Today's Top Stories Also Noted: IBM News From the Fierce Network:
Today's Top News1. Is Michael Steinberg about to be criminally charged?
For months now, federal prosecutors have been weighing whether to bring criminal charges against Michael Steinberg, a former technology portfolio manager with SAC Capital's Sigma Capital division and confidante of Steve Cohen. He has long been thought to be the ultimate prize in the insider trading investigations. Steinberg had been named previously by prosecutors as an unindicted co-conspirator in a criminal prosecution involving convicted hedge fund traders, Todd Newman and Anthony Chiasson. Any charges would likely involve trading in Dell, as evidence in trials made clear that Steinberg and his colleagues discussing Dell's earnings performance before they were publicly released. Trading in Nvidia may also be included. Jon Horvath would likely been a prime witness if a case against Steinberg gets to trial. Horvath pleaded guilty in September, saying he passed confidential insider information about the technology stocks to Steinberg, who was his supervisor, and another second SAC portfolio manager, thought to be Gabe Plotkin, according to media reports. So it's fair to say that criminal prosecutors continue to slowly work their way up the food chain at SAC Capital. As of now, it's not a sure-shot that Steinberg will be charged, but he's anticipating the worst. According to the New York Post, he has moved out of his home on the Upper East Side and into a hotel. The idea is to spare his family and himself the ignominy of being arrested in front of loved ones. His lawyer will try to wrangle a deal whereby he turns himself in. There will be plenty of other opportunities for perp walks. This is a strategy employed by Chiasson, not too long ago. "When FBI agents showed up at his East 96th Street apartment at the crack of dawn, the doorman handed them a note, telling them to call his lawyer, sources said. Later that day, Chiasson turned himself in to authorities," the article noted. For more:
Read more about: insider trading, prosecutors
2. Martoma may still have time to turn on Steven Cohen
The announcement that SAC Capital has settled civil charges that it traded on insider information for $616 million is not the best news for Matthew Martoma. Martoma is the portfolio manager who stands criminally accused of acquiring insider information about a drug and sharing that information with Steven Cohen, CEO of SAC Capital, which then traded on the information to spectacular gains. Martoma has decided to fight these charges and take his chances at trial, steadfastly refusing to testify against his old boss. But the bulk of the SEC's complaint against SAC Capital was about the drug trades that involved Martoma. Now that the controversial hedge fund has settled the charges without admitting any guilt, what does that mean for Martoma? His hand certainly has not been strengthened. There are two sides to the transaction. The conventional wisdom all along has been that prosecutors could not make a criminal case against Cohen with a direct witness. Martoma, it seemed, was doing Cohen quite a favor by not testifying against him. Had SAC Capital admitted to any wrongdoing it would have amounted to selling Martoma down the river. As of now, it's unclear if anything has changed for Martoma, but there is still time for Martoma to cut a deal and turn state's evidence. All this would have to happen relatively quickly. Fortune notes that the statute of limitations is running out, and the government would have to bring a case against Cohen by the end of the year. It is still possible but perhaps not likely. For more: Related articles: Read more about: insider trading, SAC Capital 3. Will Jamie Dimon lose JPMorgan chairman job?
Jamie Dimon wasn't at the last week's hearing into the JPMorgan London Whale "hedging" fiasco, but he took a lot of fire in absentia. He has personally taken some big hits, including an assertion by JPMorgan's former CFO that Dimon ordered the bank to stop sending various reports to the OCC about the matter. The danger for him now is that all the criticism might snowball. DealBook is already reporting that investors are growing weary of what one called his "off-putting arrogance." In addition, two board members are concerned "about the repercussions of Mr. Dimon's statements on an earnings call last April that dismissed news reports about the trades as a "tempest in a teapot." Some have suggested that Dimon direct role in the incident has been underplayed. All this comes at a time when shareholders have succeeded in placing a ballot measure in the proxy this year, calling for a split in the CEO/chairman job. The question now is whether all these problems for Dimon, who holds both jobs, will result in him being stripped of the chairman title. Analyst Richard Bove spoke with FOX Business and said, "I think they should definitely be broken up. I don't agree that the chairman and CEO should be the same person and even though I think [JPMorgan Chase Chairman and CEO] Jamie Dimon is probably the best manager, or close to being the best manager of a bank in the United States, I don't believe he should have both roles of chairman and CEO. I think there has to be regulation of banks both internally which is supposedly the Board of Directors and externally which is all of these agencies that went to sleep before 2008 and didn't do their jobs." It will be interesting to see how many shareholders agree at the annual meeting. Dimon has already had his 2012 compensation cut in half. But there could be more consequences, despite the bank's strong results as of late. For more: Related articles:
Read more about: CEO, chairman 4. PIMCO employee plays hardball
DealBook has reported on what appears to be a case of high-stakes employee-vs.-management drama playing out at fixed-income powerhouse PIMCO. A former executive, Jason Williams, recently filed a lawsuit against the company after he was fired, alleging all sorts of wrongdoing, including attempted insider trading, and wrongful termination. The complaint painted a very unflattering portrait of the firm, to say the least. But then just three days after the suit was filed, Williams withdrew his suit, and he has entered talks with PIMCO to amicably resolve the situation. You can imagine the human drama in such a situation, pitting an aggrieved employee who took his concerns to management and the compliance department only to be rebuffed and possibly retaliated against (as he claimed in his complaint). Williams appears to have the upper-hand, as he has forced the company to the bargaining table. But the question for PIMCO is whether the damage has been done. The fact that the dispute has hit the media not a good sign. The dirty laundry has been aired. Perhaps more disconcerting for PIMCO management is the fact that Williams already reported what he saw to regulators. In his complaint, Williams suggested that Sigtarp has opened up an investigation. What will probably happen from here is that the company will agree to a decent settlement that satisfies Williams, who will then agree not to talk about any of it to anyone. But if his charges were explosive enough, Sigtarp regulators may continue with their probe. In any case, this is what high-stakes corporate in-fighting is all about. It is not for the faint of heart. For more:
Read more about: PIMCO, lawsuit 5. A protracted war over Herbalife?
The Deal Professor has weighed in on the hedge fund war over Herbalife. He came to the conclusion that, "Without someone buying the company, it is essentially a stalemate. The only way out appears to be over time as each quarter unfolds and Herbalife's model holds up under Mr. (William) Ackman's scrutiny — or doesn't. Let's face it, without something to stop the attacks, the company is going to undergo strain as time goes on and the questions and suspicions persist. But this could take years." His view is predicated in part on the assumption that a meaningful short squeeze will not materialize anytime soon, given the plentiful shares available for shorting purposes among other things. "So, it's unlikely that Mr. Ackman will be forced into a short squeeze without someone buying the entire company. Except for Mr. Icahn, it is hard to see anyone making a bid, given the uncertainty and the unwillingness of a bank to finance an offer. Certainly, a private equity firm would not want to take the risk." But will the winner be determined only after several years? The battle certainly will likely not end quickly, though Ackman has land a few recent blows. He gave a presentation last week comparing Herbalife to Fortune Hi-Tech marketing, which was shut down by regulators. In any case, Ackman's $1 billion short position is not free, or even cheap. In fact, the costs could really spike over time. It's unclear how much his prime broker, Goldman Sachs, is charging him in interest and fees, but it's fair to say that the bank is in this business to make money. At the same time, while shares are plentiful on the market, if the short position loses value over time, the prime broker is likely to ask for more collateral, which could be quite costly if the stock soars. So a massive spike in the shares in the near term may be enough to prod Ackman to reduce his position. Then again, he is a proud man, and he may be willing to hold onto his bet no matter what the cost. The Deal Professor may well be right, but it's fair to say that a protracted war could end up being very costly to at least one of the combatants. For more: Related articles:
Read more about: short bets, William Ackman Also Noted
SPOTLIGHT ON... Investigators look at wash trades The on-going scrutiny of high-frequency trading practices has morphed toward wash trades in the futures market. The idea here is that high-frequency trading techniques might allow for trading at faster-than-lightening speeds, evading detection. The CFTC is investigating suspected wash trades by in futures contracts tied to crude oil, precious metals, agricultural commodities and the Standard & Poor's 500 stock index, among other underlying instruments, reports Reuters. Article Company news:
©2013 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: | ||||||||||||||||||||||||||||||||||||||
Tuesday, March 19, 2013
| 03.19.13 | Is Michael Steinberg about to be criminally charged?
Subscribe to:
Post Comments (Atom)
No comments:
Post a Comment