Opening Bell: 11.04.14 - Dealbreaker

Opening Bell: 11.04.14

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JPMorgan Faces U.S. Criminal Probe Into Currency Trading (Bloomberg)
JPMorgan Chase & Co. said it faces a U.S. criminal probe into foreign-exchange dealings and boosted its maximum estimate for “reasonably possible” losses on legal cases to the highest in more than a year. The firm is cooperating with the criminal investigation by the Department of Justice as well as inquiries by regulators in the U.K. and elsewhere, it said yesterday in a quarterly report. The largest U.S. bank said it might need as much as $5.9 billion to cover losses beyond reserves for legal matters, up $1.3 billion from the end of June, and the most since since mid-2013.

China Bankers Enjoy A Bumper Year (WSJ)
The world’s second-largest economy may be suffering its worst growth in five years, but a spate of mergers and bond and share sales by the country’s new tech stars and other privately-owned Chinese firms has sent fees for banks to their highest level since 2010. Big deals from tech giants like Alibaba Group Holding Ltd. and Tencent Holdings have sent a wave of fees to banks, marking a shift from years past when state-owned firms were banks’ top clients. “In China, there is no question this is a big year,” said David Chin, head of corporate client solutions for Asia at the investment-banking unit of UBS AG , the Swiss lender. The value of deals handled by investment banks—transactions ranging from bond sales to mergers—reached a record $679 billion so far this year, according to Thomson Reuters data, up from $544 billion last year. Chinese companies listed their stocks not just in New York and Hong Kong, but also in Shanghai, which reopened its market for new listings in January after a moratorium on initial public offerings that lasted more than a year.

Herbalife slashes full-year forecast, shares slide (Reuters)
Herbalife, a maker of weight-loss and nutritional products, slashed its full-year revenue and adjusted profit forecast as it wrote down the value of its Venezuelan assets. Shares of the company, which also reported a 92 percent drop in third-quarter profit, fell 13 percent after the bell on Monday. The weak forecast underscores faltering sales at the company, which has been strenuously denying claims by activist investor Bill Ackman that it is a pyramid scheme.

Jury acquits ex-UBS exec in IRS probe (AP)
A jury in South Florida has acquitted a former top executive at Swiss bank UBS AG on charges of helping wealthy Americans hide billions of dollars in secret accounts from the Internal Revenue Service. The jury deliberated just over an hour before reaching its verdict Tuesday in the case of Raoul Weil. He had faced up to five years in prison and $250,000 fine if convicted of a count of conspiracy to defraud the U.S. government. Several former UBS bankers testified that Weil was deeply involved in hiding $20 billion in U.S. taxpayer assets from the IRS. Weil did not testify, but his attorneys blamed wrongdoing on lower-ranking bankers acting without Weil's knowledge.

Sex and Drug Claims at Investment Bank Jefferies Draw Risky Retort (Dealbook, earlier)
Rather than just putting out a boilerplate statement saying that the firm doesn’t tolerate drug use, Mr. Handler defended Mr. Kelly, made an impassioned case that his firm was being unfairly smeared and somehow ended up marching an army of bankers into a drug test in the middle of the day after approaching other members of Mr. Kelly’s team...There’s something authentic and admirable about Mr. Handler’s reaction. He is an emotional, larger-than-life leader; he takes anything involving the firm personally and does so without any filter. He likes to confront challenges head on. But his passion may be overwhelming his logic in this case. He has ruled out acknowledging the possibility of a problem at the firm or even the chance that Mr. Kelly may have hidden demons; he denies them outright. Yet Mr. Kelly has acknowledged recreational drug use in the past. To some of his clients, Mr. Handler’s memo made him a hero who demonstrated his passion. For others, the memo and the drug test were a bizarre publicity stunt. (Despite some of Christina Kelly’s most outrageous accusations, she never actually contended that Jefferies’s headquarters was some kind of high-end crack den. The idea that Mr. Kelly’s colleagues passed the drug test is almost irrelevant.)

Couple holds wedding during Southwest Airlines flight (UPI)
Dottie Coven and Keith Stewart, of Croyden, Ind., fly so often for their work that they were inspired to get married on an airplane. Coven and Stewart had racked up so many frequent flier miles that they were able to buy tickets for about 30 family members and friends to attend their sky-high nuptials. The rest of the flight's 141 passengers were strangers. A flower girl passed out peanuts and officiant performed the ceremony over the plane's intercom. They said their vows somewhere over Arkansas. "We are gathered here today — whether you intended to or not — to celebrate the wedding of Dottie Coven and Keith Stewart," he told the flight. "If anyone can show just cause why they may not be lawfully joined together let them push their flight attendant call button now," he added.

Apple prepares for debt sale (FT)
Apple is preparing for another potential blockbuster debt sale as global corporations take advantage of a drop in borrowing costs to raise the last batch of funds this year. The world’s most valuable company has hired Deutsche Bank and Goldman Sachs to organise calls with investors in anticipation of its first return to global debt markets since it sold $12bn in bonds in April, people familiar with the calls said. A debt sale would probably target the eurozone, where interest rates are lower than in the US, to diversify Apple’s debt investor base. “If I was Apple, I would try to sell as many bonds, with as long maturities as possible, at the lowest cost possible,” said Jack Ablin, chief investment officer at BMO Private Bank.

Giant Diamonds Lure Investor Cash to Botswana (WSJ)
Dozens of diamond dealers are flocking to this remote African country to buy huge gems. Some of those stones are going into investment portfolios alongside stocks, bonds and gold, a trend that has accelerated as miners in southern Africa have started to put more big diamonds on the market in the past few years. “It’s $10 million you can carry in your pocket without setting off an alarm, and it’s reasonably resalable. That’s unique,” said Brian Menell, an oil, gas and mining investor who has helped find big diamonds for wealthy clients and formerly worked for diamond-industry giant De Beers.

No licenses that will kill bitcoin: Lawsky (NYP)
New York is bending over backward for bitcoin. Individuals, software engineers, currency converters and so-called miners will not need a license to deal with the digital currency under a transitional licensing program unveiled by state regulators on Monday. A transitional “BitLicense” will be needed by companies that accept the digi-currency and by small companies, bitcoin wallet hosts, under the rules established by New York Department of Financial Services Superintendent Ben Lawsky and bitcoin exchanges that want to use virtual currencies could be able to get a transitional license to pay for goods and services with bitcoin, the latest concession that Empire State watchdogs have made in their bid to oversee the barely-regulated currency.

Soldiers Face The Music For Lending Tanks To Bikini Film Shoot (AP)
Four Utah National Guard soldiers are being disciplined for their unauthorized involvement and use of military vehicles in a risque video featuring bikini-clad women firing high-powered weapons and riding in tanks. Guard Lt. Col. Steven Fairbourn said Saturday that a 19th Special Forces non-commissioned officer who inappropriately allowed the video to be partially shot at Camp Williams in May has been relieved of his leadership position and faces a reprimand and mandatory early retirement. The three other soldiers will receive lesser measures ranging from counseling to a reprimand, he said. The $200 cost for military fuel used during the shoot also will be recouped from the soldiers involved...The video, produced by an England-based company, is a promotional "behind the scenes" look at the making of an annual pinup calendar. It features women wearing camouflage bikinis and other tight clothing while shooting guns and riding in military vehicles.

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