Editor's Corner: A new look at stock research industry structure Also Noted: Spotlight On... Retail clients may not jump at hedge fund mutual funds News From the Fierce Network:
Today's Top News1. Stakes rising for Mathew Martoma
At this point, it's probably too late in the game for Mathew Martoma to do an about face and decide to cooperate with criminal prosecutors. The government seems resigned to his lack of cooperation, as they have proceeded with criminal charges against SAC Capital, leaving the top dog, Steven Cohen, uncharged personally. Thus, there is no chance that Cohen will see the inside of a prison due to insider trading (as of now anyway). As for Martoma, he might not be so lucky. By not agreeing to turn states evidence, he will be in for rough treatment. Prosecutors need to make him an example. And if he is found guilty at trial, the chances are great that will do jail time. In fact, the trial would nothing less than a rank failure for the government if Martoma weren't sent to jail for many years. The government has given itself some more opportunities, filing an updated indictment that includes new charges. The new indictment adds a claim that Martoma corrupted another, unnamed doctor, in addition to the elderly Dr. Sidney Gilman. Prosecutors allege that the "second doctor met with Mr. Martoma as a paid consultant, providing him with secret information. There was a quid pro quo arrangement, the government said, with Mr. Martoma, a health care industry specialist, promising to assist the doctor in obtaining additional clinical trial work," according to DealBook. "The doctor has not been charged in the case and was described only as a 'co-conspirator.' " The government said alleges that "an unnamed financial services firm linked Mr. Martoma with another doctor who was involved in the Elan and Wyeth drug trials. The updated charges mesh with the accusations contained in the S.E.C. lawsuit brought against Mr. Cohen last month. In that civil complaint, securities regulators said that Mr. Cohen knew of a second doctor who might have had secret information about the clinical trials. Rather than raise concerns about the fund's possible possession of confidential information, Mr. Cohen encouraged Mr. Martoma to talk further with the doctor, the government said." For more:
Read more about: insider trading, SAC Capital 2. Bank of America responds to intern's death
We have urged caution when it comes to the death of Moritz Erhardt, the 21-year-old intern at Bank of America in London. It's really hard to pin down an exact cause of death so soon after the incident. The long hours at Bank of America may have played a role; various reports say he stayed up all night "eight times in two weeks" and worked "until six o'clock in the morning for three days in a row" leading up to the day he died. His epilepsy may have played a role when he collapsed in a shower. We just do not know. The British media is having a field day, however. The Independent headlined a story: "Slavery in the City: Death of 21-year-old intern Moritz Erhardt at Merrill Lynch sparks furore over long hours and macho culture at banks." One intern was quoted: "We all work long hours, but the guys working regularly until 3am or 4am are those in investment banking. People working in markets will have to be in at 6am but not stay as late, so what time you can leave the office depends on your division. "You're only doing it for up to 10 weeks so there's a general acceptance of it. I see many people wandering around, blurry-eyed and drinking caffeine to get through but people don't complain because the potential rewards are so great. We're competing for some very well-paid jobs." Bank of America was right to set up a "senior working group" to review how interns and junior employees are treated by the bank. My sense is that the London unit in particular should set up some standards about what is expected of interns. Bankers would be wise to set up some reasonable expectations. They would be even more wise to leaven the experience with plenty of social events and fun activities. These are internships after all. Shouldn't they be more like law firm summer internships, which tend to be more fun while still giving the partners a glimpse of their work skills? Now first year associated and other fresh employees, well, the hours are going to be long. For more: Read more about: internships 3. Credit rating may not take huge hits
The idea that the government should no longer bail out banks once they run into trouble has become a perennial issue for bank bond holders. The chances that banks will receive extraordinary support, as they did in the aftermath of the financial crisis, have declined to the point that credit rating downgrades may be in order, at least in the minds of credit rating companies, such as Standard & Poor's and Moody's. At S&P, the following banks were put on watch for possible downgrades: Bank of America, Wells Fargo, JPMorgan Chase, Citigroup, Bank of New York Mellon, State Street, Morgan Stanley and Goldman Sachs. Moody's has said that ratings for Goldman Sachs, JPMorgan, Morgan Stanley and Wells Fargo are on review with downgrades possible. Meanwhile, Bank of America and Citigroup are merely on review, with the direction uncertain. But there may be reason to think that the effects of the reduced likelihood of public support will be offset by the likelihood that envisioned "bail-ins" will actually work. The government has been working toward a system of orderly wind-downs in the event that banks experience severe turbulence, per Dodd Frank. That effort seems to be bearing fruit. "Over the last year, regulators have proposed forcing debt investors to rescue tottering banks, instead of taxpayers - when a bank starts to falter, some of its debt would be turned into equity under the proposed rules. Regulators at the Federal Deposit Insurance Corp and the Federal Reserve are expected this fall to announce minimum amounts of bond financing for bank holding companies to ensure the so-called resolution plans would work," notes Reuters. For more: Read more about: Bank Credit ratings 4. Goldman Sachs banker charged with rape
Once again, a banker has thrown away his career. Jason Lee, the 37-year-old MD in the equity capital group at Goldman Sachs, has been arrested in East Hampton and charged with first-degree rape. The charges stem from allegations that the 37-year-old sexually assaulted a 20-year-old woman at his rented home on Long Island. He has been placed on leave, and his life will never again be the same. In terms of sheer tawdriness, this exceeds even the case of William Bryan Jennings, the Morgan Stanley executive who was charged with stabbing a cab driver while uttering hate speech near his home in Darien. To be sure, the charges against Jennings were eventually dropped. And it's possible that the charges against Lee may be dropped soon. In the end, whether the allegations are true or not, the career damage has been done. Mug shots have hit the Internet. Both men's reputations have been tarnished in ways that cannot be cleansed. "But those charges were dropped" may end up being a career-long refrain, not that it ought to be stamped on an epitaph. The alleged assault apparently took place at a raucous pool party at the four-level home, which rented for $33,000 a month, according to some reports. The police say "nudity" was involved in the festivities. The police were summoned by reports of a disturbance. While there, they determined that a sexual assault had taken place and subsequently arrested Lee. He posted $20,000 in bail, handing over cash in an envelope, and was released. His lawyer says his client is innocent. At this point, there is no reason to rush to judgment. This may be a lot of bull (along the lines of charges against the Duke Men's Lacrosse team a few years ago), or it may be a serious crime. The investigation will hopefully get to the truth quickly. If he is guilty, Lee deserves to be punished accordingly. But even if he is innocent of the rape charge, he is still guilty of stupidity for letting this happen. He had a lot to lose. For more: Read more about: Goldman Sachs 5. Wells Fargo faces great marketing challenge
"It's a great asset ... the only other company that has anything like it is Budweiser with the Clydesdales." So says the executive in charge of marketing at Wells Fargo, speaking about the bank's stagecoach logo. That may be a stretch. The horse-pulled stagecoach may not have truly hit iconic status. The issue really is whether the Wells Fargo marketing and advertising folks can put the logo in the same league with other icons. And that's a neat way of segueing into the larger issue at the bank, which is this: as the bank morphs from a regional bank into a truly national bank, the marketing function has to morph as well. Ad Age takes a look at the bank's efforts and comes away reasonably impressed. "We're broadening the role of marketing," the CEO was quoted. "A lot of the product innovation is going to happen in the white space that's between products or channels, and our corporate marketing group sees all that -- we see what our customers want, and we see where there are gaps or space for us to play." The bank seems to be betting big on social media, which is tucked in its entirety under the marketing umbrella at the bank. The bank has put together a social-media steering committee, made up of representatives from corporate communications, marketing, legal, and various business units. "It meets biweekly and serves as a social-media governance forum and screens and selects tools and technologies. A second group more broadly representative of the company's businesses meets weekly to strategize on social-media content." In the end, the jury is still out on Wells Fargo as a premiere national brand. Hopefully, it'll likely get there sooner rather than later. For more: Read more about: marketing, Bank Brands Also NotedSPOTLIGHT ON... Retail clients may not jump at hedge fund mutual funds So-called hedge fund mutual funds of all stripes are all the rage apparently. But some have raised some obvious concerns that retail clients will no doubt be forced to explore. The performance of hedge funds over various time spans has not been stellar. And the fees are super high compared with other mutual funds. All in all, it seems like a fund of hedge funds approach for the retail crowd. Of course funds of hedge funds have not fared well institutionally. It's hard to see a better outcome at retail. 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 You may enjoy these publications from FierceMarkets: | ||||||||||||||||||||||||||||||||||
Monday, August 26, 2013
| 08.26.13 | Bank of America responds to intern's death
Subscribe to:
Post Comments (Atom)
No comments:
Post a Comment