| August 17, 2012
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Today's Top Stories
1. Jon Corzine avoids charges
2. Rolling Stone sounds off on DOJ
3. Bank of America releases CSR report
4. LIBOR may boost CDO losses
5. Hedge funds page JPMorgan holdings Also Noted: Kaseya
Spotlight On... Apollo to market a new fund
Credit Suisse sued; Discover stock on a tear and much more... News From the Fierce Network:
1. Judge Rakoff still fighting SEC-Citigroup deal
2. Small banks vs. big banks on mortgage protection
3. The hidden costs of deep liquidity
| FierceLive! Webinars > Controls for automated trading. Can you rely on the sell-side alone? Wednesday, August 29th, 11 am ET / 8 am PT
> Webinar: Network Security: Emerging threats require updated Best Practices- September 12, 2pm ET/ 11am PT
Events > Investment Consultants Forum - The Crowne Plaza Times Square, New York, NY - March 2, 2012
> NFC Ticketing Europe 2012 - March 20-21 - London
> NYIF Essentials of Project and Infrastructure Finance - September 10-12 - New York, NY
> Investment Trends Summit - September 12-14, 2012 - The Four Seasons, The Biltmore - Santa Barbara, CA
> NYIF Core Skills Analyst Program - October 22- November 16 - New York, NY
> NFC Payments USA Unites NFC Experts in Boston Once Again - October 29-30 - Boston, MA
> The Mobile Wallet Summit - November 28-29 - London
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* General ad info: Click here | Today's Top News 1. Jon Corzine avoids charges It always seemed a inevitable that there was never a chance that former MF Global CEO Jon Corzine would be criminally charged over his failed stewardship of the firm. Corzine ran the firm into the ground in about as reckless fashion as possible and deserves all the contempt that has been heaped upon him. Yet the prosecutors have to ask whether he committed any actual crimes as he went about this. And the answer at this point, after a thorough investigation, is no, as noted by the New York Times. There may be other ways he might be held accountable, but he will not be going to jail because of anything he did at MF Global. In fact, he is in a position to put other people in jail. Surprisingly enough, prosecutors want to talk to him about the actions of others at the firm, notably Edith O'Brien, an assistant treasurer whom prosecutors once hoped would testify and provide the goods on Corzine. O'Brien was central to the transfer of funds at issue. She sought full immunity and was apparently denied. There's a lot going on behind the scenes, but it now appears her gambit has failed. She just might be the only person charged in this mess, though Corzine is reportedly not of a mind to provide damning testimony. In the end, it's likely that no one will be criminally charged. For more:
- here's the article Related articles:
Jon Corzine may avoid criminal charges
Prosecutors near decision on MF Global Read more about: MF Global
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2. Rolling Stone sounds off on DOJ When Rolling Stone wants to make an emphatic point, it often strives to do so in quotable fashion. It was spectacularly successful when Matt Taibbi coined his memorable put down of Goldman Sachs. The writer has now turned his indignation to the Justice Department, which recently announced that it will decline to bring a criminal case against Goldman Sachs. "You know that look a dog gives you when you show it something confusing, like an electric razor or a lawn sprinkler? That's the look federal prosecutors give when companies like Goldman wave their attorneys' sanctifying opinions at them. They scratch their heads and say: 'Oh, wow, well since this was signed in Australia by three millionaire lawyers wearing magic invisibility cloaks, it really isn't fraud! They're right!' " He is nothing if not entertaining as he makes his points, but at least one point stuck out. He bemoans "a general pattern that has been coming into focus for years in American law enforcement. Our prosecutors and regulators have basically admitted now that they only go after the most obvious and easily prosecutable cases." If you put all his rhetoric aside, you'll have to admit he's on to something. The SEC has basically said that it cannot go after all crimes. It just doesn't have the resources, so the most it can do is wield its big stick in symbolic fashion. It has to go after cases that will bring it lots of attention and serve as an example. The insider trading convictions by Preet Bharara, however, would appear to contradict that point. The prosecutors did a rather thorough job in ferreting out the many subtleties of the many crimes. But when all is said and done, the SEC and U.S. Attorneys can't chase every case, even if there's a decent chance of a victory. They have to ration their resources. Sadly for some, the pickings were surprisingly slim in the wake of the financial crisis. For more:
- here's the article Related articles:
Chance of criminal prosecutions plummets
Senator not backing down on Goldman Sachs
DOJ's unusual annoucnement on Goldman Sachs Read more about: fraud, Rolling Stone
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3. Bank of America releases CSR report More banks are embracing the idea of a corporate social responsibility (CSR) reports, which tout achievements in areas such as philanthropy and green initiatives. While some cynics suggest that such reports amount to mere PR, I would caution that too much cynicism is unwarranted. The fact is that such reports are increasingly prized by institutional investors, who want to see progress on environmental, social and governance (ESG) criteria. So these reports can have a direct effect on the success of the company. I note this in light of Bank of America's second CSR report, just released via a snazzy web page. The report means "to provide an overview of the social and environmental impacts of its business operations and efforts to create value for shareholders, customers and clients, and communities the company serves globally. The report highlights the company's efforts to promote fairness and transparency in its products and services; lending and investing activities in low-income and underserved communities; philanthropic investments to address immediate and long-term community needs; and company and customer-focused environmental initiatives." Such reports, as they become de rigueur, tend to be feel-good documents. Banks should take pains to make sure all the claims are backed by substance. For more:
- here's the report Related articles:
How to execute CSR reporting Read more about: CSR, corporate social responsibility
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4. LIBOR may boost CDO losses The long reach of Libor has complicated matters for analysts trying to figure out just how much the debacle will ultimately cost banks. It's unclear as of now what the fallout will be, but the use of Libor in CDOs cannot be discounted. Reuters notes that "many collateralized debt obligations (CDOs) were hedged with interest rate swaps, they say, and inflated payments on those swaps siphoned away money that should have gone back to investors." One expert was quoted as saying that, "Especially for CDOs whose underlying pool of securities had to be 100% hedged, lower Libor meant ridiculously large payouts each quarter to bank counterparties -- up to $8 million to $10 million per year for some deals. The burden of having this payment is essentially like having an extra senior tranche in the CDO. We are already engaged on a CDO-related Libor case with a law firm, trying to quantify how much the manipulation in the rate increased losses. These are just the early stages. There will definitely be more litigation around this topic -- possibly a class action." If a CDO was receiving payments based on Libor, "and it was paid Libor plus 1 percent instead of Libor plus 3 percent, the result is that over the years the CDO holder got much less than it should have." This is going to be huge for the lawyers. For more:
- here's the article Related articles:
Goldman Sachs: No CDO charges by SEC
Jury acquits Citigroup exec of CDO negligence Read more about: CDOs, LIBOR Scandal
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5. Hedge funds page JPMorgan holdings According to a recent Reuters article investigating the lingering effects of JP Morgan's massive losses from the bank's London CIO unit, "Jamie Dimon's whale is turning into an albatross." As a direct consequence of the $5.8 million in losses in the first and second quarter, the bank has been forced to suspend its stock buyback program and recalculate capital ratios to better reflect its risk metrics. JPMorgan also revamped the VaR calculation that it relied on just as the Whale trades blew up. As a result of the changes, requested by the OCC and the Federal Reserve Bank of New York, the Basel I Tier 1 common ratio was reduced to 9.9 percent from 10.3 percent. So how big of a setback is all this? JP Morgan will likely be able to recommence the buybacks soon, and the new capital levels are still significantly "higher than the 5 percent level at which banks are considered well-capitalized under Federal Reserve stress tests." For some funds, however, the effects will linger a bit too long. At least a few hedge funds have liquidated their JPMorgan holdings. According to Bloomberg, Moore Capital Management sold all of its JPMorgan common shares -- about 6.47 million -- in the second quarter. TPG-Axon Management sold all of its of 3.13 million shares. Hedge funds, mutual funds and other big asset managers reduced their holdings of JPMorgan stock by $28.7 billion, leaving them with $89.8 worth of stock. For more:
- here's the article
- here's the Bloomberg article Related articles:
Ex-JPMorgan employees deny hiding trade trade losses
JPMorgan trading loses balloon to $4.4B Read more about: Hedge Funds, JPMorgan
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Also Noted | This week's sponsor is Kaseya. |  | Ten Effective Habits of Indispensable IT Departments
It's no secret that responsibilities are growing while budgets continue to shrink. Enact these ten IT habits throughout your financial institution to help you cut costs, create operational efficiencies and align IT to business goals. Download Today!
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SPOTLIGHT ON... Apollo to market a new fund Leon Black's Apollo Global is seeking to raise $10-$12 billion for his next private equity funds, according to Bloomberg. His previous fund raised about $15 billion in 2008. Other fund firms are also scaling back compared with their previous efforts. My sense is that there will plenty of institutions willing to invest. The future liability challenge remains for many pensions, and they have little choice but to load up. Performance remains an issue, however. Article Company News:
> MF Global mess still vexing. Article
> Credit Suisse sued by magazine mogul. Article
> M&T Tarp stock to be sold. Article
> Discover stock on a tear. Article
> Knight Capital and ETFs. Article
> Biggest BAC sellers in Q2. Article
> Fannie Mae, Freddie Mac keep pushing. Article
Industry News:
> Banks loom as political issue. Article
> Chinese banks seek IPO alternatives. Article
> Traveling modification show. Article
> Facebook shares plunge. Article
> Best Buy battle not fading. Article
Regulatory News:
> Turf battles over Standard Chartered. Article
> Who's next to settle over Iran? Article And Finallt…CEO pay vs. tax payments. Article > Controls for automated trading. Can you rely on the sell-side alone? Wednesday, August 29th, 11 am ET / 8 am PT Join us for this informative and thought-provoking webinar, lead by renowned Capital Markets expert Richard Bentley, VP of Capital Markets, Progress Software . And learn how you can better mitigate and manage the risk of automated trading. Register today! > Webinar: Network Security: Emerging threats require updated Best Practices- September 12, 2pm ET/ 11am PT The security picture at financial services seems to be getting cloudier by the day. While many banks have awoken to the risks imposed by possible network breaches, the landscape continues to morph, raising the stakes. Cyber criminals continue to refine their techniques and to develop more advance hacking methods to compromise corporate networks, and they are as sophisticated as ever. The very notion of Best Practices in the realm of network management and security continues to evolve. We take a look at current trends and up-to-date practices. Register today!
| > Investment Consultants Forum - The Crowne Plaza Times Square, New York, NY - March 2, 2012 This conference provides a unique environment for developing dialogue between plan sponsors, managers and consultants. This event will feature panel-driven discussions focused on specific investment techniques of fixed income and hedge fund managers, the evolving role of institutional consultants, the manager evaluation process and more. Register today. > NFC Ticketing Europe 2012 - March 20-21 - London Come and join MasterCard, Renfe, Deutsche Bahn, Visa Europe, Orange, Arriva Netherlands, O2 and many more for the first event to bring together the whole NFC Ticketing industry for discussion, debate and quality networking. Click here. > NYIF Essentials of Project and Infrastructure Finance - September 10-12 - New York, NY This is a practical course that provides executives, whether as financiers, sponsors, or professional support, an opportunity to understand the risk-return character of limited recourse projects from multiple perspectives. Case studies span a variety of sectors and geographical regions. This course will not use in-depth models involving Excel™, but the instructor (a broad-based finance and investment executive with global experience throughout the U.S., Europe and the emerging markets of Latin America and Asia who has negotiated numerous transactions, including mergers and acquisitions, public offerings, mezzanine financings, international bank syndications, corporate valuations and fairness opinions) will review modeling approaches with examples. Register today. > Investment Trends Summit - September 12-14, 2012 - The Four Seasons, The Biltmore - Santa Barbara, CA The Investment Trends Summit is an educational forum focused on analyzing trends for the future, and exploring ways to implement new strategies in investment plans. Speakers and attendees will discuss topics such as investor's perspectives, investment management theories, and more. Register Today! > NYIF Core Skills Analyst Program - October 22- November 16 - New York, NY Bringing together core finance concepts and theories, this program is a challenging and rewarding experience for entry-level analysts, finance and investment professionals seeking to enhance their skill set. Real-life case studies supplement the hands-on learning experience, providing a wealth of practical knowledge to take back to the workplace. The program provides four weeks of intensive training in accounting (optional), corporate finance, credit risk and financial modeling. Register today. > NFC Payments USA Unites NFC Experts in Boston Once Again - October 29-30 - Boston, MA NFC Payments USA (Oct 29-30th)is back for its second year, hosting 150 senior level delegates to debate industry challenges and facilitate the roll out of NFC payments. Speakers include Best Buy, PayPal, Verizon, Barclaycard, T-Mobile, Best Buy, VISA, Capital One, MasterCard. Click here for more information. > The Mobile Wallet Summit - November 28-29 - London The Mobile Wallet Summit is the only show that looks at the future of mobile transactions. It brings together every industry you find in your physical wallet, loyalty, identity, ticketing and payments and provides a forum for debate on how they will fit on your mobile.
| > Get Subscriptions to the Leading Finance Magazines for FREE Mercury Magazines offers top Finance titles for Free to professionals. No Credit Card Required. Stay Ahead in your Industry. Sign up now. > Whitepaper: Using Modern CRM to Attract and Retain Advisors and Clients Learn how this “next generation” CRM delivers game-changing benefits over early CRM options and can help your organization attract and retain top tier talent, foster customer loyalty, and grow assets under management or increase share of wallet/household. Download here. > Whitepaper: Ten Effective Habits of Indispensable IT Departments It's no secret that responsibilities are growing while budgets continue to shrink. Enact these ten IT habits throughout your financial institution to help you cut costs, create operational efficiencies and align IT to business goals. Download Today! | ©2012 FierceMarkets This email was sent to kumaresan.selva.blogger@gmail.com as part of the FierceFinance email list which is administered by FierceMarkets, 1900 L Street NW, Suite 400, Washington, DC 20036, (202) 628-8778.
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