Opening Bell: 04.03.14

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Moody's Is No-Show in Bond Deal Rating (WSJ)
When the sale of more than $1 billion in commercial-mortgage bonds went off without a hitch last week, one name was conspicuously missing from the prospectus: Moody's Investors Service. The ratings firm, known for adopting more-cautious stances than its rivals, has been a mainstay on such deals during the aftershocks of the financial crisis. But with investors scrambling to buy higher-yielding bond deals, the underwriters on this one took a gamble that they could still sell the securities without the rater's seal of approval. When the market was tougher, bankers "were not willing to [sell a bond] without putting a Moody's rating on it," said Lea Overby, head of commercial-mortgage-backed securities research at Nomura Securities International. "It's worth a shot to try it now" given the market's strength, she said.

Judge tosses man’s claim of ownership of Facebook (AP)
A federal judge has officially closed the book on a New York man’s multibillion-dollar lawsuit claiming half-ownership of Facebook. Judge Richard Arcara has granted Facebook and founder Mark Zuckerberg’s motion to dismiss Paul Ceglia’s lawsuit. Last week’s ruling affirms a magistrate judge’s recommendation from a year ago saying the lawsuit should be thrown out because the contract Ceglia based it on was faked. Ceglia is from Wellsville. He claimed he and Zuckerberg signed a 2003 software development contract that included a provision entitling him to half-ownership of Facebook in exchange for startup money for the budding company. Facebook lawyers say the two had a contract but references to Facebook were slipped in for the lawsuit.

Morgan Stanley CFO says companies need more female executives (Reuters)
Morgan Stanley Chief Financial Officer Ruth Porat on Wednesday called on government and corporate leaders to encourage the promotion of women into senior business roles, saying the number of women in top positions at U.S. corporations is "an embarrassment."

Yelp Reviews Brew a Fight Over Free Speech vs. Fairness (WSJ)
In early 2012, Joe Hadeed, owner of Hadeed Carpet Cleaning Inc., arrived at his office atop a 70,000-square-foot warehouse in Springfield, Va., to discover a critique posted on Yelp.com: "Lots of hype, a mediocre cleaning and a hassle at the end. Don't go with Joe!" wrote a "Mike M." A few days later, another review, by "M.P." popped up: "I will never use them again and advise others to proceed with caution!" it said. Over the next several weeks, a string of similarly harsh reviews replaced more-favorable comments "as if someone had flipped a switch," said the 47-year-old Mr. Hadeed, in an interview last month at his offices, where trucks drop off carpets to be washed, rinsed and dried...Following the rash of negative Yelp reviews, business sank 30% in 2012, Mr. Hadeed says. Last year, Hadeed cleaned just 20,000 carpets, down from 29,000 in 2011. Revenue fell to $9.5 million from $12 million in 2011. Mr. Hadeed said the business has let 80 workers go and sold six trucks, reducing its fleet to 54...In July 2012, Hadeed sued the seven reviewers for defamation, and demanded that Yelp turn over their true identities. So far, both the Alexandria Circuit Court and the Virginia Court of Appeals have sided with Mr. Hadeed, holding Yelp in contempt for not turning over the names. Yelp in January appealed to the state Supreme Court, arguing that the reviews are protected under the First Amendment and that Mr. Hadeed offered scant evidence that they were fakes. This month the Supreme Court could issue an order granting or denying Yelp's appeal, or schedule a hearing in Richmond, which could take place in the next 90-120 days.

Rachel Canning, teen who sued parents, picks college (USAT)
Rachel Canning, the New Jersey high school senior who made national headlines after suing her parents last month, has chosen a college. The 18-year-old Canning announced on her Facebook page in a public post Saturday that she plans to attend Western New England University as a biomedical engineering major on a $56,000 scholarship. "Decision made. WNE U class of 2018 BME Major w/ 56,000$ scholarship," read the Facebook post. The post had more than 145 likes before it was removed or restricted to the public at about 1:30 p.m. Tuesday...Canning sued her parents, Sean and Elizabeth Canning of Lincoln Park, for child support and college costs, filing a lawsuit on Feb. 24 in Superior Court in Morristown, N.J. After the judge denied Canning's claim for immediate assistance on March 4, she moved back in with her parents March 11, and dropped her lawsuit the following day.

How High-Frequency Stock Trader Quantlab Guarded Its Algorithms (WSJ)
Under a gazebo's shade, a Ukrainian physicist who aspires to be a monk met with a Milwaukee lawyer seven years ago and began planning a firm whose profits from rapid-fire stock trades would go mostly to charity. They and another founder eventually named it SXP Analytics LLC after St. Xenia, an 18th century Russian who gave the poor her possessions. Today, SXP's founders stand accused of stealing someone else's prized possessions: the algorithms of a powerful Houston high-frequency-trading company. Eleven months after the gazebo meeting, more than 70 Federal Bureau of Investigation agents raided SXP offices and employees' homes in seven states, seizing computers, servers and flash drives. The search target was computer code belonging to the Houston firm, Quantlab Financial LLC.

Fed should hike rates in second half of 2015: Williams (Reuters)
"Given the economic outlook, and given also my view that we need accommodative policy relative to historical norms, we need to have relatively low levels of interest rates for quite some time," San Francisco Federal Reserve Bank President John Williams told Reuters. "My own view is it makes sense to start raising rates in the second half of 2015."

Brazil Central Bank Hints at End to Rate Increases (WSJ)
"There will probably be another increase at the next meeting, if there's no surprise, but the continuity of the cycle beyond that is unlikely," said economists at Banco Fator in a note. "After all, there were lots of caveats and conditions" in the statement, they said.

A Pivotal Financial Crisis Case, Ending With a Whimper (Dealbook)
The regulatory cloud has lifted for Kenneth D. Lewis. Last week, the former head of Bank of America received a modest penalty, paid for by his former employer, and a temporary ban from an industry he is no longer a part of. In this seminal financial crisis investigation, regulators put on a master class in how to take a strong case and render it weak.

Artist plants fake Justin Bieber CDs in LA stores (AP)
Paz, a 25-year-old electronic musician and artist, says he planted 5,000 copies of an album that appears to be Bieber’s “Believe” but actually contains a copy of his own CD at retailers such as Best Buy, Wal-Mart and Target on Tuesday, April Fool’s Day. “We were meticulous,” said Paz, who fancies the stunt more of a performance art piece than an April Fool’s gag. “We paid a lot of attention to detail because we wanted these to stay up on shelves as long as possible.” From the outside, the wrapped CDs resemble “Believe” right down to the bar code and silky Bieber portrait on the cover. However, Paz’s artwork is inside the back cover, and the disc itself is slathered with images of cats, pizzas and a dog stuffed inside a taco. The CD contains the 13 tracks from Paz’s synth-heavy independent release “From the Bottom of My Heart to the Top of Your Lungs.” The Associated Press independently verified the stunt by purchasing random copies of what looked like Bieber’s “Believe” from widely scattered LA-area locations, such as a Target store in Burbank and Best Buy stores in West Hollywood and Culver City. In each instance, the CDs were scanned and paid for as if they were Bieber CDs. But when they were opened outside the store, each contained a copy of Paz’s album, not Bieber’s...Paz, whose full name is Paz Dylan, said he wanted to use so-called “big-box retailers” as his artistic canvas by “droplifting” his music into the hands of consumers.

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Opening Bell: 11.21.17

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Opening Bell: 08.03.12

JPMorgan London Whale Was Prodded (WSJ) A JPMorgan executive encouraged the trader known as the "London whale" to boost valuations on some trades, said a person who reviewed communications emerging from the bank's internal probe of recent trading losses. After reviewing emails and voice-mail messages, the bank has concluded that Bruno Iksil, the J.P. Morgan trader nicknamed for the large positions he took in the credit markets, was urged by his boss to put higher values on some positions than they might have fetched in the open market at the time, people familiar with the probe said. The bank's conclusion is based on a series of emails and voice communications in late March and April, as losses on his bullish credit-market bet mounted, the people said. The bank believes they show the executive, Javier Martin-Artajo, pushing Mr. Iksil to adjust trade prices higher, according to people close to the bank's investigation. At the time, Mr. Martin-Artajo was credit-trading chief for the company's Chief Investment Office, or CIO. RBS Loss Widens (WSJ) The 82%-government-owned bank reported a net loss of £1.99 billion ($3.09 billion), wider than the loss of £1.43 billion a year earlier. However, the result was hit by a £3 billion accounting charge for the fair value of the company's debt and a number of provisions for misselling financial products. Analysts focused on the more-positive underlying figures for the half, helping to make its shares the leading gainer on the FTSE 100. Excluding the own-debt charge, RBS would have posted a net profit of £287 million. It posted an operating profit of £1.83 billion, down from the £1.97 billion a year earlier. Nevertheless, RBS warned that it faces a number of lawsuits. The bank is cooperating with regulators in the U.S., Japan and the U.K., who are probing whether banks colluded to try and rig benchmark rates including the London interbank offered rate. RBS said that it had fired a number of traders following the investigations but said it was too early to estimate the fines the bank may have to pay. RBS’s CEO Blames Libor-Manipulation On ‘Handful’ Of Individuals (Bloomberg) RBS dismissed four employees for trying to influence the individual responsible for Libor submissions following an internal investigation, the bank said today, without identifying the staff involved. Hester said it is too early to estimate the potential cost of fines and litigation linked to rate-rigging. “The Libor issue is more to do with the wrongdoing of individuals than it is to do with a systemic problem,” Hester, 51, said on a call with journalists today after the Edinburgh- based bank reported a 22 percent drop in second-quarter operating profit. “It’s hugely regrettable that the actions of a relatively small number of wrongdoers, which seems to be the key issue here, has such a tainting effect on the industry.” Knight Said To Open Books To Suitors As Loss Pressure Grows (Bloomberg) Bank of America Corp. was among several potential partners that was in talks with Knight yesterday, said a person with knowledge of the matter. John Yiannacopoulos, a Bank of America spokesman, declined to comment. Loss Swamps Trading Firm (WSJ) Knight wouldn't comment on the status of the rescue talks. But market participants said the firm is running out of time. In the span of two days, the company's market value has plunged to $253.4 million from $1.01 billion, and its shares continued their nosedive in after-hours trading. "If they don't get an investor within the next 48 to 72 hours, I think Knight's going to have trouble surviving," said David Simon, chief executive of hedge fund Twin Capital Management LLC. Mt. Sinai urologist busted on charges he used spy cam to peek up subway riders’ skirts (NYDN) Dr. Adam Levinson, an assistant professor of urology at the hospital’s school of medicine, allegedly clipped a pen camera to a folded newspaper so he could peek up a woman’s skirt on a southbound 4 train about 5 p.m. Tuesday, authorities and a witness said. Sheldon Birthwright, 46, a construction worker who once worked for the Transportation Security Administration, said he sensed something wrong almost immediately after Levinson stepped on the train at E. 59th St. The doctor — a New York Medical College grad who twice won a national Patients’ Choice Award — held the newspaper at his side as he inched toward a woman wearing a knee-high dress and reading a Kindle. “He’s leaning on the pole right next to the door,” Birthwright told the Daily News. “He has a paper in his hand. But what’s mysterious about it, there’s a pen attached to the paper...He has it down in a very unsuspicious way. But every time the woman would move, he would move.” Catholic Fund Fails To Convince Believers (FT) JPMorgan Asset Management had hoped to attract investors who wanted exposure to investments that would not clash with tenets on issues such as birth control and civil rights. It also eschewed investments in governments of countries that have the death penalty. The aim was to replicate the success of funds compliant with Shariah law which have been in strong demand with Muslim investors. However, JPMorgan is to liquidate the Global Catholic Ethical Balanced Fund just over a year since it was launched. At May 31, it had net assets of just 4.3 million euros ($5.24 million), far short of a $30 million threshold outlined in its prospectus. Fake-bookers (NYP) Facebook admitted that some 83 million of the social network’s 955 million total users are fakes — meaning duplicates, spam or silly pages for pets. That represents nearly 9 percent of profiles on the site. The rash of fakes — equal to the population of Egypt — has shot up since Facebook’s rocky public debut in May, when it estimated “false” profiles accounted for 5 percent to 6 percent of its users. “These estimates are based on an internal review of a limited sample of accounts, and we apply significant judgment in making this determination, such as identifying names that appear to be fake or other behavior that appears inauthentic,” the company said in a recent regulatory filing. The spike is a major cause for concern, with advertisers and investors questioning Facebook’s effectiveness in reaching consumers. In particular, Facebook has been under scrutiny for slowing ad sales growth. Economy Adds 163,000 Jobs (WSJ) U.S. employers stepped up hiring in July as the economy continued its uneven recovery heading into this fall's presidential election. U.S. payrolls increased by a seasonally adjusted 163,000 jobs last month, the Labor Department said Friday, but the unemployment rate, obtained by a separate survey of U.S. households, ticked up one-tenth of a percent to 8.3%. Economists surveyed by Dow Jones Newswires expected a gain of 95,000 in payrolls and an 8.2% jobless rate. Family kept grandparents' deaths secret from Chinese diver until she won gold medal (YS) Chinese diver Wu Minxia's celebrations at winning a third Olympic gold medal were cut short after her family revealed the details of a devastating secret they had kept for several years. Wu's parents decided to withhold news of both the death of her grandparents and of her mother's long battle with breast cancer until after she won the 3-meter springboard in London so as to not interfere with her diving career. "It was essential to tell this white lie," said her father Wu Yuming...Wu's mother defended the decision to keep her situation private and admitted she only broached the subject of her breast cancer at this point because she is now in remission. Both of Wu's grandparents died more than a year ago, but the diver knew nothing of their passing until this week.

Opening Bell: 08.22.12

Public Pension Funds Named To Lead ‘London Whale’ Lawsuit (Bloomberg) U.S. District Judge George Daniels in Manhattan ruled today that lawsuits against the New York-based bank should be consolidated into a class action. The pension funds allege they lost as much as $52 million because of fraudulent activities by JPMorgan’s London chief investment office. The lead plaintiffs named by Daniels are the Arkansas Teacher Retirement System, Ohio Public Employee Retirement System, School Employees Retirement System of Ohio, State Teachers Retirement System of Ohio, Oregon Public Employee Retirement Fund and the Swedish pension fund Sjunde AP-Fonden. Pressures Intensify On Merkel (WSJ) The Greek government, struggling with depression-like conditions that have pushed the economy to the brink, is likely to need many billions of euros of additional aid to avoid bankruptcy. If Athens doesn't get the money, it may be forced to leave the euro, an outcome that would undermine financial markets' tenuous confidence in other vulnerable southern euro members, including Spain and Italy. An expansion of Greece's €173 billion ($213.4 billion) bailout that was agreed to this spring faces adamant opposition in Ms. Merkel's center-right coalition in Germany's parliament, the Bundestag. Her junior coalition partners are especially against lending Greece more money, threatening to leave her either without a governing majority—or without a plausible way to cover Athens's funding gap. "It is one of the hardest dilemmas she has faced as chancellor," said an adviser to Ms. Merkel. The chancellor is set to meet with French President François Hollande on Thursday and Greek Prime Minister Antonis Samaras on Friday, meetings the chancellor's aides say will help determine Berlin's course. Austria's AAA Rating Under Attack From East and West (CNBC) Of the three major credit rating agencies, only Fitch Ratings still rates Austria triple-A with stable outlook. Moody’s Investors Service put Austria’s top notch rating on negative watch in February, while Standard & Poor’s downgraded the country to double-A plus with negative outlook in January. Facebook Challenged By Swedish Count’s Jet-Set Website (Bloomberg) The BestofAllWorlds site, which starts Aug. 27, will allow users to mingle online with like-minded people, find restaurants and nightlife in city guides and discover who’s attending events such as Art Basel in Miami and England’s Royal Ascot horse racing, said Erik Wachtmeister, whose father was a Swedish ambassador to the U.S. “Facebook is a monopoly in the social sphere, but it only gives little value,” Wachtmeister said in an interview in London. “We can deliver clever filters, cut through the mess and get information that’s relevant and we can trust.” Fed Probes RBS Over Dealings With Iran (FT) The UK bank is being probed by being probed by the Federal Reserve and Department of Justice after volunteering information to them and U.K. regulators about 18 months ago, several people close to the situation said. The bank uncovered the alleged failings after Chief Executive Stephen Hester initiated an internal review not long after his arrival three years ago...The probe marks the latest blow for RBS following a series of mishaps including an IT failure, widespread mis-selling of retail and small-business products and its involvement in the scandal over the alleged manipulation of Libor interest rates Suspect asks DeLand doughnut shop worker for pen to write robbery note (NYP) An embarrassed Atlantic City casino is suing 14 gamblers — including two Big Apple residents — demanding they return the whopping $1.5 million they collectively won after realizing the mini-Baccarat table they were playing at was using unshuffled decks of cards. The sharp-eyed gamblers racked up a staggering 41 winning bets in a row at the Golden Nugget after seeing cards in the eight-deck shoe coming out in sequence and adjusted their wagers accordingly — as the clueless croupiers kept on dealing. Stunned casino workers swarmed the hot table suspecting the players of cheating — but only later realized that the cards that had been ordered as pre-shuffled from a Missouri company “were not shuffled at all,” a Golden Nugget spokeswoman said yesterday. “The gamblers unlawfully took advantage of the Golden Nugget when they caught on to the pattern and increased their bets from as little as $10 to $5,000,” the casino said in a written statement...It has been met with a countersuit from three of the bettors, including Queens resident Ping Lin, who allegedly managed to collect $50,000 from the casino, and Brooklyn cook Hua Shi, who allegedly collected $149,000. They claim they should be allowed to cash in chips they won and keep the cash they already managed to collect. Nomura Retrenches, Mends Fences (WSJ) Nomura's new leaders are discussing the future of that global push as well as how to repair the company's relationship with financial authorities. On the table are deep cuts in overseas operations and a possible change to a controversial compensation plan, among other policy options, that could shift away from the globalization strategy set by former Chief Executive Kenichi Watanabe and his deputy Takumi Shibata through the acquisition of Lehman Brothers' European and Asian businesses in 2008, say people close to the talks. Last Man Standing Means Europe Investment Banks Resist Shrinking (Bloomberg) Europe’s failure to resolve its sovereign-debt crisis will force investment-banking chiefs in the region to consider shuttering entire businesses rather than rely on piecemeal job reductions to reviveprofit. Dealmaking fees may drop 25 percent this year from 2009, when the crisis began in Greece, research firm Freeman & Co. estimates. European banks have cut about 172,000 positions since then, according to data compiled by Bloomberg, the same strategy they used after Lehman Brothers Holdings Inc. collapsed in 2008. Florida couple arrested after swinger’s party takes violent turn (NYDN) Tina Michelle Norris, 39, and her boyfriend James Albert Barfield, 56, both invited guests over to their home for sex Sunday night, the Hernando Today reported. But Norris got mad when she saw her boyfriend in bed with another woman and Barfield lost his cool when he saw his girlfriend under the sheets with two other men, according to the newspaper. The pair quickly got physical, with Norris sustaining a bloody lip and Barfield suffering multiple scratch marks on his neck and back, cops told Hernando Today. Police got quite the eyeful when they arrived at 6 a.m. to arrest the couple, both of whom were still donning their birthday suits. Norris was "very intoxicated and uncooperative" and refused to put her clothes back on, Deputy Cari Smith wrote in her affidavit. Barfield was also nude when Smith arrived at the home. A roommate, who was sleeping in a separate room of the house at the time of the incident, said she awoke to shouting and yelling. She went out into the hallway and found Norris and Barfield "pushing and shoving each other from one end of the house to the other (while) breaking things in the process," Smith wrote.