Opening Bell: 07.23.14

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Herbalife Bashing Brings Bill Ackman Behind Where He First Began (Bloomberg, earlier)
During a more than three-hour presentation yesterday, billionaire investor Bill Ackman choked up while describing his family’s immigrant beginnings, called Herbalife (HLF) Ltd. Chief Executive Officer Michael Johnson “a predator” and labeled that company “a criminal enterprise.” Herbalife stock rose 25 percent. The increasingly public spectacle of Ackman eviscerating a company on stage, television and online after betting $1 billion that it will fail is raising questions about his credibility on Herbalife and whether there are limits to how short sellers make their case...Ackman has denounced Herbalife as a pyramid scheme since December 2012, spending $50 million of Pershing Square Capital Mangement LP’s money for a probe that included undercover investigators. He has since predicted that Herbalife’s distributors would leave in droves and that auditors wouldn’t sign off on the company’s financial statements. So far he is wrong about both.

John Paulson Makes Almost $1 Billion on OneWest Sale (Bloomberg)
John Paulson’s hedge funds made almost $1 billion on his investment in OneWest Bank, which is being purchased by CIT Group Inc. (CIT) for $3.4 billion in cash and stock. The $21.4 billion Paulson & Co. owns the investment through its Recovery Fund, which was created in October 2008, and a credit pool, according to a memo sent to clients. The funds spent $400 million to purchase a 24.9 percent stake in Pasadena, California-based OneWest in 2009. The sale values that stake at $788 million and Paulson also received $551 million in dividends. The total gain for the funds is $939 million. The transaction will take six to nine months to close and Paulson & Co. will be restricted from trading the stock for six months, the firm wrote in the memo.

US warned of up to 25 groups eyeing foreign switch to cut tax (FT)
Up to 25 more US companies are considering relocating overseas to cut their tax bills this year, a Democratic senator has warned, as he assailed investment bankers for encouraging the idea. The prediction came as concern mounts in Washington over a rise in merger deals, known as inversions, which US multinationals use to move their headquarters to countries with lower corporate tax rates...Ron Wyden, chairman of the Senate finance committee, intensified his attacks on inversions on Tuesday. “The inversion virus now seems to be multiplying every few days,” he said. “How many more infections can America’s economic body endure?” He complained that even as they hurt US employment and shrank the country’s tax base, the deals were being promoted by “fast-buck artists” such as investment bankers, private equity groups, lawyers and accountants.

Connecticut Supreme Court to Revisit Protection for Whistleblowers (WSJ)
The Connecticut Supreme Court will consider whether a 2006 U.S. Supreme Court ruling that restricted protections for workers who expose alleged wrongdoing by their employers should apply to cases brought under Connecticut law, which is friendlier than federal law on employee rights. Richard Trusz, 58, said he was fired from his Connecticut-based position as head of valuations at UBS's real-estate investment arm, UBS Realty Investors LLC, in August 2008 after confronting senior management about properties that he considered overvalued, and therefore led to excessive fees for clients including state pension funds. The unit Mr. Trusz led was responsible for determining the market value of its real estate and mortgage investments. Mr. Trusz later sued the Swiss bank in federal court, saying his superiors engaged in "acts of intimidation and retaliation" and "treated him differently from others who didn't complain" before terminating his employment. A UBS spokeswoman said recently that Mr. Trusz's claims were "thoroughly looked into both internally and externally many years ago." She declined to comment on Mr. Trusz's valuation allegations and said the bank is continuing to seek dismissal of the lawsuit. The state will remain a haven for corporate whistleblowers if the Connecticut Supreme Court sides with Mr. Trusz. But if it applies the U.S. Supreme Court ruling, the state will fall in line with the federal standard.

Dodd-Frank not final chapter on reform: Dodd (CNBC)
Four years after the Dodd-Frank Wall Street Reform and Consumer Protection Act was signed into law, its co-authors told CNBC the law was doing its job, but said it certainly isn't the last chapter in regulating Wall Street and private equity firms. "We didn't pass the Ten Commandments. We talked about a bill here, giving regulators the ability to modernize the architecture of our financial services industry," said former Sen. Christopher Dodd, who authored the law with former Rep. Barney Frank.

Justin Bieber could face citizen’s arrest if illegal activity takes place at new Beverly Hills penthouse (NYDN)
Police have talked to folks at Bieber’s ritzy new Beverly Hills building about the possibility of placing him under citizen’s arrest if they see any illegal activity, the Daily News confirmed Tuesday. Cops discussed the option after being called to his posh penthouse a half dozen times Saturday night into Sunday morning for noise complaints related to a rooftop party, a police source said. “We responded six times this past weekend, as late as 3 a.m. Four were for the party, and two were calls for screaming fans outside,” Sgt. Max Subin with the Beverly Hills Police told The News. “Our officers went there and advised residents there are three ways to handle any situations of this nature,” he said. “We can give a citation for municipal code violations. There’s the possibility of arrest by us for something done in front of us. And the third way is a private person’s arrest for a misdemeanor not committed in police presence.”

SEC Is Set to Approve Money-Fund Rules (WSJ)
Under the SEC plan, "prime" money funds whose shares are held by corporations and large institutional investors will have to abandon a stable $1-a-share price and float in value like other mutual funds, according to people familiar with the matter. Investors in these funds would risk losing principal if the share price fell. Prime funds invest in short-term corporate debt. The plan also would allow all funds to temporarily stop investors from redeeming shares in times of market tumult or impose fees on them to do so, these people said, meaning corporations and other investors may not always have immediate access to their cash. The rules are aimed at training institutional investors to accept fluctuations in the value of their investments, as well as ensuring funds can stop a trickle of outflows from turning into a flood.

Donald Sterling Sues Wife, NBA in Fight Over Clippers (Bloomberg)
Sterling alleges in a complaint filed Tuesday that he’s the sole shareholder of LAC Basketball Club Inc., the corporation that owns the Clippers, and that his wife can’t sell the team to Ballmer without his consent. He asked for a judge to “freeze” the sale as well as for unspecified damages.

Bats President Who Rebuked Michael Lewis Leaves Exchange (Bloomberg)
Bill O’Brien, the former Goldman Sachs Group Inc. executive who built Direct Edge Holdings LLC into one of the biggest U.S. stock exchanges, is leaving the firm after merging it with Bats Global Markets Inc...O’Brien, 43, played a central role in the debate spurred by Michael Lewis’s “Flash Boys,” which blasted Bats and other key players in the stock market. The Bats executive appeared on CNBC a day after the best-seller came out to spar with Lewis and IEX Group Inc. CEO Brad Katsuyama, the hero of the book. Their heated exchange captivated Wall Street. Later that week, Bats was forced to correct something O’Brien said about the speed of his company’s technology systems.

Ex-Goldman Trader’s Bitcoin Exchange to Fill Mt. Gox Void (Bloomberg)
When Kano, 38, left his job as a derivatives and convertible bonds trader in December, bitcoin had climbed to a record $1,151. Three months later, it was worth half that after a $530 million heist at Tokyo-based Mt. Gox bankrupted what was once the virtual currency’s largest exchange. “That’s one less competitor for us, but it also left many Japanese with a very negative impression of bitcoin,” Kano said in an interview in Tokyo on July 17. “We already had a company then and felt it was up to us to rebuild the trust.” Since Mt. Gox closed in February, acquiring the digital currency in Japan meant going to the city’s only bitcoin ATM machine or arranging a person-to-person deal. Kano’s bitFlyer website allows anyone with a Japanese bank account to buy and sell the coins. The service began in April and eschews the trading options used by other exchanges in favor of a simple interface that would appeal to beginners, Kano said, declining to give subscriber numbers.

This year’s wedding status symbol? A booking on 12/13/14 (NYP)
Couples are desperately hoping to tie the knot Dec. 13 — 12/13/14. Jennifer Krysiak, 31, who works as an educational director of a preschool in Queens, was inspired by a friend who married on 7/7/07. “I wanted to have a cool wedding date, too,” Krysiak says. “I always wanted a winter wedding, so I originally picked Dec. 6. But that wasn’t cool, and when I found out that 12/13/14 fell on a Saturday, I knew I had to pick it. We started planning as soon as we got engaged last September.” [...] “We’ve had to turn a lot of people away,” says Julie Miller, the production manager at The Foundry, a popular venue in Long Island City (and where the character Jessa was married on HBO’s “Girls”). “We’ve gotten 20 requests for the day since we booked it [a few months back], and December is generally a quiet month for us.” New York-based DJ company Scratch Weddings says they’ve seen a 300 percent increase in requests over the same weekend last winter. Columbia University law student Zila Acosta called all over town looking for a venue to host her 12/13/14 wedding. “There were tons of places that I looked at that were like, ‘We’re booked. We’ve been booked,’ ” she says. “A lot of the main hotels told me, ‘We have, like, three interested couples ahead of you.’ ” [...] And venues across the country are hoping to cash in. Many hotels and chapels in Las Vegas are advertising 12/13/14 wedding packages — Caesars Palace is offering a chapel ceremony with two buffet lunches for $1,213.14. And one lucky couple already snagged the “12, 13, 14 . . . Eternity” package on Little Palm Island in the Florida Keys. The resort there offered the package for $195,000, which bought the pair the entire private island for the weekend.

Related

Opening Bell: 02.29.12

David Loeb, a Goldman managing director who acts as a middleman between the Wall Street firm and some of its most important hedge-fund clients, is the latest Goldman official to be investigated in the insider-trading probe. As a senior Goldman salesman, Mr. Loeb deals with many technology hedge-fund employees...Known at Goldman and among clients as self-deprecating and colorful, Mr. Loeb sometimes signs his emails "cbf," for "chunky but funky."

Opening Bell: 03.11.13

EU Chiefs Seeking to Stave Off Euro Crisis Turn to Cyprus (Bloomberg) European leaders grappling with political deadlock in Italy and spiraling unemployment in France will turn to a financial rescue for Cyprus in an effort to stave off a return of market turmoil over the debt crisis. European Union leaders will meet for a March 14-15 summit in Brussels to discuss terms for Cyprus, including the island nation’s debt sustainability and possibly imposing losses on depositors. That comes as Italy struggles to form a government after an inconclusive Feb. 24-25 election and as concern over the French economy mounts with unemployment at a 13-year high. Spain's Bailout Fund Said to Seek Help on Bank Strategy (WSJ) Spain's bank bailout fund is seeking to hire advisers to help shape a long-term strategy for dealing with its portfolio of nationalized lenders, a week after calling off an auction of one of the most troubled banks. People briefed about the plan said the fund, known by its Spanish acronym FROB, will make contact with strategic consultants, and possibly with investment banks, once the plan has been approved by the FROB's board of directors. Is There Life After Work? By Erin Callan (NYT) "I didn’t start out with the goal of devoting all of myself to my job. It crept in over time. Each year that went by, slight modifications became the new normal. First I spent a half-hour on Sunday organizing my e-mail, to-do list and calendar to make Monday morning easier. Then I was working a few hours on Sunday, then all day. My boundaries slipped away until work was all that was left...I have often wondered whether I would have been asked to be C.F.O. if I had not worked the way that I did. Until recently, I thought my singular focus on my career was the most powerful ingredient in my success. But I am beginning to realize that I sold myself short. I was talented, intelligent and energetic. It didn’t have to be so extreme. Besides, there were diminishing returns to that kind of labor. I didn’t have to be on my BlackBerry from my first moment in the morning to my last moment at night. I didn’t have to eat the majority of my meals at my desk. I didn’t have to fly overnight to a meeting in Europe on my birthday. I now believe that I could have made it to a similar place with at least some better version of a personal life. Not without sacrifice — I don’t think I could have “had it all” — but with somewhat more harmony. I have also wondered where I would be today if Lehman Brothers hadn’t collapsed. In 2007, I did start to have my doubts about the way I was living my life. Or not really living it. But I felt locked in to my career. I had just been asked to be C.F.O. I had a responsibility. Without the crisis, I may never have been strong enough to step away. Perhaps I needed what felt at the time like some of the worst experiences in my life to come to a place where I could be grateful for the life I had. I had to learn to begin to appreciate what was left. At the end of the day, that is the best guidance I can give. Whatever valuable advice I have about managing a career, I am only now learning how to manage a life." Paper Trail Goes Cold in Case Against S&P (Reuters) In early 2007, as signs of distress began appearing in securities backed by residential mortgages, executives at Standard & Poor's began advising analysts responsible for rating mortgage bonds that they should put the phrase "privileged and confidential" on emails to one another. Analysts working for the McGraw Hill Cos division also were discouraged from doodling on notepads and official documents during meetings to discuss pending deals and existing ratings, several former S&P employees said. That was not the first time S&P had tried to caution employees about paper trails. In 2005, a full two years before the housing market began to melt down, several top S&P managers attended an off-site meeting at hotel in Old Saybrook, Connecticut, to discuss ways to increase the fees it collected from Wall Street banks for rating mortgage bonds. A former S&P executive said that after the meeting, employees were instructed to discard any notes they had taken from the meeting. InTrade Shuts Down (WSJ) InTrade, the Ireland-based website that allows users to place wagers on non-sports-related upcoming events, announced on Sunday that it is shutting its site down. In an official statement, the company does not go into great detail as to why it is closing its doors, only that it is related to “financial irregularities which, in accordance with Irish law,” require InTrade to cease operations until resolved. “At this time and until further notice, it is not possible to make any payments to members in accordance with their settled account balance until the investigations have concluded,” the company said. Commodities Squeeze Banks (WSJ) The sharp fall in commodity revenue has already claimed some victims. UBS AG, the Swiss bank that has been under pressure to cut costs and improve its performance, last year closed all its commodities-trading desks aside from those dealing in precious metals. Goldman, UBS, Deutsche Bank, and Barclays have all suffered departures of senior commodity traders to hedge funds and independent trading companies over the last several months. Average staffing in commodities trading declined 5.9% last year at major banks, according to Coalition. Artist Teaches George W. Bush How To Paint (Fox5) An artist in Cumming, GA spent a month teaching former President George W. Bush how to paint. Bonnie Flood said that President Bush has a passion for painting and shows real potential as an artists. "He started off painting dogs. I think he said he painted 50 dogs," Flood said. "He pulled out this canvas and started painting dogs and I thought, 'Oh my God, I don't paint dogs!" Flood, who does most of paintings at her home in Cumming, occasionally conducts workshops in Florida. That's where the former President heard about her. The next thing she knew, she was packing up her paints to spend a month in Boca Grande with President Bush. She said that she spent about six hours a day with the President, mixing paints and teaching him proper brush strokes. She says she wasn't intimidated but admits she really didn't know what to call him until she found the magic number. "I called him '43' because that's the way he signed his paintings. "When I really wanted him to do something, I would say, 'Mr. President you know that you don't do it that way.'" She says the President learned quickly and soon started painting fewer dogs and more landscapes. "He has such a passion for painting, it's amazing," Flood said. "He's going to go down in the history books as a great artist." Hostess Creditor, Private-Equity Firms Show Interest in Twinkies Brand (Reuters) Hostess Brands creditor Silver Point Capital and hedge fund Hurst Capital have expressed interest in buying Hostess's snack cake brands, including Twinkies, the New York Post reported. Paulson Said to Explore Puerto Rico as Home With Low Tax (Bloomberg) John Paulson, a lifelong New Yorker, is exploring a move to Puerto Rico, where a new law would eliminate taxes on gains from the $9.5 billion he has invested in his own hedge funds, according to four people who have spoken to him about a possible relocation. More US Profits Parked Abroad (WSJ) A Wall Street Journal analysis of 60 big U.S. companies found that, together, they parked a total of $166 billion offshore last year. That shielded more than 40% of their annual profits from U.S. taxes, though it left the money off-limits for paying dividends, buying back shares or making investments in the U.S. The 60 companies were chosen for the analysis because each of them had held at least $5 billion offshore in 2011. Twitter, Social Media Are Fertile Ground For Stock Hoaxes (Reuters) "Twitter pump and dump schemes are obviously something for the market to be concerned about, even if they are just a new way for people to do schemes that have been done forever," said Keith McCullough, chief executive officer at Hedgeye Risk Management in New Haven, Connecticut. He uses Twitter and has more than 22,000 followers. In such hoaxes, anonymous users set up accounts with names that sound like prominent market players, issue negative commentary, and spark massive declines. The selling that follows shows how the rapid spread of information on social media can make for volatile trading, and is a warning to investors who trade on news before fully verifying the source. SEC: Goldman Cannot Ignore Proposal to Split Chairman, CEO Roles (Reuters) SEC staff sent a letter to Goldman internal counsel Beverly O'Toole this week, saying the agency is "unable to concur" with Goldman's view that the shareholder proposal does not warrant a vote. El Paso Sheriff's deputies arrest 2 ice cream men for possession of pot (EPT) Saturday afternoon, Sheriff's deputies spotted a purple ice cream truck with a cracked windshield and an expired registration sticker along the 8600 block of Alameda. During the traffic stop, one of the occupants left the vehicle and led deputies on a brief foot pursuit before being caught. Two tupperware bowls containing a green leafy substance, believed to be marijuana, was found on the man, who was identified as 19-year-old Elijah Sanchez. The second occupant, identified as 29-year-old Anthony Arellano, was also charged with possession of marijuana after deputies found marijuana inside the vehicle. Arellano has been arrested in the past for numerous felony charges and a previous possession of marijuana charge in 2006, deputies said.

Opening Bell: 11.19.15

All signs point to December rate lift; Ackman down big; AIG; Match; Square; "Klingon Sword Brandished In Trekkie Trash Dispute, Cops Say"; and more.

Opening Bell: 4.26.16

Citadel tops list of private U.S. trading venues; Citigroup won't breakup; Nashville man ordered to remove zombie statue from front yard; and more.