Goldman May Delay UK Bonuses Until Top Tax Rate Falls (Reuters) Goldman Sachs is considering delaying bonus payments in the U.K. until after April 6, when the top rate of income tax in the country will drop to 45 percent, from 50 percent, a person familiar with the bank's operations said on Sunday. The strategy relates to bonuses that were deferred from 2009, 2010 and 2011, the person said. The Financial Times reported the news earlier today. JPMorgan Said to Weigh Disclosing Whale Report Faulting Dimon (Bloomberg) JPMorgan's board will consider releasing an internal report this week that faults Chief Executive Officer Jamie Dimon’s oversight of a division that lost more than $6.2 billion on botched trades, said two people with direct knowledge of the matter. The final report, which builds on a preliminary analysis released in July, is critical of senior managers including Dimon, 56, former Chief Financial Officer Doug Braunstein, 51, and ex-Chief Investment Officer Ina Drew, 56, for inadequately supervising traders in a U.K. unit that amassed an illiquid position in credit derivatives last year, the people said. The report, which isn’t complete, will be presented to the board when it meets tomorrow. The directors will then vote on whether to disclose it when the bank announces fourth-quarter results the following day, said the people, who asked not to be named because the report isn’t yet public. Morgan Stanley to trim Dubai staff amid global cuts (Reuters) "The Dubai cuts are part of the bank's global plan. Obviously, the bank is trying to focus on growth opportunities in the region and there has been little growth on the equities side barring Saudi," one of the sources said, speaking on condition of anonymity as the matter has not been made public. Morgan Stanley's equities business will now focus on Saudi Arabia, the source said, adding that planned cuts at other divisions in the Middle East were minimal. Hedge-Fund Leverage Rises to Most Since 2004 in New Year (Bloomberg) The rising use of borrowed money shows that everyone from the biggest firms to individuals is willing to take more risks after missing the rewards of the bull market that began in 2009. While leverage means bigger losses should stocks decline, investors are betting that record earnings and valuations 9.8 percent below the six-decade average will help push the Standard & Poor’s 500 Index toward the record it set in October 2007. “The first step of increasing risk is just going long, the second part of that is levering up in order to go longer,” James Dunigan, who helps oversee $112 billion as chief investment officer in Philadelphia for PNC Wealth Management, said in a Jan. 8 telephone interview. “Leverage increasing in the hedge-fund area suggests they’re now getting on board.” Goldman: Insurer Knew Paulson Was 'Shorting' (WSJ) Goldman Sachs on Friday fired back at a bond insurer suing it over a soured mortgage-linked deal, arguing in a court filing that ACA Financial Guaranty Corp. "cherry-picked" evidence to bolster its case. ACA in 2011 filed suit against Goldman in New York State Court, alleging Goldman misled it about a 2007 mortgage deal. ACA alleges that Goldman told it that one of Goldman's hedge-fund clients, Paulson & Co., was betting on the deal, when in fact Paulson was betting against it, according to an amended complaint the insurer is seeking to file. Had ACA known Paulson's true position, it never would have insured the deal, according to the amended complaint. Goldman countered in the Friday filing that ACA insured the deal knowing Paulson was betting against residential mortgage-backed securities at the time. ACA analyzed and chose the investments in the deal and should have been alerted by various "red flags" that Paulson wasn't betting on the investment, according to the filing. Primate found to be addicted to porn (NYDN) Gina, a resident of the Seville Zoo in Spain, chose to solely watch adult entertainment channels when a television and remote control was placed in her enclosure. Primatologist Pablo Herreros, writing in Spanish newspaper El Mundo, claimed he made the discovery some years ago on a tour of the nation's chimpanzee enclosures. During his research trip he conducted surveys on the behavior of the animals. Herreros wrote, “What I could never imagine were the surprises prepared for me by a female of this species called Gina who inhabited Seville Zoo.” To enliven Gina's nights, officials apparently decided to install a television, protected behind glass, and gave her a remote control so she could change the channels herself. And enliven herself she did. “The surprise was when they found that within a few days, Gina was not only using the remote control perfectly well, but that she also used to choose the porn channel for entertainment, as many of us would have done, ” Herreros wrote. “Although a small study estimated that porn films are only watched for about 12 minutes on average, the truth is that human and non-human primates possess an intense sexual life.” AIG Sues New York Fed... To Secure Right To Sue Bank Of America (Reuters) American International Group Inc has filed a lawsuit against a vehicle created by the Federal Reserve Bank of New York to help bail out the insurer, in a bid to preserve its right to sue Bank of America Corp and other issuers of mortgage debt that went sour. The complaint filed in the New York State Supreme Court in Manhattan seeks a declaration that AIG has not transferred billions of dollars of "litigation claims" to Maiden Lane II, including many related to the insurer's $10 billion lawsuit against Bank of America. UK court approves ex-Credit Suisse trader's extradition to U.S. (Reuters) A British court on Monday approved the extradition of a former Credit Suisse trader to the United States, where he is wanted over a $540-million fraud dating back to the subprime mortgage crisis. The case of Kareem Serageldin will now be sent to Home Secretary Theresa May, the interior minister, who under British law has the final say over extraditions to the United States. She is expected to give the green light for the transfer to take place. Serageldin, 39, the Swiss bank's former global head of structured credit, is accused of artificially inflating the prices of mortgage-backed bonds between August 2007 and February 2008, when their real value was plummeting. Equities Bear Brunt of Wall Street Job Cuts on Volume (Bloomberg) Employees on stocks desks fell by 8.5 percent globally in the first nine months of last year, according to a survey by Coalition Ltd., an industry analytics firm. That compares with a 6.6 percent drop in fixed-income workers and a 5.8 percent decrease for origination and advisory functions, the data show. Banks Find Promise Unfulfilled in China Forays (WSJ) Global firms sold about US$44 billion worth of shares in Asian financial institutions in 2012 to institutional investors or other strategic buyers, up from US$32.7 billion in 2011, according to data provider Dealogic. The retreat is gathering pace as a host of new regulations, including the so-called Basel III capital rules, make holding minority stakes in financial institutions more expensive. Thousands Participate In Annual No Pants Subway Ride (CBS) Organizers arranged that starting at 3 p.m., people got on trains at six different stops across the city, took off their pants and put them into their backpack. Participants then acted as if everything was completely normal as they rode on to Union Square. Participants are asked to don typical winter wear such as coats, hats and gloves and act as if they don’t know other pantsless riders, according to organizers. The group said it was just all in good fun. “People are willing to give basically their Sunday afternoon to take off their pants; to do something silly and fun, and you know, a good time,” one participant said. “It makes you feel invincible; superior, because nobody else has any idea what’s going on,” another said. There were no-pants subway rides in dozens of cities in 17 countries Sunday. In New York City, participants were happy it was rather warm. In prior years, the cold has bummed them out.

SEC Drops Case Against Ex-Berkshire Exec Sokol (Reuters) The U.S. securities regulator has decided not to take action against David Sokol, once considered a possible candidate for the top job at Warren Buffett's Berkshire Hathaway, Sokol's lawyer told Reuters. In 2011, Buffett said Sokol violated the company's insider trading rules to score a $3 million windfall profit on shares of U.S. chemicals maker Lubrizol, which rose by nearly a third after Berkshire Hathaway announced it would buy the company. The U.S. Securities and Exchange Commission began investigating Sokol's investment in Lubrizol shortly after Sokol resigned from Berkshire Hathaway. Sokol's lawyer Barry Wm. Levine told Reuters late on Thursday that he was informed that the SEC had wrapped up its probe and decided not to take action against Sokol. "SEC has terminated its investigation and has concluded not to bring any proceedings against Sokol," said Levine, a lawyer at legal firm Dickstein Shapiro. Sokol has been "completely cleared" as there was no evidence against his client, Levine said. Cohen’s SAC Tops Most Profitable List Amid Insider Probes (Bloomberg) SAC Capital International, Cohen’s flagship fund, was the world’s most-profitable hedge fund in the first 10 months of 2012, earning $789.5 million for Cohen, 56, and his managers, according to Bloomberg Markets’ annual ranking of hedge funds...SAC Capital International is No. 1 not because of performance; it ties for No. 86 on that measure, with a 10 percent return in the Markets ranking of the 100 top-performing funds. Rather, the fund earned the most money because Cohen charges some of the highest fees on Wall Street. While most funds impose a 1 to 2 percent management fee and then take 15 to 20 percent of the profits, Cohen levies 3 percent and as much as 50 percent, according to investors. Geithner's Planned Departure Puts Obama In A Tough Spot (Reuters) The Treasury Department said Geithner would stick to his previously announced schedule to stay until sometime around the Jan. 21 inauguration. Obama chose Geithner to lead the just-ended negotiations with Congress to avert the Dec. 31 fiscal cliff of spending cuts and tax hikes that threatened to push the economy back into recession. But the deal, which preserved most of the Bush-era tax breaks for Americans, sets up a series of crucial fiscal deadlines by delaying automatic spending cuts until March 1 and not increasing the government's borrowing limit. That puts Obama in the tough spot of nominating another Treasury secretary and asking the Senate to approve his choice when lawmakers are in the middle of another budget battle. Egan Jones Says Further US Downgrades Unlikely (CNBC) "This latest round (of negotiations) indicates a sign of health. You have a major ideological clash going on in Congress and many people uncomfortable with it, but it is part of democracy. The more positive light is that we actually have a deal and can move forward," Sean Egan, managing director of Egan-Jones told CNBC on Friday. "We've gotten a lot more comfortable about the U.S. and we probably won't take additional negative actions for the foreseeable future," he added. Almost All of Wall Street Got 2012 Market Calls Wrong (Bloomberg) From John Paulson’s call for a collapse in Europe to Morgan Stanley’s warning that U.S. stocks would decline, Wall Street got little right in its prognosis for the year just ended. Paulson, who manages $19 billion in hedge funds, said the euro would fall apart and bet against the region’s debt. Morgan Stanley predicted the Standard & Poor’s 500 Index would lose 7 percent and Credit Suisse foresaw wider swings in equity prices. All of them proved wrong last year and investors would have done better listening to Goldman Sachs Chief Executive Officer Lloyd C. Blankfein, who said the real risk was being too pessimistic. The ill-timed advice shows that even the largest banks and most-successful investors failed to anticipate how government actions would influence markets. Unprecedented central bank stimulus in the U.S. and Europe sparked a 16 percent gain in the S&P 500 including dividends, led to a 23 percent drop in the Chicago Board Options Exchange Volatility Index, paid investors in Greek debt 78 percent and gave Treasuries a 2.2 percent return even after Warren Buffett called bonds “dangerous.” Fed Divided Over Bond Buys (WSJ) A new fault line has opened up at the Federal Reserve over how long to continue bond-buying programs aimed at spurring stronger economic growth. Minutes released Thursday of the Fed's Dec. 11-12 policy meeting showed that officials were divided. Some wanted to continue the programs through the end of 2013, others wanted to end them well before then and a minority wanted to halt the programs right away. Swiss Bank Pleads Guilty In Probe (WSJ) In the latest blow to Switzerland's centuries-old banking practices, the country's oldest bank pleaded guilty to a criminal conspiracy charge in the U.S. on Thursday and admitted that it helped wealthy Americans for years avoid tens of millions of dollars in taxes by hiding their income from secret accounts abroad. Wegelin & Co., founded in 1741, is the latest Swiss bank to reach a deal with U.S. prosecutors as they crack down on Americans who kept their money in secret accounts overseas and the entities which helped them. Three Wegelin bankers also were charged criminally in the U.S. last year. Subway worker tells customer to 'fight me like a man,' during confrontation over ketchup (WFTV) Luis Martinez said he stopped by a Subway shop in a Walmart on South Semoran Boulevard late Tuesday night to get something to eat. He said he ordered a Philly cheese steak the way he always does. "American cheese, onions and ketchup," said Martinez. Lawrence Ordone was working behind the counter. "He wants ketchup on the Philly cheese steak and I have never put -- we don't even have ketchup at Subway -- I've never put ketchup on anybody's sandwich," said Ordone. Martinez said he didn't want the sandwich without the ketchup and that a man next to him in line offered to buy the sandwich. Ordone said that Martinez mouthed off at the man. Martinez denied saying anything, but neither he or Ordone disputed what they said happened next. "That's when I flew off the handle," said Ordone. "He shoved a chair to the side, like knocked it down to come at me, and I said, 'This is going to be serious,'" said Martinez. "I said, 'Let's go, fight me like a man,'" said Ordone. "I was scared. Next thing, I'm thinking a gun's going to come out," said Martinez. Ordone said he blocked the customer so he couldn't get out. "He threatened to kill me in front of my wife," said Martinez. Martinez called 911, but by the time police got there the Subway worker had already left. Ordone said he was fired from his job Wednesday, and that he is baffled the confrontation started over something as simple as ketchup. "There's ketchup three aisles down. You can go buy your own ketchup, and I promise to God, you can put as much as you want on it and nobody's going to say nothing," said Ordone. Economy Adds 155,000 Jobs (WSJ) Rebuilding following superstorm Sandy, which struck the Northeast in late October, likely added to job growth last month. Nationally, employment in the construction sector advanced by 30,000 jobs. Meanwhile, manufacturing payrolls increased by 25,000 and health-care jobs grew by 45,000. JPMorgan Faces Sanction for Refusing to Provide Madoff Documents (Bloomberg) The Treasury Department’s inspector general has threatened to punish JPMorgan Chase for failing to turn over documents to regulators investigating the bank’s ties to Bernard Madoff’s Ponzi scheme. Inspector General Eric Thorson gave the largest U.S. bank a Jan. 11 deadline to cooperate with the Office of the Comptroller of the Currency probe or risk sanctions for impeding the agency’s oversight. JPMorgan, according to the Dec. 21 letter, contends the information is protected by attorney-client privilege. Rich Catch a Break With Budget Deal Providing Deductions (Bloomberg) “The increases in taxes and limits to deductions are more favorable than expected,” said Christopher Zander, partner and head of wealth planning at Evercore Partners Inc. (EVR)’s wealth management unit. “They could have been worse for high net-worth taxpayers.” Regulators to ease up on banks to get credit flowing (Reuters) Banks will get more time to build up cash buffers to protect against market shocks under a rule change that could help free up credit for struggling economies, a European regulatory source said. The Basel Committee, made up of banking supervisors from nearly 30 countries, is expected to announce the revision on Sunday to its "liquidity coverage" ratio or LCR, part of efforts to make banks less likely to need taxpayer help again in a crisis. The change comes after heavy pressure from banks and some regulators, who feared Basel's original version would suck up too much liquidity at a time when ailing economies are badly in need of a ready supply of credit to finance growth. 'Stripper' arrested after performance art leads to ruckus in Hallandale (SS) According to police and witnesses, Mena, 25, was first spotted standing and yelling in the middle of A1A outside her condo building along the 1800 block of South Ocean Drive about 10:45 a.m. on Wednesday. Noel von Kauffman, 40, said he was walking along the street when he noticed Mena trying to direct traffic while wearing a tank-top, cut-off jean shorts and tall boots...At some point, Mena picked up a traffic cone and threw it at a car driven by Dieter Heinrich, 49, of Dania Beach, according to an arrest report. The cone broke the car's side mirror, causing about $300 in damages, the report indicated. When Heinrich got out of his car, Mena allegedly spat in his face. Von Kauffman said he jumped in to help Heinrich, who had children in the back seat of his car. Mena scratched von Kauffman's wrist as the two men tried to restrain her and move her away from the busy roadway, according to the police report. After pinning her to the ground, von Kauffman said the woman first tried to say the incident was part of a television show and that everything was being caught on camera. Then she claimed she was a federal agent. Then she said she was friends with Hallandale Beach Mayor Joy Cooper and everyone involved would be in trouble, von Kauffman said.

Greece Charges Statisticians Over Size of Deficit (FT) Greece has brought criminal charges against the official responsible for measuring the country's debt, thereby calling into question the validity of its 172 billion euros second bailout by the EU and International Monetary Fund. Andreas Georgiou, head of the independent statistical agency Elstat, and two senior officials are accused of undermining the country's "national interests" by inflating the 2009 budget deficit figure used as the benchmark for successive austerity packages. The three statistical experts face criminal charges of making false statements and corrupt practices, a judicial official said, adding that if found guilty they could serve prison terms of five to 10 years. They have denied any wrongdoing. Spain's Recession Deepens (WSJ) Spain's central bank said a recession in the euro zone's fourth-largest economy deepened slightly in the final quarter of last year, but it said austerity cuts are bringing the country's runaway budget deficit under control. Obama-Bashing Swapped for Pragmatism at Davos (Bloomberg) “We have to move on in our society,” Blackstone found Stephen Schwarzman said today in an interview in Davos with Bloomberg Television’s Erik Schatzker. “I like President Obama as a person, and he’s well- intentioned.” Schwarzman, 65, warned in Davos in 2010 that banks could restrict lending because “their entire world is being shaken and they’re being attacked personally.” Later that year, at a nonprofit group meeting, he likened Obama’s tax proposals to Hitler’s invasion of Poland. Third Point LLC CEO Daniel Loeb, who in 2010 compared Wall Street’s Obama supporters to “battered wives,” will help lead a Jan. 25 Davos dinner discussion, “Can Capitalism Evolve?” Schwarzman apologized in 2010 for his comparison of Obama’s effort to double taxes on private-equity income to the invasion of Poland. He said the analogy was inappropriate and that the administration’s need to work with business “is still of very serious concern.” JPMorgan's Jamie Dimon Apologizes, Attacks (WSJ) James Dimon of J.P. Morgan Chase was prepared in Davos to apologize for the more than $6 billion of trading losses racked up by the so-called London Whale, but he certainly wasn’t prepared to abase himself...Min Zhu, deputy managing director of the International Monetary Fund, reeled off a string of statistics to show that the industry certainly hadn’t cleaned up its act since the crisis, and Paul Singer, principal of hedge fund Elliott Associates, was also keen to lambaste big banks, including Mr. Dimon’s. The two had some testy exchanges and the body language indicated that Messrs. Singer and Dimon have exchanged fire quite a few times previously. Still, Mr. Dimon gave us good as he got. He kicked off with repeating his apology to shareholders for the London Whale trading losses, which led to his own bonus being slashed, saying, “If you’re a shareholder of mine, I apologize deeply.” Having offered this apology he then went on the offense. He pointed out that his bank lent money to a whole host of worthy organizations such as schools, hospitals, governments, and Italian and Spanish corporates and governments. And he also had some snappy comebacks. Elliott’s Singer said that the global banks are “too big, too leveraged, too opaque,” which left Mr. Dimon with an easy retort about how could a hedge fund possibly criticize a bank about being opaque? “Our [securities filing] 10K is 400 pages long,” Mr. Dimon said. “What would you like to know?” Geithner Exit Next Friday (AFP) US Treasury Secretary Timothy Geithner, who steered the administration of President Obama through the financial crisis, will step down from his post Friday, a source told Agence France Presse yesterday. Golfer Mickelson recants tax rant (NYP) Mickelson — who hinted he might move from his home state of California to escape higher taxes — said he regretted his public rant on the issue after setting off a political firestorm. “Finances and taxes are a personal matter and I should not have made my opinions on them public,” according to a statement from Mickelson, who plans to elaborate today at the Farmers Insurance Open. “I apologize to those I have upset or insulted and assure you I intend to not let it happen again.” Senator Lautenberg Suggests Spanking In Store For Mayor Cory Booker (CI via DI) "I have four children, I love each one of them. I can't tell you that one of them wasn't occasionally disrespectful, so I gave them a spanking and everything was OK," Lautenberg said with a smile in his first public comments since Booker announced he was considering a run for Senate. Banker's Latest Bet: Teamwork on Bonds (WSJ) Texas banking tycoon Andrew Beal is known for making unconventional moves, including gambling on high-stakes poker and a self-financed plan to launch rockets into space. His latest gambit: an attempt to wring money from giant banks by banding together aggrieved bondholders. Mr. Beal's CXA Corp. ran a pair of advertisements late last year, one appearing in The Wall Street Journal. The ads listed an alphabet soup of residential mortgage-backed securities held by CXA and asked those with positions in the same securities to join the company in investigating possible infractions by banks that sold the debt. If the groups can prove the mortgages that underlie the bonds were approved through shoddy underwriting, they could be entitled to compensation—CXA's payday alone could be tens of millions of dollars. Firms Keep Stockpiles Of 'Foreign' Cash In US (WSJ) Some companies, including Internet giant Google, software maker Microsoft, and data-storage specialist EMC Corp, keep more than three-quarters of the cash owned by their foreign subsidiaries at U.S. banks, held in U.S. dollars or parked in U.S. government and corporate securities, according to people familiar with the companies' cash positions. In the eyes of the law, the Internal Revenue Service and company executives, however, this money is overseas. As long as it doesn't flow back to the U.S. parent company, the U.S. doesn't tax it. And as long as it sits in U.S. bank accounts or in U.S. Treasurys, it is safer than if it were plowed into potentially risky foreign investments. SEC Reins In Ratings Firm (WSJ) The U.S. Securities and Exchange Commission barred Egan-Jones Ratings Co. from issuing ratings on certain bonds, an unprecedented step by the regulator and a setback for a small credit-rating firm with a history of courting controversy. The SEC said Tuesday that Egan-Jones couldn't officially rate bonds issued by countries, U.S. states and local governments, or securities backed by assets such as mortgages, for at least the next 18 months. The ban was part of an agreement the SEC reached with Egan-Jones and its president, Sean Egan, to settle charges that they filed inaccurate documents with the regulator in 2008. The SEC alleged that Egan-Jones misled investors about its expertise, and that Mr. Egan caused the firm to violate conflict-of-interest provisions. Lindenhurst dentist busted after reporting to work reeking of booze and drilling teeth while allegedly drunk (NYDN) Dr. Robert Garelick was hauled out of his Lindenhurst office in handcuffs Monday after his dental hygienist smelled booze on his breath and caught him administering Novocain to the wrong side of a patient’s mouth. “I observed Dr. Garelick looking for cavities in the right side of the patient’s mouth, but the cavities were in the left side,” hygienist Kimberly Curtis told police in a written statement. “I pointed this out to the doctor and that’s when he ordered more Novocain for the patient,” Curtis told cops. “So now, he basically numbed the whole patient’s mouth.” After noticing Garelick’s wobbly behavior Monday, Curtis texted co-worker Dina Fara, who called 911. Curtis said she sent the message after Garelick used a drill to treat another patient who had a chipped tooth. “He was filing the tooth down,” Curtis said. “When you’re using that drill, you have to be very careful and have a steady hand.” She said that just before Garelick treated the chipped tooth, he slipped into his office. “I noticed that he was drinking from a white and purple squeeze bottle,” Curtis said. “At first I didn’t think anything was wrong,” Curtis said. “But right after, he took a drink from that bottle, he got up and walked past me. When he did this I smelled a strong odor of alcohol.” The dentist initially claimed he only had a couple of beers with pizza during lunch Monday, according to Suffolk County cops. But Garelick, who was charged with misdemeanor reckless endangerment, later confessed to his drunken dentistry while being taken to a police precinct in the back of squad car. “I never had any beers with my pizza. I’ve been sipping at that bottle all along today,” he told police, referring to his squeeze bottle filled with vodka, according to a criminal complaint.