Opening Bell: 10.31.14


The texts that sparked the SEC pot stock probe (NYP)
A pair of investing tycoons traded giddy text messages this spring as they planned to unload a massive haul of hyped-up shares in GrowLife, a supplier to pot farmers that has come under regulatory scrutiny. “April 10 is your day! Buy two houses in Miami!” David Weiner, a Los Angeles-based penny-stock financier texted to fellow investor Fred Knoll, according to messages obtained by The Post. “Lol you are my hero,” replied Knoll, an MIT-educated Wall Street veteran. The duo were licking their chops over the April 10 expiration of a restriction against selling a massive chunk of GrowLife shares they’d acquired after giving the company a cash infusion, Knoll admitted in a brief interview Wednesday. “There was a restriction on the shares that was expiring,” Knoll said, declining to elaborate. The plan for a big payday was thwarted at the last minute, however, when the Securities and Exchange Commission halted trading of GrowLife stock at 50 cents a share before the stock opened for trading on April 10. At the time, the SEC cited “potentially manipulative transactions” in the stock. The specific reason for the SEC’s halt on GrowLife shares had been a mystery up to now — but a source confirmed that the SEC made its move after reviewing the lock-up expiration data and the text exchange.

Big Banks Brace for Penalties in Probes (WSJ)
Big banks in the U.S. and Europe are stockpiling billions to pay for a potential trans-Atlantic settlement of allegations that they manipulated foreign-exchange rates as talks heat up with regulators on both continents. The possibility of a major deal soon, instead of the firms settling with regulators one by one, is a new wrinkle in the long-running talks to settle foreign-exchange probes that have ensnared about a dozen banks in the U.S. and Europe. Several people familiar with the discussions said banks appeared more optimistic of reaching a global settlement than U.S. regulators. One person said the direction of the talks was changing by the hour.

Citigroup Legal Costs Jump as Currency Probes Accelerate (Bloomberg)
Citigroup revealed that it’s facing a U.S. criminal probe into the bank’s foreign-exchange business and took a $600 million legal charge that forced it to restate third-quarter results reported two weeks ago. The lender is cooperating with criminal and antitrust investigations by the Justice Department as well as inquiries by the Commodity Futures Trading Commission and regulators in the U.K. and Switzerland, New York-based Citigroup said today in a regulatory filing.

3 years later, some MF Global creditors get paid (Reuters)
A large group of creditors of MF Global's bankrupt brokerage unit will soon receive their first payout, as $518.7 million of checks start to be mailed out on Friday, the third anniversary of the company's Chapter 11 filing. James Giddens, the trustee liquidating the MF Global brokerage unit, on Thursday said the payout to unsecured general creditors will cover 39 percent of claims he has deemed valid. He said another $32.3 million will be distributed to some "priority'' claimants, covering all of their valid claims.

StanChart faces US sanctions probe (FT)
US authorities have reopened an investigation into Standard Chartered to determine whether the UK bank hid transactions that flouted sanctions laws as it was settling a related action two years ago, people familiar with the matter said. The inquiry is a blow for StanChart and its embattled management team. Peter Sands, one of the longest serving chief executives of any global bank, faces growing doubts about his future after this week announcing the group’s third profits warning of the year.

Fridge-raiding Teletubbie charged with burglary (UPI)
Police in Pennsylvania said a man who dressed as the yellow Teletubbie and broke into a friend's home for leftover Chinese food has been charged with burglary. Bethlehem police said Lehigh University student Terez Owens Jr., 20, was dressed as Laa-Laa, the yellow Teletubbie, when he allegedly broke into a friend's house about 2 a.m. Sunday and filled his "man purse" with leftover Chinese food from the refrigerator. The door to the residence was damaged during the break-in, police said. Officers caught up to Owens, who police said was dressed up for a nearby Halloween party, shortly after the incident, but he was released when the victim initially declined to press charges.

LinkedIn rise bucks social network trend (FT)
Shares in LinkedIn rose 2 per cent in after-hours trading following its quarterly earnings release, bucking a trend set by other social media stocks which have suffered this earnings season despite beating expectations. The social network for professionals, which boasts more than 300m users, also surpassed estimates, reporting earnings per share of 52 cents, compared with the average analysts’ forecast of 47 cents, excluding the cost of stock-based compensation and amortisation due to acquisitions. Revenue of $568m, 45 per cent higher than the third quarter of 2013, was also higher than the consensus forecast of $558m. Unlike Facebook and Twitter, which depend on advertising revenue, LinkedIn generates most of its revenue from subscriptions it sells to recruiters, which give them extra tools in their search for candidates.

Advice from Buffett's 30-year-old right-hand woman (CNBC)
Tracy Britt Cool, 30 and just named CEO of wholly owned Berkshire Hathaway subsidiary Pampered Chef, began her journey to the Oracle of Omaha from a childhood on a fruit-and-vegetable farm in Manhattan, Kansas. "At around 10 years of age, I had my own farmer's market stand," recalled Cool, speaking with CNBC..."I hired my friends and set their wages, set the prices of fruit and vegetables, and I realized I liked all those aspects of business and that's what I wanted to go into," Cool said. It wasn't until 2006, when Cool graduated from Harvard Business School and met Buffett that she wrote him a letter offering to be a "gal Friday" of sorts in Omaha if he agreed to let her pick his brain on investment and business topics. Buffett ended up creating a role for Cool to join Berkshire a few weeks after she had accepted her first post-business school offer with another company. Now, in addition to running Pampered Chef, Cool is a board member at Heinz, Benjamin Moore and Johns Manville—among her many duties helping to oversee Berkshire's sprawling investments and subsidiaries.

World Bank’s Kim Announces About 250 Net Job Cuts (Bloomberg)
“Staffing decisions are always challenging,” Kim said in a memo to staff today. “But we feel confident that the changes we are making will help us better align our staffing to our strategy, which is what our clients want and what we must deliver.” He said about 500 reductions would be made from 2015 to 2017 “through attrition, redeployment, and redundancies,” and about 70 available open positions canceled, and 250 to 300 new hires made in the reorganization.

Efforts to replace Fed hawks Plosser, Fisher pick up speed (Reuters)
Two regional Federal Reserve banks have taken steps to replace their hawkish presidents, Charles Plosser and Richard Fisher, whose departures early next year could change the tenor of debate within the U.S. central bank's policy-setting committee. The Philadelphia Fed said on Thursday it had hired executive search firm Korn Ferry to find a successor to Plosser, 66, who will retire on March 1 after more than eight years at the helm. A committee of Philadelphia Fed directors working with Korn Ferry will consider "a diverse group of candidates from inside and outside" the Fed, it said. Fisher, 65, will retire by April after about a decade as the Dallas Fed's president.

Matt Taibbi’s First Look exit reveals worker unrest (NYP)
Clashes over budgets, editorial direction and mission plagued the company this summer and a complaint filed with management last month against star recruit Matt Taibbi by a female employee over Taibbi’s “verbally abusive and unprofessionally hostile” management style has First Look in disarray, according to a report Thursday on one of the media company’s sites...Omidyar’s big bucks wooed Taibbi to jump from Rolling Stone to help start a First Look Web publication called Racket...First Look President John Temple “conducted an investigation, and … determined that while none of the alleged conduct rose to the level of legal liability, the grievance bolstered their case that Taibbi should not be the manager of Racket,” according to the story.

'Wasting Time on the Internet' Is Now an Actual College Class (Motherboard)
Next semester at the University of Pennsylvania, students will walk into a classroom, pull out their laptops, their smartphones, their tablets, and sit there, for three hours, doing what they no doubt do pretty often: Waste time on the internet. The Ivy League school's newest creative writing class is trying to remove the stigma from an activity that millions of people do on a daily basis, in an attempt to explore how our minds might work when we're totally aimlessly clicking through reddit or Facebook or Buzzfeed or watching porn or doing whatever the hell people do in their free time. "I'm very tired of reading articles in the New York Times every week that make us feel bad about spending so much time on the internet, about dividing our attention so many times," Kenneth Goldsmith, a world-renowned poet and the course's professor, told me. "I think it's complete bullshit that the internet is making us dumber. I think the internet is making us smarter. There's this new morality built around guilt and shame in the digital age."

Man accused of stealing chainsaw by hiding it under his shirt (WPTV)
A Port St. Lucie man is under arrest after police say he attempted to steal a chainsaw by placing it under his shirt and walking out of a local lawn equipment store. According to Port St. Lucie Police, Anthony Brian Ballard is facing a charge of grand theft. Police said he went into Treasure Coast Lawn and asked for change for a dollar, then tried to conceal a chainsaw under his shirt and leave without paying for the merchandise. Investigators then said Ballard got onto a stolen bicycle and fled from the area of 1802 SW Bayshore Drive. A store employee tracked down Ballard and witnessed him drop the chainsaw in a vacant lot. Ballard was eventually caught by a store employee who held him in custody until police arrived.