Monday, April 30, 2012

Wells Fargo Closes 3 NYC Branches After Receiving Suspicious Envelopes Containing White Powder

According to Reuters, Wells Fargo & Co has closed three bank branches in New York City after they received suspicious envelopes containing white powder, a company spokesman said on Monday.

New York City Police told Reuters they are investigating six separate incidents of white powder reported at locations around Manhattan.

The Wells Fargo branches will remain closed pending further investigation by the police, bank spokesman Ancel Martinez said. The branch locations are at Third Avenue and 47th Street; Madison Avenue and 34th Street; and Broadway and 85th Street….

Layoff Watch 2012: BofA To Axe 2,000

Bank of America could soon announce a fresh round of layoffs, reports the Wall Street Journal's Dan Fitzpatrick and Dana Cimilluca.

The Charlotte, N.C., company is planning about 2,000 staff cuts in its investment banking, commercial banking and non-U.S. wealth-management units, said people familiar with the situation.
In the latest round of cuts, less than 400 will come from investment banking, corporate banking, sales and trading, the people familiar with the matter said. An expected sale of the bank's non-U.S. wealth-management operations in Asia, Latin America and Europe would eliminate less than 2,000 positions.
The reporters say that these cuts will come on top of the 30,000 planned layoffs the bank had already announced last fall....

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Occupy Wall Street has moved. Its new address: 60 Wall Street.

WaPo reports on Occupy the regulatory system!

“….In its heyday, the tea party turned to elections to enact change, rallying supporters to primary incumbents and helping the GOP retake the House. Occupy Wall Street, by contrast, has largely eschewed the traditional political process. Instead, as protesters have moved off the streets, a small minority of Occupiers has waded deep into the weeds of the federal regulations, legal decisions and banking practices that make up the actual architecture of Wall Street. And they’re drawing on the technical expertise of the financial industry’s own refugees, exiles and dissidents to do so.

Many of the Occupy wonks once worked on Wall Street, and some of them still do. They’re former derivatives traders, risk analysts, compliance officers and hedge fund quants. They hail from Morgan Stanley, Deutsche Bank, Bear Stearns, D.E. Shaw, Merrill Lynch and JPMorgan Chase — and at least one is a former Securities and Exchange Commission regulator. They’re more likely to use a flowchart than protest signs to fight big banks. But they identify with the movement’s animating belief that America’s financial heavyweights wield too much power, and that its political leaders are too eager to do their bidding.

As the more visible signs of the movement fade, with their encampments all but cleared from the country’s public spaces, the Occupy wonks have doubled down on their policy work behind the scenes. They’re slowly gaining attention for their efforts — not just from the news media, but also from the some of the financial rulemakers and gatekeepers they’re hoping to influence….”

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N.Y., JPMorgan Sued by Council Members in Occupy Lawsuit

Four New York City Council members sued the city over the handling of Occupy Wall Street protestors, claiming the police used excessive force and should be subject to an outside monitor Bloomberg reports.

The Police Department made false arrests and violated free- speech rights of protestors and journalists last year, according to a complaint filed today in Manhattan federal by the council members and 11 others. JPMorgan Chase & Co., Brookfield Office Properties and Mayor Michael Bloomberg are among the defendants.

...“Through unlawful exercises of public power and misapplication of law, the NYPD has sought to prevent and has prevented plaintiffs and other citizens from exercising certain constitutional rights, including the right to public assembly and expressive speech,” according to the complaint…..

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Will New York City Turn Happy Hour Into Dour Hour?

Happy hour in the city could end if Department of Health policy party-poopers go ahead with a proposal to outlaw beer and booze specials at bars and restaurants, sources told The Post.

“It’s absolutely been discussed,” confirmed a department source. “It goes to show you the spirit with which they operate. Everyone is a child.”

High-level conversations have gone beyond merely “throwing pencils on the ceiling and seeing what sticks,” another Health source revealed.

Sources said the happy-hour ban is being pushed by the agency’s marathon-running boss, Commissioner Thomas Farley, and is serious enough for one source to say the alcohol lobby had better find itself a good lawyer...

BofA’s Merrill Lynch Settlement Piss Poor, Lawyers Say

Bank of America Corp. directors’ $20 million settlement of investor lawsuits alleging the bank overpaid when it bought Merrill Lynch & Co. amounts to just 4 percent of the board’s $500 million in insurance coverage and is inadequate, lawyers objecting to the accord told Bloomberg.

Attorneys for Bank of America shareholders suing in Delaware over the $50 billion acquisition of Merrill Lynch have asked a judge in that state to keep their claims alive even though a federal judge in New York is considering a $20 million settlement of almost identical suits brought by other bank investors. If that accord is approved, it could wipe out the Delaware claims.

 “The proposed settlement is grossly inadequate and represents only 0.4 percent of the value of the $5 billion derivative claims that the Delaware Derivative Plaintiffs have been vigorously pursuing,” lawyers for the Delaware investors said in a Delaware Chancery Court filing late yesterday. The settlement also amounts to “only 4 percent” of available insurance, they said.

In case you were wondering how much moolah is at stake....the total amount of insurance coverage for directors of Charlotte, North Carolina-based Bank of America, the second- largest U.S. bank, was blacked out of the filing. Bloomberg News’s calculations show the total is $500 million…..

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Sad: Madoff Costs Surpass Victim Payouts as Strategy Fails

Irving Picard, who said last year he hoped to pay investors in Bernard Madoff’s defunct firm as much as $65 billion, has only put his hands on about $2.6 billion to actually give back to customers, according to Bloomberg.

More than three years after Madoff’s epic swindle collapsed, Picard, the trustee responsible for liquidating the firm, has paid investors back about $330 million, while holding about $2.3 billion in customer accounts. About $6.4 billion that Picard has won in settlements with former Madoff investors is being challenged in court and is unavailable for disbursement.

So far, winding down the Madoff estate has cost more than Picard has sent to customers, with total administrative spending as of March 31 at about $554 million, including fees for Picard, his firm and consultants he hired, according to his April 25 report. At the same time, Picard’s strategy of filing $100 billion of lawsuits to claw back money from Madoff winners has largely collapsed, as federal judges led by U.S. District Judge Jed Rakoff in New York have dismissed about $90 billion of Picard’s claims…

Goldman's Cohen: 'We Will Avoid Another Recession'

The U.S. isn't going back into a recession, though economic growth has slowed, Goldman Sach's chief equity strategist Abby Joseph Cohen told CNBC Monday. "All you need to believe is that we will avoid another recession over the next couple of years," she told Squawk on the Street. "And that is indeed our forecast, even though we see growth has slowed somewhat."

She said the current historically low interest rates have made equities a better investment than bonds, which now also have their share of risk after generations of being perceived as safe.

"It's hard for us to see how bonds can generate the same kind of returns going forward that they have over the last 30 years," she said. "Equities seem to be very attractively valued."

She said she agrees with Goldman economist Jan Hatzius's forecast of the second half being more "difficult" than the first. "We have seen some deceleration in economic activity" after a mild winter that might have "puffed up" seasonal growth in the first quarter, she said.  But slow growth is still growth, and the longer-term trend is to the upside, she said….

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Only in America: A Man Is Claiming His BMW Motorcycle Gave Him A Permanent Erection

A ride on a motorcycle can be an incredibly exciting and invigorating experience. However, it seems that a man from California may have had a far more exciting ride than most other people.  According to Torque News, Henry Wolf believes his BMW Motorcycle and Corbin Seat has caused him to have a permanent erection.

How long has he had it? His erection has lasted for 20 months and counting. To put that in perspective, the makers of Cialis and Viagra recommend medical attention for anyone with an erection lasting longer than four hours.

Torque News reports that Wolf can no longer participate in sexual activity due to his condition. He filed suit in San Francisco court last week against BMW and Corbin for "lost wages, medical expenses, product liability and negligent infliction of emotional distress and 'general damage,'" according to Torque News.....
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Microsoft to Invest in Barnes & Noble's Nook; B&N Shares Surge

The Wall St Journal reports that Microsoft Corp. MSFT -0.03% is making a $300 million investment in Barnes & Noble Inc.'s BKS +64.59% Nook digital-book business and college-texts unit in a move that helps value the prized Nook business, the companies said.

Microsoft will have a 17.6% stake in a new subsidiary for the businesses in a transaction that values them at $1.7 billion, the companies said. That compares with Barnes & Noble's current market capitalization of about $791 million and could fuel the argument of some analysts and investors that the digital business should be separated from the retail division.
As part of the move, there will be a Nook application included in the new Windows 8, which is scheduled to have a release preview in early June. Later this year, computers and tablets with Microsoft's Windows 8 operating system are expected to go on sale....

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Romney Holds Big-Bucks Fundraiser at Hedgie Billionaire’s Townhouse

The Republican candidate has accepted donations from controversial hedge-fund billionaire John Paulson, but Thursday night he made their association more explicit by allowing Paulson to host a fundraiser, The Daily Beast’s Ben Jacobs reports.  Mitt Romney held a high-dollar fundraiser Thursday night at the home of John Paulson, the controversial hedge-fund billionaire who made a fortune shorting the housing market and subprime mortgages in 2007.

New York grocery billionaire John Catsimatidis told The Daily Beast the fundraiser, at Paulson’s posh townhouse at 9 East 86th Street on the Upper East Side of Manhattan, was a “big-dollar event” for wealthy donors like himself “fighting for the soul of America.” The Romney campaign did not return requests for information about the fundraiser—which was not listed on the candidate’s public schedule. Paulson’s publicist, Armel Leslie, also did not return calls seeking comment.

A neighbor who witnessed the event from across the street described it to The Daily Beast as a large crowd of “older white people, mostly men,” who started showing up around 7:30 p.m. Thursday. Around 8 p.m., sirens started blaring as more and more people started to show. There was security at the door as well as a police car on the street.

Occupy Wall Street Plans Global Disruption of Status Quo May 1

From Bloomberg: Occupy Wall Street demonstrators, whose anti-greed message spread worldwide during an eight-week encampment in Lower Manhattan last year, plan marches across the globe tomorrow calling attention to what they say are abuses of power and wealth.

Organizers say they hope the coordinated events will mark a spring resurgence of the movement after a quiet winter. Calls for a general strike with no work, no school, no banking and no shopping have sprung up on websites in Toronto, Barcelona, London, Kuala Lumpur and Sydney, among hundreds of cities in North America, Europe and Asia.

In New York, Occupy Wall Street will join scores of labor organizations observing May 1, traditionally recognized as International Workers’ Day. They plan marches from Union Square to Lower Manhattan and a “pop-up occupation” of Bryant Park on Sixth Avenue, across the street from Bank of America’s Corp.’s 55-story tower….

Falcone Agrees To Step Aside

Hedge-fund manager Philip Falcone agreed to step aside eventually as the public face of his LightSquared Inc. venture, a concession that may keep the wireless-telecommunications company from defaulting on its debt, people familiar with the negotiations told the Wall St Journal.

Falcone's compromise is expected to prompt LightSquared's lenders to approve a one-week extension on a debt-term violations waiver that expires Monday morning, the people said.

If a deal is finalized, Falcone and LightSquared's lenders plan to continue negotiations for a longer extension of somewhere between 18 months and two years, the people said….
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Go figure: Uber Rich Chinese Rev Up Demand for Used Cars

According to The Financial Times, the Chinese rich change cars the way some people change handbags. Beijing’s biggest used car dealership displays more than 500 of the world’s most expensive cars — and staff say some of them have only been driven for days.

Three 2011 Porsche Panameras — a model so new that many people have never heard of it — are lined up side by side, just down from a near-new Bentley, among a sea of previously owned Ferraris, Mercedes, Audis, BMWs and Lamborghinis, all of them priced at more than $100,000 each.  Why did their owners trade them in while still so new? “They just got tired of them,” says one salesperson. “Chinese people are very rich”, says another, adding “if business goes well, they want to upgrade, and if it goes badly, they sell.” That makes for an increasingly active mainland used car market.

Last year second-hand vehicle sales grew faster than new car sales in China, the world’s largest car market. China Automobile Dealers Association figures show that used vehicle sales rose 12.5 percent in volume terms last year, much faster than the 2.5 percent growth in new vehicle sales....

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Why the Amazon Naysayers Should Be Scared

From Bloomberg: Another quarter, another blowout earnings report for (AMZN). The online retailer and technology juggernaut blew away analysts’ expectations on Thursday, posting $13.18 billion in revenue for the first three months of the year. The stock is up 13 percent. At this rate, the company will easily become the fastest retailer in history to cross $50 billion in sales for the year (it just missed in 2011). “The March quarterly results showed just enough upside in both revenues and margins to make the naysayers run for cover,” Stifel Nicolaus analyst Jordan Rohan wrote in a research note, sticking the shiv into the vociferous Amazon short-sellers.

The earnings report was yet another rousing movement in the entrepreneurial symphony being conducted in Seattle by Chief Executive Officer Jeffrey Bezos. Everything seems to be going right just now: His company is attracting new customers and third-party sellers, getting existing customers to spend more, and increasing profitability on new ventures such as Amazon Web Services and the Kindle…

Titanic II Planned by Billionaire

Australian billionaire Clive Palmer plans to build a 21st-century replica of the Titanic and sail it from England to New York accompanied by the Chinese navy by the end of 2016.

Palmer has signed a first-stage agreement with Nanjing- based CSC Jinling Shipyard to build the ship as part of a planned fleet of luxury liners, the Gold Coast, Queensland-based businessman said in an e-mailed statement today. Palmer’s investments include property developments, coal and iron-ore mining projects, a nickel smelter, a soccer team and a horse stud.

“It will be every bit as luxurious as the original Titanic, but of course it will have state-of-the-art 21st century technology and the latest navigation and safety systems,” said Palmer, 58. “We have invited the Chinese navy to escort Titanic II on its maiden voyage to New York….”

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Sunday, April 29, 2012

Warren Buffett Is Now Grooming Kiddie Entrepreneurs

If you didn't already know, billionaire and class traitor Warren Buffett has his own online financial literacy cartoon — the Secret Millionaires Club — which is sponsoring a competition for budding 7- to 16-year-old business tycoons. A group of the finalists will actually have the opportunity to pitch their business ideas to the Sage of Omaha next month. Startup capital is just $5,000 for the grand winner, which is at least enough for one lucky kid to corner this summer's lemonade stand business….


Facebook billionaire shuns luxury for startup life

Facebook co-founder and former Mark Zuckerberg roommate Dustin Moskovitz is by many accounts the world's youngest self-made billionaire. But according to the 27-year-old isn't sipping champagne in the Caribbean.  Instead he's thrown himself back into San Francisco's startup mix, even as Facebook's looming IPO seems likely to send his wealth spiraling even higher.

Moskovitz and his friend Justin Rosenstein, a former Facebooker himself worth $150 million, head a company called Asana, which just launched the first paid version of its online project management service. During a recent interview at their inconspicuous Mission District offices, the pair said they come to work every day because, their fortunes already made, they still have to do something with their lives.

"When we think of work, we think of work as an act of service, as an act of love for humanity," said Rosenstein, 28.  Added Moskovitz: "If we were just retired, we wouldn't be serving anyone."  While such idealistic sentiments might sound too easy coming from two guys who never have to worry about money again, they both do keep working even though they'd never have to again. And like Zuckerberg himself they seem uninterested in the flash and status-hoarding that great wealth makes possible.

What sets them apart, they acknowledge, is their absolute freedom to pursue their particular vision of how to change the world. And they seem to have no doubt that their software will do just that. After all, as some of Facebook's earliest engineers, they've seen their code change the world once already….

Whether Asana's world-changing potential exceeds that of competitors in the crowded project and task management software marketplace remains to be seen. Like other similar products, their software lets users set up Web-based to-do lists that any group focused on a common goal can use to assign jobs and keep track of what gets done...

Hedge Funds Arrive on Madison Avenue

Washington's new JOBS Act empowers funds to advertise themselves more broadly–sort of, Barrons writes.

Will John Paulson rent a billboard on I-95 promoting his $14 billion hedge fund? Is there a George Soros World Cup in the offing? Probably not. But there are a lot of people in the hedge-fund industry who are excited about the fact that hedge funds can now advertise, sponsor sporting events, and generally reach a wider audience of potential investors.

But, as with everything regulatory, it's not quite that simple.

The industry's ability to advertise came about when, earlier this month, President Obama signed the Jumpstart Our Business Startups Act, better known as JOBS….

Buffett and Companies Give $500K to 2012 Campaigns

While most of the attention has been focused on conservative donors to super PACs, Forbes reports that Warren Buffett and his companies have quietly contributed more than $500,000 this year to political campaigns and committees.

Buffett, a longtime Democratic supporter, personally gave $30,000 to two organizations: the Obama Victory Fund 2012 and the Democratic National Committee. The holding company he heads, Berkshire Hathaway, does not have a PAC….


How Apple Sidesteps Billions in Taxes

Apple, the world’s most profitable technology company, doesn’t design iPhones here. It doesn’t run AppleCare customer service from this city. And it doesn’t manufacture MacBooks or iPads anywhere nearby, the New York Times writes from Reno, Nevada. Yet, with a handful of employees in a small office here in Reno, Apple has done something central to its corporate strategy: it has avoided millions of dollars in taxes in California and 20 other states.

Apple’s headquarters are in Cupertino, Calif. By putting an office in Reno, just 200 miles away, to collect and invest the company’s profits, Apple sidesteps state income taxes on some of those gains.

California’s corporate tax rate is 8.84 percent. Nevada’s? Zero.   Setting up an office in Reno is just one of many legal methods Apple uses to reduce its worldwide tax bill by billions of dollars each year. As it has in Nevada, Apple has created subsidiaries in low-tax places like Ireland, the Netherlands, Luxembourg and the British Virgin Islands — some little more than a letterbox or an anonymous office — that help cut the taxes it pays around the world….

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The New Conventional Wisdom: It Looks Like America Is 'Creating Yet Another Historic Turning Point'

From BusinessInsider: We wrote yesterday about how how Hugh Hendry is back with his first big shareholder letter since 2010.  The gist is that Hendry is more bearish than ever on China, and that his favorite way to play it remains credit default swaps on China-exposed Japanese corporate names, which are still up to their necks in debt.

He doesn't write much about the US, but we wanted to highlight his bullish commentary...
This might be the year everyone else notices this; the year panic over Chinese economic growth comes to replace the market's morbid fascination with the travails of the European continent and the year in which we see that the US is not giving way to China in terms of global economic leadership. There is a near consensus that China will supplant America this decade. We do not believe this. We are more bullish on US growth than most. The momentous nature of recent advances in shale oil and gas extraction and America's acceptance of the unpleasantness of debt and labour price restructuring looks to us as if it is creating yet another historic turning point.

As we just noted, he's not the only one making this bullish argument. It does seem as though this is becoming a new conventional wisdom, that the best path forward for the US is revolves around the exploitation of domestic natural resources (such as those in Williston, North Dakota)….

Weird’s Deep Thoughts (Sunday Morning Edition) Stay In Stocks Or Sell In May?

“Sell in May and go away” is strategy that some investors and traders are likely contemplating right now.  The adage is based on the historically weaker performance of stocks during the May through October time period. Adherents shift from stocks to cash at the beginning of May and then invest back into stocks at the start of November.

Historical performance shows there are best and worst six-month periods for stocks. Jeff Hirsch at the Stock Trader’s Almanac calculates that the Dow Jones industrial average has an average return of just 0.3% during the worst six-month period (May through October) since 1950.

Conversely, during the best six months (November through April), the Dow has an average gain of 7.5%. Sam Stovall at S&P Capital IQ says the S&P 500 has risen by a mere 1.2% during the average worst six-month period, while rising 6.9% during the average best six-month period. (Sam’s numbers go back to 1945.)

Certainly, last year made selling at the end of the April seem like a prudent decision. From the end of April 2011 to the end of October 2011, the Dow lost 6.7%. Using the October 4, 2011, intraday low as the endpoint, the drop worsened to 19.1%...

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A Short (but pithy) Warning for Eager Facebook Investors

Here is a thought for an eager Facebook investor: Google revenue – $40 billion; market capitalization $200 billion (plus $40 billion of cash).  Facebook revenue $4 billion; market capitalization $100 billion. So Facebook has to grow revenue 10x for you to double your money.  Good luck!

Saturday, April 28, 2012

David And The Société Générale

Look who's fighting back: BusinessInsider writes that Jérôme Kerviel, the meek-looking French guy who became famous in January 2008 as the junior trader who’d lost €4.9 billion at French mega-bank Société Générale. Accused of a litany of shenanigans, from unauthorized trading to hacking into SocGen’s computers, he was condemned in 2010 to five years in the hoosegow, with two years suspended.

SocGen called him a rogue trader who’d acted without his superiors’ knowledge. Kerviel confessed to a few of the accusations but claimed that his bosses had known about and had tolerated his activities. He just couldn’t prove it.... until now.

.….But on Friday, he struck back. His new lawyer, David Koubbi, announced at a press conference that they had filed a complaint against Société Générale, alleging that it had tampered with evidence. They were quite a pair, the mostly silent Kerviel dressed in a dark suit and pink button-down shirt with the top two buttons unbuttoned, and the articulate Koubbi, similarly attired, and with the top two buttons of his white shirt unbuttoned. A statement of sorts….

Why Google’s Stock Revamp is A Ripoff

Google's founders recently announced a new corporate structure designed to perpetuate their grip over the company. Fortune writes that everyone should beware.

Google's founders announced a plan designed to perpetuate their ironclad grip on the long-term governance of the company. With the board's blessing, the company will issue a new non-voting class of shares to existing shareholders. Because the founders currently hold majority-voting rights, the plan does not require that shareholders give their consent to the dilution of their future voting power. The action comes amid ongoing stock sales by Google's (GOOG) founders.
While this edict by the founders is important to Google stockholders, users of Google's products, and owners of other stocks -- outright or in mutual funds or retirements savings plans -- should also beware.

Other technology firms, like Facebook, and financial firms, like Carlyle, are attempting to gain access to public market funding without giving shareholders a mechanism to keep the founders accountable. In a conference call with analysts on April 12, Google CEO Larry Page took credit for a similar lack of voting rights at other companies. "Given Google's success, it's unsurprising this type of dual-class governance structure is now somewhat standard among newer technology companies," he said….

Here Comes All the Pain In Spain Stuff

Forbes' Joshua Brown writes: I was doing TV the other night and when I mentioned Spain as being something to watch for this summer, the host shut me down, saying “I’m bored with Spain.”

You don’t have to be interested in Spain, because Spain is now interested in you, Papi.  It’s fixing to send a wave of disturbing headlines your way this summer whether you’re bored or not.  Here’s the playbook in case you weren’t paying attention:

1.  First something crazy happens there – riots, protests, government shutdowns, whatever.  52% of Spanish youth are unemployed, the only surprising thing is that they haven’t torn the place apart already.

2.  Then Germany and France make a big show about how they’re not bailing it out or in or whatever.

3.  Then the other ratings agencies downgrade it past the point of usefulness as Spanish sovereign CDS blows out, bond yields climb and European equities are waterboarded.  US stocks start to struggle with a rising dollar, Treasurys knock on the door…

4.  Everyone freaks out and then the IMF starts running their mouths and we play the headline-driven Risk-On, Risk-Off game again for a few weeks.

5.  Bailout.  US equities go wild to the upside again as people come back to their senses and realize that things ain’t so bad here and stocks are the only game in town in the end.  We end up going nowhere but we take the long road to get there.

Is this going to happen for sure?  I don’t know, but I’m mentally preparing for it….

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Dewey Said to Be Subject of Probe as Deadline Nears

Dewey & Leboeuf LLP, the New York law firm fighting to stay alive after more than 70 partners left, is the subject of a criminal probe by state prosecutors into whether managers misled partners about payments due them, a person familiar with the matter told Bloomberg..

Manhattan District Attorney Cyrus Vance Jr.’s investigation is in a preliminary stage, said the person, who declined to be identified because the matter isn’t public. Prosecutors, tipped by disenchanted Dewey partners, are probing whether some attorneys were wrongly shut out of pay as the firm’s profits shrank while others received guaranteed packages. Vance seeks to ensure documents and other evidence is preserved ahead of any bankruptcy, merger or dissolution, the person said.

Dewey, the No. 3 law firm adviser to banks handling merger deals, faces an April 30 deadline to show lenders it has a survival plan, possibly including absorption by another firm or cost-cutting...


LightSquared creditors have had their fill of Phil

It’s showtime for hedge fund honcho Phil Falcone.  Acording to a report in the New York Post the wealthy backer of LightSquared, the 4G wireless start-up, is staring at a 10 a.m. Monday morning deadline to step down from the company and greatly reduce his ownership stake or risk losing his entire $2.9 billion investment by having creditors force it into bankruptcy.

Creditors, including Carl Icahn, feel Falcone has become too toxic a presence atop LightSquared and that the company can succeed only if the 49-year-old chairman of Harbinger Capital Management makes himself scarce.

Falcone, earlier this year, rankled a Capitol Hill lawmaker with his actions and has been unable to smooth over a hostile relationship with several groups, including the Defense Dept., which are upset that LightSquared’s 4G network interferes with their GPS systems.  Creditors have deemed Falcone a “political lightning rod.”

A Weekend Must Read

The big report everyone is talking about: “The value of the hedge fund industry to investors, markets, and the broader economy” (KPMG/AIMA)

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John Thain: The One Bonus That Can *Never* Be Clawed Back

Dealbreaker’s own Bess Levin writes: When people think of Jonathan Alexander Thain, as people surely often do, lots of thinks come to mind. High school wrestling. Competitive bee-keeping. Masterful stewardship of Wall Street firms. $68,179 19th Century Credenzas. $35,000 commodes. $28,091 curtains. $87,784 area rugs. $1,405 garbage cans. A keen eye for interior design and fabulous taste in general. Though we knew the current CIT Group chief executive officer was a father, we probably wouldn’t have included his parenting skills on a list of his noted attributes and accomplishments, only because there are so many to mention and we didn’t know if he excelled as a dad like he did as a decorator. Apparently this represents a gross oversight because John Thain? Is a phenomenal dad. Award-winning, in fact….

Forget about the $87,000 area rug and the $16,000 commode.  This brings a tear to the eye, doesn’t it?  More? Go to

Friday, April 27, 2012

You Won't Believe The Crazy Amount Of Money Lehman's Top Trader Made Before The Collapse

We all know Lehman Brother's disgraced chief executive Dick Fuld and other top execs received massive paychecks before the bank's demise, but how about the other employees? 

DealBook's Peter Lattman, citing new bankruptcy documents, reports the payout the bank's top prop trader received and you will be absolutely floored.   From DealBook:

Robert Millard, the head of Lehman’s proprietary trading operations — the group that traded the bank’s own money — was in line to make $51.3 million in 2007, making him the highest-paid employee on a list of the top-50 paid employees that year. The list shows that he was paid $44.5 million in 2006 and $3.8 million in 2005. Mr. Millard now runs Realm Partners, a hedge fund in New York.

The $51.3 million paid to Mr. Millard approximates the pay package received by Mr. Fuld that year, which, depending on how it was calculated, was worth $40 million to $51.6 million.  To put that into context, the second place guy was paid $20 million less raking in $31.2 million in 2007, according to the report….

And Now For Something Completely Different: No More Pot Tourism in Holland: Bummer, Dude

A controversial law that will make it harder for foreign tourists to buy cannabis at the Netherlands' famous coffee shops has been upheld by a Dutch court according to a CNBC report.

The law, which reverses 40 years of liberal drugs policy in the Netherlands, is targeted at the many foreigners who have come to see the country as a soft drugs paradise and to tackle a rise in crime related to the drug trade.

The law, which goes into force in 3 southern provinces on May 1 before going nationwide next year, means coffee shops can only sell cannabis to registered members.

Only locals, whether Dutch or foreign residents, will be allowed to join a coffee shop, and each coffee shop will be limited to 2,000 members. Some users regard the requirement to register as an invasion of privacy....

Garth, Ex-Morgan Stanley exec, pleads guilty to corruption charges

There has been speculation as of late that banks and private equity companies were in the prosecutorial crosshairs regarding the Foreign Corrupt Practices Acts (FCPA), which prosecutors have been zealous about in recent years, efinancialnews writes.

Much of the chatter has focused on sovereign wealth funds and their dealings with bank executives and private equity officials. The SEC has apparently sent requests for information to top banks, as part of its information gathering process. In this light, the guilty plea of Garth Peterson, the former head of Shanghai office of Morgan Stanley's global real estate business, is certainly interesting.

Garth was charged with illegally buying property for himself and a Chinese government official--the former chairman of the Yongye Enterprise Company, a state-owned entity--who in turn steered business to Morgan Stanley's funds. Garth has been barred from the securities industry and will pay more than $250,000 in disgorgement. He faces up to five years in prison and his sentence will be delivered on July 17.....

Xtreme Reality – American Style: How A Former Currency Strategist Went From $150K/Year To Serving Lattes At Starbucks

From BusinessInsider: A few years ago, Kevin Cronan had it all.  At 38, he pulled in $150,000/year as a currency strategist for a major Boston investment firm and was this close to dropping $35,000 to rub elbows at an ultra-exclusive country club.

Then the recession hit with all the force of a wrecking ball, and he joined 8 million other Americans on the unemployment line.   But with a college diploma, 22 months of severance to rely on and 15 years worth of experience under his belt, he figured he had nothing to worry about. Right?


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US Economy Grows at a Disappointing 2.2%

Bummer. U.S. economic growth cooled in the first quarter as businesses cut back on investment and restocked shelves at a moderate pace, but stronger demand for automobiles softened the blow, CNBC writes..

Gross domestic product  expanded at a 2.2 percent annual rate, the Commerce Department said on Friday in its advance estimate, down from the fourth quarter's 3 percent rate.  While that was below economists' expectations for a 2.5 percent pace, a surge in consumer spending took some of the sting from the report. However, growth was still stronger than analysts' predictions early in the quarter for an expansion below 1.5 percent.

Consumer spending which accounts for about 70 percent of U.S. economic activity, increased at a 2.9 percent rate - the fastest pace since the fourth quarter of 2010. That compared to a 2.1 percent rise in the fourth quarter…


Could The New York Times Sell Its Scoops to Hedge Funds?

Could the NYT have profited legally from its Wal-Mart expose?  According to CNBC’s John Carney Felix Salmon has raised an interesting question: could The New York Times sell early access to market-moving scoops to hedge funds?

After The New York Times published the results of its investigation of the Wal-Mart bribery case, something like $12 billion came off its market cap.

Clearly, early access to the story would have been very valuable to traders. So, in this age of cash-strapped news organizations, shouldn’t The New York Times be able to monetize the value of scoops by selling early access to hedge funds?

It’s very clear that The New York Times isn’t in the front-running business. In fact, I suspect that the potential market-moving effect of the story played a role in the timing of the publication. By publishing it over the weekend, the editors assured that information would be fully disseminated into the market before anyone could trade Wal-Mart’s stock.   No one received even a momentary edge from asymmetric information.  But let’s say a particularly enterprising publisher took over at the paper and decided to launch a NYT: Frontrunner subscription service.  Would it work? Would it be legal?

Pimco’s El-Erian: U.S. Economy Not Getting Traction

Pacific Investment Management Co.’s Mohamed El-Erian said the U.S. economy is having difficulty gaining traction after a government report showed U.S growth expanded less-than-forecast in the first quarter Bloomberg reports.

The Federal Reserve is likely to provided additional assistance if the U.S. economy weakens further, though there is “no immediate need” to do so, El-Erian, the chief executive officer of the world’s largest manager of bond funds, said during an interview on Bloomberg Television’s “In the Loop” with Betty Liu.

Gross domestic product, the value of all goods and services produced in the U.S., rose at a 2.2 percent annual rate after a 3 percent pace, Commerce Department figures showed today in Washington. The median forecast of economists surveyed by Bloomberg News called for a 2.5 percent rise…

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LightSquared Lenders Put Pressure on Falcone

Some of LightSquared Inc.'s lenders want hedge-fund manager Philip Falcone to step aside as the public face of the wireless communications firm as a condition for avoiding a looming debt default, said people familiar with the matter, the Journal reports.

The lenders are in talks with representatives of Mr. Falcone, the founder of Harbinger Capital Partners LLC and LightSquared's main backer, over possibly extending a waiver on debt-term violations that expires Monday, the people said.

If Mr. Falcone doesn't agree to eventually leave LightSquared's board and make way for new executives and directors at the wireless communications firm, lenders are likely to balk ...

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Thursday, April 26, 2012

The Curious Case of the Telus Proxy Battle

The proxy battle involving the Telus Corporation, the $19 billion Canadian telecommunications company, is shaping up to be the most interesting of the year, involving allegations of empty voting, vote buying and secret share accumulations. What fun according to Dealbook.

It began on Feb. 21, when Telus announced it would collapse its dual-class share structure. The two classes of shares are identical, except that one has voting rights.

The structure is a relic of Canadian government regulations and ownership restrictions, which cap Telus’s foreign ownership at 33.3 percent. In 1999, Verizon, based in the United States, acquired a 26 percent stake in Telus. To avoid running afoul of the rules, Telus issued nonvoting shares and listed them on the New York Stock Exchange and Toronto Stock Exchange. Telus’s voting shares remain listed only on the Toronto Stock Exchange….

Amazon's streak of Fire ignites shares

Just yesterday the Wall Street pundits were worrying about the thin profits, but today Reuters reports that Inc's quarterly results beat Wall Street's most bullish expectations as heavy spending by the world's largest Internet retailer began to pay off through sales of more digital products on its new Kindle Fire tablet.

Amazon shares surged almost 15 percent, increasing the company's market value by more than $10 billion and boosting the stake of CEO Jeff Bezos by almost $2.5 billion.

Analysts cheered first-quarter earnings and revenue which comfortably exceeded their forecasts.  Amazon is spending in three main areas: fulfillment centers to support online retail; video content and other media businesses; and infrastructure for its cloud computing service….

Go figure.  Check out

Only in America: McMadam Will Accept Donations

From the New York Post: Unable to post her $2 million bail and desperate to get her out of jail and home for Mother’s Day, the husband and kids of accused Upper East Side madam Anna Gristina have gone public to raise money.

The family yesterday launched a Web site asking for donations toward her whopping bail, which they blast as “cruel and unusual.”

“The children are distraught,” Gristina’s husband, Kelvin Gorr, told The Post, noting that her 17-year-old son Stefano’s high-school graduation is fast approaching.

“There’s Mother’s Day, the prom, graduation. She should be out. These are once-in-a-lifetime things that she’s missing because of an unjust bail…..

S&P cuts Spain ratings two notches to BBB-plus

Get ready to fasten your seatbelt. According to Reuters Standard & Poor's on Thursday cut its credit rating on Spain to BBB-plus from A, a two-notch downgrade, citing its expectation the government's budget deficit will deteriorate even more than previously thought due to economic contraction.

The ratings agency put a negative outlook on the credit and said it believes the government will also have to provide more financial support for the euro zone nation's banking sector.

Moody's Investors Service rates Spain one notch higher at A3 with a negative outlook, and Fitch Ratings has it two notches higher at A, also with a negative outlook….

Goldman Banker Probed for Alleged Leaks

Investigations are deepening into the potential involvement of Goldman Sachs Group Inc. employees in the high-profile Galleon Group insider-trading ring, the Wall St Journal reports.

U.S. prosecutors and securities regulators are investigating whether a senior Goldman investment banker gave Galleon hedge-fund traders advance word of pending health-care deals, according to people familiar with the matter. The banker, whom the people identified as Matthew Korenberg, is a San Francisco-based managing director for Goldman, a senior post.

Among the merger deals being scrutinized by Los Angeles federal prosecutors and the Securities and Exchange Commission is the 2009 acquisition by Abbott Laboratories of Advanced Medical Optics, a Santa ….

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Sympathy for the Devils Running Short at Goldman

A few years ago, Mick Jagger was asked why the Rolling Stones were about to embark on one of their gray-haired, past-their-prime tours with big beer-company sponsorships and pricey tickets.  "Is it about the money?" the questioner said.

Without missing a beat, Mr. Jagger replied: "It's always been about the money."

Yes, the Rolling Stones have more in common with the shareholders and board of Goldman Sachs Group Inc. than either of them probably ever considered.  At Goldman, it has undoubtedly always been about the money, specifically, profit, pay and dividends. And even though the bank's singular purpose has never been a secret, it gets obscured by those who try to read too much into what Goldman and Lloyd Blankfein, the New York company's frontman, chairman and chief executive, stand for.

Like every bank, moral choices and social good are secondary to profit and loss burn. If Goldman could make money by feeding starving children in Africa, there would be 1,000 bankers and a Shake Shack in Ethiopia.
This laserlike focus on the bottom line has allowed Goldman's board to overlook a litany of transgressions that would derail companies less committed to the goal of regular and increasing paydays.  That is, until now.

Firm to give half their earnings to charity

The general partners of Andreessen Horowitz have pledged to donate at least half of their future venture capital earnings to philanthropic causes, Fortune reports.. And, to begin, they have sprinkled $1 million on Silicon Valley nonprofits that focus on everything from urban forestry to homeless families.

Here's how it will work: Each of Andreessen Horowitz's six general partners -- Marc Andreessen, Ben Horowitz, Jeff Jordan, Peter Levine, Jon O'Farrell and Scott Weiss -- will donate at least half of all management fee and carried interest income they earn for the rest of their venture capital careers. It is up to each individual partner to determine where the money goes.

"We've been inspired by what John Doerr and Mike Moritz have done by participating in the Buffett/Gates Giving Pledge," explains Ben Horowitz, whose initial donation was to a program for special needs children and their families. "We hope other venture capital firms are inspired by what we're doing, and maybe do something similar."


Wall Street Tracks “Wolves” as Protesters Plot May 1 Resurgence

Occupy Wall Street Betting It All on May Day With Big Targets

The world’s biggest banks are working with one another and police to gather intelligence as protesters try to rejuvenate the Occupy Wall Street movement with May demonstrations, industry security consultants told Bloomberg.

Among 99 protest targets in midtown Manhattan on May 1 are JPMorgan Chase & Co. (JPM) (JPM) and Bank of America Corp. (BAC) (BAC) offices, said Marisa Holmes, a member of Occupy’s May Day planning committee. Events are scheduled for more than 115 cities, including an effort to shut down the Golden Gate Bridge in San Francisco, where Wells Fargo & Co. investors relied on police to get past protests at their annual meeting this week….

The Dude Wall Street Never Stops Buzzing About

According to the gurus at Businessinsider BlackRock CEO Larry Fink is the kind of guy people in the financial industry never stop talking about.

Most recently, he's generated buzz for BlackRock's new trading platform to connect buyers and sellers of bonds directly that many say could make Wall Street obsolete. Just last week, BlackRock announced a profit for its first quarter for 2012, not to mention the investment managing firm is always making headlines for being the biggest money manager in the world with over $3 trillion AUM.

But to get to his current stardom, Fink has walked a path in the shadows. Before the financial crisis, few had heard of the executive. Now, he's on top….

Deutsche Bank Profit Dives 33%

Deutsche Bank said business conditions worsened this month after first-quarter profit at Germany’s biggest bank dropped more than analysts expected following a charge from the sale of drugmaker Actavis Group hf.

Deutsche Bank declined the most in almost four months in Frankfurt trading after net income fell 33 percent to 1.38 billion euros ($1.82 billion) from a year earlier. That missed the 1.56 billion-euro average estimate of nine analysts surveyed by Bloomberg.

Obama Sends Back Contribution From Hedge Fund Fraudster

According to finalternatives President Barack Obama's re-election campaign is to return more than $35,000 donated by an accused Ponzi schemer.

Shervin Neman gave the Obama campaign the maximum $35,800 contribution. Earlier this month, the Securities and Exchange Commission won an emergency order against Neman's Neman Financial hedge fund, accusing him of running a $7.5 million fraud targeting Persian Jews in California.

"With 1.8 million donors this far, we constantly review those contributions for issues," the Obama campaign said. "In this particular case, we will be refunding the contributions and have placed the funds in escrow until a trusteeship or other appropriate place to return these funds is established given the interests of the investors."

Neman, who reportedly visited the White House in November, also gave $30,800 to the Democratic National Committee...


For Apple, China Is The Middle Kingdom

Not long ago, Asia Pacific was all but a footnote in the financial statements of technology juggernaut Apple Inc. But no more.   Apple's sales in the fast-growing region, fueled largely by China, more than doubled and represented 26% of its $39.2 billion in sales for the first three months of the year.

Asia Pacific came within striking distance of becoming Apple's largest revenue source in the fiscal second quarter.

The company took in $10.2 billion in sales for the region for the first three months of the year, compared with $13.2 billion for the Americas, long its biggest source of ...

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Ex-brokerage chief to serve 30 months in the Slammer

According to Reuters a former chief executive of Optionable Inc commodities brokerage was handed a prison term of 2-1/2 years on Wednesday for his role in defrauding the Bank of Montreal by helping inflate the value of the bank's natural gas derivatives portfolio.

In August last year, the former Optionable executive, Kevin Cassidy, of Bedford Hills, New York, pleaded guilty to one count of conspiracy to commit wire fraud in Manhattan federal court. Cassidy was charged in November 2008 with six felony counts.

U.S. District Judge Thomas Griesa sentenced Cassidy on Wednesday to 30 months in prison to be followed by three years of supervised release. The judge also ordered Cassidy to forfeit $200,000….

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The UK economy fell back into recession at the start of this year, it was revealed yesterday, leaving George Osborne’s credibility – and his deficit reduction plan – in tatters City AM reports.

Every sector of the economy disappointed, dragging GDP down 0.2 per cent in the first quarter, following a 0.3 per cent contraction at the end of 2011 and leaving the economy in a technical recession, according to initial estimates from the Office for National Statistics (ONS).

Many economists queried the scale of the slump and the accuracy of the official figures, which contradict more upbeat surveys, but all agreed that the economy was weak….

Harvard Embraces the Startup Culture

Earlier this year, according to Fortune, a team of six Harvard Business School MBA students was brainstorming ideas for a new startup business. They came up with a peculiar takeoff on all the online dating sites: a Facebook application for Jewish mothers to set their children up with potential marriage material….

With $3,000 of seed capital from Harvard Business School, Yenta was launched last week along with as many as 150 other new startups in what might well be the largest single experiment in entrepreneurship ever undertaken. The so-called "micro-businesses" range from a company called Kinsey that sells "premium undergarments" for men to another called 4n Friend that is creating an online network that matches language tutors with students all over the world.

It's part of a bold and highly unusual initiative within Harvard's new MBA curriculum…..