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2. Prosecutors crack down on virtual money firm

Yet another SAC Capital executive has been subpoenaed to testify before a grand jury, reports Bloomberg Businessweek.

Portfolio manager Anthony Vaccarino becomes the fifth executive at the hedge fund firm to receive such a subpoena in the on-going criminal investigation. He joins President Tom Conheeney, Chief Operating Officer Solomon Kumin, compliance head Steve Kessler, head of trading Phillipp Villhauer, and founder Steven Cohen.

This is certainly another sign that prosecutors and investigators are laying their chips on the table. The time is now, as they face two expiring statutes of limitations this summer, one for the Elan and Wyeth trades and one for the Dell trades.

In an odd way, the receipt of summons may hold a powerful silver lining. Some have suggested that it would be very odd for prosecutors to subpoena the target of an investigation, which means that the five men listed above may be out of scope as of now. Instead, it would appear that the government is going all out to bring criminal charges against the company. That's still conjecture at this point. There could be some big surprises ahead.

With deadlines looming, we'll get some clarity soon.

For more:
- here's the article

Read more about: insider trading, SAC Capital
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By Jim Kim

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3. Dimon's daughter dishes on the most awkward moment for women at work

In a sure sign that the criminal underworld has embraced the digital economy, prosecutors have cracked down hard on an entity called Liberty Reserve, which allegedly ran a global cybercurrency system that proved attractive to criminals.

Prosecutors in Manhattan call the operation the largest money laundering operation ever, and a prime example of why digital currency schemes should be closely regulated. At the very least, they argue that traditional AML measures should apply.

As noted by Wired, Liberty Reserve was incorporated in Costa Rica in 2006 and grew quickly to 200,000 customers in the U.S., but it never registered here as a money-remittance service. It still touted itself as the Internet's "largest payment processor and money transfer system," according to the complaint. The system required people to send money to so-called exchangers, who would forward the money to the company and give virtual currency to the depositor.

"Liberty Reserve required only a valid email address to open an account and initiate transactions. It charged a 1 percent fee for each transaction and, for an additional 75 cents, offered to hide a user's account number in transactions. Although the service had legitimate customers, the anonymity it provided attracted a large clientele from the criminal underground who relied on offshore Liberty Reserve currency exchangers to move their ill-gotten cash in and out of the financial system."

Seven men have been charged, and five have been apprehended, including the founder Arthur Budovsky.

For more:
- here's the article
- here's the complaint

Read more about: prosecutors, Enforcement Action
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By Jim Kim

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4. Cov-lite loans back in vogue

Jamie Dimon's daughter has penned an interesting piece of pop office anthropology in the Daily Beast, tackling a major workplace issue: The right of women to go to the bathroom in peace.

Sadly, this will not be easily achieved, given the cultural norms of the modern office place, which have turned the act into one of shame and secrecy. The daughter of the CEO and still chairman of JPMorgan Chase starts with a telling anecdote about a young worker at a financial services firm in New York City, who "brings her BlackBerry along while she does it, and sends an email during the experience so that she has an 'alibi.'"

Women on Wall Street especially, where the pressure is intense in every way, have a lot to grapple with.

"These women, and many others like them, are not partaking in a secret drug deal or plotting a crime. They're just trying to take care of an essential bodily function at the office. But for many women, the act of a bowel movement is enshrouded in fear and anxiety. Jill, 28, a Vancouver native now working at an insurance company in New York City, said that if she absolutely can't avoid the act entirely, she lifts her feet off the ground and props them up against the side of the stall to avoid the 'chance that the person next to me would recognize my shoes and forever hold in their heads that I was the girl' defecating in the ladies' room," Laura Dimon writes.

"Other women report going to different floors, or walking roundabout routes from their desk to the bathroom. And some say they've experienced the 'standoff,' when two or more women are in the bathroom, but all decline to do their business until the others leave—instead waiting awkwardly, in silence, writhing in emotional and physical discomfort, until someone surrenders," she notes.

So this would suggest a recruiting tool.

If you want the most talented women to work at your bank, you might be wise to offer some perks in this area. At a high executive level, personalized bathrooms would be a big draw. At lower levels, companies will have to get more creative. Of course, employees will find their own solutions. When in doubt, one can always flush strategically to cover certain sounds.

For more:
- here's the article

Read more about: jobs
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By Jim Kim

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5. Former Goldman Sachs partner aims for comeback

When the private equity bubble imploded back in 2007, the notion gained ground that cov-lite loans were passé.

Lots of articles were written predicting the demise of these loans, as issuers and private equity firms lost clout and investors demanded more protection. But we seem to have come full circle, as cov-lite loans are all the rage -- all over again.

Some may be wondering if they ever fell out of vogue. The bond market is on fire, and in some ways it is becoming a sellers' market again.

"Whether or not record bond and loan issuance points to a 'bubble' in the US corporate fixed-income markets, we do see evidence of a 'covenant bubble' driven by strong demand for higher-yielding instruments at a time of low interest rates," says Moody's Senior Vice President Christina Padgett, in a release.

She added that, "Credit metrics of US speculative-grade companies have held relatively steady over the past five years, suggesting that the quest for yield, rather than changes in debt issuers' underlying credit quality, is a primary driver of looser covenant terms."

Issuers seem to be having little trouble finding buyers for cov-lite and junk bonds with fewer protections. Moody's says institutional cov-lite loan volume approached $80 billion in the first quarter, close to the total for all of 2012. High-yield bond issuance is up 16.4 percent so far this year. At the same time, Moody's Bond Covenant Quality Index is at record lows.

The near-term outlook for bonds remains strong, but you never know when the market will shift. Perhaps it would be wise to get a grip on all covenants now.

For more:
- here's the article

Read more about: bonds, Cov-lite loans
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By Jim Kim

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