Goldman, Morgan Stanley win back hedge fund business; BlackRock says shut.it.down; Clinton will propose tax on high frequency trading; "Student reportedly expelled from UConn for mac and cheese tantrum"; and more.

Morgan Stanley beats estimates; Osborne says UK economy faces permanent hit with Brexit; Owl's ring delivery goes spectacularly wrong at Canadian wedding; and more.

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.

Morgan Stanley Beats Estimates as Trading Gain Tops Peers (Bloomberg) The net loss of $94 million, or 6 cents a share, compared with profit of $968 million, or 50 cents, a year earlier, the New York-based company said today in a statement. Excluding accounting charges tied to the firm’s own credit spreads, profit was 71 cents a share, topping the 44-cent average estimate of 17 analysts surveyed by Bloomberg. Fixed-income trading revenue surged 34 percent, surpassing the 19 percent gain at Citigroup Inc. and Goldman Sachs Group Inc.’s drop of more than 15 percent, excluding accounting adjustments. Morgan Stanley Chief Executive Officer James Gorman, 53, has set a goal of 15 percent return on equity after lingering pressures from the financial crisis held that measure below 10 percent for five straight years. First-quarter return on equity was 9.2 percent. BofA Profit Falls But Beats Estimates (WSJ) The bank reported a profit of $653 million, compared with a year-earlier profit of $2.05 billion. Per-share earnings, which reflect the payment of preferred dividends, fell to three cents from 17 cents a year ago. The latest quarter included, among other items, a $4.8 billion pretax hit tied to changes in the value of the bank's debt. Excluding accounting changes related to the bank's debt, BofA reported profits of 31 cents per share, compared with the 12 cents estimated by analysts polled by Thomson Reuters. Blackstone First-Quarter Profit Falls on Performance Fees (Bloomberg) Economic net income, a measure of earnings excluding some costs tied to the firm’s 2007 initial public offering, dropped to $432.3 million, or 39 cents a share, from $571 million, or 51 cents, a year earlier, New York-based Blackstone said today in a statement. Analysts had expected earnings of 40 cents a share, according to the average of nine estimates in a Bloomberg survey. Fitch Analyst Reportedly Warns on Dutch Rating (Reuters) "The Dutch are on the edge of a negative rating action," the Telegraph quoted Fitch analyst Chris Pryce, the rating agency's expert on the Netherlands, as saying. Ackman Plans 2013 listing for $4bn fund (FT) Pershing Square is planning a $4bn public flotation for a new fund in January 2013. Bill Ackman intends to float the vehicle, which has already been set up in Guernsey and is known as Pershing Square Holdings, on a "major exchange." PSH will be a shell company and invest all its assets in Pershing Square’s offshore hedge funds. As such, after flotation, it would offer Mr Ackman a source of permanent capital. Man accuses Blackhawks, Cubs of 'stealing his ideas' (Chicago Tribune) Emanuel Kuvakos, 56, was arrested Tuesday night and charged with three counts of misdemeanor harassment by electronic means, police said. Kuvakos sent “a number’’ of emails to Blackhawks CEO John McDonough and to Jim Hendry, the former general manager of the Chicago Cubs, that accused them of “stealing his ideas to win championships,’’ according to a police report. On Saturday, he sent them another email stating that he would keep the Blackhawks from winning the Stanley Cup, police said. While being interviewed by authorities, he claimed he also sent a message to Rocky Wirtz, the Blackhawks owner, saying that if he ever saw Wirtz, he would beat him, according to the police report. Kuvakos, whose nickname is “Mike,” said during a telephone interview with the Chicago Tribune that he has been a freelance sportswriter for 30 years, and claimed he is a sports psychologist and “savant” who works for the Blackhawks, White Sox and the Cubs. Talks With Instagram Suggest a $104 Billion Valuation for Facebook (Dealbook) Facebook bought the photo-sharing service for $1 billion in early April, agreeing to pay roughly 30 percent in cash and 70 percent in stock, according to people briefed on the negotiations who did not want to be identified because the discussions were private. At that level, Facebook is pegging its own stock price at roughly $30 a share. Based on those numbers, the giant social network is valued at north of $75 billion. But Facebook could actually be worth more. During the negotiations with Instagram, the parties framed the deal around a logical assumption: Facebook could soon trade publicly at a much higher market value. As part of the talks, the companies discussed a potential value of about $104 billion for Facebook, these people said. One of Instagram’s founders, Kevin Systrom, first broached the number, one of the people said. At $104 billion, the value is roughly in line with where Facebook has at times traded on the secondary market: shares of the privately held company have been selling for as high as $40. More Americans Than Forecast Filed Weekly Jobless Claims (Bloomberg) Jobless claims fell by 2,000 to 386,000 in the week ended April 14 from a revised 388,000 the prior period that was higher than initially estimated, Labor Department figures showed today in Washington. The median forecast of 47 economists surveyed by Bloomberg News called for a drop to 370,000. KKR's Real-Estate Arm Makes Its First Investment (WSJ) The Yorktown Center mall has 1.5 million square feet of retail space and more than 150 stores including a J.C. Penney and a Victoria's Secret. KKR's co-investor in the deal is YTC Pacific, which will manage the property, these people said. As is typical in a private-equity real-estate investment, KKR plans to improve the look of the mall and increase the occupancy rate with an eye toward reselling the property. Facebook Photo Sinks Man Who Stole Police Gas (TSG) A Kentucky man is facing a misdemeanor rap after he siphoned gasoline from a police car, a theft that came to the attention of cops after the perp posted a Facebook photo memorializing the crime. As Michael Baker, 20, was swiping the gas last month from a Jenkins Police Department squad car, he made sure to flip the bird as his girlfriend snapped a picture. While the siphoning photo has been removed from his Facebook page, Baker yesterday updated his 380 friends on his legal problems. “just got out of jail,” he wrote in one post, adding later that “yea lol i went too jail over facebook.” Responding to a friend who had not seen the image before it was yanked, Baker assured, “yea lol u would just have to seen it it was funny as hell tho.”

On Wall Street, Time To Mend Fences With Obama (NYT) Few industries have made such a one-sided bet as Wall Street did in opposing President Obama and supporting his Republican rival. The top five sources of contributions to Mr. Romney, a former top private equity executive, were big banks like Goldman Sachs and JPMorgan Chase, according to the Center for Responsive Politics. Wealthy financiers — led by hedge fund investors — were the biggest group of givers to the main “super PAC” backing Mr. Romney, providing almost $33 million, and gave generously to outside groups in races around the country. On Wednesday, Dan Loeb, who had supported Mr. Obama in 2008, was sanguine. “You win some, you lose some,” he said in an interview. “We can all disagree. I have friends and we have spirited discussions. Sure, I am not getting invited to the White House anytime soon, but as citizens of the country we are all friendly.” [...] “Wall Street is now going to have to figure out how to make this relationship work,” said Glenn Schorr, an analyst who follows the big banks for the investment bank Nomura. “It’s not impossible, but it’s not the starting point they had hoped for.” Morgan Stanley Reassures Its Bankers (WSJ) The New York bank said Monday that investment-banking chief Paul Taubman would leave the firm at year-end. Mr. Taubman was passed over for a new job overseeing both the trading and investment-banking operations, people involved in the process said. The position went to Colm Kelleher, who has overseen sales and trading. To calm nerves and soothe egos among the firms' bankers, Morgan Stanley gathered its new team of investment-banking leaders in New York this week. Mr. Kelleher and one of his new banking lieutenants, Franck Petitgas, traveled from their London office, and Mr. Petitgas spent much of the week meeting with managers in the investment-banking division and senior bankers, people familiar with the discussions said. Top executives reassured senior bankers Monday that the investment-banking business was a priority for Morgan Stanley. In a memo to employees, Chief Executive James Gorman said Morgan Stanley would "continue to build on our leadership position in investment banking and capital markets." The messages came as some rank-and-file bankers at Morgan Stanley privately expressed surprise and dismay at the news from Mr. Taubman, who announced his departure to colleagues in an emotional meeting Monday with Messrs. Kelleher and Gorman in attendance. Some Morgan Stanley bankers said they worried that the new chiefs of investment banking didn't have the stature of Mr. Taubman, who spent a significant amount of time as a mergers banker and was known internally for his staunch support of the firm's investment-banking franchise. "People are upset," one senior person inside the company said. Wall Street Trades Foiled Romney Dreams For Bowles Hopes (Bloomberg) Wall Street executives who lost a bet that Republican Mitt Romney would defeat President Barack Obama are bracing for tougher regulation and hoping a deal can be struck with Congress to cut the deficit. Obama’s choice to succeed Treasury Secretary Timothy F. Geithner will be watched closely for signs about the administration’s approach to business and the deficit, industry executives said. Erskine Bowles, who served as chief of staff under former President Bill Clinton, would be a sign that Obama is willing to endorse a bipartisan debt-reduction plan supported by many business leaders, they said. “With the appointment of the Treasury secretary, Obama will be sending an important message to the public and to the foreign governments who own a lot of Treasuries,” Curtis Arledge, chief executive officer of Bank of New York Mellon Corp.’s investment-management arm, which oversees $1.4 trillion, told journalists in New York yesterday. “If he goes with somebody like Erskine Bowles, then the message will be that he cares about the deficit and is serious about cutting it.” Focus Shifts To Fiscal Cliff (WSJ) Barry Knapp, head of U.S. equity portfolio strategy at Barclays, turned more bearish after seeing the election results, arguing that the risk of fiscal-cliff disaster increased to more than half, from about 30% before. "When I look at what happened, I see a government that grew farther apart, which might be worse than the status quo," Mr. Knapp said. "The risk of going off the cliff has just gotten huge." Jobless Claims Fall (WSJ) Initial jobless claims, which are a measure of layoffs, decreased by 8,000 to a seasonally adjusted 355,000 in the week ended Nov. 3, the Labor Department said Thursday. Economists surveyed by Dow Jones Newswires expected 365,000 new applications for jobless benefits. Greek Jobless Rate Hits New High (WSJ) Elstat, the Greek statistical agency, Thursday said the seasonally adjusted rate of unemployment increased to 25.4% from 24.8% in July and 18.4% in August 2011. That was just below the 25.5% unemployment rate recorded by Spain in the same month, the highest in the European Union. Herd of elephants go on drunken rampage after mammoth booze up (Metro) The trunk and disorderly mammals ransacked a shop, three houses and ruined crops in the eastern village of Dumurkota, India. Police say the gang of over-the-limit tuskers downed more than 500litres of moonshine alcohol, managing to drink the place dry in a matter of minutes. The unruly mob demolished dozens of houses in their desperate hunt for more booze after hoovering up the hard stuff in record time. Local police officer Asish Samanat said the drunken elephants were more 'aggressive' than usual after their mammoth drinking session. 'Unfortunately these animals live in close proximity to man and they recognised the smell of the drink,' he explained. 'They were like any other drunk - aggressive and unreasonable but much, much bigger.' ECB Stands Ready to Buy Bonds as Economy Weakens (Bloomberg) “We are ready to undertake” Outright Monetary Transactions, “which will help to avoid extreme scenarios,” Draghi said today at a press conference in Frankfurt after policy makers left the benchmark interest rate at a historic low of 0.75 percent. “The risks surrounding the economic outlook remain on the downside” and underlying inflation pressures “should remain moderate,” he said. SocGen CEO Blames ‘Stupid’ Accounting for Profit Drop (CNBC) “Exceptional items are related in particular to this stupid accounting thing which means that when you have a credit that is improving, your CDS is going down and you have to recognise negative revenues,” Frederic Oudea told CNBC in Paris. SocGen’s third-quarter net profit was 85 million euros, down by 86 percent on the same period in 2011, after losses on asset sales. That was lower than analysts’ mean estimate of 139.1 million euros. Blackstone Leads Hedge Funds Attracting Bond-Rally Bears (Bloomberg) Funds that bet on both gains and losses in credit attracted $12.6 billion of deposits in the three months ended Sept. 30, the most since the period ended Dec. 31, 2007, according to HFR. Blackstone Group LP raised $4.05 billion during the period for its debt unit, which includes so-called long-short funds. Panning Capital Management, which was founded by Kieran Goodwin this year, started such a fund on Nov. 1 with $500 million. Two-Tier Global Housing Market Could Lead to Bubble: Goldman (CNBC) In a report titled: “Just don’t look down some house markets are flying again” Goldman argues easy money policies by the world’s major central banks has had a ripple effect on countries which have avoided the worst of the global financial crisis, boosting their house prices. According to Goldman, there now exist housing “high-flyers” - countries that have experienced real house price increases and “low-lyers” - countries where the housing market downturn appears to be more protracted. “High flyers” include Germany, Finland, Norway, France, Switzerland and Israel as well as Canada and Australia. The “low lyers” include the U.S., and the euro zone periphery of Spain, Greece, Italy and Ireland- but also those places where prices fell in the post-crisis period but have since stabilized such as the U.K., Japan and Denmark. Judge throws Dallas attorney back in jail after his Design District office trashed, vandalized with obscene drawings (DN) Attorney Tom Corea was charged earlier this year with four felonies alleging he stole from his clients. He was arrested, posted bond and was released. Weeks later, he was evicted for not paying rent for his upscale office in the 2000 block of Farrington Street near Interstate 35E and Market Center Boulevard, according to testimony before state District Judge Mike Snipes. Corea was ordered out by Oct. 31. When the president of the real estate company that represents the building, Doug Molny, showed up the next day to check out the property, he found “complete destruction,” including “penis graffiti on every single wall throughout the building,” Molny said. Written next to some of the penises was the name Doug. Molny said it appeared someone took a sledgehammer to granite counters. Additionally, doors, light fixtures, cabinets and appliances were destroyed or removed.

Forthcoming Facebook Motion Said to Discuss Nasdaq’s Role in I.P.O. (NYT) Facebook is preparing for battle. One month after its botched initial public offering, the social network is set to file a motion to consolidate all the shareholder lawsuits against the company, according to a person with knowledge of the matter. The lead underwriters, Morgan Stanley, Goldman Sachs, and JPMorgan Chase, are expected to join the motion, which could be filed in the Federal District Court for the Southern District of New York as early as Friday. The motion will represent the first time Facebook has publicly addressed the lawsuits and the performance of its highly anticipated, but ultimately lackluster, IPO on May 18. Facebook Is Not The Worst IPO (Deal Journal) Thursday marked the 4-week anniversary of the pricing of the IPO at $38 and today marks the anniversary of the innocuous opening and subsequent turmoil. Through Thursday’s close the stock was down about 26%, losing some $27 billion in market capitalization. That is ugly, but not as bad as the Halloween 2007 debut of Giant Interactive Group. The Chinese online-gaming company raised just over $1 billion in an IPO that started out well, rising about 18% on day one, but then promptly tumbled 30% through its first month, according to Dealogic. Draghi Hints ECB Is Ready To Act (WSJ) Providing liquidity "is what we have done throughout the crisis, faithful to our mandate of maintaining price stability over the medium term, and this is what we will continue to do," Mr. Draghi said. The Eurosystem, the ECB and the 17 national central banks that use the single currency "will continue to supply liquidity to solvent banks where needed," he added. Greeks Return To Ballot Box As Crisis Nears Decisive Moment (Bloomberg) The June 17 vote will turn on whether Greeks, in a fifth year of recession, accept open-ended austerity to stay in the euro or reject the conditions of a bailout and risk the turmoil of becoming the first to exit the 17-member currency. World leaders have said they’d prefer a pro-euro result, underscoring concern over global repercussions. Moody's Downgrades Dutch Banks (WSJ) In a statement, Moody's said it had cut the ratings by two notches each of ABN Amro Bank NV and ING Bank NV to A2, LeasePlan Corp. NV to Baa2 and Rabobank Nederland to Aa2. It also cut the rating of SNS Bank NV by one notch to Baa2. Giselle Is World's Highest Paid Model (Forbes) Just like last year, the Brazilian bombshell Bündchen leads the pack with a stunning $45 million in earnings (all estimates from May 1st, 2011 to May 1st, 2012). Even in her early thirties, Bündchen remains an unparalleled force within the fashion world. As the world’s most powerful supermodel, she racks up modeling gigs, spokesperson deals, and independent licensing ventures at every turn...Bündchen’s success combining business with modeling is influencing young, ascendant models. “The ones that are coming up, their model for excellence is Gisele. They’re looking at her and saying ‘that’s what I want to shoot for,’” Razek said. Fed Loans Backing AIG, Bear Repaid (WSJ) On Thursday, the regional Federal Reserve bank said it has been repaid, with interest, on $53.1 billion in loans it made to two crisis-era vehicles that held complex subprime mortgage bonds, home loans, commercial-property loans and other unwanted assets from Bear and AIG. The New York Fed earlier recouped a separate $19.5 billion loan that financed the purchase of mortgage-backed securities from AIG. Warren Buffett fired Benjamin Moore CEO after Bermuda cruise (NYP) “[Abrams] kept asking what he’d done wrong,” according to an insider briefed on the ouster. “[Berkshire officials] told him to clear his stuff out while they stood and watched every move he made.” Gupta Hopes Family Guy Image Will Help (NYP) The 63-year-old former Goldman Sachs director — facing 25 years in prison on charges of leaking inside information to his hedge fund pal Raj Rajaratnam — has surrounded himself with family and friends throughout the four-week trial. Gupta’s four Ivy League-educated daughters, his wife, Anita, and sister, Kumkum, in-laws and colleagues — roughly a dozen daily attendees — were in the courtroom each day, taking up the first two rows of the gallery. As the jury today starts its second day of deliberations, the fallen Wall Street star hopes the family vibe helps push the panel toward an acquittal. In the Facebook Era, Reminders of Loss if Families Fracture (NYT) The Times just found out that one of the weird things about Facebook is that you can find out things about people you haven't spoken to in years: Not long ago, estrangements between family members, for all the anguish they can cause, could mean a fairly clean break. People would cut off contact, never to be heard from again unless they reconciled. But in a social network world, estrangement is being redefined, with new complications. Relatives can get vivid glimpses of one another’s lives through Facebook updates, Twitter feeds and Instagram pictures of a grandchild or a wedding rehearsal dinner. And those glimpses are often painful reminders of what they have lost.