Pimco ETF Draws Probe by SEC (WSJ)
The Securities and Exchange Commission is investigating whether bond giant Pacific Investment Management Co. artificially boosted the returns of a popular fund aimed at small investors, according to people familiar with the matter, the latest challenge for the firm run by investor Bill Gross. A probe into pricing issues at Pimco has been under way for some months, the people familiar with the matter said. Mr. Gross has been interviewed by SEC investigators, the people said. Mr. Gross declined to comment for this article. The issues being scrutinized by the SEC include the way a flagship exchange-traded fund, managed by Mr. Gross, purchased and valued certain bonds. Investigators from the SEC's enforcement division are examining whether the $3.6 billion Pimco Total Return ETF BOND +0.08% bought investments at discounted prices but relied on higher valuations for the investments when the fund calculated the value of its holdings shortly thereafter. Such a maneuver could make it seem as though the ETF had scored quick gains when it was in fact taking advantage of variations in the way some investments are valued in the bond market.
Harvard Endowment Earns 15.4% Return for Fiscal 2014 (WSJ)
Those returns exceeded internal goals and boosted the endowment's assets to $36.4 billion as of June 30. Harvard also deepened its commitment to alternative investments in hedge funds, private equity and assets such as real estate. The nonprofit agency that manages Harvard's money said it had received approval to increase allocations to private equity and hedge funds during fiscal 2015 to 34% of assets, up from 31%, according to a letter issued by Harvard endowment chief Jane Mendillo.
Oracle Cuts Ellison’s Stock Awards, Adds CEOs’ Incentives (Bloomberg)
Ellison’s performance-based stock award was cut by 187,500 shares, or $7.28 million based on Oracle’s closing price today, and his stock-option award for fiscal 2015 was reduced by 750,000 shares, according to a filing with the U.S. Securities and Exchange Commission. Ellison’s total compensation last year was $67.3 million, down from $79.6 million the prior year. Mark Hurd and Safra Catz were both named CEOs of the software maker on Sept. 18, while Ellison became chairman and took on the title of chief technology officer. Hurd will run sales, marketing and strategy, while Catz will remain chief financial officer and oversee legal and manufacturing operations. Each received a one-time grant of 500,000 stock options and a performance-based stock award of 125,000 shares in connection with their promotions, according to the filing.
Apple's Tim Cook: 'Get on board' with climate change (CNBC)
Apple CEO Tim Cook took on the hot-button issue of climate change on Monday during the Climate Week NYC 2014 conference. Speaking during the opening day of the high-profile climate change event, Cook said people shouldn't accept a trade-off when it comes to business and the environment. "What are the root causes?" he said. "And you are not accepting that there is a trade-off between the economy and the environment. Too many people believe you can do this or that. What we found is that both are doable. If you innovate and you set the bar high, you will find a way to do both." Cook added: "When you realize it and you see the urgency, it is time to act now. Everyone that hasn't been on board, that's OK, but now is the time to get on board."
Looking to cuddle? There’s an app for that (NYP)
The app launched on Sept. 11 allows users to set their hug preferences, including whether they like to be the big or little spoon to ensure they are matched with nearby huggers of similar tastes. Cuddlr founder Charlie Williams told The Daily Mirror newspaper that the app was only designed for a “little cuddle,” but users could take the relationship further if they pleased. “On Cuddlr, you get together straightaway, have a little cuddle, and then part ways,” he said. “If you want to hang out again, you can exchange information then and there — but you already know what kind of cuddles they give.”
Fed Said to Warn Banks on Capital Charges on Leveraged Loans (Bloomberg)
Federal Reserve officials are warning banks that rising levels of high-risk, high-yield loans on their balance sheets may require more capital held against them, according to a person familiar with the conversations. Regulators have beefed up scrutiny of the market after guidance issued in 2013 by the Fed, the Office of the Comptroller of the Currency and the Federal Deposit Insurance Corp. didn’t slow deal volume or declining credit standards. Banks have arranged about $411 billion of leveraged loans sold to investors such as mutual funds this year, compared with a record $696 billion in all of 2013, according to data compiled by Bloomberg. “Covenant-lite” loans, which lack requirements that can help protect lenders, are on pace to exceed 70 percent of total issuance this year, according to a Barclays Plc research report dated Sept. 5. “It appears that many banks have not fully implemented standards set forth in the interagency guidance,” Todd Vermilyea, senior associate director for banking supervision and regulation at the Fed Board, said in May.
New Tax Rules Will Slow, Not Halt, Inversion Deals (WSJ)
In 2004, after a previous wave of inversions, Congress prohibited the most overt ones, in which a company simply moved on paper to a Caribbean tax haven. But at the same time, lawmakers basically agreed to allow inversions that occur through a real merger. That has tied Treasury's hands in shutting down the new deals altogether, and helped lead to the new spate of inversions. The Obama administration, as well as many Democratic lawmakers, wants Congress to tighten the rules further, and essentially prohibit inversions through merger, unless the U.S. company accounts for half or less of the combined firm. There is little prospect that will happen soon, however, given Republican concerns. The administration still has at least one more regulatory card to play—it could limit still more of the benefits of inverting. The biggest benefit left untouched by Monday's action allows inverted firms to "strip" domestic profits out of the U.S. in the form of untaxed interest payments to their new overseas parent. Administration officials say they are still studying that one.
Wall St. Bankrolls Ex-Executive as He Sues Over A.I.G. Bailout (Dealbook)
Maurice R. Greenberg, 89, the former A.I.G. chief executive who still holds a large stake in the insurance company, filed the lawsuit on behalf of fellow shareholders. He has now raised several million dollars from three Wall Street companions to help cover the cost of the case. The investors, who are entitled to a cut of any damages Mr. Greenberg collects from the government, contributed about 15 percent of the tens of millions of dollars in legal costs, according to people with knowledge of the arrangement. Six years after the government saved Wall Street from the brink of collapse, the lawsuit is coming to trial, reopening one of the ugliest chapters in modern financial history. The trial, which begins next week in Washington, will most likely hinge on testimony from the policy makers who orchestrated A.I.G.’s rescue, including former Federal Reserve Chairman Ben S. Bernanke and former Treasury Secretary Timothy F. Geithner. With the legal bills mounting in the three-year case, Mr. Greenberg sought support from a certain breed of investor — those who have misgivings about the government. Kenneth G. Langone, the former director of the New York Stock Exchange who spent years fending off accusations from the New York attorney general’s office, contributed to Mr. Greenberg’s legal fund, the people said. Steven A. Cohen, whose hedge fund was indicted on charges of insider trading last year, considered investing, too, but ultimately declined.
10 colleges with the most billionaire alumni (Fortune)
Fifty-two living billionaires hold a degree from [Harvard], almost twice as many as those who graduated from second-place University of Pennsylvania, with 28 billionaire alumni. The other universities in the top 10, in descending order: Stanford, NYU, Columbia, MIT, Cornell, USC, and Yale. The U.K.’s Cambridge University is the only school outside the U.S. to make the list. Eleven of its recent grads are worth $1 billion or more. Didn’t go to any of those schools? Cheer up. The ranking is part of a detailed new study of the world’s billionaires, by WealthX, a market research firm that helps businesses reach ultra-rich consumers, and UBS, whose wealth management arm handles a big chunk of their money. The report points out that, although 68% of billionaires hold at least a four-year degree, a sheepskin “is not a prerequisite to then go on and amass a billion-dollar fortune,” since one in three billionaires either never went to college at all or didn’t stick around to finish.
Queen Elizabeth ‘purred’ in joy after being told Scotland rejected independence (NYDN)
U.K. Prime Minister David Cameron was caught on camera by Sky News telling former New York Mayor Michael Bloomberg about Queen Elizabeth's jovial reaction the news that Scotland would remain part of the U.K. “The definition of relief is being the Prime Minister of the United Kingdom and ringing the Queen and saying 'It's alright, it's okay'. That was something,” Cameron said Tuesday, according to Sky News, which captured his statement on camera. "She purred down the line."