Eliot Spitzer

Citi's research move a good idea

Jim Kim — Wed, 13 Aug 2008 07:12:51 -0400

Citi has confirmed that it is indeed moving its stock research unit out of Smith Barney, where it was placed following the stock research scandals of yesteryear, and back into institutional clients' business. It will become part of a new research unit that will combine fixed income and economic and equities research, and lead to some cost savings. Breakingviews argues this is a good move. The Chinese Walls that the settlement with Eliot Spitzer brought forth will still be in place, and the analysts will not be reporting to banking heads. They'll report instead to chief operating officer Hamid Biglari. It will be interesting to see what kind of research emerges from this move. The bank may try to offer a blend of analysis that treats stocks, debt and other securities as a whole, along the lines of the savvy work at Creditsights. We'll see.

For more:
- here's the Breakingviews article

Recombining stock research and banking a good idea?

Jim Kim — Wed, 06 Aug 2008 13:49:15 -0400

You can bet Eliot Spitzer is not taking this well: Citigroup is mulling a move that would fold its once-maligned equity research unit into the institutional securities business. Recall that six years ago, in a high-profile victory for Spitzer, a so-called "global settlement" forced banks to separate the two and ended the practice of using analysts as tools of bankers. This may seem shocking. But the fact is that investment banking still pays for the research, the Financial Times notes. Citi execs tell the paper that rules separating the two functions will prevent any conflicts of interest. Which makes sense. But not all have great trust in Citi right now. It was just accused of destroying evidence in an auction rate security probe by the state of New York. Meanwhile, Mass. regulators accused Merrill Lynch execs of muzzling an analyst who was bearish on auction rate securities.

For more:
- here's the Financial Times article

Frank Quattrone laments lack of pre-IPO research

Jim Kim — Fri, 25 Jul 2008 07:57:46 -0400

Frank Quattrone, who famously beat a long government attempt to convict him of obstruction, is certainly back on the technology industry banking scene. At a recent conference, he lambasted Eliot Spitzer's efforts to separate banking and research, which included rules that apparently make it harder for sell-side analysts to work on pre-IPO companies. Quattrone also said top sell-side analysts have fled Wall Street for hedge funds and private equity because they can no longer get paid the way they could in the dot.com era. The dearth of VC-backed IPOs stems from a host of other factors. I'm not sure the lack of sell-side research at the pre-IPO stage ranks that high. The going-public bar is just so much higher now. In any case, Quattrone's Qatalyst Group seems to be faring well. It is currently advising Google in the Microsoft-Yahoo matter.

For more:
- here's an article in the San Francisco Chronicle

Grasso wins! Former NYSE chief can keep money

Jim Kim — Wed, 02 Jul 2008 07:54:47 -0400

Dick Grasso's career seemed to be ending on a very sour note: the State of New York was making him something of a poster boy for his gargantuan pay over the years. In an ugly battle, then-New York Attorney General Eliot Spitzer went after Grasso for the $139.5 million he was paid. Along the way, there were hardly flattering portrayals of Grasso, who came across as embittered. But a judge has dropped the few remaining charges against him. So Grasso gets to keep the money after all, which he vowed to do all along. Andrew Cuomo, Spitzer's successor, said he will not pursue the issue.

For more:
- here's the New York Times article

Grasso finally vanquishes Spitzer

Jim Kim — Wed, 25 Jun 2008 21:11:56 -0400

Truth be told, former NYSE chairman Dick Grasso's battle against former New York State Attorney General Eliot Spitzer was looking better, even before Spitzer imploded amid revelations that he used an escort service. This week, yet another nail was driven into Spitzer's public-life coffin: The New York State Court of Appeals agreed with a lower court ruling that chucked four of six counts brought by Spitzer against Grasso that would have forced the latter to pay back $187.5 million of compensation he amassed during his time at the Big Board. As of now, the New York Times reports, a ruling that Grasso breached his duties and must pay back $100 million still stands. Regardless, this has to count as a big, satisfying win for Grasso, whose enmity toward Spitzer is well known. You now have to wonder if Andrew Cuomo will seek a settlement to end the saga once and for all.

For more:
- here's the New York Times article

Wall Street can't knock Grasso out

Jim Kim — Tue, 03 Jun 2008 07:17:11 -0400

This seems like it happened a long time ago: Former NYSE chief Dick Grasso was locked in a do-or-die struggle with then state Attorney General Eliot Spitzer over his eye-catching take of $185 million. The New York Times points out that Grasso may have put some kind of curse on his adversaries. Just look at what has happened to Spitzer--a humiliating story to say the least. And then there's Jimmy Cayne and Stanley O'Neal, both whom were on the board that approved much of Grasso's pay and witnessed his fall from grace. The Times says Grasso, who faces a court date this week, has a "a growing chance that he may keep the vast portion of his payout."

For more:
- here's the article

Citigroup anlayst gets it wrong--really wrong

Thu, 08 May 2008 06:59:56 -0400

Shannon Cowherd, bank analyst at Citigroup, raised eyebrows last week when she put out a note to clients estimating that the Royal Bank of Canada faced a whopping $10.2 billion in writedowns. Whew! The Globe and Mail noted that no other analysts was expecting more than $800 million. The bank issued a release saying the analyst had her facts wrong. The next note to clients had a revised estimate, $1.8 billion, based in part on "incremental information." Still high, but in the ballpark. Analysts are still influential, even in this post-Spitzer era. These sorts of gaffes are rare, but they do happen. The sad part is that some IR employee likely took the blame internally.

For more:
- here's the Globe and Mail article

ALSO NOTED: Wachovia to take big charge due to court ruling; Och-Ziff founder fares well; and much more...

Thu, 01 May 2008 06:59:50 -0400

Company News:
> Wachovia to take big charge due to court ruling. Article
> Analysts sour more on Countrywide. Article
> PNC private equity unit sells food maker. Article
> Despite stock swoon, Och-Ziff founder fares well. Article

Industry News:
> Police hunting for hedge fund fraudster in Canada. Article
> Cramer: The only non-toxic banks. Video
> Banks need to come clean on capital needs. Article
> Book about Eliot Spitzer coming soon. Article

Regulatory News:
> SEC must give up documents in Aguirre case. Article

And Finally... Is a liberal arts degree a waste in the job market? Article

ALSO NOTED: UBS downgrades financial firms; Chanos tied to Spitzer scandal; and much more...

Tue, 18 Mar 2008 07:59:50 -0400

Company News:
> UBS considering 8,000 layoffs. Article
> Chanos tied to Spitzer scandal. Article
> Wilbur Ross buys H&R Block mortgage unit. Article
> Lehman in rumor-denying mode. Article
> Lehman fears overblown. Brief
> Biggest threat to Lehman is rumors. Brief
> UBS downgrades financial firms. Article
> Lehman CEO tries to calm employees. Article

Industry News:
> CME to buy NYMEX for 9.5 billion. Article
> Are more firms vulnerable? Video
> Online brokerages take a hit. Article
> Did taxpayers fund the Bear bailout? Article
> Credit card data at risk in new breach. Article
> Commercial bank stocks take a hit. Article

And Finally... March Madness: Office pools present issues. Article

ALSO NOTED: Cramer: Major collapse needed for recovery; Citigroup reaches out to John Reed for help; and much more...

Fri, 14 Mar 2008 07:59:50 -0400

Company News:
> Credit Suisse sues resort after default. Article
> More on Carlyle Fund collapse. Article
> Cramer: Major collapse needed for recovery. Video
> Citigroup reaches out to John Reed for help. Article
> SocGen trader and bosses questioned. Article
> Twist in Jerome Kerviel affair. Article

Industry News:
> How bad will it get for financial stocks. Article
> Mortgage rates jump. Article

Regulatory News:
> FINRA warns on reverse mortgages. Article
> Will Fed directly enter the markets? Article

And Finally... Spitzer: A Wall Street quiz