Today's Top Stories Also Noted: Spotlight On... Big bank CEO to meet with Fed officials News From the Fierce Network:
Today's Top News
Facebook appears to be on schedule to price its much-anticipated initial public offering in mid-to-late May. The roadshow will commence this Monday, according to media reports. The show will make the expected stops in, New York, Chicago, Boston, San Francisco and possibly one other city. Typically, such events last one to two weeks, after which one would expect the shares to be priced. Some reports hold that May 18 has been penciled in as the live date. According to The Telegraph, Chairman and CEO Mark Zuckerberg will be involved in the marketing events. "Many on Wall Street had not expected Mr. Zuckerberg to turn up on the roadshow after he skipped a March analysts' meeting, ceding the stage to chief operating officer Sheryl Sandberg and chief financial officer David Ebersman. His March absence irked some investors who were indignant that the chief executive, while wielding near-absolute control over the eight-year-old firm, had snubbed Wall Street." His level of participation is unclear, however, though that's not going to slow the process. The media reports that the SEC has blessed all the documentation and there is no regulatory reason standing in the way of an offering, even after the late, surprise purchase of Instagram. In these final days, we'll no doubt witness the great debate about Facebook as a public company kick up again. Investors will have to decide if the company hit the sweet spot, going public at a time that allows for a massive stock run-up reflecting revenue and earnings curves that are increasing at increasing rates. Or has it matured to the point that the curves will increase at steady or declining rates? For more: Related articles: Read more about: IPO, Facebook 2. Man Group runs into fresh turbulence
There are plenty of good reasons for alternative investment companies to go public. The rationale is compelling, especially if the company continues to perform. Of course, one downside is that if the company ever fails to perform up to snuff, its public company status can add a layer of complexity that might make a recovery impossible with its current management. As of right now, shareholders are unhappy with Man Group, the world's largest publically traded hedge fund company. The stock has fallen 60 percent since September, and many of the fund's limited partners have fled. More than $1 billion in redemptions in the first quarter have hit the company hard. On top of all that, Moody's has the firm on watch for possible credit rating downgraded. It's no wonder executives are on the defensive, and shareholders are demanding action. People seem to be giving up on its flagship algo fund, the AHL fund, which remains about 15 percent below its high-water mark. CEO Peter Clarke maintains that shareholders still support him, but it's always telling when an executive is forced to say as much. There are signs that shareholders might get more aggressive soon. Almost one-third of shareholders declined to back one director, who had been criticized for approving a controversial pay plan for executives. As reported by Reuters, Man's small shareholders expressed frustration at the annual meeting over the pay awarded to Clarke after the massive stock falloff. One asked: "Sir, does it really seem like a $7 million sort of year to you?" For more: Related articles:
Read more about: Hedge Funds, redemptions 3. Say-on-pay negative votes: A harbinger or a fluke?
So what to make of the say-on-pay votes at Citigroup, Barclays and other banks? The fact that 55 percent of shareholders voted thumbs down on Citigroup CEO Vikram Pandit's pay was nothing short of remarkable. Some might be thinking that a wave of similar protests is in the offing, but I agree with the Deal Professor that such a wave is not likely. But that doesn't mean will be spared the drama. The Wells Fargo meeting, for example, featured plenty of theatrics as activists crashed the meeting, forcing the closure of nearby streets. In the end, the say-on-pay vote was won decisively by management. Shareholders are heavily swayed by proxy advisory firms like Glass Lewis and ISS.These firms have been pretty picky about which banks' pay plans ought to be rejected. Shareholders and their advisors seem to be willing to pass large pay plans as long as they are sufficiently aligned with shareholders, even in the face of poor stock price performance. Whether that is the best approach--and many would agree that it's not ideal--is up for discussion. "Expect to see a few headlines this proxy season about financial companies and perhaps a handful of no votes because of say-on-pay provisions. Companies may even adjust their pay packages to conform more with I.S.S. recommendations on tying pay to performance. But this is just tinkering at the edges at best. Thousands of other companies will go on as before, safe in knowing that the dynamics of the corporation and say-on-pay will not touch them" unless their plans are egregiously off track. "The fact that executive compensation increased more than 12 percent in the first year after say-on-pay was introduced doesn't give much comfort." For more: Related articles:
Read more about: Say on Pay 4. Pre-trial skirmishing over wiretaps
Will the upcoming insider trading trial of former Goldman Sachs director Rajat Gupta be decided before the trial gets underway? Lawyers from both sides are skirmishing over the admissibility of wiretap evidence, and a lot is at stake. The prosecution would love to have three wiretap recordings featuring convicted insider trader Raj Rajaratnam admitted as evidence. "In the taped conversations, Mr. Rajaratnam boasts to a colleague that a Goldman director had tipped him off about the bank's coming earnings announcement. On another call, Mr. Rajaratnam tells his trader that he's been told something good is going to happen at Goldman." Of course, the prosecution will argue that the tipper was Gupta. But there are no wiretaps featuring Gupta himself, and the defense will argue that the prosecution has the wrong man, that there was another tipper. So the wiretaps, while they would no doubt be useful to prosecutors, would perhaps not be decisive the way they were in previous insider trading trials, including the trial of Rajaratnam. In any case, the trial, which is scheduled to begin May 21, is going to be a barn-burner. We may see some big names mount the witness stand. For more: Related articles: Read more about: Goldman Sachs, insider trading 5. Costs of doing right by Madoff victims soar
Bernard Madoff has long since been banished to prison, where he is increasingly less newsworthy. And The long march to clawback ill-gained funds from the criminal enterprise, an effort that was once such a cause celebre, has run into some roadblocks. At some point, one has to wonder whether the effort is still worth the costs. Bloomberg notes that more than three years after the Ponzi Scheme surfaced, "winding down the Madoff estate has cost more than Picard has sent to customers." Picard has so far paid aggrieved investors back about $330 million. But "as of March 31, Picard himself has been paid about $5.1 million in fees. His law firm, Baker & Hostetler LLP, has been paid about $262.2 million in fees. All professional fees and expenses now stand at about $522 million, with about $31.7 million having been spent on general administrative costs such as office rent and telephones. By 2014, the bill will top $1 billion, Picard has estimated." The industry-financed SIPC, which pays Madoff, no longer expects Picard to pay all currently allowed claims of $17.3 billion in full. At some point, the gig may be up. Certainly, the litigation over Picard's attempts will stretch out for years, and the last thing anyone wants is for this to turn into even more of a financial sinkhole. We may have indeed reached the point of diminishing returns. For more: Related articles:
Read more about: Madoff Scandal, Trustee Also NotedSPOTLIGHT ON... Big bank CEO to meet with Fed officials Top CEOs of Wall Street banks sat down with Fed officials Wednesday, in what was surely a riveting conversation. The big topics were scheduled to include regulation and the stress tests, and one would expect the CEOs, notably JPMorgan's Jamie Dimon, to make their views very clear. There's a lot to discuss regarding derivative clearing, the Volcker Rule, interchange fees and the like. It would be nice if we could get a transcript after the fact. Article Company News: Industry News: Regulatory News: And Finally...Target chooses iPad over Kindle. Article
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Thursday, May 3, 2012
| 05.03.12 | Facebook IPO on track
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