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Jul 5, 2016

DealBook | Today's Top Headlines on July, 5, 2016: Standard Life Fund Halts Withdrawals | Summer Reading List: Tell-Alls and Cautionary Tales in Finance | British Court Convicts Former Barclays Employees Over Libor Rigging



BY AMIE TSANG
STANDARD LIFE FUND HALTS WITHDRAWALS A sense of caution returned to financial markets as Asian stocks dropped for the first time in a week and haven assets rose, Bloomberg reports.


Stocks had climbed last week as it became less likely that the Federal Reserve would raise interest rates in the United States and more likely that central banks would add to monetary stimulus in Europe and Japan. NowItaly is considering using state funds to recapitalize its banking system, giving investors more reason to be cautious in the wake of Britain's vote to leave the European Union.

Investor wariness also prompted Standard Life Investments - the mutual fund arm of a British insurance company, with large investments in London commercial real estate - to suspend requests from investors wanting to exit the $3 billion fundLandon Thomas Jr. reports in DealBook. The firm said there had been an "increase in redemption requests as a result of uncertainty for the U.K. commercial real estate market following the E.U. referendum result" and that it would end the suspension "as soon as practicable."

Standard Life had reduced the value of its commercial property investments along with other fund managers last week by 3 percent to 5 percent. Its U.K. Real Estate Fund invests in high-end commercial properties in London, which have soared in value. But the decision by a majority of British voters to leave the European Union has raised questions about London's future as a financial and commercial hub.

The move caused jitters among traders who were already worried about mutual funds investing in assets that are hard to buy and sell. Mutual funds in Britain that invest in London property markets have been particularly popular as aggressive central bank policies pushed interest rates to zero. Many of them are in effect big bets on London malls, office towers and elite residential developments. But these properties can be hard to sell in a down market.

European stocks slid for a second day on Tuesday with shares in Britain's property sector slumping after Standard Life's decision, as The Financial Times reports. Britain's largest property company, Land Securities, fell about 4.6 percent on Tuesday morning. As confidence crumbled, thepound tumbled to a 31-year low.
SUMMER READING LIST: TELL-ALLS AND CAUTIONARY TALES IN FINANCE Andrew Ross Sorkin has plowed through stacks of books to find the best reads on business, finance and technology for you.

"Chaos Monkeys: Obscene Fortune and Random Failure in Silicon Valley," by a former Facebook executive, is the most fun business book Mr. Sorkin has read this year. The story is a tell-all of Antonio García Martinez's experience in venture capital and at Facebook, filled with insights into what he calls "the tech whorehouse" of Silicon Valley.

Mohamed A. El-Erian's "The Only Game in Town: Central Banks, Instability, and Avoiding the Next Collapse" explains the power and limits of central banks, and how interconnected our economies are, while"Makers and Takers: The Rise of Finance and the Fall of American Business," by the journalist Rana Foroohar, is a well-told exploration of why the economy is leaving too many behind.

For something a little more introspective, Adam Grant, the youngest-ever tenured full professor at the Wharton School at the University of Pennsylvania, examines what it takes to be a Steve-Jobs-like success in"Originals: How Non-Conformists Move the World." It turns outprocrastination is a great thing.

Deal junkies will devour "Bloodsport: When Ruthless Dealmakers, Shrewd Ideologues, and Brawling Lawyers Toppled the Corporate Establishment," by Robert Teitelman, the founding editor of The Deal. It tells the story of our modern mergers and acquisitions economy and has captured how power shifted from the boardroom to its shareholders. They can follow up with "Dear Chairman: Boardroom Battles and the Rise of Shareholder Activism," in which Jeff Gramm, the owner and manager of the Bandera Partners hedge fund and an adjunct professor at Columbia Business School, has collected letters sent by investors to chief executives. They are eye-opening, often chilling and include fascinating lessons about business, Mr. Sorkin writes.

If you want to do some reading before the Olympics in Rio, pick up"Brazillionaires: Wealth, Power, Decadence, and Hope in an American Country." The journalist Alex Cuadros charts Brazil's economic rise and fall through some of the biggest, most colorful characters in business.

Those interested in the former Fed chairman Alan Greenspan will have to wait until October, when a biography written by the journalist Sebastian Mallaby will be published. Mr. Mallaby ventured beyond the narrative of him as a genius who was later blamed for the financial crisis to examine the complicated mind of a man who may have had one of the largest ever influences over the economy.

If you want to put a smile on your face, pick up "To Pixar and Beyond: My Unlikely Journey with Steve Jobs to Make Entertainment History," by Lawrence Levy, the digital animation studio's former chief financial officer.
ON THE AGENDA The Bank of England will hold a news conference to discuss its July Financial Stability Report at 6 a.m.
BRITISH COURT CONVICTS FORMER BARCLAYS EMPLOYEES OVER LIBOR RIGGING Three former employees of Barclays have been convicted of plotting to improve the bank's trading results by "dishonestly rigging" the benchmark interest rate known as Libor, Chad Bray reports in Dealbook.

The trial comes after a half-decade investigation into the London interbank offered rate that led to billions of dollars in fines and shook the reputations of some of the world's biggest banks.

The setting of Libor and other rates involves banks submitting the rates at which they would be prepared to lend money to one another. Libor is used to price more than $300 trillion in securities.

The Serious Fraud Office of Britain had claimed that a group of Barclays derivative traders in New York and London conspired with rate submitters in London to manipulate the benchmark interest rate. The aim was to increase the traders' profits from interest rate swaps and other derivative contracts with so-called counterparties, which could include other banks, governments and pension funds, prosecutors said.

Two former Barclays traders, Jay Vijay Merchant and Alex Pabon, as well as Jonathan J. Mathew, a former rate submitter at the bank, were each convicted on a charge of conspiracy to defraud. Sentencing is expected later this week.

The jury, which began its deliberations on June 20, was unable to reach a verdict regarding two other former Barclays employees, the former traders Stylianos Contogoulas and Ryan Michael Reich. The convictions were delivered on Wednesday, but reporting was restricted until after the jury had concluded its deliberations on all five defendants. The Serious Fraud Office will now have two weeks to decide whether to pursue a retrial of the Mr. Contogoulas and Mr. Reich.

British prosecutors have had mixed results in their efforts to pursue criminal charges over Libor. Tom Hayes, a former trader at UBS and Citigroup, is serving 11 years in prison, but prosecutors hit a stumbling block in January, when six former brokers were acquitted of criminal charges that they helped Mr. Hayes manipulate Libor.
MERGERS & ACQUISITIONS »
London Stock Exchange Shareholders Approve Deutsche Börse Merger Support for the deal came after Britain voted last month to leave the European Union, a move that led to questions about whether the agreement could be completed.
C.I.C.C. and China Investment Securities Said to Be in Merger Talks The investment bank China International Capital Corporation and the brokerage firm China Investment Securities, which had combined assets of $28 billion last year, are in talks about a possible merger, Bloomberg reports, citing people familiar with the matter.
HNA Group of China Aims to Do More Deals Chen Feng, the chairman of the acquisitive Chinese conglomerate HNA Group, said he was looking to do more deals because he was confident about the growth of tourism, even with China's economy slowing.
INVESTMENT BANKING »
Warning Over Bad Debt Prompts Fresh Fears for Italian BanksMonte dei Paschi di Siena, the world's oldest bank, has been told by the European Central Bank that it needs to shed another 10 billion euros, or about $11 billion, in bad loans, creating fresh worries over the health of the Italian banking center.
London Banker Bonuses Set to Shrivel as 'Brexit' Hits Deal Making Bonus pools are set to be cut by at least a quarter as Britain's decision to leave the European Union stymies deal making and creates costs from moving staff, according to executives and recruiters.
The 9 Ways 'Brexit' Will Affect Foreign Banks Britain's vote to leave the European Union will change overseas banks significantly - sometimes for the good.
Goldman Sachs Tells Its Asset Managers to Tighten BeltsGoldman Sachs has told staff at its asset management division to curtail spending and banned all travel that is not associated with meeting clients and winning new business.
Credit Suisse Names New Markets Head for Asia-Pacific Credit Suisse Group named Ali Naqvi as sole head of global markets for Asia-Pacific as part of moves to consolidate the management of its equities and fixed-income businesses in the region.
Slowdown in Shadow Lending Tightens Credit on Main StreetThe drop in the value of bonds backed by personal, corporate and real estate loans has made it harder for businesses and consumers to refinance their debt.
For the latest updates, go to NYTimes.com/DealBook
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PRIVATE EQUITY »
Blackstone Recruits Former Chief of British Retailer Marc Bolland, the former chief executive of Marks and Spencer, will join Blackstone as head of its European private equity portfolio operations.
HEDGE FUNDS »
Point72 Mines Social Media to Lure Traders Point72 Asset Management, Steven A. Cohen's new firm, is marketing itself in a more public fashion as part of efforts to leave behind the image of SAC Capital, which pleaded guilty to insider trading charges.
Western Shareholder Activism Arrives in China Indus Capital Partners, a hedge fund based in New York and focused on Asia, is trying to see if global investors can persuade China Mobile to concentrate more on raising the payout to its stockholders.
I.P.O./OFFERINGS »
China's Looming $8 Billion I.P.O. Has Risks Tied to Shadow Banking Postal Savings Bank of China, which is ubiquitous in small-town China, disclosed about $143 billion of interbank investments in "special purpose vehicles" in a prelisting document.
Line Raises I.P.O. Price Range to Meet Strong Demand The Japanese messaging app operator Line revised its price range for a coming initial public offering to raise as much as $1.12 billion, citing strong demand.
VENTURE CAPITAL »
Outside Twitter's headquarters in San Francisco this month during an evening commute. Twitter has declined to comment on the proposal to add a payroll tax just for technology companies.
San Francisco Considers Tax on Tech Companies to Pay for Boom's Downside As officials struggle to balance the city budget, activists and some lawmakers want the sector to help pay for programs for the homeless and for affordable housing.
Eric Zsadanyi, a Goodwill of Silicon Valley employee, sorts donated goods in San Jose, Calif. Mr. Zsadanyi has been using PayActiv advances to pay his rent.
New Payday Options for Making Ends Meet Employers and start-ups are testing ways to give employees faster access to their wages.
LEGAL/REGULATORY »
John Lee, a former chief executive of the South Korean unit of Reckitt Benckiser, was taken in for questioning by prosecutors in Seoul in May.
South Korea Targets Executives, Pressed by an Angry Public Long seen as lenient on businesses, South Korea is increasingly seeking to prosecute company officials to address public anger over corporate misbehavior.
Battle Lines Drawn Over London's Role in Euro Clearing "The potential impact for the City of London is that up to 69 percent of its interest rate derivatives market could move to continental Europe after Brexit," says Dirk Schoenmaker, senior fellow at Bruegel, a research group based in Brussels.
Michael Weinstein, president of the AIDS Healthcare Foundation, which sponsored pharmaceutical cost transparency initiatives in California and Ohio.
Patient Advocates Criticize California Drug Price PlanA California initiative meant to lower skyrocketing prescription drug prices faces opposition from not only from drug makers but also some patient advocacy groups.
Infidelity Website's Parent Company Faces F.T.C. Inquiry Avid Life Media, the parent company of Ashley Madison, a dating website marketed at would-be adulterers, is the target of an investigation by the Federal Trade Commission. It said it did not know the focus of the inquiry.