Holiday Bell: 12.24.13

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Big Rally to Pump Up Wall Street Bonuses (WSJ)
A strong rally in financial markets over the past two months is expected to add a last-minute boost to bonus packages for Wall Street's traders and investment bankers, partially offsetting an otherwise grim year. The winners in financial firms this year are likely to be equity traders, who have reaped gains from soaring stock markets, and investment bankers, who have benefited from a pickup in initial public offerings and other deals. But the recent rally is unlikely to provide much help to bond traders, who have endured one of their toughest years since the financial crisis.

Ackman Takes Another Swipe At Herbalife (NYP)
The dicey recruiting methods used by Herbalife distributors, which the company said would be banned as of June 30, are still happening, hedge-fund titan Bill Ackman claimed in a letter sent Monday to his investors. Herbalife, fighting claims by Ackman that it is a pyramid scheme, said it would ban distributors from selling leads through related companies that troll the Internet for new recruits. The Herbalife distributors would then sell the recruit names for about $50 to $100 a piece to newer distributors. The practice, considered indicative of a pyramid because it focuses solely on recruitment, is believed to have become even more lucrative than selling Herbalife products. Despite the ban, the practice “continues to this day,” Ackman wrote in the letter to investors in his Pershing Square hedge funds.

Swiss Banks Employ Army of Advisers for U.S. Amnesty Plan (Bloomberg)
Switzerland’s 300 banks have enlisted an army of auditors, lawyers and in-house workers as they race to meet a Dec. 31 deadline on whether to seek U.S. amnesty for helping American clients evade taxes. Banks in Switzerland, the largest cross-border financial center with $2.2 trillion of assets, are closely examining accounts before joining a disclosure program that’s the broadest assault in a five-year U.S. crackdown on offshore tax evasion.

NYSE proposes 'kill switch' to help catch trading errors (Reuters)
Intercontinental Exchange Group's NYSE Euronext unit has filed a plan with regulators to offer firms that trade on the New York Stock Exchange a "kill switch" that could cut off trading if preset levels were breached...Under the NYSE proposal, the exchange's member firms will have the option of pre-setting certain trading thresholds that when hit would block the firms' orders.

My 'Orgy' With Leonardo DiCaprio (NYP)
I’m playing a high-end hooker, one of about 20 hired by rogue financier Jordan Belfort [played by Leonardo DiCaprio] to accompany him and his broker friends on a debauched flight from New York to his bachelor party in Las Vegas. “Oh my gosh,” jokes P.J. “You’re gorgeous! What am I gonna tell my wife? I’m so happily married, I can’t even look at you!” It feels surreal to be on a set in Brooklyn, made up as the interior of a luxury jet, and about to shoot an R-rated sequence showing simulated sex, binge drinking and a huge amount of drug-taking. But this is what I’ve signed up for. Dressed in red silk lingerie, red leather jacket, red fishnet stockings and red Manolo Blahniks, I slip off my robe and take a deep breath. It’s not every day you get a call from a casting director inviting you to audition for a Martin Scorsese film. But that’s what happened to me this spring. “It will involve some nudity,” the casting agent warned. “Martin has asked for you, personally, at least eight or nine times.” My first reaction was: “I can’t do it! I’m not taking my clothes off! I’ve never even cursed on camera!” But then I thought about it: “This is Martin Scorsese. How can you say no?” [...] I stayed pretty much fully clothed in my red leather jacket and lingerie, which is more than I can say for P.J., who plays Nicky Koskoff in the film. He was the most naked of all the people in the scene, wearing a thong made out of candy Smarties with a sock over everything underneath. Needless to say, I think he felt very uncomfortable...Meanwhile, the girl who was on top of Jonah Hill — she really got spanked. She can’t have been Method acting, because she was complaining so much. “I’ve got broken blood vessels all over my a$$,” she said. But she wanted to be with the principal, so she got what she wanted.

Cohen Said to Have Warned Friend About Possible Federal Investigation (Dealbook)
By the summer of 2009, the billionaire investor Steven A. Cohen appeared to be growing suspicious that federal authorities were gathering evidence about insider trading in the hedge fund industry. When a former employee approached Mr. Cohen that summer, seeking a job at SAC Capital Advisors, his hedge fund, Mr. Cohen called a friend at another hedge fund and told him to be careful about talking to the former trader, according to people briefed on the matter. The phone call, which has not been previously reported, suggests that Mr. Cohen and potentially others in the hedge fund industry were gradually becoming aware of the broad investigation into insider trading, despite attempts by authorities at that time to keep it secret.

NFL Christmas-Tree Power Rankings (WSJ)
With the holiday season upon us—and the playoffs right round the corner—The Wall Street Journal contacted all 32 of the NFL's teams and asked them to send photos of the Christmas trees located at their facilities. All but three teams submitted entries...For the most part, the better the team, the better the tree. Among the top 12 tree teams, there were nine playoff (or potential playoff) teams. That said, the Patriots, Broncos, Colts and Packers weren't exactly lighting it up. The most elaborate tree (by far) was housed in the NFL's most-expensive stadium: Jerry Jones's palace to all things Cowboys. But fancy trees are clearly not a Texas thing—the least impressive tree (a trio of shrubs, really) resided in Houston. Cincinnati's modestly sized tree punched above its weight thanks to homey touches like pompon tinsel—and its impressive view of the field. Arizona scored well with our panel thanks to the giant lifelike bird perched on top of the tree (we didn't ask any questions).

Italy Approves ‘Google Tax’ on Internet Companies (Bloomberg)
Italy’s Parliament today passed a new measure on web advertising, the so-called “Google tax,” which will require Italian companies to purchase their Internet ads from locally registered companies, instead of from units based in havens such as Ireland, Luxembourg and Bermuda. The tax has stirred controversy, with some lawyers saying it probably violates European Union laws regarding non-discrimination over commercial activity and could be subject to legal challenges. In July, at the request of the Group of 20 nations, the Organization for Economic Cooperation and Development proposed a blueprint to fight strategies used by companies such as Google Inc. (GOOG), Apple Inc. and Yahoo! Inc. (YHOO) to shift taxable profits into havens. Italy is the first major European government to pass legislation to combat the problem of moving corporate taxable earnings into havens, which costs Europe and the U.S. over $100 billion a year, since the OECD proposal.

Companies Binge On Share Buybacks (WSJ)
U.S. companies in the S&P 500-stock index bought back $128.2 billion of their own shares in the third quarter, according to S&P Dow Jones Indices. That is the highest level since the fourth quarter of 2007. Combined, stock buybacks and dividends totaled $207 billion in the third quarter, also the highest in nearly six years, according to the data provider.

70,000 -light home Christmas display draws crowds in California (NYDN)
Tom BetGeorge is setting a bold new standard for Christmas decorations on his block with a dazzling 70,000-light display that reels in the crowds. The 34-year-old resident of Newark, Calif., moved into his home a year ago and wanted to make a big splash with his holiday light display. The music director for a conservatory told the Daily News he was helping with a dance number for a group of female students for a show in April. It was then he discovered a computer program to design a light show. "I said wait a minute. I could do this at my house for Christmas," he said.
BetGeorge started building a 17-foot guitar and 19-foot piano for his front yard. The giant wooden instruments took two months each to build, he said. "I'm a little bit of a perfectionist. I said if I'll do this, I'll do it right." His ensemble also includes four singing trees on the roof and an alluring sequence of 70,000 lights to highlight everything. The show is played to "Christmas Can-Can" by the band Straight No Chaser. BetGeorge said the band even contacted him after seeing the video and sent him their approval. The shows runs on a loop every night from 5:30 to 11 p.m. and have been a big attraction in the Bay Area, he said. And the display hasn't even hurt his relationship with his neighbors, who BetGeorge said saw how much work he put into it. The light from the show bleeds into one neighbor's home, but even he hasn't complained, he said.

Programming Note: We’re on an abbreviated, vacation-esque schedule. Opening/closing wraps and brief sprinkles of moral support should the urge to reach out and touch you strike us (or Bridgewater Associates takes a play from First Round Capital's playabook).

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Holiday Bell: 11.23.12

FBI Tried To Flip Trader Against Cohen (WSJ) A year before the government charged Mathew Martoma with insider trading, it tried to get him to turn against his former boss, Steven A. Cohen. Federal agents, including Federal Bureau of Investigation case agent Matthew T. Callahan, turned up at the Boca Raton, Fla., home of Mr. Martoma, a former portfolio manager at an affiliate of SAC Capital Advisors L.P. Agents tried and failed to persuade him to be a cooperating witness in the government's effort to build a criminal case against Mr. Cohen, the founder of SAC and one of the biggest names in the hedge-fund world, said people close to the case...The government's attempt to engage Mr. Martoma as a cooperating witness shows the high level of focus placed on Mr. Cohen, whose $14 billion fund has posted some of the best returns on Wall Street. It also demonstrates how the government has been unable so far to implicate Mr. Cohen in Mr. Martoma's alleged wrongdoing...Each of the two securities fraud charges against Mr. Martoma carry a maximum of 20 years in prison; federal sentencing guidelines, based on the amount of the alleged illegal profits, recommend a sentence of 15 to 19 years. By contrast, most people who have pleaded guilty to insider trading and cooperated with the government have been sentenced to little or no jail time. Mr. Martoma is married with children. "Twenty years is a very long time in prison," said Thomas Gorman, a partner at Dorsey & Whitney LLP in Washington, referring to the sentence Mr. Martoma could serve if convicted. "There will be an enormous amount of pressure to earn a cooperation credit to try to mitigate that." Cohen’s ’Elan Guy’ Martoma Dropped Ethics for Hedge Fund (Bloomberg) Martoma got his undergraduate degree at Duke University in Durham, North Carolina, according to the university registrar. During his first year, he was inducted into Phi Eta Sigma, an honors society for freshmen who attain at least a 3.5 grade point average, according to the university registrar. He graduated in December 1995. Less than two years later, he went off to Harvard Law School in Cambridge, Massachusetts. He wrote two medical-ethics papers, one of which identifies him as a member of Harvard Law’s class of 2000 and as the former deputy director of the National Human Genome Research Institute’s Office of Genome Ethics. He left Harvard in December 1998 without attaining a degree, according to the school’s registrar, and attended Stanford Business School, where he joined three alumni groups including MBA Class of 2003, according to university records. In 2001, he changed his name from Ajai Mathew Mariamdani Thomas...Former colleagues, who asked not to be named because the fund is private, said the Martoma, who stood almost six feet tall, had a quiet demeanor and left little impression except for an outsized trade that earned him the name “the Elan guy.” Trading Case Casts a Deeper Shadow on a Hedge Fund Mogul (NYT) Thus far, any potential evidence against Mr. Cohen is entirely circumstantial. The government's complaint includes e-mails about secretly selling the Elan and Wyeth shares through esoteric methods like algorithms and dark pools. But that is common practice among large, sophisticated funds that do not want to alert competitors or move the stock too much. Moreover, while SAC dumped its large positions in the two stocks quickly - raising the question of what prompted it to do so - Mr. Cohen is known for a rapid-fire trading style. He frequently moves aggressively in and out of stocks while processing gobs of information fed to him by his underlings. It would be difficult for a jury to infer anything incriminating just from the way these trades were executed. The government in this case also lacks the powerful wiretap evidence that it has used to convict dozens others, including Raj Rajaratnam, the head of the Galleon Group. Greek Bond Buyback In Doubt (WSJ) The rally in outstanding Greek bonds has made any buyback plan more expensive, eroding the impact it would have on Greece's debt. It raises the challenge for euro-zone finance ministers to seal a deal at their next meeting on Monday that would both plug holes in Greece's €246 billion ($316.95 billion) bailouts and bring the country's debt load to a more manageable level. S&P Confirms France's AA-Plus Rating (WSJ) The decision removes the immediate threat of another downgrade of France, though S&P kept a negative outlook on the country's debt. That indicates a one-in-three chance of a cut in France's credit rating during 2013. Diamond, Dimon’s Early Risks Made Them Better: Adoboli (Bloomberg) Adoboli, who was jailed Nov. 20 for causing the largest unauthorized trading loss in British history, said in an e-mail exchange with Bloomberg News that Jamie Dimon, Bob Diamond and Yassine Bouhara, the former co-head of global equities at UBS, all lost large amounts of money at some point in their careers. The more senior you are the easier it is to avoid getting slammed to the wall,” Adoboli wrote in a Nov. 14 e-mail. “Funny thing is though, losing money seems to make you better at making money. Perhaps that’s why traders who lose money always get rehired, as long as they still have their risk appetite.” Canada Police Arrest Man Who Told Kids Santa Isn't Real (Star) As Christmas-themed floats slowly rolled down Princess St. during Kingston’s annual Santa Claus parade, an intoxicated man shouted blasphemous lies to shocked children: Santa doesn’t exist. The man, whose gelled hair “looked like a set of devil horns protruding from his head,” was reported to Kingston police, Const. Steve Koopman said. Police arrested a 24-year-old man around 6 p.m. “It was pretty despicable that someone, during this time of the year, would tell kids Santa isn’t real — which of course we would argue,” Koopman said. Higher Gas-Tax Idea Joins Fiscal-Cliff Talks (WSJ) Other industries also are moving to have initiatives attached to a budget deal—as part of either a short-term agreement this year or a longer-term plan reached next year to overhaul spending and taxes. Casinos are pushing a measure to legalize Internet poker games nationally. Small banks are pressing to extend a program that gives unlimited federal guarantees to certain bank deposits. Governors want additional aid to cover destruction wrought by Hurricane Sandy. The financial industry is pushing to loosen regulations on complex financial derivatives. "Basically, you've got a bunch of people waiting in the wings to stick the collection plate out and grab whatever they can grab," said Dan Kish, senior vice president for policy at the Institute for Energy Research, which advocates for free-market energy policies. Jain Gets Silent Treatment as Bankers Eat Humble Pie (Bloomberg) Deutsche Bank co-Chief Executive Anshu Jain says telling people he works in banking is a conversation-killer at parties, as the industry fails to convince the general public that it’s changing. “If you go to a party these days, you’re asked what you do and you say you’re a banker, people go all quiet,” Jain said before a conference on Europe’s finance industry began in Frankfurt. “We’re still the subject of anger.” Judge Rules For Singer (Reuters) A federal judge has ordered Argentina to pay holders of defaulted bonds, including Paul Singer’s Elliott Management, immediately, a blow to the country’s efforts to overcome a 2002 debt crisis that has raised fears of another default. In a ruling Wednesday, Judge Thomas Griesa lifted a previous order stalling payments to so-called holdout investors who refused to take part in two swaps of defaulted debt. Argentina’s president, Cristina Fernandez, has said her government will not pay “one dollar,” and Griesa’s ruling cited threats by Argentina’s leaders to defy his rulings in the decade-old dispute. Germany Halts Swiss Tax Deal (WSJ) The bilateral treaty was vetoed by the left-leaning Social Democrat and Green opposition parties in the Bundesrat, which represents Germany's 16 states. The treaty's opponents argue that it is too lenient on tax evaders. We want a treaty that is "more painful to Swiss banks and German tax evaders," Norbert Walter-Borjans, the Social Democrat finance minister of the German state North Rhine-Westphalia said in a debate in the upper house preceding the vote Friday. A ‘Whale’ of a Chase is on (NYP) JPMorgan Chase turned its chief investment office into a proprietary-trading unit that caused more than $6.2 billion in losses, pension funds said in a revised complaint in their suit against the bank. JPMorgan contended the unit’s primary role was managing risk when in fact it was engaging in trades to generate profit for the bank, the funds said in an amended complaint filed in Manhattan federal court. CEO Jamie Dimon “secretly transformed the CIO from a risk management unit into a proprietary-trading desk,” the plaintiffs said. The pension funds allege they incurred losses in their holdings because of trades by the chief investment office and Bruno Iksil, known as “the London Whale.” Porn star vows night of passion if Barcelona wins (NYDN) Colombian-born Janeira Ventura said she would give "any Barca fan who dares" the "night of their lives" if Lionel Messi, Andres Iniesta and co. fire them to the top of La Liga by the end of the season. The adult actress told Mundo Deportivo, "If we win the league this year, I pledge publicly to spend a night of passion with any Barcelona member or supporter who dares. "How can they prove they support the team? It's easy, by showing me the membership card or photos and tickets to a game. They just have to contact me on my website." The 27-year-old was born in Barranquilla, moved to Spain when she was a baby and now lives in Toronto. She added, "I've been a Barcelona fan since I was little, I love the team, the way they play, and above all I love the players. The most sexy ones? Messi, Xavi and Puyol." Her obsession extends to having two cats, who are called Leo and Messi, and plans to tattoo the Argentine striker's name "in a secret place" when she returns to Spain in 2013. She also wants to convince Barcelona bosses to let her be their "official club porn star."