Dealbreaker

Yes, The SEC Has Noticed The Swarm Of SPACs Crawling All Over Wall Street

Fri, 25 Sep 2020 19:09:01 GMT

Jay Clayton’s got some questions.

Jay Clayton has certainly been busy the last few months. Between reducing the amount of information available to investors while simultaneously limiting what those investors can do with the companies they own, giving as many people as possible the opportunity to lose money on alternative investments, sifting through whistleblower complaints, cutting checks to them, taking revenge, making phone calls and portentous statements, investigating coronavirus scandals of varying size, issuing slaps on the wrist, all the while making plans for his next step, you might think he wouldn’t have time to keep up with old friends like Gary Cohn and Paul Ryan. But you’d be wrong! He’s well aware of what they and everyone else on the Street is up to, and he’s keeping an eye on them (wink, wink), at least for the next couple of months.

“One of the areas in the SPAC space I’m particularly focused on, and my colleagues are particularly focused on, is the incentives and compensation to the SPAC sponsors,” Mr. Clayton said in an interview on CNBC. “How much of the equity do they have now? How much of the equity do they have at the time of the IPO-like transaction? What are their incentives?”…
Mr. Clayton’s comments were intended to communicate that regulators are closely reviewing SPAC written disclosures, a person familiar with the matter said. The SEC staff reviews thousands of public-company disclosures every year and offers written comments about them, with an eye toward enhancing disclosure for investors. Mr. Clayton’s remarks weren’t intended to signal the existence or possibility of enforcement action, the person said…. This has been a record year for new SPAC listings. So far in 2020, IPOs of new blank-check companies have raised $41.2 billion, handily breaking last year’s haul of $13.5 billion, which was then a record, according to Dealogic.

Blank-Check Firms Offering IPO Alternative Are Under Regulatory Scrutiny [WSJ]

If You Can Build A Multi-Billion Hedge Fund, You Can Probably Send An Explicit E-Mail To An ...

Fri, 25 Sep 2020 15:00:47 GMT

For once, Sam Isaly’s dogged refusal to accept his limitations has backfired on him.

As a teenager, Sam Isaly lost the use of his legs and the partial use of his upper body to a wrestling injury. This did not stop him from getting to Princeton and graduating with honors, nor from studying at the London School of Economics. It did not keep him from founding and running his own hedge fund for three decades, nor from becoming the most successful investor ever in the life sciences space.

Indeed, Isaly’s is the sort of overcoming-of-adversity stories that keeps the American Dream alive, and with it the belief that anyone can do anything if they just set their minds to it. But, according to Isaly, that’s not entirely true: For instance, he says his paralysis prevents him from, say, embedding pornographic material in routine e-mails to his assistant, or creating a hostile work environment for the tiny handful of women working at his OrbiMed Advisors through verbal abuse and sexually explicit japery. At the very least, he says the Boston Globe didn’t do enough reporting on whether his condition might have prevented him from doing any or all of the gross things it reported he did and which led to his departure from OrbiMed—whatever that reporting might be, with what we’re sure would have been Isaly’s and OrbiMed’s full cooperation—and so: Money, please.

Unfortunately for Isaly, however, the legal burden of proof runs the other way, and does his entire life story up to this point.

Boston Globe Media Partners LLC defeated a defamation suit over a story on a hedge fund founder’s alleged workplace harassment because he failed to show his quadriplegia made it impossible to send porn and do many of the other reported acts, according to a Southern District of New York ruling.

Hedge Fund Founder Loses Suit over Boston Globe Harassment Story [Bloomberg Law]

An Ivy League Education Is Probably Not Worth The Cost, Unless You Want To Be A Hedge Fund Manager

Fri, 25 Sep 2020 13:48:11 GMT

A CFA is nice, too.

We’re not sure if you are aware of this startling fact of American life, dear reader, but here it is: College is expensive. Like, really, really expensive. Even if you go as cheap as you can, attending an in-state public university, the sticker price for four years is close to $40,000; at a private university, the average is more like $140,000. At the highest end, the Ivy League, $140,000 will only cover about two years.

Most Americans don’t have that kind of scratch just sitting around, and so they have to take on loans to finance their education. The average college graduate begins her career something like $30,000 in the hole, a number that can rise significantly, of course, with the school’s U.S. News & World Report ranking. (It must be said that the top colleges also happen to be the most generous with aid; even so, the average out-of-pocket cost for four years on an Ivy-covered campus can still be around $100,000.)

All of the above have a lot of people asking whether college is worth it at all, and a lot of people who go to college and graduate with tens of thousands of dollars of student loans are answering that question, “no.”

There are, however, some people for whom the answer is emphatically the opposite, even for the biggest-ticket degrees out there. These people are called hedge fund managers.

The study, called “Manager Characteristics and Hedge Fund Returns, Liquidity, and Survival,” found that the educational pedigrees of hedge fund managers directly affected arcane, but crucial, characteristics like the liquidity of their portfolios…. According to the study, these funds not only delivered higher returns on average, but also lower risk, higher Sharpe ratios, and higher alphas, or returns above a benchmark….
Park found that a manager’s education signaled whether or not their hedge fund would be around in the long term…. Park found that on average managers with a degree from a top 10 school ran funds with longer lock-up and redemption notice periods. These asset managers also processed requests from investors to redeem their shares less frequently than other funds. In addition, managers with elite degrees charged higher performance fees, but lower annual management fees than other funds.

Why? Well, it’s not the education itself, of course, nor even the connections one makes on campus, rather a dubious proposition these days anyway. It’s the old boys’ network and the ability of a piece of parchment written in Latin to wow the plebs.

Park argued that alumni networks contribute to the bump that managers get from top schools. “The major driving force is trust inspired by the reputation and network of elite institutions,” she wrote in the study.

In other words, if you didn’t go to one of the Ancient Eight or its adjacent elites, should you not even bother starting a hedge fund? Maybe just go into something that actually serves a public good or, worse still, mutual funds? Don’t be discouraged. There is another way. Unfortunately, this way is even harder that getting into a top school in the first place.

An even better indication of survival, according to the study, was whether or not a manager that holds the Chartered Financial Analyst (CFA) designation. Between 1994 and 2015, the so-called hazard rate, or rate at which they fail, of funds managed by CFAs was 13.6 percent lower than other funds after controlling for factors such as risk, return, and investment style.

Ivy League Hedge Fund Managers Get Away With More [II]

Opening Bell: 9.25.20

Fri, 25 Sep 2020 12:58:42 GMT

September sucks; Steve Cohen won’t buy free agents like he buys art; prison bound? and more!

Dow futures drop 130 points as Wall Street heads for fourth straight weekly loss [CNBC]
For the week, the Dow entered Friday’s session down 3% while the S&P 500 has lost 2.2%. The Nasdaq Composite is down 1.1% week to date…. Much of September’s losses have been concentrated in mega-cap tech stocks, which carry a heavy weight in the indexes. Shares of Apple rose 1% on Thursday but were still down more than 19% from their recent closing high on Sept. 1….
On Thursday, Goldman Sachs cut its fourth-quarter projection for gross domestic product growth to 3% on an annualized basis, down from 6%.

Why the U.S. Risks Repeating 2009’s Economic Stimulus Mistakes [NYT]
The combination of a moderating economic rebound and fading government support are an eerie echo of the weak period that followed the 2007 to 2009 recession. In the view of many analysts, a premature pullback in government support back then led to a grinding recovery that left legions of would-be employees out of work for years. In recent weeks, prominent economists have warned that both the United States and Europe, where many early responses are drawing to a close, were at risk of repeating that mistake by cutting off government aid too soon….
On Thursday, Treasury Secretary Steven Mnuchin said that he and House Speaker Nancy Pelosi had agreed to restart talks on another economic relief package. But Ms. Pelosi was more circumspect about negotiations and deep divisions remain about the scope and type of aid needed.

Powerful Vatican Cardinal Becciu resigns amid scandal [AP]
The powerful head of the Vatican’s saint-making office, Cardinal Angelo Becciu, resigned suddenly Thursday from the post and renounced his rights as a cardinal amid a financial scandal that has reportedly implicated him indirectly…. Becciu, the former No. 2 in the Vatican’s secretariat of state, has been reportedly implicated in a financial scandal involving the Vatican’s investment in a London real estate deal that has lost the Holy See millions of euros in fees paid to middlemen.

Source: Steve Cohen to spend with Mets, but will do so with responsible restraint [amNY]
Conversations with direct knowledge of the situation suggest that Cohen won’t simply be throwing money at the Mets’ problems to make them disappear….
“I expect him to spend where he needs to quickly, but not make too many high-priced moves,” the source said. “He and his people have to lift up the hood and see what works and what doesn’t.”

An Ex-UBS Broker Did Prison Time. Now He Helps Others Prepare for Theirs. [ThinkAdvisor]
In the last year, Paperny has had a sizable increase in clients who are financial advisors. The crimes center on pump-and-dump stock schemes, stealing from their clients’ accounts and insider trading…. They’ve got to create a routine on the inside where they’re growing their network and working to change the narrative. With the right preparations, they’ll have less fear as they release. They’ll recognize that this is a [short] period in their life — not a “life sentence” — and understand that without proper preparation, life on the other side is going to be harder.

Police raid in Vietnam finds more than 300,000 used condoms being packed for resale [CBS News]
Market inspectors in the Binh Duong province raided a factory near Ho Chi Minh City, where they discovered used condoms being repackaged to be sold at the market…. After buying the condoms from a man, they were washed and reshaped, then packed in plastic bags, according to the newspaper.

Poof! JPMorgan Makes Spoofing Allegations, $1 Billion Disappear

Thu, 24 Sep 2020 18:17:51 GMT

Spoofing really is a magical affair.

Spoofing, as we have established, is awfully hard to prove in a court of law. Far, far better to come to a more or less amicable arrangement that makes clear that spoofing is very much not OK, but without the hassle of building a case or making an argument or potentially losing and having spoofing become de facto, if not de jure, OK, while also setting a very expensive precedent for those whose spoofing efforts far exceed those of Jamie Dimon’s people, however creative they’ve been.

JPMorgan Chase & Co. is poised to pay close to $1 billion to resolve market manipulation investigations by U.S. authorities into its trading of metals futures and Treasury securities…. A penalty approaching $1 billion would far exceed previous spoofing-related fines. It would also be on par with sanctions in many prior manipulation cases, including some brought several years ago against banks for allegedly rigging benchmark interest rates and foreign exchange markets.

And speaking of record settlements, we’ve got a quaint one from Down Under. And by quaint we mean in terms of size, as our banks pay far more for doing far less gross things.

Westpac, Australia’s second-largest bank, said it would pay a $920 million penalty for breaches that included a failure to detect transfers that may have been used to facilitate child exploitation in Asia.
The bank also said it had failed to report more than 19.5 million international transfers and didn’t keep records relating to the origin of some of them.

JPMorgan Is Set to Pay $1 Billion in Record Spoofing Penalty [Bloomberg]
Westpac to Pay Record Fine for 23 Million Money-Laundering, Terror-Financing Breaches [WSJ]

Jay Clayton Really Making Up For Three Years Of Procrastination

Thu, 24 Sep 2020 17:02:30 GMT

Gut shareholder democracy? Check. Put a crimp in whistleblowing? Check.

In a few months, Jay Clayton will get his wish: He will get to go home. His four generally untroubled but still unhappy years by the Potomac shall be at an end, and he can resume his life where he belongs, in New York City.

Whether he crosses the Hudson in triumph or as one of the many refugees from former President Donald Trump’s Washington depends on the outcome of November’s election. Clayton, however, clearly still has his eye on the top prosecutorial job this side of Bill Barr’s, and the only way to get it is to both see Trump reelected and to remain on his good side. There’s not very much he can do about the former (although the man he hopes is his future boss is doing his best), but after three years of more or less doing nothing, he can certainly continue his hyperactive remaking of the SEC in his patron’s image.

Commissioners voted 3-2 to pass a final rule requiring shareholders to hold $25,000 of stock for a year, up from $2,000 currently, in order to submit such proposals…. The new rule also raised the percentage of votes that proposals must receive to be resubmitted—and prohibits multiple shareholders who don’t individually meet the minimum thresholds from joining together to submit a proposal…. Critics of the move said it was the Trump administration’s latest effort to stymie Wall Street’s growing focus on environmental, social and governance—or ESG—issues, which are the subject of most shareholder proposals.

That’s the kind of democracy a Trump can get behind! And that’s not all.

The new rules would allow the SEC to streamline the award evaluation process, particularly for certain awards of $5 million or less. The adopted amendments provide a presumption of a statutory maximum award percentage at 30% for awards that are estimated to be $5 million or less, assuming that there were no negative factors…. For awards estimated to be more than $5 million, the SEC would analyze more deeply positive and negative factors in determining a final award amount, the agency said. If there are no negative factors, a tipster can expect to receive an award that is in the top third of the range, according to the final rules published Wednesday….
“I think this is particularly problematic,” Erika Kelton, a partner at Phillips & Cohen LLP, said, noting that the consideration of the size of the payouts wasn’t a factor that Congress adopted when it enacted the law in 2010. She said her clients and potential whistleblowers are concerned about the new rules. “The rules do not bring clarity to the awards process and actually bring more uncertainty.”

Well, Jay, if things don’t work out exactly as you hope, you can at least look your president and your future clients in the eye and sincerely say you did your best for them.

SEC Raises Bar for Shareholder Resolutions [WSJ]
SEC Votes to Amend Whistleblower-Award Rules [WSJ]

Opening Bell: 9.24.20

Thu, 24 Sep 2020 14:25:33 GMT

So much for the recovery (unless you’re a bank); the future of WeWork is not in China; Steve Cohen hires an old friend; and more!

US workers file 870,000 jobless claims as coronavirus total nears 62 million [N.Y. Post]
The latest filings ticked up slightly from the prior week’s revised total of 866,000 and brought the seasonally adjusted total for the coronavirus pandemic to about 61.9 million — a number equivalent to more than 38 percent of the nation’s workforce.
Jobless claims have stagnated in recent weeks as the COVID-19 crisis kept workers under pressure…. “The recovery is losing momentum and further fiscal stimulus is needed to support jobs and incomes,” Bloomberg economist Eliza Winger said in a commentary.

Americans have lost $145 million to scams linked to Covid-19 [CNBC]
Consumers have filed more than 205,000 reports of fraud linked to the coronavirus since the beginning of the year, according to the federal agency.
The average loss was $300, according to the FTC. But financial loss among seniors who are at least 80 years old, despite being victimized less frequently than others, was more than double at $655 for the typical person.

WeWork Sells Majority Stake in China Business, Cutting Costs [WSJ]
A group led by investment firm Trustbridge Partners paid $200 million to increase its stake in WeWork China, which leases and effectively sublets office space in the country… WeWork will license its name and services for a fee. Parts of the deal resemble a traditional franchise model, and WeWork is giving up operating control. But WeWork will retain a minority stake and a board seat in the China business….
In 2018 WeWork announced the acquisition of the Chinese co-working company Naked Hub and Mr. Neumann said he hoped to grow to one million customers in China by 2021. But the company faced fierce competition from local co-working companies, and ahead of its planned 2019 initial public offering the country had become a drag on earnings. WeWork said it currently has more than 65,000 customers at more than 100 office locations in China.

Early Pandemic Bets Paid Off Big for a Few Asia Hedge Funds [Bloomberg]
Funds overseen by Anatole Investment Management Ltd., Aspex Management (HK) Ltd., CloudAlpha Capital Management Ltd. and Franchise Capital returned more than 50% this year to the end of August, making money on bets ranging from electric cars to e-commerce, while some shorted hard-hit tourism sectors…. Proximity to China, the initial epicenter of the Covid-19 outbreak, gave the funds a vantage point to see how the pandemic would play out elsewhere. That prompted them to either short companies expected to suffer long-term damage, or bargain-hunt stocks primed for a quick rebound.

Banks Are Loving 2020 Market, but Market Doesn’t Love Them Back [WSJ]
After warning that their trading revenues would fall steeply from the second quarter, several top banking executives recently said that the third quarter wasn’t as bad as they had feared. Clients remained active through the normally dull July and August, and September delivered a fresh bout of market volatility…. Add a better-than-average summer to a strong first half, and banks’ trading floors are chasing their best performance in a decade.
Their own stocks, however, are being slammed. The KBW Nasdaq Bank Index is down 38% this year, while the S&P 500 is up slightly. If that gap were to persist, it would be the banks’ worst full-year underperformance in at least 84 years, according to Barclays analyst Jason Goldberg.

Hertz Backs New $400 Million ABS Deal to Restock Vehicle Fleet [WSJ]
The new securitization deal between Donlen Corp., which supplies Hertz with cars, and Barclays Bank PLC is separate from Hertz’s search for chapter 11 financing in the form of a $1.5 billion loan that will preserve the company until business returns to normal levels…. The proposed $400 million asset-backed securitization deal might reduce Hertz’s need to draw down on a bankruptcy loan, but it won’t reduce the size of the chapter 11 financing, Mr. Lauria said./“We need all the cushion we can get,” he said.

Steve Cohen hiring Sandy Alderson as Mets team president [N.Y. Post]
There are owners who have concerns about Steve Cohen, especially because his previous hedge fund paid a $1.8 billion penalty for insider trading and his current fund has faced gender discrimination lawsuits. Alderson is well regarded at the highest level of the sport, having been involved in the majors since 1983.
Will Alderson’s strong reputation help Cohen?... He tried to pull the Mets into a more analytical mode in his tenure, but did not have complete buy in — philosophically or financially — from the Wilpons. That is unlikely to be a problem under Steve Cohen, who uses analytics at the highest levels to help run his hedge fund.

French Foreign Minister Calls LVMH A Liar

Wed, 23 Sep 2020 22:09:07 GMT

Whether that means it has to buy Tiffany is now for a court to decide.

The crux of the argument LVMH plans to present at a January trial it very much wishes wasn’t happening is that it had no choice but to back out of what—in light of the coronavirus pandemic, not that that has anything to do with it—looks like a very expensive $16 billion deal for Tiffany & Co. You see, the luxury goods conglomerate plans to tell Delaware Chancery Court, the republic for which it stands, in this case the Republic of France, ordered it to put on the brakes for the benefit of its homeland, in order to give it leverage in the meticulously scheduled trade war with the United States set to break out on Jan. 6, which also just happens to be well past the deal closing on the calendar for November, so they guess we’ll just have to call the whole thing off.

Strictly speaking, the basis of that argument is true: French Foreign Minister Jean-Yves Le Drian did send LVMH a letter instructing or at the very least suggesting it not to buy Tiffany until next year, although the legally-binding nature of that order or request is open to question. Also open to question is how, exactly, that letter came about. After all, LVMH reportedly asked Le Drian’s colleague, Finance Minister Bruno Le Maire, to help it scotch the deal, which request was swiftly rejected. The company has emphatically denied that “malicious and completely unfounded accusation,” much as it has called Le Drian’s letter “unsolicited” and a “total surprise.” That description, frankly, sounds like a total surprise to M. Le Drian.

Aurélien Pradié, a lawmaker with the conservative Les Republicains party, asked Mr. Le Drian why he sent the letter, which was addressed to Bernard Arnault, LVMH’s chief executive and controlling shareholder. “You flew to the aid of his board of directors with no legal basis, no solid argument,” Mr. Pradié said.
Mr. Le Drian said part of his job is to respond to the political questions of French companies, particularly concerning the U.S.
“My role is to apply, if necessary, the government’s opinion on assessments of a political nature on the management of major international events to come,” Mr. Le Drian said. “This is the reason why I answered a question from the LVMH group, totally in my role.”

That certainly sounds bad, and very much like something Vice Chancellor Joseph Slights III will want to hear about come Jan. 5, and might even lead him to conclude that Tiffany shareholders are entitled to their $16 billion from LVMH, or at least a few billion in compensation for being left at the altar, since, you know, LVMH looks like they might have torpedoed their own deal and then lied through their teeth about it. Certainly, it’s not something LVMH wants to talk about.

Last Wednesday, LVMH said in a court filing responding to Tiffany’s lawsuit that U.S. legal doctrine precludes courts from questioning the validity of Mr. Le Drian’s letter.

French Foreign Minister Says LVMD Query Led to Letter on Tiffany Deal [WSJ]
LVMH Sought French Government Help in Dropping Tiffany Takeover [WSJ]

Wells Fargo CEO Sees Even Fewer Qualified Black People Than Its Board Saw Women Qualified For ...

Wed, 23 Sep 2020 20:50:41 GMT

Affirmative inaction beneficiary Charlie Scharf doesn’t understand why he only wants to hire white people.

When Wells Fargo went looking for its third CEO in as many years, it was determined to make history. America’s number four bank was going to be the first to break the ultimate financial glass ceiling. And why not? A lady could hardly screw up as badly as her male predecessors, and it would make for the first good press Wells had received in, uh, well, three years.

Of course, it screwed it up. Even though two larger and much better-run banks had managed to find female heirs apparent, and even though Wells would seem to have one of its own ready to hand—you know, the one it always charged with cleaning up the messes the boys made—it simply couldn’t find a single woman willing or—in the unerring opinion of its board of directors—able to do the job. So they gave it to a white dude. And wouldn’t you know that that white dude just doesn’t see any non-white faces worth hiring or promoting, possibly because none have married one of Jamie Dimon’s kids?

Wells Fargo & Co Chief Executive Charles Scharf exasperated some Black employees in a Zoom meeting this summer when he reiterated that the bank had trouble reaching diversity goals because there was not enough qualified minority talent, two participants told Reuters.
He also made the assertion in a company-wide memo June 18 that announced diversity initiatives as nationwide protests broke out following the death of George Floyd, an unarmed African-American man, in police custody.
“While it might sound like an excuse, the unfortunate reality is that there is a very limited pool of black talent to recruit from,” Scharf said in the memo, seen by Reuters.

Plus, you know, the Caucasian talent at Wells has performed flawlessly, so why go all SJW? If it ain’t broke, you know? Anyway, before the libtard outrage machine gets whirring at full bore, Scharf has a totally sincere apology to make.

Some of you may have seen media stories referencing a comment on diverse talent from my June "Our commitment to change” memo. I apologize for making an insensitive comment reflecting my own unconscious bias. There are many talented diverse individuals working at Wells Fargo and throughout the financial services industry and I never meant to imply otherwise. I’ve worked in the financial services industry for many years, and it’s clear to me that, across the industry, we have not done enough to improve diversity, especially at senior leadership levels. And there is no question Wells Fargo has to make meaningful progress to increase diverse representation. As I said in June, I have committed that this time must be different.

You know, there’s just something about Wells committing to something being different this time that just makes you know there’ll be a next one.

Wells Fargo CEO ruffles feathers with comments about diverse talent [Reuters]
CEO Charlie Scharf Reinforces Commitment to Diversity and Inclusion [press release]

Trump Fed Nominee Not Only Crazy And Craven, But A Complete Hypocrite

Wed, 23 Sep 2020 19:44:40 GMT

She’s perfect.

No one can accuse Judy Shelton of consistency. President Trump’s 387th attempt to get a Federal Reserve Board of Governors nominee past a Senate that is very much controlled by his lackeys has been accused of a “fatal attraction to nutty ideas” by a member of that not-so-august group, but her likely elevation to the central bank can be credited to her willingness to say and believe whatever the Dear Leader wants: She was in favor of higher interest rates until she wasn’t, and backed a return to the gold standard before deciding against it in a politically expedient way. She’s a conservative, which means she believes in following the letter of the law, unless it’s politically convenient to follow the spirit of an expired one, and presumably is a fan of smaller government, deregulation, small business, natural resource extraction and untrammeled property rights. That is, of course, as long as those things happen somewhere other than her quiet Tidewater community.

Over the past several years, Ms. Shelton and her husband have gone to court to block mining projects near their home — a manor on a former plantation outside Fredericksburg, Va., that once served as the Confederate general Stonewall Jackson’s winter camp. While the would-be miners argued that their operations would be good for the local economy, the Sheltons and their neighbors seized on zoning rules to try to block them, arguing they would provide too little benefit to outweigh added truck traffic, lost property value, environmental damage and disruptions to the local peace.
“She espouses this free enterprise notion,” said Emmett C. Snead, who found himself in the Sheltons’ cross hairs when he tried to start a sand mine near their home. “She says one thing in the world, and does a different thing here….” In 2008, Mr. Snead wanted to mine a field he owns for sand and gravel, a hot commodity in this community upriver from the Chesapeake Bay. The land in question sits across from the road that leads to Ms. Shelton’s house, and she and her husband were among a group that filed a lawsuit to prevent him from doing so. The State Supreme Court ultimately decided in Mr. Snead’s favor in late 2013.
Ms. Shelton and her husband have also tried repeatedly to squash other proposed mines that they viewed as a threat to their bucolic community, which borders the Rappahannock River. The Sheltons filed a different complaint against a company owned by another neighbor, Larry Silver, over a project that they argued would detract from their property value and undermine their efforts at historic preservation. The complaint noted that Mr. Silver had also installed a “spiteful” hog farm on his property, which is adjacent to the road that leads to the manor.

Embattled Fed Nominee Celebrates Free Markets, but Not in Her Backyard [NYT]

83-Year-Old Gets Four Years For Crimes Of All Panama Papers Characters

Wed, 23 Sep 2020 19:23:55 GMT

‘It’s not even a close question that von der Goltz be incarcerated.’

Prison is never a fun place to have to go. COVID-19 has made it even less so. Things are so bad that they’re letting people out to keep them safe from the sickness. (Not everyone, of course, but enough to make it next to impossible for California to fight its increasingly devastating wildfires with forced labor, which it to say it makes it impossible for California to fight them at all.)

Prison is an even less fun place to go in this year of the plague if you’re a member of a high-risk group—say, octogenarians—are more used to passing your days in Europe, tony suburbs of Boston and Key Biscayne; and enjoy a the sort of lifestyle you might bemoan missing out on behind bars. Of course, these realizations generally occur far too late, for example: when you are standing before a judge to answer for tax evasion and money laundering.

An attorney for von der Goltz, who was arrested in London in 2018, asked that the octogenarian be spared prison based on his age, frail health and risks inside prison from COVID-19. “Any period of incarceration is likely to kill him,” the attorney said….
“How could I have been so foolish?” von der Goltz said. “Why not just pay the taxes from this, especially since it would not have been impacting my life or lifestyle?”

Well, I can think of 4.3 million reasons to start. Plus, of thousands and thousands of alleged tax evaders in the millions and millions of Panama Papers, which represent the clients of just one palm-shaded tax-avoidance factory of who knows how many, Harald Joachim von der Goltz is still the only one to be indicted—and only after doing it for 17 years. The odds are still very much in favor of the von der Goltzes of the world: The judge in the case noted that 17% of American taxpayers don’t do all of the taxpaying they’re supposed to, and as hard as we try, 17% of Americans taxpayers are not in jail—not even 17% of the Black ones. And so, on the rare occasions they get, the book must be thrown to make the gamble a little closer to as “foolish” as von der Goltz now believes his to be.

A U.S. federal judge has sentenced a taxpayer to four years in prison for crimes revealed by the Panama Papers investigation…. “It’s not even a close question that von der Goltz be incarcerated,” Judge Richard M. Berman said on Monday…. Judge Berman rejected the arguments. “It can’t be that you can commit so many crimes for such a long period for such an excessive amount and then say, ‘I’m 83, pandemic, home confinement,’” Judge Berman said. “It’s just not in the realm of justice.”

First US taxpayer sentenced to prison for crimes revealed by Panama Papers [ICIJ]
U.S. Taxpayer in Panama Papers Investigation Sentenced to Prison [DoJ]

Opening Bell: 9.23.20

Wed, 23 Sep 2020 13:09:59 GMT

September stutter; SPAC strikes; water woes; Elon equivocates; and more!

September Brings a Reality Check for Stocks [WSJ]
The S&P 500 has fallen almost 3% over the past week, driven by shares that are directly exposed to economic growth and retail sales. The “consumer discretionary” sector is down 4%.... Overall, investors can take some solace from a market that, with some notable exceptions, has kept in touch with corporate news. But a 1.7% rise in the S&P 500 during the worst one-off economic hit in recent history still merits some soul-searching as to whether the rally has gone too far, given the unusual risks to which some sectors’ earnings estimates are subject to right now.
This month’s setback could be a cheap price to pay to keep the market grounded.

United Wholesale Mortgage Goes Public in Biggest SPAC Deal Ever [WSJ]
The Gores SPAC will take only a small percentage of the new company in this deal, leaving current United Wholesale Mortgage owners with a 94% stake…. United Wholesale Mortgage, which is based in Michigan, works with independent brokers around the U.S. to underwrite and service mortgages. So far, the company is on track to underwrite nearly $200 billion of mortgages this year, up from roughly $108 billion in 2019, amid record low interest rates as the U.S. Federal Reserve takes aggressive steps to cushion the economy from the effects of the pandemic.

US regulator welcomes water futures as tool to manage climate risk [FT]
CME, which operates the Chicago futures exchange, last week said that it would begin trading the world’s first future contracts for water, tied to prices in California.
The contracts are “a really good thing,” [CFTC Commissioner Rostin] Behnam told the Financial Times. Water derivatives and other investment products linked to environmental, social and governance factors will “help stakeholders manage the risk that is going to continue to present itself to us,” he added.

Elliott and Veritas Capital submit offer for Cubic –sources [Reuters]
On Monday, Cubic announced it adopted a poison pill after Elliott took a 15% stake in the firm and expressed interest in acquiring the company with a private equity partner…. Cubic makes technology that helps major subway systems collect fares as well technology for the defense industry, areas that are largely dependent on government spending.

Nikola founder Trevor Milton deletes Twitter account amid fraud claims [N.Y. Post]
As recently as Sept. 10, Milton had put out a defiant tweet promising to defend his reputation.
“Coward’s run,” Milton tweeted, “leaders stay and fight for integrity.”

Elon Musk Promises a $25,000 Tesla in 3 Years—Again [Wired]
Musk has never been one to underpromise and overdeliver. He told an interviewer in 2018 that Tesla could roll out a $25,000 EV in three years. Tuesday, he pushed that deadline back by two years—because, Musk said, it’s a challenging goal….
Tuesday’s battery presentation was filled with plenty of hedging, with Musk and company warning many times that the technology they were presenting would likely take years to implement. Despite sharing plenty of details about its newest battery breakthrough, the company didn’t show off a prototype. Observers noted the slightly subdued tone, a contrast to the bombastic presentations and projections that have occasionally gotten the company in trouble with public officials.

What CEOs Really Think About Remote Work [WSJ]
“We tried it…It’s just not the same. You just cannot get the same quality of work.”
“In all candor, it’s not like being together physically. And so I can’t wait for everybody to be able to come back into the office. I don’t believe that we’ll return to the way we were because we’ve found that there are some things that actually work really well virtually.”
“There’s sort of an emerging sense behind the scenes of executives saying, ‘This is not going to be sustainable.’”

Are markets in a bubble because traders live in one? [FT]
The definition of a bubble — a cut-off world isolated from diverse interaction or plurality of views — reminded me of the market professionals I encountered in 20 years as a hedge fund investor. I met exactly one other female partner. Most investment teams look like male Ivy League rowing crews…. Outsiders are not only rare, but often disregarded. While in a meeting where everyone else was male, I once corrected a participant who had erroneously valued an interest rate option as worthless. It wasn’t worthless, I said, merely out of the money. “You are a woman, I am a man,” he said. “Let's not debate….”
Generating uncorrelated returns, or “alpha”, requires differentiating yourself from the herd. Surely that is easier for a diverse group of people to do. The alternative is a community sealed in a bubble, woefully unprepared to recognise irrational exuberance.

Quibi-rella Looking For Hollywood Ending With Prince SPACing

Tue, 22 Sep 2020 19:15:00 GMT

And, this being a Quibi show, it’d be great if the courtship could be short and sweet and not subject to too much inspection.

Say what you will about Jeff Katzenberg and Meg Whitman—and there are a great many unkind things to say about both of them, and indeed a goodly number of those things have, in fact, been said about them—they are not stupid, and they are not illiterate. Arrogant, out-of-touch, immune to criticism, surrounded by yes men, sure. They may even be intellectual property thieves. But they can see the extremely grim subscriber numbers and, if the e-mails we get from their representatives are any indication, they can also read. And if they can read, they can read more than just articles talking about how bad their Quibi short-form video platform is flopping. Whitman, especially, would seem likely to be aware of the billions and billions of dollars splashing around Wall Street in the form of blank-check companies that literally anyone can and has launched. And perhaps one or more of them would like to buy a $1.75 billion hole filled with content no one asked for or is interested in paying for, and which may eventually be completely upended by Paul Singer? Sure, it doesn’t sound like a very attractive option, but Airbnb doesn’t seem to be available and the number of SPAC suitors in need of a mate continues to grow.

Streaming service Quibi is exploring several strategic options including a possible sale, according to people familiar with the situation… Quibi, which launched its short-form, mobile-focused video service in April, is also considering raising more money or going public through a merger with a special-purpose acquisition company, or SPAC—essentially a blank-check company that helps fund deals….
The company has enough cash on hand to last for the next several months and isn’t in danger of shutting down imminently….

Quibi Explores Strategic Options Including Possible Sale [WSJ]

Judge Is Gonna See What Happens Over The Next Three Months And Then Decide If LVMH Has To Buy ...

Tue, 22 Sep 2020 17:44:58 GMT

The Nov. 3 through Jan. 20 period could be very enlightening indeed in this matter.

The wheels of American justice turn slowly, inefficiently and ponderously, if at all. While this feature is often maddening to foreign companies used to their own more favorable and less predictable systems, it was certainly welcome to LVMH when it called off its plan to spend $16 billion on Tiffany & Co. earlier this month. After all, the unwanted deal was set to close on Nov. 24 and its antitrust clearance was due to expire on Feb. 3, and surely no American court could adjudicate such a complicated matter in so short a time. Why, LVMH was confident that the discovery and depositions alone would take well into next year, really rendering the whole thing moot, if you think about it.

Well, Delaware Vice Chancellor Joseph Slights III has thought about it. And while getting ready for a trial in the time it took to strike the deal in the first place—a month—was plainly impossible, one thing would become clearer sooner, specifically whether LVMH’s reason for abandoning its agreement with Tiffany, the Franco-American trade war set to break out on Jan. 6, would actually occur, and whether it will last longer than two weeks. So why not have everyone get together in a Wilmington court room (pandemic permitting) with some popcorn and see if the fireworks go off.

“We appreciate the court’s ruling today to expedite the process,” said Tiffany Chairman Roger Farah. “A trial on Jan. 5, 2021, will hopefully lead to a ruling prior to the expiration of U.S. antitrust clearance on Feb. 3, 2021, and enable us to protect our company and our shareholders.”

Still, the next two months are going to suck big-time for Tiffany’s if it’s going to avoid giving LVMH other reasons for junking the marriage.

Tiffany’s capital expenditures are capped until the deal’s closing date and the agreement doesn’t stipulate a budget for next year. Its shares outstanding are also capped, meaning a delay would prevent it from paying equity compensation to employees at year-end.
Moreover, Tiffany can’t hire or fire employees at the level of vice president or above or enter into material contracts, including the signing of store leases, without LVMH’s consent.

Tiffany, LVMH Trial Set for Early January [WSJ]

Bridgewater Employees At Last Actually Working In Magical Forest

Tue, 22 Sep 2020 16:12:38 GMT

Bring on the wildebeests.

Once upon a time (specifically, eight years ago), Bridgewater Associates was prepared to abandon its enchanted woods and great lawn and cave of contemplation and mystical parking lake (and its fish ladder) in Westport for a new home in Stamford. This campus of the future was euphemistically referred to as a magical forest, but it was to be, in reality, a fairly typical five-story suburban office park with a helipad.

It did not happen, and not because of any prophecy of plague delivered to Ray Dalio by a talking fish-oracle, or the insight, revealed to him in his gilded survival bunker, that he definitely wouldn’t need room for 3,500 people and 3,000 cars in order to lose a shrinking band of preferred clients 20% a year. It happened because of the Boat People, a lot so unPrincipled that we have to imagine their numbers have been ravaged by the coronavirus.

Still, even Dalio would admit that sometimes it’s better to be lucky than good, for a magical forest on the Long Island Sound, surrounded by public lands and amenities, would not be nearly so conducive to pandemic planning as the good old place along the Saugatuck.

Ray Dalio’s $138 billion hedge fund has set up tents in the woods across from its Westport, Conn., headquarters so that its traders and other staffers can continue to work from their desks during the coronavirus pandemic… The tents, which can accommodate about 50 of Bridgewater’s roughly 1,500 global staff, were implemented in May when it was determined that the safety protocols required for indoor work were too “stressful,” according to Fortune.
While the setup includes kayaks, it also comes with chirping birds that can disrupt calls and at least one downed tree, according to the report….
Bridgewater intends to keep the woodsy setup through October, or until the weather gets too cold to comfortably work outdoors, [Nir] Bar Dea told Fortune.

Hedge fund Bridgewater set up tent offices in the woods to beat COVID-19 [Thornton/N.Y. Post]
The world’s biggest hedge fund is working from tents in the forest during the COVID pandemic [Fortune]

Opening Bell: 9.22.20

Tue, 22 Sep 2020 13:54:01 GMT

Comcast cut-up; Powell’s pledge; Bernie backs break-up; index insider; Sizzler slump; and more!

Activist Trian Fund Management Takes Stake in Comcast [WSJ]
Trian has accumulated about 20 million shares in Philadelphia-based Comcast, for a roughly $900 million stake or about 0.4% of the company, a person familiar with the matter said. Comcast’s market value is about $200 billion.
Executives at Trian, which was founded by Nelson Peltz, Ed Garden and Peter May, recently began conversations with Comcast management, the hedge fund said in a statement Monday….
“The cable business is an infrastructure asset with steady growth and very high free cash flow,” said MoffettNathanson analyst Craig Moffett, referring to Comcast’s broadband, pay-TV and phone unit. “The other two businesses, Sky and NBC, are sort of cyclical turnaround stories. They naturally appeal to entirely different types of investors.”
He added: “I can’t imagine a shareholder that would disagree that this company would be valued more highly if it were separated into pieces.”

U.S. debt to hit nearly twice GDP by 2050 –CBO [Reuters]
The nonpartisan budget referee agency said that the 2020 deficit is projected at 16% of U.S. GDP, and the share will fall for several years, but will begin rising sharply again by 2028.
By 2050, the annual deficit is projected at 17.5% of GDP as a result of higher interest costs and higher spending on health care programs and Social Security, CBO said.

Powell pledges the Fed’s economic aid ‘for as long as it takes’ [CNBC]
“Economic activity has picked up from its depressed second-quarter level, when much of the economy was shut down to stem the spread of the virus. Many economic indicators show marked improvement,” he said. “Both employment and overall economic activity, however, remain well below their pre-pandemic levels, and the path ahead continues to be highly uncertain.”

Elizabeth Warren And Bernie Sanders Want Big Banking Reforms Following The FinCEN Files Investigations [BuzzFeed]
Sen. Elizabeth Warren called on Monday for reforming the government practice of offering banks deferred prosecution agreements instead of real punishments when they are caught abetting money laundering, one of the problems highlighted in the series….
“The business model of Wall Street is fraud. It is not the exception to the rule—it is the rule,” [Sen. Bernie Sanders] said on Twitter. “Break them up.”

Two N.Y. Men Accused of Trading on Inside Information From S&P Dow Jones Indices [WSJ]
Yinghang “James” Yang, a senior index manager, and his friend, Yuanbiao Chen, a manager at a sushi restaurant, were accused of running the scheme for several months last year…. The two Queens men stopped in October 2019 after Mr. Chen’s brokerage firm asked some questions about his occupation and sources of money, according to a complaint filed by the Securities and Exchange Commission against the two men….
The authorities accused the men of trading on information about index changes before the information was released to the public.

Musk Says Tesla Has ‘Shot at Record Quarter’ in Staff Email [Bloomberg]
“We have a shot at a record quarter for vehicle deliveries, but will have to rally hard to achieve it,” said Musk in an internal email Sunday in the U.S. that was seen by Bloomberg News. “This is the most number of vehicles per day that we’ve ever had to deliver….”
“Please consider vehicle deliveries to be absolute top priority,” Musk said in the email, which was titled “All hands on deck!” “It’s also extremely important that we keep factory output as high as possible over the remaining 10 days. This is vital for the California market.”

Senate Democrats Oppose Bankruptcy Bonus for Purdue Pharma CEO [WSJ]
Purdue CEO Craig Landau could get between $2.6 million and $3.5 million under an executive incentive program the company is proposing in the U.S. Bankruptcy Court in White Plains, N.Y., dependent on the drugmaker hitting certain performance targets.
Five Senate Democrats sent a letter Monday urging the judge overseeing Purdue’s bankruptcy, Robert Drain, to reject the proposed bonus, saying Mr. Landau led Purdue during a period during which the company was accused by state and federal authorities of fueling the opioid crisis through misleading marketing of OxyContin….
“To provide Mr. Landau with this bonus is to endorse the very behavior for which Mr. Landau has been sued by multiple states,” the senators wrote, noting that during the bankruptcy process, more than 122,000 people have filed personal injury claims related to opioid products made by Purdue. Bonus payments outlined in Purdue’s incentive plan “should not be made while these families continue to wait for justice,” the letter said.

Sizzler, one of America's first steakhouse chains, files for bankruptcy [CNN Business]
The filing is only for Sizzler's 14 company-owned restaurants -- not its international locations or more than 90 franchised US restaurants. Sizzler explained in a press release that it's using the bankruptcy process to reduce debt and renegotiate its leases…. The chain began in Culver City, California in 1958 with the goal that "everyone could enjoy a great steak dinner at an affordable price," according to its website. Once a pioneer in the industry, the chain has fallen out of favor with newer rivals like Applebee's and TGI Friday's.

Banks’ Airtight Compliance Procedure Involves Laundering Money, Sending Report That Won’t ...

Mon, 21 Sep 2020 22:01:23 GMT

It doesn’t stop the money laundering, of course, but that’s not really the goal, is it?

As we and everyone else who looks at them have noted, banks could really do a much, much better job of detecting, reporting and preventing money laundering. Well, BuzzFeed has got its hands on 2,100 suspicious activity reports filed by those banks, demonstrating that they have a pretty good handle on how and when $2 trillion worth of money laundering is happening. It’s just that, aside from filing those SARs, they don’t do anything about it, because, well, they don’t have to.

The Financial Crimes Enforcement Network, or FinCEN, is the agency within the Treasury Department charged with combating money laundering, terrorist financing, and other financial crimes. It collects millions of these suspicious activity reports, known as SARs…. What it does not do is force the banks to shut the money laundering down….
For more than a year, BuzzFeed News and its partner news organizations across the world mined the information on these tens of thousands of pages to map more than 200,000 transactions…. Western banks could have blocked almost any of them, but in most cases they kept the money moving and kept collecting their fees.

OK, so that’s not exactly what we were expecting or hoping for back when FinCEN piously warned against the unlawful disclosure of SARs to journalists, but there’s some fun stuff all the same.

Experts say, some banks treat SARs as a kind of get-out-of-jail-free card, filing alerts about a huge array of transactions without actually moving to halt them. In some cases, banks filed numerous reports on the same clients, detailing their suspected crimes over the course of years while continuing to welcome their business.
By December 2013, JPMorgan Chase had filed at least eight SARs on accounts and companies controlled by [Paul] Manafort, flagging more than $10 million, according to a FinCEN research report. Manafort, who went on to become Trump’s campaign chair, was convicted of bank and tax fraud in 2018….
When investigators for HSBC’s American operations asked their colleagues in Hong Kong for the name of the person who owned Trade Leader, a company that had moved more than half a billion dollars through the bank in less than two years, the answer they got was “None available.” The company would reportedly emerge as an important hub in the so-called Russian Laundromat, a sprawling scheme in which wealthy Russians, facilitated by banks, secretly moved their money into the West….
In 2012, HSBC faced a historic crisis. After permitting narcotraffickers to launder money and conducting business in off-limits countries such as Sudan and Myanmar, the bank was fined $1.9 billion. It promised to change its ways, and to hold it to that promise, the government installed an independent monitor to keep close watch. But the FinCEN Files investigation shows HSBC continued banking, and profiting from, the same kinds of customers that got it in trouble in the first place, such as a Panamanian import-export firm that the Treasury Department later said was laundering money for drug kingpins.

And there is so, so very much more where all that came from, which we invite you to enjoy at your leisure as we have. Not enjoying it? Well, HSBC, for one, and Swedbank, for another, albeit in a not-directly-related, adjacent sort of way.

Chinese state media over the weekend warned the British lender could face restrictions on its business in China, adding to a squeeze on the stock after reports said HSBC and other banks overlooked instances of money laundering… Investors are concerned HSBC could be put on an “unreliable entities” list in China that would threaten the bank’s growth plans in retail banking and in the country’s securities markets. Over the weekend, China’s Ministry of Commerce said such entities could face limits on investment and staff in China. It hasn’t designated any businesses in this way yet, but China’s state-owned Global Times tabloid said many media reports had named HSBC as a candidate….
On Monday, the bank’s Hong Kong-listed stock closed down 5.3% at 29.30 Hong Kong dollars, the equivalent of $3.78 and the lowest since May 1995. HSBC’s U.K.-listed shares also fell sharply, amid a broad selloff in European bank stocks.

[Swedbank] said the investigation covers the period between Sep. 20, 2018, through Feb. 20, 2019, and relates to the disclosure of insider information and the obligation to establish an insider list in connection with the disclosure of suspected money laundering within the company.

Meanwhile, the Treasury Department—FinCEN’s parent organization—figured that now would be a great time to finish four years of work on a rule to close one key anti-money laundering loophole, extending the customer identification and beneficial ownership requirements so effective above to some federally-unregulated financial institutions. And also to maybe ensure that there are far fewer SARs to leak going forward.

The latest announcement, an advance notice of proposed rule making published last week in the Federal Register, seeks public comment on the requirement that financial institutions must maintain an “effective and reasonably designed” anti-money-laundering program…. Under federal AML regulations, banks and other financial institutions are required to detect and report suspicious activity to the government. That obligation, coupled with elevated enforcement of anti-money-laundering laws over the past decade, has driven institutions to file massive amounts of low-value reports, experts say….
The proposed rule making is part of a larger effort to modernize the U.S.’s AML regime, according to FinCEN. The agency has suggested making clarifications about the requirements of the U.S.’s primary AML legislation, the Bank Secrecy Act, that would empower banks to allocate their resources more effectively.

Dirty Money Pours Into The World’s Most Powerful Banks. [BuzzFeed]
FinCEN Files [BuzzFeed]
Treasury Plugs Gap in Anti-Money-Laundering Regulations [WSJ]
HSBC Stock Hits 25-Year Low [WSJ]
Swedbank Under Investigation By Swedish Regulator in New Probe [WSJ]

Dime Store Elon Musk Will Have To Do His Serial Innovating On Someone Else’s Turf

Mon, 21 Sep 2020 21:06:27 GMT

Nikola’s Trevor Milton isn’t successful enough to be able to make potentially untrue statements about his company on Twitter willy-nilly.

An electric vehicle entrepreneur with a bad Twitter addiction, dangerous propensity towards grandiose promises, a wandering spirit of innovation, a need for a babysitter, and a knack for raising the eyebrows and blood pressures of short sellers and regulators has been forced from his pedestal by a burgeoning fraud scandal.

No, not that one: He’s invincible. It’s Nikola Corp. founder Trevor Milton, who’s off to revolutionize vertical farming in a county with a population density of 22.5 per square mile, or at least claim to have done so.

Mr. Milton said he offered to resign to shift the focus away from the company, and the board accepted. He added in a statement posted on his Twitter account early Monday that he intended to defend himself against “false allegations leveled against me by outside detractors….” His decision to resign came abruptly, following a turbulent period for Nikola, in which the company’s stock has lost about one-fifth its value since the Hindenburg report was released. The stock was down more than 21% in late morning trading Monday.

And so ends the electric-vehicle story of a man who just three months ago was making Elon Musk nervous. And you can sort of see why, as the shock of recognition when Musk saw Milton must have shaken him to his very core, such as it is.

He served as chief executive until the company went public, at which point he became executive chairman and Mark Russell was appointed as CEO. Investors have seen Mr. Russell as a calming influence over the ebullient behavior of Mr. Milton, who has frequently vented frustrations and shared ideas via Twitter…. He has described himself as a serial entrepreneur, and was involved in a string of businesses, including an alarm and security company, an e-marketplace and another heavy-truck startup focused on compressed natural gas—all this before founding Nikola….
Most of the allegations in the short seller’s report directly involved Mr. Milton, who has served as the face of the company and spent years tweeting and live streaming many of the statements now under examination.

Trevor Milton is Elon Musk without the bewildering sustained success and rocketships. Thank goodness we only have to deal with one of them going forward.

Nikola Founder Trevor Milton Resigns as Executive Chairman Amid Fraud Allegations [WSJ]

Opening Bell: 9.21.20

Mon, 21 Sep 2020 13:07:18 GMT

Not Members only; the new high priests of dealmaking; Neel Kashkari’s got a mild problem with you people; and more!

Wall Street-Backed Exchange Set to Launch as Rival to NYSE, Nasdaq [WSJ]
Members Exchange, or MEMX, is expected to execute its first trades after it opens premarket trading at 7 am ET. Initially it will handle trades in seven stocks, including Alphabet Inc. and Exxon Mobil Corp. On Sept. 29, MEMX plans to extend trading to all U.S. exchange-listed securities….
The New Jersey-based startup has raised more than $135 million from firms including Charles Schwab Corp., Citadel Securities, Goldman Sachs Group Inc. and Virtu Financial Inc…. The consortium behind MEMX came together after years of frustration among banks and trading firms with the fees charged by the major exchanges. Many Wall Street firms say the exchanges abuse their dominant position in the marketplace to overcharge for market data and other key services…. MEMX plans to undercut the big exchanges on price, initially giving away its data.

Goldman Sachs Names New Leaders of Global M&A Unit [Bloomberg]
[Stephan] Feldgoise, formerly co-head of M&A for the Americas, will continue his job as global head of consumer and retail. [Mark] Sorrell, who previously led M&A in Europe, the Middle East and Africa, will continue as co-head of Goldman Sachs’s U.K. investment banking business and become a member of the division’s executive committee…. Although deal activity has crept up since July, volumes are down almost 40% globally so far this year, after corporate executives retreated to the sidelines amid the economic damage from the coronavirus pandemic.

HSBC Stock Hits 25-Year Low [WSJ]
On Monday, the bank’s Hong Kong-listed stock closed down 5.3% at 29.30 Hong Kong dollars, the equivalent of $3.78 and the lowest since May 1995. HSBC’s U.K.-listed shares also fell sharply, amid a broad selloff in European bank stocks.
Fahed Kunwar, London-based head of European banking research at Redburn, said the FinCEN leaks, plus the prospect of China potentially labeling HSBC an “unreliable entity,” were weighing on the stock.

Fed’s Kashkari Says New Forward Guidance Could Have Been Stronger [WSJ]
“While I believe the statement is a positive step forward…I would have preferred the Committee make a stronger commitment to not raising rates until we were certain to have achieved our dual mandate objectives….”
Mr. Kashkari said the problem with the Fed’s new guidance is that it still holds on to the importance of a basically unknowable variable, that maximum sustainable job level.

Hedge funds see opportunity in battered New York, San Francisco apartment markets [Reuters]
Prominent hedge funds, including D1 Capital Partners and Long Pond Capital and mutual fund giants Capital Group and T. Rowe Price, purchased shares in the second quarter in companies that rent residential real estate in urban markets, buying in at beaten-down levels and possibly betting on a faster rebound than Wall Street forecast…. Some fund managers are not convinced that cities are dead and note that big employers like banks are already trying to bring people back into offices, something that would mean residential real estate won’t lay fallow for long….
“We think that, overall, the fear is probably worse than the reality. There’s more pain to go perhaps, but we see a lot of value in these stocks over the next one to three years,” said George Taras, an analyst at mutual fund manager Baron Capital.

Bridgewater has a plan for steering through storm [P&I]
Bridgewater has reserved the analytical and portfolio advisory services that previously were offered to its entire client base for its large strategic partnerships.
By way of replacement for advice and investment counsel from Bridgewater employees, Mr. Delaney said Bridgewater has spent "tens of millions" in building out its technology capability to handle a new push to provide more digital engagement and portfolio management tools to smaller investors as well as to investment consultants.

‘Billions’ Judge Is Clearly No Clotheshound

Fri, 18 Sep 2020 18:12:14 GMT

Closet infringement or no, this case is closed.

Back in October, the creators of Showtime’s “Billions” dodged a bullet: A federal judge watched their terrible show, and found no similarity between its character Wendy Rhoades and the real-life Denise Shull beyond their gender and jobs, neither of which are, apparently, copyrightable. But then, according to Shull, Andrew Ross Sorkin & co. got cocky and started having Maggie Siff, who plays the allegedly-not-fictitious-enough hedge fund performance coach and dominatrix, dress suspiciously like Shull, just to stick it to her, as Shull saw it.

Now it was Shull’s turn to get cocky. After all, she’d filed an amended complaint against the Billionsaires, and was delighted to see them “playing chicken with the court.”

Well, U.S. District Judge George Daniels is either no fashionista or the contents of one’s closet are no more open to copyright than one’s job description, because he remains distinctly unimpressed, and Shull remains distinctly uncompensated for all of those questions about whether she, too, employs a riding crop.

"Plaintiffs do not offer any specific information that this Court apparently overlooked that would cause this Court to reach an alternative conclusion," he writes in the order, which is posted below. "Instead, Plaintiffs simply reassert the same or similar arguments they previously made, and this Court previously rejected, despite the Court's thorough review at the motion to dismiss phase."

‘Billions’ Battle Won’t Be Reconsidered by Judge [The Hollywood Reporter]