Today's Top Stories Also Noted: Spotlight On... Apple vs. Microsoft as a hedge on short bets News From the Fierce Network:
Today's Top News1. Goldman Sachs sets up hedge fund platform
Funds of hedge funds have disappointed plenty of limited partners as of late. In some ways, this segment of the industry has performed the worst since the financial crisis in terms of inflows. Criticism has been rampant, which has led some broker-dealers to take a different approach. Goldman Sachs has put together a new hedge fund platform for customers, which will allow them to make easier investments in hedge funds with lower minimum investments. According to Reuters, the move was prompted by criticism that the firm's funds of funds weren't all that great and that the firm's proprietary hedge funds were equally disappointing. Now, "Goldman clients who have $25 million or more with the investment bank can invest in the funds on the Hedge Fund Select platform…There is a minimum $500,000 investment in any single fund, and Goldman will earn a 1 percent fee on the money invested with any particular fund. A big name hedge fund typically requires an investor to put in at least $1 million. A bank that boasts a hedge fund platform can reduce the minimum investment needed because it pools all its customers' money together into a single portfolio." So far there are 10 funds available on the platform, but one would expect that number to grow significantly. It remains to be seen just how popular this effort will prove. Other banks have likewise moved to set up similar platforms. The key will be to offer some winning hedge funds, which will not be easy to do. For more: Read more about: Hedge Funds, Goldman Sachs
2. Morgan Stanley puts an end to Smith Barney brand
As a retail brokerage brand, Smith Barney has a long and storied history. It was born back in 1938, via the merger brokerage firms, Charles D. Barney & Company and Edward B. Smith. Smith Barney achieved a high water mark culturally with its iconic advertising campaign featuring John Houseman intoning, "They make money the old-fashioned way. They earn it." But like other great Wall Street brands, it will soon expire. Morgan Stanley all along has said that it would likely rebrand the Morgan Stanley Smith Barney venture once it purchased control. That moment is at hand, and the name of the brokerage outfit will be Morgan Stanley Wealth Management going forward. "As many of you know, we will be communicating this change through a variety of marketing initiatives, which you will be able to leverage with your clients," according to a memo from Morgan Stanley's top executives. "Over the years, the Smith Barney name has earned broad respect and admiration, and we have deep appreciation for the ways in which the Smith Barney tradition is strengthening our franchise. As we now move under one name and advertise in support of our brand, here is what you can expect." The memo laid out some aggressive advertising plans that include various print and online buys. "Going forward, 'Morgan Stanley Wealth Management' will stand for the first-class service, and the tradition of excellence that clients have long associated with the Morgan Stanley and Smith Barney names." It's possible that an entity might purchase the rights to the Smith Barney brand. Consider another big name -- Shearson. Coincidentally, it was Smith Barney that decided to drop the name Shearson from Smith Barney Shearson back in 1994. Subsequently, a small Florida brokerage bought rights to the Shearson name. For more: Related articles:
Read more about: Morgan Stanley, Smith Barney 3. John Thain aims for a big-time position
The financial crisis of 2008 and its aftermath were anything but kind to John Thain, who at one point seemed to have a golden career, one that took him from Goldman Sachs to the CEO's office at NYSE Euronext to the top job at Merrill Lynch, where he ultimately unraveled. The nadir may have come after Merrill Lynch was sold to Bank of America, a controversial sale that has been recounted often. His personal reputation bottomed out when he decided to renovate his office for $1.2 million, all paid for by a company that had been bailed out by the government. "Thain repaid the company for the office renovation but faced months of ridicule and was thought to be exiled from Wall Street for good," notes FOX Business. Even President Obama noted how inappropriate the renovations were. In early 2010, however, Thain was appointed chief executive of CIT, which had just emerged from bankruptcy. FOX now reports that he is seeking a return to a high position at a top bank. He is shopping CIT Group with the idea that he'll be tapped for top job at the combined company.Rumors have suggested that Canadian banks may be interested in at least taking a look. CIT need to expand its deposit base and suffered a blow when it failed in its effort to buy assets from ING Direct. Whether an acquirer would want Thain as a top executive is an open question. For more: Read more about: Merrill Lynch, John Thain 4. A bull market for criminal defense lawyers
The surge in alleged criminal activity at banks--and it has been quite a crime wave--has been good news for criminal defense lawyers. The growth in business has prompted firms to expand significantly, orienting their business development activities around the opportunity. A terrific example of how all the enforcement activity can trickle down into profits for law firms is the on-going Libor controversy, for which Barclays has already settled for $450 million, likely prompting a round of similar settlement. "While many of the recent scandals have been relatively isolated, the scope of the rate-rigging scandal has been vast, encompassing 16 banks. More than 10 government authorities around the world are looking into whether the banks reported false rates, potentially affecting trillions of dollars of financial products like mortgages and student loans," reports DealBook. The gravy train began well in advance of the settlement news. In addition to the standard enforcement and investigatory activity, a flood of private litigation is expected. There has been plenty of internal investigation activity as well. Individual executives have also been forced to lawyer up personally. The bottom line is that the financial crisis has been good to the legal industry, even though it is reeling in other areas. White collar criminal defense work and bankruptcy work have certainly been thriving. The good news is that the Libor business boom is expected to last for years. Dragging things out often makes good business sense. For more:
Read more about: lawyers, Enforcement Action 5. Bank of America keeps Merrill Lynch investment bank name
For all its recent woes, Bank of America remains a formidable brand. As does Merrill Lynch. But is the combination somehow less than the sum of parts? Is there a negative synergy that renders adding Bank of America to Merrill Lynch a losing proposition? Those are fair questions, which management is apparently serious about answering. According to CNBC, in recent months executives have been "toying" with the idea of changing the name of the investment bank, perhaps to just Merrill Lynch, instead of Bank of America Merrill Lynch. A review has been underway since May, as managers have spoken to many employees about the implications of such a change. In the end, the bank apparently decided that a name change wouldn't quite work. They are sticking with the status quo. Still, the issue revived some talk about whether the merger has worked or not. "Maybe Bank of America's leadership has solved all the major problems of the company, and has plenty of time to deal with minor issues like a name change for its investment bank division. And maybe not. Either way, it leaves me wondering: would a name change solve BOFA's strategic mistakes? Will it help Merrill Lynch rekindle the innovative fire for which it was once known? I don't think so," wrote one commentator in Forbes. One might argue that changing the name now might reflect that Merrill Lynch has won the internal culture wars, which might make Bank of America look bad. In the end, however, it's doubtful that a name change will make a difference in terms of actual business, domestically anyway. For more: Related articles: Read more about: Bank of America, Merrill Lynch Also NotedSPOTLIGHT ON... Apple vs. Microsoft as a hedge on short bets "We're getting afraid of heights," says James Chanos about Apple. "It has had an enormous run. Something about it is holding us back in that it's had such a run." The esteemed manager, who made his name as a savvy short seller, is not shorting the stock. In addition, The fund manager says that right now he does prefer Microsoft to Apple as a hedge against his other short bets on tech firms. Article Company News:
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Wednesday, September 26, 2012
| 09.26.12 | John Thain aims for a big-time position
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