October 22, 2021
Opening Bell: 9.27.21

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Opening Bell: 9.27.21

Don’t personally guarantee business loans; don’t bribe governments officials; don’t vote for Elon Musk’s kid brother; and more!
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West Virginia Gov. Jim Justice Offers $300 Million Settlement Payment to Credit Suisse [WSJ]
Mr. Justice’s heavily indebted family businesses were thrown into turmoil by Greensill’s collapse. He and his family borrowed $850 million from Greensill and he said in June the outstanding loans were “a burden on our family beyond belief.” Mr. Justice and his family members personally guaranteed the loans…. Mr. Justice would also pledge to pay half of the proceeds to Credit Suisse of a sale or initial public offering of Bluestone, the family company that operates coal mines and that took the loans.

China’s Cnooc Plans Big Share Sale at Home as U.S. Delisting Looms [WSJ]
The planned issuance—like a recent megadeal by China Telecom Corp. —shows that China’s corporate champions are able to access large pools of capital back home if needed, blunting the impact of being exiled from American markets…. Cnooc aims to raise 35 billion yuan, or the equivalent of $5.4 billion, it said in a statement late Sunday to the Hong Kong stock exchange, where it is already listed. The new shares would be listed on Shanghai’s stock exchange….

WPP Pays $19 Million Over SEC Claims it Broke Bribery Laws [Bloomberg]
WPP acquired majority interests in firms in high-risk markets without ensuring that these subsidiaries implemented WPP’s internal compliance controls, according to a Friday SEC statement…. For example, a subsidiary in India continued to bribe Indian government officials in return for advertising contracts even though WPP had received seven anonymous complaints about the conduct.

Natural gas hedge fund Statar suffers $130m hit [FT]
Miami-based Statar Capital, which manages $1.7bn in assets and is run by Ron Ozer, a former trader at Citadel and DE Shaw, made a hefty gain in the first 10 days of this month, according to a person familiar with its performance. But it suffered a pullback the following week, leaving it down about 7.7 per cent for September before fees…. Statar, which trades other commodities as well as natural gas, was one of the world’s top-performing hedge funds last year, gaining 59 per cent, according to figures sent to investors.

Tesla Shareholders Urged to Reject Murdoch, Kimbal Musk on Board [Bloomberg]
Private equity investor Antonio Gracias won’t stand for re-election and won’t be replaced. [James] Murdoch, the son of media mogul Rupert Murdoch, was the chief executive officer of 21st Century Fox from 2015 to 2019. Kimbal Musk is a food entrepreneur who also serves on the board of Elon Musk’s SpaceX./ISS said that directors have received “outlier levels of pay without a compelling rationale” and that there is no explanation as to why the magnitude of option awards is “so much larger than director compensation at peer companies.”

Boston Fed President Rosengren abruptly announces retirement 9 months earlier than planned [CNBC]
In his announcement, which came weeks after an uproar over his trading in individual stocks in 2020, Rosengren revealed that he has been on a kidney transplant list since June 2020…. A release from his office said Rosengren’s doctor told him changes in his lifestyle might reduce the need for dialysis….
The Fed has come under criticism in recent weeks following revelations that several of its officials had owned and been trading individual stocks, a potential conflict with the Fed’s role in the financial markets.
Rosengren and Dallas Fed President Robert Kaplan were most prominent in the controversy….

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US Probes Gold Pricing (WSJ) The Commodity Futures Trading Commission is examining the setting of prices in London, in which a handful of banks meet twice daily and set the spot price for a troy ounce of physical gold, the people said. The CFTC is looking at issues including whether the setting of prices for gold—and the smaller silver market—is transparent. No formal investigation has been opened, the people said. US And UK Tussle Over Trader (WSJ) Officials in the U.S. Justice Department and the U.K. Serious Fraud Office clashed late last year in their mutual pursuit of Tom Hayes, the former UBS trader who is viewed by prosecutors in both countries as a ringleader of banks' attempts to rig the London interbank offered rate, or Libor, these people said. While jurisdictional disputes among law enforcement agencies aren't unusual, some U.S. officials worry that the friction on this case will jeopardize trans-Atlantic cooperation on future financial-fraud investigations. 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Lehman Judge Allows 'London Whale' Subpoena in JP Morgan Fight (Dow Jones) A judge on Wednesday said Lehman Brothers Holdings Inc. creditors can subpoena Bruno Iksil in its lawsuit against J.P. Morgan, ensuring the phrase "London Whale" will stay in the lexicon for at least a bit longer. Judge James Peck of U.S. Bankruptcy Court in Manhattan said Mr. Iksil, who is in France, can be questioned over the alleged mismarking of $273.3 million in derivatives when he worked at J.P. Morgan in the days leading up to Lehman's bankruptcy. "I consider it inappropriate except for in a clear case of abuse to cut off discovery of a witness that has fingerprints all over a transaction," Judge Peck said. "And in this case, Mr. Iksil's fingerprints are on the $273.3 million transaction that took on some significance in the case." Lehman U.K. Wins $1 Billion Appeal on Hedging Contracts (Bloomberg) The ruling may result in London-based Lehman Brothers International Europe and its administrators PricewaterhouseCoopers LLP receiving an extra $1 billion, according to a written decision handed down this morning by Judge Mary Arden in the U.K. Court of Appeals. Jobless Claims Unexpectedly Fall as Labor Market Improves (Bloomberg) First-time jobless claims fell by 10,000 to 332,000 in the week ended March 9, the fewest since mid January, according to data today from the Labor Department in Washington. The median forecast of 49 economists surveyed by Bloomberg called for an increase to 350,000. The four-week average declined to a five- year low. JPMorgan exec sued over 'bullying' behavior (NYP) Plaintiff Walter Suarez, a former financial adviser, was banished to the company’s Delancey Street outpost when he complained about colleague Michael Quach, and the move cost Suarez an $80 million client list, $20 million of which was taken by JPMorgan, his lawyers claim. According to Suarez, Quach was a bully who resorted to physical violence to intimidate colleagues. Suarez, who is Hispanic, says Quach, an Asian-American, got away with the behavior because bosses preferred Asian employees. “Eventually, it got to the point of being ridiculous. This isn’t the corner bodega,” Suarez told The Post. “We’re investment people. This is a professional setting. That’s when I spoke up. “He just wasn’t a very professional person from the get-go, and I don’t think that I was the only person who felt that way.” Suarez told superiors that Quach had manhandled several staffers, including one woman who was “physically assaulted during working hours on the banking floor,” according to the lawsuit filed in Manhattan Supreme Court by attorneys Matthew Blit and Amanda Gudis. Suarez said Quach even threatened to punch him out in front of clients. 'Canada's Warren Buffett' Interested in Greece's Top Bank (Reuters) Greece's biggest lender, National Bank (NBG), said on Wednesday that Canadian investment fund Fairfax Holdings was interested in acquiring a stake in it by taking part in a planned recapitalization. Under the terms of cash-strapped Greece's international bailout, its top four lenders must issue new shares by the end of April to replenish their capital after the losses they suffered in the debt crisis from bad loans and bond writedowns. The European Union and the International Monetary Fund have set aside 27.5 billion euros ($37 billion) in bailout funds to invest in the new bank shares. But private investors must buy at least 10 percent of them or the lenders will be nationalized. NBG said in a bourse filing that Fairfax was among other investors who had expressed an interest, without giving details. Fairfax is controlled by investment guru Prem Watsa, known as the "Warren Buffett of Canada." SandRidge Gives In, Settling Proxy Fight (WSJ) SandRidge Energy agreed to fire its chief executive or give control of its board to an activist shareholder, settling a closely watched proxy battle amid an outbreak of investor unrest in the oil patch. SandRidge, an oil-and-gas producer with a stock-market value of about $3 billion, immediately appointed four directors to its board who were nominated by hedge fund TPG-Axon Capital LP, which owns 7.3% of its shares. Bofa Battles Credit Suisse for 50% Markups on State Loans (Bloomberg) The firms are among at least five lenders in talks to loan five states at least $6.5 billion this year -- more than double last year’s total -- as local governments seek to chop debt costs by replacing loans from a 1997 federal bailout that average 14.4 percent in reais. Credit Suisse is lending Mato Grosso, an agricultural state in western Brazil, $1 billion for 15 years. The loan, with a rate equal to 11.2 percent in reais and guaranteed by Brazil if Mato Grosso defaults, compares with 7.35 percent for yields of similar-maturity government debt. Private Equity Could Trigger Another Crisis: Bank of England (CNBC) The amount of leverage in the U.K. corporate sector poses a risk to the stability of the financial system and could produce the next big financial crisis over the coming years, the U.K.'s central bank has warned. 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