lives in the Woodside section of Queens, stopped writing Rakoff about the case after he reprimanded her. In the complaint, Bensam said Bharara “may have instigated” her dispute with the marshals. Euro Zone as We Know It Has 2 Years Left: Jim O’Neill (CNBC) “Two years maximum is my perception of the time the euro zone has left to survive in its current form, though the reality is probably far less than that. Markets being markets we’ve unveiled a degree of speed with the Spanish and Italian bond yields and I can’t see us getting through the summer without some serious consequences,” said Jim O’Neill, Chairman at Goldman Sachs Asset Management. Child Treated After Being Bit By Rabid Bat Woman Gave Go-Ahead To Touch (CBS) Even as the summer fun rolls on for JoJo Keefe, a freshly healed cut on the 10-year-old’s finger reminds her of a scary detour. “I was like oh my God it bit me!” She’s talking about a rabid bat that sunk its tiny teeth into her finger last Tuesday during a visit to the Spencer Town Beach on Lake Whittemore. The small bat was attracting quite a bit of attention on the shoreline just beyond the picnic area. The trouble really began when a woman picked it up and began asking the children gathered around her if they wanted to hold it. “Another little girl said ‘oh I want to hold it will it bite me?’ And the lady was like no it’s the friendliest thing ever,” she says...Her mother retrieved the sick animal which then tested positive for rabies. Soon after, JoJo was getting the first in a series of life saving antibiotic shots (you can’t wait with rabies).