Opening Bell: 09.23.14

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Barclays will 'robustly' defend dark pool allegations: CEO (CNBC)
Jenkins said the matter was investigated fully by "internal and external resources." "We believe our defense is strong, and we intend to defend robustly those allegations that were made against us," he said in an interview with "Closing Bell." "Obviously if we have made mistakes, if we have gotten things wrong, then we'll acknowledge that, we'll take the sanction, we'll learn and we'll move on but where we think we are on strong ground, then we will defend our position." New York Attorney General Eric Schneiderman brought the lawsuit against Barclays in June, and last week he defended it in court documents filed in the case. He also reasserted allegations that Barclays employees misled clients about their exposure to high-speed and potentially predatory market participants.

Morgan Stanley Trader Misses Bunnies as She Quits Playboy Club (Bloomberg)
The Morgan Stanley trader-turned-chef has quit the London club to open a restaurant and recalls the fun she had over three years, cooking for celebrities from Justin Bieber to Kate Moss. “Talk about a massive fun factor with the brand, and the stories I walked away from there,” Joo says. “It was incredible, hanging out in the Playboy Mansion in L.A. and looking after tons of rappers and footballers. ‘‘And I miss the bunnies. I love those girls. Who doesn’t love being surrounded by beautiful people? Come on!’’ To say that she has had a varied career is an understatement. Joo, 39, a Columbia engineering graduate, interned at Goldman Sachs Group Inc. She spent more than four years with Morgan Stanley in New York and San Francisco before studying at the French Culinary Institute in New York. She then moved to London and got a job as a pastry chef at Restaurant Gordon Ramsay. Television beckoned and she appeared on ‘‘Iron Chef’’ before being named executive chef when the Playboy Club returned to London in 2011. The Korean-American is now set to open a restaurant in London’s Soho in December. It will be called Jinjuu, which means ‘‘pearl’’ in Korean and will occupy a site on Kingly Street. She’s bringing her head chef from the Playboy Club, Andrew Hales, as well as pastry chef Jaime Garbutt.

Alibaba Banks Bring Home $261 Million in Fees (Bloomberg)
Alibaba Group Holding Ltd.’s underwriters raked in $300 million in fees after completing the largest initial public offering in history. The banks received 1.2 percent of the proceeds in fees, according to a regulatory filing. The total IPO size increased to $25 billion the company said today, after the underwriters exercised the option to purchase 15 percent more shares. Pulling off Alibaba’s IPO is a coup for the five lead banks, which were all given an equal stake in the deal’s success. The fee structure is different from typical IPOs in the U.S., where there’s one lead manager that is awarded much of the fees. Alibaba also used an incentive bonus to coax better performance from underwriters.

Crackdown Targets Inversions Designed to Limit U.S. Taxes (Bloomberg)
The Treasury Department announced steps that will make it harder for U.S. companies to move their addresses outside the country to reduce taxes, clamping down on the practice known as inversions. The rules, which apply to deals that closed starting [yesterday], include a prohibition on “hopscotch” loans that let companies access foreign cash without paying U.S. taxes, and impose new curbs on actions that companies can use to make such transactions qualify for favorable tax treatment. The changes will have the biggest effect on eight U.S. companies with pending inversions, including Medtronic Inc. and AbbVie Inc., which plan the two largest such deals in U.S. history. In its purchase of Covidien Plc, Medtronic is loaning some of its untaxed profits outside the U.S. to its new Irish parent company, and that transaction could be penalized by the new anti-hopscotch rule.

German Firms Go on U.S. Buying Spree (WSJ)
The forces fueling the activity include record-low interest rates and stagnation in Europe, economic growth and declining energy prices in the U.S., and expanding cash hoards at thriving German companies. "German companies want to be where their customers are," said Dietmar Rieg, president of the German American Chamber of Commerce in New York. The latest deals bring to almost $70 billion the total value of German acquisitions announced in the U.S. so far this year, according to Dealogic. That ranks second to $77 billion in proposed takeovers by Canadian companies during a global M&A boom. German firms have already spent more on U.S. investments so far in 2014 than in every full year of the past two decades, according to Dealogic.

Man who has suffered 100 orgasms a day for past two years after slipping a disc in his back – but can't enjoy sex (DM)
For the last two years, Dale Decker has suffered 100 orgasms a day - but has not enjoyed one. The 37-year-old is the first man to speak out about suffering persistent genital arousal syndrome. He developed the condition in September 2012 after slipping a disc in his back while getting out of a chair. While he was en route to the hospital, he suffered five orgasms. Since that moment he has been plagued by the condition, he describes as 'disgusting and horrendous'. According to medical literature, trauma to the pelvic nerves can trigger hypersensitivity in this area. The painful pelvic condition has left him housebound and isolated, through fear of suffering a public orgasm. He said: 'Imagine being on your knees at your father's funeral beside his casket - saying goodbye to him and then you have nine orgasms right there. 'While your whole family is standing behind you. It makes you never want to have another orgasm for as long as you live.

Carl Icahn might save Trump Taj Mahal under right conditions (NYP)
Carl Icahn is ready to saddle up and ride in to save the Trump Taj Mahal — under certain circumstances, The Post has learned. The investor stands ready to pump $100 million into the ailing Atlantic City casino — but only if its unions and Atlantic City make big concessions, sources close to the situation said. Taj’s owner, Trump Entertainment Resorts, filed for bankruptcy on Sept. 9 after years of red ink, and is proposing a restructuring deal that needs the participation of Icahn, the unions and Atlantic City in order to save the 24-year-old boardwalk casino. If an agreement is not reached by Oct. 3, Taj executives will tell New Jersey authorities it is planning to close the casino — a move that will result in the loss of more than 4,000 jobs, a source close to the situation said.

BlackRock Urges Changes in ‘Broken’ Corporate Bond Market (Bloomberg)
BlackRock, a major competitor in the bond market with $4.3 trillion in client assets, urged changes including unseating banks as the primary middlemen in the market and shifting transactions to electronic markets. Another solution BlackRock proposed: reducing the complexity of the bond market by encouraging corporations to issue debt with more standardized terms.

Starbucks testing stout beer-flavored 'dark barrel latte' (Reuters)
The non-alcoholic drink includes a chocolaty stout flavored sauce, whipped cream and dark caramel drizzle, a spokeswoman said on Monday. Among other things, Starbucks is known for flavored lattes such as the "pumpkin spice" latte. The Seattle-based chain has sold more than 200 million of those seasonal drinks since their debut in 2003.

Wells Fargo brokerage arm fined $5m (FT)
Wells Fargo Advisors, the brokerage arm of the US bank, was fined $5m on Monday for failing to stop an employee from trading on customer information ahead of the 2010 acquisition of Burger King dubbed “the sandwich deal”. Internal compliance groups responsible for ensuring brokers did not abuse customers’ confidential information “ultimately failed to act”, the Securities and Exchange Commission said as it detailed the allegations. The brokerage declined to comment. The penalty is the first by the SEC against a broker-dealer for failing to protect a customer’s market-sensitive information. The case involved a broker trading on his own account and allegedly tipping off others about a client’s private information related to the acquisition of Burger King by 3G Capital Partners, the Brazilian private equity firm.

Assault by cake reported at North Seattle KFC (Seattle Times)
On Saturday, Seattle police Officer Nic Abts-Olsen responded to reports of an assault at the KFC in the 13200 block of Aurora Avenue North. The weapon of choice: Cake...As Abts-Olsen and his partner Cliff Borjeson rolled to the scene, details of the attack trickled in from dispatchers: “Unknown male was throwing cake at employees.” Followed by the ominous: “They can no longer sell the cake.” Employees told the two officers that a man walked into the store, threw a KFC-brand cake at them and then left. Fortunately, the man’s aim was off. Staff at the KFC were only able to provide a vague description of the man. But they offered a much more vivid description of his weapon: “The cake was described as a lemon cake, yellow in color and circular and costs exactly $5.19,” Officer Abts-Olsen wrote in a report.

Related

Opening Bell: 08.07.12

Probe May Hit UK Bank's Clean Image (WSJ) Last week, Standard Chartered PLC Chief Executive Peter Sands told analysts that "our culture and values are our first and last line of defense." On Tuesday, allegations by a New York financial regulator that Standard Chartered hid illegal Iranian transactions seemed to breach that line, sending the lender's shares down and wiping £7.65 billion ($11.9 billion) off its market value. In the U.K., Mr. Sands has long been heralded as a voice of reason in the country's turbulent banking sector. The former consultant, who was named Standard Chartered CEO in 2006, regularly espoused the importance of sound governance and sensible investment. While several of its British peers were being bailed out by taxpayers, Mr. Sands was guiding the Asia-focused bank to record profits boosted by growing trade between emerging nations. The executive stressed the fact that Standard Chartered doesn't have an investment bank and didn't need European Central Bank cheap loans to keep its business ticking over. Italian's Job: Premier Talks Tough in Bid to Save Euro (WSJ) During an all-night European summit in June, Mario Monti, the Italian prime minister, gave German Chancellor Angela Merkel an unexpected ultimatum: He would block all deals until she agreed to take action against Italy's and Spain's rising borrowing costs. Ms. Merkel, who has held most of the euro's cards for the past two years, wasn't used to being put on the defensive. "This is not helpful, Mario," Ms. Merkel warned, according to people present. Europe's leaders were gathered on the fifth floor of the European Union's boxy glass headquarters in Brussels, about to break for dinner. "I know," Italy's premier replied. Bill Gross: Stay Away From Europe (CNBC) “Investors get distracted by the hundreds of billions of euros in sovereign policy checks, promises that make for media headlines but forget it’s their trillions that are the real objective,” Gross wrote. “Even Mr Hollande in left-leaning France recognizes that the private sector is critical for future growth in the EU. He knows that, without its partnership, a one-sided funding via state-controlled banks and central banks will inevitably lead to high debt-to-GDP ratios and a downhill vicious cycle of recession.” “Psst…investors: Stay dry my friends!” Gross said. Richest Family Offices Seeing Fastest Growth As Firms Oust Banks (Bloomberg Markets) They call it “money camp.” Twice a week, 6- to 11-year-old scions of wealthy families take classes on being rich. They compete to corner commodities markets in Pit, the raucous Parker Brothers card game, and take part in a workshop called “business in a box,” examining products that aren’t obvious gold mines, such as the packaging on Apple Inc.’s iPhone rather than the phone itself. It’s all part of managing money for the wealthiest families, says Katherine Lintz, founder of Clayton, Missouri- based Financial Management Partners, which runs the camp for the children of clients. Supplying the families with good stock picks and a wily tax strategy isn’t enough anymore. These days, it’s about applying the human touch, she says. Lintz, 58, is on to something. Her 22-year-old firm was No. 2 among the fastest-growing multifamily offices in the second annual Bloomberg Markets ranking of companies that manage affairs for dynastic clans, Bloomberg Markets magazine reports in its September issue. The assets that FMP supervises grew 30 percent to $2.6 billion as of Dec. 31, just behind Signature, a Norfolk, Virginia-based family office that expanded 36 percent in 2011 to $3.6 billion. MS Takes Trading Hit (NYP) Morgan Stanley, which had the largest trading-revenue drop among major US banks last quarter, lost money in that business on 15 days in the period, up from eight days a year earlier. Morgan Stanley traders generated more than $100 million on three days in the period, compared with seven days in the second quarter of 2011, the company said in a regulatory filing yesterday. None of the daily losses exceeded the firm’s value-at-risk, a measure of how much the bank estimates it could lose on 95 percent of days. Morgan Stanley had a 48 percent year-over-year decrease in trading revenue, excluding accounting gains, led by a 60 percent drop in fixed-income revenue. Former Lloyds Digital Security Chief Admits $3.76 Million Fraud (Bloomberg) Lloyds Banking Group's former head of digital banking fraud and security pleaded guilty to submitting false invoices totaling more than 2.4 million pounds ($3.76 million)...Jessica Harper admitted to submitting fake invoices between 2007 and 2011 and then laundering the proceeds, the CPS said. She will be sentenced on Sept. 21, and faces as long as 24 years in prison for the two charges, a CPS spokesman said, although she will get credit for the guilty plea. Ex Lehman Exec Requests Rehab To Avoid Jail Time (NYP) Former Lehman Brothers Co-Chief Operating Officer Bradley H. Jack, arrested twice in less than a year on charges of prescription forgery, said he is willing to undergo a program for drug and alcohol treatment to avoid prosecution. Jack applied for the program at a hearing yesterday in Connecticut Superior Court in Norwalk. Judge Bruce Hudock ordered a doctor’s report to determine if he is eligible for the new program, which the judge said would be “a rare event.” Fed Official Calls For Bond Buying (WSJ) Eric Rosengren, president of the Federal Reserve Bank of Boston, called on the Fed to launch an aggressive, open-ended bond buying program that the central bank would continue until economic growth picks up and unemployment starts falling again. His call came in an interview with The Wall Street Journal, the first since the central bank signaled last week that it was leaning strongly toward taking new measures to support economic growth. Mr. Rosengren isn't currently among the regional Fed bank presidents with a vote on monetary policy. Although all 12 presidents participate in Fed deliberations, only five join the seven Fed governors in Washington in the formal committee vote. Tokyo Exchange Glitch Halts Derivatives Trading (WSJ) The Tokyo Stock Exchange on Tuesday temporarily suspended all derivatives trading soon after the morning open due to an unidentified system problem, the second significant trading glitch on the exchange this year. Amazon Exec Swindled By Tom Petty Con Artist (NYDN) Brian Valentine simply wanted to give his wife the wedding present of a lifetime - a performance by Tom Petty and the Heartbreakers. The senior vice president of Amazon, instead, fell victim to fraud, losing a whopping $165,000 to a Las Vegas man who pretended to be a concert booking agent, the Smoking Gun reported. FBI agents arrested the fraudulent agent, Chad Christopher Lund, on Aug. 2 in Illinois, after a private investigator Valentine had hired found that Lund had skipped town. But the ordeal began almost ten months before in late 2011, a year after Valentine, 52, popped the question to fellow Amazon employee, Gianna Puerini, 39, according to a wire fraud complaint unsealed by the U.S. District Court. Valentine decided that he wanted the "Won't Back Down" singer to perform a set at the couple's wedding reception since he proposed to Puerini at a Petty concert in Seattle. He turned to the Internet, where he found the website of Lund's firm, lundlive.com, boasting to have booked acts like Petty, Run-DMC and Ludacris. Lundlive.com no longer exists. Valentine connected with Lund over email and by October 2011, Lund told the Amazon exec that he had negotiated with Petty's representatives "down to a price of $330,000 for the performance." Later in the month, Lund sent Valentine a contract with the forged signature of Petty's manager, Tony Dimitraides. Valentine sent Lund a $165,000 down payment in return. Valentine finally uncovered the fraud in early April 2012, when the wedding was just three months away. He contacted Petty's management to discuss the performance only to find out that they had no idea about the planned appearance. "We have never heard of Chris Lund or his agency," Dimitraides wrote in an email to Valentine. "We are not aware of any deal for Tom Petty to play Seattle in July and I have never signed a contract for any such." "It looks like you have been defrauded."

Opening Bell: 10.05.12

Merkel’s First Greek Crisis Visit Seen Sending Signal to Critics (Bloomberg) German Chancellor Angela Merkel will travel to Athens for the first time since Europe’s financial crisis broke out there three years ago, a sign she’s seeking to silence the debate on pushing Greece out of the euro. Merkel’s visit to the Greek capital Oct. 9 to meet with Prime Minister Antonis Samaras underscores the shift in her stance since she held out the prospect last year of Greece exiting the 17-nation currency region. “The meeting could mark the turning point to the Greek crisis,” said Constantinos Zouzoulas, an analyst at Axia Ventures Group, a brokerage in Athens. “This is a very significant development for Greece ahead of crucial decisions by the euro zone for the country.” Spain Finance Minister’s ‘No Bailout’ Remark Sparks Laughter (CNBC) “Spain doesn’t need a bailout at all,” finance minister Luis de Guindos said, straight faced and somber, as mirth spread throughout the audience (even de Guindos’ assistant interpreter couldn’t mask a smile). US Probes Credit Suisse Over Mortgages (Reuters) U.S. federal and state authorities are investigating Credit Suisse over mortgage-backed securities packaged and sold by the bank, people familiar with the probe said on Thursday. The Justice Department and the New York Attorney General are among those probing Credit Suisse's actions, according to the sources, who spoke on condition of anonymity. New Shuffle At JPMorgan (WSJ) Barry Zubrow, a trusted lieutenant of J.P. Morgan Chase Chief Executive James Dimon, is expected to give up his job as regulatory affairs chief in what would be the latest reshuffling to follow a multibillion-dollar trading blunder. The change is expected before year-end, said people close to the bank. It is possible the 59-year-old executive will remain with the company in an advisory role, these people added. More executive shifts also are possible. The chairman of the corporate and investment banking unit, Jes Staley, was recently in the running to become chief executive of British banking giant Barclays PLC, according to people close to Mr. Staley, but didn't get the job. He gave up day-to-day oversight of J.P. Morgan's investment bank in a July reorganization. J.P. Morgan declined to comment about Mr. Staley, and he couldn't be reached. Investors Back Away From 'Junk' Bonds (WSJ) The massive "junk"-bond boom is raising alarm bells among some large money managers, who warn the market is showing signs of overheating. So much money has flooded into the junk-bond market from yield-hungry investors that weaker and weaker companies are able to sell bonds, they say. Credit ratings of many borrowers are lower and debt levels are higher, making defaults more likely. And with yields near record lows, they add, investors aren't being compensated for that risk. India’s NSE Says 59 Erroneous Orders Caused Stock Plunge (Bloomberg) “India has joined the big league with this trading disaster,” A.S. Thiyaga Rajan, a senior managing director at Aquarius Investment Advisors Pte., which manages about $400 million, said by phone from Singapore. “It’s very surprising so many erroneous orders went through. Exchanges and regulators must be one step ahead as systems and technologies upgrade.” Halloween Horror Story: Case Of The Missing Pumpkin Lattes (WSJ) For Asher Anidjar, the arrival of fall isn't marked by turning leaves or a chilly breeze, but a steaming seasonal drink. Recently, though, when he headed to his local Starbucks for a Pumpkin Spice Latte, he left with a bitter taste in his mouth. They were out of the special sauce that gives the treat its distinctive autumnal flavor. "I just left, depressed," said Mr. Anidjar, a 26-year-old commercial real-estate analyst who lives in Manhattan. The drink crops up on the Starbucks menu annually for a limited time, and this year there has been an unusual run on the pumpkin batch. Thanks in part to a frothy dose of buzz brewed up by the Seattle-based coffee giant before the beverage's Sept. 4 debut, the craze has drained supplies at stores across the country. Baristas are hitting the street, searching for stashes of the flavored sauce at other stores. Customers denied their fix—which costs about $4 for a small cup, or "tall" in Starbucks speak—are tweeting about their dismay. "My world almost ended this morning when the local Starbucks told me they were out of Pumpkin Spice Latte," tweeted Jason Sizemore, 38 years old, of Lexington, Ky. Fed Seeks To Clarify Plans (WSJ) Since August 2011, the Fed has been saying it will keep short-term interest rates near zero until a particular date. Right now that date is mid-2015. The hope has been that these assurances would help hold down longer-term interest rates, as well as short-term ones, and thus boost spending and investment. But the Fed isn't happy with this approach. While central-bank officials believe the assurances have helped hold down long-term interest rates, they find the fixed date to be confusing, and they are looking at a new approach. The idea under consideration is to keep offering assurances of low rates, but tie those assurances to what is happening in the economy rather than a point on the calendar. Dave And Buster's IPO Plan A Bust (Bloomberg) Dave & Buster’s Entertainment, operator of 59 company-owned dining and gaming stores, withdrew its plans for a US initial public offering, citing market conditions. The company had sought to raise as much as $107.7 million. Black Swans In The Red Until Turmoil Hits (NYP) The Apocalypse has not arrived — but that hasn’t stopped some of the country’s wealthiest investors from betting on it. The investors, mostly pensions funds, hedge funds of funds and deep-pocketed individuals that were burned during the financial meltdown in 2008, are jumping into these so-called Black Swan investments that carry promised returns of up to 1,000 percent — if another financial Armageddon strikes. The Cassandras of the hedge-fund world that are offering these funds — also called tail risk funds and often with a geographic focus — would suffer terribly in the absence of disaster...The hot sector has attracted such well-known names as Saba Capital’s Boaz Weinstein, Hayman Capital’s Kyle Bass, Corriente Advisors’ Mark Hart, and Universa’s Mark Spitznagel...When markets are buoyant, of course the funds lose money. Through August, Saba Tail Hedge was down 16 percent, Pine River Tail Hedge had fallen 23 percent and Corriente Europe Divergence is down 24 percent, according to investors. Bass’s Japan short fund, which he launched two years ago, is down more than 60 percent since inception. By design, it will lose all of its investors’ money in three years if Japanese bonds don’t go into a tailspin. Bridezilla’s demanding email to potential bridesmaids: If you can’t commit, ‘you’re going to the wrong wedding’ (NYDN) One woman’s over-the-top email of demands to potential bridesmaids has gone viral since it was posted on Gawker.com. “You all have a big roll [sic] in this wedding, so before we continue I’m going to be setting some ground rules and it’s very important you read and think everything through before you accept this honor to be a bridesmaid,” the unnamed bride-to-be begins. If recipients don’t answer emails when outside the country, can’t attend every wedding-related event, or don’t have the cash for several flights and a bridesmaid’s dress, they might not make the cut. “If money is tight and you can’t afford to contribute to the bachelorette party or won’t be able to afford a dress, then [I] don’t have time to deal with that, I’m sorry,” the woman wrote. Of course, she’ll aim for what’s affordable, but, “If you think it’s going to be a $25 Forever 21 dress then you’re going to the wrong wedding.” The lucky bridesmaids must also be available — at any moment — between February and August. “If you don’t think you’ll be able to attend one party but can make the rest of them, I’m sorry, but I’ll have to take you out as a bridesmaid and put you as a guest,” the woman wrote. And please, don’t ignore phone calls. “I don’t have time to wait around for responses, everyone has their phone on them,” she wrote. “It shouldn’t take you more than a day to get back to me. Really think about everything I've said. This is really going to be the most epic wedding ever so I hope you girls can share this special day with us!"