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Criminal charges being prepared against former Fed regulator and junior Goldman Sachs executive
Capital Markets
<p>Federal prosecutors are preparing criminal charges in a case of leaked information passing from the New York Fed to a former employee of the regulator then working at a major bank. Under a tentative deal first reported in The New York Times, Goldman Sachs would pay a $50 million fine, be banned from a certain type of bank consulting for three years and face additional restrictions regarding how it handles sensitive regulatory information.<br /> Former Fed employee assigned task to work with bank he once regulated, while supervisor claims no knowledge regarding leaked information<br /> Rohit Bansal first worked at the New York Federal Reserve Bank for seven years before he took a job at Goldman in 2014, where he was assigned to consult with the same banks he regulated while at the Fed.  He is accused of accessing confidential information about a bank client he supervised as a regulator.</p> <p>Despite the fact that Bansal had emailed his supervisor the documents he had placed some of the leaked documents in question to his supervisor, Joseph Jiampietro, lawyers briefed on the matter said he will not face criminal punishment. Goldman fired Jiampietro, a former senior adviser to former Federal Deposit Insurance Corporation Chair Sheila C. Bair, for failure “to properly escalate” the issue internally. Jiampierto claimed to have never looked at the documents and was unaware they were improperly obtained.<br /> After recusing himself from working with the bank, supervisors said to pressure junior Goldman banker to work with client<br /> Goldman’s internal compliance process, which Bansal participated in, instructed employees not to use any material from a previous employer, but such clear instructions were not part of the New York Federal Reserve’s compliance procedures. Despite the confusion, Bansal’s recused himself from working with the one bank he was now assigned to consult with at Goldman, but claims he felt pressured to remain on the account when his supervisors encouraged him to work behind the scenes for that New York bank in question, the lawyers told the New York Times.<br /> Goldman Spokesman Michael DuVally told the New York Times the bank had “reviewed our policies regarding hiring from governmental institutions and have implemented changes to make them appropriately robust.” As soon as the incident was discovered it was reported.<br /> Goldman’s offer fails to match the regulator’s bid on a fine, as Bansal being shunned from banking industry<br /> Goldman initially offered to pay the New York State Department of Financial Services a $3 million fine, but found the bid-ask spread on the deal to be much higher in accepting a $50 million penalty, admission that it failed to supervise Bansal alongside a proposed three-year suspension from involvement in certain consulting deals with banks in New York State, the report said..</p> <p>The Federal Reserve is further expected to permanently bar Bansal from the banking industry, a tactic that was recently advocated on the opinion pages of the New York Times. The Fed has barred six people so far this year for infractions, a significant increase from the three preceding years, the report noted.</p> <p>Bansal’s lawyers are appealing for leniency from criminal charges, as much of what Bansal did was categorized as “fair game.”</p> <p>The Bansal case i</p>
Daily Scan: Stocks slip slightly; Massachusetts regulators go after Fidelity
Capital Markets
<p>Updated throughout the day</p> <p>October 26</p> <p>Stocks slipped slightly Monday, with the Dow slipping 0.1% with the fall of oil prices. The Nasdaq gained 0.1%, and the S&amp;P 500 lost 0.2%. Oil prices fell to $43.85/barrel. Earnings for the third quarter are looking shaky -- especially for manufacturing firms where demand is slowing. Companies continue to indulge in share buybacks to boost earnings per share comparisons. Howard Silverblatt, senior index analyst at S&amp;P Dow Jones Indices, reports that nearly one-quarter of the companies that have published earnings so far (172) have bought 4% of their outstanding stock. Leading the buyback policy: Microsoft, which absorbed $4.8 billion in stock.  Apple, which reports Tuesday, bought back $10 billion last year. Also reporting this week: UPS, another economic bellwether, Exxon, Twitter, Alibaba, and more. ... The Federal Open Market Committee convenes. Goldman Sachs says no rate hike until December, but only with 60% confidence. Before the Fed policymakers convene on Tuesday and Wednesday, they will get word on new home sales in September. Look for a slight drop to 549,000 from 552,000 in August, seasonally adjusted. The other big numbers: third quarter GDP on Thursday and personal income and spending on Friday.</p> <p>Here’s what else you need to know:</p> <p>Fidelity in trouble for "unethical" behavior. Massachusetts regulators filed a complaint Monday against Fidelity Investments for allowing unregistered investment advisors to trade. Fidelity says that it does not believe it violated any laws or regulations. One unregistered advisor allegedly received about $732,000 in advisory fees over 10 years to conduct 28,958 trades for 20 Fidelity customers. Wall Street Journal</p> <p>Valeant defends itself. The big pharmaceutical company said on a conference call Monday that it had found "no evidence whatsoever" of any illegal activity in the company. It also created a new board committee to review the specialty pharmacy relationships it disclosed last week, as well as the report of wrongdoing from the Wall Street Journal. Wall Street Journal</p> <p>White House, Republicans near deal on budget. The deal would be one of John Boehner's last important pieces of law to go through the House before he resigns in two weeks as leader. The agreement would boost the federal debt limit so the government doesn't have to shut down. It still needs to get support from Democrats and a few Republicans. Wall Street Journal (paywall)</p> <p>Seventh high school football player dies. Andre Smith died of "blunt force head injuries to due a football accident" in Illinois Friday. The 17-year-old senior is the seventh high school player to die this year. Last year five students died of causes directly linked to football, and six others died of indirect causes, such as heat stroke or water intoxication. CNN</p> <p>University of Mississippi to remove Confederate flag. Ole' Miss has stopped flying the state's flag on campus because it includes the stars and bars. Students at the universit</p>
Relax like Hillz
Lifestyle, 4:01
<p>Hillary Clinton was the Queen of Calm during her 11-hour hearing with the Benghazi commission. Her secret? Meditation.</p> <p>Clinton told NPR that she tried to meditate between breaks, and she practices yoga to help remain calm, reports Quartz.</p> <p>So breathe deep. If Hillz can mediate to keep her cool while getting pummeled by Republicans for hours on end, you have nothing to worry about in your next client meeting.<br /> Photo: VictoryNH: Protect Our Primary </p>
Q3 wipes $700B from top fund managers
Asset Management
<p>Seven of the largest asset managers in the world lost a whopping $700 billion total during the third quarter. BlackRock alone lost $215 billion during those three months, reports the Financial Times.</p> <p>With end of year bonuses coming soon, everyone must be hoping for a much, much better fourth quarter.<br /> Photo: Purple Slog</p>
Why are so many key hedge funds closing down?
Hedge Funds
<p>&nbsp;</p> <p> This year has been the worst year for hedge fund shutdowns since 2008.</p> <p> More than 400 funds shut down in the first half of the year.<br /> Of the remaining funds, average 2015 returns are nearly flat.</p> <p>&nbsp;</p> <p>There’s no doubt about it: 2015 has been a rough year for hedge funds. New data from Bloomberg indicates that more funds have shut down this year than in any other year since the Financial Crisis. Here’s a look at just how bad it’s gotten.<br /> The Numbers<br /> According to Bloomberg, the total combined assets of the hedge funds that have shut down so far this year is about $16 billion. A whopping 417 hedge funds closed ...</p> <p>Full story available on<br /> Photo: Jason<br /> &nbsp;</p>
World markets weekend update: A boost from central banks
Capital Markets
<p>All eight indexes on our world watch list posted gains over the past week, with central bank policy as a key driver. On Thursday the ECB's president hinted at another stimulus package, and on Friday the Chinese central bank cut interest rates for the sixth time in 12 months. The two Eurozone indexes were the week's biggest winners, the DAX up 6.83% and the CAC 40 up 4.70%. The Nikkei finished in third place with a 2.92% advance and the S&amp;P 500 finished fourth with a 2.07% gain.</p> <p>Here is an overlay of the eight for a sense of their comparative performance so far in 2015.</p> <p>As for the Shanghai Composite, below is a log-scale weekly chart illustrating the bubble that peaked in 2007 and the bubble that started last year. The index is now down -33.9% from its June 12 peak but well off its -43.3% interim low set on July 8th. Optimists might identify the interim low as the beginning of a new bull market. But a comparison with the failed rallies during the crash that began in 2007 suggests a less encouraging forecast.</p> <p>&nbsp;</p> <p>A Closer Look at the Last Four Weeks</p> <p>Read more at Advisor Perspectives.<br /> Photo: Indigo Skies Photography</p>
Video: James Bonds by the numbers -- and they are big
Lifestyle, 4:01
<p>Via CNBC</p> <p>&nbsp;<br /> Photo: Audrey Larrive</p>
FT: Aberdeen Asset Management is searching for a buyer
Asset Management
<p>Aberdeen Asset Management – after years of countless hurts from its love affair with the emerging markets – is reportedly shopping around for a buyer:<br /> “Aberdeen Asset Management has begun to sound out potential buyers for the group as Europe’s second-largest fund house struggles to put an end to a slump in its profitability, share price and assets under management.</p> <p>People familiar with the process said Martin Gilbert, Aberdeen’s 60-year-old founder and chief executive, had made informal approaches to a number of rivals in recent months.”<br /> According to the Financial Times, word on the strasse is that Credit Suisse – which at one time owned 25% of the firm – may actually be interested in purchasing the asset manager, though analysts do cite Deutsche Bank, K.K.R., and Blackstone as potential suitors as well.</p> <p>As The Press and Journal wisely point out however, Japan’s largest bank – Mitsubishi UFJ (MUFJ) – would probably be Aberdeen’s best bet if it was really looking for a buyer.</p> <p>Not only does MUFJ already own a large chunk of Aberdeen, but as we’ve previously reported, the Japanese behemoth had previously planned to “have closer ties” with the fund manager as it tries to expand its global asset management business.</p> <p>Aberdeen absolutely denies that Gilbert’s been shopping around though, so it should be interesting to see how it plays out over the next few days. We’ll keep you in the loop.<br /> Photo: David Jones</p>
Cash hungry Uber raising another $1 billion for its war chest
Venture Capital
<p>You would be forgiven for thinking that you have stumbled upon a post from August, you haven't. Uber has a thirst for cash that cannot be quenched and is now allegedly scrapping together another billion a mere three months after pumping the same amount into its China business.</p> <p>The New York Times reports that the investment will value Uber at $60-70 billion making it the most valuable private startup by a country mile.</p> <p>In short, this is war money and Uber is now fighting a battle on many fronts. In China, Uber is struggling to snatch market share from giant incumbent Didi Kuaidi, while in India its up against an equally entrenched Ola.</p> <p>The same heavyweight backers behind Didi and Ola – which include Softbank, Alibaba, and Temasek Holdings – have also thrown their weight behind GrabTaxi in Malaysia, and Lyft in the U.S. Uber is also fighting legal battles in its three biggest markets: the U.S.,China and India. </p> <p>Despite the odds being stacked against them, the company is now on the cusp of reaching a valuation that soars well above Facebook's $50 billion market value when it listed in 2012. According to Business Insider, Facebook's Mark Zuckerburg has even had a word in Uber CEO Travis  Kalanick's ear, advising him to take his firm public. But Kalanick recently said:<br /> "We're maturing as a company, but we're still like eighth graders. [...] We're in junior high. And someone's telling us we need to go to the prom. But it's a little early. Give us a few years. Give us a little time."<br /> At this rate one wonders whether public market investors will ever have an appetite for Uber's insane valuations. When prom night comes, Uber may struggle to get a date.  <br /> Photo: Moyan Brenn </p> <p>&nbsp;</p>
My heart will go on
Lifestyle, 4:01
<p>UK Prime Minister David Cameron’s ardent embrace of President Xi Jinping last week has borne rapid fruit. The China State Shipbuilding Corp, the country’s biggest shipbuilder, is set to ink a £2.6 billion ($3.9 billion) joint venture with Britain's Carnival Corp, the world's largest cruise ship operator, Mainland news website said.</p> <p>The deal, which would create a new domestic cruise line brand, would help to develop China's luxury cruise-line industry. The first of five vessels built by Waigaoqiao Shipbuilding will launch in 2020.</p> <p>“The ships' displacement of 130,000 tonnes will be more than twice that of the Titanic. The ships will measure more than 300m long - the Titanic was 269.1m long - and have the capacity to hold 5,000 passengers,” reports SCMP, perhaps a tad mischievously.</p> <p>The Titanic famously sank on its maiden voyage in 1912 with the loss of 2,334 lives after striking an iceberg.<br /> Photo: cliff</p>