Today's Top Stories Also Noted: Spotlight On... Wells Fargo aims to be a hedge fund power News From the Fierce Network:
Today's Top News1. The debate over money market funds rages
After the Primary Reserve Fund's "breaking the buck" fiasco, few still believed these funds were as safe as an FDIC-insured account. That illusion of safety is what has long driven the industry. Even as the regulatory debate rages, it would be fair to say that the investing public is none the wiser on this issue. Most would probably say, "Yes," if asked if their money market funds were government insured. Adding fuel to the fiery debate, the SEC has released a study showing that nearly 160 money market funds have sought the SEC's permission "to shore up their funds using cash from their parent companies since 1989 — and that's not counting the requests made during the financial crisis years. Nearly a dozen events triggered the written requests, including headline-making events such as the bankruptcy of California's Orange County in 1994. But the requests were not immediately disclosed. The SEC did not make the letters public before the 2008 financial crisis. Now, they're made public on a delayed basis to avoid instigating a run on a fund," according to the Washington Post. The industry notes that the requests did not always result in an actual bailout of a fund. In some cases, they were preventative measures meant to preserve the rating of the fund, for example. To some critics of the industry, however, the study demonstrates the need for additional regulation, which seems to be likely at some point. Despite a false start last year, the SEC may pass new rules soon, requiring more capital, enhanced disclosure and perhaps and to the $1-per-share tradition. For more: Read more about: money market funds
2. Lending key to success in brokerage
Morgan Stanley wants the world to know that when it comes to wealth management, it does not intend personal lending (or lack thereof) to be its Achilles heel. Wealth management looms as a key revenue generator for commercial banks and investment banks going forward. Some have wondered lately whether the latter are at a disadvantage because they aren't as well positioned to lend to retail clients. The issue cropped up again when a group of big-producing Morgan Stanley brokers defected to other firms. One said that a decisive issue was the internal perception that investment bank-owned wealth management units could not lend as aggressively as commercial bank-units. This person was at Smith Barney, which was part of Citigroup before it was bought by Morgan Stanley. To blunt any more damage, Morgan Stanley is making clear that it has aggressive plans to expand lending. In fact, it says it is on track to becoming the eleventh largest bank by deposits. The Financial Times notes that, "From its base in the leafy hamlet of Purchase, New York, the private bank lends money to Morgan Stanley's brokerage clients. The loans can fund any number of purchases – from refinancing mortgages on office buildings to buying multimillion dollar yachts, though demand for the latter has fallen off in recent years. While Morgan Stanley does not publicly disclose its lending targets, the percentage of its brokerage customers that have taken out loans is in the single-figures and the bank is aiming to boost that to double-digits in the near future." The issue is whether commercial bank owned wealth managers can lend at better rates, with less hassle and in a more integrated manner. They'll try to leverage their core skills at every turn. For more: Related articles:
Read more about: Lending, brokerages 3. Private equity debacle over gun control ownership
The tragedy in Newtown, Conn. has sparked a national debate over gun control, and that presents a thorny dilemma for the private equity companies that own gun makers. One company has already decided the outcome of the debate is fait accompli. "It is apparent that the Sandy Hook tragedy was a watershed event that has raised the national debate on gun control to an unprecedented level," said Cerberus Capital Management, which owns the Freedom Group. The group owns Bushmaster, which makes the weapon thought to be used in the massacre. The company wisely will not seek to press a case against additional gun control. It would be hard to stand tall with an anti-gun control agenda right now. Even the NRA is staying quiet for the moment. Other private equity firms face similar issues and are likely to stay quiet as well. Savage Sports, which makes rifles and shotguns, was sold in January to management group backed by Norwest Equity Partners. Sciens Capital Management owns a stake in Colt Defense, the small arms maker. Gun accessory maker Bushnell is owned by Midocean Partners, and distributors Jerry's and Ellett Brothers are owned by Wellspring Capital, notes CNN. Publicly traded gun makers have been bid down on the rising likelihood that gun control measures are passed into law. Some pensions are likely to review their investments. Private equity firms that own gun makers will have to decide if they want to sell off these units. In any cases, losses would appear to be likely. For more: Read more about: Gun Control, pensions 4. Mass. charges Morgan Stanley over Facebook
For those of you who thought that Morgan Stanley had escaped any regulatory fallout from the disastrous Facebook IPO, a surprise has landed, one that could have implications for future charges. Morgan Stanley has agreed to pay Massachusetts a $5 million fine for violating securities laws governing banks and IPOs. The charges allege that the bank played an improperly large role in the deal, including coaching the company's financial officers about how to communicate with analysts, according to media reports. DealBook identifies the banker as Michael Grimes, one of Morgan Stanley brightest banking stars who ran into a career pothole with the Facebook IPO. Interestingly, Grimes pushed hard for the company to file its now infamous amended prospectus, which detailed a slowdown in revenue. The reason? He didn't want anyone to accuse the bank of selectively sharing information. But he also coached the company to communicate with analysts as soon as the prospectus was filed. And in those follow-up conversations, information that did not appear in prospectus was allegedly shared. Grimes was so involved with the communications process--right down to handwritten scripts for executives--that in the eyes of Massachusetts, he crossed line and improperly influenced stock analysts in violation of vaunted Global Settlement in 2003. One big issue here is the extent to which other states will file similar suits. Massauchetts tends to be a bellwether in financial cases. The bigger question may be whether the SEC decides to act. For more: Related articles: Read more about: Morgan Stanley, Enforcement Action 5. Prosecutors rack up more insider trading convictions
Are the jury convictions of Anthony Chiasson, co-founder of Level Global, and Todd Newman, formerly of Diamondback Capital, enough to make Mathew Martoma think twice about rolling the dice at a trial? The two were convicted on 10 counts of conspiracy and securities fraud for insider trading and will face jail time when they are sentenced in April. Once again, the government was able to rack up victories without wiretap evidence that directly implicated the men. Instead, the Financial Times notes that courts relied on "emails, instant messages, phone and trading records and the testimony of two analysts, Spyridon Adondakis, formerly of Level Global, and Jesse Tortora, formerly of Diamondback. Both men pleaded guilty and testified for the government. They described during the four-week trial how they learnt the confidential information from insiders at Dell and Nvidia through a chain of friends and then ultimately passed it on" to the defendants, who were four or five levels away from the source of inside information. If Martoma persists to the point of a jury trial, he will face off against the once respected 80-year-old doctor who fed him information, who most think will prove a decent witness. The government's record ought to be enough to make anyone think twice about going to trial, especially if there are witnesses willing to testify against them. The government can now boast victories in the form of a conviction or guilty plea in 71 of 72 cases in which they lodged charges. At this point, you have to wonder what it would take for Martoma to change his mind. For more: Related articles: Read more about: insider trading Also NotedSPOTLIGHT ON... Wells Fargo aims to be a hedge fund power How important is institutional business to Wells Fargo? It has committed to doubling its assets under management in this area within seven years. Toward that goal, it has purchased a 35 percent stake in hedge fund firm Rock Creek Group. The bank has an option to purchase even more, enough to give it a controlling interest. This follows the move by Wells Fargo to by a prime broker Merlin Securities. Article Company News:
©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. Contact Us Editor: Jim Kim Advertise Advertising: Jack Fordi or call 202.824.5040 Email Management Unsubscribe from FierceFinance Explore our network of publications: | ||||||||||||||||||||||||||||||||||||||
Wednesday, December 19, 2012
| 12.19.12 | Prosecutors rack up more insider trading convictions
Subscribe to:
Post Comments (Atom)
No comments:
Post a Comment