Opening Bell: 07.28.14

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Argentine Default Drama Nears Critical Stage (WSJ)
Argentina could make unfortunate history this week if it defaults on its foreign debt for the second time in 13 years as a showdown with creditors comes to a head. When Argentina last defaulted on this debt, in 2001, it was the biggest sovereign default ever. It led to a debt restructuring and the country's deepest recession since the Great Depression. The political turmoil was so bad that the country had five presidents in just over a week. The seeds of the current drama were sown not long after that, when investors bought the country's defaulted bonds but never accepted its terms for restructuring the debt. Now they are standing in the way of payouts that would avoid a default this week. Although there is little fear of contagion for other emerging markets and minimal concern Argentina would suffer the kind of economic implosion of 13 years ago, a default still could cost one of Latin America's biggest economies dearly, keeping it shut out of international credit markets and crimping credit to companies. It also could complicate the transition to a new government after next year's presidential election.

No meeting scheduled on Monday between Argentina and court mediator (Reuters)
Argentina does not have a meeting scheduled for Monday with a court-appointed mediator in New York in its debt dispute with creditors but talks continue, a government source said on Sunday, as the country looks to avoid a possible debt default next Thursday. Argentina, Latin America's third-largest economy, has for years fought the "holdout" hedge funds which snapped up its junk bonds after its $100 billion default in 2002 and then refused the restructuring terms, suing for repayment in full. "There is no meeting scheduled for Monday. Talks are continuing," the government source told Reuters.

J.P. Morgan Questioned for Conflicts of Interest (WSJ)
Regulators have questioned J.P. Morgan Chase & Co. executives in recent months about whether the firm steers private-banking clients to its own investment products, according to people familiar with the matter. The queries helped prompt J.P. Morgan to spell out more clearly to private-banking clients the differences between its own products and outside offerings, and how much of clients' assets were invested in each, these people said. The latest changes were set in motion several months ago when the Office of the Comptroller of the Currency, one of J.P. Morgan's primary regulators, began asking officials at the firm about the percentage of clients' assets that were being directed to J.P. Morgan's own funds and products instead of third-party options, these people said.

Deutsche Bank, HSBC Accused of Silver Fix Manipulation (Bloomberg)
Deutsche Bank, HSBC Holdings, and Bank of Nova Scotia were accused in a lawsuit of rigging the price of billions of dollars in silver, an allegation similar to earlier suits involving the London gold fix. The banks unlawfully manipulated the price of the metal and its derivatives, an investor claims in a complaint filed yesterday in federal court in Manhattan. The banks abused their position of controlling the daily silver fix to reap illegitimate profit from trading, hurting other investors in the silver market who use the benchmark in billions of dollars of transactions, according to the suit. “The extreme level of secrecy creates an environment that is ripe for manipulation,” according to the complaint. “Defendants have a strong financial incentive to establish positions in both physical silver and silver derivatives prior to the public release of silver fixing results, allowing them to reap large illegitimate profits.”

Goldman mortgage deal with federal agency could reach $1.25 billion: source (Reuters)
A deal to resolve a U.S. regulator's claims against Goldman Sachs Group Inc over mortgage-backed securities sold to Fannie Mae and Freddie Mac leading up to the financial crisis could cost the bank between $800 million and $1.25 billion, according to a person familiar with the matter. The person said Goldman Sachs is discussing a settlement with the Federal Housing Finance Agency (FHFA), which filed 18 lawsuits against Goldman and other banks in 2011 over about $200 billion in mortgage-backed securities that later went sour.

Doughnut-Wielding Vandals Terrorize Neighborhood (AP)
There's mischief afoot in one suburban Portland neighborhood, but police say it doesn't involve the typical spray paint or broken windows. No, we're talking pastry here — maple bars smeared on cars, doughnuts left atop windshield wipers, pastries littering a yard. One woman told officers she's seen more than a dozen incidents of food smeared on cars. Not just pastry, but yogurt, cakes and eggs. She alerted police July 11. The next day, another woman told police her vehicle had been hit six times — twice with a maple bar, once with a cinnamon doughnut, once with pink yogurt, once with "bread soaked in a white slimy liquid" and once with red potato salad. The crime wave in a northeast Hillsboro neighborhood has been going on for six weeks, The Oregonian reported. Police think the victims of the night-time vandalism are chosen at random and kids are likely behind it. Lt. Mike Rouches says officers are investigating and extra patrols have been added. Still, he adds, "In my 25 years in police services, I have never investigated or seen a criminal mischief involving pastries."

Negotiating? Intimidate Your Boss With Your Big, Fat Face (BusinessWeek)
...a team of researchers led by Michael Haselhuhn, a management professor at the University of California, Riverside, found that having a bloated face is worth more than $2,200. When a group of business school students were asked to negotiate for fictional signing bonuses, big-faced candidates earned close to $11,000, while narrower-visaged students earned a (paltry) $8,700. One reason wide faces win in tete-a-tetes such as these is that they lie. A second paper published in 2011 by the same authors found that business students were more likely to resort to outright deception to close a sale if they had round faces. They also cheated more in dice games, which is something to keep in mind the next time you use dice competitively. Women apparently miss out on the perks of a wide mug. When men see their own bulky faces in the mirror, they get a rush of power—whereas women do not, according to the study.

Herbalife Feud Gets Personal (WSJ)
...the fight over Herbalife Ltd. has taken on a more personal, distinctly 19th century flavor. Rather than a battle among faceless institutions, as is usually the case today, Herbalife features a handful of financiers— Bill Ackman, Carl Icahn and George Soros —in a high-stakes duel. If Mr. Ackman had his way, it is the management of Herbalife who would be in prison for running what he alleges is an "illegal pyramid scheme." But his billion-dollar short bet tempted other financiers to profit from a rise in the stock as his charges, refuted by Herbalife, failed to dent its business. And Herbalife greatly boosted share buybacks recently, putting further pressure on short sellers, who borrow shares in hope of buying them back cheaper at a later date. The most recent chapter in the fight, though probably not the final one, was Mr. Ackman's pledge last week to deliver a "death blow" to the company in a lengthy presentation. Instead, the stock had its largest daily gain ever, enriching Mr. Ackman's opponents.

Trendy Chipotle burritos show how pricing power belongs to the hip (Reuters)
Chipotle is prospering even as it raises prices on burritos that are already expensive – about twice as much as those sold by Taco Bell. Besides its naturally-raised meats and organic ingredients such as beans and avocados, the company occupies the center of fast-casual dining - the booming "sweet spot of the restaurant industry," according to Hottovy - in which customers order at a counter but eat quality products inside a hip space. And Chipotle is still growing. The chain runs about 1,700 restaurants in the U.S., and analyst Stephen Anderson at Miller Tabak estimates that it could grow to 3,100, expanding in less populated areas beyond its urban strongholds.

An $800 Pair of Kicks Plays Hard to Get (WSJ)
The sudden appeal of Buscemi—a year-old, $800-a-pair sneaker brand that has been snapped up by Justin Bieber, Sean "Diddy" Combs and other celebrities—marks a new chapter in conspicuous consumption. In the digital age, where nearly everything is a click away, there is growing pressure to flaunt possessions that no one else can buy. "You ain't got THESE!!! Na na na na naaa!" tweeted Mr. Combs to his more than 9 million Twitter followers in October, linking to a picture of his new chocolate-hued Buscemis on Instagram. At the time, Buscemi shoes had been unavailable for two months, having sold out the entire original production run in a matter of days. When they returned to shelves in January, they quickly sold out again, and just reappeared two weeks ago. The shoes are stamped on the tongue with Made in Italy. Golden padlocks dangle from the ankle strap of each shoe; tiny keys are included. And in the year since they first went on sale, they have been out of stock far more often than they have been on shelves. The company says it is all part of a plan to stoke demand.

Traders Flee Russia ETF as Ukraine Standoff Continues (Bloomberg)
Traders took $12.3 million out of the Market Vectors Russia ETF, the largest U.S. dedicated exchange-traded fund tracking the nation’s stocks, last week through July 24, according to data compiled by Bloomberg. The moves added to redemptions of $90.8 million in July, putting it on pace to be the biggest monthly outflow since February. Withdrawals from the Russian ETF are accelerating as the U.S. and European Union seek to punish Putin for supporting separatists in eastern Ukraine with deeper sanctions intended to squeeze the $2 trillion economy.

British inventor creates giant buttocks to 'fart on France' (NYDN)
An eccentric British inventor has realized his dream of firing a "fart gun" from a massive model butt towards France. Colin Furze was apparently determined to make something loud enough the French could hear it from England. The countries are around 22 miles apart from where the fart gun was fired, in Dover, southern England. Furze built a pulse jet and attached it to giant buttocks and fired it from cliffs overlooking the English Channel. Apparently the reason he used a pulse jet is because it sounds like a fart. The event was videoed and a crowd turned out to watch Furze successfully complete his unique mission.

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Opening Bell: 12.21.12

Critics Say UBS Let Off Too Easy (WSJ) Our goal here is not to destroy a major financial institution," Lanny Breuer, assistant attorney general for the Justice Department's criminal division, said Wednesday after the $1.5 billion fine against UBS was announced. Prosecutors have to at least "evaluate whether or not innocent people might lose jobs" and other types of potential collateral damage. Sen. Charles Grassley (R., Iowa), a Senate Finance Committee member, said he is unsatisfied that prosecutors didn't go higher up the corporate ladder at UBS than its Japanese subsidiary..."The reluctance of U.S. prosecutors to file criminal charges over big-time bank fraud is frustrating and hard to understand," Mr. Grassley said. The $1.5 billion fine is a "spit in the ocean compared to the money lost by borrowers at every level, including taxpayers." Regulatory 'Whale' Hunt Advances (WSJ) The first regulatory ripples from the "London Whale" trading fiasco are about to hit J.P. Morgan Chase. The Office of the Comptroller of the Currency, led by Comptroller Thomas Curry, is preparing to take a formal action demanding that J.P. Morgan remedy the lapses in risk controls that allowed a small group of London-based traders to rack up losses of more than $6 billion this year, according to people familiar with the company's discussions with regulators. Khuzami To Leave SEC Enforcement Post (WSJ) Robert Khuzami, head of the Securities and Exchange Commission's enforcement unit, plans to leave the agency as soon as next month, a person familiar with the expected move said Thursday. Boehner Drops ‘Plan B’ as Budget Effort Turns to Disarray (Bloomberg) House Speaker John Boehner scrapped a plan to allow higher tax rates on annual income above $1 million, yielding to anti-tax resistance within his own party and throwing already-stalled budget talks deeper into turmoil. He will hold a news conference today at 10 a.m. Washington time to discuss the next steps in the budget dispute, a Republican leadership aide said. House members and senators won’t vote on the end-of-year budget issues until after Christmas, giving them less than a week to reach agreement to avert tax increases and spending cuts set to take effect in January. The partisan divide hardened yesterday, making the path to a deal more uncertain. BlackRock Sees Distortions in Country Ratings Seeking S&P Change (Bloomberg) Credit rating companies are distorting capital markets by assigning the same debt ranking to countries from Italy to Thailand and Kazakhstan, according to BlackRock, the world’s biggest money manager. While 23 countries share the BBB+ to BBB- levels assessed by Standard & Poor’s, the lowest investment grades, up from 15 in 2008 at the beginning of the financial crisis, their debt to gross domestic product ratios range from 12 percent for Kazakhstan to 44 percent for Thailand and 126 percent for Italy, International Monetary Fund estimates show. The cost of insuring against a default by Italy, ranked BBB+, over the next five years is almost triple that for Thailand, which has the same rating. For BlackRock, which oversees $3.7 trillion in assets, the measures are so untrustworthy that the firm is setting up its own system to gauge the risk of investing in government bonds. This year, the market moved in the opposite direction suggested by changes to levels and outlooks 53 percent of the time, data compiled by Bloomberg show. “The rating agencies were very, very slow to the game,” Benjamin Brodsky, a managing director at BlackRock International Ltd., said in a Nov. 23 interview from London. “They all came after the fact. For us, this is not good enough.” If You Bought Greek Bonds in January You Earned 80% (Bloomberg) Greek government bonds returned 80 percent this year, compared with 3.7 percent for German bunds and 6.1 percent for Spanish securities, Bank of America Merrill Lynch indexes show. It’s the first year since 2009 that investors made money on Greek securities, with 2012 providing the biggest advance since Merrill began compiling the data in 1998, according to figures that don’t reflect this month’s debt buyback by the government. Texas lawmaker: ‘Ping-pongs’ deadlier than guns (The Ticket) Incoming Texas State Rep. Kyle Kacal says guns don’t kill people—ping-pong kills people. "I've heard of people being killed playing ping-pong—ping-pongs are more dangerous than guns," he says. "Flat-screen TVs are injuring more kids today than anything." The lifetime rancher, who will take his seat in 2013 as a freshman, says that new gun restrictions are unnecessary. Kacal, who reportedly operates a hunting business, notably came out against a bill instructing Texans how to secure their assault weapons. "People know what they need to do to be safe. We don't need to legislate that—it's common sense," he said. "Once everyone's gun is locked up, then the bad guys know everyone's gun is locked up." Flare-up in war of words between Ackman, Herbalife (NYP) “This is the highest conviction I’ve ever had about any investment I’ve ever made,” Ackman said yesterday in a series of interviews. The investor told CNBC that he expects the Federal Trade Commission will take a “hard look” at the company. The heavyweight battle picked up steam over the last two days and has become, in the typically slow days leading up to Christmas, one of the most-watched events on Wall Street. As the financial world watched, Herbalife CEO Michael Johnson returned fire — calling Ackman’s statements “bogus” and asking the Securities and Exchange Commission to probe the motives of Ackman and his Pershing Square Capital hedge fund. A spokeswoman said if Johnson were allowed the chance to face-off against the investor at the Downtown conference, the CEO “would have been able to tear Mr. Ackman’s premises and interpretation of our business model apart.” Citigroup Said to Give CCA Managers 75% Stake in Funds for Free (Bloomberg) Among Vikram Pandit’s last jobs as Citigroup’s chief executive officer was to decide the fate of the bank’s hedge-fund unit, which employs some of his oldest colleagues. He agreed to give them most of it for free. While Citigroup is keeping a 25 percent stake, managers at the Citi Capital Advisors unit will pay nothing for the remaining 75 percent of that business as it becomes a new firm managing as much as $2.5 billion of the bank’s money, according to people with knowledge of the plan. The lender will pay the executives fees while gradually pulling out assets to comply with impending U.S. rules, said the people, who requested anonymity because the terms aren’t public. The deal was Citigroup’s response to the Volcker rule. Peter Madoff Is Sentenced to 10 Years for His Role in Fraud (Dealbook) A lawyer by training, Peter Madoff is the second figure in the scandal to be sentenced. His older brother, Bernard, pleaded guilty in March 2009 and is serving a prison term of 150 years. UK Boom in Pound Shops: An Austerity-Proof Business Model? (CNBC) Pound shops in the U.K. are reporting massive increases in profits across the board showing that the formula "pile 'em high and sell 'em cheap" has particular resonance in Britain's current age of austerity. Names like "Poundstretcher," "Poundland" and "99p Stores" in the U.K. have become high street stalwarts as other brands go bust. The chains, immediately recognizable on price point, are opening new stores and reporting record results reflecting the increasing public demand for cheaper goods. U.K. based "Poundland" is one such chain reporting steep sales growth as its range of 3,000 items -- from umbrellas and pregnancy tests (it sells 14,000 a week) to bird feeders and bags of crisps all priced at one pound – resonates with cash-strapped Britons. In the year to April 2012, the Warburg Pincus owned company said its turnover increased 22 percent to 780 million pounds ($1.25 billion) and profits increased by 50 percent to 18.3 million pounds from last year's figure of 12.2 million. Former Olympian Suzy Favor Hamilton admits to life as a $600-an-hour hooker (NYP) Steamy, lingerie-clad images of the champion runner helped tout her services on the Web site of a Vegas escort agency called Haley Heston’s Private Collection, where Favor Hamilton operated under the name “Kelly Lundy,” according to The Smoking Gun. Customers could hire her lithe Olympic-class runner’s body for $600 an hour, $1,000 for two hours and $6,000 for 24 hours. The site described her build as “athletic,” her bosom as “perky,” and her belly button as “pierced.” She was willing to provide horny customers the full “girlfriend experience,” and would also engage in a certain undisclosed sex act for an extra $300. “I enjoy men of all shapes, sizes and colors, and I have an affinity for women (I am bisexual),” “Kelly” wrote on her page on the escort service’s Web site. “I consider dates with couples an experience to cherish.” Her sexual skills reportedly earned her a high rating on The Erotic Review, a Web site frequented by prostitution fans. Favor Hamilton’s lusty secret life might have stayed secret if she had not made the mistake of revealing her true identity to some of her wealthy johns, who went to the media.

Opening Bell: 03.14.13

US Probes Gold Pricing (WSJ) The Commodity Futures Trading Commission is examining the setting of prices in London, in which a handful of banks meet twice daily and set the spot price for a troy ounce of physical gold, the people said. The CFTC is looking at issues including whether the setting of prices for gold—and the smaller silver market—is transparent. No formal investigation has been opened, the people said. US And UK Tussle Over Trader (WSJ) Officials in the U.S. Justice Department and the U.K. Serious Fraud Office clashed late last year in their mutual pursuit of Tom Hayes, the former UBS trader who is viewed by prosecutors in both countries as a ringleader of banks' attempts to rig the London interbank offered rate, or Libor, these people said. While jurisdictional disputes among law enforcement agencies aren't unusual, some U.S. officials worry that the friction on this case will jeopardize trans-Atlantic cooperation on future financial-fraud investigations. The spat revolves around a sequence of events that played out in rapid succession last December. The trouble began, the people said, when the U.K. government unexpectedly blocked a Justice Department request to interview Mr. Hayes, who is British and lives outside London. Then, without notifying the U.S., British fraud prosecutors on Dec. 11 arrested Mr. Hayes and two others in connection with their own probe—infuriating American officials, according to people familiar with the U.S. investigation. The U.S. prosecutors punched back the next day by filing sealed criminal fraud charges against Mr. Hayes. Banks Bow To New York On Clawbacks (WSJ) Three more top banks, including Citigroup, will broaden their clawback policies to cover more executives, increase disclosures or add potential triggers. The moves increase to six the number of leading financial companies that have bowed to pressure from the New York City's Comptroller's Office. Lehman Judge Allows 'London Whale' Subpoena in JP Morgan Fight (Dow Jones) A judge on Wednesday said Lehman Brothers Holdings Inc. creditors can subpoena Bruno Iksil in its lawsuit against J.P. Morgan, ensuring the phrase "London Whale" will stay in the lexicon for at least a bit longer. Judge James Peck of U.S. Bankruptcy Court in Manhattan said Mr. Iksil, who is in France, can be questioned over the alleged mismarking of $273.3 million in derivatives when he worked at J.P. Morgan in the days leading up to Lehman's bankruptcy. "I consider it inappropriate except for in a clear case of abuse to cut off discovery of a witness that has fingerprints all over a transaction," Judge Peck said. "And in this case, Mr. Iksil's fingerprints are on the $273.3 million transaction that took on some significance in the case." Lehman U.K. Wins $1 Billion Appeal on Hedging Contracts (Bloomberg) The ruling may result in London-based Lehman Brothers International Europe and its administrators PricewaterhouseCoopers LLP receiving an extra $1 billion, according to a written decision handed down this morning by Judge Mary Arden in the U.K. Court of Appeals. Jobless Claims Unexpectedly Fall as Labor Market Improves (Bloomberg) First-time jobless claims fell by 10,000 to 332,000 in the week ended March 9, the fewest since mid January, according to data today from the Labor Department in Washington. The median forecast of 49 economists surveyed by Bloomberg called for an increase to 350,000. The four-week average declined to a five- year low. JPMorgan exec sued over 'bullying' behavior (NYP) Plaintiff Walter Suarez, a former financial adviser, was banished to the company’s Delancey Street outpost when he complained about colleague Michael Quach, and the move cost Suarez an $80 million client list, $20 million of which was taken by JPMorgan, his lawyers claim. According to Suarez, Quach was a bully who resorted to physical violence to intimidate colleagues. Suarez, who is Hispanic, says Quach, an Asian-American, got away with the behavior because bosses preferred Asian employees. “Eventually, it got to the point of being ridiculous. This isn’t the corner bodega,” Suarez told The Post. “We’re investment people. This is a professional setting. That’s when I spoke up. “He just wasn’t a very professional person from the get-go, and I don’t think that I was the only person who felt that way.” Suarez told superiors that Quach had manhandled several staffers, including one woman who was “physically assaulted during working hours on the banking floor,” according to the lawsuit filed in Manhattan Supreme Court by attorneys Matthew Blit and Amanda Gudis. Suarez said Quach even threatened to punch him out in front of clients. 'Canada's Warren Buffett' Interested in Greece's Top Bank (Reuters) Greece's biggest lender, National Bank (NBG), said on Wednesday that Canadian investment fund Fairfax Holdings was interested in acquiring a stake in it by taking part in a planned recapitalization. Under the terms of cash-strapped Greece's international bailout, its top four lenders must issue new shares by the end of April to replenish their capital after the losses they suffered in the debt crisis from bad loans and bond writedowns. The European Union and the International Monetary Fund have set aside 27.5 billion euros ($37 billion) in bailout funds to invest in the new bank shares. But private investors must buy at least 10 percent of them or the lenders will be nationalized. NBG said in a bourse filing that Fairfax was among other investors who had expressed an interest, without giving details. Fairfax is controlled by investment guru Prem Watsa, known as the "Warren Buffett of Canada." SandRidge Gives In, Settling Proxy Fight (WSJ) SandRidge Energy agreed to fire its chief executive or give control of its board to an activist shareholder, settling a closely watched proxy battle amid an outbreak of investor unrest in the oil patch. SandRidge, an oil-and-gas producer with a stock-market value of about $3 billion, immediately appointed four directors to its board who were nominated by hedge fund TPG-Axon Capital LP, which owns 7.3% of its shares. Bofa Battles Credit Suisse for 50% Markups on State Loans (Bloomberg) The firms are among at least five lenders in talks to loan five states at least $6.5 billion this year -- more than double last year’s total -- as local governments seek to chop debt costs by replacing loans from a 1997 federal bailout that average 14.4 percent in reais. Credit Suisse is lending Mato Grosso, an agricultural state in western Brazil, $1 billion for 15 years. The loan, with a rate equal to 11.2 percent in reais and guaranteed by Brazil if Mato Grosso defaults, compares with 7.35 percent for yields of similar-maturity government debt. Private Equity Could Trigger Another Crisis: Bank of England (CNBC) The amount of leverage in the U.K. corporate sector poses a risk to the stability of the financial system and could produce the next big financial crisis over the coming years, the U.K.'s central bank has warned. White Rock woman holds 'Lying Cheating Sale' to sell all her husband's stuff while he's 'gone with his floozie' (The Province) A scorned White Rock woman held a yard sale on the weekend to get rid of her husband's stuff while he was "gone with his floozie," according to a Craigslist ad. "Husband left us for a piece of trash, selling everything while he is gone this weekend with his floozie," read the text of the ad, which was posted early Friday afternoon to the free classifieds site. The Province dropped by the yard sale on Saturday and, sure enough, bargain-hunters were sifting through the goods which included office chairs, camping gear and other offerings. The lady in charge of the sale declined to speak on the record. Her colourful Craigslist ad, however, said she was selling everything and moving after 10 years of marriage. The featured items included his favourite red leather reclining theatre-seating sofas, and "lots of tools which he didn't have a clue how to use." "I want the house empty on Monday when he returns because that will be a shock for him to see. So come pick out what you would like Saturday and Sunday at 8 a.m. "Don't come too early (like he did) because I will be thoroughly enjoying some wine with my girlfriends this evening as we clean out all this stuff and likely be nursing hangovers in the morning. So please speak softly to the ladies wearing the sunglasses." The ad discouraged clothes-buyers, "as we will have already burned those in the driveway," but it did offer to let visitors see the pile of ashes.

Opening Bell: 02.05.13

Barclays CEO Vows To Improve Bank's Ethics (WSJ) Chief Executive Antony Jenkins said Tuesday he is "shredding" the legacy of the bank's self-serving culture by improving its ethics and moving beyond the misconduct issues that have cost it billions of pounds. Mr. Jenkins told a U.K. parliamentary group that his efforts so far include changing the way employee bonuses are calculated and abolishing commissions on financial-product sales. He said the changes would take time to produce results, but that ultimately he wants to eliminate a culture that at times has been "too short-term focused, too aggressive and on occasions, too self-serving." "Our resolve and intent behind this is absolute," Mr. Jenkins said. McGraw-Hill, S&P Sued by U.S. Over Mortgage-Bond Ratings (Bloomberg) The U.S. Justice Department filed a complaint Monday in federal court in Los Angeles, accusing McGraw-Hill and S&P of mail fraud, wire fraud and financial institutions fraud. Under the Financial Institutions Reform, Recovery and Enforcement Act of 1989, the U.S. seeks civil penalties that can be as high as $1.1 million for each violation. Earlier today, the company’s shares tumbled the most in 25 years when it said it expected the lawsuit, the first federal case against a ratings firm for grades related to the credit crisis. “It’s a new use of this statute,” Claire Hill, a law professor at the University of Minnesota who has written about the ratings firms, said in a phone interview today from Minneapolis. “This is not a line to my knowledge that has been taken before.” Dell Nears $25 Billion Deal To Go Private (WSJ) Late Monday, Mr. Dell was in talks with Microsoft Corp and private-equity firm Silver Lake Partners to offer shareholders between $13.50 and $13.75 a share, said people familiar with the matter, about a 25% premium to Dell's stock price in January before the possibility of a deal became public. The buyout, if approved by shareholders, would be the largest such deal since the financial crisis. It also would be an admission by Mr. Dell that he wasn't able to pull off the changes needed to improve his company's revenue and profit under Wall Street's glare. The buyout would give Mr. Dell the largest stake in the company, ensuring that the 47-year-old is the one who gets to oversee any changes. Gross: Beware 'Credit Supernova' Looming Ahead (CNBC) The head of the Pacific Investment Management bond giant has issued an ominous forecast in which he worries that the global central bank-induced credit bubble "is running out of energy and time." As a result, investors will have to get used to an atmosphere of diminishing returns and portfolios that will hold more hard assets like commodities and fewer less-tangible financial assets like stocks. "Our credit-based financial markets and the economy it supports are levered, fragile and increasingly entropic," Gross said in his February newsletter. Obama to Meet With CEOs of Goldman, Yahoo, Other Firms (Reuters) President Barack Obama will meet with chief executives from 12 companies including Goldman Sachs Group's Lloyd Blankfein and Yahoo's Marissa Mayer on Tuesday to discuss immigration and deficit reduction, according to a White House official. "The president will continue his engagement with outside leaders on a number of issues, including immigration reform and how it fits into his broader economic agenda, and his efforts to achieve balanced deficit reduction," the official said Monday. Other chief executives include Arne Sorenson of Marriott International, Jeff Smisek of United Continental Holdings, and Klaus Kleinfeld of Alcoa. A Billion-Dollar Club And Not So Exclusive (NYT) an unprecedented number of high technology start-ups, easily 25 and possibly exceeding 40, are valued at $1 billion or more. Many employees are quietly getting rich, or at least building a big cushion against a crash, as they sell shares to outside investors. Airbnb, Pinterest, SurveyMonkey and Spotify are among the better-known privately held companies that have reached $1 billion. But many more with less familiar names, including Box, Violin Memory and Zscaler, are selling services to other companies. “A year from now that might be 100,” said Jim Goetz, a partner at Sequoia Capital, a venture capital business. Sequoia counts a dozen such companies in its portfolio. It is part of what he calls “a permanent change” in the way people are building their companies and financers are pushing up values. The owners of these companies say the valuations make them giddy, but also create unease. Once $1 billion was a milestone, now it is also a millstone. Bigger expectations must be managed and greater uncertainty looms. Donald Trump to sue Bill Maher after bet feud (Politico) Donald Trump filed a lawsuit Monday in California against liberal comic Bill Maher, suing him for $5 million after Trump says Maher did not follow through on a $5 million public bet he made on “The Tonight Show.” “I don’t know whether this case will be won or lost, but I felt a major obligation to bring it on behalf of the charities,” Trump said in a public statement first obtained by POLITICO. Last month, Maher said on NBC to Jay Leno that he would pay $5 million to Trump’s charity of choice if he provided a birth certificate proving that he’s not “spawn of his mother having sex with orangutan.” It was similar to an offer Trump made to President Barack Obama during the presidential campaign season, in which Trump wanted Obama to release his college records. Trump’s statement continued: “Bill Maher made an unconditional offer while offer while on The Jay Leno Show and I, without hesitation, accepted his offer and provided him with the appropriate documentation. Money-Market Funds Best By Excess Cash (WSJ) Money-market funds have a high-quality problem: investors are entrusting them with too much cash. The flood of money is prompting the funds, which buy short-term, top-rated debt, to seek higher returns in investments that until recently were seen as too risky, including French bank debt. Investors plowed $149 billion into U.S.-based money-market funds between the start of November and Jan. 30, bringing total assets under management to $2.695 trillion, close to the most since mid-2011, according to the Investment Company Institute. Knight Capital Group to Cut Workforce by 5 Percent (Reuters) Knight Capital, which recently agreed to be bought for $1.4 billion by Getco, will lay off 5 percent of its global workforce as part of efforts to restructure the automated trading firm, according to a regulatory filing released on Monday. FTC Corrects Language On Herbalife (NYP) The Federal Trade Commission yesterday corrected an earlier statement regarding a “law enforcement investigation” into Herbalife. In response to a Freedom of Information Act request by The Post, the FTC said some complaints against the company were withheld because the information was “obtained through a law enforcement investigation.” The agency said yesterday that the language in its letter accompanying the FOIA request was incorrect and it should have said that the exemption from disclosure was related to “foreign sources.” FTC spokesman Frank Dorman defined “foreign sources” as government entities, including law enforcement agencies, and the exemption relates to information-sharing between the FTC and these foreign government agencies. The FTC said that it “may not disclose any material reflecting a consumer complaint obtained from a foreign source if that foreign source has requested confidential information.” The agency said it could not confirm, or deny, an investigation into the nutritional supplements company. Hedge Fund Mogul, Swiss Villagers Clash Over Ski Slopes (Bloomberg) Since hotelier Tobias Zurbriggen can remember, the business of running Saas-Fee has been a local affair. Now, the Swiss ski resort neighboring the Matterhorn is feeling the heat from a New York-based financier. Edmond Offermann, a nuclear scientist turned millionaire working for hedge fund Renaissance Technologies LLC, invested 15 million Swiss francs ($16.4 million) in 2010 to revive Saas- Fee’s struggling ski-lift company. “It’s like a hobby, which completely got out of control,” Offermann, 53, said in an interview from Long Island, New York. He wants to shake things up by managing hotels and the ski-lift operator in one company controlled by a single chief executive. JPMorgan Joins Rental Rush For Wealthy Clients (Bloomberg) The firm’s unit that caters to individuals and families with more than $5 million, put client money in a partnership that bought more than 5,000 single family homes to rent in Florida, Arizona, Nevada and California, said David Lyon, a managing director and investment specialist at J.P. Morgan Private Bank. Investors can expect returns of as much as 8 percent annually from rental incomeas well as part of the profits when the homes are sold, he said. Man Allegedly Tries To Walk Out Of Costco With 24 Quarts Of Oil — Strapped To His Body (CBS) Jorge Sanchez, 35, was spotted about 4:30 p.m. trying to leave a Burbank Costco without paying for the oil. Store employees gave chase and officials said they lost Sanchez after he jumped a fence at the west side of the Costco parking lot. Burbank Police Sgt. Darin Ryburn told CBS2/KCAL9 reporter Andrea Fujii that nine of the 24 quarts were recovered during the foot chase. Authorities said Sanchez walked into the Costco and went straight to the oil aisle. He allegedly grabbed a couple of cases and emptied them. Said Ryburn, “He proceeded to hide the quarts of oil in his pants, socks, and in his shirt.” Sanchez was later apprehended near Beachwood Drive and Monterey Avenue, about eight blocks from the store. Officials said he was arrested on suspicion of burglary charges. Margo Martin was a witness to the apprehension. “All of a sudden, I hear ‘Get down on the ground’ and there is this man laying in our driveway.” Witnesses thought the man was running funny and weren’t sure why. Witness Manuel Atlas said, “He looked kind of heavy and out of shape.” Police said Sanchez was also running funny because he still had 15 quarts of oil strapped to him. Police said he used a bungee cord to strap the bottles down.