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Nov 14, 2014

Federal Reserve Bank of New York Press Release - November 14, 2014: Statement to Revise the Terms of the Overnight Fixed-Rate Reverse Repurchase Agreement Operational Exercise

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Statement to Revise the Terms of the Overnight Fixed-Rate Reverse Repurchase Agreement Operational Exercise
November 14, 2014
As noted in the October 29, 2014, Statement Regarding Reverse Repurchase Agreements, the Open Market Trading Desk at the Federal Reserve Bank of New York has been conducting daily overnight reverse repo (ON RRP) operations as part of an operational readiness exercise and intends to periodically adjust the offering rate of these operations over the next month.
Beginning with the operation to be conducted on Monday, November 17 the offering rate of ON RRP operations will be increased from three basis points to seven basis points.  As noted in the October 29 statement, the Desk plans to maintain the offering rate at seven basis points through the operation to be conducted on Friday, November 28.  All other terms of the exercise will remain the same.
As an operational readiness exercise, this work is a matter of prudent planning by the Federal Reserve. These operations do not represent a change in the stance of monetary policy and no inference should be drawn about the timing of any future change in the stance of monetary policy.

CMI Spot Prices as of Close of Trading in New York on November 14, 2014.

CMI Gold & Sliver

Spot Prices as of close of trading in New York

Friday, November 14, 2014











SEC Enforcement Actions - November 14, 2014: SEC Charges Business Owner and Stockbroker in Maryland-Based Offering Fraud.

SEC Seal

11/14/2014 02:50 PM EST

The Securities and Exchange Commission today charged the owner of a Maryland-based real estate company with conducting an offering fraud and spending investor money on such personal expenses as his mortgage, country club dues, and season tickets to the Baltimore Ravens.  The agency also charged a former stockbroker for participating in the scheme.

The SEC alleges that Wilfred T. Azar III sold investors purported bonds in his company Empire Corporation, which he touted as a successful and profitable business with the resources to pay promised annual returns of 10 percent.  Along with Joseph A. Giordano, Azar and his company raised more than $7 million by making these and other false and misleading statements exaggerating the safety and low risk of the bonds.  However, Empire Corporation was functionally insolvent in reality, and despite saying investor funds would be used for various corporate purposes, Azar used the money to pay personal expenses as well as thousands of dollars in compensation to Giordano for participating in the fraud.  Giordano also steered a mutual fund that he managed into purchasing the bonds despite knowing the company was nearly broke.  The scheme collapsed when they were unable to recruit new investors to fund Empire Corporation’s operations and repay existing investors, who did not receive their promised returns and lost substantially all of their investments.

In a parallel case, the U.S. Attorney’s Office for the District of Maryland today announced criminal charges against Azar.

“As alleged in our complaint, investors in Empire Corporation were fraudulently sold worthless bonds after Azar and Giordano misled them entirely about the profitability of the company,” said Sharon B. Binger, Director of the SEC’s Philadelphia Regional Office.  “Giordano also violated the trust of his customers by entangling them in what he knew was a bad investment.”

The SEC’s complaint filed in federal court in Baltimore charges Empire Corporation, Azar, and Giordano with violations of Sections 5(a), 5(c) and 17(a) of the Securities Act of 1933 as well as Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5.  The complaint also charges Giordano with violations of Sections 206(1), 206(2) and 206(4) of the Investment Advisers Act of 1940 and Rule 206(4)-8 as well as Section 34(b) of the Investment Company Act of 1940.  The SEC seeks disgorgement plus prejudgment interest and penalties as well as permanent injunctions.  The agency is seeking an officer-and-director bar against Azar.

The SEC’s investigation, which is continuing, has been conducted by Michael F. McGraw and Dustin Ruta and supervised by Brendan P. McGlynn in the Philadelphia Regional Office.  The SEC’s litigation will be led by Nuriye C. Uygur.  The investigation followed an examination conducted by Andrea Dittert, Peter J. DiMartino, Kevin P. Logue, and Hope A. Santo of the Philadelphia office under the supervision of Frank A. Thomas.  The SEC appreciates the assistance of the U.S. Attorney’s Office for the District of Maryland.

SEC Litigation Release - November 14, 2014: Securities and Exchange Commission v. CR Intrinsic Investors, LLC et al., Civil Action No. 12 Civ. 8466 (VM).

SEC Seal


Litigation Release No. 23133 / November 14, 2014

Securities and Exchange Commission v. CR Intrinsic Investors, LLC et al., Civil Action No. 12 Civ. 8466 (VM)

On November 14, 2014, the Securities and Exchange Commission announced that it had filed a motion asking the Court to establish an approximately $602 million Fair Fund for investor victims pursuant to Section 308(a) of the Sarbanes-Oxley Act of 2002.
The SEC filed civil charges in November 2012 against the hedge fund advisory firm CR Intrinsic Investors and others for their role in an insider trading scheme involving the securities of pharmaceutical companies Elan Corporation and Wyeth. In March 2013, CR Intrinsic and its affiliates agreed to pay $601.7 million in disgorgement, prejudgment interest, and civil penalties to resolve the SEC's claims. The Court approved the SEC's settlement with CR Intrinsic and its affiliates in June 2014, and in August 2014 CR Intrinsic and its affiliates paid approximately $601.7 million to an interest bearing account with the Court Registry Investment System.
In its November 20, 2012 complaint, the SEC alleged that Mathew Martoma, then a portfolio manager at CR Intrinsic, illegally obtained confidential details about the clinical trial from Dr. Sidney Gilman, who served as chairman of the safety monitoring committee overseeing the trial. Dr. Gilman was selected by Elan Corporation and Wyeth to present the final drug trial results to the public. In phone calls that were arranged by a New York-based expert network firm for which he moonlighted as a medical consultant, Dr. Gilman tipped Martoma with safety data and eventually details about negative results in the trial about two weeks before they were made public in July 2008. Martoma and CR Intrinsic then caused several hedge funds to sell more than $960 million in Elan and Wyeth securities in just over a week.
The Commission is requesting that the Court establish a Fair Fund for the funds paid in the settlement and to be used to compensate those investors harmed in connection with the insider trading of CR Intrinsic and its affiliates. Congress and court decisions have agreed that certain contemporaneous investors may be considered victims of insider trading. Where, as is the case here, the size of the fund and the circumstances of the trading make the identification of harmed investors feasible, the Commission has determined it is appropriate to create a Fair Fund for investor victims.
The Commission is recommending that the Fair Fund be established for the benefit of those investors who traded contemporaneously with CR Intrinsic and its affiliates from July 21 to July 29, 2008, up to 100% of such investors' harm, with the remainder of the funds, if any, to be sent to the Treasury. Whether any particular investor will receive a distribution will ultimately be subject to the plan of distribution that the Court approves.
The Court previously entered a consent judgment against Gilman requiring him to pay disgorgement and prejudgment interest, and permanently enjoining him from further violations of the federal anti-fraud securities laws. Martoma was convicted of criminal securities fraud for his role in the scheme in February 2014. The SEC's litigation against Martoma continues.

DealBook AM and PM Editions - November 14, 2014:

For the latest updates, go to »
Weekend Reading: Round 2 of the Foreign Exchange InquiryNow that the big banks have been fined and vulgar chat room messages exposed, "other numpty's in mkt" are watching as the currency-rigging case shifts to criminal misconduct.

No bankers were charged with wrongdoing as part of the $4.25 billion settlement that regulators reached this week with JPMorgan Chase, Citigroup, UBS, HSBC and the Royal Bank of Scotland. But the Justice Department's criminal investigation is moving ahead.

JPMorgan's lawyers have already opened discussions with prosecutors in Washington. Barclays, which withdrew from Wednesday's settlement, and Citigroup are expected to meet with prosecutors in the coming weeks. The Federal Reserve and the Department of Financial Services in New York may join those meetings. Bloomberg News reported that the "prosecutors have demanded a full accounting of any misconduct by mid-December." Separately, the Commodity Futures Trading Commission and the Financial Conduct Authority of Britain have yet to enter talks with Deutsche Bank.

DealBook reported that "prosecutors are aiming to file a case against at least one bank by the end of the year" and "might ultimately indict several bank employees." But "any potential punishments, including guilty pleas and big fines, are likely to wait until next year."
For the latest updates, go to »
A look back on our reporting of the past week's highs and lows in finance.
Representative Dave Camp, Republican of Michigan who is chairman of the House Ways and Means Committee, has explicitly called for a change in the carried interest treatment as part of the comprehensive tax reform proposal he unveiled in February.
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Halliburton trailers, which store sand for fracking, at a Hess well site near Williston, N.D.
Reuters Breakingviews: Some Back-of-the-Envelope Calculations in Deal for Baker Hughes The plunge in oil prices provides a fresh rationale for a combination of Halliburton and its rival Baker Hughes, if Halliburton can find cost cuts, Kevin Allison of Reuters Breakingviews writes.
Executives at the Brazilian oil giant Petrobras were arrested as part of a broad corruption inquiry.
Troubles at Petrobras Raise Broader Questions for Investors Few emerging market companies are as widely held by equity and bond investors as Petrobras, long seen as a benchmark for developing markets.
Two new books argue that the Greek aphorism
Book Entry: Capping a Strong Performance With an Exit Strategy Two new books, "Finish Big" and "Succession," examine how entrepreneurs and corporate chieftains alike can be assessed on their departures, writes Jonathan A. Knee in Book Entry.
The logo at Alibaba's headquarters.
Alibaba Is Star of Hedge Funds' Latest Reports Alibaba, the Chinese e-commerce website, was the hot initial public offering of the year. And not surprisingly, shares of Alibaba wound up in the portfolios of many well-known money managers in the third quarter.
Top executives of Virgin America at the opening of trading for the company's stock on Nasdaq.
Virgin America Soars in Stock Debut In midmorning trading, the airline's stock price was up more than 27 percent, to $29.36, giving the company a market valuation of about $1.3 billion.
Warren Opposes a Treasury Nominee With Wall Street TiesElizabeth Warren will not vote to confirm Antonio Weiss, a Wall Street investment banker nominated this week to be Treasury undersecretary for domestic finance.
The dealing room of ABN Amro, the state-owned Dutch lender, in Amsterdam in 2011.
ABN Amro to Cut Jobs in Shift to Digital ABN Amro said on Friday that it would spend about $187 million on upgrading its digital banking operations and cut up to 1,000 full-time jobs by 2018.
Duracell is one of the best-known battery companies in the world, even if its prominence has diminished as its growth has slowed.
Warren Buffett to Buy Duracell in $4.7 Billion Stock Deal Berkshire Hathaway, the conglomerate run by Warren E. Buffett, will acquire Duracell using a transaction aimed at lowering the tax bill.
Suman Srinivasan, a Goldman Sachs vice president, recruiting at Columbia University.
Goldman Sachs Recasts Its Reputation to Woo Tech Talent In recruiting programmers from elite universities, Wall Street runs up against the idea that Silicon Valley is the technological promised land.
David McDonald, right, a Baker Hughes worker, turns on an oil well in Laurel, Miss., in 2006.
Halliburton Is in Talks to Buy Rival Baker Hughes A deal between Halliburton and Baker Hughes would unite two of the biggest oilfield services providers and would be one of the biggest energy deals in years.
Bernadette Gatling said she has lost job opportunities because employers viewed her credit report, which included voided debts.
Debts Canceled by Bankruptcy Still Mar Consumer Credit Scores Officials suspect that big banks ignore bankruptcy court discharges, keeping debts alive on credit reports and impairing borrowers' ability to secure housing and jobs.
Members of the Financial Conduct Authority at a news conference in London on Wednesday, when some of the world's biggest banks were fined.
Big Banks Are Fined $4.25 Billion in Inquiry Into Currency-Rigging The fines come as regulators are increasingly targeting a business culture in the financial industry that they say encourages improper conduct by its employees.
A Paddington Bear sculpture sits in front of the Bank of England in London.
Bank of England Officials Cleared of Wrongdoing in Currency Manipulation An inquiry found that no one at the central bank was involved in unlawful behavior, but a top official was fired after he failed to follow internal policies.
DreamWorks Animation, the maker of Shrek, may join the Hasbro, the maker of Transformers.
Hasbro Is Said to Be in Talks to Buy DreamWorks Animation The deal, in which Hasbro would pay a mix of cash and stock, would form an unusual union of toy maker and animation studio.
Mathew Martoma, with his wife, Rosemary, leaving the federal courthouse in New York after his sentencing in September.
Casting Doubt on Appeal, Court Rejects Bail for Ex-SAC Capital Trader Mathew Martoma, a portfolio manager for Steven A. Cohen's former hedge fund, is now waiting for a judge to set a new date for him to start a nine-year prison term.
BB&T in Winston Salem, N.C.
Susquehanna Bancshares in Deal to Be Sold to BB&TThe deal will give the BB&T Corporation a bigger foothold in Pennsylvania, Maryland, New Jersey and West Virginia.
The billionaire hedge fund manager Paul Singer,  who wrote a note to his investors about
Jesse Eisinger: Fears of Inflation Stem From Worrisome Origins Hedge fund managers howl about "fake" economic data, but the paranoia over inflation is rooted in troubling episodes.
The hulk of Detroit's old train station has long stood as a symbol of the city's urban decay.
Detroit Emerges From Bankruptcy, Pension Risk Still Intact While Detroit's plan to exit bankruptcy has been praised, its pension system relies on some of the same assumptions that got it into trouble in the first place.
The British bank Barclays has yet to commit to a settlement in a case involving manipulating the foreign currency market.
As Currency Settlement Draws Near, Barclays Gets Cold Feet The next phase of the case will most likely present a greater test to the banks, as the focus shifts to criminal investigations and individual liability.
Deal Professor: As Sears Gasps, Lampert Turns to Financial Engineering to Revive It Edward Lampert's efforts to save Sears have left it reeling, so he is employing a method he is familiar with: breaking it up and monetizing it.
Members of an honor guard carried the coffin of Army Staff Sergeant Christopher M. Hake, 26, to his grave during his burial service at Arlington National Cemetery in 2008.
Suit Accuses Banks of Role in Financing Terror Attacks The suit accuses banks - including HSBC and Barclays - of helping to finance the violent activities through their ties to Iran, painting Wall Street as a sort of middleman of terror.
Michael Dell, chief of Dell, had his pay quadruple after his company began using a compensation consultant in 2011.
Andrew Ross Sorkin: More Transparency, More Pay for C.E.O.s As compensation consultants have become more popular in determining pay, chief executives' paychecks have actually grown.
Timothy Massad, chairman of the United States Commodity Futures Trading Commission.
More Bank Settlements Coming in Widening Currency Case Banks face tougher settlement language than expected and larger fines in a currency-manipulation case as multiple United States and British regulators act in concert.
Lawrence Baldwin, left, at Defcon, a convention of computer hackers, in Las Vegas in 2002.
On the Hunt for Wall St. Hackers, but Not the Spotlight Lawrence Baldwin is one of the more well-known and valuable allies of financial institutions in their fight against online crime, but the nature of his work means he keeps a very low profile.
Morgan Stanley has cut back its bond-trading operations and put much more focus on the wealth management business.
Wall Street's Bonus Season Not Likely to Be Filled With Joy, Survey Finds Year-end payouts could drop as much as 10 percent for the trading desks and hedge funds that not long ago were the centers of gravity on Wall Street, according to a survey.
For the latest updates, go to »
'Make You Feel My Love' The programmers' paradox: Goldman Sachs or Silicon Valley? Everyone loves tech talent.
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