Opening Bell: 12.17.13

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Volcker Rule Shows Its Wide Reach (WSJ)
Unforeseen consequences of the Volcker rule already are rippling into the furthest corners of the economy and financial markets. Financial institutions and investors are scrambling to line up a new way to finance municipal-bond investments, with the week-old rule set to curtail banks' dealings in so-called tender-option bonds—a $75 billion niche of the market for debt issued by cities, states and local governments. Meanwhile, more than a dozen small and midsize banks likely will need to sell collateralized debt obligations under a Volcker rule provision limiting certain risky bank investments, according to analysts.

SEC seeks $1.1 million-plus from ex-Goldman VP Tourre (Reuters)
The U.S. Securities and Exchange Commission asked a federal judge to order former Goldman Sachs Group Inc vice president Fabrice Tourre to pay more than $1.1 million for his role in a failed 2007 mortgage deal, according to a court document filed Monday in Manhattan federal court...The agency asked that Tourre pay a civil monetary penalty of $910,000. It also asked that he pay $175,463 in ill-gotten gains, plus interest of $62,858.03, according to the document. The SEC also said Tourre should be prohibited from accepting reimbursement for the penalty from Goldman

More Asia Hedge-Fund Managers Expect Rising Bonuses, Survey Says (Bloomberg)
More Asia hedge-fund industry employees are expecting increases in bonuses this year as they delivered returns, a survey by executive recruitment firm Heidrick & Struggles International Inc. showed. The share of respondents anticipating their bonuses to increase climbed to 48 percent in a survey carried out in September by the Chicago-based executive recruitment firm, up from 45 percent in last year’s poll. By contrast, those anticipating a decline in their bonuses shrank to 11 percent from about 25 percent last year.

Insider-Trading Case May Hinge on Phone Call (WSJ)
The phone call was between Mr. Steinberg and former SAC analyst Jon Horvath, who worked under Mr. Steinberg and, according to court documents, is the only witness who can connect his former boss to the alleged insider-trading conspiracy. n his closing arguments Monday, Assistant U.S. Attorney Harry Chernoff said Mr. Steinberg received the phone call one minute before making a huge bet against Dell Inc. on Aug. 18, 2008. On the call, Mr. Steinberg received an inside tip from Mr. Horvath that Dell's gross margins would disappoint ahead of the company's earnings announcement, Mr. Chernoff told jurors. Jurors could begin deliberating as soon as Tuesday to decide the fate of Michael Steinberg, right. "They didn't need more than two minutes for that call, because Michael Steinberg already knew the score," Mr. Chernoff said. Barry Berke, an attorney for Mr. Steinberg, painted a completely different picture. The call was "rushed," Mr. Berke said, because Mr. Horvath was calling from an airport before leaving for Mexico. The former analyst passed "perfectly proper" information to his boss ahead of the Dell announcement, said Mr. Berke.

Steinberg wife to pals: No wearing bling near jury (NYP)
Liz Steinberg, who has been noticeably dressed down during her husband’s four-week trial in Manhattan federal court, sent an email to supporters days before the trial started to instruct them to leave the bling at home if they plan to attend the trial. “Dress conservatively,” the email instructed, adding that women would be wise to check their furs, jewels and designer handbags at the door. “We request that women wear no jewelry or furs, and no designer scarves, handbags, etc.,” said the Nov. 15 email, a copy of which was obtained by The Post.

Capitals fan takes a puck to the head, refuses to get stitched up until after the game (NIS)
Tricia Drummond, a Capitals fan and hockey player herself, took a puck off the head late in the third period of yesterday’s Caps-Flyers game in Washington, opening up a pretty nasty cut on her forehead that would require stitches to repair. Those stitches would have to wait though, as Drummond refused repairs until the game was over despite leaking quite heavily from her skull. The Caps trailed by one goal with just over three minutes left to play in regulation when Drummond suffered the injury, but they managed to tie the game up and force OT before winning 5-4 in a shootout...Drummond wound up getting five stitches following the game but said it was worth it to see her team pull out the victory.

Chocolate Eaters Drive Record Cocoa-Output Deficit (Bloomberg)
Global cocoa supplies are headed for the longest production shortfall in more than five decades as chocolate demand surges in Asia. Cocoa use will top output by about 70,000 metric tons in the 12 months started Oct. 1 and deficits will persist through 2018, a six-year stretch that would be the longest since the data began in 1960, said Laurent Pipitone, head of statistics at the International Cocoa Organization in London. Prices may rally 15 percent to $3,200 a ton by the end of 2014, according to the median of 14 trader estimates in a Bloomberg News survey.

The Good, The Bad, And The IPO (WSJ)
The heirs of late Italian director Sergio Leone —who invented the spaghetti-western genre and made films such as "The Good, the Bad and the Ugly," "A Fistful of Dollars" and "Once Upon a Time in America"— will take their father's company public this week in Milan, with a plan to stake out a bigger chunk of the Italian film industry and revive their father's name. Mr. Leone, known for his intense close-ups and laconic one-liners, became an icon for a generation of younger directors such as Quentin Tarantino, who in his 2012 film "Django Unchained" emulated the kinetic violence and flamboyant style that the Italian westerns pioneered...The Leone heirs are launching the IPO to raise funds to broaden the company's film library, make more distribution agreements with U.S. filmmakers and expand its own movie production. They plan to sell a 20% stake in the company through a public listing slated for Wednesday. Because the company is quite small—bankers value it at just €75 million ($103 million)—it will be listed with Milan's small-cap stocks. The Leone heirs hope to raise about €17 million in fresh cash through the placement.

CFTC Is Poised to Expand Its Reach Overseas (WSJ)
The CFTC is preparing to say that multiple rules developed by the European Union and five other jurisdictions governing so-called swaps aren't strict enough, clearing the way for the CFTC to impose its regulations on much of the $693 trillion global swaps market, the official said.

Store owner forgives thief who returned $300 samurai sword to his Beach business (WTKR)
In the surveillance footage, the man is seen stuffing the sword down his pant leg, concealing it with a black trench coat. The store’s owner, John, who did not want to show his face or give his last name, says he was upset when he first saw the video, but says he forgave the thief. “He really didn’t mean to steal it from my store,” John says. “I can tell from their eyes or their face. I think everyone makes mistakes.”

Related

Opening Bell: 08.16.12

No Criminal Case Is Likely In Loss At MF Global (NYT) A criminal investigation into the collapse of the brokerage firm MF Global and the disappearance of about $1 billion in customer money is now heading into its final stage without charges expected against any top executives. After 10 months of stitching together evidence on the firm's demise, criminal investigators are concluding that chaos and porous risk controls at the firm, rather than fraud, allowed the money to disappear, according to people involved in the case...In the most telling indication yet that the MF Global investigation is winding down, federal authorities are seeking to interview the former chief of the firm, Jon Corzine, next month, according to the people involved in the case. Authorities hope that Corzine, who is expected to accept the invitation, will shed light on the actions of other employees at MF Global. Standard Chartered's Deal Rankles Regulators (WSJ) Officials at the U.K. Financial Services Authority complained afterward to the New York regulator, which oversees Standard Chartered's U.S. unit, that the sudden move could have damaged the stability of the bank and that the lack of advance notice breached long-standing protocol among bank regulators, these people said. The New York case ended Tuesday when Standard Chartered agreed to pay the regulator $340 million to settle allegations it broke U.S. laws in handling transactions for Iranian customers...The New York office's success in pursuing a case without the help of the U.S. Justice Department and U.S. Treasury Department could embolden other state regulators, while adding to pressure on federal regulators who have been criticized for a perceived failure to confront large banks. "Holding a bank accountable for past misconduct doesn't need to take years of negotiation over the size of the penalty," said Sen. Carl Levin (D., Mich.). "It simply requires a regulator with backbone to act." Knight Puts Fate In Familiar Hands (WSJ) At about 9 p.m. on Aug. 1, Knight Chief Executive Thomas Joyce called Carlos Hernandez to seek emergency funding from J.P. Morgan, the lead bank on a primary credit line, to plug losses from errant trades caused by a software upgrade, according to people familiar with the conversation. Mr. Hernandez, J.P. Morgan's global head of equities, had just returned from business meetings in Mexico. "We've had these issues," the Knight chief, known as T.J., told his longtime acquaintance, the people said. "We're looking for help." J.P. Morgan executives have been on the receiving end of similar pleas for help in some of Wall Street's biggest meltdowns. Jobless Claims In U.S. Little Changed As Market Stable (Bloomberg) Jobless claims climbed by 2,000 to 366,000 in the week ended Aug. 11, Labor Department figures showed today in Washington. The median forecast of 45 economists surveyed by Bloomberg News called for an increase to 365,000. The four-week moving average, a less volatile measure, dropped to 363,750, the fewest since the week ended March 31. Chocolate Losing To Cocaine On Colombia Cocoa Slump (Bloomberg) Cocaine is proving a more resilient commodity than chocolate in Colombia, the largest supplier of the narcotic to the U.S. Prices of cocoa beans, used to make chocolate, have dropped 40 percent this year in Colombia, South America’s third-largest supplier, as the cost of leaves processed into cocaine holds steady, according to data compiled by police and growers. Morgan Stanley Unit Fined Over Trader’s $1.3 Billion Bet (Bloomberg) Morgan Stanley Smith Barney, the brokerage venture of Morgan Stanley and Citigroup, was fined $450,000 after a trader amassed a $1.3 billion bet in 2009, Financial Industry Regulatory Authority records show. The brokerage didn’t have enough controls in place to detect that Jared Weinryt, 31, had breached his $116 million trading limit as he made overnight bets on futures, Finra said this month. The trades led to losses for Morgan Stanley Smith Barney of about $14.9 million, according to Finra. MF Global Trustee to Join Existing Suits Against Executives (WSJ) The move Wednesday by James Giddens could accelerate a morass of lawsuits that seek money from former MF Global executives, directors and other people accused in the suits of failing to protect customer money. As a result of the agreement, Mr. Giddens will give lawyers in those cases access to documents and other evidence gathered in his probe. Facebook Freeing 60% More Shares Seen Weighing On Stock (Bloomberg) Early Facebook investors such as DST Global Ltd., Goldman Sachs, Elevation Partners and Accel Partners get a green light today to start selling part of their holdings, Menlo Park, California-based Facebook has said in filings. That’s after the lifting of restrictions designed to prevent a flood of shares immediately after an IPO. The prospect of more stock sales means Facebook will need to work even harder to convince investors that it deserves a higher valuation, compared with earnings, than all but two of its closest competitors including Google. The shares freed up today make up only 14 percent of the 1.91 billion that will be available for sales in the coming nine months. “Buckle your seatbelts for the next couple of months until they make it through all these shares coming unlocked,” said Tom Forte, an analyst at Telsey Advisory Group in New York.