Opening Bell: 10.16.15

US no longer home to most billionaires; Profit actually matters again for companies seeking IPO; McDonald’s all-day breakfast not going well; "Hamptons principal reassigned after cameo in raunchy rap video"; and more.
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For IPOs, Earning a Profit Matters Again (WSJ)
Concerns about the economy and jitters in credit markets are prompting skepticism about issuers that aren’t very profitable or are carrying heavy debt loads. Those concerns were evident this week, when grocery chain Albertsons Cos. Inc. was forced to delay its IPO and payments processor First Data Corp. priced its offering sharply below its expected price range and saw its shares trade slightly lower.

Banks' Record Treasuries Stockpile Boosts Case for Fed to Hold (Bloomberg)
The probability of an increase by the December policy meeting has dropped to 30 percent from 70 percent odds at the start of August, according to futures data compiled by Bloomberg. The calculations are based on the assumption the effective fed funds rate will average 0.375 percent after liftoff.

US dethroned as world's billionaire capital (CNBC)
The U.S. has lost its crown as the country with the most billionaires. According to a report released Thursday, China minted 242 billionaires over the past year, leading to a nearly 70 percent jump in its billionaire population. The country's 596 billionaires surpassed the number of billionaires in the United States, at 537, according to the Hurun Rich List.

Tech Incubator Y Combinator Takes New Tack With Venture Capital Fund (WSJ)
Over the past decade, tech-startup incubator Y Combinator has invested in and cultivated hundreds of fledgling companies, including highfliers like Airbnb Inc. and Dropbox Inc. Now, with money rushing into Silicon Valley, the seed investor known as YC is aiming to cash in on its influential name and investor network by doubling down on its hottest startups. It raised a $700 million venture-capital fund in late September aimed at expanding ownership stakes in its most successful companies and helping cash-intensive businesses that might have trouble raising funds elsewhere.

Connecticut jury denies woman's claim eight-year-old nephew broke her wrist (Reuters)
The six-member jury deliberated for less than half an hour in Superior Court in Bridgeport on whether to find the Westport boy responsible for breaking his aunt's wrist when he jumped into her arms during his birthday party four years ago, a court clerk said after the verdict. She had sought $127,000 in damages. Jennifer Connell, 54, had testified that while her nephew, Sean Tarala was a "loving and sensitive," 8-year-old, when he leaped into her arms yelling "Auntie Jen," on March 18, 2011, the boy "acted unreasonably" causing her to fall to the ground and break her wrist. Connell, a human resources manager from New York City, testified that while she loves her nephew, "he should be held accountable."

Bank of Internet Denies Accusation That It Defied Regulators (Dealbook)
Bank of Internet USA, one of the nation’s top-performing banks, fiercely criticized a lawsuit filed by a former employee that said the bank had not been forthcoming with its regulators. Bank of Internet’s chief executive, Gregory Garrabrants, responded to the lawsuit during a conference call on Wednesday evening that came after a 30 percent drop in the bank’s stock. The lawsuit was filed by Matt Erhart, a former internal auditor at the bank who officially left the company in June. The complaint, filed in federal court in the Southern District of California, said that Bank of Internet had violated federal laws created to protect whistle-blowers. Mr. Garrabrants sharply denied Mr. Erhart’s accusations, saying there were “no issues” in the bank’s relations with regulators. “He wasn’t a great auditor,” Mr. Garrabrants said of Mr. Erhart, and he suggested that the lawsuit might have been financed by investors betting against Bank of Internet’s stock.

Startup Theranos Dials Back Lab Tests at FDA’s Behest (WSJ)
Under pressure from regulators, laboratory firm Theranos Inc. has stopped collecting tiny vials of blood drawn from finger pricks for all but one of its tests, according to a person familiar with the matter, backing away from a method the company has touted as it rose to become one of Silicon Valley’s hottest startups. The move is a setback to the Palo Alto, Calif., company’s ambition to revolutionize the blood-testing industry. As a result of the halt, Theranos is operating more like a traditional lab that draws blood with needles from patients’ arms. Theranos is valued at $9 billion, or about as much as each of the industry’s two largest companies in the U.S. Food and Drug Administration inspectors recently showed up unannounced at Theranos, the person familiar with the matter said. The inspection was triggered by concerns the agency had about data Theranos had voluntarily submitted to the FDA in an effort to win approval for its proprietary testing methods, this person said.

McDonald’s all-day breakfast has been a disaster (NYP)
McDonald’s franchisees say the launch of all-day breakfast has been a disaster — griping that it has slowed down service, lowered average bills and sparked chaos in the kitchens. Mark Kalinowski, an analyst for the Japanese finance company Nomura, surveyed 29 operators overseeing 226 different locations in the US and found that many were pulling their hair out due to the new menu options, which rolled out last Tuesday to much praise from Egg McMuffin lovers. “In small stores, the problems are vast with people falling over each other and equipment jammed in everywhere,” one franchisee wrote in response to Kalinowski’s survey.

Hamptons principal reassigned after cameo in raunchy rap video (NYP)
A Southampton ​assistant ​principal has been tossed from her job after appearing in a twerking-and-alcohol-filled video by raunchy rappers JR and Trey Songz. Esther Adler-O’Keefe was reassigned Tuesday to an academic-support position in the school district after making two cameo appearances — fully clothed — at the beginning and end of the salacious video for the song “BEST FRIEND.” She speaks only six words​ (“Enjoy yourself. Just remember, security’s here​.​”​) while playing the role of an uptight, wealthy housewife who wants the Hip Hop artists to behave while she’s away. Then in the last scene, the ​school disciplinarian-turned-actress — who’s been employed for five years, according to the district — happens upon the aftermath of what clearly had been a wild party while she was gone. She angrily tosses a beach ball at one rapper, as her ​video husband picks up a joint left near bikini-clad women passed out on a couch. During the​ heart of the vid​eo​, dozens of women down shots with the rappers at ​a pool party. “I can’t keep these bitches off me,” booms JR. “All she want to do is paaaarty.”

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Opening Bell

Opening Bell: 04.02.13

Cyprus Finance Minister Sarris Resigns After Brokering Rescue (Bloomberg) Cyprus Finance Minister Michael Sarris quit the government today after helping clinch the final terms of an international aid agreement to stave off a financial collapse of the island. Sarris told reporters in Nicosia that he resigned due to a committee set up today to investigate the reasons that led to Cyprus’s economic crisis. Sarris has served as chairman of Cyprus Popular Bank Pcl, the second-largest lender, which has been shut as part of the financial rescue. Fannie Logs Record Profit (WSJ) Fannie Mae reported an annual profit of $17.2 billion on Tuesday, its first annual profit since 2006 and its largest annual profit ever, boosted by the housing market's turnaround and sustained declines in the number of soured home loans. Fannie's profit compares with a year-earlier loss of $16.9 billion. Fannie and its smaller sibling, Freddie Mac, posted banner earnings for 2012 because rising home prices have allowed them to set aside much less to cover the cost of defaulting home loans. Bank of America Finds Profit in Foreign Tax Credit Moves (Bloomberg) Bank of America Corp. more than doubled its profits in 2012 -- with some help from the tax code. What the bank calls “restructuring” of its non-U.S. operations yielded $1.7 billion in foreign tax credits, or 41 percent of the $4.2 billion the company reported in 2012 earnings, according to securities documents including the form 10-K it filed Feb. 28. While the maneuvers didn’t provide an immediate cash tax benefit for Bank of America, the foreign tax credits count toward net income under accounting rules. Goldman Unit To Seek Risk (WSJ) Goldman Sachs is launching a specialty finance company to invest in high-risk debt primarily of midsize U.S. companies with no credit ratings. The New York firm said in a filing with the Securities and Exchange Commission late Friday that it plans to offer shares in the new unit, Goldman Sachs Liberty Harbor Capital LLC, "as soon as practicable after the effective date of this registration statement." SEC Ex-Chief Lands at Consultant (WSJ) Promontory Financial Group LLC is expected to announce Tuesday that it has hired Ms. Schapiro, who was chairman of the Securities and Exchange Commission for nearly four years. "In my case, there's no revolving door…I won't ever be going back to government," the 57-year-old Ms. Schapiro said in an interview. She decided that after spending "28 of the last 32 years as a regulator," now was the "right time…to do something different." Mothers brawl during Seattle zoo Easter egg hunt (SPI) A fight between two women during an Easter egg hunt at Woodland Park Zoo led to a bloody nose and several crying children Sunday, according to police and a witness. The incident began about 1 p.m. when a woman allegedly pushed a child aside as her own child was scrambling toward some brightly colored eggs, police spokesman Jonah Spagenthal-Lee said. “The shoving sparked a confrontation between the first woman (the supposed shover) and the second child’s mother, who began fighting and had to be separated three or four times,” Spagenthal-Lee said in a statement. “The brawl left the first woman with a bloody nose.” The children, mostly 4- to 6-year-olds, were subjected to foul language. The bloody scene left several children crying. Judge Questions Fairness of Citigroup $590 Million Settlement (Reuters) A Manhattan federal judge on Monday signaled he will not rubber-stamp Citigroup's proposed $590 million settlement of a shareholder lawsuit accusing it of hiding tens of billions of dollars of toxic mortgage assets. U.S. District Judge Sidney Stein asked lawyers for the bank and its shareholders to address several issues at an April 8 fairness hearing, including requested legal fees and expenses of roughly $100 million, and the absence of payments by former Citigroup executives. Argentine-bond tango heats up (NYP) The yearly cost to insure the debt in the credit default swaps market for five years jumped by nearly 10 percent yesterday after President Cristina Kirchner and her government refused to come up with a better offer for bondholders led by hedge fund billionaire Paul Singer’s Elliott Management. A New York appeals court is expected to rule that Argentina must pay the Elliott group $1.44 billion, and its latest proposal indicated that it will not, which could push its bonds into default. Nasdaq Accepts Credit Rating Risk in Quest to Expand (Bloomberg) For Nasdaq OMX Group Inc., the benefits of expanding into electronic bond trading justify the risk of a lower credit rating. The second-biggest operator of American equity exchanges agreed yesterday to acquire eSpeed, a platform for U.S. Treasuries, from BGC Partners Inc. (BGCP) for $750 million cash, or $1.2 billion should sales goals be met. Moody’s Investors Service said Nasdaq’s Baa3 senior rating may be cut following the deal. Hampton Waffle House employee charged for April Fool’s joke (WTKR) A Hampton Waffle House employee is now charged after officers say she played an April Fool’s joke on them. Susan Tinker is charged for lying about a robbery. Police say around 6 a.m. Monday morning, Tinker called to report the robbery at the restaurant on West Mercury Boulevard. Police say they got to the scene and spent more than an hour investigating. While waiting for the manger to get there to review surveillance tape, they figured out there was no robbery. Tinker told police it was all an April Fool’s joke. But officers say this was no laughing matter. A spokesperson for the Waffle House says they do not tolerate this kind of behavior and Tinker is no longer employed there.

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Opening Bell

Opening Bell: 12.14.17

Disney gobbles up Fox; Bill Ackman is going to make a comeback...eventually...just you wait; Wilbur Ross slipped his security detail in the Hamptons; square dancing is actually racist?; and more.

Opening Bell

Opening Bell: 11.2.15

Berkshire No. 2 Charlie Munger bashes Valeant (again); Fed rate rise odds at 50%; Hedge funds suck wind; "Rap video recorded inside Georgia jail prompts investigation"; and more.

Opening Bell

Opening Bell: 11.20.12

Former UBS Trader Found Guilty (WSJ) Former trader Kweku Adoboli was found guilty on one count of fraud in connection with a $2.3 billion loss the Swiss bank suffered last year, as the juryin the alleged rogue-trading case continued to deliberate on five other counts he was charged with. The partial verdict comes nearly a week after the jury began deliberating following a roughly eight-week trial. It is unclear when the jury might reach verdicts on the other five counts or when sentencing might take place. Mr. Adoboli pleaded not guilty to all six counts. Shakeup At Credit Suisse (WSJ) Credit Suisse said Tuesday that it will combine the Swiss bank's asset management unit with its private bank, but stopped short of announcing the more drastic revamp analysts expected after crosstown rival UBS decided to fire 10,000 bankers. Robert Shafir, who currently heads the U.S. business of Credit Suisse, will take the helm of a new private banking and wealth management division jointly with Hans-Ulrich Meister, who has run the private banking business, the bank said. At the investment bank, Gael deBoissard is being promoted to co-head of the division, jointly with incumbent Eric Varvel. Following the revamp, Credit Suisse will have only two units—wealth management and investment banking--which are distinctly separate from each other, a move that is "in alignment with the new regulatory reality," Chairman Urs Rohner said. Greece Waits Nervously For Vital Bailout Funds (Reuters) Officials familiar with preparations for the finance ministers' meeting expect a "political endorsement in principle" on unfreezing loans to Athens, after Greece completed almost all the reforms that were required of it in exchange for funding. The final go-ahead from the ministers is likely to come only once the remaining few Greek reforms are in place and once there is agreement in the euro zone on how to reduce the country's huge debt and secure extra financing while it is being done. French Downgrade Widens Gulf With Germany as Talks Loom (Bloomberg) France’s loss of the top credit rating at Moody’s Investors Service may weaken President Francois Hollande’s leverage in European budget talks and deepen concern in Germany over its neighbor’s lagging competitiveness. The downgrade late yesterday of Europe’s second-biggest economy underscores the concern expressed by allies of German Chancellor Angela Merkel that the Socialist Hollande’s failure to recognize the urgency of France’s woes risks a deepening of Europe’s slump. “This downgrade will certainly increase pressure on France big-time,” Jan Techau, director of the Carnegie Endowment for International Peace office in Brussels, said today in a phone interview. “It gives Germany more of an edge over France.” ‘Tide Turning’ Against France, Say Economists (CNBC) “The tide is turning for France. Although the country's bond market is likely to remain resilient — the yield on 10-year paper is little changed [Tuesday] morning and still stands a whisker above its record low of 2.06 percent on July 19 — French debt looks more and more overvalued relative to fundamentals,” Nicholas Spiro, Managing Director of Spiro Sovereign Strategy, said in a note on Tuesday. France has enjoyed low borrowing costs as investors have viewed the country as a safe haven in comparison with its southern European cousins. The downgrade of France to AA1 with a negative outlook by Moody’s has thrown its “deteriorating fundamentals….into sharp relief” Spiro said. China’s Richest Woman Divorces Husband, Fortune Declines (Bloomberg) Longfor Properties Co. Chairwoman Wu Yajun is no longer China’s richest woman after divorcing Cai Kui and transferring about 40 percent of the developer’s shares the couple used to own to her ex-husband. Her stake in Longfor, which Wu co-founded with Cai, dropped from a combined 72 percent to 43 percent, while Cai retains 29 percent, according to filings from Hong Kong’s stock exchange. Wu’s net worth is estimated at $4.2 billion, down from $7.3 billion as of 5:30 p.m. New York time yesterday, according to the Bloomberg Billionaires Index. New York Prepares Lawsuit Against Credit Suisse (Reuters) The New York attorney-general is preparing to file a civil lawsuit against Credit Suisse for misleading investors who lost billions of dollars on mortgage-backed securities, according to a source familiar with the matter. The lawsuit, which is expected to be filed on Wednesday, will allege that Credit Suisse misrepresented the quality of loans packaged in securities, according to the source. Petraeus Mistress Paula Broadwell To Jill Kelley: 'I can make you go away' (NYDN) The notes Paula Broadwell sent to Jill Kelley were far more sinister than previously reported and seemed like the rantings of someone “clearly unhinged,” a close friend of Kelley said Monday. “This wasn’t just a catfight. Any normal person who got emails like that would have immediately called the police,” said the friend. She said Kelley read her the emails when she called, panic-stricken and seeking advice in the days before the scandal became a stunning public spectacle and led to Petraeus’ resignation as CIA director. The friend, who did not want to be identified, said Kelley saw the emails as death threats, specifically one in which Broadwell vowed to “make you go away.” [Meanwhile,] Broadwell...bloodied a female news photographer’s forehead Monday in a confrontation outside the biographer’s Charlotte, N.C., home. Broadwell smacked the photographer with the driver’s-side door of her Nissan Pathfinder SUV. “I had my camera and in all the chaos the door slammed and I got hit in the head with the flash,” said Nell Redmond, a freelancer for The Associated Press. Redmond suffered a small cut and is not pressing charges. Morgan Stanley’s Doom Scenario: Major Recession in 2013 (CNBC) The bank’s economics team forecasts a full-blown recession next year, under a pessimistic scenario, with global gross domestic product (GDP) likely to plunge 2 percent. “More than ever, the economic outlook hinges upon the actions taken or not taken by governments and central banks,” Morgan Stanley said in a report. Under the bank’s more gloomy scenario, the U.S. would go over the “fiscal cliff” leading to a contraction in U.S. GDP for the first three quarters of 2013. In Europe, the bank’s pessimistic scenario assumes a failure of the European Central Bank (ECB) in cutting rates and a delay of its bond-buying program. Judge Tosses Suit Over AIG (WSJ) A federal judge in Manhattan dismissed a $25 billion lawsuit by Starr International Co., which Mr. Greenberg runs, against the New York Federal Reserve Bank over claims the Fed breached its fiduciary duty to AIG's shareholders in the rescue during the U.S. financial crisis. It is one of two lawsuits Starr, AIG's largest shareholder at the time of the government takeover, is pursuing over the bailout. Mark Cuban Throws A Tantrum On Facebook Fee (NYP) Facebook used to be a “time suck” — now it just sucks. That’s the view of Dallas Mavericks owner Mark Cuban, who is urging marketers to take their business elsewhere after the social network started charging the tech billionaire to send messages to all the team’s fans. “In the past we put FB first, Twitter second,” Cuban wrote in a roughly 1,700-word blog post calling out the social network. “FB has been moved to the bottom of a longer list.” He added: “FB doesn’t seem to want to accept that its best purpose in life is as a huge time suck.” At issue is Facebook’s filtering of posts that appear in users’ news feeds. The site says it is trying to present users with content that they have shown an interest in while cutting down on spam. But Cuban says it is a pay-to-play move. He argues that Facebook is making it harder for marketers to reach their fans without paying for so-called “promoted posts.” And making the site more targeted and efficient is actually a mistake, according to Cuban. He claims most people go to the site because it’s a “time suck” that they enjoy. Cannibal Cop Pleads Not Guilty (NYDN) “cannibal cop,” accused of conspiring with an online buddy to kidnap, rape and slow-cook women, pleaded “not guilty” Monday to two federal charges. Gilberto Valle, 28, was arraigned in Manhattan Federal Court on charges of conspiracy to commit kidnapping and accessing the federal National Crime Information Center database without authorization. Valle’s public defender, Julia Gatto, made a third attempt at getting bail for her now-infamous client. "You have a hard row to hoe," said Judge Paul Gardephe...Valle — who was suspended after being arrested last month in a joint NYPD and FBI investigation — is accused of chatting last July with a sick online buddy about “kidnapping, cooking and eating body parts” of a woman identified as Victim 1, according to the indictment released Friday.

Opening Bell

Opening Bell: 03.21.12

Hartford Bows to Paulson Wish to Exit Annuity Business (WSJ, earlier) Bowing to pressure from hedge-fund titan John Paulson, Hartford Financial Services Group said Wednesday it would exit its annuity business and weigh a sale of a large portion of its life-insurance operation. The move will allow Hartford to focus on its property-casualty unit, where the company got its start more than 200 years ago, as well as its group benefits business and its "high return" mutual fund operation, Chief Executive Liam McGee said in a statement. The announcement marks a substantial change of strategy for Hartford, which has long resisted calls to separate its life insurer from its property-casualty arm. Mr. Paulson, whose hedge fund is Hartford's largest shareholder, became the latest to push for such a move when he took to the company's fourth-quarter-earnings call in February to criticize management and urge them to "do something drastic" to boost the share price. Bernanke As Professor Tries To Buff Fed's Image (NYT) Mr. Bernanke, one of the most powerful men in Washington, has agreed to moonlight as a college professor, delivering four lectures on central banking over the next two weeks. He also will read some student papers...“It always surprises you to realize that this guy actually exists and he’s not just on TV,” said Max Sanders, a 19-year-old from New York. “It’s a once-in-a-lifetime opportunity to hear lectures from him,” said Noah Wiviott, 21, of New Jersey. “He clearly knows what he’s talking about.” Not everyone, however, found him convincing. Yuqi Wu, a 20-year-old student from China, said she did not agree with Mr. Bernanke’s criticism of her government’s monetary policy. “I definitely support the Chinese government’s position,” she said. Buffett Seizes Lead in Bet on Stocks Beating Hedge Funds (Bloomberg) Warren Buffett made a friendly bet four years ago that funds that invest in hedge funds for their clients couldn’t beat the stock market over a decade. So far he’s winning. The wager that began on Jan. 1, 2008, pits the Omaha, Nebraska, billionaire against Protégé Partners LLC, a New York fund of hedge funds co-founded by Ted Seides and Jeffrey Tarrant. Protégé built an index of five funds that invest in hedge funds to compete against a Vanguard mutual fund that tracks the Standard & Poor’s 500 Index. The winner’s charity of choice gets $1 million when the bet ends on Dec. 31, 2017. Banks Seek Delay On Volcker Rule (WSJ) The Volcker rule, which restricts banks' ability to trade with their own money, is set to take effect July 21, whether or not regulators have a final rule in place, according to the 2010 Dodd-Frank financial overhaul law. Federal Reserve Chairman Ben Bernanke said last month that regulators likely wouldn't have a rule in time. A group representing banks and others involved in bundling and selling loans is warning that deals worth hundreds of billions of dollars may need to be shut down because of wording in the law requiring compliance with a rule that doesn't yet exist. Cops arrest Occupy Wall Street protesters in Union Square (NYP) Cops shut down Union Square and kicked out a large crowd of Occupy Wall Street protesters last night, arresting nine demonstrators last night and this morning, just days after larger clashes at the group's former encampment downtown. I love lava lamp (Politico) Another amusing exchange as Mitt Romney walked past a Chicago Google employee with a big blue lava lamp (turned off) on his desk: "That's a big lava lamp, congratulations," Romney said. Wilbur Ross: Long-Term Bond Bubble Getting Ready To Burst (CNBC) "I think the greatest bubble that is about to burst is the 10-year and longer Treasury, because the idea that inflation is gone forever and for all time, and therefore these artificially low rates can last, is silly," the president of W.H. Ross & Co. said in an interview. Bernanke: Fed Is Ready To Act If Europe Falters (Reuters) "In the past few months, financial stresses in Europe have lessened, which has contributed to an improved tone of financial markets around the world, including in the United States," Bernanke said in testimony prepared for a House hearing Wednesday. Bernanke stresses, however, that a full resolution of the crisis "will require a further strengthening of the European banking system; a significant expansion of financial backstops, or “firewalls,” to guard against contagion in sovereign debt markets." Greece Names New Finance Minister (WSJ) Greek Deputy Finance Minister Philippos Sachinidis will be the country's new finance minister, replacing Evangelos Venizelos, the prime minister's office said Wednesday.

Opening Bell

Opening Bell: 04.22.13

Bill Gross Attacks UK and Euro Zone Austerity (FT) Bill Gross, manager of the world's largest bond fund for Pimco, has launched a stinging attack on efforts by Britain and much of the euro zone to cut debt rapidly with severe austerity measures, warning that such action risks stifling recovery. "The U.K. and almost all of Europe have erred in terms of believing that austerity, fiscal austerity in the short term, is the way to produce real growth. It is not," Mr Gross told the Financial Times. "You've got to spend money." Argentina's New Debt Offer Rejected by Holdout Creditors (WSJ) Holdout creditors on Friday rejected Argentina's proposal to pay them about 20 cents on every U.S. dollar of bonds they own, leaving a U.S. appeals court to decide how to enforce a ruling that may push Argentina into a new default. "Not only are the details of Argentina's proposal unacceptable and unresponsive; Argentina fails even to provide this court with meaningful 'assurances' that it will actually comply with its own proposal," said Theodore Olson, a lawyer for the holdouts, in a brief filed Friday. Argentina's own math values the offer at $210 million, less than 15% of the $1.47 billion that holdouts were owed on their defaulted bonds as of March 1, according to the brief. Hedge Fund Stars Suit Up At Yankee Stadium To Attract Investors (NYP) Hedge-fund mogul Stevie Cohen will be pitching at Yankee Stadium tomorrow. No, the 56-year-old billionaire is not suiting up for the Bronx Bombers — but he will be hoping the magic of the House that Ruth Built will yield some investment cash. Cohen, whose SAC Capital faces a loss of $1.7 billion from investors who want out of his $15 billion hedge fund, is one of about 70 hedge fund managers who’ll be at the Stadium tomorrow making a pitch to prospective new investors at a day-long event sponsored by Goldman Sachs. Singapore Will Replace Switzerland As Wealth Capital (CNBC) Switzerland has $2.8 trillion in assets under management, with $2.1 trillion of that coming from offshore wealth. Switzerland accounts for 34 percent of the $8.15 trillion in total global wealth. Yet the report said Singapore could overtake Switzerland in offshore assets under management by 2020. It said Swiss offshore assets could fall below $2 trillion by 2016, while Singapore's assets could more than quadruple by then. Somali Banking Starts From Ground Up (WSJ) Abdusalam Omer is a central bank governor without much to govern. The Central Bank of Somalia doesn't hold reserves in the country's currency, the shilling. There are no functioning commercial banks in the strife-torn country for it to regulate. The 75-strong staff that still turns up for work after two decades of civil war is a motley crew of money men and handymen. "I don't know why the central bank employs painters," says the 58-year-old who was named the country's top banker in January. Eventbrite Funding Slows Its IPO Chase (WSJ) Eventbrite Inc., an event ticketing company, has raised $60 million from two investors, making it the latest example of a startup to raise significant private late-stage funding that puts off an initial public offering. San Francisco-based Eventbrite had sparked expectations of an imminent IPO when it said earlier this month that it hired a chief financial officer, Mark Rubash, who previously worked at Yahoo Inc. and eBay Inc. Instead, it joins a growing number of companies that have found plentiful funding in the private markets rather than going public at an early stage. The company has raised the new cash from mutual-fund firm T. Rowe Price Group Inc. and Tiger Global Management LLC, an investment-management firm, said Kevin Hartz, co-founder and chief executive. That brings its total private fundraising to some $135 million since its inception in 2006. "This gives us flexibility in setting the timeline for a later IPO, on our schedule," said Mr. Hartz. Deutsche Bank Margin Call on Vik Sparks $2.5 Billion Dispute (Bloomberg) Alexander Vik went to Deutsche Bank AG’s London office in October 2008 to meet account managers who congratulated the Norwegian entrepreneur on how well his Sebastian Holdings Inc. investment fund was doing. Within a month, as global markets tumbled into crisis, the same bankers demanded about $530 million against the fund’s currency bets and began to liquidate its positions. Vik, 58, will argue at a 12-week trial starting in London today that the bank’s actions resulted in losses and missed profits totaling about $2.5 billion. A judge will have to decide whether Sebastian’s calculation of lost trading gains is accurate, said John Day, a lawyer at London-based litigation firm DaySparkes. Zimbabwe Prepares Law to Seize Company Stakes Without Paying (Bloomberg) Zimbabwe’s government is preparing a law that would allow it to seize controlling stakes in companies without compensation, according to a draft of the legislation obtained by Bloomberg News. The law would be an amendment to a 2007 act that compels foreign and white-owned companies such as Rio Tinto Group, Sinosteel Corp. and Impala Platinum Holding Ltd. to sell or cede 51 percent of their shares to black nationalsor state-approved agencies.

Opening Bell

Opening Bell: 10.23.12

Barney Frank cries foul in government's lawsuit against JPMorgan (Reuters) Democratic Congressman Barney Frank defended the largest U.S. bank on Monday, saying in a statement that the government was wrong to go after JPMorgan Chase & Co for the alleged misdeeds of Bear Stearns. Frank, who served as chairman of the House Financial Services Committee during the Bear Stearns acquisition, said federal and state officials should reconsider holding financial firms liable for the wrongdoing of institutions they absorbed at the government's urging. "The decision now to prosecute J.P. Morgan Chase because of activities undertaken by Bear Stearns before the takeover unfortunately fits the description of allowing no good deed to go unpunished," said Frank, who was also the co-author of the 2010 Dodd-Frank financial reform law. New York Attorney General Eric Schneiderman sued JPMorgan, the nation's largest bank by assets, on October 1 over mortgage-backed securities packaged and sold by Bear Stearns. Hedge Funds Hot For Ailing Greece's Debt (WSJ) Ever since Greece completed a debt restructuring in March that turned €200 billion in bonds into about €60 billion, distressed-debt investors—many at U.S. hedge funds—have been picking them over. Hedge-fund analysts have flooded Greek finance officials with requests for information. Prices have climbed. Third Point LLC, based in New York, crowed about Greece in its investor letter earlier this month, citing the resilience of the bonds of fellow bailout-recipient Portugal. "We expected Greece to keep its head up and undergo a similar metamorphosis," the letter said. Ever since Greece completed a debt restructuring in March that turned €200 billion in bonds into about €60 billion, distressed-debt investors—many at U.S. hedge funds—have been picking them over. Hedge-fund analysts have flooded Greek finance officials with requests for information. Prices have climbed. Third Point LLC, based in New York, crowed about Greece in its investor letter earlier this month, citing the resilience of the bonds of fellow bailout-recipient Portugal. "We expected Greece to keep its head up and undergo a similar metamorphosis," the letter said. Billionaire Wilbur Ross Interested In Buying Spanish Bank Assets (Bloomberg) Ross’s WL Ross & Co., which holds about 10 percent of Bank of Ireland and teamed up with Richard Branson to buy part of Northern Rock Plc, is in talks “almost every week” with representatives of the large Spanish banks, he said in an interview in Abu Dhabi, without naming potential targets. “Maybe next year will be the year for Spain,” he said. “We’ve been doing a lot of work in Spain. We’ve put a lot of time and effort into Spain but haven’t put any money in yet.” Doom Heralded at Hayman by Widening Trade Deficit (Bloomberg) Japan’s worsening trade gap will make it harder to service the world’s largest debt, fulfilling part of the doomsday scenario that Hayman Capital Management LP is betting on. The nation’s 10-year note yield may rise toward 10 percent from the world’s third-lowest of 0.79 percent, while the yen weakens, said Richard Howard, who oversees Dallas, Texas-based Hayman’s Japan-focused fund with J. Kyle Bass. That would represent the developed world’s second-highest borrowing costs after Greece, and a surge to that level by the end of 2013 would cause losses of 42 percent for investors purchasing the securities now, data compiled by Bloomberg show. Regulators Crash Over Volcker Definitions (WSJ) The SEC and a trio of banking regulators are butting heads over how to define the buying and selling of securities on behalf of clients, known as market-making, as well as over banks' ability to invest in outside investment vehicles such as hedge funds, according to officials close to the discussions. Since brokers, which are overseen by the SEC, conduct market-making activities, the SEC is pushing for more influence over the issue, these people said. Police: Woman fakes her own kidnapping to get day off work (WOAI) An officer on patrol went to check out a car parked near Ray Ellison and Five Palms around 6:30 p.m. on October 10th. When the officer looked inside the car, he spotted 48-year-old Sheila Bailey Eubank bound with rope. An arrest warrant affidavit states Eubank told police a man jumped into her car around 6:15 a.m. while she was at a Security Service Federal Credit Union ATM near Loop 1604 and Bandera Road. Eubank said the man held her an knife point and forced her to drive him to various locations for what she believed were drug deals. She told officers he then assaulted her, tried to choke her with a rope, and then tied her up and left her in her car. However, officers discovered a lottery ticket in Eubank's purse that was purchased that day during the hours she claimed she was being held. Investigators reviewed surveillance video from the store where the lottery ticket was purchased and found out she had entered the store by herself and appeared "healthy, unhurried, and pleasant with the clerk." Investigators then reviewed video from the Security Service Federal Credit Union where Eubank claimed she was abducted. The video showed withdrawing money from the motor ATM, but there were no signs that anyone else was with her. Police say when Eubank was confronted by investigators, she eventually admitted her story was false and that she simply wanted a day off from work and wanted attention. BofA CEO Moynihan Declares Victory Over Capital Doubters (Bloomberg) Bank of America now has the “top capital” among peers and is capable of paying a bigger dividend, said Chief Executive Officer Brian T. Moynihan. The bank has fulfilled a goal Moynihan drilled into subordinates since his first day on the job: building a “fortress balance sheet,” he said in an Oct. 17 staff meeting at the company’s Charlotte, North Carolina headquarters. “We’re going to officially declare victory on one of those operating principles,” Moynihan said in the town-hall style meeting. “The reason why is, we have the top capital in the industry, the top liquidity in the industry.” People have stopped asking if the bank needs more funds to absorb losses and now want to know when investors will get the excess, he said. Word-Smith: Greg's Book Has 0 Sachs Appeal (NYP) Among the mistakes in the book, sources noted, was Smith’s description of a town-hall meeting last year hosted by Goldman’s co-heads of investment banking — South African Richard Gnodde and Michael “Woody” Sherwood...Smith said one question from a Goldman employee during the 2011 meeting was: “What is the firm doing to address the fact that the culture is dying and our reputation is deteriorating?” According to Goldman, a female referenced in Smith’s book as a “power-hungry” managing director — identified as “Georgette” — was the individual who posed the question about culture. Georgette presented the question as: How is the firm addressing “the perception of the deteriorating culture,” according to a recording of the event, reviewed yesterday by The Post. Smith also writes about a follow-up question demanding “what specifically” the bank was doing — and that it was followed with uncomfortable laughter before some fumbling about over which executive should field the query. There was no follow-up question in the recording of the meeting. Smith embellished that aspect of the book and omitted that “Georgette” — a woman whom Smith worked with and dubbed the “Black Widow” for her cutthroat manner — was the source of the question about values because it undermined his narrative, a source inside the company said. Low Rates Pummel Bank Profits (WSJ) "The longer the Fed stays down at these levels the more it will hurt banks," said Scott Lied, the chief financial officer of ENB Financial Corp, an Ephrata, Pa., institution that has eight branches and 225 employees. "It's painful." Gupta Sentencing Set For Tomorrow (NYP) Prosecutors say Gupta, convicted by a jury in June, deserves as long as 10 years in prison. Gupta seeks probation. Gary Naftalis, a lawyer for Gupta, argued his client’s crime was an “aberrational” event in a “lifetime of good works” that merited a punishment for a man who has suffered an extraordinary fall from grace. He asked Rakoff to impose a term of community service, suggesting Gupta work with troubled youth in New York or with the poor in Rwanda. Theater Thief Costs Movie-Goers Tens of Thousands In Credit Card Fraud (Courant) A man who may have stolen as much as $70,000 a week by slithering beneath theater seats while movies were playing and lifting credit cards from women's' pocketbooks was convicted Monday of fraud and identity theft crimes. Anthony Johnson, 49, and a string of accomplices used the stolen cards to collect thousands of dollars in cash advances from Connecticut's gambling casinos and to make tens of thousands of dollars more in retail purchases in Connecticut and elsewhere, authorities said. On a "good" weekend, Johnson collected $50,000 to $70,000 from the scheme, one of his accomplices testified last week at his trial at U.S. District Court in Hartford. He had to settle for $30,000 or $40,000 on a bad weekend, the accomplice said. The accomplice, who agreed to cooperate with authorities, said Johnson, of Philadelphia, typically worked with women accomplices. They bought tickets to motion pictures likely to be popular with female audiences and chose seats from which they could watch how women in the audience stored their pocketbooks. "Once the movie started, Johnson crawled on the floor, removed credit cards from the stored purses, and returned the wallet to the purses," according to an FBI affidavit. "Johnson crawled in this manner around the theater until he was done…"

Opening Bell

Opening Bell: 05.14.12

JPMorgan Loss Claims Official Who Oversaw Trading Unit (NYTimes) The $2 billion trading loss at JPMorgan Chase will claim its first casualty among top officials at the bank as early as Monday, with chief executive Jamie Dimon set to accept the resignation of the executive who oversaw the trade, Ina R. Drew. Ms. Drew, a 55-year-old banker who has worked at the company for three decades and serves as chief investment officer, had repeatedly offered to resign since the scale of the loss became apparent in late April, but Mr. Dimon had held off until now on accepting it, several JPMorgan Chase executives said. Two traders who worked for Ms. Drew also planned to resign, JPMorgan Chase officials said. Her exit would mark a stunning fall from grace for one of the most powerful women on Wall Street, as well as a trusted lieutenant of Mr. Dimon...Former senior-level executives at JPMorgan said it was a shame that Ms. Drew has ended up suffering much of the fallout from the soured trade. They said that Thursday’s announcement of the $2 billion loss was the first real misstep that Ms. Drew has had and said that the position was not meant to drum up bigger profits for the bank, but rather to ensure that JPMorgan could continue to hold lending positions in Europe. “This is killing her,” a former JP Morgan executive said, adding “in banking there are very large knives.” Jamie Dimon: Trading Losses Are Not Life-Threatening (CNBC) “This is a stupid thing that we should never have done but we’re still going to earn a lot of money this quarter so it isn’t like the company is jeopardized,” he said in an interview with NBC’s “Meet with Press.” “We hurt ourselves and our credibility, yes — and that you’ve got to fully expect and pay the price for that.” Yahoo’s Thompson Out Amid Inquiry; Levinsohn Is Interim CEO (Bloomberg, earlier) Thompson, 54, was brought on to orchestrate a turnaround after Google Inc. and Facebook Inc. lured users and advertising dollars. Thompson’s undoing stems from erroneous biographical references to him as holding a bachelor’s degree in computer science from Stonehill College. A former EBay Inc. (EBAY) executive, he earned a degree in accounting from the Easton, Massachusetts- based school, and the information is correctly listed in EBay regulatory filings and some Yahoo press releases. The incorrect degree showed up in Yahoo’s April 27 10-K filing, as well as on the company’s website. As part of the board changes, Daniel Loeb, chief executive officer of Third Point, joins as a director along with Harry Wilson and Michael Wolf. A fourth nominee, Jeffrey Zucker, said in today’s statement that he withdrew his nomination to allow a quick transition. Euro Officials Begin to Weigh Greek Exit (Bloomberg) Greek withdrawal “is not necessarily fatal, but it is not attractive,” European Central Bank Governing Council member Patrick Honohan said in Tallinn on May 12. An exit was “technically” possible yet would damage the euro, he said. German Finance Minister Wolfgang Schaeuble reiterated in an interview in Sueddeutsche Zeitung that member states seeking to hold the line on austerity for Greece could not force the country to stay. LightSquared Moves Toward Bankruptcy Filing (WSJ) Hedge-fund manager Philip Falcone's LightSquared Inc. venture was preparing Sunday to file for bankruptcy protection after negotiations with lenders to avoid a potential debt default faltered, said people familiar with the matter. LightSquared and its lenders still have until 5 p.m. Monday to reach a deal that would keep the wireless-networking company out of bankruptcy court, and there were some indications over the weekend that a final decision hadn't yet been reached on its fate. Still, the two sides remained far apart, and people involved in the negotiations expected LightSquared to begin making bankruptcy preparations in earnest. Facebook cofounder living large in Singapore as he stiffs US for a possible $600M in taxes (NYP) Saverin is renouncing his US citizenship in favor of Singapore, the Southeast Asian city-state that has no capital-gains tax, where he has lived like royalty since 2009. The move already has saved him about $288 million in taxes, and will save him much more if he chooses to sell his $4 billion personal stake in Facebook, which goes public next week. “This pisses me off,” fellow tech-industry billionaire Mark Cuban spat on Twitter Friday upon hearing news of Saverin’s decision. Saverin’s spokesman has defended the move, claiming he has investments in the Far East, and Europe and the permanent move makes perfect sense. “Eduardo recently found it more practical to become a resident of Singapore since he plans to live there for an indefinite period of time,” Saverin’s spokesman told Bloomberg. JPMorgan Unit's London Staff May Go as Loss Prompts Exits (Bloomberg) The entire London staff of JPMorgan Chase’s chief investment office is at risk of dismissal as a $2 billion trading loss prompts the first executive departures as soon as this week, a person familiar with the situation said. The firm is examining whether anyone in the unit, which employs a few dozen people in London, sought to hide risks, said the person, who requested anonymity because the deliberations are private. In Wake Of JPMorgan Loss, Rivals Fret About New Rules, Downgrades (WSJ) Over the weekend, rival banks scurried to explain why they believe a similar trading loss couldn't happen at their firm. Some companies pointed to moves already taken to reduce risk and sell off volatile and opaque assets such as derivatives on credit indexes. In a statement, Citigroup "has a small amount of straight-forward economic hedges managed at the corporate center to mitigate our credit exposure, principally relating to consumer loans." About half of that total is in cash, with most of the rest in U.S. Treasury bonds and other conservative investments. At Morgan Stanley, the portfolio most similar to J.P. Morgan's investment office is a $32 billion "available for sale" portfolio. The portfolio primarily consists of easily traded U.S. Treasury and government agency securities. It doesn't hold any derivatives instruments, a person familiar with Morgan Stanley's operations said. Goldman Sachs has no similar unit to the one at J.P. Morgan that suffered the loss. Apple Founder Wozniak to Buy Facebook Regardless of Price (Bloomberg) “I would invest in Facebook,” he said in an interview yesterday on Bloomberg Television. “I don’t care what the opening price is.” Missing: Stats on Crisis Convictions (WSJ) It is a question that has been asked time and again since the financial crisis: How many executives have been convicted of criminal wrongdoing related to the tumultuous events of 2008-2009? The Justice Department doesn't know the answer. That is because the department doesn't keep count of the numbers of board-level prosecutions. In a response earlier this month to a March request from Sen. Charles Grassley (R.,Iowa), the Justice Department said it doesn't hold information on defendants' business titles. "Consequently, we are unable to generate the [requested] comprehensive list" of Wall Street convictions stemming from the 2008 meltdown, the letter from the Department of Justice to Mr. Grassley said. Man Charged in Death Offers Victim's Foot for Deal (AP) A homeless man charged with killing and dismembering his friend says he can't remember much about the crime. But in a jailhouse interview, Leslie Sandoval told the Anderson Independent-Mail he remembers where he put the victim's missing left foot and is willing to tell a prosecutor if she will make him a deal. Sandoval says he went on a January drinking binge with Seth Foster. Foster's torso was found under an Anderson home, and his head, hands and right foot were found different places. Sandoval says he is confused about exactly what happened. But he disagrees with a coroner's finding he beat Foster and denies a claim from investigators that he confessed and gave them the knife used to dismember Foster.