Levine on Wall Street: SAC IR Guy's Work Here Is Done
SAC Capital is cutting back on marketing
SAC Capital has had always done impressive public relations work. In March, when SAC agreed to pay the largest insider trading fine ever (at the time) to settle two Securities and Exchange Commission cases, it claimed to be "happy to put the Elan and Dell matters with the S.E.C. behind us" and "committed to continuing to maintain a first-rate compliance effort woven into the fabric of the firm." Arguably paying the largest insider trading fine ever is evidence that your compliance effort is in fact last-rate. Now that SAC has paid an even larger fine and agreed not to be a hedge fund any more, returning all outside money but continuing as a family office to invest Steve Cohen's and his employees' money, it has determined that it will no longer need its chief operating officer, Sol Kumin, who was in charge of business development and investor relations. Delightfully SAC's spin is that "we will not need the same degree of business development activity or investor relations as before," because they have been prohibited by law from developing business or having relations with investors. So not the same, no.
Finra is cutting back on
Finra, the Financial Industry Regulatory Authority, which is in charge of regulating brokers, boasts about its crackdown on what I guess are called "rogue brokers" by saying "No regulator gets more brokers out of the industry," which you would hope, right? It would be awkward if like the Federal Aviation Administration caught more rogue brokers than the broker regulator. Anyway this is a somewhat amusing article about how Finra is using various high-tech programs to track brokers who do bad stuff so that eventually they can be thrown out of the industry when they've done enough bad stuff. Particularly fun is the "computer-powered risk-analysis 'broker migration model' to track people who worked at expelled firms," because brokerage firms expelled from the industry for fraud probably do tend to employ brokers who commit fraud.
points for honesty
Is it unfair that UBS and Barclays have reached immunity deals with European Union antitrust regulators over Libor manipulation? Oh sure probably. They -- especially UBS -- were among the worst Libor manipulators, but "After they were contacted by U.S. and British authorities," they looked into their e-mails and chat records, found tons of manipulation, and went to EU antitrust officials to confess and get immunity as whistleblowers. (This did not help them in the U.S. or U.K., which fined Barclays some $450 million and UBS some $1.5 billion.) The incentives that this immunity creates are weird. On the one hand, sure, if you did bad stuff, come clean quickly and you'll minimize trouble. On the other hand, the companies most likely to come clean quickly are the ones who obviously and blatantly and frequently did the bad stuff: Their internal investigations can be quick and conclusive and implicate others. On the other other hand, I guess at the margin this will encourage companies to at least try to keep track of their bad stuff for easy investigating, meaning that it might slightly offset the otherwise strong incentives banks have to keep it off e-mail and chat.
Big day in the
diet shake business
Today Bill Ackman is planning to make a big presentation on how Herbalife is a pyramid scheme, which he does from time to time. Here is a long interesting Washington Post Wonkblog post about Herbalife whose thesis seems to be roughly "well, yeah, Herbalife is probably a pyramid scheme, but not enough of one for regulators to do anything about it." Which is a problem for Ackman in that for his investment to pay off he doesn't need to be right, he needs to get regulators to do what he wants, which is perhaps less a part of the hedge-fund skill set.
Here you can read a security consultant claiming that bitcoins are not a good way to pay for political assassinations. This fits with my intuitions about bitcoin's anonymity and potential use in crimes, which seem to get a lot of people -- in both the pro- and anti-crime camps -- very agitated. Yes, using bitcoins to pay for drugs or guns or murders is probably a better idea than using your credit card, but it is a worse idea than using a brown paper bag filled with cash, and really if you are going to be paying for a murder you should choose the best way to do it, not the second-best. This is not advice of any kind obviously.
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Matthew S Levine at firstname.lastname@example.org