Friday, November 30, 2012

Can Wall Street Tame Elizabeth Warren?




NY Mag’s Kevin Roose writes: Wall Street vs. Warren, round one.  Elizabeth Warren is already giving Wall Street execs serious agita. In their mind, the spunky senator-elect from Massachusetts is heading to Washington for one reason only: to destroy them and everything they stand for.
Banks have disliked Warren since her Harvard days, when she agitated against predatory lending, credit card fees, and other bank practices. And as her national profile grew through her work with TARP oversight and the Consumer Financial Protection Bureau, the watchdog agency she helped create, their arm's-length opposition became a full-on war. Banks lobbied to keep her from being nominated to head the CFPB, then poured big donations into the campaign of Scott Brown, her Senate race opponent.

...After her convincing victory in November, her appointment to the powerful Senate Banking Committee, where she would have actual oversight of the financial sector, is seen by many on Wall Street as a fait accompli….

More?  Go to http://nymag.com/daily/intel/2012/11/can-wall-street-tame-elizabeth-warren.html

Warren Watch: Berkshire Moves Into Spain With CaixaBank Reinsurance Deal



According to the NY Times’ Dealbook: Warren E. Buffett has generally shied away from dipping his toe into southern Europe. But Mr. Buffett is nothing if not full of surprises.  His investment firm, Berkshire Hathaway, agreed on Friday to pay $780.8 million to claim the future cash flows of a life insurance portfolio held by CaixaBank, a major Spanish lender.

CaixaBank, which will continue to service the portfolio, will claim a pretax profit of about $680 million.  With the reinsurance deal, Mr. Buffett and his sizable insurance team are betting that at least one Spanish firm is in good financial shape, even as its home country remains on shakier economic ground.

He has repeatedly offered a dour assessment of Europe since the onset of its sovereign debt crisis, calling it a serious problem with few obvious solutions….

Read all about it at http://dealbook.nytimes.com/2012/11/30/berkshire-moves-into-spain-with-caixabank-reinsurance-deal/

Introducing The Fixers, The Wall Street Super Group!





From NY Magazine: ".....If you thought wizened Rock n' Roll Hall of Famers or Occupy Wall Street, you were wrong. These dudes came from recent interviews with top-level members of Fix the Debt, the high-minded confab of business elites that is pushing for bipartisan deficit reduction ahead of the so-called “fiscal cliff.”

"The Campaign to Fix the Debt, as it is properly known, is a four-month-old effort led by Alan Simpson and Erskine Bowles, the bipartisan duo who unsuccessfully tried to push a deficit-reduction scheme through Congress in 2010. With a reported $43 million war chest and the support of Peter G. Peterson, the Blackstone billionaire and leader of the deficit-scold movement, the group has been waging a nationwide media campaign meant to encourage President Obama and House Republicans to work together to avoid the expiration of the Bush income tax cuts and get long-term spending under control.

"At its top levels, Fix the Debt has quickly morphed into a massive business kaffeeklatsch — a stateside Davos, with fewer panels on green energy and more talk of baselines and dynamic scoring. The organization’s “CEO Council” now consists of roughly 150 executives, many of them recognizable names from Wall Street’s upper echelons….."

Why One of China's Richest Men Is Squaring off Against Obama in Court



 From the Christian Science Monitor: One of China’s richest men squares off against President Obama in a Washington federal court today, challenging the US leader’s refusal, on national security grounds, to let him build a wind farm in the US.


“We are suing the president because we do not accept his finding that we are a national security threat. It is not true,” says Wu Jialiang, CEO of Ralls Corp., whose deal to buy land for a wind farm in Oregon near a US Navy weapons training facility ran into a presidential veto in September.

US and Chinese lawyers say it is unlikely Ralls will win its case, but that the high profile challenge is a landmark in Chinese companies’ increasingly bold strategy of investing abroad. It could also serve as a test of Chinese allegations that US investment rules are biased against Chinese companies…..

http://www.cnbc.com/id/50018106

Bond God: 'I'm Waiting For Something To Go Kaboom'




From BI: “I’m waiting for something to go kaboom,” Jeff Gundlach says in his office a week before the L.A. speech. “If phase three takes two years, it’s worth waiting for. The markets don’t have lots of opportunity now.”

According to the report, Gundlach recommends investors start positioning their portfolios now as there will be little warning when the "kaboom" happens.

For now, Gundlach recommends buying gemstones, art, commercial real estate, and other hard assets.

Gundlach's DoubleLine Funds plans to off a long-short equity fund to provide inflation-adjusted returns.  He's also sitting on cash because he expects there to eventually be extraordinary opportunities when asset prices tumble....

And Now For Something Completely Different: Harvard Approves BDSM Group





According to the Harvard Crimson it started last October with a meal in Currier dining hall with a handful of friends who shared something in common: an affinity for kinky sex.  More than a year after the group first began informally meeting over meals to discuss issues and topics relating to kinky sex, Harvard College Munch has grown from seven to about 30 members and is one of 15 student organization that will be approved by the Committee on Student Life this Friday.

Michael, who was granted anonymity by The Crimson to protect his privacy, is the founder of Munch, an informal lunch or dinner meeting for people across the kink community.  For him, the recognition will provide a sense of ease for current and future members, knowing they are receiving institutional support.

“It’s a little hyperbolic for me to get teary-eyed and paternal about sophomores, but it’s really a joy to see the experience they will have now,” Michael said…..

Michigan Professor Tied to Insider Trading Case Bails




Sid Gilman, the University of Michigan neurologist linked to an insider trading case, has resigned his university position. Gilman, 80 was named by authorities as the person who leaked data to Mathew Martoma, 38, an SAC Capital Advisors LP hedge fund manager charged with insider trading. Gilman quit his university post on Nov. 27th.

Gilman had been paid $1,000 an hour to act as a consultant to Martoma and in 2008 allegedly gave the hedge fund manager details of a clinical trial for an Alzheimer’s drug being developed by Wyeth LLC. The neurologist treated Martoma as a “friend and pupil” while leaking him secret data for 18 months, authorities said….

Google Chief Page Said to Meet FTC Over Antitrust Probe

Google Inc. CEO Larry Page met with U.S. Federal Trade Commission officials today in Washington as the agency moves to wrap up its 19-month investigation of the company’s business practices, a person familiar with the discussions told Businessweek..

Google is seeking to persuade the FTC it hasn’t broken antitrust laws and that any final agreement with the agency shouldn’t be bound by a consent decree, according to the person and two others, who declined to be identified because the negotiations aren’t public.

Google has been engaged in settlement talks with the FTC for about a week,….

Top Firm's Unit Said to Cut Bonuses, Jobs




Citi’s trading and investment-banking division plans to eliminate 150 more jobs while shrinking bonuses by as much as 10 percent, extending the toll of Wall Street’s revenue slump, two people with direct knowledge of the decisions told Bloomberg.

The dismissals, which will occur this quarter at the New York-based firm, will affect businesses including equities trading and underwriting, said one of the people, who requested anonymity because the plans haven’t been announced. While bonuses for this year will shrink across the securities and banking division, which employs about 17,000 people, top performers are likely to be spared reductions, the people said….

Fnd out more at http://www.bloomberg.com/news/2012-11-29/citigroup-said-to-pare-bonuses-as-investment-bank-cuts-150-jobs.html

Argentina's President Basically Just Declared War On New York

According to Clusterstock yesterday, Argentina won a substantial victory when a New York Appeals Court ruled that its legal battle with hedge fund billionaire Paul Singer would continue on without the country having to make a $3 billion payment to bond holders on December 15th....

You would think that Argentina's President, then, would be breathing a sigh of relief. Instead she's breathing fire….


Read all about it at : http://www.businessinsider.com/fernandez-argentina-the-counter-model-2012-11#ixzz2DgsuHU8E

Thursday, November 29, 2012

Damage Control: Here's What Happened On SAC Capital's Conference Call This Afternoon



According to the good people at BI this afternoon, hedge Fund SAC Capital held its second conference call since a subsidiary hedge fund's manager, Mathew Martoma, was charged in the largest insider trading case in history. The call was short, less than half an hour, but CNBC's Kate Kelly gave the low down on what happened:

SAC Founder Steve Cohen has not been charged with any wrongdoing.

That said, if SAC is liable for anything monetarily, investors will not have to pay anything out. The hedge fund has set things up so that Cohen will take the financial hit.

Cohen has been meeting individually with portfolio managers to make sure everyone is on the same page.

Read more: http://www.businessinsider.com/sac-capitals-2nd-conference-call-2012-11#ixzz2Dgo9pnXA

The Stock Market Doesn’t Care About the Fiscal Cliff




Trading stocks on whether there’s a deal by January 1 is a fool’s errand. In the long run, the market just doesn’t care about that stuff, writes Daniel Gross.

….Stock trading is a fool’s game to begin with. Very few investors can beat the market. The market is dominated by insane, hyperactive machines that frequently don’t know what they are doing. Professionals mostly fail at beating the indices. And a bunch of those who do, we’re learning, are clumsy cheaters. (Pro tip: if you’re IM’ing about insider trading, don’t use phrases like “I don’t want to go jail.”)

Watching and reacting to what Congress people say about the cliff negotiations and the prospects of a deal won’t give you an edge—regardless of what the headline writers say. Why? Well,……


Barclays Has Fired All The Employees Involved In Libor Manipulation That Didn’t Slip Out A Side Door And Beat Them To The Punch



Dealbreaker’s one and only Bess Levin writes: Barclays has fired five employees following its internal investigation of the rigging of Libor interest rates and disciplined another eight people, the head of its investment bank said on Wednesday. Rich Ricci, chief executive of Barclays’ corporate and investment banking, said “a lot” of the individuals identified in its internal probe had left the bank so it could not take action against them…

Only in America: Teaching Rich People Not to Suck at Charity Donations




From NY Magazine: We know that ultrarich people can be very good at giving their money away. Think of Bill Gates, who started a massive and well-respected charitable empire and has given his way off the top of the Rich List. Or George Soros, whose political contributions often overshadow the billions of dollars he has given to uncontroversial programs like the U.N.'s Millennium Villages project.

We also know that the wealthy can make very puzzling philanthropy decisions. Think of the private equity baron Henry Kravis, whose $100 million gift to Columbia Business School will enrich a demographic (Ivy League MBA students) that hardly needs a boost. Or hedge fund honcho John Paulson, who gave $100 million to the Central Park Conservancy despite it already being insanely well-funded.

The idea that you can take the Kravises and Paulsons of the world, and teach them to be more like the Gateses and Soroses, is the root premise of GiveSmart, a new, Gates-funded initiative……

Black Friday sales not enough to offset Sandy's retail damage


Black Friday was no match for Sandy. According to the NY Post report major retailers such as Kohl's, Target and Macy's on Thursday reported weak sales in November as a strong start to the holiday shopping season on the day after Thanksgiving wasn't enough to fully offset a slow start to the month caused by Superstorm Sandy.

The storm stunted enthusiasm among shoppers early in the month just as stores were preparing for the busiest shopping period of the year, a roughly two-month stretch in November through December when they can make up to 40 percent of their annual revenue….

SEC Weighs Lawsuit Against SAC Capital



At 8 a.m. on Wednesday, an hour when Mr. Cohen is normally at the center of SAC’s cavernous trading floor in Stamford, Conn., he sat in his office to hold a hastily arranged conference call with his clients., according to the NY Times report.

Wealthy investors dialing in from as far away as Europe and Asia listened to soothing classical music before the call started. Then they received some grim news: Federal securities regulators were preparing to file a civil fraud lawsuit against the fund.

The move, which stems from a criminal insider trading prosecution brought last week against a former SAC employee, is the most significant action yet by the government in a long-running investigation of Mr. Cohen, who has not been accused of any wrongdoing, and his firm….

http://www.cnbc.com/id/50005887

Hedge funds face profit headache in 2013



Hedge funds' glory days seem a long way off as they head into a tricky 2013, with bumper profits likely to remain elusive in markets now dominated by political and central bank action, according to the good folks at Reuters.

Speakers at the Reuters Global Investment 2013 Outlook Summit said the $2 trillion industry, which has disappointed investors with below-market returns this year and losses last year, faces a headache making money in an environment where markets are choppy and not as buoyant.

"We're now (in) a world where we recognize that the ability to make money is a lot more difficult and there aren't that many people who can do it. There simply aren't enough, it just doesn't exist," said Saker Nusseibeh, CEO of Hermes Fund Managers……

Find out more at http://www.reuters.com/article/2012/11/27/us-investment-summit-hedgefunds-idUSBRE8AQ15U20121127

Million Dollar Twinkie: Hostess To Seek Approval For $1.8 Million In Exec Bonuses



Hostess Brands Inc. is asking for a judge's approval to give its top executives bonuses totaling up to $1.8 million as part of its wind-down plans, HuffPo reports..

The maker of Twinkies, Ding Dongs and Ho Hos says the incentive pay is needed to retain the 19 corporate officers and "high-level managers" during the liquidation process, which could take about a year. Two of those executives would be eligible for additional rewards depending on how efficiently they carry out the liquidation. The bonuses would be in addition to their regular pay.
The bonuses do not include pay for CEO Gregory Rayburn, who was brought on as a restructuring expert earlier this year. Rayburn is being paid $125,000 a month….


Read all about it at http://www.huffingtonpost.com/2012/11/29/hostess-executive-bonuses_n_2210515.html

'Head Trader' In The Biggest Insider Trading Case Identified




Bloomberg reports Phillipp Villhauer was the head trader at SAC Capital Advisors LP who allegedly helped the firm founded by Steven A. Cohen make $276 million on trades that led to the arrest of an ex-hedge fund manager for insider-trading, according to two people familiar with the matter.
Villhauer is referred to only as the “Head Trader” in a Securities and Exchange Commission complaint filed Nov. 20 in Manhattan federal court against Mathew Martoma, said the people, who declined to be identified because the matter isn’t public. He is referred to in an FBI complaint filed that same day as the “Senior Trader.” Martoma denies wrongdoing. Villhauer hasn’t been charged or sued.

“If this trader is not a cooperator, he is or soon will be in the government’s crosshairs,” said Andrew Frisch, a New York attorney and former federal prosecutor who isn’t involved in the case. “The government will see him as either a potential cooperator against others or as a worthy target by himself….”

More?  Go to http://www.businessinsider.com/phillipp-villhauer-head-trader-at-sac-2012-11

Blankfein: Seems Like 'Fiscal Cliff' Deal Could Be 'Reachable'




We don't know what stuff Lloyd is smoking these days but Goldman Sachs CEO Lloyd Blankfein described President Barack Obama's plan for Washington to reach an agreement on the "fiscal cliff" as detailed and "very credible." However, he cautioned CNBC that marginal income tax rates may have to rise to seal a deal.

In an interview with CNBC after meetings between the president and several CEOs, Blankfein said, of course, it's hard to tell if a deal will be reached but "if I were involved in a negotiation like this, and everybody was purporting to be where they are, I would say that an agreement was reachable."
Blankfein said he thought concessions on both the revenue and entitlement sides would be necessary to reach a final deal to avert the fiscal cliff, when large spending cuts and tax increases are slated to take effect on Jan.1....

Seems?  Read all about it at http://www.cnbc.com/id/50000436

Life in These United States: Senator Proposes Dissolving City Of Detroit




According to CBS Detroit: It would no doubt be controversial, but the idea of dissolving the fiscally struggling city of Detroit and absorbing it into Wayne County is being tossed around in Lansing, Mich.

WWJ Lansing Bureau Chief Tim Skubick reports some state Republicans are talking about giving the city the option to vote itself into bankruptcy. And mid-Michigan Senator Rick Jones said all options should be considered — including dissolving the city.

“If we have to, that is one idea we have to look at. We really have to look at everything that is on the table,” Jones said. “Again, if this goes to federal bankruptcy, every employee down there will suffer, the city will suffer and the vultures will come in and take the jewels of Detroit and they will be gone….”

Jewels? The Priceless Jewels of Detroit?  Wait, wait…there’s more at http://detroit.cbslocal.com/2012/11/28/state-senator-proposes-dissolving-city-of-detroit/

Dismal year for quant funds




According to the Financial Times quantitative hedge fund managers are facing up to one of their worst years on record as losses mount for many of the sector’s biggest names.

BlueTrend, the $11bn Geneva-based fund run by Leda Braga, dropped 5.3 per cent in October, bringing year-to-date losses to 3.1 per cent, an investor in the fund said. Winton Capital, the world’s largest quant fund, with $26bn under management, has seen its flagship futures fund drop 5.65 per cent in the year to November 27……

Wednesday, November 28, 2012

Monster $46 Trillion Order F#*ks Up Stockholm Exchange




Stockholm Stock Exchange was paralyzed on the morning of a purchase order of over 4.2 billion index futures. The value of words corresponding to 131 times Sweden's gross domestic product, and the stock market reports on technical problems.

The order was on buy side of the order book and covered more than 4.2 billion futures, to a unit price of almost 107,000 dollars. It gives a theoretical value of 459 561 500 030 000, ie nearly 460 trillion dollars. Sweden's gross domestic product, by comparison, amounted in 2011 to more than 3500 billion….

An Appeals Court Just Granted Argentina The Right To Fight Hedge Fund Managers Another Day




They said it couldn't be done (or that it was highly unlikely).  But an Appeals Court has granted the group of bond holders that restructured Argentine debt (exchange bond holders) the right to challenge Judge Thomas Griesa's ruling that Argentina must pay bond holders that didn't restructure, Bloomberg reports.

This is a huge victory Argentina, and it's a loss for billionaire hedge fund manager Paul Singer and other bond holders of the country's 2001 sovereign debt working with him.

SAC’s Villhauer Head Trader Cited in U.S. Case




Phillipp Villhauer was the head trader at SAC Capital Advisors LP who allegedly helped the firm founded by Steven A. Cohen make $276 million on trades that led to the arrest of an ex-hedge fund manager for insider-trading, two people familiar with the matter told Bloomberg people.

Villhauer is referred to only as the “Head Trader” in a Securities and Exchange Commission complaint filed Nov. 20 in Manhattan federal court against Mathew Martoma, said the people, who declined to be identified because the matter isn’t public. He is referred to in an FBI complaint filed that same day as the “Senior Trader.” Martoma denies wrongdoing. Villhauer hasn’t been charged or sued.
 “If this trader is not a cooperator, he is or soon will be in the government’s crosshairs,” said Andrew Frisch, a New York attorney and former federal prosecutor who isn’t involved in the case…

FBI Scours Social Media In Insider Probe




Would-be hedge fund insider-traders had better beware their Twitter feed.
The Federal Bureau of Investigation is taking a long, hard look at Twitter and other social media as part of its crackdown on insider-trading, two agents said. The Feds are on the lookout for tips that may be exchanged on such networks.

"I will tell you technology will play a huge part, social media, Twitter," April Brooks, head of the FBI's New York field office and a member of the "Operation Perfect Hedge" team that has won more than 60 insider-trading convictions, told Reuters TV. "Any kind of technology that is new and doesn't exist today, if there is any way to exploit it, these individuals will exploit it..."

Fiscal Cliff Panic: Costco Special Cash Dividend: Retailer To Pay Shareholders Early To Avoid Fiscal Cliff Tax Boost




Costco will spend $3 billion to pay a special dividend of $7 per share next month ahead of higher tax rates that may kick in come January, HuffPo writes.

The Issaquah, Wash., company said Wednesday that the special dividend will be payable Dec. 18 to shareholders of record Dec. 10. In addition, Costco Wholesale Corp. will pay its regular quarterly dividend of 27.5 cents per share on Nov. 30 to shareholders of record as of Nov. 16…..

Newsflash for readers who’ve been hiding under a rock (you know who you are): Many companies are making special end-of-year dividend payments or moving up their quarterly payouts because investors will have to pay higher taxes on dividend income starting in 2013, unless Congress and President Barack Obama reach a compromise on taxes and government spending....

It’s B-a-a-a-c-k! American Housing Casino Revives After Big Drop




Renee and Dwaine McCuistion, who lost their Las Vegas (SPCSLV) home after defaulting in 2010, are feeling lucky again. Bloomberg reports that they bought another property last month for $475,000, 42 percent less than what the previous owner paid.

 “It’s like we won the lottery,” said Renee, sitting on the patio of the four-bedroom house at Red Rock Country Club beside Dwaine, her police officer husband. “With everything so low, we felt it was imperative to start building equity again.”

Las Vegas, the center of the U.S. housing speculation and collapse that sparked a global financial meltdown, is again enticing buyers after a 62 percent price drop, the steepest of any American city. Demand has intensified among investors such as Blackstone Group LP (BX), the world’s largest private-equity firm, as well as families like the McCuistions who are climbing back up the property ladder as Nevada’s supply of bank-owned property tumbled the most of any state…..

And Now For Something Completely Different: Woman Jailed For Attacking Beau Over Bad Sex



Dealbreaker writes: A Florida woman was jailed last night for a post-coital assault on her boyfriend, an attack the victim says was prompted when only he climaxed during a sexual encounter in the couple’s residence. Raquel Gonzalez, 24, was arrested Monday afternoon for felony domestic battery and booked into the Manatee County lockup, where bond has been set at $750. According to a Manatee County Sheriff’s Office report, Gonzalez and Esric Davis, 30, are “boyfriend and girlfriend who live in the same home and are involved in a sexual relationship.” Deputies noted that Davis and Gonzalez were “involved in sexual intercourse” when “Esric then climaxed and Raquel did not.” Which reportedly angered Gonzalez, who allegedly “began hitting and scratching [Davis], causing scratches near his eye and nose.” Davis told investigators that Gonzalez “goes off” frequently and that she had previously been physical with him….

Why stop now, double-wide readers.  For more details go to http://www.thesmokinggun.com/documents/attack-over-bad-sex-785623


British Petroleum (BP ) Suspended From U.S. Contracts



There is a God!  BP Plc (BP/), which agreed to plead guilty to criminal charges after the worst oil spill in U.S. history, will be suspended from winning new contracts from the federal government, the U.S. Environmental Protection Agency told Bloomberg.

The Interior Department also said it won’t award BP any leases in a Gulf auction today because the company has been barred from winning federal contracts. BP would be eligible for the leases when the government ends the contract suspension, the agency said.

The EPA said the ban was imposed because the company’s conduct during the 2010 Deepwater Horizon disaster showed a lack of business integrity. The action, which doesn’t affect existing contracts, will stand until BP can demonstrate it meets business standards set by the government, the EPA said. The incident killed 11 people and caused the largest environmental disaster in U.S. history, it said….


Buffett Expects 'Fiscal Cliff' Fix, but Not by December 31




Warren Buffett expects Washington lawmakers will come up with a compromise on the "fiscal cliff," but he's not sure that will happen by the end of the year, according to the gurus at CNBC.   He doesn't, however, think it will take several more months to come up with a fix and it won't be the "end of the world" if a compromise comes shortly after the December 31 deadline.

Buffett appeared live on CNBC's Squawk Box with long-time friend Carol Loomis to promote a book about him that she compiled from Fortune magazine articles over the years.  Buffett didn't outline a specific solution that he prefers, saying he could "go with any number of plans."
But he thinks the end result should have U.S. revenues at 18.5 percent of GDP and expenditures at 21 percent……

More?  Check out the coverage at http://www.cnbc.com/id/49984648

SAC Capital notified that SEC may bring insider trading charges against them



Totally unsurprisingly.....Steve Cohen's SAC Capital Advisors has received a Wells notice from the Securities and Exchange Commission, suggesting the regulator may bring civil charges of insider trading against the hedge fund firm, a person familiar with the matter told Reuters.


The $14 billion hedge fund firm held a phone call with investors on Wednesday morning to inform them of the notice, the source said. (A Wells notice indicates that SEC staff would recommend a civil enforcement action against the firm.)   Cohen, who founded the firm, has not been accused of wrongdoing. He was on the telephone call on Wednesday morning, the source said.

This is the first time the government has indicated it may move against the hedge fund firm itself on insider trading, after previously accusing only former SAC employees....

Hedge funds face big profit headache in 2013




Yes folks read it and weep.  Hedge funds' glory days seem a long way off as they head into a tricky 2013, with bumper profits likely to remain elusive in markets now dominated by political and central bank action. At least if you can believe Reuters.

Speakers at the Reuters Global Investment 2013 Outlook Summit said the $2 trillion industry, which has disappointed investors with below-market returns this year and losses last year, faces a headache making money in an environment where markets are choppy and not as buoyant.

Hedge funds made double-digit returns in seven out of nine years between 1991 and 1999, according to Hedge Fund Research's HFRI index, and made returns of more than 9 percent every year between 2003 and 2007 inclusive amid rising markets. However, their secret sauce of 'alpha' - profits due to a manager's skill rather than overall market moves - has been hard to find in the 'risk-on, risk-off' environment where markets can be more influenced by the words of euro zone politicians and central bankers than companies' fundamentals….

Harvard doctor turned hedge fund felon lured by ambition, riches




According to Bloomberg from the age of six, Joseph F. “Chip” Skowron III aspired to be a doctor. At Yale, he earned both a medical degree and a doctorate in molecular and cellular biology, then qualified for Harvard’s elite, five-year residency program. Three years in, Skowron quit medicine for Wall Street. He and two partners started a group of health-care investment funds under the auspices of FrontPoint Partners LLC, a hot new property in the exploding world of hedge funds.

Skowron was soon making millions of dollars a year. He built a gabled, 10,000-square-foot home on three acres in the nation’s hedge-fund capital, Greenwich, Connecticut. He assembled a small fleet of pricey cars, including a 2006 Aston Martin Vanquish and a 2009 Alfa Romeo Spider 8C. He also spent vacation time engaged in Third World humanitarian causes.

Today, Skowron, 43, is serving a five-year term for insider trading at the federal prison at Minersville, Pennsylvania. At FrontPoint, Skowron lied to his bosses and law enforcement authorities, cost more than 35 people their jobs and stooped to slipping envelopes of cash to an accomplice. FrontPoint is gone. Morgan Stanley, which once owned FrontPoint, is seeking more than $65 million from Skowron, whose net worth a year ago was $22 million.....

More schadenfreud anyone?  Check out http://www.nj.com/business/index.ssf/2012/11/harvard_doctor_turned_hedge_fu.html

Argentina Rating Downgraded by Fitch: ‘Probable’ Default




Argentina’s credit rating was cut by Fitch Ratings, which said a default is probable after a U.S. judge ruled the country can’t make payments on its restructured bonds unless it pays holders of defaulted debt by Dec. 15.

The rating on Argentina’s international law bonds was lowered to CC, eight levels below investment grade, from B, Fitch said today in an e-mailed statement. It cut the rating on bonds sold under Argentine law to B- from B.

U.S. District Judge Thomas Griesa ruled on Nov. 21 Argentina must deposit $1.33 billion for creditors who rejected the terms of the country’s two debt restructurings before it makes a $3 billion coupon payment to holders of performing securities next month. Fitch said the country’s failure to make a payment on warrants that are linked to economic growth would be considered a default on the country’s other debt securities issued under international law…..

Read more at http://www.businessweek.com/news/2012-11-27/argentina-rating-downgraded-by-fitch-on-probable-default#r=bloomberg

Stevie on line 1: Cohen holds call to soothe SAC investors’ jitters




Investors worried about an insider-trading scandal that has engulfed SAC Capital Advisors want to get the straight scoop directly from the hedge fund’s billionaire boss, Steve Cohen, NY Post reports.

SAC’s senior management is planning to hold a special call today to try to allay concerns after a former portfolio manager was charged in the government’s widespread crackdown on insider trading.

One former SAC investor, whose firm pulled capital in 2011 due to concerns about insider trading, said those remaining will “want to hear at least directly from Stevie, preferably with non-gamed, pre-sent Q&As.” “I would want to hear about this specific dealing and why this guy was a lone wolf,” the investor said....

Read all about it at http://www.nypost.com/p/news/business/stevie_hot_line_NFE7DRvLvRE3qgwcKzZvjP

Tuesday, November 27, 2012

Can the Feds Bag the Teflon Trader?




From the Daily Beast: The government is trying to persuade former SAC employee Mathew Martoma to turn against his ex-boss in a $267 million insider-trading case involving an Alzheimer’s drug. So far Martoma is not playing ball—and both men insist they are innocent.

If John Gotti was the Teflon Don, then in the off-the-record view of the FBI and prosecutors, Steven Cohen is the Teflon Trader, where the feds never have enough to charge him with anything even as underling after underling at his hedge fund gets locked up for insider trading—five in all, three of them pleading guilty, two others acknowledging complicity, none of them implicating Cohen personally.

On his part, Cohen says he has never been charged simply because he has committed no crimes. The government is convinced it merely has never been able to catch him—until now, perhaps.

http://www.thedailybeast.com/articles/2012/11/27/feds-hope-to-use-former-underling-to-land-hedge-fund-trader-steven-cohen.html

O.E.C.D., Warns of Global Recession



The Organization for Economic Cooperation and Development on Tuesday sharply cut its forecast for the world economy, warning that failure to end the euro crisis and avert a fiscal impasse in the United States could cause a global recession according to the NY Times.

The organization, based in Paris, predicted that gross domestic product in its 34 member countries, all of which have developed economies, would expand 1.4 percent in 2013, significantly below the forecast of 2.2 percent it made just six months ago.

Even that forecast assumes that United States lawmakers reach a budget agreement to prevent billions of dollars in tax increases and automatic spending cuts from taking effect automatically at the end of the year.  If the United States does not avoid that so-called fiscal cliff, “a large negative shock could bring the U.S. and the global economy into recession,” according to the forecast….

Goldman's Blankfein Said to Meet With Obama Tomorrow



Goldman Sachs CEO Lloyd Blankfein is among the business leaders invited to the White House tomorrow as President Barack Obama seeks their support for his approach to addressing the fiscal cliff, two people familiar with the matter told Bloomberg.

Obama’s meeting with the execs, his second such session this month, is part of an administration campaign to pressure Congress to extend tax cuts for middle-income Americans while letting them rise for top earners, according to the people, who requested anonymity because the list of those at the meeting hasn’t been officially released.

U.S. House Speaker John Boehner of Ohio and other House Republican leaders are also scheduled to meet with Blankfein tomorrow and other CEOs pressing for an agreement to avoid the $607 billion in automatic tax increases and spending cuts scheduled to take effect in January….


And Now For Something Completely Different: Belgian man finds out his wife of 19 years was born a man




According to the folks at Fox News: a Belgian man is battling the country’s court system to get his marriage annulled after finding out that his wife of 19 years was born a man. Jan, identified only by his first name, told the Het Nieuwsblad newspaper that he discovered his Indonesian wife Monica underwent a sex change after he and his son heard rumors, according to the Telegraph.

"I brought her to Belgium. That was not easy. The Belgian courts had serious doubts about the authenticity of her birth and her identity papers, but eventually they accepted it anyway,” he said. “I thought she was an attractive woman, all woman. She had no male traits."

Jan, who is now undergoing psychiatric treatment, added that he decided not to have children with his wife because he had two in his previous marriage….

Here's Everything We Know About The Alleged Fraud At Microsoft's PR Agency



According to BI a senior member of Bite Communications' finance team is suspected of embezzling nearly $3 million from the company, its corporate parent disclosed today in a delayed annual report.
San Francisco-based Bite's clients include Microsoft, Nokia, Sony and Mozilla.  The executive was not named.

Next Fifteen, the British PR agency holding company, disclosed in its annual report that the fraud was "an act of personal embezzlement by a long-serving employee in a trusted position heading up the finance team in the Bite office in San Francisco. This entailed a cheque fraud over a number of years...

Investors: JPMorgan A 'Secret Hedge Fund,'




From finalternatives: JPMorgan Chase shareholders have trotted out the dreaded epithet—"hedge fund"—in a revised class-action lawsuit against the bank.

The shareholders, led by several large public pension funds, accuse the bank of turning its chief investment office into a "secret hedge fund." The move blew up in the bank's face when a trader known as the "London whale" cost it some $6 billion on bad credit-default swap index trades.
JPMorgan CEO Jamie Dimon "secretly transformed the CIO from a risk management unit into a proprietary trading desk whose principal purpose was to engage in speculative, high-risk bets designed to generate profits," the revised class-action complaint, filed last week in New York federal court, alleges….


Billionaire's Hedge Fund Rebuffs NY Fed In Argentina Case: No Risk To $2.6T Payments System




…..The legal battle between NML Capital, which is connected to Paul Singer’s Elliott Management and the Republic of Argentina has faced a crescendo ever since the flagship vessel of the Argentine Navy was detained at a Ghanaian port back in October, Forbes tells us..  Just before the Thanksgiving weekend, New York Federal Judge Thomas Griesa ruled that Argentina had to pay holdout bondholders as it paid those that entered two restructurings; Griesa also ruled that any party aiding Argentina in making payments that excluded the holdouts, including trustee Bank of New York Mellon, were legally liable….
Institutions from the New York Fed to the Clearing House (which is backed by the likes of JPMorgan Chase, Citigroup, Bank of America, and Wells Fargo) hit the panic button…
http://www.forbes.com/sites/afontevecchia/2012/11/26/billionaires-hedge-fund-rebuffs-ny-fed-in-argentina-case-no-risk-to-2-6t-payments-system/

Facebook Makes It Official: An External Advertising Network (and Big Bucks) Is Coming Soon




From BW: There’s been a lot of discussion over the past few days about the recent changes to Facebook’s (FB) privacy and governance policies—including the revelation that (gasp!) Facebook is not actually a democracy—but one element of the new rules has gotten less attention than it probably should: Namely, the giant social network is going to use the data it has about your likes and dislikes to show you ads outside of Facebook. This is the first real confirmation that the company is going to roll out an advertising network that extends beyond just its own walled garden, and it could turn out to be one of the biggest factors in the success or failure of Facebook’s revenue-growth strategy….

All Of Knight Capital Is For Sale



Since last week, there's been speculation about who would buy Knight Capital's market-making unit. Now, CNBC's Kate Kelly reports that the entire company is for sale, and competitors Virtu and Getco (both high frequency trading firms) are putting in proposals to buy it.

Knight is one of the biggest brokerages in the country That isn't to say, though, that the company will be bought at all, according to Kelly. Knight has had an incredibly rough year. This summer it lost $400 million due to a glitch in one of its new trading programs. The incident prompted an investigation by the SEC and lawsuits from clients that lost money trading.  Knight Capital's stock spiked sharply on Kelly's report and it's up around 16%......


Read more: http://www.businessinsider.com/knight-capital-is-on-sale-2012-11#ixzz2DRqP2GPV

SAC Capital To Hold Investor Call Wednesday Morning




SAC is losing no time!  According to a CNBC report facing perhaps its toughest moment yet in the U.S. government’s insider-trading probe, SAC Capital will host a special investor call Wednesday morning to field questions about the recently-unveiled federal case against former trader Mathew Martoma, say two people familiar with the matter.

SAC management will host an investor question-and-answer session Wednesday before the U.S. markets open at 9:30 a.m., say these people. The Stamford-based hedge fund firm holds quarterly calls to discuss matters of performance, these people added, but additional calls to discuss particular legal issues, while not unprecedented, are also not the norm.  It is unclear as yet whether SAC founder Steve Cohen will participate in the scheduled discussion…..

Apple Goes To Court Again….



Apple. and LG Electronics are set to face trial over claims by an Alcatel-Lucent SA (ALU) unit that they infringed patents for electronic devices including phones and computers.

The jury trial, scheduled to begin today in federal court in San Diego, stems from a 2010 lawsuit by the Paris-based company’s Multimedia Patent Trust accusing Apple and LG Electronics of copying video-compression technology that allows data to be sent more efficiently over communications media, including the Internet and satellites, or stored on DVDs and Blu-Ray disks.

The trust claims its patents are infringed by products including multiple versions of Apple’s iPhone, iPod, iPad and MacBook, as well as LG Electronics’s……

Cyber Monday Sales Up 20 Percent



Black Friday's doorbusters may be long gone, reports the New York Daily News, but deep online discounts were set to help retailers click up record Cyber Monday sales.  Online sales on the Monday after Thanksgiving spiked 26% by mid-afternoon over the same period last year, according to an early tally by IBM Benchmark.

Like their brick-and-mortar cousins, some of which kicked off the biggest shopping season of the year as early as Thanksgiving night, online retailers were aiming to get a jump on holiday sales.  Walmart began its Cyber Monday promotions as early as Saturday and rolled out deals like $1,000 off a Samsung 55” HDTV.  Clothing retailer Gap was offering its 30%-off Cyber Monday special on Sunday morning. Amazon.com, which kicked off its Cyber Monday promotions at the stroke of midnight, cut the price of its Kindle Fire by $30.

Cyber Monday is expected to be the busiest Web shopping day of the year for a third year running, with retailers racking up online sales of $1.5 billion, up about 20%, according to comScore.

Read more at http://www.nydailynews.com/news/national/cyber-monday-bargains-click-shoppers-article-1.1208512

Buffett: Jamie Dimon The 'Best Person' For Treasury Secretary




Tim Geithner is leaving at the end of Obama's first term so the speculation for who will be the next Treasury Secretary is running hot, reports BI.

Billionaire Warren Buffett has just thrown his pick out. He told TV host Charlie Rose that JP Morgan CEO Jamie Dimon would be the best man for the job.

From Bloomberg: “If we did run into problems in markets, I think he would actually be the best person you could have in the job,” Buffett said in response to a question about Dimon from Charlie Rose, according to the transcript of an interview that was scheduled to air yesterday on PBS. “World leaders would have confidence in him....”

And about that $6 billion trading lost JP Morgan suffered earlier this year... Buffett thinks it shows Dimon knows how to handle intense pressure…….

Read more: http://www.businessinsider.com/warren-buffetts-treasury-pick-2012-11#ixzz2DRH3uah1

Monday, November 26, 2012

Google's $400 million Wi-Fi buy a hoax




A spate of press reports on Monday heralded Google's latest takeover deal: An apparent $400 million purchase of ICOA, a Warwick, R.I., company that makes Wi-Fi hotspots for public areas like parks and airports.  Not so fast, ICOA executives said soon after. Turns out the press release announcing the deal was a hoax.

The official-looking notice appeared on PRWeb, a distributor of press releases and other corporate announcements. The story was then reported by several news organizations, including the Associated Press, as well as tech blogs, such as TechCrunch.

Then the retractions began pouring in, as ICOA and people familiar with Google's operations began to deny the report. The press release has since been taken down by PRWeb. A representative from the company did not respond to a request for comment. Google (GOOG, Fortune 500) also declined to comment.....

Is Microsoft On The Verge Of A Sudden Collapse?




The departure of Steve Sinofsky so soon after the launch of Windows 8 was not a vote of confidence by the maker of the world’s largest operating system. But according to a Forbes report is it a sign of Microsoft‘s imminent collapse?

Last week, usability expert Jakob Nielsen wrote a devastating critique of Windows 8 on his Alertbox blog. He writes, “One of the worst aspects of Windows 8 for power users is that the product’s very name has become a misnomer. ‘Windows’ no longer supports multiple windows on the screen.… When users can’t view several windows simultaneously, they must keep information from one window in short-term memory while they activate another window. This is problematic for two reasons. First, human short-term memory is notoriously weak, and second, the very task of having to manipulate a window—instead of simply glancing at one that’s already open—further taxes the user’s cognitive resources….”

Buffett's and Obama’s $250K Difference of Opinion



CNBC writes: Warren Buffett says he supports President Barack Obama's efforts to eliminate the Bush-era tax cuts for wealthy Americans, but he disagrees on where to draw the line.  In an op-ed piece in The New York Times on Monday, Buffett writes that the cutoff should be "maybe $500,000 or so."

Obama has insisted that the cuts be extended only for families with less than $250,000 in annual income….

Read all about it at http://www.cnbc.com/id/49965038


New York vs. London: Brit Bankers Bracing for Smaller Bonuses





Bankers in London, the hub for securities firms in Europe, are bracing for lower bonuses compared with New York counterparts as earnings from the region plummet and pressure to tighten compensation rises. Bloomberg's Ben Priechenfried reports.

“The real split is coming, and we will see the quantum divide this year,” said Tom Gosling, a partner at PricewaterhouseCoopers LLP in London, referring to the difference in pay between the two financial centers. “U.S. regulators don’t have the same obsession with pay structures that European regulators have…...”



Ex-SAC’s Martoma granted $5 million bail



A former SAC Capital portfolio manager was released on $5 million bail on Monday after making his first appearance in a New York court on charges of making illegal trades that hedge fund titan Steven A. Cohen personally signed off on, Reuters reports.


Mathew Martoma, 38, of Boca Raton, Florida, was charged last week in what U.S. prosecutors called "the most lucrative" insider-trading scheme ever.

Martoma was accused of helping Cohen's firm avoid losses and reap profits totaling $276 million in the summer of 2008 by using insider tips he obtained from a doctor about Elan Corp and Wyeth LLC. Martoma worked for CR Intrinsic, a unit of Cohen's SAC Capital…..

Rotted Corpse of Lehman Brothers Is Still Making Deals




New York Magazine’s Kevin Roose writes: You might think that Lehman Brothers would have a hard time making money in 2012, what with having gone out of business and all.
But, like Wesley in the Princess Bride, the bank was only mostly dead after its 2008 bankruptcy. And today, it proved that it could still summon the old Dick Fuld fightin' spirit to get a deal done, with a $6.5 billion sale of Archstone, a real-estate developer owned by the zombie bank's estate.
Archstone, which owns apartment complexes across the U.S. and Europe, is widely regarded as one of the primary reasons that Lehman died in the first place…..

INTRADE: US Residents Should Begin Closing Down Their Accounts Immediately



The CFTC is suing popular betting site Intrade.  And now Intrade is telling its customers to start shutting down their accounts.  From Intrade (via TPM):

ATTENTION U.S. CUSTOMERS - IMPORTANT!
We are sorry to announce that due to legal and regulatory pressures, Intrade can no longer allow US residents to participate in our real-money prediction markets.
Unfortunately this means that all US residents must begin the process of closing down their Intrade accounts. We strongly urge you to begin this process immediately:

Step 1: Close out open predictions
You must close out all open predictions before 8:00am GMT (3:00am ET) on December 23, 2012. Instructions on how to close out an open prediction can be found HERE.  If this is not done then by the deadline noted above, Intrade will close out your predictions for you at what we consider to be fair market value as of the daily session close of December 23, 2012….

Step 2: Withdraw funds
Members have until December 31, 2012, to withdraw all funds from their account.....

Obama to Announce Elisse Walter New Head Of The SEC

CBS is reporting that President Obama is expected to name SEC Commissioner Elisse Walter the new head of the SEC.

Walter is a Bush appointee who served as acting Commissioner right before Schapiro was appointed in 2009. Like Schapiro, she has worked for the CFTC and FINRA before — so another D.C. insider here.
Walter is a graduate of Yale University with a B.A. in math and also holds a J.D. from Harvard.

Read more at http://www.cbsnews.com/8301-505123_162-57554187/schapiro-stepping-down-after-leading-sec-in-crisis/

Citizen Peter to Pay CEO Paul: How some CEOs are trying to make a killing off the fiscal cliff




From Fortune: A new study shows that CEOs will reap huge financial benefits if a fiscal cliff campaign some of them are undertaking is successful. This is yet another reason it's time to raise the flag on CEO pay.

What should boards pay CEOs for anyway? A new study raises questions about the structure and size of CEO pay that deserve answers -- and fast.  An analysis from the Institute for Policy Studies' (IPS) released earlier this month shows that CEOs will reap huge personal moolah if a fiscal cliff campaign some of them are undertaking is successful. According to the report, the Fix the Debt campaign "has raised $60 million and recruited more than 80 CEOs."

The paper highlights three elements of the campaign's agenda:  repatriation of foreign profits tax free, maintenance of the Bush tax cuts, and offsets through reductions to Social Security, Medicare, and Medicaid benefits….

Buffett Tells It Like It Is: Higher Taxes Won't Stop Smart Investors



           
Billionaire Warren Buffett says it's foolish to let higher taxes stop you from following a good investment idea. He's right.

From Forbes: Warren Buffett this morning rightly scolds the whiny. Complaints about the possibility of higher taxes next year border on idiotic. The savviest investors will put money to work.  Buffett asks you to imagine a scenario: A smart investor presents an idea. Perhaps it’s Buffett himself suggesting you also buy JPMorgan Chase or Party City or whatever. Will you really demur—and pass up such an opportunity because of those increased levies? Only the foolish would.

“Let’s forget about the rich and ultrarich going on strike and stuffing their ample funds under their mattresses if — gasp — capital gains rates and ordinary income rates are increased,” Buffett, CEO of Berkshire Hathaway, writes in a New York Times op-ed. “The ultrarich, including me, will forever pursue investment opportunities”

UBS Stung by Adoboli Case




Swiss and U.K. financial regulators have cracked down on UBS AG after a former trader at its investment bank in London lost $2.3 billion, the WSJ reports.  Britain's Financial Services Authority Monday said it fined the Zurich-based bank £29.7 million pounds ($47.6 million), one of the biggest fines it has ever imposed.

"Failures of this type in firms of the size and standing of UBS not only damage the firms concerned but also wider confidence in the integrity of the markets and the financial system," said Tracey McDermott, the FSA's director of financial crime.
Switzerland's equivalent regulator Finma, which doesn't have the power to impose fines, said it would consider "whether UBS must raise capital backing for its operational risks…..