DealBook Today's Top Headlines - June 15, 2016: MSCI Holds Off Adding China to Emerging Markets Benchmark | The Global Stakes of a Saudi Aramco I.P.O. | Wall St. Scion Had Gambling Addiction, Lawyer Says
Wednesday, June 15, 2016
TODAY'S TOP HEADLINES
By AMIE TSANG
MSCI HOLDS OFF ADDING CHINA TO EMERGING MARKETS BENCHMARKMSCI has
decided not to add Chinese stocks to its influential emerging markets
index, dealing a blow to despondent local investors and the Chinese
Neil Gough and Landon Thomas Jr. report in DealBook.
"International institutional investors clearly indicated that they
would like to see further improvements in the accessibility of the China
A shares market before its inclusion in the MSCI Emerging Markets
Index," Remy Briand, the global head of research at MSCI, said in a news release on Tuesday.
China has been pushing to increase its influence in financial markets
and its efforts managed to get the renminbi included in the exclusive
club of currencies at the International Monetary Fund. China's inclusion
in the MSCI index could have paved the way for overseas money to pour
into its markets, but it has not convinced MSCI that it is any easier
for foreigners to buy and sell stocks.
In fact, the government's grip over the stock market has grown tighter.
And its heavy-handed intervention has raised more questions about
whether China's markets can pass muster with global investors and
regulators. Chinese stocks have been off about 40 percent in the last 12
months, so a boost from extra money flowing in was needed.
"Accounting in China is a state secret," said Hugh Young, who
oversees investments in Asia for Aberdeen, one of the world's largest
emerging markets investors. "Our money goes into companies, and we have
had trouble finding the right ones to invest in."
MSCI said investors were also bothered by the stiff limits imposed on foreign investors withdrawing their funds from China.
It said it would reconsider Chinese A shares for inclusion in 2017.
THE GLOBAL STAKES OF A SAUDI ARAMCO I.P.O.The initial
public offering of Saudi Arabia's state oil company could value the
company at trillions of dollars, but the real eye-opener may be where
the Saudi government chooses to list the shares,
Steven Davidoff Solomon writes in Deal Professor.
It would be revolutionary to list anywhere except its home country exchange and it matters because this is arguably the I.P.O. of an entire country.
The company generated an estimated $180 billion in profit per year to
the state, which represented over 40 percent of its economy before the
recent slump in oil prices. About 90 percent of the government's budget
comes from oil profits.
If Aramco lists only on the Saudi exchange, it will swamp the current market capitalization of the exchange,
which is about $300 billion to $400 billion. This would make foreign
shareholders uneasy as it would dominate trading and could set its own
rules on disclosure and other regulation.
But there have been indications that the listing will be in New York, Hong Kong and London.
Aramco would be subjecting itself to the full array of United States
securities laws, but it would allow American investors in, bringing the
company and the country into the full financial sphere.
Subjecting Aramco to United States financial reporting would be a shock to the Saudi system
- as if the entire country were to be suddenly regulated by outside
capital markets. It would be a difficult task - audited financial
statements would have to be prepared, which could take years. Aramco
would have to decide which assets to keep and which would remain
private. It would also have to adopt a board, possibly with outside
members, and trim the company down.
Because of this, an I.P.O. is unlikely to happen soon, Mr. Davidoff
Solomon writes. Saudi Arabia is still a closed government and is likely
to remain so for some time, but an Aramco I.P.O. could be a victory for
ON THE AGENDABlackRock's investor day starts at 8 a.m. The Council on Foreign Relations will hold an event focused on Britain's possible exit from the European Union and what it means for Europe from 8:30 a.m. Business Roundtable will publish the results of its latest survey of chief executives at 9 a.m. The latest data on industrial production will be published at 9:15 a.m. The Federal Reserve Open Market Committee will make a statement on its latest monetary policy decision at 2 p.m.
Federal prosecutors have accused Mr. Caspersen of running a Ponzi-like
scheme to defraud friends, family and a hedge fund foundation of nearly
$40 million. His lawyer contends that his addiction was so severe that he checked his phone throughout the day for updates on the stock market's direction and bets that ran into tens of millions of dollars.
Mr. Caspersen told Judge Jed S. Rakoff of Federal District Court on
Tuesday afternoon that he had been treated for "compulsive gambling and
mental health illness" issues, and pleaded not guilty to a criminal
document that included one count of securities fraud and one count of
wire fraud. Negotiations have continued for several weeks, however, and
he is expected to plead guilty at a July 7 hearing.
Mr. Caspersen has been portrayed as a man of privilege who took
advantage of his social and professional standing to fuel his trading
addiction, but Paul Shechtman, his lawyer, said he was "remorseful and
"He had every intention of paying everyone back," Mr. Shechtman said. "This is a pathological gambling addiction."
Mr. Shechtman said Mr. Capsersen's addiction started with casino
gambling and sports betting, which turned into stock market bets while
he was studying at Harvard's law school. He said reports characterizing
him as a man driven by greed and self-interest were wrong. "This is not about Wall Street greed," he said. "This is about addiction and mental illness."
Judge Rejects F.T.C. Effort to Block Health System MergerThe decision is
a significant setback in the agency's attempt to police the industry
during a flurry of deals among hospitals and physician groups.
ChemChina Said to Add Time to Its Deal Review China National
Chemical Corporation refiled its submission for a review by the
Committee on Foreign Investment in the United States of its planned
takeover of Syngenta, giving it more time to complete the process,
Bloomberg reports, citing people familiar with the matter.
Goldman Banker Said to Have Used Prostitutes to Build Links with Libya A Goldman
Sachs banker procured the services of two prostitutes to help cement
closer ties with officials at the Libyan sovereign wealth fund, a lawyer
for the fund contended at a trial in London.
Venture Capitalist Expects Big Exits for Tech Start-UpsWith mature
tech companies sitting on piles of cash and the valuations of some
start-ups beginning to come down, the technology landscape was rich for
deal making, the venture capitalist, Marc Andreessen, said.
Surprising Progress in Newtown Families' Suit Against Maker of the AR-15 RifleA lawsuit
brought by relatives of the shooting victims in Connecticut argues that
the AR-15 is a weapon of war and should never have been marketed to
Court Backs Rules Treating Internet as Utility, Not LuxuryAn appeals
court panel affirmed the Federal Communications Commission's rules about
net neutrality, clearing the way for stricter oversight of broadband
Regulator's Plan to Rein In Trading Risks Raises ConcernsThe Commodity
Futures Trading Commission wants the power to see the source codes of
trading firms without a subpoena, but its request is overreaching, Gina
Chon writes in Breakingviews.
Head of I.R.S., Facing Censure, Relishes a Job Few Could LoveJohn A.
Koskinen became the nation's top tax collector in 2013 to steady an
agency rattled by political upheaval, but critics say he has obstructed
justice and misled Congress.
For Hillary Clinton, a Risk of Excess Caution in Economic PolicySome of the
proposals by the presumptive Democratic presidential nominee could help
lift employment, but her focus seems to be anachronistic, Eduardo Porter
writes in the Economic Scene.
Sumner Redstone Makes Rare Appearances at CBS, ParamountSumner Redstone
paid a visit to Viacom's Paramount Pictures movie studio in Hollywood,
according to a letter made public by Viacom's lead independent director
on Tuesday. A person familiar with the matter also told The Wall Street
Journal that he had visited the West Coast headquarters of CBS.
Appeals Court Endorses S.E.C. Rules for Small Offerings Qualified
investors may buy up to $50 million in securities without first seeing
detailed financial data that everyday investors would expect in a public