Today's Top Stories Also Noted: Quest Software News From the Fierce Network:
Today's Top News1. Facebook issuers to release research
The timing of stock research published by analysts who work for deal underwriters has been in the news as of late. It's unclear whether investment banks will start releasing research on deals they are managing any earlier despite the changes put forward in the JOBS Act, which aims to promote emerging growth companies. To be sure, Facebook would likely not qualify as an emerging company, but there's a lot at stake when the underwriters start to release their reports. The mandatory quiet period has expired, and people are awaiting a flood of opinion. There's plenty of reason to be skeptical of such research. Traditionally, sell-side analysts are loathe to do anything to upset a revenue-generating deal. In this case, "with such a large group of underwriters involved in the deal (33 in total), some analysts involved in the process worry a game of one-upmanship could distort the market," notes CNBC. One analyst was quoted as saying, "I think some people will swing for the fences to try to make a name for themselves by putting a big price target on." Some experts caution that a 'research rally' may be in the offing, while others think that the price already reflects the bullish bias of analysts. Another view is that analysts could stand out with sober analysis, instead of jumping on the hype bandwagon. Indeed, if you really want to stand out and you are bearish short-term, it might make sense for you to offer that opinion unvarnished. In the end, accuracy and results will matter most. For more: Related articles: Read more about: analysts, Stock Research 2. Bank of America to hire vets
Bank of America's implementation of Project New BAC is still going on, causing lots of pain as the bank works through Phase II, which is aiming for cuts in the wealth management and investment banking units. These cuts will not be as dire as the initial phase, which contemplated job reductions in the neighborhood of 30,000 over time. In fact, there are some pockets of hiring going on. And Bank of America plans to double military-veteran hires to 1,000 this year, with positions to be filled in IT and operations, military assistance, consumer banking and wealth management, according to FINS. The bank counts 6,000 veterans, reservists and active-duty service members among its 282,000 employees. Veterans are a particularly good fit in technology and operations, the bank's senior vice president in charge of the bank's military business told the publication, as the "the skills needed for those positions align with the field training that many in the military receiver." The bank will be hiring in customer service for military support as well. "We want veterans who know how to speak to their fellow service members, know the legislation and understand the payment allowance systems from the Department of Defense," the executive was quoted. All in all, this is a good move, especially from PR point of view. It's hard to argue with efforts to employ veterans, especially given the recent settlements involving top banks alleged abusive practices committed against military personnel. JP Morgan Chase, for example, settled a class-action lawsuit over such issues recently for $27 million. Other banks may well follow suit with hiring programs of their own. For more: Related article: Read more about: Layoffs, hiring 3. Key Rajaratnam trial witness gets probation only
Does it pay to cooperate with prosecutors in the thick of a massive insider trading scandal? Prosecutors try hard to send the message that the witnesses have everything to gain from cooperating -- that can avoid jail time. So far, six cooperating witnesses, who essentially turned on their former colleagues, have received probation only. The list now includes Adam Smith, the Harvard grad who turned to the dark side before agree to testify against his boss Raj Rajaratnam, who now languishes in jail. Smith was sentenced to just two years of probation this week. Judge Jed Rakoff said he imposed a light sentence because of the strong assistance Smith provided the government. DealBook notes that the two other big-time government witnesses--Anil Kumar, a former executive at the consulting firm McKinsey & Company, and Rajiv Goel, a former executive at Intel--have yet to be sentenced. It remains to be seen whether they will be as richly rewarded as smith, who "began cooperating with the government in late 2010 after prosecutors presented him with evidence they had built against him. He met with federal authorities for more than 150 hours to help them build their case against Mr. Rajaratnam. He secretly recorded telephone conversations with his friends and colleagues. He also provided prosecutors with incriminating evidence against Rajat Gupta, the former Goldman Sachs director who was convicted earlier this month of leaking confidential information to Rajaratnam," according to DealBook. For more: Related articles: Read more about: insider trading, trial
Bloomberg reports that the SEC has voted internally to authorize charges against hedge fund billionaire Philip Falcone, who has struggled mightily in recent years, painfully and publically falling from grace. The charges will likely go after Falcone and his Harbinger Capital for his controversial move in 2009 to take a $113 million loan from his Special Situations fund to pay personal taxes. "The loan was disclosed in the fund's annual financial statement the following March. At the time he borrowed the money, clients were barred from pulling money from the fund. Falcone subsequently repaid the loan with interest." The funds relationship with Goldman Sachs may also factor in the charges. Harbinger apparently "allowed Goldman Sachs, which at the end of 2008 had $1 billion invested in two Harbinger funds, to redeem some money from the firm" even though other limited partners were locked in. And finally, the government may bring charges alleging manipulation in its trading of various bonds of MAAX Holdings, a Canadian company. Fraud charges would mark the nadir for a man who rose from humble beginning to incredible success in the hedge fund industry, thanks mainly to his bet that the housing market would collapse. He had incredible ambitions, reflected mainly by his ill-fated investment in the LightSquared, a venture that is now in bankruptcy court. Now he'll have to turn his attention to vigorously defending himself. For more: Related articles: Read more about: Hedge Funds, Civil Charges 5. Glencore, Xstrata merger on the verge of collapse
When commodity firm Glencore and Xstrata announced their intention to merge earlier this year, the investment banking market seemed so full of promise. The good times seemed to be just around the corner. The deal was expected to generate up to $150 million in fees for the likes of Deutsche Bank, Goldman Sachs, JPMorgan and Nomura, which were advising Xstrata, as well as Morgan Stanley and Citigroup, which were advising Glencore, and others. But the deal has run into some major roadblocks in the form of shareholders who think a better deal can be struck. The latest is that the sovereign wealth fund of Qatar has weighed in, voicing its dissatisfaction with management retention payments and the share exchange, two issues that other shareholders have raised. Given that the Qatar fund holds 11 percent of the stock, the dissidents could easily block the deal, which the Financial Times says is now "on the verge of collapse." The two companies are now under pressure to re-jigger the retention terms and exchange ratio. Unfortunately, there is a shareholder vote scheduled in just two weeks. It would appear that the vote may end up being cancelled. The companies have to figure out if it will be worth it to start all over again. For the financial advisors, this is another tough pill to swallow. The deal no longer looms as gravy train. For more: Related articles: Read more about: Advisory Fees, investment banking Also Noted
SPOTLIGHT ON... Dell is mystery bidder for Quest Software One interesting aspect in the bidding war for Quest Software was the fact that one of the bidders sought to remain anonymous. But that bidder has been outed by the media and it's reported to be Dell. Dell has put itself in position to the win the bidding, with its latest offer topping the one put forward by Insight Venture Partners and Vector Capital, which Quest accepted last week. Article
Company News: And Finally… Happy birthday iPhone. Article
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Thursday, June 28, 2012
| 06.28.12 | Glencore, Xstrata merger on the verge of collapse
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