Today's Top Stories Also Noted: Spotlight On... George Soros pessimistic about hedge fund industry News From the Fierce Network:
Today's Top News1. Bank of America board continues to morph
Bank of America has added two more board members in anticipation of several others not standing for reelection as they hit the mandatory retirement age. One newcomer is Arnold Donald, 58, who from 2000 to 2003 served as chairman and CEO of Merisant, a privately held manufacturer of tabletop sweeteners. Previously, he spent more than 20 years at Monsanto in senior leadership positions. Lionel L. Nowell III, 58, served as treasurer of PepsiCo from 2001 to 2009. Previously he served as Chief Financial Officer of The Pepsi Bottling Group, a position he assumed in 2000. He was PepsiCo's controller before joining Pepsi Bottling. Reuters notes that, "The bank's most recent proxy filing says a director who has reached the age of 72 or older should not be nominated for re-election, although the board can make exceptions. Three directors are currently at or near that age: MillerCoors senior adviser Virgis Colbert (73), Carlyle Group senior adviser Charles Rossotti (72) and former Federal Deposit Insurance Corp Chairman Donald Powell (71)." Going forward, the board would have 15 directors, which is the number it set as the norm back in 2009. This board may last for years, as the next oldest director is Jack Bovender, who is just 67. For more: Read more about: Bank of America
I noted that at the end of Round 1 in the 2013 Carl Icahn vs. William Ackman slugfest, the personal feud could get interesting. And sure enough, Round II was ever more bitter, nasty and entertaining. The second round played out live on CNBC's "Fast Money Halftime." Both hedge fund managers were phone-in guests on the network, ostensibly appearing to discuss Herbalife. Instead they decided to go after one another like hungry pitbulls, venting personal acrimony that has flared up on several occasions over the years. One choice jab from Icahn came as: "He's like a crybaby in the schoolyard." Icahn also called Ackman "the quintessential example that if you want a friend on Wall Street, get a dog." Ackman swang back, saying Icahn "is not an honest guy who keeps his word. This is a guy who takes advantage of little people." Anchor Scott Wapner was caught in cross fire. "I don't give a damn what you want to know, I came on to talk about what I want to talk about," Icahn told him. The cantankerous Icahn used the BS word at least twice on air. CNBC reports that "traders at the New York Stock Exchange punctuated the air with 'oohs' and 'aahs' during the arguing, while social networks lit up, with financial journalists and market watchers tweeting and posting as fast as their fingers could type." So who won? "While each combatant scored style points during the battle, if the winner was to be declared from the performance of Herbalife, Icahn scored a clear victory," concludes the news network. Herbalife shares surged as much as $2.15 during the half-hour bout. For more: Related articles: Read more about: Carl Icahn 3. JPMorgan Chase puts risk executive on sabbatical
"Later this month I plan to begin a sabbatical for a few months--returning to the firm in early summer in my current role as chief risk officer," said John Hogan, chief risk officer at JPMorgan Chase in a statement. It's unclear what to make of the news, but it's hard not to interpret the move as punishment of some sort for some risk management lapses that have cost the bank dearly. Recall that the bank was recently hit with two cease-and-desist orders from federal regulators aimed at remediating lapses in AML controls. Recall also that the board recently released a report that documented how the calamitous London Whale trades were allowed to happen at the bank. Hogan's sabbatical has to be interpreted also in light of the news that former chief of compliance and regulatory management Martha Gallo has been replaced by Cindy Armine. So what to make of all this? It would appear that the board wants to start fresh in terms of risk management and compliance. That said, the board might have been better off if it had been a little less wishy-washy. If the board wanted to punish the chief risk officer, it should be upfront about it. It should've just gone ahead and fired him. Putting him on sabbatical muddles whatever message the board is trying to send. If there are personal issues behind the move and it was not punishment, the bank should indicate that without breaching the executive's privacy. As of now, the move seems a little off. Ashley Bacon, the bank's deputy chief risk officer, will take over until Hogan returns. For more: Read more about: Chief Risk Officer 4. SAC Capital still working to hang onto investors
SAC Capital let it be known not too long ago that it was bracing for $1 billion in redemptions. Citing a specific figure might have been part of its PR strategy. If the firm can keep redemptions to less than $1 billion, at least ahead of the Feb. 15 deadline, it can hold itself up as being successful in stemming the tide of defectors. On the other hand, if redemptions come in higher than $1 billion, the firm will appear to be losing in that effort. As of now, even with the news that Citigroup is yanking $187 million, it looks like SAC Capital will be successful. That said, DealBook notes the firm is in a frenzy to keep the redemptions from snowballing. It has put on the full-court press from a marketing point of view, and has boosted year-end bonuses of portfolio managers by 3 percent in an effort to keep them in the truck. The most important effort underway may be the legal action to prevent the SEC from filing civil charges, which many see as fait accompli. If that were to happen, more investors will have no choice but to exit the fund, saying goodbye to 30 percent plus annual returns since 1992. Outside investors hold $6 billion of the $14 billion AUM and pay the fattest fees in the industry. The controversy has also made additional fundraising hard. SAC Capital and Mizuho Financial Group negotiated a deal for more than a year that would have brought in an additional $500 million of funds, but the deal has apparently fallen apart, in part due to the enforcement controversy swirling around the hedge fund firm. For more: Related articles: Read more about: SAC Capital
You might have thought Greg Smith, the former executive director and vice president of Goldman Sachs, was a 15-minutes-of-fame phenomenon. He is someone who makes a media splash as a complete unknown, gains notoriety, gets a book deal, generates modest reviews and then slinks back into obscurity. The Greg Smith story will indeed strike some as tired. But he's still an object of interest for many, including young people who are pondering careers on Wall Street. He recently did an interview with The Stanford Daily, saying, "I'm not certainly going to be the person to tell students to go or not to go into finance. There are certainly a lot of positive aspects to finance. Unfortunately, actual finance on Wall Street is only 20 percent of the pie. "So, what I would say to people is that if you are going into finance, go into it for the right reasons. Don't go into it because you think that it's the easiest career or because you think that it's the path you should take." Smith adds it's important for would-be Wall Streeters to follow their instincts. "The longer I've been in business and the longer I've been away from Stanford is that it's more important to follow your interests and your heart than what you think you should be going. I would encourage them to not lose track of their own ethical framework and to stay true to themselves no matter how long they stay in business. I would not encourage someone to go into something because it looks flashy, or that they're supposed to do it, or that society thinks it's the right thing to do." That sounds reasonable enough. For more: Related articles: Read more about: Goldman Sachs Also NotedSPOTLIGHT ON... George Soros pessimistic about hedge fund industry George Soros was one of the greatest hedge fund investors of all time, but he seems to have soured on the industry. He was interviewed by Business Insider in Davos and said most hedge funds will have a hard time beating the market because there are so many of them now, and because the fee structure takes a too-large chunk of profits. That's not going to go over well with a lot of younger hedge fund managers, but he's earned the right to speak his mind. Article Company News:
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Tuesday, January 29, 2013
| 01.29.13 | Bank of America board continues to morph
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