Also Noted: Spotlight On... Fairholme opens hedge fund to institutions News From the Fierce Network:
Today's Top News1. Karen Strauss Cook: A true pioneer passes away
Karen Strauss Cook wanted to work as a trader, and she refused to take no for an answer. She stubbornly persisted back in 1975, when "she paid an unsolicited visit to the headquarters of Goldman Sachs, resume in hand, and drew the attention of then-general partner Robert Rubin, the future U.S. Treasury secretary, by refusing to accept a generic referral to human resources. She became the first woman hired in Goldman Sach's Equities Division, and the firm's first female trader," according to Bloomberg. Strauss Cook passed away at her home in Manhattan this month, a victim of progressive supranuclear palsy, a neurodegenerative brain disease that she was diagnosed with in 2008. Strauss Cook left Goldman Sachs in 1987 "to spend more time with her sons, then 2 and 4, and later to cofound an executive-search firm geared to helping women find part-time work in finance." More recently she had been working with Michael Steinhardt, the hedge fund pioneer. She will be honored soon by 100 Women in Hedge Funds for her pioneering career. In the end, you have to love what she was able to do with her career. She bucked the odds and then had the guts to move on to greater glories, all on her terms. Her legacy will endure. For more:
Read more about: traders, Gender Discrimination 2. SEFs creak to life amid government shutdown
It's fair to say that the government shutdown came at an inauspicious moment for the new derivatives market that was mandated by Dodd Frank. After years of bickering and lobbying, new swap execution facilities (SEF) creaked to life, amid an escalating political battle that has shut down the government. So what did Gary Gensler, the former Goldman Sachs executive and now head of the CFTC do? "With most of the staff at the Commodity Futures Trading Commission's Washington headquarters on furlough, Gensler, in his final months on the job, had to pick up the phone and call around to make sure the system was working. He pronounced himself satisfied," according to Bloomberg. He told the news service: "It was a very good start. Though the CFTC is in darkness with the shutdown, we've been able to bring some additional light to the marketplace." To be sure, the SEFs got off to a cautious start. Some firms sent only test trades. But others dipped their toes in for real. Bloomberg's multi-asset SEF, for example, saw more than 110 trades executed on the first day by more than 50 firms globally across every asset class Bloomberg's SEF offers, including interest rate swaps, credit default swaps, foreign exchange swaps and commodity derivatives. Total volume was more than $6 billion with $1.5 billion in interest rate swaps. Volume more than doubled on day two, with more than $13 billion in transactions. At some point, one would think that more participants will feel comfortable enough to transact more on these platforms. Unfortunately, "we have no ability at this point in time to monitor markets, to do surveillance and investigations," Gensler was quoted. "We're but a skeleton staff. In many departments we have no people at all. And in others, we have people to just insure the technology and property is secure." A bigger milestone looms: The move to central clearing, the very heart of the reform effort, is scheduled to go live on October 23. For more: Read more about: Swap Execution Facilities, SEFs 3. Bank of America sued by hockey coach
Big-time trials featuring celebrities tend to generate lots of attention, which might be bad news for Bank of America right now. It is embroiled in a courtroom showdown pitting it against no less that the head coach of the Philadelphia Flyers. Peter Laviolette says he had just led the Carolina Hurricanes to a Stanley Cup championship in 2006 when Bank of America approached him with an investment concept, according to Courthouse News Service. "At the time, and still today, the couple owned a home in Raleigh, N.C., and two homes in Florida. Peter Laviolette and his wife, Kristen Laviolette, say the bank advised them 'to leverage all of the available equity in the properties, including their primary residence, through several high-interest loans and then to invest these loan proceeds in other purportedly sound, but ultimately high-risk, investments.' " He later sued the bank, charging its wealth advisors sold him the investments based on "artificially inflated values for their properties and an unreasonable rate of return on the investments." The investments "not only failed to produce the projected high rate of return needed to cover the loan interest, they utterly collapsed, resulting in a loss of the principal investment as well," according to the complaint. The couple seeks at least $3 million in damages for the fraud, plus rescission of the three loans. All in all, it seems a like a fairly generic case, one that the bank should've settled. It's unclear if this first went to arbitration or not. For more:
Read more about: Bank of America, Lawsuits 4. Twitter IPO, bragging rights on the line
The fact that Goldman Sachs has won the top spot on the Twitter IPO tombstone has been much discussed, mainly in the context of Morgan Stanley, which been seen as the top investment banker to Silicon Valley firms. The fact that Morgan Stanley, and JPMorgan, have also been tapped as lead underwriters lessens the sting a bit, but not completely. Morgan Stanley especially wanted to be in the driver's seat. The Twitter deal certainly has implications for the IPO league tables so far this year, one of which (from Thomson Reuters) was reproduced by DealBook: 1. Goldman Sachs, 69 offerings, $8.1 billion in proceeds 2. JPMorgan Chase, 65 offerings, $7.2 billion in proceeds 3. Morgan Stanley, 60 offerings, $7 billion in proceeds 4. Citigroup, 60 offerings, $6.3 billion in proceeds 5. Deutsche Bank, 57 offerings, $5.7 billion in proceeds 6. Credit Suisse, 68 offerings, $5.7 billion in proceeds 7. Bank of America Merrill Lynch, 56 offerings, $5 billion in proceeds 8. Nomura, 26 offerings, $4 billion in proceeds 9. Barclays, 42 offerings, $3.3 billion in proceeds 10. UBS, 38 offerings, $3.1 billion in proceeds So far, all these firms have been tapped by Twitter except for Citigroup and Credit Suisse. Eventually, one would expect them to get in on the gravy train to some degree. There will eventually be many more underwriters. The really big competition at the moment pits the NYSE against the Nasdaq. Despite numerous media reports that Twitter has selected NYSE as its listing venue, a winner has yet to be confirmed in the official documentation. The most recent S-1 does not name a listing venue. But an announcement cannot wait for much longer. It's fair to say that the NYSE has made inroads on the Nasdaq's traditional strength, technology companies. Winning Twitter might prove to be a watershed moment. For more: Read more about: league tables, IPOs 5. Controversial judge to play huge role in JPMorgan settlement
Judge Denise Cote doesn't conjure up a lot of warm and fuzzy feelings in Wall Street legal circles. Fairly or not, she has acquired a reputation as being anti-bank, especially when it comes to the mortgage misrepresentation claims lobbed by the FHFA. The Financial Times put it succinctly: "In 2011, the Federal Housing Finance Agency, a government regulator, accused JPMorgan and more than a dozen other banks of selling mortgage-backed securities packed with loans made to uncreditworthy borrowers. The banks hired dozens of the top lawyers in New York and Washington. Those lawyers were dismayed, later horrified, that the case fell to Judge Cote in district court." She proceeded to "rule against the banks so many times" that the banks asked an appeals court to intervene. Despite many protests, the appellate court has never acted on such requests, and JPMorgan and other banks are basically stuck with her as the FHFA's case wends through the system. In the end, perhaps the banks distaste for the judge will hasten the settlement process. JPMorgan seems willing to pay in the $11 billion range. The bank has been negotiating in Washington ---the CEO of the bank and the U.S. attorney general have been personally involved---but the deal will eventually have to go through her. For more: Read more about: Judge, trial Also NotedSPOTLIGHT ON... Fairholme opens hedge fund to institutions Bruce Berkowitz made his name as mutual fund manager. But there are certain charms that lesser regulated vehicles offer proved to be too powerful. The president of Fairholme has started up a hedge fund, now open to institutional investors. It will be interesting to see how he fares. One innovation: he will not charge management fees, only performance fees. Many institutions will raise their brows. Article Company News:
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Tuesday, October 8, 2013
| 10.08.13 | SEFs creak to life
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