Wall Street Folly

The latest subprime victim: Standard and Poor’s president Kathleen Corbet has resigned  / been shown the door as criticism grows over that company’s role in the subprime meltdown.  Devin Sharma is her replacement:

McGraw-Hill Cos., the parent of Standard
& Poor’s, said in a statement yesterday that Corbet, 47, resigned to spend
more time with her family. Her exit isn’t related to the current credit- market
turmoil, Steven Weiss, a New York-based spokesman for the company, said in an
interview. Sharma, 51, is executive vice president of investment services and
global sales.

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Tags: Credit Crunch, Ratings, Revolving Door

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Can Mark Cuban dance?  We’re all gonna find out on this season’s "Dancing With the Stars". The latest cast was announced yesterday and it included the always outspoken billionaire / Dallas Mavericks owner, even after his having undergone recent hip replacement surgery.  Rumor has it he taught disco dancing in college though, so maybe he really can dance.  According to the Dallas Morning News:

He’s our first billionaire!" is how
the show’s host, Tom Bergeron, preferred to put it.

Hey, Tom: Don’t be fooled by the hip
replacement. Cuban isn’t simply Warren Buffett with an attitude.

You TV types have no idea what you’ve
gotten yourself into this time. On American Idol, they occasionally toss Simon
Cowell a no-talent schlub he can eviscerate, just to keep his teeth sharp.

If that’s what they intended in Cuban’s
case, they need to know that the intended sacrifice will bite back.

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Tags: Entertainment, Mark Cuban

Asleep at the switch?:  Contgratulations to CNBC for its timely reporting (NOT!).  Here’s some of the sequence of events:

12:18     *NERVE GAS DISCOVERED IN OFFICE DESK AT U.N., EVADUATION UNDERWAY ABC SAYS  (Bloomberg)
12:19     *VIALS OF NERVE GASA DISCOVERED IN OFFICE DESK AT U.N>, ABC SAYS      (Bloomberg)
12:19     Nerve gas discovered at UN, evacuation underway, ABC says – Bloomberg     (Briefing.com)
12:20     Mkt averages drop on 12:19 nerve gas headline… Dow comes in 40 pts, SPX drops 4 in past few minutes (Briefing.com)
12:23     Follow up on nerve gas story — equity markets coming down as story circulates… Dow -70 points since story hit ABC, Naz -16 points

    ABC reported on their website blog about 20 min ago that United Nations weapons inspectors discovered six to eight vials of a dangerous nerve gas, phosgene, as they were cleaning out offices at a U.N. building in New York this morning, federal authorities tell the Blotter on ABCNews.com. The federal authorities said the office, in a U.N. building near headquarters, was being evacuated and the White House had been notified at 10 a.m. New York police and fire officials said federal authorities had not notified them of any problem at the U.N. building, as of 11 a.m. A U.N. spokesperson said a statement would be issued shortly.    (Briefing.com)

12:40  CNBC Fiiiiiinally reports the story.   

Tags: CNBC

Warren Buffett is another year older today — 77 years young.

Happy Birthday!

Tags: Bill Gates, Birthdays

In a sign of how quickly investment banks
are moving to scale back businesses hit by the turmoil, RBS said it had shed a
quarter of the just over 20 staff on its collateralised debt obligation team,
which repackages mortgage-backed securities and other instruments. Rick Caplan,
co-head of CDOs at RBS Greenwich Capital, the bank’s US capital markets
subsidiary, left two weeks ago as a result of the cutbacks.

The reductions at RBS mark a sharp reversal
from the expansion of recent years, when the bank beefed up its CDO team to take
advantage of demand from investors for new structures. CDO volumes jumped 134
per cent in 2006, according to RBS Greenwich’s annual review, and the bank
ranked in the top three underwriters of CDOs based on asset-backed securities.

RBS staff in US hit by subprime turmoil - Financial Times

Tags: CDO, investment banking, Revolving Door

After being a good boy for the year required by the government, all remaining charges against former Credit Suisse banker Frank Quattrone have been officially dismissed:

The decision today came four years after Quattrone was accused of obstructing
justice and 17 months after his conviction for the crime was reversed. Last
August, the government agreed to drop its case if Quattrone, 51, didn’t break
the law for a year.

“The fed’s criminal casebook is now closed,” said Jacob Frenkel, a former
federal prosecutor now in private practice in Rockville, Maryland. “With the
one-year clock having run, there is nothing left hanging over Mr. Quattrone’s
head.”

Frank Quattrone’s Criminal Case Is Formally Dismissed – Bloomberg

Tags: Credit Suisse, Frank Quattrone, investment banking, Legal

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After weeks of bad to worse news over subprime losses, Basis Capital pulled the plug on its Basis Yield Alpha Fund and put it into bankruptcy.  Liquidation to follow.  Creditors include JP Morgan, Goldman, Citigroup, Morgan Stanley, Lehman and Merrill, all of which had filed notices of default against Basis in June:

The Sydney-based firm’s fund asked a court
in the Cayman Islands for permission to liquidate its assets, according to a
petition filed in New York yesterday. The George Town, Grand Cayman-based fund
has assets and liabilities of more than $100 million, according to the petition,
which asked a federal bankruptcy judge to bar lawsuits in the U.S. while it
liquidates in the Caymans.

Basis Yield Alpha has fewer than 49
creditors, according to the petition, which was filed under Chapter 15 of the
U.S. bankruptcy law. Using Chapter 15, a foreign-based company can win
protection from U.S. creditors while it liquidates or reorganizes overseas.

Judge Robert Gerber in Manhattan will hear a request on Sept. 6. to temporarily
bar U.S. lawsuits while the company makes its case for permanent Chapter 15
protection. Today, Basis was granted a restraining order protecting it from
lawsuits until that hearing.

Basis Files for Bankruptcy Protection Over Subprime Losses – Bloomberg

Tags: Bankruptcy, Credit Crunch, Hedge funds, Toe Tags

Throwing water on a Financial Times report that they were planning to sell a minority stake, Renaissance Technologies issued a denial:

"We are not in discussions and there are no plans," a spokesman for the firm said. "There is no truth to the story."

So much for that.  At least for now.
Renaissance Tech says no plans for stake sale – Reuters

Tags: Hedge funds, Jim Simons, Renaissance Technologies

According to Page Six, while the CNBC and the world seem to fawn over so called "Money Honey" Maria Bartiromo and rising star "Street Sweetie" Erin Burnett (who seems to now be overshadowing her), the other femmes of CNBC aren’t so happy.  Why?  CNBC is said to be lavishing MB and EB with rich perks and attention that aren’t also flowing to the other ladies.

If rumors of all of this infighting are true, we smell defections that couldn’t be more timely.  We hear Rupert Murdoch is hiring….

A source says reporters including sexy
blonde Melissa Francis, who covers energy, have complained to CNBC suits that
while they get zip, Bartiromo and Burnett are treated like princesses – with
massive promotion, regular gigs on the "Today" show and "NBC
Nightly News," perks such as limos and gushing quotes from network brass in
newspaper articles.

"The catfight that started with Maria
being jealous of Erin’s rise has spread down the line. Now all of the other
female reporters are getting p – - – ed off," our insider said.

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Tags: CNBC, Erin Burnett, Fox Business Network, Maria Bartiromo, Rupert Murdoch

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London based Cheyne Capital’s $6.3 billion SIV vehicle, Cheyne Finance, is the latest credit market meltdown victim.  The company told investors that it had breached funding restrictions, with the consequence ultimately being a wind down of the fund.  As of last week, the company had drawn down $275 million of bank lines leaving it with more than $1 billion in cash….

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Tags: Cheyne Capital, Credit Crunch, Derivatives, Hedge funds

Former Goldman Sachs analyst, Harvard
educated ballroom dancer extraordinaire and wannabe
novelist/screenwriter Eugene Plotkin, who masterminded last year’s well
publicized global insider trading ring featuring strippers,
a Croatian seamstress, a
U.S. Postal worker, BusinessWeek employees, a
Russian bath house and oh so much more, finally pleaded guilty.  (Yah,
we know….that was one very long sentence!):

Plotkin admitted today to one count of
conspiracy and eight of insider trading. He faces a maximum of 165 years in
prison on all counts, prosecutors said. He agreed to forfeit $6.7 million.

“I understand what I did was wrong and against the law,” he told U.S.
Magistrate Judge Debra Freeman in federal court in New York.

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Tags: Eugene Plotkin, Goldman Sachs, Insider Trading, Legal

BusinessWeek’s Anthony Bianco interviewed Lazard Frere’s CEO Bruce Wasserstein who shared his thoughts on the market turmoil.  In short, he thinks it’s far from over.  He does think there will be more M&A, much of it by strategic buyers, but private equity, which might not be able to do the huge dieals once contemplated, isn’t going away::

You’ve seen plenty of turmoil on Wall
Street. What distinguishes this round?
Of course, it started with problems in the subprime [mortgage] market. To
protect themselves from that exposure, banks pulled back from risky assets of
other sorts. Lenders are waiting for existing loans to wash through the system
and for credit spreads and asset prices to recalibrate. Panic followed—an
undifferentiated, very unsophisticated panic that persists.

 

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Tags: Bruce Wasserstein, Lazard

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Which is the next hedge fund thinking about selling a piece of itself?  It could be Renaissance Technoloagies….

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Tags: Hedge funds, Jim Simons, Renaissance Technologies

Another byproduct of the credit market meltdown:  Manhattan’s hot commercial real estate market is taking some lumps.  According to the New York Post, Lehman Brothers won’t be taking 70,000 – 80,000 square feet of additional office space at 399 Park Avenue.  Other deals are also falling apart or being revalued:

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Tags: Credit Crunch, Real Estate

The number of distressed bonds is on the rise according to S&P, growing from 66 to 185 from July to August:

The percentage of distressed credits, those
that yield at least 10 percentage points more than Treasuries, rose to 2.9
percent in August from 0.9 percent in July, S&P said in a report.

"A rising distress ratio signals an
increased need for capital and could act as a precursor to more defaults if
accompanied by a credit crunch," S&P said.

U.S. distressed debt ratio rises in August -S&P - Reuters

Morrellwine.com – 1 Rockefeller Plaza NYC

Tags: Distressed

John Devaney’s troubled United Capital Markets lost three traders to distressed debt shop Seaport Group according to Bloomberg:

Seaport’s hires are Sean Kirk, a trader and
member of the United Capital Markets senior management team; Evan Kestenberg, a
trader of collateralized debt obligations; and analyst Jeffrey Humphrey, Kirk
said in an interview today.

Seaport, a New York-based securities firm with a trading focus on bonds of
distressed or restructured companies, began trading structured debt with the new
staff, Kirk said. Much of that market is now “distressed” because of the
fallout from a jump in defaults on subprime mortgages, Kirk said.

`We intend to be a liquidity provider in the distressed ABS space as a broker
dealer, as we’ve always been,” he said.

Seaport Hires Two Traders From Devaney’s United Capital Markets – Bloomberg

Tags: Distressed, Hedge funds, John Devaney

The combined firm will be known as Dewey
& LeBoeuf LLP and have more than 1,300 attorneys and annual revenue
approaching $1 billion. Steven Davis, LeBoeuf’s chairman, will lead the new
firm. The merger, which was agreed to late Friday, is expected to take effect
Oct. 1, with the firms’ partnerships voting on the deal in the coming weeks.

While law-firm mergers have become
commonplace, combinations among the nation’s largest firms occur infrequently,
and marriages involving top New York law firms are rarer still.
Profits-per-partner at the two firms are virtually identical. In 2006, Dewey
partners earned an average of $1.45 million; LeBoeuf’s made $1.43 million,
according to the American Lawyer magazine.

In an interview yesterday at Dewey’s
midtown Manhattan offices, both Mr. Davis and Morton Pierce, Dewey’s
co-chairman, cited the increasing globalization of the legal market as an
important reason for the combination. Though the firms already have sizable
presences outside the U.S. — 38% of Dewey’s lawyers and 35% of LeBoeuf’s
attorneys are based abroad — the deal allows the firms to accelerate their
international expansion, they said.

Dewey-LeBoeuf Merger Shows Trend Stressing Global Growth – Wall Street Journal

Tags: Law firms, Lawyers, Legal, M&A

The New York Post speculates that convicted fugitive hedge fund manager Angelo Haligiannis, who was nabbed last week, could ultimately get away with his crime of stealing $80 million from investors.   He’s out on bail compliments of the Greek authorities.   U.S. authorities are contemplating filing charges against Haligiannis’ wife, for lying about not knowing about the fugitive’s whereabouts.  She was caught with him vacationing in Greece.:

The manhunt involved federal marshals,
Interpol, and even victims themselves – but it appears their efforts were
wasted.

Haligiannis, born in Queens, immediately
claimed to be a naturalized Greek citizen and was released by local police,
sources close to the case said.

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Tags: Hedge funds, Legal

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Edward Cahill, who headed Barclays European CDO effort quit last Monday after returning from vacation; Barclays so far is being mum about why.  The spin is that he quit, but who knows?:

Barclays Capital refused to comment on the
reasons for his departure. However, Mr Cahill’s resignation appears to be the
first in recent weeks in the City or on Wall Street in this particular field of
finance.

His departure may promote scrutiny as it
comes at a time when several structures arranged by Barclays Capital appear to
have run into problems due to losses on subprime assets.

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Tags: Barclays, CDO, Revolving Door

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