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Will Rajat Gupta take the stand in in his own defense? Such a question pops up in any trial, though putting the defendant on the stand is a rare move by defense attorneys. If Gupta were to testify, it might be seen as a last-gasp move by the defense, one that usually is not necessary. To be sure, the risks are really high, as it would be all too easy for the defendant to incriminate himself or herself in A Few Good Men fashion. It's rarely clear how the defendant will play to the jury. Someone like Gupta could easily come across as arrogant or overly defensive. While some have suggested that the prosecution has fared well in the trial so far, in winning the right to present circumstantial wiretap evidence and in persuading the Judge Jed Rakoff to use its preferred language in his jury instructions, the defense has yet to get started. It's perhaps way too early to tell if it's any kind of a hole, such that it need to resort to a Hail Mary. Recall that Raj Rajaratnam did not testify, and he went down in defeat. He's serving 11 years in jail. Several other white collar defendants similarly did not testify, and they ended up convicted. By the same token, neither Ralph Cioffi nor Matthew Tannin took the stand in their trial, and both were acquitted. In another high-profile case, disgraced politician John Edwards did not testify in his case. The jury is still deliberating. For more: Related articles: Read more about: insider trading, Trials
2. Facebook may hit high-frequency traders
The Facebook IPO fiasco has generated a lot of finger pointing, but thankfully for high-frequency traders, few have fingered them as culprits, preferring to point to the Nasdaq and lead underwriter Morgan Stanley. But the fiasco may ultimately prove to be significant for the high-frequency crowd. The conventional wisdom at the moment is that the Facebook fiasco may have exacerbated the wariness with which individual investors view today's stock market. Retail buying of mutual funds and individual stocks has suffered since the Flash Crash of May 2010 and the financial crisis of 2008, as more people conclude that the market is somehow rigged against the little guy. Facebook has done nothing to dispel that notion. This is a problem for the high-frequency set because they prefer to trade against retail order flow. In fact, they depend on retail order flow. The lack of high-frequency volume in fact is indeed directly correlated with individual investor activity. As the latter stepped aside, the former has suffered in the resulting volume drought. In general, many thought that the Facebook IPO would reignite the public's passion for owning stocks. Instead, the effect may have been the exact opposite of what was intended. Retail volume does not seem to be poised for a rally anytime soon, which will cap high-frequency activity to some degree. For more: Read more about: High Frequency Trading, Facebook IPO 3. Criticism of Madoff trustee continues to grow
"Picard is going to wind up being richer than Madoff." So said one attorney fighting with Irving Picard, the trustee hired by the SIPC to recover money from the Bernard Madoff Ponzi Scheme and return it to victims. I've noted that criticism of the trustee has been mounting in recent years. Picard has ridden his gravy train to instant partner status at Baker & Hostetler and to millions in personal profit (more than $5 million) and hundreds of millions in revenue for his firm ($554 million in legal fees). "How much have Mr. Madoff's victims actually received from all of the cases and motions he's made? Only $330 million. And how much does Mr. Picard estimate the fee spigot will pour out by 2014? A mere $1 billion," according to influential DealBook, which has weighed in with an unflattering portrait of Picard's efforts. "At $850 an hour, Mr. Picard and his law firm, Baker & Hostetler, are starting to look more like the princes of the Full Employment Act for Lawyers than storybook heroes. In the last several years, Mr. Picard has brought more than 1,000 cases seeking more than $100 billion on behalf of victims, despite acknowledging that only about $17.3 billion had actually been invested by customers. (The entire Ponzi scheme has been estimated to be worth $65 billion, but much of that is the result of made-up profits recorded by Mr. Madoff.)" Judges have not warmed to his novel approach, and at some point you have to wonder when the SIPC will intervene and enforce a less aggressive and less expensive agenda. Picard is no longer seen as a Robin Hood. For more: Related articles: Read more about: Hedge Funds, fraud 4. Praising Goldman Sachs' green investments
Goldman Sachs generates a lot of cynicism these days, and its motives are questioned at every turn. To be sure, the bank has no choice but to invest in its image, as it should after the drubbing it has taken in the court of public opinion. And so it goes with the bank's announced $40 billion in investment in green technologies over the next decade. This is how Breakingviews puts it: "The Wall Street firm isn't above self-serving spin, but it's also never far from the money. With solar and wind power nearing cost levels that are competitive with fossil fuels, clean energy could burnish Goldman's bottom line as well as its green credentials. A degree of cynicism ... is warranted. The firm helped funnel $4.8 billion to clean energy firms in 2011, so its latest pledge, averaged over 10 years, would actually represent a drop in investment in the sector. But in fact Goldman has a record of being better than its word on environmental investments. A $1 billion commitment in 2005 turned into the deployment of $24 billion of financing by the end of 2011." In the end, it's all about the ROI, and financial services firms have proven that in some cases, you can have both a solid return as well as a PR-enhancing project. Across the industry, there are lots of green initiatives underway. The best example may be the green buildings--data centers, office towers, and branches--that companies like Citigroup, Morgan Stanley, TD Bank and others have invested in. The savings will likely prove to be more than worth the costs, even when you don't factor in the PR benefits, which have been plentiful. For Goldman Sachs, this is a great chance to banish its Solyndra fiasco--the company advised the ill-fated company--to a distant memory. For more: Related articles: Read more about: Goldman Sachs, Green Investments 5. Will Facebook switch to NYSE?
NYSE Euronext has maintained that it is not in discussions with Facebook officials about the much-maligned social networking giant switching its listing venue to the Big Board. It says such discussions would not be appropriate at this point, and yet media reports say overtures have been made and that the idea is alive. CNBC reports that Facebook officials "are now open to moving its listing to" the Nasdaq's biggest rival. "If Facebook were to decide to switch, experts maintain that the mechanics behind a listings switch would not be complicated." A former Nasdaq vice chairman who oversaw the exchange's global listings business told the news service: "It's not hard [to switch listings]." He adds that there are very few restrictions to prevent companies from making such a change. "Both firms [NYSE and Nasdaq] handle this sort of things all the time." I would beg to differ on that last point. The number of actual changes are infrequent. When it comes to really super high-profile companies, they are downright rare. Both exchanges would go all out to hang onto their crown jewels. Facebook is definitely such a jewel. There's no technical obstacle for companies aiming to switch, and both sides work hard to woo companies to their services. Officials at Facebook are no doubt steamed at what has become of their IPO. They may be in a punitive mood, and the Nasdaq had better be groveling. It will have to make amends somehow. Whatever sweetheart deal Facebook received from the Nasdaq to list may have to be sweetened even more. For the NYSE, this is a rare moment. It looks good by comparison. Some reports have been over the top in comparing the two. For more: Related articles: Read more about: Nasdaq, exchanges Also Noted
SPOTLIGHT ON... Goldman Sachs hits snag with new bond platform Goldman Sachs' new, much bally-hooed Gsessions fixed income e-platform has run into some snags that has delayed its launch, which was expected in mid-May. The Financial Times says the delay "highlights the technical difficulties facing big Wall Street banks as they build new electronic trading platforms – a vital component in their response to more competitive markets and new rules requiring increased trading transparency." The bank would be wise to launch a fully functional service, to essentially get it right on its first at-bat. Article Company News: Industry News: Regulatory News: And Finally…How women might sleep better. Article
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Wednesday, May 30, 2012
| 05.30.12 | Criticism of Madoff trustee continues to grow
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