September 28, 2021

Opening Bell: 10.23.14

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Credit Suisse Profit More Than Doubles as Trading Rises (Bloomberg)
Net income more than doubled to 1.03 billion Swiss francs ($1.08 billion), the Zurich-based bank said today in a statement. That compares with 454 million francs a year ago and beat the 809 million-franc average estimate of five analysts surveyed by Bloomberg. Chief Executive Officer Brady Dougan said earnings at the investment bank reflected “robust client activity” across businesses, while October has been “mixed.” Last week, he promoted two investment bankers in a revamp that boosts the influence of the securities unit within the executive board. Trading activity has benefited from price swings stemming from a stronger U.S. dollar and a slowdown in the European economy.

Hedge Funds Add To Venture Capital Bounty (WSJ)
Maverick Capital Ltd., one of the oldest hedge-fund firms, plans to launch its first venture-capital fund on Jan. 1, according to investors, with hopes of raising $400 million to take stakes in young companies. In pitching the fund at Maverick’s annual investor meeting last week, one investor said, founder Lee Ainslie III said the New York firm was seeing the best opportunities in many years for making early-stage investments in private companies. Such deals aren’t the bread and butter of hedge funds, which typically bet on the moves of stocks and other publicly traded assets. But Maverick, with roughly $9 billion under management, is among a growing number of Wall Street firms that are trying to get a piece of the lofty valuations being achieved by startups in Silicon Valley and elsewhere. New York investment firms Tiger Global Management LLC and Coatue Management LLC have been players on the West Coast venture-capital market. Tiger Global, which started as a hedge fund, now manages more money in its venture funds than in its hedge funds, according to a person familiar with the firm. Hedge-fund firm Valiant Capital Management LP, out of San Francisco, has also been active.

UBS Hunts for Millionaires in Hong Kong’s Nine Dragons (Bloomberg)
UBS is seeking to bolster its position as the largest manager of private wealth in Asia by looking for millionaires in an unlikely place: the lower-income part of Hong Kong. Switzerland’s largest bank is searching for clients in Kowloon, a name derived from the Cantonese translation for “nine dragons,” and the New Territories, said Amy Lo, the Hong Kong and Greater China head for UBS’s wealth unit. While average incomes are 27 percent lower on the north side of Victoria Harbour than on Hong Kong Island, the business people include toy, electronic and plastics entrepreneurs who like being closer to their factories in mainland China. UBS is targeting as many as 25,000 such individuals who each have at least $1 million in cash and liquid assets, according to Lo.

As Facebook Eyes China, Zuckerberg Makes Ties With Chinese Business School (BusinessWeek)
In its quest to dominate the social media industry worldwide, Facebook has long hankered after China, where the company been been banned since 2009. Facebook may have just gained a foothold to help it infiltrate the Chinese market: the appointment of Chief Executive Officer Mark Zuckerberg to the board of one of China’s top business schools, the Tsinghua University School of Economics and Management.

California venture firm does not have to release documents in discrimination suit (Reuters)
California’s privacy laws have saved a high-profile venture capital firm from having to release potentially embarrassing information about a former partner in a discrimination lawsuit by a former female partner. A judge ruled Kleiner Perkins Caufield & Byers, defending itself against allegations of discrimination and retaliation, will be able to keep to itself any other harassment complaints against former male partner at the center of the lawsuit, Ajit Nazre, in part because producing such complaints would hurt the privacy rights of other Kleiner employees. The suit, brought in 2012 by former partner Ellen Pao, claims discrimination and retaliation at the firm and helped kick off a broad and ongoing discussion in Silicon Valley about sexism in technology.

Could Allen Stanford go free? Convicted fraudster appeals (CNBC)
Jailed financier R. Allen Stanford, convicted in 2012 of running a massive global Ponzi scheme that rivals the Madoff scandal, says he is the victim of an illegal prosecution, and "the clearest of assaults on the U.S. Constitution." The comments come in Stanford's formal appeal of his conviction, filed in federal court on Wednesday. Stanford wrote the appeal himself at the prison in Florida where he is serving a 110-year sentence. Having fired the last of a string of court-appointed attorneys, and with no funds to hire a replacement, he is representing himself even though he has no legal background. He has also asked to argue his case in person before the Fifth Circuit Court of Appeals in New Orleans, a task normally handled by experienced attorneys. Stanford calls the case against him a "reckless action," and accuses authorities of a "by-any-means pursuit" of him to cover up their missteps in the still-unfolding financial crisis.

Romanian Princess Irina Walker Sentenced For Cockfighting (AP)
A Romanian princess was sentenced Wednesday to probation after apologizing for her role in an Oregon cockfighting enterprise that she said brought shame to her and her family. "I'm very sorry about my involvement in this business," Irina Walker told a federal judge before she was given three years' probation. "It was not my intention to go against the law." She and her husband John Walker both pleaded guilty in July to operating an illegal gambling business. John Walker, a former sheriff's deputy, was also sentenced to probation by U.S. District Judge Michael Mosman...Irina Walker, 61, is the third daughter of former Romanian King Michael I, who was forced to abdicate by communists in 1947. The judge agreed to let the Walkers travel internationally during their probation after their attorneys said the 93-year-old former king has health problems and Irina wants to visit while he's still alive. The Walkers were arrested in 2013 after authorities said they staged at least 10 cockfighting derbies in a barn at their ranch in Irrigon, 175 miles east of Portland. The Walkers charged spectators each $20 to watch roosters with knives attached to their legs fight to the death. Crowds generally exceeded 100 people, and the couple also made money from the sale of alcohol. Authorities said the people who brought roosters paid $1,000 to enter the fights, and the prizes ranged from $10,000 to $18,000. The person whose roosters won the most matches took home the money, except for 10 percent kept by referees.

SEC to Keep Veil Open on ETFs (WSJ)
BlackRock, the world’s biggest fund manager with $4.32 trillion in assets, had filed with the Securities and Exchange Commission in September 2011 for permission to sell the ETF. Precidian Investments had filed a proposal of its own in January 2013. Firms that had planned to offer similar ETFs include Invesco Ltd. ’s PowerShares unit and Capital Group Cos., which runs American Funds. Most funds in the nearly $2 trillion ETF market track indexes such as the S&P 500. Some actively managed ETFs, in which a manager or team makes decisions about asset allocation, have gotten the green light from the SEC. But in a twist New York-based BlackRock, led by CEO Laurence Fink , had proposed keeping the fund’s investments secret, which is against the agency’s rules.

Jimmy John's Noncompete Agreement Comes Under Congressional Scrutiny (HP)
House Democrats plan to send a letter to the Labor Department and the Federal Trade Commission on Wednesday asking the federal agencies to look into the use of noncompete agreements by the Jimmy John's sandwich chain. As The Huffington Post first reported last week, many workers at Jimmy John's stores have been required to sign noncompete clauses in which they agree not to work at a competing sandwich shop for a period of two years following their employment at Jimmy John's. A competitor is defined as any business that earns 10 percent or more of its revenue from sandwich sales and sits within three miles of a Jimmy John's location.

Manhattan’s Mr. Chocolate Proves Cost Surge Not a Problem (Bloomberg)
Jacques Torres is betting Americans simply can’t kick their chocolate habit even after the price of cocoa surged to the highest in three years. Torres, a former pastry chef at New York’s swanky Le Cirque restaurant who dubbed himself Mr. Chocolate, spent more than $3 million on a Brooklyn confection-making plant last year and doubled his eponymous shops in New York to eight from four, with seven Manhattan locations. He said 2014 sales will top last year’s record of $10 million. “People love chocolate,” Torres said by telephone from his Hudson Street store, where a 12-piece box of popular treats sells for $19.20 and three monthly of deliveries of assorted goodies fetches $145. “Business is still strong. The market is there. The economy in New York and the U.S. is better.”

Hedgie Brevan Howard invades Fortress, nabs top executive (NYP)
The $40 billion investment company tapped Hilmar Schaumann as its head of risk on Oct. 1, Max Hilton, a Brevan Howard spokesman, confirmed to The Post.

Lovelorn Chinese woman lived at KFC for a week (UPI)
Tan Shen, 26, of Chengdu, said she decided to stop into the KFC at the train station near her home shortly after she and her boyfriend broke up and she ended up staying at the fast food restaurant for a week. "I hadn't planned on staying there long, I just wanted some chicken wings," she said. "But once I got in there and started eating I decided I needed time to think." Tan said she decided to end her weeklong stay at the eatery and catch the next train toward her parents' house when she started attracting attention from local media. "And I was getting sick of the taste of chicken so there was no point in staying there anymore," she said. Jiang Li Lung, a worker at the train station KFC, said it took some time before employees noticed the woman wasn't leaving. "At first no one really noticed her," the worker said. "But after a few days I began thinking she looked really familiar. Then I realized we had been serving her for the past three days and that she hadn't actually left."

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SAC’s Cohen May Face SEC Suit as Deposition Hurts Case (Bloomberg) U.S. investigators have subpoenaed a 2011 deposition of SAC Capital Advisors LP founder Steven Cohen, whose sworn statements on insider-trading compliance may hurt him as he tries to persuade regulators not to file a lawsuit with the potential to shut his $14 billion firm. The SEC told the hedge fund Nov. 20 that it planned to sue SAC for securities fraud and so-called control-person liability for failing to supervise employees. The same day, the agency accused an ex-SAC portfolio manager and his hedge-fund unit of insider trading for persuading Cohen, 56, to make $700 million in illegal trades. Prosecutors also indicted the manager. Cohen’s testimony, reviewed by Bloomberg News, establishes his personal control over the unit, CR Intrinsic, and records his unfamiliarity with his firm’s compliance and ethics policies on insider trading. “I’ve read the compliance manual, but I don’t remember exactly what it says,” Cohen said. Morgan Stanley Strives to Coordinate 2 Departments Often at Odds (Dealbook) Traditionally, traders and investment bankers think of themselves as the elite of Wall Street and look down on the retail business, seeing it as pedestrian...Yet since Morgan Stanley moved to acquire control of the Smith Barney brokerage business from Citigroup in 2009, the balance of power has shifted to wealth management, which now accounts for almost 52 percent of the company’s earnings, up from roughly 16 percent in 2006. Paulson Leads Funds to Bermuda Tax Dodge Aiding Billionaires (Bloomberg) A decade after the U.S. Internal Revenue Service threatened to crack down on what it said were abuses by hedge-fund backed reinsurers, more high-profile money managers are setting up shop in tax havens. Paulson, SAC Capital Advisors LP’s Steven A. Cohen and Third Point LLC’s Daniel Loeb have started Bermuda reinsurance companies since 2011, following a similar Cayman Islands venture by Greenlight Capital Inc.’s David Einhorn. Options Activity Questioned Again (WSJ) Over the past year, unusually large positions were established shortly in advance of news that moved shares of Nexen Inc., Youku Inc., Human Genome Sciences Inc., Constellation Brands Inc. and, most recently, CBS Corp. All turned profitable after the news. A spokeswoman for the SEC, which regulates stock and options trading, said the agency would neither confirm nor deny the existence of inquiries into trading tied to those companies. No charges have been filed in the Heinz case, which was linked to a Swiss trading account, but the move to freeze the assets is one of the fastest enforcement actions ever filed by the agency, according to officials. The SEC said Friday that the timing and size of the trades were highly suspicious given the account had no history of trading in Heinz securities in the last six months. Prosecutors, Shifting Strategy, Build New Wall Street Cases (Dealbook) Criticized for letting Wall Street off the hook after the financial crisis, the Justice Department is building a new model for prosecuting big banks. In a recent round of actions that shook the financial industry, the government pushed for guilty pleas, rather than just the usual fines and reforms. Prosecutors now aim to apply the approach broadly to financial fraud cases, according to officials involved in the investigations...The new strategy first materialized in recent settlements with UBS and the Royal Bank of Scotland, which were accused of manipulating interest rates to bolster profit. As part of a broader deal, the banks’ Japanese subsidiaries pleaded guilty to felony wire fraud. Russians Wade Into the Snow to Seek Treasure From the Sky (NYT) Ever since the meteor exploded somewhere over this impoverished Siberian town, Larisa V. Briyukova wondered what to do with the fist-size stone she found under a hole in the roof tiles of her woodshed. On Monday, a stranger knocked on her door, offering about $60, Ms. Briyukova said. After some haggling, they settled on a price of $230. A few hours later, another man pulled up, looked at the hole in the roof and offered $1,300. “Now I regret selling it,” said Ms. Briyukova, a 43-year-old homemaker. “But then, who knows? The police might have come and taken it away anyway.” On Friday, terror rained from the skies, blowing out windows and scaring people over an enormous swath of Siberia. But by Monday, for many people what fell from the sky had turned to pure gold, and it touched off a rush to retrieve the fragments, many buried in deep February snows. Many of those out prospecting looked a lot like Sasha Zarezina, 8, who happily plunged into a snowbank here in this village of a thousand, laughing, kicking and throwing up plumes of powdery snow. Then she stopped, bent over and started to dig. “I found one!” she yelled. A warm breath and a rub on her pants later, a small black pebble, oval like a river rock, charred and smooth, was freed of ice. While trade in material from meteorites is largely illegal, there is a flourishing global market, with fragments widely available for sale on the Internet, usually at modest prices. At least one from the recent meteor was available on eBay on Monday for $32, and there is a Web site called Star-bits.com devoted to the trade — much to the displeasure of scientists and the countries where the objects were found. UK's Lloyds fined $6.7 million for mis-sold insurance (Reuters) Britain's financial regulator on Tuesday fined Lloyds Banking Group 4.3 million pounds ($6.7 million) for failing to handle complaints relating to insurance sold on loans and mortgages properly. The Financial Services Authority (FSA) said failings in the bank's systems and controls resulted in up to 140,000 customers experiencing delays in receiving compensation for being mis-sold payment protection insurance (PPI). Horsemeat Scandal Draws in Nestlé (FT) Switzerland-based Nestle on Monday removed pasta meals from shelves in Italy and Spain and suspended deliveries of all processed products containing meat from German supplier, H.J. Schypke, after tests revealed traces of horse DNA above 1 per cent. Nestle said it had informed the authorities. Is Berlusconi Getting a Poll Bounce From Tax Evaders? (CNBC) The media mogul, who has been convicted of tax fraud, has promised to introduce a tax amnesty for evaders if elected and to abolish the real estate tax. Swelling U.S. Labor Force Keeps Fed at Ease (Bloomberg) In the short run, the larger labor force will have an unfortunate side effect: It will slow the fall in unemployment. Mellman sees the jobless rate dropping to 7.5 percent by year- end from 7.9 percent now. It fell 0.7 percentage point in 2012. In the longer run, a bigger supply of labor is good news because it swells the pool of Americans available and willing to work, enhancing the economy’s potential to grow, according to Julie Hotchkiss, a policy adviser at the Federal Reserve Bank of Atlanta. It also has a silver lining for investors. The gradual fall in unemployment will allow policy makers to keep monetary policy looser for longer without having to worry about igniting a wage- driven rise in inflation. Couple Getting Affectionate Drive Through Home (WO) "She told the investigating trooper that her and the boyfriend were getting a little amorous and the trooper suspects that's probably why she lost control of the vehicle," said Florida Highway Patrol spokeswoman Kim Montes. Walker lost control of the vehicle and slammed into an unoccupied home. The vehicle went all the way through the house. The impact was so dramatic, the pressure blew a window in another part of the house out. Florida Highway Patrol troopers said Walker was injured when debris fell inside the vehicle. She was taken to Halifax Medical Center to be checked out. Her boyfriend, Charles Phillips, was not hurt.

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Greece Readies Record Debt Swap With 60% Commitments (Bloomberg) Greece moved closer to sealing the biggest sovereign restructuring in history as investors indicated they’ll participate in the nation’s debt swap. Holders of about 60 percent of the Greek bonds eligible for the deal, including Greece’s largest banks, most of the country’s pension funds and more than 30 European banks and insurers including BNP Paribas (BNP) SA and Commerzbank AG (CBK), have agreed to the offer so far. That brings the total to about 124 billion euros ($163 billion), based on data compiled by Bloomberg from company reports and government statements. Roubini: Private Sector’s Greece Deal Is ‘Sweet’ (FT) “The reality is that private creditors got a very sweet deal, while most actual and future losses have been transferred to the official creditors." Hedge Funds See Tax Break in Republican Bill (Bloomberg) ^^^An interesting way of putting this: Cantor told House members in a memo last month his plan would let “every” business with fewer than 500 employees deduct 20 percent of its profits. Labor Dept. Asks Nuclear Guardians for Help Keeping Jobs Data Secret (CNBC) The Department of Labor has asked Sandia National Laboratories — the organization that ensures the safety of the nation’s nuclear weapons stockpile — to scrutinize the security procedures surrounding the release of monthly jobs report data. Separately, officials at the U.S. Energy Information Administration tell CNBC they have taken steps to block computers operating from certain Internet protocol addresses from accessing the administration’s website, arguing that some users appear to have a “malicious intent” to slow down the website’s release of data for the general public while speeding it up for themselves. 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