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Opening Bell: 06.24.14

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Allergan Rejects Latest Offer from Valeant (WSJ)
Allergan again rebuffed advances from Valeant Pharmaceuticals International Inc., saying Monday that its board has unanimously determined that the unsolicited exchange offer to acquire all of the Botox maker's shares outstanding is "grossly inadequate." Allergan said its board strongly recommends that Allergan shareholders not tender any Allergan shares to Valeant, adding that the offer substantially undervalues the company, creates significant risks and uncertainties for Allergan shareholders, and isn't in the best interests of the company and its shareholders. A representative for Valeant said Allergan's rejection of the proposal is based on assumptions about the business that aren't supported by the facts. Pershing Square didn't immediately respond to requests for comment.

Dean Foods Subpoenaed in Icahn Insider-Trading Case (WSJ)
Federal authorities have sought information from two companies in connection with an insider-trading investigation of activist investor Carl Icahn, sports bettor William T. Walters, and golfer Phil Mickelson, according to people familiar with the matter. Dean Foods Co. in recent weeks received a subpoena from criminal authorities ordering the company to produce information, said a person familiar with the matter. Clorox Co. and Mr. Icahn received requests for information from the Securities and Exchange Commission in 2011 related to trading in the company's shares, according to a person familiar with the matter. Neither of those developments has been previously reported. In the case of Dean Foods, authorities are probing whether Mr. Walters provided stock tips to Mr. Mickelson, said people familiar with the matter. In the case of Clorox, investigators are looking into whether Mr. Icahn tipped Mr. Walters about his actions involving Clorox, the people said.

Ex-Millennium Fund Manager Gets Four Years in Prison (Bloomberg)
Former Millennium Global Investments portfolio manager Michael Balboa was sentenced to four years in prison for defrauding investors by inflating the value of Nigerian sovereign debt by $80 million. Balboa, convicted in December in a retrial in Manhattan federal court, had faced a possible life sentence because of the size of his fraud. The U.S. said investors lost more than $390 million based on Balboa’s misstatements...Balboa, a London-based investment manager, was convicted of providing fake valuations to inflate month-end market prices on Nigerian warrants. The scheme generated millions of dollars in management and performance fees for which he earned as much as $6.5 million, prosecutors said.

American Apparel: Charney's Bad Behavior Was Very, Very Expensive (BusinessWeek)
Dov Charney’s behavior has never been a secret. For starters, as the chief executive of American Apparel (APP), he occasionally walked around the Los Angeles headquarters in his underwear. He was open about his libertine attitudes toward sex in general and sex in the workplace in particular, at one point “putting on a show” for a journalist on assignment for Jane magazine. So when Charney was fired last week “for cause,” it was reasonable to wonder “why now?” In his termination letter, posted on BuzzFeed yesterday, the board accuses him of sexually harassing employees, paying off some of them with “significant” severance packages, and refusing to participate in sexual harassment training...It is true that Charney’s antics are not new, but apparently they have grown unacceptably expensive. The [termination] letter to Charney eventually comes around to this point: "Your conduct has required the Company to incur significant and unwarranted expenses, including expenses associated with litigation and defense costs, significant settlement payments, substantial severance packages that were granted to employees, and unwarranted business expenses that you incurred for personal reasons. The Company’s employment practices liability insurance retention has grown to $1 million from $350,000. … The resources American Apparel had to dedicate to defend the numerous lawsuits resulting from your conduct, and the loss of critical, qualified Company employees as a result of your misconduct cannot be overlooked."

How Marissa Mayer Fell Asleep and Kept Ad Executives Waiting For Hours (CMO Today)
Last Tuesday evening, Interpublic Group arranged a private dinner at the swanky L’Oasis for Ms. Mayer to meet executives from marketers such as Mondelez International , brewer MillerCoors and Greek yogurt maker Chobani. It was supposed to be a chance for Interpublic and some of its clients to get a first hand update from Ms. Mayer on what Yahoo has to offer. But Ms. Mayer was nearly two hours late, and several dinner attendees including IPG Chief Executive Michael Roth ended up leaving before she arrived, people familiar with the matter said. Ms. Mayer told some attendees that she had fallen asleep, some of the people said.

Crash captain left helm for ‘drunken 3-way sex romp’ (NYP)
Craig Gallo...was busy messing around with a pal and a woman they’d just met when his 28-foot Wellcraft boat crashed early Sunday into runway approach lights at La Guardia Airport, sources told The Post. Gallo later admitted to cops that he’d been drinking and was involved in a boating accident, prosecutors said.“I was driving, I had a few beers,” Gallo told cops, who noticed he reeked of booze. Gallo, who was arrested in 1999 for urinating in public, refused a Breathalyzer test...The boat captain and friend James Benenato, 60, were boozing it up from 9 pm to 11:30 pm at a tiki party at the Arrow Yacht Club in College Point, when they picked up Mary Ann Belson, sources said. Gallo docks his 1981 fishing boat at Skyline Marina next door. The crash happened at 11:47 pm, cops said. Both Gallo and Belson, 60, suffered facial injuries in the crash, while Benenato, 60, was not hurt. Photos taken after the crash showed a dozen or so Budweiser beer cans overflowing a bucket and strewn about the deck and cabin, with sheets and clothing strewn about the ship’s cramped cabin.

MBIA says Credit Suisse hid crucial documents in U.S. mortgage case (Reuters)
Credit Suisse Group AG has withheld many key documents from MBIA Inc in a lawsuit accusing the Swiss bank of lying about how it processed loans used in mortgage-backed securities, and it should be ordered to review whether it has more evidence suggesting misconduct, the bond insurer said. In a filing in New York state court on Monday, MBIA objected to what it called Credit Suisse's failure to turn over "some of the hottest documents" in the 4-1/2-year-old lawsuit, on the ground that they were "non-responsive." MBIA, based in Armonk, New York, said it learned of the documents only in the last few months, after a court told Credit Suisse to turn over deposition transcripts from other U.S. cases involving similar claims.

Lew Defends Council’s Work to Guard Against Financial Risk (Bloomberg)
U.S. Treasury Secretary Jacob J. Lew pushed back against Republican efforts to curtail the work of a council of regulators charged with preventing another financial crisis and said a failure to examine potential risks could lead to “large-scale problems.” “If we avoid or are discouraged from asking questions” altogether, “our financial system will be more exposed to unseen risks, potentially leading to large-scale problems,” Lew said in testimony prepared for a hearing tomorrow before the House Committee on Financial Services. Lew also said regulators should take further action to reduce vulnerabilities in wholesale funding markets, including money market-mutual funds and triparty repurchase agreements, “that can lead to destabilizing fire sales” of assets.

Officials at Ex-Im Bank Face Investigations (WSJ)
One employee, Johnny Gutierrez, an official in the short-term trade finance division, allegedly accepted cash payments in exchange for trying to help a Florida company obtain U.S. government financing to export construction equipment to Latin America, according to a person familiar with the inquiry. Mr. Gutierrez was escorted from the Ex-Im Bank building in April, said two people familiar with the matter.

Trophy Art Brings Top Prices at Sotheby's (WSJ)
In 2010, Christie's offered up Claude Monet's 1906 "Water Lilies" for at least £30 million ($51 million at current exchange rates) and no one nibbled. On Monday, Sotheby's brought the same painting up for sale and at least three bidders dueled for it. An American telephone bidder ultimately won it for £31.7 million, or $54 million. That price amounts to the second-highest ever paid at auction for a Monet, whose purple-blue pond scene ranks among his later works set at his French garden in Giverny.

Woman breaks into house, samples wine, pajamas (NYDN)
A real-life Goldilocks is accused of breaking, entering and making herself at home in a Florida house Friday night, according to a report. But while a shower and a soft couch in an empty St. Augustine Beach home might have seemed just right to 19-year old Chancy Layton, her trespass was an unpleasant surprise for the homeowners. The owners returned home early Saturday and told a local news station that they were stunned to find Layton asleep on their couch, wearing stolen pajamas and surrounded by bottles of their wine...The nursery rhyme scenario ended with charges of burglary, theft and criminal mischief for the blonde suspect, who left her purse and passport behind when she fled the scene, according to the arrest report. Police caught up with Layton a block away from the house, where she expressed remorse and wanted to return the pajamas she'd taken. Layton told police that a male friend had broken into the house earlier and told her it was empty. Her friend, whom she knew only as "Jeremy," left the balcony door open for Layton to enter, she told police.

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J.P. Morgan’s Investor Day: Cut That Headcount (Deal Journal) JP Morgan is looking to cut another $1 billion out of its expenses this year, including somewhere around 4,000 jobs, according to a new presentation...And that may not be all the cuts. In a separate presentation on the consumer bank and mortgage operations the bank expects to cut costs in mortgage banking by $3 billion over this year and next year and cut headcount there by between 13,000 and 15,000. Banks Face Hurdle In Libor Fight (WSJ) Next week, lawyers for Barclays PLC, Royal Bank of Scotland Group PLC, UBS AG and more than a dozen other banks still under investigation are expected to ask a federal-court judge to throw out many of the suits, which seek class-action status. The suits, filed in civil court in California and New York by plaintiffs ranging from a retired cable-car driver in San Francisco to the city of Baltimore, have been piling up for nearly two years. They seek damages that could reach into the tens of billions of dollars from financial institutions that help determine the London interbank offered rate, or Libor. Barclays, RBS and UBS already have paid about $2.5 billion, and admitted wrongdoing, to settle rate-rigging allegations by U.S. and U.K. regulators. In court filings, lawyers for the 16 banks accused of wrongdoing say the lawsuits have no legal validity. The lawyers say regulatory settlements reached so far don't support the central allegation in most of the civil suits that banks engaged in illegal, anticompetitive behavior. Berlusconi Concedes as He Weighs Alliance (Bloomberg) Former Italian Prime Minister Silvio Berlusconi acknowledged rival Pier Luigi Bersani’s narrow victory in the lower house of Parliament and said he’s open to a broad alliance to avoid a second election. “Everyone needs to think what good can be done for Italy and this will take some time,” Berlusconi said in an interview with Canale 5, a station owned by his Mediaset SpA broadcaster. The country can’t be left without a government, he said. Lew gettin’ close: Senate panel to OK as next Treasury boss (NYP) Treasury Secretary-nominee Jack Lew will get the green light to replace Tim Geithner despite taking heat during and after his confirmation hearing over a loan he received from New York University. The 57-year-old former White House chief of staff has enough votes from the Senate Finance Committee, headed by Max Baucus (D-Mont.), to pass a vote today that will likely lead to his confirmation, sources said. A full Senate vote is likely to be scheduled in a couple of days and held sometime next week. Larry Summers: Sequestration 'Meat Cleaver' Is Irresponsible (CNBC) Avoiding the "sequester" is "round three" in the debt-reduction debate, former Clinton Treasury Secretary Lawrence Summers told CNBC Tuesday, arguing for a "balanced approach" because President Barack Obama has agreed to more spending cuts than revenue during the process. In a "Squawk Box" interview, Summers said the funding constraints of the Budget Control Act of 2011 — which resolved that year's debt ceiling crisis — were round one. "You had spending cuts that were far larger from the discretionary side, that were far larger than anything [on revenue] that happened in December. Right now, we're way in balance toward more spending cuts." Dominique Strauss-Kahn seeks to ban 'half-man half-pig' book (Telegraph) The "biographical novel" by Marcela Iacub, a lawyer and journalist, recounts her seven-month affair with the 64-year-old Mr Strauss-Kahn last year. It is due to be published on Wednesday under the title, Belle et Bête, or Beauty and Beast. But the one-time Socialist presidential hopeful will this morning seek to have the book banned for "violation of the intimacy of private life" and the author and her publisher fined 100,000 euros (£88,000) in damages...In the work, she claims Mr Strauss-Kahn would have transformed the Elysée Palace into a "giant swingers' club" had he been elected French president. In fresh accounts by those who have read the book yesterday, the last chapter narrates the pair's final encounter, ending in Miss Iacub receiving treatment in casualty after "the pig" left her with an "eaten ear". Mr Strauss-Kahn has slammed the work of a woman who "seduces to write a book, claiming to have amorous feelings to exploit them for financial gain". Gupta's Gotta Pay GS $6.2 Million (NYP) Former Goldman Sachs director Rajat Gupta was ordered yesterday by a Manhattan federal judge to fork over a whopping $6.2 million to repay the Wall Street bank for legal fees it spent during the government’s probe of Gupta’s insider-trading case. The 64-year-old fallen star was convicted last year of giving up secrets he learned while on Goldman’s board to his pal and hedge fund honcho Raj Rajaratnam. Among the counts, the jury found Gupta guilty of giving Rajaratnam a tip on Warren Buffett’s $5 billion investment in Goldman in the throes of the financial crisis. Gupta, the former head of consulting firm McKinsey, is out on bail while he appeals the ruling. Goldman had requested restitution of $6.9 million — and submitted 542 pages of billing records from its lawyers at Sullivan Cromwell. Yahoo’s Mayer Risks Productivity With Work-From-Home Restriction (Bloomberg) Jackie Reses, Yahoo’s executive vice president of people and development, sent a memo last week asking employees with work-from-home arrangements to make their way to the company’s offices, starting June. “To become the absolute best place to work, communication and collaboration will be important, so we need to be working side-by-side,” according to the memo, whose contents were confirmed by a Yahoo employee who asked not to be identified because it’s not a public document. “Speed and quality are often sacrificed when we work from home.” At a time when Mayer is under pressure to jump-start growth and create innovative products, the shift may compromise Yahoo’s ability to attract employees seeking the freedom to work outside the office -- a perk offered by many of the company’s competitors. Research suggests that working from home enhances productivity, said Jody Thompson, co-founder of workforce consultant CultureRx. BP Oil-Spill Trial Begins (WSJ) Both Transocean and the Justice Department focused part of their opening statements on a 10-minute ship-to-shore phone call between two BP engineers, Donald Vidrine and Mark Hafle, less than an hour before the blast. From the rig, Mr. Vidrine allegedly talked about unusual results from a test designed to ensure the cement sealing in the bottom of the well was successful. Investigators later found that rig workers misinterpreted the results of the test. Dennis Rodman Bound For North Korea (Reuters) Retired U.S. basketball player Dennis Rodman is to visit North Korea to film a television documentary and will arrive in the capital Pyongyang on Tuesday, the Associated Press reported. Rodman, now 51 years old, won five NBA championships in his prime, achieving a mix of fame and notoriety for his on- and off-court antics. 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Eurogroup approves Spanish banking sector bailout (Reuters) Euro zone finance ministers approved an agreement on Friday to lend up to 100 billion euros ($123 billion) to Spain so it can recapitalize its banks, but the exact size of the loan will probably only be determined in September. Yahoo To Pay Mayer $100 Million Over 5 Years (WSJ) Ms. Mayer is expected to receive around $5.4 million from Yahoo for the remainder of this year and around $20 million a year after that, though some of that amount is tied to performance targets set by the board...The Yahoo pay package includes restricted stock units valued at $14 million in order to "partially compensate" Ms. Mayer for forfeiting her compensation from Google. It also includes a one-time retention award that is valued at $15 million and will vest over five years. Morgan Stanley Joins Citigroup In Job-Cut Push Amid Slump (Bloomberg) Headcount at Morgan Stanley will decline by about 700 in the second half, bringing total 2012 staff reductions to 4,000, Chief Financial Officer Ruth Porat, 54, said yesterday in an interview. Deutsche Bank, Europe’s biggest lender by assets, is considering about 1,000 job cuts at its investment bank, while Citigroup plans to chop about 350, people with knowledge of the decisions said this week. London Fund-Raisers Put Romney in a Scandal’s Glare (NYT) The former chief executive and a top lobbyist for Barclays, the bank at the center of the scandal, helped organize a Romney fund-raiser. The former chief executive, Robert E. Diamond Jr., has since withdrawn his name as the event’s co-host. The bank’s lobbyist, Patrick J. Durkin, remains a co-chairman: he has bundled $1.1 million for Mr. Romney from friends and business associates, more than any other lobbyist, according to federal records. Nasdaq to Release Compensation Plan for Investors Hurt by Facebook IPO Mess (FBN) Nasdaq is looking to release next week the compensation plan for investors who lost out on the bungled IPO of Facebook...Sources say the deal being discussed will be all in cash, and likely above the $40 million originally proposed...Nadsaq had proposed a $40 million deal in which $27 million of it involved trading credits--a move that outraged investors and market makers who may have lost a combined $200 million or more on the botched IPO. Because of that one source says the new Nasdaq proposal could be as high a $100 million and all of it in cash. Insider Traders Face Longer Sentences As Judges Get Tough (Bloomberg) Since Jan. 1, 2011, the judges have sent the average violator to prison for more than 22 months, according to an analysis of sentencing data by Bloomberg News. That was a 20 percent increase from the average term of 18.4 months during the previous eight years. Boxer’s Bloody Nose Leads to Bank Robbery Charges (AP) Martin Tucker won his latest boxing match, but a bloody nose in the ring could send him to prison for bank robbery. The FBI said it obtained a swab used to stop the bleeding and found that DNA matched Tucker's DNA on other evidence from a 2009 robbery at Monroe County Community Credit Union in Temperance, near the Michigan-Ohio border. In a court filing, agent Robert Schmitz said he was aware of Tucker's bout in April in Toledo, Ohio, and obtained the "discarded" Q-tips swab. Tucker's DNA matched DNA from a mask believed to have been used in the robbery and from the steering wheel of the getaway car, the FBI said...Detroit FBI spokesman Simon Shaykhet declined to discuss how Schmitz got the bloody swab. Defense attorney Haytham Faraj said there seems nothing illegal about acquiring it. "We leave our fingerprints, bits of hair and skin all over the place. If you're a boxer, sometimes you leave your blood around," Faraj said in an interview Thursday. Bank of England Says New York Fed Gave No Warning on Rate-Rigging (Dealbook) The call for a review into Libor in 2008 came after Mr. King and Mr. Geithner had talked about potential problems with the rate during a meeting in Basel, Switzerland, in early May 2008. This discussion was followed by a flurry of e-mails a month later in which Mr. Geithner, who is now the Treasury secretary, recommended changes to the rate, which is used as a benchmark for more than $360 trillion financial products worldwide. The suggestions included ‘‘strengthen governance and establish a credible reporting procedure’’ and ‘‘eliminate incentive to misreport,’’ according to documents released by the New York Fed. Mr. King told Mr. Geithner that he supported the suggestions. Yet the New York Fed did not make any allegations of wrongful behavior connected to Libor, according to documents released on Friday. Mr. King told a British parliamentary committee on Tuesday that Mr. Geithner’s suggestions did not represent a warning about the potential manipulation of Libor. Geithner-Led Fed Didn’t Do Enough in Libor Scandal: Sheila Bair (CNBC) "Looking at those emails, it looks like they had pretty explicit notification of some very bad behavior, and I don't understand why they didn't investigate," Bair said today. Banks in Libor probe consider group settlement (Reuters) A group of banks being investigated in an interest-rate rigging scandal are looking to pursue a group settlement with regulators rather than face a Barclays-style backlash by going it alone, people familiar with the banks' thinking said...Barclays Plc was the first to settle with U.S. and British regulators, paying a $453 million penalty and admitting to its role in a deal announced June 27. Its chief executive, Bob Diamond, abruptly quit the next week, bowing to public pressure and erosion of the bank's reputation. The sources told Reuters that none of the banks involved now want to be second in line for fear that they will get similarly hostile treatment from politicians and the public. Rex Ryan's Biggest Loss (NYP) “My surgeon told me one time, ‘How many tacos do you eat?’ because I told him how much I love Mexican food,” Ryan recalled. “I said, ‘I probably can eat about 12 tacos.’ He’s like, ‘OK.’ Never flinched. He said by the time this is really working, you’ll eat about a half or three-quarters of a taco and that’s it. I was like, ‘Why would I want to do that?’ And he said, no, you’ll be satisfied. That’s exactly where I’m at now...I have no clothes that fit. Socks are the only things that fit. Even a hat, underwear, I’ve got to change everything.”

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