Wall Street Folly

The clip is only 15 seconds long.  Soros makes a funny and gets a good laugh from attendees of the GBF annual dinner.

2006 Nobel Peace Prize winner Muhammad Yunus, founder of Grameen Bank.

In what Reuters calls a shake-up of the top Lehman ranks, Michael Tory has replaced Anthony Fry as the head of its UK investment banking.  Tory joined Lehman late last year from Morgan Stanley where he was head of their UK investment banking.  Fry will focus on developing the firm’s UK client base.

Lehman names new head of UK investment banking - Reuters

Tags: Lehman Brothers

Next year could be a good one for vulture investors if Wilbur Ross is right.  He’s predicting a surge of bankruptcies next year:

Ross, dubbed the ‘King of Bankruptcy’ by Fortune magazine in 1998, said at a conference in London on Wednesday that defaults would rise to about 7 percent of all companies by the end of next year — one of the most bearish predictions in the industry — from about 1 percent now.

"The number of defaults will rise even in the absence of an economic downturn or interest rate increases," said the chairman of WL Ross & Co. LLC in a videoconference from his office in New York. "There will be some tragedies. When you pay higher multiples, you have less margin of error."

The value paid by the average European leverage lender has risen to 8.2 times a company’s earnings before interest, taxes, depreciation and amortization (EBITDA) from 5.2 times five years ago, Ross said.

Leveraged companies are more likely to default in their third or fourth year rather than during the initial years after an investment, and 2007 coincides with the end of the cycle of the 2002-2003 investments, Ross said.

‘King of Bankruptcy’ predicts rise in defaults – Reuters

Tags: Distressed

Vadim Benyatof, Credit Suisse’s managing director for central and eastern Europe, and three Romanian government officials will spend nearly three weeks in jail while prosecutors stage a criminal investigation of the sale of state-owned assets:

“The court admitted the request by prosecutors to put them under preventive arrest for 20 days,” Cazanciuc said in a telephone interview late yesterday.

Prosecutors said last week they were investigating Benyatov and seven other men for economic espionage related to the sale of government assets. Credit Suisse, Switzerland’s second-biggest bank, advised on the sale of Romanian oil and gas companies in 2004 and this year worked on the sale of the country’s remaining stake in a phone company.

The criminal investigation, the first involving international investment bankers in Romania in the past decade, comes as the country prepares to join the European Union on Jan. 1. The EU has repeatedly told Romania to crack down on corruption to make sure competition rules are respected.

“We have no reason to believe that any Credit Suisse employee has acted inappropriately,” Credit Suisse said yesterday in a statement e-mailed from London before judges in Bucharest approved the men’s arrest. “We take these accusations very seriously and are prepared to cooperate fully with the investigation.”

Credit Suisse Manager, Officials Face Romanian Assets Probe – Bloomberg

Tags: Credit Suisse, Legal

The Senate Finance Committee’s report on allegations that the SEC got in the way of investigating Pequot because of the John Mack connection could be issued as early as next February.  We thought that this thing would be wrapped up neatly but Grassley’s comment below makes us wonder what they’ve found that’s "generally "supportive"" of fired whistle-blower Gary Aguirre’s claims.:

Sen. Charles Grassley, R-Iowa, said in an interview that "we’re expecting early next year to have all of this wrapped up." He said the evidence turned up so far in the investigation into SEC’s probe of Pequot Capital Management was generally "supportive" of accusations by a former SEC enforcement attorney.

The attorney has said, among other things, that he was fired after his investigation got too close to John Mack, who currently leads investment bank Morgan Stanley.

SEC-Pequot probe to conclude early ‘07 – BusinessWeek

Tags: Gary Aguirre, John Mack, Pequot Capital

It was inevitable that the Goldman cleaners’ protest would make it to YouTube. Here’s footage of the demonstrators outside the company’s Fleet Street headquarters in the UK.  You hear sirens in the background as the protesters chant while they march, carrying their "Goldman Sucks" signs.  (1:12)

Tags: Goldman Sachs

More fallout from the Jessica Wolcott sextortion plot:  Pepsi Bottling exec Gary Wandschneider now finds himself without his high paying job, and more of her lies are uncovered:

"As of today, Gary Wandschneider no longer works for Pepsi Bottling Group," said spokeswoman Kelly McAndrew, who refused to say whether he was canned or quit his $6 million post as executive vice president for worldwide operations.

McAndrew also refused to say if an internal probe had found that the married Wandschneider, 54, used corporate e-mail for his admitted Web prowling.

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Tags: Craigslistspotting, Legal

DSP Merrill Lynch’s India country head, managing director Amit Chandra, is quitting at the end of the year to join a private equity firm:

Mr Chandra, DSP said in a statement, will remain with the firm for the rest of the year to ensure a smooth transition. His operational responsibilities will be taken over by Hemendra Kothari, the chairman, DSP Merrill Lynch, the statement said.

Mr Chandra is set to join a fund floated by Rajat Gupta, the former CEO of McKinsey & Co. A firm announcement of the size and details of the fund is likely to be revealed some time in December.

More and more investment bankers are leaving big-size firms to either form private equity funds or join global firms, such as 3I or Carlyle. Rajeev Gupta, Mr Chandra’s colleague in DSP quit last year to head Carlyle’s buyout group based in India.

Amit Chandra quits Merrill Lynch – The Economic Times

Tags: Merrill Lynch, Private equity

• Wall Street Losing Competitive Edge, Must Take Action
• Paulson-Backed Group Seeks Reduced Business Penalties
• Grasso Appeals for Jury In Civil Case Over Pay
• Citigroup aims to manage $40bn in Gulf by 2012
• Carlyle Seeks $4 Billion Funding for Taiwan Buyout
• NYSE to scrap listing fees on transferring issuers
• FSA urges more price transparency on hedge funds

More headlines below

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Wonder how many Jessica Wolcott types will respond to this filthy rich, married guy with a dirty mind "awash in the fruits of Wall Street" [we assume that doesn't imply he swings both ways].  Hope this guy is smart enough not to use a corporate email address…

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Tags: Craigslistspotting

This made us laugh:  McDonald’s wants your tykes to enjoy their happy meals and be able to work the calorie-laden feasts off at the same time.  So they’re installing kiddie exercise areas in some of their units.   They have a total of seven of them so far in California, Oklahoma, Colorado and Illinois.  Will a few minutes of exercise really work off the guzillion calories that a normal kid would want to consume?  They’re not exactly gonna be the ones ordering salads.  Who are they trying to kid?:

The fast-food giant is piloting the McDonald’s R Gym, a new in-restaurant exercise area designed to promote physical activity among children ages 4 to 12.

But nutrition experts warn it will take more than a few extra minutes of play time to work off the ill effects of a burger and fries.

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Tags: Restaurants

JP Morgan didn’t hold those Amaranth energy positions for very long.  Turns out that they sold them for $750 million less than two weeks after they took the distressed position off of the imploded fund’s hands.  Who did they flip them to?  It was Citadel, who partnered with JP Morgan in their purchase:

The proceeds helped New York-based JPMorgan cushion a third- quarter decline in trading revenue. Last week, Chief Executive Officer Jamie Dimon said the Amaranth transaction was a victory for his energy-trading department, which hasn’t produced consistent gains since beginning an expansion last year.

“We did spend a lot of time building our energy business and had we not, we would not have been able to do something like that,” Dimon said in a Nov. 20 speech before the CFA Society of Chicago. “We did fine. It was a very nice increment to fixed- income trading in the third quarter.”

According to the prospectus for the recently announced Citadel bond offering, Citadel didn’t do too badly on the Amaranth trade either, at least so far:

Citadel also made money from Amaranth. According to the 363- page document, a copy of which was obtained by Bloomberg News, Citadel’s two main hedge funds earned a 3 percent return on their energy investments in September, partly because of “the returns received in this transaction.”

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Tags: Amaranth, Citadel, JPM Chase

You’d think that after 45 years it’s a little late for a refund.  But the heirs of Charles and Marie Robertson, who made one of the largest university donations in history in 1961 — $35 million to Princeton – are going to court seeking return of the funds:

The money was supposed to help the Woodrow Wilson School of Public and International Affairs turn out U.S. government spies and diplomats.

But heirs of the Robertsons say the school hasn’t turned out enough government agents.

They sued in 2002 and are demanding the money back, now worth more than $750 million, thanks to investments and endowments. Arguments scheduled this week are largely technical and have to do with motions filed in the case. Any trial would be months — possibly years — away.

Family Asks For Return Of College Donation – AP via WXPI

Tags: Endowments, Lawsuit

There’s more information on Jessica Wolcott, the Craigslist tart who pleaded guilty to extorting thousands of dollars from Gary Wandschneider, a 54 year old Pepsi Bottling Group senior executive.  According to her lawyer, Susanne Brody, the extortion plot was hatched in anger after learning he was married. The New York Post reports a pattern of lies:

Months before Jessica Wolcott, 22, pleaded guilty to shaking down a Pepsi Bottling Group vice president, she hit the Web, claiming she was a multilingual high-paid marketer and hair model with a distinguished chemistry degree who wanted to fund everything from a furniture invention to a used-car purchase.

Online lender Jeff Danewitz said he "booted" Wolcott from his loan group last spring after she repeatedly changed her stories when lenders confronted her with serious questions about her claims.

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Tags: Craigslistspotting, Legal

The Donald may or may not have fired her last July depending on whose version of the story you believe, but Carolyn Kepcher now has a new gig — with Microsoft.  She’ll be a judge in a contest that helps the company find the best small business idea in America:

“It takes a big idea to create a big business,” Kepcher said. “And I’ve seen some ideas before.”

The winner of the Redmond, Wash.-based company’s "Ultimate Challenge” contest will get $100,000 in seed money, a storefront or other space in Manhattan for a year rent-free, and software to help get their business started.

Kepcher and fellow judges — maternity wear entrepreneur Liz Lange and Chris Caposella, a Microsoft vice president — began hearing ideas Tuesday in a computer-equipped recreational vehicle parked in midtown Manhattan.

Fired by Trump, she’s hired by Microsoft – Reuters via MSNBC

Tags: Donald Trump, Microsoft

That makes the company the largest bank in the world, at least as of last night’s close.   However, Citigroup still has bragging rights on size based on assets.

Based on reported shares outstanding, Bank of America’s market capitalization totaled $243.71 billion as of Tuesday’s close, while Citigroup’s totaled $243.52 billion, Reuters data shows.

Shares of Bank of America closed up 35 cents at $54.27, while Citigroup fell 33 cents to $49.56. Citigroup remains the largest U.S. bank by assets, with $1.75 trillion as of Sept. 30, followed by Bank of America, with $1.45 trillion.

Bank of America Market Value Tops Citigroup – Reuters

Tags: Bank of America, Citigroup

• NASD, NYSE Agree to Merge Some Oversight
• Citigroup Shakeout in China IPOs Began With Ren Exit
• Citigroup plans to incorporate in China
• Credit deriv. volatility seen rising -Merrill
• Citadel Says Hedge-Fund Profit Rose Fivefold in 2006
• Carlyle to Hire Investment Team of 15 for Middle East, Turkey
• New York Fed Taps Economist Dudley As Markets Chief

More headlines below

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Here’s another view of the cleaners who demonstrated at Goldman Sach’s Fleet Street HQ. This is a picture of the sit-in they staged in the lobby, complete with their "Goldman Sucks" signs.  They chanted "No wages, no peace." (Earlier today we showed the scuffle outside.):

Maria from Portugal was one of the cleaners at the protest. She works two jobs for £5.35 an hour. She said, “I have been a cleaner for five years. Most of the companies I’ve worked for don’t show cleaners any respect….

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Tags: Goldman Sachs

Hedge-fund investors could earn greater returns at a fraction of the cost, according to research by Cass Business School Professor Harry Kat, who designed software to automatically mimic funds’ trading profits.

Synthetic funds would have outperformed 82 percent of the 2,000 hedge funds and 500 funds of hedge funds studied by Kat, a former head of equity derivatives at Bank of America Corp. Most of the gains generated by hedge funds were eaten up by fees, typically 2 percent of a portfolio and 20 percent of profits, he found after studying 15 years of monthly fund results.

“In most cases, managers aren’t good enough to make up for the massive fees that they charge,” said Kat, a professor of risk management at Cass, part of London’s City University, in an interview. “The combination of excessive fees and minimal opportunity in the market makes alternative investments really doubtful in terms of their value for portfolios.”

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Tags: Fees, Hedge funds

Still upset about the low wages they’re being paid, cleaners at Goldman Sachs’ Fleet Street headquarters staged a protest today that turned into a scuffle.  Goldman workers were trapped inside the building as a result:

Around 40 cleaners, some carrying placards saying "Goldman Sucks", blocked the investment bank’s entrance and there were scuffles with security guards.

The cleaners are employed by one of Britain’s biggest building services companies, ISS, which is part-owned by Goldman Sachs.

They are demanding a pay rise for cleaners in the capital, many of whom are on the mimimum wage of £5.35 an hour.

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Tags: Goldman Sachs

In a deal that’s believed to be the first of its kind for a hedge fund, Citadel Investments is planning to sell up to $2 billion of senior unsecured debt.  Lehman and Goldman are managing the offering.

The offering of five-year notes is the latest attempt by a hedge fund group to tap public markets and establish itself as a mature financial services company. Fortress Investment Group, which has $26bn in hedge fund and private equity assets under management, filed this month for an initial public offering that would value it at $7.5bn.

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Tags: bonds, Citadel, Hedge funds

Next mayor of New York? We thought that the ridiculousness of the idea of Donny Deutsch running for mayor was a one shot deal confined to an interview he gave last spring.  Seems like he still thinks he’d be just great in the position:

Apparently, Michael Bloomberg has started a trend that is only just getting started. The latest media mogul to publicly float dreams of grandeur isn’t AOL’s Richard Parsons, but none other than ad executive-turned-TV host Donny Deutsch. In a recent interview with political talking head Chris Matthews, Deutsch inexplicably, with absolutely no prompting from Matthews, starting talking himself up as the next mayor of New York City! Fortunately, we may be spared because according to Deutsch, “I would be a great mayor of New York. I would take the best of Giuliani and the best of Bloomberg. But I can’t run. This political system does not allow for great leaders.” This was said with a straight face, deadpan and no punch line. Which, of course, means we should expect Deutsch to run for New York mayor sometime in the next decade. Even scarier: He just might win.

Perish the thought.

Hype Stalker – New York Press

Tags: Donny Deutsch

Thanks to the New York Post we now know who the "senior executive" is who was on the receiving end of Jessica Wolcott’s Craigslist extortion attempt.  His name is Gary Wandschneider, Divisional Executive VP at Pepsi Bottling.

"I’m sure this will be an unpleasant surprise. I’m sure when your wife finds out that you’ve been looking for a fill-in for her . . . it will be unpleasant for her, too," Jessica Wolcott, 22, e-mailed multimillionaire exec Gary Wandschneider, 54, in August.

"You are disgusting . . . you are pathetic," Wolcott continued in the August e-mail.

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Tags: Craigslistspotting, Legal

New data from Infovest21 quantifies what we all knew: Hedge fund CEOs and portfolio managers can make a lot of dough when they strike out on their own.  Duh.  For an average fund that manages at least $500 million, the CEO took home $4.5 million while its portfolio manager reaped $2.5 million.  The worst paid hedge fund executives according to Infovest21 are the lawyers and chief risk officers, earning in the $400K-$600K range. Here are some more numbers, some of which surprised us on the low side.:

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Tags: Compensation, Hedge funds