Wall Street Folly

• Goldman Tops Forecast, With $3.46 Billion in Earnings
• Goldman Employees Rally Around Blankfein
• What the Committee Knew
• Goldman’s London Units Face Formal U.K. FSA Probe
• Financial News: FSA Goldman Probe May Spark Intl Crackdown
• Goldman Sachs CDO Lawsuit Split SEC Commissioners in 3-2 Vote
• The SEC’s Impeccable Timing
• AIG eyes action on Goldman over CDOs
• Goldman ‘Shenanigans’ to Be Barred by Bill, Dodd Says
• Kirk to Return Goldman Donations in Illinois Campaign Read the rest of this entry »

Tags: AIG, CDO, fraud, FSA, Goldman Sachs, Hedge funds, John Paulson, Lloyd Blankfein, Paulson & Co, Politics, SEC, Subprime mortgages, Witchhunts

Tags: AIG, Autos, Citigroup, Distressed, FSA, Greece, Hedge funds, Lazard Freres, New York, Political Contributions, Sovereign debt, Taxes, Tim Geithner, Toyota, U.S.. Treasury, Yahoo

Tags: Bonuses, Compensation, FSA, Greece, leveraged loans, Porn, Revolving Door, SEC

• Economists Call for Bernanke to Stay, Say Recession Is Over
• Feinberg’s Pay Decisions May Set the Template for Wall Street
• Atticus closes flagship fund
• Feeling Roomy, J.P. Morgan Shops Its Space
• Lehman Contract to Test Billions of Dollars of Swaps
• FSA Rules Seek to Rein in Risky Bonuses at U.K. Banks Read the rest of this entry »

Tags: Atticus, Autos, Barack Obama, Ben Bernanke, Bernie Madoff, Bonuses, CDOs, Compensation, Derivatives, Economy, Fed, FSA, GM, JP Morgan, Lehman Brothers, Tim Barakett

	SEC Presses Hedge Funds US hedge funds rush to revamp strategies Hedge funds move $100bn into safe havens Hedge fund community defiant despite shorting ban London Turns Against Hedge Funds in Hunt for Culprit UK hedge funds shouldn’t sue the FSA
Salem witch hunt

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Tags: FSA, Hedge funds

With bans on short selling wreaking havoc on hedge funds, some are looking to fight back.  A group of hedge funds plans to sue the UK’s FSA over losses incurred after the ban was imposed.  According to the Daily Telegraph:

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Tags: FSA, Hedge funds

It was a wild day in the market.  It started off rocky with the already battered financials again taking it on the chin, but when the news that the UK was banning short sales on financial stocks came out in the early afternoon, the market took off.  And then later in the day, there was more news for the longs that was received enthusiastically — Hank Paulson had a plan to set up an agency to buy toxic waste debt from financial institutions (that sounded pretty similar to the Resolution Trust Corp), and as the story got more fleshed out, with Paulson and Ben Bernanke set to go before congressional leaders this evening to make their case, stocks took off again.  Financials, like Goldman Sachs and Morgan Stanley that had tanked to shocking lows by mid-day –  to $85.88 and $11.70 respectively, skyrocketed. Goldman traded as high as $120, closing at $108, while Morgan Stanley traded as high as $24.72, closing at $22.55.  The DJIA closed up 410 points.

So you can get some idea of just how whippy trading was, below are 2 day intraday charts of the major indices, the VIX and some of the financials.

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Tags: Ben Bernanke, Charts, Fed, FSA, Goldman Sachs, Henry Paulson, Morgan Stanley

The Financial Services Authority, the UK’s SEC equivalent, is banning short selling financial stocks until January 16, although the situation will be reviewed in 30 days.  The ban could extend to other sectors as well.   They’re also changing disclosure rules — now it will be required on all positions of more than 0.25% of a stock.

Britain bans short-selling of financial stocks – Marketwatch

Tags: FSA

Over the past couple of weeks, many large funds like Harbinger, GLG and Jabre Partners have been forced to disclose big short positions in UK stocks due to new rules generated by the FSA. Darren Fox, partner at London lawyers Simmons & Simmons, has doubts about whether those rules would stand up in court and suggests that they could be challenged on several grounds.  "The making of this rule is best described as legally ‘questionable", he told FinancialNews.

“Despite the fact that it purports to
form part of the Code of Market Conduct, the FSA has introduced part of the new
(shorting) provision as a ‘rule’,” Fox said. The Code, he added, is meant to
consist of ‘guidance’, not ‘rules’. “The FSA simply does not have the
power to make ‘rules’ within the Code," said Fox. 

Lawyer casts doubt over FSA shorting rule - FinancialNew Online

Tags: FSA, Harbinger, Hedge funds, Philippe Jabre

The bonus hits keep on coming:  Sounds like this FSA move could influence the way that bonuses are structured, moving away from schemes that reward those taking large short term risks….

The structure and scale of bankers’
bonuses will be taken into account by regulators when they assess banks’
exposure to financial risk.

Hector Sants, chief executive of the
Financial Services Authority, told a City dinner on Tuesday night that although
the regulator would not dictate pay levels, it would consider the implications
of remuneration structures when judging the overall risk of individual
institutions. “We will do this with increasing intensity,” he told the
Investment Managers’ Association.

Mr Sants later told the Financial Times: “When we look at risk, we should be
looking more than we have in the past at compensation structures that encourage
risk-taking.”

The framework of rewards and incentives
will feed into FSA assessments of how much capital banks need to cushion
themselves against possible losses.

City watchdog to focus on bankers’ bonuses – Financial Times

Tags: Bonuses, FSA

Investors don’t seem to really care about the FSA sanctions levied against former GLG Partners star Philippe Jabre (prior coverage is here) — with a great investment return track record, they’re throwing money his way nonetheless.  His new Geneva based fund, which will be up and running next year after his non-compete with GLG expires, is attracting capital with no shortage of backers:

The fund, which could raise more than $2 billion, has commitments from investors and will be backed by at least one bank, the person said. Swiss bank UBS AG will act as the fund’s prime broker, according to the person familiar with the matter.

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Tags: FSA, GLG Partners, Philippe Jabre

Former GLG star trader Philippe Jabre withdrew his appeal over the £750,000 fine levied against him by the FSA over alleged insider trading, handing the regulator a rare victory.  Next, he’s likely to be banned from trading in the City.

"Although Mr. Jabre disagrees with the FSA’s decision, he considers he had a fair hearing before the Regulatory Decisions Committee and he accepts its decision," a statement issued by the former GLG Partners manager said.

"All it means is he’s accepted the original decision by the FSA," said Richard Campbell, Mr. Jabre’s spokesman. "That means paying the fine and getting on with his life."

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Tags: FSA, GLG Partners, Philippe Jabre

Confirming what many had suspected, former GLG Parners star trader Philippe Jabre is opening his own firm, Ballena Capital, to manage his own fortune….

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Tags: FSA, GLG Partners, Philippe Jabre

After lengthy and acrimonious negotiations Philippe Jabre has severed his ties to GLG Partners.  The terms are under wraps, but it’s believed that Jabre gave up a stake in GLG worth at least £160 million.  Jabre and GLG were both fined a paltry £750,000 in March over alleged insider trading charges; Jabre is appealing his fine while GLG has decided not to….

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Tags: FSA, GLG Partners, Philippe Jabre

Dogged by poor performance of bond investments in downgraded auto makers General Motors and Ford, which caused investors to flee from one of GLG Partners’ flagship credit funds, its manager, Jean-Michel Hannoun left the firm last Monday…. 

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Tags: FSA, GLG Partners, Philippe Jabre

Despite the fact that his former firm, GLG Partners, has decided not to fight the relatively paltry $750,000 fine that was levied against them for alleged insider trading, star hedge fund trader Philippe Jabre has decided to fight his fine of the same amount.  That has to be pretty mortifying to the Financial Services Authority, which was only able to levy that embarrassingly itty bitty fine.  They would no doubt like to see this thing just go quietly away but that ain’t gonna happen….

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Tags: FSA, GLG Partners, Philippe Jabre

We noted yesterday that the £750,000 fines ultimately levied against GLG and its former director/star trader Philippe Jabre were pretty paultry  — an amount that’s barely a slap of the hand given how much those guys pull in.   All things considered, they have to be pretty pleased.  And the Financial Service Authority knows it;  it’s turned their victory into a hollow one.  They apparently sought £4 million in penalties instead of the £750,000 that each GLG and Jabre were fined….

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Tags: FSA, GLG Partners, Philippe Jabre

The UK’s Financial Services Authority (FSA) has finally rendered its much anticipated decision.  GLG former star trader Philippe Jabre and his firm were each fined £750,000 for their alleged insider trading, but Jabre was not banned from the industry.  While the fines are the largest ones ever imposed by the FSA, it sounds like chicken feed by our standards – only $1.32 million a piece which won’t leave them tightening their belts a whole lot.  They must be heaving a huge sigh of relief to have received what seems, at least at first blush, like a hand slap.

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Tags: FSA, GLG Partners, Philippe Jabre

As if GLG Partners didn’t have enough problems with its star trader (or should we now say, former star trader?) Philippe Jabre under assault by both UK and French regulators over alleged insider trading allegations.

Now trades by one of GLG’s other founders are coming under attack as well.  French regulators are apparenly looking into trading in two GLG funds, one managed by GLG co-founder Pierre Lagrange, to see if they also might have benefitted by inside information.

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Tags: FSA, GLG Partners, Philippe Jabre

GLG star trader, Philippe Jabre, under assault by regulators in both the UK and France, is unlikely to be returning to GLG regardless of the outcome of the investigations into his trading according to what the other two fund founders, Noam Gottesman and Pierre Lagrange, are telling investors. 

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Tags: FSA, GLG Partners, Philippe Jabre

Philippe Jabre, under investigation for insider trading,  resigned last month as a director of GLG Partners according to filings…. 

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Tags: FSA, GLG Partners, Philippe Jabre

GLG hedge fund star Philippe Jabre could find out his fate as early as this week as the Financial Services Authority nears a decision on his alleged insider trading charges….

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Tags: FSA, GLG Partners, Philippe Jabre

In what’s being called a scandal that "could be the 21st century London equivalent to what happened on Wall Street in the 1980’s when men like Ivan Boesky and Michael Milken traded tips on pending company mergers and acquisitions", Philippe Jabre, GLG’s star manager and co-owner appeared before the Financial Services authority nearly 2 weeks ago to face charges that he traded on nonpublic information provided by a Goldman Sachs banker having to do with Sumitomo Mitsui bank in March 2003.  As of this past weekend, the FSA was apparently still deliberating on the evidence.

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Tags: FSA, GLG Partners, Philippe Jabre

No need to shed a tear for GLG, the large London based hedge fund ($11.2 billion at the end of 2004), over the Financial Services Authority Investigation into a trade made by one of their star managers, Philippe Jabre.  In spite of that ongoing flap, they did just fine:

Documents obtained by the Financial Times show three-quarters of GLG’s offerings had notched up double-digit returns for the year to December 9, with several key funds returning more than 20 per cent and most of them beating their benchmarks and industry averages.

Only one fund posted losses: the Credit fund took a blow in the spring along with many credit-arbitrage funds and was down by just under 6 per cent….

"In spite of all the headlines, this has been GLG’s best year ever by a huge margin," said one person familiar with the firm’s returns. GLG declined to comment on performance.

GLG has best year in spite of inquiry – Financial Times

www.wallstreetfolly.com

Tags: FSA, GLG Partners, Philippe Jabre

While one of its senior managers, Philippe Jabre, will be going on leave, GLG is also hiring:

The activist hedge fund manager Mathieu Dubicq, who along with other shareholders put pressure on Medidep SA’s supervisory board chairman, Jean-Claude Marian, to resign earlier this year, will soon join GLG Partners to work with Georges Gedeon on European event-driven situations.

Mr. Dubicq has been running Mellon HBV’s European Special Situations Fund, an event-driven fund. He will join GLG in early 2006, according to a news release.

Rustling in the Hedge Fund Row – HedgeWorld

Tags: FSA, GLG Partners, Philippe Jabre