Wednesday, August 31, 2011

Stop In The Name of the Law: Quant Fund Fraud Halted

“The Securities and Exchange Commission today announced an asset freeze against a Chicago-area money manager and his hedge fund advisory firm that the SEC charged with lying to prospective investors in their startup quantitative hedge fund. A federal court today entered a preliminary injunction order in the case, which was unsealed earlier this week.

“The SEC alleges that Belal K. Faruki of Aurora, Ill., and his advisory firm Neural Markets LLC solicited highly sophisticated individuals to invest in the "Evolution Quantitative 1X Fund," a hedge fund they managed that supposedly used a proprietary algorithm to carry out an arbitrage strategy involving trading in liquid exchange-traded funds (ETFs). Faruki and Neural Markets falsely represented the existence of investor capital and that trading was generating profits when, in fact, losses were being incurred. They defrauded at least one investor out of $1 million before confessing the losses, and were soliciting other wealthy investors before the SEC obtained a court order to halt the scheme…

http://sec.gov/news/press/2011/2011-174.htm

BoNY Mellon’s Robert Kelley Bails

From The Toronto Globe Mail: Robert Kelly, one of the most prominent Canadians in global banking, has walked away from his job as chief executive officer of Bank of New York Mellon (BK-N20.67-0.15-0.72%), which cited differences in opinion about how the bank should be managed.

In a sign of how hastily the decision appears to have been made, BNY Mellon issued a statement late Wednesday that its president Gerald Hassel, a board member since 1998, would be stepping in immediately to serve as the new CEO.
Mr. Kelly, 57, a former top executive at Toronto-Dominion Bank, left BNY Mellon “by mutual agreement with the board of directors,” the bank said in a statement. The move was the result of “differences in approach to managing the company.”

“We are grateful to Bob Kelly for his leadership….yaddah yaddah..

For more check out http://www.theglobeandmail.com/report-on-business/international-news/us/kelly-leaves-bny-mellon-by-mutual-agreement/article2149359/

Ending Robo-Signing: Banks, State Reach a Deal

From Wall St Journal: The mortgage industry will take a step toward cleaning up some of its most controversial practices under a deal between a New York regulator and three financial firms, including Goldman Sachs Group Inc.

Under the agreement with the state's financial-services superintendent, Benjamin M. Lawsky, the three firms—Goldman, its Litton Loan Servicing business and Ocwen Financial Corp.—promised to end so-called robo-signing, in which bank employees signed foreclosure documents without reviewing case files as required by law. They also agreed to comb through loan files for evidence they mishandled borrowers' paperwork and to cut mortgage payments for some New York homeowners.

The settlement most affects mortgage servicers, the companies that collect monthly house payments from homeowners and pass them on to investors and lenders. They also work with troubled borrowers to restructure their debts, and they process foreclosures….

Find out more at http://online.wsj.com/article/SB10001424053111904716604576543021468088268.html?mod=googlenews_wsj

Galleon Group Trader Sentenced To 6.5 Years In The Slammer


New York courts sentenced a former Galleon employee, Craig Drimal, to 6.5 years in jail today for insider trading, according to Forbes.

Drimal plead guilty to insider trading this Spring. He was charged with netting $11 million insider trading (in 3Com, Hilton, and other stocks) along with 4 others last year. More indictments were added to their charges on April 8.

Read more at http://www.forbes.com/sites/walterpavlo/2011/08/31/galleon-group-trader-craig-drimal-sentenced-to-66-months-in-prison/

Fund Managers Behaving Badly: The Four Most Awesome F*k-Ups of 2011


CNBC writes: Here are four high-profile, respected fund managers who have struggled this year:

Bill Gross, who was named Morningstar's fixed-income manager in the decade ending 2009, has seen his $246 billion Pimco Total Return Fund eke out a mere 3 percent gain this year, almost half that of the Barclay U.S. Aggregate Bond Index, the fixed-income benchmark. Pimco Total Return's performance this year puts it in the 88th percentile versus its peers, but the fund beats all but 5 percent of its peers over the past 15 years.

Gross made no bones about his strategy shift this year: He dumped U.S. debt holdings, principally Treasury and agency bonds, early in the year, saying he expected faster economic growth would contribute to inflation . The Federal Reserve also had been expecting a pickup in economic growth in the second half of the year. That didn't happen. "The portfolio's 1.1% return from July 1 through Aug. 18 has been subpar, and has dragged its year-to-date return to the group's bottom quartile," reports fund-ranking firm Morningstar.

The $13.4 billion Fairholme Fund is synonymous with manager Bruce Berkowitz and his against-the-tide bets….

Read more at http://www.cnbc.com/id/44342456

One Of The Most Personal Attacks Ever Made On A Bank CEO ?

Our readers can be the judge. According to HuffPo’s Charlie Gasparino: “If the saga of Bank of America, the country's largest and most troubled bank, were to be made into a movie, its title would have to be "The Dumbest Men in the Room," with a starring cast that features its half-witted chief executive officer Brian Moynihan and his equally half-witted board of directors.

All of which wouldn't be so bad if Moynihan and his brain-dead board weren't running a bank with more than $2 trillion in assets and $1 trillion in customer deposits that the federal government (meaning taxpayers) might have to cover some day if Bank of America hits the skids just as it did during the financial crisis of 2008, and as it almost did in the last couple weeks.

Just to recap: BofA's share price was heading to zero as investors came to believe that all the bailout money, the billions upon billions of guarantees and zero-percent borrowing rates the government handedthe bank over the past two years wasn't working. That's because on top of everything else, the big bank was facing a new potentially, more devastating liability: untold billions of dollars in losses tied tothe sale of faulty mortgages by its Countrywide Financial unit, and Moynihan's inability to come up with a plan to deal with the problem….

Read the rest at http://www.huffingtonpost.com/charles-gasparino/bank-of-america-brian-moynihan_b_942452.html

BoNY Mellon Better watch out. The Prince of Whistleblowers Has Them In His Sights

Harry Markopolos is now an independent investigator.

The Financial Times reports that the whistleblower who tried unsuccessfully to expose Bernard Madoff’s Ponzi scheme claims large financial institutions are “above the law” as he seeks to expose allegedly deceptive foreign currency exchange practices at State Street and Bank of New York Mellon.

Harry Markopolos, now an independent fraud investigator, has helped build cases against the banks, which have resulted in probes in Ohio, California, Florida and Virginia. The investigations and lawsuits claim that the banks priced foreign exchange trades to the detriment of clients…

Find out more at http://www.ft.com/intl/cms/s/0/5a05a27e-d324-11e0-9ba8-00144feab49a.html#axzz1WcQoyppY

Double Dip Anyone?: Announced U.S. Job Cuts Rose 47% in August From Year Ago

Employers in the U.S. announced more job cuts in August than a year ago, signaling little progress in the labor market more than two years after the recession ended, according to the good folks at Bloomberg.

Planned firings climbed 47 percent from August 2010 to 51,114, according to figures released today by Chicago-based Challenger, Gray & Christmas Inc. The announcements were led by reductions at government agencies and in the financial industry.
Job cuts in federal, state and local governments are another restraint on consumer spending that accounts for about 70 percent of the economy. Job growth this month probably fell shy of the gain needed to reduce the unemployment rate, according to a Bloomberg News survey before a Sept. 2 report…

Read more at http://www.bloomberg.com/news/2011-08-31/announced-u-s-job-cuts-rose-47-in-august-from-year-ago-challenger-says.html

Dirty Rotten Scoundrels: Sino-Forest Insiders Including Ex-CEO Sold $83 Million of Shares Since ’06

From Bloomberg: Former Sino-Forest Corp. CEO Allen Chan and other insiders sold C$81 million ($83 million) of shares since the end of 2006, according to regulatory filings.

Chan, who stepped down Aug. 28 after the Ontario Securities Commission suspended trading in Sino-Forest, sold C$3 million of stock, the filings show. Kai Kit Poon, with whom Chan founded the tree-plantation company in 1992, sold more than C$30.1 million. CFO David Horsley sold C$11.2 million of shares. Simon Murray, a director and also chairman of Glencore International Plc, sold $10.8 million.

The OSC, Canada’s main securities regulator, said Aug. 26 that officers and directors of Hong Kong- and Mississauga, Ontario-based Sino-Forest may have engaged in acts “related to its securities” that they “knew or should have known” perpetuated a fraud. Meanwhile, billionaire investor Richard Chandler, the company’s biggest investor, added to his stake two days earlier, filings also show…

http://www.bloomberg.com/news/2011-08-30/sino-forest-insiders-including-ex-ceo-sold-83-million-of-shares-since-06.html

FEMA disaster relief funding faces congressional wrangling

Let them eat cake! From CNN: As rescuers raced Tuesday to free people trapped by floodwaters caused by Hurricane Irene, Washington politicians bickered over how to pay for it. The same budget arguments that nearly brought the first government default in history earlier this month now raise questions about whether the Federal Emergency Management Agency will have enough money to deal with Irene's aftermath.

FEMA's Disaster Relief Fund has less than $800 million remaining, and given the pace of operations in the wake of Irene, could run out before the end of the current fiscal year on September 30.

With conservative House Republicans calling for spending cuts to offset any increase in emergency funds -- a condition opposed by many Democrats -- the ability of Congress to act quickly on the issue remains uncertain...

Find out more at http://edition.cnn.com/2011/POLITICS/08/30/fema.funding/

Tuesday, August 30, 2011

You've Gotta Be Kidding: Some U.S. firms paid more to CEOs than taxes


Reuters reports that twenty-five of the 100 highest paid U.S. CEOs earned more last year than their companies paid in federal income tax, a pay study said on Wednesday. It also found many of the companies spent more on lobbying than they did on taxes.

At a time when lawmakers are facing tough choices in a quest to slash the national debt, the report from the Institute for Policy Studies (IPS), a left-leaning Washington think tank, quickly hit a nerve.

After reading it, Democratic Rep Elijah Cummings, ranking member of the Committee on Oversight and Government Reform, called for hearings on executive compensation.
In a letter to that committee's chairman, Republican Darrell Issa, Cummings asked "to examine the extent to which the problems in CEO compensation that led to the economic crisis continue to exist today...."


Wait, wait...there's more at http://www.reuters.com/article/2011/08/31/us-usa-tax-ceopay-idUSTRE77U0KW20110831

From Our It's Not Over 'Till The Fat Lady Sings Dept.: HP resurrects TouchPad for one last go at the iPad

Hewlett Packard plans to crank out "one last run" of TouchPads, days after declaring it will kill off a line of tablets that failed to challenge Apple Inc's command of the booming market according to the good people at Reuters.

A day after the chief of HP's personal devices division told Reuters the TouchPad might get a second lease on life, HP announced a temporary about-face on the gadget after being "pleasantly surprised" by the outsized demand generated by a weekend fire-sale.

As readers may remember, HP slashed the price of its tablet to $99 from $399 and $499 the weekend after announcing the TouchPad's demise on Aug. 18, part of a raft of decisions intended to move HP away from the consumer and focus on enterprise clientele. That ignited an online frenzy and long lines at retailers as bargain-hunters chased down a gadget that had been on store shelves just six weeks.

"The speed at which it disappeared from inventory has been stunning," the company said. "We have decided to produce one last run of TouchPads to meet unfulfilled demand."

Read all about it at http://www.reuters.com/article/2011/08/31/hp-touchpad-idUSN1E77T22220110831

UBS Is Laying Off People In Investment Banking Today

UBS is laying off a bunch of people in its investment banking division today, a source inside the firm tells Clusterstock.

The firm announced recently that 3,500 people will be laid off in order to cut costs. We heard that the layoffs would be brutal particularly in the investment banking unit.
Looks like those layoffs will come this week.

According to a source inside the firm, Carsten Kengeter, the head of UBS' IB division, sent out a memo this morning to say that this week would be tough and that everyone should stay focused. Units began layoffs soon after and they will continue today and likely throughout this week...

Find out more at http://www.businessinsider.com/ubs-is-laying-off-a-bunch-of-people-in-investment-banking-today-2011-8

Frank Quattrone and the Dot-Com Lawsuit: a Blast From the Past

Oh Baby, is Frank P. Quattrone on a roll! This month the technology banker and his firm, Qatalyst Partners, advised on two multibillion-dollar mergers. The deals add to a string of assignments that have re-established Mr. Quattrone as Silicon Valley’s marquee deal maker.

But into each life a little crap must fall. Dealbook reports that now a judge has issued a decision that throws some cold water on Mr. Quattrone’s hot streak. Judge Nancy Gertner of Federal District Court in Boston on Friday denied a request by Mr. Quattrone and his co-defendants to dismiss a decade-old lawsuit that charges his former bank, Credit Suisse First Boston, with issuing misleading stock research on AOL-Time Warner. The case now proceeds to trial.

The ruling comes as a new wave of analysts covering companies like Facebook and Groupon are securing large pay packages from investment banks. This latest Internet craze calls to mind a decade ago when dot-com analysts were Wall Street’s darlings. Jack Grubman, Henry Blodget and Mary Meeker earned millions of dollars publishing research on the sizzling companies of the tech boom. As for Mr. Quattrone, he was the era’s rock-star banker, advising on dozens of initial public offerings for companies including Cisco Systems and Amazon.com. Then came the dot-com bust….

Read more at http://dealbook.nytimes.com/2011/08/30/a-lawsuit-blast-from-the-dot-com-past/

Eight Miami Football Players Suspended Over Illegal Benefits From A Convicted Ponzi Schemer


From BusinessInsider: The NCAA has suspended eight current Miami Hurricanes football players and ordered them to repay improper benefits they received from convicted ponzi schemer Nevin Shapiro.

Yahoo Sports laid out the charges in a thorough and detailed investigation of Shapiro, who offered evidence of more than 70 current and former Miami athletes that he provided gifts to.

Five athletes (including starting QB Jacory Harris were suspended for one game), two have been banned for four games, and one – defensive lineman Oliver Vernon – has been suspended six games and ordered to pay back $1,200 before he will be reinstated.

Read more: http://www.businessinsider.com/miami-football-players-suspended-2011-8#ixzz1WaAHbYFx

Exxon Nabs Huge Russian Oil Deal

Exxon Mobil, America’s largest company, won a coveted prize in the global petroleum industry Tuesday with an agreement to explore for oil in a Russian portion of the Arctic Ocean that is being opened for drilling even as Alaskan waters remain mostly off limits. According to the NY Times the agreement seemed to supersede a similar but failed deal that Russia’s state oil company, Rosneft, reached with the British oil giant BP earlier this year — with a few striking differences.

Where BP had planned to swap stock, Exxon, which is based in Texas, agreed to give Rosneft assets elsewhere in the world, including some that Exxon owns in the deepwater zones of the Gulf of Mexico and on land in Texas.

In announcing the arrangement at a surprise signing in the Russian resort town of Sochi, Prime Minister Vladimir V. Putin described a sweeping global alliance — and a potentially vast investment by Exxon in the Russian Arctic. While Russian news agencies said Mr. Putin had stated the potential investments by both companies to be as high as $500 billion, Exxon officials said the figures, at least initially, would more likely be in the tens of billions of dollars.

Find out more at http://www.nytimes.com/2011/08/31/business/global/exxon-and-rosneft-partner-in-russian-oil-deal.html?_r=1

Lehman Bankruptcy Takes Big Step Toward an End

A federal bankruptcy judge has blessed a plan by Lehman Brothers‘ bankruptcy estate to pay out about $65 billion to creditors, in a major step to wind down the investment bank. The approval by Judge James M. Peck of the federal bankruptcy court in Manhattan, who has overseen Lehman’s Chapter 11 case, paves the way for a vote by creditors sometime this fall. The proposed payout plan will offer creditors an average recovery of about 20 cents on the dollar — higher than estimates of 17 to 18 cents on the dollar from earlier this year.

The labyrinthine disclosure statement — months in the making — followed clashes between Lehman and its bondholders and other institutions to which the firm owes billions of dollars. Lehman revised the scheme several times in order to earn the support of several major creditors, including Paulson & Company, Elliott Management and Goldman Sachs.

Lehman’s disclosure statement for the plan will be sent to the estate’s 110,000 creditors, who will have 60 days to vote. A confirmation hearing is scheduled for Dec. 6, pending approval by creditors….

http://dealbook.nytimes.com/2011/08/30/lehman-bankruptcy-takes-big-step-toward-an-end/?nl=business&emc=dlbkpma2

Watch Your Back, Apple!. Amazon tablet sales to soar

Reuters reports that Amazon.com may sell as many as 5 million tablet computers in the fourth quarter, making the largest Internet retailer the top competitor to Apple in this fast-growing niche of the consumer PC market, Forrester Research said yesterday.
Amazon.com has to price its tablet “significantly” below competing products and have enough supply to meet demand, but if the company can pull this off it can “easily” sell 3 million to 5 million units in the final three months of 2011, Forrester’s Sarah Rotman Epps predicted…

Find out more at http://www.nypost.com/p/news/business/amazon_tablet_sales_to_soar_H75MWBio4TwWfrlIYbiDFO

…And Now U.S. Bancorp Is Suing Bank Of America Too

From Forbes: U.S. Bancorp, one of the nation’s biggest banks, became the latest large financial firm to sue Bank of America, filing a lawsuit over $1.75 billion of mortgage loans on Monday on behalf of investors of the loans.

Acting as trustee of a trust that included 4,400 mortgage loans originated by Bank of America’s Countrywide unit, U.S. Bancorp claims Bank of America, the biggest bank in the U.S., must repurchase loans in the mortgage pool because Countrywide had agreed to do so if it misled investors about the quality of the loans.

“The Trustee seeks to compel Countrywide, and Bank of America as its successor-in-interest, to specifically perform their obligation to repurchase all of the loans that the Trustee has submitted as breaching loans,” the lawsuit filed in New York state court in Manhattan says..

Read more at http://forbes.com/sites/nathanvardi/2011/08/30/the-bank-of-america-lawsuit-of-the-day/

Surprise, surprise: Buffett's Berkshire Hathaway Owes Taxes Going Back To 2002


If you can remember that far back, a little over two weeks ago, Berkshire Hathaway CEO Warren Buffett, the third-richest person in the world, penned an op-ed critical of the low tax rates for the superrich. It would seem his own company hasn't prioritized paying its rightful share in a timely fashion either.

Berkshire Hathaway, the eighth-largest public company in the world according to Forbes, openly admits to still owing taxes for years 2002 through 2004 and 2005 through 2009, according to the New York Post. The company says it expects to "resolve all adjustments proposed by the US Internal Revenue Service" within the next year.

But The Post doesn't focus on the issue of a major corporation not paying its correct amount in taxes in a timely manner. Instead, the newspaper criticizes Buffett's position that America's rich should be taxed at a higher rate, taking issue with Buffett's claim that he gave 17 percent of his income to the government in 2010...


Read more at http://www.huffingtonpost.com/2011/08/29/warren-buffett-taxes-berkshire-hathaway_n_941099.html

Death Wish: H-P's One-Year Plan

Let's say you were given a year to kill Hewlett-Packard. According to Wall St Journal’s Al Lewis here's how you do it:

Fire well-performing CEO Mark Hurd over expense-report irregularities and a juicy sexual-harassment claim that you admit has no merit. Fire four board members, as publicly as possible. Foment a mass exodus of key executives who actually know how to run the giant computer company.

Hire new a CEO from German competitor, SAP, which sells business software, not consumer products. Tell the new CEO, Leo Apotheker, that Mr. Hurd "left H-P in great shape."

Draw public criticism from a major corporate-governance advisory firm, alleging Mr. Apotheker filled board openings with cronies.

Pursue pricey mergers and stock buybacks. Allow expenses to run out of control. Try to blow through billions of dollars in cash reserves before the next global economic slowdown.

Provoke partners Microsoft and Oracle by threatening to put H-P's own operating software on PCs. Then decide not to. Remember that promising webOS software H-P bought in a $1.2 billion acquisition of Palm last year? Sideline it….

Read the rest at
http://online.wsj.com/article/SB10001424053111904787404576535211589514334.html?mod=WSJ_hp_mostpop_read

Obama’s Not-So-New New Economist

The NY Times reports that in tapping Alan B. Krueger on Monday to lead the Council of Economic Advisers, President Obama has picked an economist well known for his studies of labor markets just as the president is about to announce a renewed push for job creation policies as early as next week.
Among the stimulus policies Mr. Obama is considering is a temporary tax credit for employers adding to their work force, an idea that Mr. Krueger championed in his earlier stint in the administration. Mr. Krueger was an assistant secretary and chief economist at the Treasury Department for 17 months, before he returned to teaching at Princeton in 2010.

A more modest version of the hiring credit became law, but Congressional Republicans blocked its extension last year.

Mr. Krueger, if confirmed by the Senate, will find Republicans a force to be reckoned with against the sorts of ideas he is associated with, including a higher minimum wage. Republicans have taken control of the House since he left Washington, and party leaders say they will oppose further stimulus measures…

Read more at http://www.nytimes.com/2011/08/30/business/krueger-chosen-to-lead-economic-council.html?_r=1&partner=rss&emc=rss

BofA Cashes In Its China Chips

Bank of America announced on Monday that it would sell about half of its China Construction Bank holdings to a group of unidentified investors, in a deal expected to raise $8.3 billion.

The deal, which came just days after Warren E. Buffett agreed to invest $5 billion in the bank, is the latest asset sale for the beleaguered financial company. Over the last month, Bank of America has sold its Canadian credit card division and has put its European card operation on the block, as it continues to clear noncore assets from its books.

The moves come amid recent fears that Bank of America lacks sufficient capital, concerns that its chief executive, Brian T. Moynihan, has tried to allay.

On Monday, Bank of America highlighted the deal’s effect on capital levels. Bruce R. Thompson, the bank’s CFO, said in the statement that the deal would increase its Tier 1 capital by $3.5 billion...

http://dealbook.nytimes.com/2011/08/29/bank-of-america-sells-stake-in-china-construction-bank/?ref=business

Clients to Merrill Lynch Advisors: Is Our Money Safe?

It's not a bank run yet, but tons of clients have been calling Merrill Lynch private financial advisers asking if their money is safe, according to Investment News.

The clients might be concerned because the share price of Merrill Lynch's parent company, Bank of America, is down nearly 50% this year as the firm deals with concerns that it is not well enough capitalized to meet the Basel III requirements in 2013.
Those concerns have churned the rumor mill. And apparently, it has been freaking out clients who hold their money in Merrill Lynch and are concerned about what might happen if the firm is the next Lehman Brothers….

http://www.businessinsider.com/merrill-lynch-advisors-are-getting-tons-of-calls-from-clients-asking-if-their-money-is-safe-2011-8

The 15 Wackiest Things People Have Listed On Their Resumes


Would you believe...

15. Candidate said the more he was paid, the harder he worked
14. Candidate said he had been fired from past positions, but still included those managers as references
13. Candidate said getting an interview was important because he wanted an opportunity to show off his new tie
12. Candidate listed her dog as a reference
11. Candidate listed-yes, the moonwalk-as a special skill..

Find out the rest at http://www.businessinsider.com/the-15-wackiest-things-people-have-listed-on-their-resumes-2011-8

Obama's uncle arrested for drunk driving, claims he'll arrange bail through White House

President Obama's uncle was stopped on suspicion of drunken driving in Massachusetts, told police he planned to arrange bail through the White House and is being held without bail by federal immigration officials, authorities said Monday.

Onyango Obama, 67, was arrested last week in Framingham, about 20 miles west of Boston, after police said he made a rolling stop through a stop sign and nearly caused a cruiser to strike his sport utility vehicle.

Police said that after being booked at the police station, Obama was asked whether he wanted to make a telephone call to arrange for bail. "I think I will call the White House," he stated, according to a police report filed in Framingham District Court….

Read more at http://www.nydailynews.com/news/national/2011/08/29/2011-08-
29_president_obamas_uncle_arrested_for_drunk_driving_claims_hell_arrange_bail_throu.html#ixzz1WSpLWnH5

Monday, August 29, 2011

The Next Big Insider Trading Case Starts Today

Manhattan US Attorney Preet Bharara faces what could be his final courtroom showdown in his massive probe of insider trading, the NY Post reports. His opponent is James Fleishman, a former vice president of sales at “expert network” firm Primary Global Research whose trial on insider-trading charges is set to begin today in Manhattan federal court.

It will also close the loop on the string of arrests that kicked off nearly three years ago, starting with the arrest of former hedge-fund billionaire Raj Rajaratman, who was convicted on all 14 charges in May.

Fleishman is accused of acting as a middleman to a pair of traders seeking illegal tips on companies like Advanced Micro Devices. Mountain View, Calif.-based Primary Global gets paid to match industry experts with investors and others seeking insight into companies...

Find out the rest at http://www.nypost.com/p/news/business/playing_downtown_insider_trading_wTEEivBzDhSNNo6ddZbEeM

Thousands of Wall Streeters are stranded in Connecticut and New Jersey this morning.

From BusinessInsider: Both Metro North and New Jersey Transit have shut down, Metro North said there will be no service on Monday and New Jersey Transit said its service is down until further notice.

Thankfully, many on Wall Street are prepared, or still on vacation.

For employees who usually reverse-commute, many firms and hedge funds have New York offices to accommodate office-less employees.

Goldman prepared for Monday to be a difficult day for commuters by implementing its "Business Continuity Plan" and sending some traders to its Chicago offices.

Read more at http://www.businessinsider.com/wall-streeters-stranded-in-connecticut-as-metro-north-cancels-trains-2011-8

Beware the Ides of September


The Wall St Journal reports that the angst was underscored in a blunt speech Saturday by the International Monetary Fund's new managing director, Christine Lagarde, at the Fed's annual retreat here.

"We risk seeing the fragile recovery derailed," the former French finance minister said. Those risks have been aggravated, she said, by the public's sense that top policy makers aren't adequately addressing the problems they face. "We are in a dangerous new phase," she said. The IMF chief pointedly called on leaders of major central banks to keep interest-rate policies "highly accommodative," a reference to the European Central Bank, which has begun to raise rates....

She directed sterner words at politicians. Europe needs to bolster the capital in its banks and—along with the U.S.—needs to strike the delicate balance of reducing government debt in the long run without cutting so aggressively in the short run that damage is done to tenuous economic growth. Her remarks could presage an effort by leaders of G-20 nations meeting in Cannes, France, in November to develop more aggressive responses to fiscal crises and the weak economy...

Coming weeks pose important challenges for financial markets. Officials here were especially worried about several fraught negotiations in Europe. European parliaments need to approve an expansion of the powers of the European Financial Stability Facility, which is seen as critical to stabilizing strained government finances in Greece, Portugal and elsewhere. Leaders in Finland are demanding hefty collateral in return for their support of Greece. Other creditors are contemplating a debt exchange with the Greek government that could lead to more turmoil if it fails…..

Wait, wait...there's more at http://professional.wsj.com/article/SB10001424053111904199404576536192343083636.html?mod=WSJ_hp_LEFTWhatsNewsCollection

How One Hedge Fund Prepared For A Hurricane: Trade Weather Derivatives!

Hell, while others were stockpiling water, flashlights, and board games in preparation for Hurricane Irene, the hedge fund Tudor Investment was crunching numbers. According to BusinessInsider Paul Tudor Jones' investment firm employs a weather derivatives analyst.

Weather derivatives are fairly new, the first one traded in 1997 and the CME introduced the first exchange-traded weather futures contracts in 1999. The main buyers aren't hedge funds, they are insurance companies, farming conglomerates looking to insure against freezes and bad crops, electric companies, etc.
But because weather derivatives are non-correlated (the Euro crisis didn't stop Irene) and provide a considerable amount of yield, investors in the space have grown recently to include direct investments from pension funds and hedge funds. Some hedge funds, like ~$2.5 billion Nephila Capital for example, specialize in reinsurance and weather risk…..

Find out more at http://www.businessinsider.com/tudor-investment-corp-reacts-to-hurricane-irene-trade-weather-derivatives-2011

Either Sino Forest Is Completely Full of Crap, or I Am Missing Something


Kiddynamitesworld writes: I was actually short Sino-Forest ($SNOFF) coming into Friday. I remarked to a few friends of mine that I guessed it was probably a once in a lifetime event that I would be short a stock that would drop 70% in a single day, and it was too bad I had a minimal position, but it’s still good to be on the right side of a trade like this. I covered my position midday, and actually bid for stock late in the day. I didn’t get hit, and the stock rallied 15% or so from my “non”-level. I was almost disappointed, in a way. Why did I bid for stock? Because again, I thought that the OSC’s announcement that they were suspending trading of Sino-Forest might be overdone. The OSC said that they had evidence of irregularities at Sino-Forest: that seemed to me to be something that was something that was already well priced in. Irregularities? File that one under “No shit, Sherlock.” The OSC did NOT say that Sino-Forest was an outright fraud that was worth $0 per share.

Well anyway, I am no longer thinking about playing $SNOFF from the long side. Their latest announcement falls into the “You are completely full of sh!t” category, and puts me squarely in the “You-don’t-get-the-benefit-of-any-doubt” camp. I am now a full non-believer in Sino-Forest (although as I mentioned, I covered my short position). What changed?

Read on…
http://kiddynamitesworld.com/either-sino-forest-is-completely-full-of-crap-or-i-am-missing-something/

Are ETFs making stock correlations increase?

From the Wall Street Journal: It has looked that way in recent weeks, as macro issues such as the solvency of European countries and fears of a global economic slowdown have overshadowed fundamental differences between companies. The consequence is that stocks are moving in tandem, indicating a high degree of correlation.
One potential reason is the popularity of exchange-traded funds. ETFs account for more than 30% of volume in U.S. stock markets, compared with just 2% in 2000, Credit Suisse says. It's reasonable to expect ETF trading to drive correlation higher because many of the vehicles are tied to stock indexes.

Even so, ETFs were by no means the beginning of index-based trading. Mutual-fund managers have traded baskets of stocks tracking the S&P 500 for decades. Stock index futures began trading in 1982 and they remain far larger than ETFs. According to CME Group, the value of CME E-mini S&P 500 futures traded each day is more than four times the combined volume of SPDR S&P 500 ETF and iShares S&P 500 Index ETF.

Another trend that may have boosted correlation is the decline in structured products. The result has been that a range of market participants, from big banks to hedge funds, have adopted more macro-oriented strategies. And even if there's no evidence that high-frequency trading firms are a source of correlation in their own right, they are likely to reinforce it by following other participants and trading products like ETFs….

Read more about this at http://online.wsj.com/article/SB10001424053111904787404576532811006776504.html

Bernard Madoff saga still making news


Yes folks, it's hard to believe that Bernard Madoff pleaded guilty to running a massive Ponzi scheme way back in 2009. Seems like just yesterday, in part because even from his North Carolina prison where he is serving a 150 year term, the great Ponzi schemer is still making news, as is Irving Picard, the controversial trustee bent on recovering assets for victims.

In case you think the Madoff media coverage is bound to fall off soon, you would be wrong. If anything, it is about to kick up again as TV new shows compete to land the "get" of the year, an interview with Madoff. He says he is working with one show but that a segment may or may not pan out. His son Andrew may also be interested in some media coverage. Bernard said his son has been talking with 60 Minutes about a segment, but that may or may not be true. Keeping all this in the headlines is the documentary, Chasing Madoff, a paean to whistleblower Harry Markopolos, which opens this weekend. The reviews so far seem to be positive. It's unclear if Madoff will be able to arrange a viewing.

Read more: Bernard Madoff affair still making news - FierceFinance http://www.fiercefinance.com/story/bernard-madoff-affair-still-making-news/2011-08-26?utm_medium=nl&utm_source=internal#ixzz1WQiHPdgV

Warren Buffett rode to the rescue of John Paulson

The Buffet's deal to invest $5 billion in Bank of America preferred shares led to a strong rally in the ailing stock, and in so doing, gave a lot of ailing hedge fund managers a boost. Reuters writes that many had been riding the stock south, watching it sink under the weight of fear, rumors and heavy short interest.

For the moment, the bears are back on top. After Buffet's deal was announced, the shorts had little choice but to cover some of their positions. It's unclear if the Buffett deal marks a low for the stock, but the likes of John Paulson are likely breathing easier. Paulson had loaded up on Bank of America shares only to watch them tank this year, helping send his flagship Advantage funds sharply downward.

Reuters reports the leveraged Advantage Plus fund is down nearly 40 percent this year after a tough August. The article notes that while Paulson sold of a lot of his Bank of America shares, he remains a top 20 shareholder. A lot of other hedge fund managers owe Buffett their gratitude. These funds face a huge question now: Is the Buffett rally an opportunity to cut their losses? Or is this turning point that points to a higher price down the road?

Read more at http://www.reuters.com/article/2011/08/25/us-hedgefunds-buffett-idUSTRE77O5QW20110825

Sunday, August 28, 2011

Rx for America’s Banks!

According to the Washington Post’s Barry Ritholtz, for anyone who thought the U.S. banking sector was healthy, Warren Buffett’s $5 billion investment in Bank of America should be a wake-up call.

Many investors assumed the Wall Street bailouts of Bank of America and the other big banks more or less healed the sector. All it took was few trillion dollars in liquidity and a few $100 billion in recapitalization. Voila! In fact, the banking system was not saved. The massive injections of liquidity temporarily salved the day-to-day operations of banks, but they did not repair the more profound troubles. Indeed, pouring billions into nearly identical management teams that mismanaged risk, overleveraged exposure and drove banks off the cliff in the first place was an invitation for another crisis.

In past weeks, Bank of America has been under increasing pressure from investors. Its already damaged stock was cut in half, and commentators including myself argued that the bank was headed back toward the rocky shoals of insolvency.
A few items leapt out:
●Despite its BS claims to the contrary, Bank of America needed both capital and a reputation reboot. Buffett provided a little of both, though I’m not sure which they needed more.

●With the Fed offering banks capital at nearly zero percent interest rates, why would BofA take money at 6 percent? This gives lie to the claim that BofA did not need more capital.

●Investors are cautioned that unless you are buying on the same terms as the billionaire, you are making a very different bet than he is. Clout matters.

Read more at http://www.washingtonpost.com/a-how-to-guide-for-fixing-americas-banks/2011/08/26/gIQAdbUijJ_print.html

What Horror Show? Here’s one group of companies that smile when markets go crazy


The latest financial market convulsions have been tough for almost everyone, including traders caught on the wrong side of another big swing and pained everyday investors watching their dwindling holdings go down and up — and down again. But there is a silver lining to even this latest market horror show, at least for the exchanges where the financial instruments change hands.

Businesses like the New York Stock Exchange and the Chicago Mercantile Exchange skim cents off each stock or contract bought or sold over their trading floors or computers. With the daily volumes of financial market contracts sent surging through their systems by nervous traders and investors up by billions, the latest trading rush is directly polishing their bottom line.

The effect, however, may be fleeting. The rising volumes have generally not translated into higher stock prices for the exchanges, and they and some analysts are worried that the volatility and downbeat economic news may frighten away investors in the long term…

Find out more at http://www.nytimes.com/2011/08/27/business/as-trade-volumes-soar-exchanges-cash-in.html?_r=1

$1.1 billion in Khadafy-government assets stashed in NYC-based banks!

According to the NY Post Moammar Khadafy's credit is good in New York. The Libyan madman stashed $1.1 billion of government assets in two New York City-based banks, The Post has learned.

Investment bank Goldman Sachs is holding onto $604,972,056.56 of Libyan government assets, and JPMorgan Chase has a cool $513,319,668.58, according to a report provided to The Post by the US Treasury's Office of Foreign Assets Control.
Wells Fargo has $6,098,291.04, and Bank of America has $837,875.85, according to the Libya Sanctions Blocked Assets Report.

The report does not show any of the banks holding personal funds for Khadafy or his son, Seif al-Islam Khadafy....

Read more: http://www.nypost.com/p/news/local/manhattan/mo_money_in_city_banks_uZuSUN6kXI3nzPeDztk00I#ixzz1WOjijhXl

Wealth Watch: Rich Couple Faces Foreclosure in the “World’s Richest Apartment Building”

Grab a hankie, maybe two: "....Not until now has one of those stories involved what author Michael Gross called 'the world's richest apartment building.'"

Property developer Kent Swig and his soon-to-be ex-wife Elizabeth are facing foreclosure on their apartment located at billionaire co-op 740 Park Avenue in New York City, the U.K.'s Daily Mail reports. The couple reportedly stopped making payments on two loans worth $16 million over 23 months ago. Real estate experts are stunned that the Swigs were ever allowed to borrow against the apartment, according to the Daily Mail, since it's in violation of the co-op's strict regulations.

Yet the Swigs are far from the first high-income Americans to be threatened by foreclosure, nor the most famous. Others afflicted include R&B singer R.Kelly, who stands to lose his Chicago mansion to foreclosure, and actor Burt Reynolds, who's $1.5 million behind on mortgage payments for his Hobe Sound, Florida estate….

Read more at http://www.huffingtonpost.com/2011/08/26/foreclosure-hits-property-developer-billionaire-building_n_937676.html

JPMorgan, Citi: New York City Headquarters ‘Fully Operational’

JPMorgan Chase & Co., the second- biggest U.S. bank by assets, said its New York headquarters escaped serious damage and that the company is using a hotline to help communicate with employees.

“All branch managers are calling employees one-by-one to see if they’re okay,” Kristin Lemkau, a spokeswoman for the New York-based lender, said today in an e-mail. “As soon as mass transit is up and running and we know they can get to work safely, we’ll update the message that it’s business-as-usual tomorrow.”
Citigroup Inc., the third-biggest U.S. bank, said offices in downtown Manhattan escaped serious damage from Hurricane Irene and that the lender is reviewing transportation options for employees.

Buildings at 388-390 Greenwich St. “are fully functional,” Danielle Romero-Apsilos, a spokeswoman for New York-based Citigroup, said today in an e-mail. “Pending the lift of the evacuation and pending updates on mass transit, we are investigating transportation options for employees.”

The company is reviewing damage to retail branches and may have an update later today, Sean Kevelighan, a spokesman for Citigroup’s consumer bank, said in a separate e-mail.

Read more at http://www.businessweek.com/news/2011-08-28/jpmorgan-says-new-york-city-headquarters-fully-operational-.html

Wall St expected to open Monday

Those good people at Reuters report that the stock market is, for now at least, expected to have a normal trading session on Monday despite the arrival of Hurricane Irene in New York.

The New York Stock Exchange, the Nasdaq Stock Market and the alternative BATS venue said they expected to open trading for the week as usual. But with the New York subway system closed down and commuter rail service into the city suspended, the question remains: who will staff Wall Street?

A final decision is expected later on Sunday after regulators, exchange officials and others meet to discuss the storm and market operations. The decision hinges on whether subways are running, the extent of flooding in downtown Manhattan, and power outages, sources familiar with the plan said on Sunday.

The NYSE and broader U.S. marketplace are mostly automated, quietly running out of powerful data centers in New Jersey and elsewhere. Electronic trading is expected to function normally on Monday.

"At this point, though like everybody else we don't have a hotline into the mayor's office, we're a lot more comfortable than we were yesterday when the strength of the storm was an unknown," said Mike Shea, a managing partner and trader with Direct Access Partners LLC in New York….

Read more at http://www.reuters.com/article/2011/08/28/us-irene-wallstreet-idUSTRE77R1UE20110828

Irene SuperSoaks New York!


According to NY Times' reports tropical storm Irene swept through the New York City area on Sunday morning lacking anywhere near the force that had been feared, but still cutting power to more than a million people, toppling trees and causing sporadic flooding in some parts of the city.

Though the storm packed strong winds and heavy rain, it never dealt the kind of punch that forecasters had feared. There were no reports of major damage to skyscrapers, for instance, and officials said the flooding appeared to be limited. People awoke anxious that they would see destruction out their windows, only to find a scene more typical after a major summer storm.

Still, even after the storm was downgraded to a tropical storm as it moved up the Eastern Seaboard, it tossed floodwater onto the coastline of New Jersey and New York. The National Hurricane Center said the storm made landfall near Little Egg Inlet, north of Atlantic City, shortly after 5:30 a.m., and made it to New York City by about 9 a.m.

Flooding was reported around the five boroughs, with the storm surge overcoming sea walls in several places around the city. In Staten Island, several dozen people had to be rescued from homes that had filled with water.

The full extent of the flooding was not immediately clear on Sunday, but from daybreak onward, forecasts offered some encouragement. City officials said it appeared that the hurricane moved more quickly than they expected, meaning less damage as the storm passed through the metropolitan area.

A storm surge at high tide predicted to be between four and eight feet had caused flooding across the city. In the Battery breached the seawall in several spots, including near the Staten Island Ferry Terminal in Lower Manhattan. Flooding was more serious in low-lying neighborhoods in Brooklyn, Queens and Staten Island with water, in some places, reaching people’s thighs and residents using kayaks to navigate inundated streets….

According to New York Post reports: "Once the tropical storm subsided, the water that had breached the seawall in Battery Park City receded back into where the Hudson River meets the harbor. There was some flooding in SoHo and the West Village.

The Mercantile Exchange confirmed the New York Stock Exchange would be open as normal Monday morning."


For more coverage check out http://www.nytimes.com/2011/08/29/nyregion/wind-and-rain-from-hurricane-irene-lash-new-york.html?ref=global-home

EU Working on ‘Radical’ Plan for Banks (Holy Smoke…Looks Like They mean it! )

Following weeks of heavy losses for banking stocks across Europe, the Sunday Times in the UK reported Sunday that European officials are working on a "radical plan" to prevent a fresh pan-European credit crunch. Without citing sources, the paper said officials from the European Central Bank and European Commission are considering offering central guarantees over certain types of debt issued by banks.

The paper goes onto say that the move comes after a number of European banks where shut out of international money markets. The report comes after the head of the International Monetary Fund warned on Saturday that "urgent recapitalization" was needed for Europe’s banking industry.

“Developments this summer have indicated we are in a dangerous new phase. The stakes are clear. We risk seeing a fragile recovery derailed, so we should act now,” said Christine Largarde in a speech in Jackson Hole Wyoming on Saturday.

Find out more at http://www.cnbc.com/id/44303970

Weird’s Deep Thoughts (Weekend Edition) The Coming Collapse Of The Commodities Bubble ( May the Force Be With You!)


“…We find ourselves still near the peak of the largest credit bubble in history. As faith in many of the more spurious 'asset' classes devised by 'financial innovation' has been shaken, faith in the ever increasing value of commodities has strengthened. However, commodities are not immune to the effects of a shift from credit expansion to credit contraction, despite justifications for endless price rises, such as apparently bottomless demand from China and the other BRIC countries.

“Every bubble is accompanied by the story that it is different this time, that this time prices are justified by fundamentals which can only propel prices ever upwards. It is never different this time, no matter what rationalizations exist for speculative fervour. BRIC demand only appears to be insatiable if we make our predictions solely by extrapolating past trends, but that approach leaves us blind to trend changes and therefore vulnerable to running off a cliff. Insatiable demand results from seemingly endless cheap credit, given that demand is not what one wants, but what one can pay for. When credit collapses, so will demand, and with it the justification for higher prices.

“While credit expansion (inflation) is a powerful driver of increasing prices, credit contraction (deflation) is a far more powerful driver of decreasing prices. Credit, having no substance, is subject to abrupt fear-driven disappearance. Confidence and liquidity are synonymous, and confidence is once again evaporating quickly, as it did in phase one of the credit crunch (October 2007-March 2009). As contraction picks up momentum, the loss of credit will rapidly lead to liquidity crunch, drastically undermining price support for almost everything. With purchasing power in sharp retreat, however, lower prices will not lead to greater affordability. Purchasing power typically falls faster than price under such circumstances, so that almost everything becomes less affordable even as prices fall.

“…We stand on the verge of a precipice. The effects of the first real liquidity crunch for decades will be profound. We are going to see prices fall across the board, but far fewer will be able to afford goods or assets at those lower prices than can currently afford them at today's lofty levels. The social effects of this will be enormous, and will spread to many more countries. The collapse of our credit pyramid will be the driving factor and it will sweep all before it like a hurricane for at least the next several years. Beware. “

http://theautomaticearth.blogspot.com/

Friday, August 26, 2011

; Bloomberg Orders Mandatory Evacuations For Low-Lying Areas;NYSE girds for Mother Nature


The massive American flag draped over the New York Stock Exchange's towering pillars has been removed so that Hurricane Irene doesn't tear it down this weekend. Inside the downtown Manhattan building, Big Board staff are prepping a backup power generator that is safely located well above the Wall Street-level trading floor. Extra fuel is in the basement and extra food is in the kitchen.

Benedict Willis III, director of floor operations for investment banking boutique Sunrise Securities, said on Friday the NYSE has a responsibility to open after the storm passes on Monday because millions of investors are relying on it for stock prices.

"But if the waters rise this high," he said gesturing at the buzzing trading floor, "then it's a bigger problem than I can handle. My name's not Noah."

With the powerful storm roaring up the US east coast, setting off evacuations in the Carolinas, NYSE Euronext officials said that for now at least they plan to open trading as usual next week. But a final decision, particularly on floor operations, won't be made until later this weekend. It hinges on whether city subways are running and whether New York Harbour waters flood over the low-lying downtown core -- one of the worst case scenarios seen on Sunday, when Irene is to hit.

"If you get a huge tidal surge then that's different. The building wouldn't be occupiable," said Lou Pastina, executive vice president of NYSE operations…
. http://www.businessspectator.com.au/bs.nsf/Article/NYSE-looks-to-open-Monday-but-Irene-has-final-say-L4MM9?OpenDocument&src=hp2

New York Transit System Prepares for Full Shutdown

Bloomberg reports that New York City’s mass-transit system could shut down for much of the weekend if Hurricane Irene arrives as is currently predicted, Metropolitan Transportation Authority chairman Jay Walder said Thursday evening.

The transit agency, which runs the city’s subways, buses and several commuter trains, can’t guarantee the safety of riders and employees if sustained winds reach above 39 miles per hour, Walder said. Even a weakened Irene would bring winds in excess of that speed, making it likely that the MTA will start shutting down service Saturday morning. There could be lingering delays and service outages into Monday’s morning rush hour.

It takes at least eight hours to shut down the nation’s largest mass-transit system, Walder said. The MTA’s network of rail, subway and bridges stretches from Long Island’s East End to the Hudson Valley and up the Connecticut coast.

The subway system is especially vulnerable to flooding. On an average day, 13 million gallons of water are pumped out of it…. Who knew?

http://blogs.wsj.com/metropolis/2011/08/25/hurricane-irene-new-york-transit-system-prepares-for-full-shutdown/?mod=google_news_blog

How Come Walmart Is Dead Meat?

MB Quirk in Consumerist writes: Make sure you read this in a spooky voice in your head: Wal-Mart is dooooomed! At least, the business model it relied on to reach such astronomical growth is now probably putting a choke hold on the company's ability to grow and compete.

AdAge says the plan developed by founder Sam Walton way back when in the 1960s, low low prices, worked because it attracted more shoppers, and more prices could be lowered, known as the "productivity loop."

Now, however, where there seems to be a Wal-Mart every four feet, leaving no more room for more stores. The expansion of stores has declined, and so have their sales. It's had to raise prices to compete and appease shareholders, but customers don't go to Wal-Mart for rising prices. They go for low ones, and so, declining sales.

Once they don't have the lowest prices around, what do they have? There are no cheap meatballs like at IKEA, there isn't any other attraction to bring in shoppers, and consumers come in less and buy less.AdAge notes that research by Morgan Stanley last month reported that 60% of Walmart shoppers don't believe the retailer actually has the lowest prices anymore. Another by WSL Strategic Retail found a whopping 86% felt that way….

Find out more at http://consumerist.com/2011/08/wal-mart-is-dying-because-its-a-self-strangling-weed.html

Why Steve Jobs chose this week to step down?

Fortune writes: “…In his "Second Opinion" column for the San Francisco Examiner, John Dvorak -- a man whose penchant for contrariness led him to suggest in 1984 that nobody would want to use a mouse to control a computer and in 2007 that Apple "pull the plug" on the iPhone before it's too late -- offers a simpler, more logical explanation.

"The reason," he wrote, "is Tim Cook." The key paragraphs:
Everyone in Silicon Valley would love to hire this guy, and from his perspective, his title as "acting" chief executive gets old fast when you are actually running the company.

Jobs has been on extended leave for months, so what's going to change with this announcement? Nothing, that's what — except the title itself. And this is what is important.

Giving up the CEO title to Cook had to be done sooner than later. The company cannot take a chance that Cook might get be tired of being jerked around. More importantly, from Cook's perspective, he cannot afford to be the acting chief executive if Jobs actually dies while he is acting chief.
The way these companies operate, they will keep a CEO if he or she is the actual CEO and the chairman/founder dies. If he or she is the acting CEO when the chairman/founder/CEO dies, then the job is up for grabs. Cook would not automatically become the CEO.

In other words, Cook may get screwed out of the top spot when the weasels come out of the woodwork. "Yes, he's the acting CEO, but let's just look around before we give him the job — just in case..."

Read more at http://tech.fortune.cnn.com/2011/08/26/why-did-steve-jobs-choose-this-week-to-step-down/

Sino-Forest Officers Ordered to Resign

Yes, Virginia there is a God! Canada's top securities regulator slapped a cease-trading order on Sino-Forest Corp. on Friday and ordered the company's top executives to resign, saying the forestry company allegedly misled the public by misrepresenting some of its timber holdings reports the Wall St Journal

The company's stock took a beating in June when allegations of questionable accounting by U.S.-based short seller Muddy Waters LLC surfaced. Sino-Forest denied the allegations, including that it fraudulently exaggerated its tree-plantation assets…

Find out more at http://online.wsj.com/article/SB10001424053111904787404576532300880367740.html?mod=WSJ_hp_LEFTWhatsNewsCollection

Did Citi Get Screwed on Yahoo Shares?

Imagine I owe you $1.135 billion. (Don’t worry. I’m good for it.) But instead of repaying you in cash, I pledge to hand over stock in an Internet company whose best days are behind it. Not a great idea, is it? But that’s exactly what Citigroup did, at least according to the Wall St Journal.

Japanese banking giant Softbank in 2004 borrowed $1.135 billion from Citigroup. Softbank was permitted to repay the loan in cash, or with a set number of shares of Yahoo, in which Softbank has been an investor since Yahoo’s early days.

Just one small problem. Yahoo’s stock price was as high as $39 back in 2004, valuing the 53 million (split adjusted) shares pledged by Softbank at more than $2 billion. Today, those shares are worth just $670 million..

Read more at http://blogs.wsj.com/deals/2011/08/26/did-citigroup-get-fleeced-on-yahoo-shares/

NO FED STIMULUS, BERNANKE PUNTS TO WASHINGTON, BUT….

.As a justification for no QE, Bernanke gives a positive outlook for the economy in the U.S. and Europe.

“…There have been some positive developments over the past few years, particularly when considered in the light of economic prospects as viewed at the depth of the crisis. Overall, the global economy has seen significant growth, led by the emerging-market economies. In the United States, a cyclical recovery, though a modest one by historical standards, is in its ninth quarter. In the financial sphere, the U.S. banking system is generally much healthier now, with banks holding substantially more capital. Credit availability from banks has improved, though it remains tight in categories--such as small business lending--in which the balance sheets of potential borrowers remain impaired. Companies with access to the public bond markets have had no difficulty obtaining credit on favorable terms. Importantly, structural reform is moving forward in the financial sector, with ambitious domestic and international efforts underway to enhance the capital and liquidity of banks, especially the most systemically important banks; to improve risk management and transparency; to strengthen market infrastructure; and to introduce a more systemic, or macroprudential, approach to financial regulation and supervision.”

Read more: http://www.businessinsider.com/ben-bernanke-jackson-hole-friday-august-26-2011-8#ixzz1W98MZcsg

U.S. Stock Futures Erase Earlier Gains as Investors Await Bernanke Speech

U.S. stock futures erased their advance as investors awaited a speech from Federal Reserve Chairman Ben S. Bernanke for indications on whether the central bank will further support the world’s largest economy, Bloomberg reports.

Bank of America Corp. rose 2.2 percent in European trading, extending yesterday’s surge after Warren Buffett’s Berkshire Hathaway Inc. agreed to invest $5 billion in the nation’s biggest bank. General Electric Co. climbed 0.9 percent in Europe after its chief executive officer for Latin America said sales in the region may double in three to four years.

Futures on the Standard & Poor’s 500 Index expiring in September rose less than 0.1 percent to 1,157 as of 9 a.m. in London, having earlier gained 0.8 percent and fallen 0.3 percent. The U.S. equity benchmark lost 1.6 percent to 1,159.27 yesterday as selling in German futures sparked a rout in global stocks. Dow Jones Industrial Average futures were unchanged at to 11,137...

Find out more at http://www.bloomberg.com/news/2011-08-26/u-s-stock-futures-rise-amid-stimulus-speculation-ahead-of-bernanke-speech.html

Gurus warn: Market crash 'could hit within weeks'


A more severe crash than the one triggered by the collapse of Lehman Brothers could be on the way, according to alarm signals in the credit markets, according to the Telegraph.

Insurance on the debt of several major European banks has now hit historic levels, higher even than those recorded during financial crisis caused by the US financial group's implosion nearly three years ago.

Credit default swaps on the bonds of Royal Bank of Scotland, BNP Paribas, Deutsche Bank and Intesa Sanpaolo, among others, flashed warning signals on Wednesday. Credit default swaps (CDS) on RBS were trading at 343.54 basis points, meaning the annual cost to insure £10m of the state-backed lender's bonds against default is now £343,540….

Find out more at http://www.telegraph.co.uk/finance/financialcrisis/8721151/Market-crash-could-hit-within-weeks-warn-bankers.html

U.S. seeks 6-7-year in the Slammer for former trader

Reuters reports that Federal prosecutors are seeking a prison sentence of roughly six to seven-plus years for a former trader who pleaded guilty in April in connection to a sweeping government probe into insider trading.

Craig Drimal told a U.S. federal judge in Manhattan at his plea hearing that he traded in shares of former computer network equipment maker 3Com Corp and Canadian drug company Axcan Pharma Inc based on tips from lawyers at the law firm Ropes & Gray working on merger transactions. Drimal pleaded guilty to securities fraud and conspiracy charges.

In court papers filed on Wednesday, federal prosecutors said that Drimal made around $6.5 million off the trades in 3Com and Axcan. They also said that Drimal lied to the Securities and Exchange Commission when he was questioned about his Axcan trades.

"In sum, Drimal engaged in repeated insider trading over the course of many months," prosecutors said. "He placed large trades so he could reap millions in illegal profits."

Find out more at
http://www.reuters.com/article/2011/08/25/us-trader-usa-sentencing-idUSTRE77O5DK20110825

The Real Dirt: Wall Street Goes Down on the Farm

Seriously folks....across the Midwest, dozens of analysts and investors are tramping corn and soybean fields this week in an annual ritual aimed at giving them an edge on their Wall Street rivals, reports the Wall St Journal..

The four-day, seven-state marathon costs $80, not including travel costs, and is organized by Pro Farmer, an agriculture advisory firm. Participants walk dozens of fields and get details from farmers about the number of bushels likely to be harvested from each acre.

Instead of relying on the spreadsheets left behind on their office computers, analysts and investors on the "corn tour" become "scouts" who disappear into each field with a 30-foot-long yellow rope. They run the rope along a row of stalks and count the number of ears. Along the 30-foot section, the scouts pull off the fifth, eighth and 11th ears—and then rip off the husks to count the number of kernels along the circumference of each ear. The scouts put their arms up in front of their faces to protect themselves from sharply edged corn leaves….

Read more at http://online.wsj.com/article/SB10001424053111904009304576530832399135412.html?mod=WSJ_business_LeftSecondHighlights

JPMorgan Settles Again, This Time for $88.3 Million

JPMorgan Chase has agreed to pay $88.3 million as part of a settlement with the Treasury Department over a series of transactions involving Cuba, Iran and Sudan, the agency told NY Times' Dealbook on Thursday.

The Treasury Department’s Office of Foreign Assets Control said in a news release that JPMorgan processed wire transfers totaling around $178.5 million for Cuban nationals in late 2005 and early 2006, violating United States embargo laws. The bank’s officers discovered the transfers in 2005, after they were tipped off by another financial institution, but failed to report them and did not take adequate steps to prevent more transfers, according to the statement. The release did not say which institution made the initial discovery.

The bank was also fined for a 2009 incident in which it made a $2.9 million loan to a bank that had ties to Iran’s government-owned shipping line, a violation of United States sanctions against the Middle Eastern nation. Again, JPMorgan Chase learned of the apparent violation early on but did not disclose it to regulators until March 2010, three days before it was repaid for the loan.

A third violation occurred in 2010 and 2011, when the bank failed to give up documents about a wire transfer that referred to Khartoum, the capital of Sudan. According to the release, the agency gave JPMorgan a list of documents believed to be possessed by JPMorgan. In response, JPMorgan, which previously said it had no such documents, produced more than 20 of the items in question.

Find out the rest at http://dealbook.nytimes.com/2011/08/25/jpmorgan-to-pay-88-3-million-for-sanctions-violations/


Thursday, August 25, 2011

Buffett’s BofA Stake Nets $1.3B on First Day Return!

Not too shabby! Warren Buffett may have earned $1.3 billion in one day on his $5 billion investment in Bank of America Corp., Bloomberg writes.

The preferred shares Buffett’s Berkshire Hathaway Inc. (BRK/A) bought are worth about $3.53 billion, Phil Jacoby, chief investment officer at Spectrum Asset Management Inc. in Stamford, Connecticut, estimated. Warrants included in the deal are worth about $2.73 billion, based on Bank of America’s share price of $7.65 as of 4:15 p.m. in New York trading, said Clay Struve, a partner with Chicago-based CSS LLC.

The 25 percent first-day return -- more than 9,000 percent on an annualized basis -- shows the premium Bank of America Chief Executive Officer Brian T. Moynihan was willing to pay to attract Buffett as an investor. As Berkshire’s CEO, Buffett has garnered a reputation as one of the world’s best investors, with shareholder returns over the past decade that are more than double those of the Standard & Poor’s 500 Index.

Read all about it at http://www.bloomberg.com/news/2011-08-25/buffett-s-bank-of-america-stakes-net-1-4-billion-in-profit-on-first-day.html

Chicago hedge fund manager pleads guilty to fraud

Philip Baker, former managing director of the collapsed Chicago hedge fund Lake Shore Asset Management Ltd, pleaded guilty on Wednesday for his role in what prosecutors called a $291.8 million worldwide fraud, according to Reuters..

Baker, a Canadian citizen, admitted to one count of wire fraud, averting a trial scheduled to begin on September 19, according to the office of U.S. Attorney Patrick Fitzgerald in Chicago. The 46-year-old Baker has been in U.S. custody since December 2009, six months after a 27-count indictment against him was made public. Baker had been living in Hamburg, Germany at the time and was arrested there in July 2009.

Under a plea agreement, prosecutors will recommend the maximum 20 years in prison. Baker will also pay about $154.8 million in restitution. Sentencing is scheduled for November 17 before U.S. District Judge John Darrah in Chicago...

Find out more at http://www.reuters.com/article/2011/08/24/us-baker-hedgefund-plea-idUSTRE77N7JW20110824

Madoff & Harvard Business School ?


Reuters’ Charlie Gasparno writes: Bernie Madoff is feeling pretty grand these days. He’s got reporters (including myself) hounding him for interviews and his insight into Wall Street and its misgivings. He’s the toast of the federal prison in Butner, NC., where he’s serving a life sentence for carrying out the greatest white collar swindle of all time -- a Ponzi scheme that cost investors some $50 billion.

And, at least in his mind, he’s getting ready to help the prestigious Harvard Business School develop course work for its students from his jail cell at Butner. In one of the handful of interviews he has given since his arrest in 2008, Madoff said that Harvard is interested in his input to develop a course in business ethics. Now he tells FOX Business that the school’s focus is in “building an Entrepreneurial course” not just on his career as a swindler (though that will certainly come up), but also his pre-phony hedge fund days, when Bernie Madoff was considered one of the best traders on Wall Street….

Find out more (if you dare): http://www.foxbusiness.com/markets/2011/08/25/madoff-im-victim-too/

Spain, Italy, France, Greece And Belgium Extend Bans On Short Selling

Market regulators in Spain, Italy, and France all extended bans on short selling today, with previous bans set to expire after trading ends on Friday, Bloomberg reports
.
While this still does not constitute a euro-wide short selling ban -- Germany, at least, is not participating -- it is a coordinated move that belies fears that speculators will wreak havoc in European markets.

Greek regulator ESMA and Belgian regulator FSMA will also extend their short selling bans, even though bans imposed previously were not set to expire this week. Bans in Spain and Italy are set to end September 30, while France's ban will last through November 11. All regulators emphasized that they will lift bans when the markets allow. Some experts, however, see no end in sight….

Find out more at http://www.bloomberg.com/news/2011-08-25/german-stocks-sink-amid-speculation-of-extended-european-short-sale-bans.html

Citadel Axing Last Two Dozen Employees in Sales, Trading

Ken Griffin, founder of the $11 billion hedge fund Citadel LLC, is firing the last of the sales people and traders in his securities business as it focuses on electronic trading, according to two Bloombger people briefed on the dismissals.

The firings today of about two dozen employees come two weeks after Griffin’s New York-based Citadel Securities said it was shutting its equity-research group and its investment bank, ending a three-year effort to build a business that the hedge- fund manager said would rival Goldman Sachs Group Inc.

Griffin, 42, founded Citadel Securities in late 2008 to offer underwriting, stock, bond and derivatives trading and advice on mergers, acquisitions and restructurings. After the business failed to gain traction, Citadel decided to concentrate on building its computer-based trading for institutions as well as its options and equities market-making operations, which started in 2002…

Read more about this at http://www.bloomberg.com/news/2011-08-24/citadel-securities-said-to-be-firing-two-dozen-employees-in-sales-trading.html

Citi Trader Starting Own Hedge Fund

Hedgefund.net informed us that the head of financial giant Citi’s prop trading desk plans to leave his post to start a new hedge fund. London-based Sutesh Sharma registered a new firm, Portman Square Capital, in the United Kingdom last month with Citigroup co-worker Toby Lingard, according to a Bloomberg report.

Sharma’s move is a response to Citi’s attempt to cut down on its in-house proprietary traders to comply with the Volcker Rule, who forbids banks from trading with its own money….

http://www.hedgefund.net/publicnews/default.aspx?story=12812

Yikes! Mayor Bloomberg Tells New Yorkers To Prepare For Evacuation!


Holy Crap! New York officials preparing for Hurricane Irene will decide tomorrow whether to call for the evacuation of low-lying areas in downtown Manhattan, Brooklyn, Queens and Staten Island, Mayor Michael Bloomberg said. The decision would be based on the strength, path and speed of the storm, Bloomberg told reporters today at a news conference in a flood-prone section of Queens. The city would offer “an enormous shelter system” for those without a place to stay on higher ground, he said.

“We don’t have enough information yet to make that call,” Bloomberg said. “The timing is a bit up in the air, as it is with all these things. Sometime on Friday, late in the day. How many depends on how severe we think the storm is going to be.”

The mayor has the power to issue an executive order to force people to move, which he said he would do only in the “worst circumstances.” City officials are planning for a storm with winds of at least 60 miles per hour (97 kilometers per hour) accompanied by heavy rain, the mayor said. They expect the brunt of the storm to cross mid-Long Island, on the border of Nassau and Suffolk counties, to the east of the city, he said.

Read more at http://www.zerohedge.com/news/mayor-bloomberg-tells-newyorkers-preapre-evacuation

How Bruce Berkowitz Just Made ~$128.5 Million In One Hour

Fairholme's Capital Bruce Berkowitz just made around $128.5 million since yesterday's close in his stake with Bank of America, assuming he owns at least as many shares in the firm as he did on June 30th.

This morning Berkshire Hathaway's Warren Buffett announced he would purchase 50,000 preferred shares for $5 billion. The news pushed the stock price nearly 20% higher.
And Berkowitz, who believed in BofA so much that he hosted a conference call for Moynihan to convince critics they were wrong, cashed in...

Find out more at http://www.businessinsider.com/berkowitz-just-made-at-least-1285-million-on-bank-of-america-in-one-hour-2011-8

Warren Watch: Buffett Puts His Guarantee On Bank Of America’s Box

Dealbreaker writes: Yesterday morning, as Bank of America continued “reaping the benefits of what Countrywide hath sowed,” Jim Cramer proposed an idea: get a billionaire to vouch for you. Just as Warren Buffett investing in Goldman Sachs had been a signal that everything was cool with the Masters of the Universe and Prince Alwaleed and his horses’ unflagging love ‘o Citi have at times kept the bank afloat, BofA, Cramer proposed, should get someone to send a message that all is good in the hood. JC suggested Carlos Slim was the guy to take one for the team, while we liked the idea of, among others, Bruce Wayne, Lynn Tilton or Warren Buffett, who enjoys spreading the love. Apparently WB is our man.

Bank of America Corporation announced today that it reached an agreement to sell 50,000 shares of Cumulative Perpetual Preferred Stock with a liquidation value of $100,000 per share to Berkshire Hathaway, Inc. in a private offering. The preferred stock has a dividend of 6 percent per annum, payable in equal quarterly installments, and is redeemable by the company at any time at a 5 percent premium.

http://dealbreaker.com/2011/08/warren-buffett-puts-his-guarantee-on-bank-of-americas-box/

Grim News: Goldman Invokes Pay Slashing Clause


Goldman Sachs International (GS) has triggered a clause inserted into the employment contracts of a group of its London-based investment bankers in mid-2009 that will result in them having to take a pay cut, Financial News has learned.

A number of staff across the investment bank's European division, which is based in London, have been told this summer that their base salaries will be cut, a source with knowledge of the situation told Financial News…

Read more at http://professional.wsj.com/article/BT-CO-20110825-707637.html?mod=WSJ_FinancialServicesAndInsurance_middleHeadlines&mg=reno-secaucus-wsj

Why "Black box" hedge funds coin it in wild and crazy markets

Hedge funds run by sophisticated computer programs are profiting from large falls in stock markets and a rocketing gold price this month, even as funds managed by human beings struggle to cope with high market volatility, the good folks at Reuters say.

Insiders say so-called managed futures funds, which try to latch onto market trends, are making money from declining bond yields and falling equities, as investors seek safe havens amid the eurozone debt crisis and after the U.S.'s credit rating downgrade.

These "black box" funds are up 4.2 percent so far this month, according to Hedge Fund Research's HFRX index, while the average hedge fund is down 4.0 percent and managers betting on rising and falling stock prices have lost a hefty 7.3 percent on average.
Man Group has seen its flagship $23.9 billion AHL fund rise 4.3 percent -- making a profit of roughly $1 billion -- over the week to Monday, a regulatory filing from the company showed. The gains take AHL to just 0.3 percent on average away from the level above which it earns performance fees…

Wait, wait...there’s more at http://www.reuters.com/article/2011/08/24/us-hedgefunds-performance-idUSTRE77N57820110824

Jobs Resignation Erases $52B From S&P 500

Steve Jobs decision to step down as Apple Inc. (AAPL)’s chief executive officer erased as much as $52 billion from the benchmark gauge for U.S. stocks, futures trading shows.

The September contract on the Standard & Poor’s 500 Index slumped up to 0.6 percent after Jobs released his statement at 6:34 p.m. in New York yesterday. The measure’s total market value was $9.34 trillion at the close of regular trading at 4 p.m., data compiled by Bloomberg show. Apple fell 5.1 percent.

Jobs, 56, who has battled cancer and had a liver transplant, presided over a 9,020 percent surge in the stock since July 29, 1997, the day before the San Francisco Chronicle broke the news that he would be named interim CEO. Over the same period, the shares grew in value to $348.7 billion from $2.08 billion. Apple briefly surpassed Exxon Mobil Corp. this month as the world’s most valuable company. Chief Operating Officer Tim Cook, 50, succeeded Jobs.

“The fortunes of Apple have been closely identified with Steve Jobs,” Matt McCormick, a money manager at Cincinnati- based Bahl & Gaynor Inc., which oversees $4 billion, said in a telephone interview. “When he is in, the stock outperforms. The stock will languish until Cook can reassure investors and demonstrate his value. It’s not the end for Apple, but the end of a chapter….”

Find out more at http://www.bloomberg.com/news/2011-08-25/jobs-decision-to-resign-erases-52-billion-from-s-p-500-as-apple-tumbles.html

Chicago fund manager guilty of $292 million fraud


Reuters reports that Philip Baker, former managing director of the collapsed Chicago hedge fund Lake Shore Asset Management Ltd, pleaded guilty on Wednesday for his role in what prosecutors called a $291.8 million worldwide fraud.

Baker, a Canadian citizen, admitted to one count of wire fraud, averting a trial scheduled to begin on September 19, according to the office of U.S. Attorney Patrick Fitzgerald in Chicago.

The 46-year-old Baker has been in U.S. custody since December 2009, six months after a 27-count indictment against him was made public. Baker had been living in Hamburg, Germany at the time and was arrested there in July 2009.

Under a plea agreement, prosecutors will recommend the maximum 20 years in prison. Baker will also pay about $154.8 million in restitution. Sentencing is scheduled for November 17 before U.S. District Judge John Darrah in Chicago….

There’s more at http://www.reuters.com/article/2011/08/24/us-baker-hedgefund-plea-idUSTRE77N7JW20110824

Bosses Don't Listen: Now There's Proof

Do you feel as if your boss never listens to you? Even when she has assigned you to research a topic, she winds up brushing off your counsel and doing her own thing. Or the boss asks you about whether to spend more of the company’s money on an initiative that you’ve been following closely. You know the project is failing, you say so, but the boss ignores your input and spends another $200,000 of the firm’s money on the poorly-performing effort.

Kelly See, an assistant professor of management and organization at New York University’s Leonard N. Stern School of Business, was curious about these sorts of scenarios, so she put together an in-depth study of the extent to which people in power take advice from knowledgeable colleagues. Together with NYU Stern’s Elizabeth Morrison, Naomi B. Rothman of Lehigh University and Jack B. Soll of Duke, See ran a research project over two-and-half-years that examined advice-taking in some 1,500 study participants. The conclusion: The more power managers have, the less likely they are to take advice. “Once you’re in a position of power, it tends to make you more confident in your decisions,” explains See….

Find out more at http://www.forbes.com/sites/susanadams/2011/08/24/bosses-dont-listen-now-theres-proof/

SEC Officials Focus of Inquiry

According to the Wall St Journal’s Jenny Strasburg The Securities and Exchange Commission's internal watchdog is investigating whether enforcement officials misled the government's archives agency last year by saying the SEC was "not aware" of the destruction of certain probe-related records, according to people familiar with the matter.

The matter is part of a broader, continuing investigation by the SEC's Inspector General office into whether the Wall Street regulator improperly destroyed thousands of records connected to "matters under inquiry," or MUIs. MUIs are the enforcement division's preliminary looks into potential violations of securities law at hedge funds, Wall Street banks and other firms. MUIs sometimes lead to formal ...

Find out more at
http://online.wsj.com/article/SB10001424053111904009304576528852525839740.html?mod=WSJ_hp_LEFTWhatsNewsCollection

What QE3? Bernanke Unlikely to Promise New Action by the Fed


Fed Chairman Ben Bernanke is unlikely to use his speech Friday at the Federal Reserve's annual Jackson Hole, Wyo., conclave to unveil new efforts to bolster the U.S. economy—despite financial markets' lingering hopes that he will, the Wall St Journal reports..

As the economic outlook for the U.S. and Europe deteriorates, stock markets have been gyrating and Fed watchers around the world speculating that Mr. Bernanke is about to ride to the rescue.

The Fed chief preaches and practices transparency. Neither Mr. Bernanke nor officials close to him have said anything to encourage the speculation that he will succumb to pressure from markets ...
Find out more at http://online.wsj.com/article/SB10001424053111904009304576528612963127774.html?mod=WSJ_hp_LEFTWhatsNewsCollection

Wednesday, August 24, 2011

A Startup Launched Today That Could Change How You Read Books Forever

Earlier this summer, we attended a party for a stealth startup that Peter Thiel backed.

Today, we can finally announce what the startup is, and why we're bullish on it.
Booktracks is a startup that could transform your reading experience forever. Like movies have soundtracks, now books can have soundtracks.

"It's difficult to imagine a movie with no soundtrack. Yet, until today, the technology did not exist to synchronize music and sound within an e-book," Paul Cameron, Booktrack's co-founder and CEO says.

"Tens of millions of commuters around the world listen to a playlist that's disconnected from what they're reading—perhaps a sad song with an upbeat story. Now they can replicate a movie-like sound experience and fundamentally transform their reading experience…."

Read more: http://www.businessinsider.com/booktracks-2011-8#ixzz1W1MUmsjB

Steve Jobs resigns from Apple, Cook becomes CEO

Reuters reports that Silicon Valley legend Steve Jobs on Wednesday resigned as chief executive of Apple Inc in a stunning move that ended his 14-year reign at the technology giant he co-founded in a garage.

Apple shares dived as much as 7 percent in after-hours trade after the pancreatic cancer survivor and industry icon, who has been on medical leave for an undisclosed condition since January 17, announced he will be replaced by COO and longtime heir apparent Tim Cook.

Analysts do not expect Jobs' resignation -- which had long been foreseen -- to derail the company's fabled product-launch roadmap, including possibly a new iPhone in September and a third iteration of the iPad tablet in 2012….

Beyond that anything (and if any indication of historically how Apple has done without Jobs,) maybe nothing is possible for Apple.


Find out more at http://www.reuters.com/article/2011/08/24/us-apple-idUSTRE77N82K20110824

WaMu’s $7 Billion Bankruptcy Nears Finish Line

Praise de Lord! Seriously folks, we never thought we were going to live long enough to see the end is near: WaMu’s $7 billion bankruptcy case could be wrapping up. A bankruptcy judge indicated Wednesday that creditors may not have to wait long to find out whether she will confirm Washington Mutual Inc.’s $7 billion Chapter 11 plan, according to a Wall St Journal – Deal Journal report.

“I’m a long way towards issuing a decision,” Judge Mary Walrath said at the start of a session in which she will hear a final debate over the plan.

The remark is welcome news to creditors who expect to rake in the cash and who have been clamoring for speed in a case that began nearly three years ago. Washington Mutual’s first bid to exit bankruptcy failed earlier this year, when Walrath rejected the Chapter 11 plan for assorted defects. The company said the problems–including over-generous grants of legal immunity–have been fixed, and the plan should be approved as a reasonable way out of the legal wreckage left behind when it lost Washington Mutual Bank, or WaMu, to a regulatory seizure….

Read more at http://blogs.wsj.com/deals/2011/08/24/wamus-7-billion-bankruptcy-nears-finish-line/

The Galleon Gang: Missing Moody's Analyst Deep Shah Ordered To Pay SEC $34.56 Million


Deep Shah, a former analyst at Moody's who was tied to the insider trading case with Galleon's Raj Rajaratnam, now has more reason to never return to the U.S.
20-something year old Shah fled the country (people suspect he went to India) after he was charged with insider trading in 2009. And since then, according to BusinessInsider, he hasn't been around to defend himself against the charges.

In March the SEC thought they had located Shah in Mumbai, but unsurprisingly, the fugitive did not respond to multiple notes left on his door, and efforts to get hold of him have failed.

So on August 24, a judge ended Shah's case with a rare default judgment.
According to Reuters, it requires Shah to give up $8.2 million of improper profits attributed to his tips, pay $1.76 million of interest, and pay a $24.6 million civil fine. In total, that's $34.56 million. Cha-ching! Now they just have to find him….

http://www.businessinsider.com/missing-fugitive-and-moodys-analyst-deep-shah-ordered-to-pay-sec-3456-million-2011-8