What We Know About Trading at SAC Capital

The investigation into insider trading that circles around SAC Capital is moving billionaire hedge fund manager Steven Cohen to attempt to shore up morale.

Cohen and his top lieutenants have been trying to calm SAC employees, telling analysts and traders who work for SAC that Cohen is confident he has done nothing wrong, according to a person familiar with the matter, who is not authorized to speak publicly about the case. SAC received a Wells Notice from the Securities and Exchange Commission in November, but no charges have been filed against Cohen.

Nonetheless, the atmosphere in the firm’s offices—hardly a bastion of good cheer, even under the best of circumstances—is described as tense, with the intimidating Cohen even more intimidating than usual.

Here are a few things we know about what it’s like to work and trade at SAC Capital:

The firm is intensely competitive, with more than 100 portfolio managers running their own pools of money and their own research staffs, essentially in silos isolated from one another. Camaraderie and chit-chat are minimal. Information flows vertically—up to Cohen—not horizontally among portfolio managers.

Sundays are important days for Cohen and SAC. That’s when the firm’s portfolio managers typically call in to update the boss on important positions and to pitch him on trading ideas, usually after sending Cohen an IM message to find out when he’ll be free to talk, according to a former investment professional with the firm. Cohen is very hands-on and accessible, this person adds.

There is a director of research at the firm one can bounce ideas off—the position is currently occupied by Perry Boyle, who has been with SAC since 2004—but Cohen generally likes to hear any ideas himself. Conversations tend to be brief, with Cohen asking whether his trader feels better or worse about something. It’s not uncommon for Cohen to blow in and out of a position in a short period of time. And if he’s not sure about the soundness of one idea, he may summon other analysts to poke holes in the investment thesis, leading to lively—and sometimes tense—debate.

Cohen also always wants to know a portfolio manager’s conviction level in a particular trade: A rating of 9 out of 10 means Cohen might take a position in his own portfolio, according to a person familiar with the investigation.The SAC model is to make very large bets over short time horizons with potentially huge payouts, so Cohen wants catalysts that are likely to make stocks move the right way—a future distribution deal in China, a positive earnings announcement—quickly. As the former SAC investment professional puts it: Everyone is trying to get an edge.

On Dec. 17, former hedge fund managers Anthony Chiasson, a co-founder of Level Global Investors, and Todd Newman, a former portfolio manager at Diamondback Capital Management, were found guilty of securities fraud, leaving intact the government’s perfect insider trading conviction record. Both Level Global and Diamondback were founded by former SAC traders. Chiasson and Newman face up to 20 years in prison.

Kolhatkar is a features editor and national correspondent at Bloomberg Businessweek. Follow her on Twitter @Sheelahk.

View the original article here

Regulators Still Trying to Understand JPMorgan's Trading Flub

Just how did regulators miss the $2 billion trading loss at JPMorgan Chase (JPM)? And how can they prevent similar losses in the future? Those were the big questions Tuesday at a House Financial Services Committee hearing.

That five panelists were called on to testify shows the web of regulators that keep an eye on banks like JPMorgan. The Office of the Comptroller of the Currency oversees national banks, while the Commodity Futures Trading Commission regulates the type of derivatives trades that caused the bank’s loss. The Federal Deposit Insurance Corporation insures customer accounts in the event of bank failures, while the Federal Reserve Board of Governors keeps an eye on risks across the banking system. Then the Securities and Exchange Commission watches disclosures that banks make to their shareholders.

Responding to a grilling, the five regulators’ defense boiled down to three main points.

We didn’t get good info from the bank. Regulators said they needed better and more detailed information to spot how JPMorgan was taking on risk. Thomas Curry, the comptroller of the currency, said, “In hindsight, if the reporting were more robust or granular, we believe we may have had an inkling of the size and potential complexity and risk of the position.” Scott Alvarez, general counsel for the Federal Reserve Board of Governors, said that since JPMorgan’s own internal reports didn’t fully capture the risk, the regulators were limited. “We have to rely on information that we get from them,” he said.

We’re looking into it now. Curry, the primary regulator over JPMorgan, says the OCC is working now to examine what actually happened with the soured trade and is monitoring the “derisking” as JPMorgan unwinds its position. He also said the OCC is checking on its own procedures to see why it didn’t spot the trade in its ongoing examination of the bank. SEC Chairman Mary Schapiro said that her agency is looking into whether JPMorgan accurately reported changes to the model it used to measure risk in its first-quarter earnings. She said if those disclosures were insufficient, JPMorgan could face penalties. 

We won’t miss it next time. Schapiro and Gensler both say that pending changes as part of Dodd-Frank financial reform will help regulators spot problems in the future. While much attention has been giving to whether the Volcker Rule would have prevented JPMorgan from making these trades, regulators pointed to lesser-known parts of Dodd-Frank with wonky names like “722(d)” and “Title VII regulatory regime” that are bringing more transparency to derivatives markets. For example, Gensler says that the CFTC will be able shrink what he called “the London loophole” in its interpretation of the 722(d) provision that gives U.S. regulators some oversight of overseas trades.

The regulators hope that when financial reform is finally implemented, they’ll have more data and powers at their disposal — so that next time, they won’t be a step behind.

View the original article here

Trading Loss Haunts Dimon at JPMorgan Chase's Annual Meeting

Annual investor meetings usually begin with management recapping a company’s financial and operational state. At this morning’s JPMorgan Chase (JPM) annual meeting in Tampa, Chief Executive Officer Jamie Dimon wasted no time before addressing the elephant in the room. “I want to start with what is probably on your mind,” Dimon said, launching into brief remarks about the bank’s $2 billion loss on a derivatives bet gone awry.

Calling the bet “poorly vetted and poorly executed,” as he has done for days, Dimon said the bank had many lessons to learn from it. He praised Ina Drew, a 30-year staff veteran who ran the chief investment office until announcing her retirement on May 14. He said a change in management was necessary in light of the office’s loss and added that the bank has appointed an executive to work full-time on investigating the lapse. Then Dimon tried to get back to regular business, reading a statement about the highlights of JPMorgan’s different business units. “Each of our businesses are among the best in the world,” he told shareholders, saying the bank will be stronger and more profitable in the future.

The loss continued to charge the meeting. Several investors who presented shareholder proposals mentioned it. When a clergy member representing the Board of Pensions of the Presbyterian Church submitted a proposal to improve the bank’s mortgage servicing, he said the loss from the derivatives trade “pales in comparison” to the losses shareholders and homeowners suffered from faulty mortgage servicing. He said the bank failed to help struggling borrowers stay in their homes and created unfair foreclosures. Others cited the big loss in contending that JPMorgan’s board should be more independent; they said Dimon should not serve as both chairman and CEO and that JPMorgan should limit its political lobbying and donations.

The trading setback came up repeatedly during the Q&A portion of the meeting. Citing Dimon’s assurances that the bank could handle a $2 billion loss, one shareholder asked why the bank wasn’t devoting that kind of money to reducing the principal on troubled mortgages. Touching on a topic dear to investors’ hearts, a shareholder from Kentucky asked if the loss would cause Chase to cut its dividend. “I certainly hope not,” Dimon replied. “The company is strong, sound, profitable.”

Another shareholder suggested that the derivatives losses present an opportunity for the bank to drop its anti-reform crusade and instead support meaningful financial regulations. “You are lobbying against a strong and meaningful Volker Rule and a strong Consumer Financial Protection Bureau,” the investor said. “It’s a benefit for Chase to really have rules that will create a level playing field.”

In the middle of the Q&A session, which lasted about half an hour, a Tampa shareholder gave Dimon a vote of confidence. “We think you are doing a fabulous job,” he said. The audience responded with tepid applause.

View the original article here

Where Has All the Stock Trading Gone?

It’s been a rough few months for NYSE Euronext (NYX), owner of the country’s biggest stock exchange. In February, European regulators scrapped its planned $9.5 billion merger with Germany’s Deutsche Borse (DB1) over concerns it would create a monopoly in exchange-traded derivatives. NYSE Euronext’s first-quarter profit tumbled 44 percent, driven by a decline in trading volume. And in April, Facebook announced it would hold the most anticipated initial public offering in years on Nasdaq, NYSE’s arch rival.

That’s not to say things are much better at Nasdaq OMX (NDAQ), the second-largest U.S. equities exchange owner. Since 2000 its share of U.S. stock trading has fallen by a third, to 22 percent. Both exchange companies are contending with similar forces: an overall slowdown in trading, the rise of smaller public exchanges such as BATS and Direct Edge, and the increasing number of trades being executed “off exchange”—either at wholesale brokerages or on private trading venues known as dark pools. Since January 2008 the share of trades executed off public exchanges has increased, to 32 percent from 26 percent, according to market research firm Tabb Group. Nasdaq and NYSE “are getting a smaller bite of a shrinking pie,” says Sang Lee, an analyst at Aite Group.

NYSE has diversified, buying electronic exchange Archipelago Holdings in 2006 and the American Stock Exchange in 2008 and expanding into markets such as derivatives, which now account for 29 percent of net revenue. It’s exploring ways to make money by providing technology software and market data to other exchanges and brokers around the world. “Fifty percent of our revenue is no longer dollar-denominated,” says NYSE Chief Operating Officer Larry Leibowitz.

The exchange is also going on a PR offensive, with Leibowitz and Chief Executive Officer Duncan Niederauer warning regulators and the public about the dangers of off-exchange trading and urging regulators to take a closer look at dark pools. “After the financial crisis, we wanted to create a market with more transparency,” says Leibowitz. “Instead, it’s gotten darker and more opaque.”

Nasdaq shares NYSE’s concern about off-exchange trading. “Dark trading has real value for investors,” says Eric Noll, an executive vice president at Nasdaq. “However, we believe in the primacy of the lit market where all investors on and off exchange ought to benefit from unimpaired transparency and price discovery.”

Credit Suisse’s (CS) Crossfinder and Goldman Sachs’s (GS) Sigma X are the largest of about 40 dark pools operating in the U.S. The dark pools’ share of trading volume has more than tripled, to almost 14 percent at the end of last year from 4 percent in early 2008, according to data compiled by Rosenblatt Securities. The brokerage companies that operate them say dark pools increase execution speeds and lower transaction costs compared with public exchanges. Overall, off-exchange trading “has resulted in a much more robust and competitive market,” says Leonard Amoruso, general counsel for Knight Capital Group (KCG), a broker that operates a dark pool and also executes stock trades internally.

Most dark pools were set up in the mid-2000s, taking advantage of regulatory changes that encouraged more electronic trading. Initially they served mainly as havens for institutional investors to buy and sell stocks without letting other traders know what they were up to. As the dark pools handled more volume, they attracted high-frequency traders—speed-focused firms that use computer algorithms to buy and sell—taking more volume off public exchanges, says Aite Group’s Lee. “Their initial purpose was to take large block orders off exchange, but that’s gone by the wayside,” says Cheyenne Morgan, a research analyst at Tabb Group.

Public exchanges are subject to more regulatory requirements than dark pools are. For one thing, they must file extensive data on trading activity to the Securities and Exchange Commission. Exchanges also must treat all customers equally. Since dark pools are run by brokerages, they can discriminate, granting access only to certain firms and charging them different prices. The way Leibowitz sees it, if dark pools are going to function like exchanges, they should be regulated like them. “The bar either has to be raised for dark pools or lowered for exchanges,” he says. Knight’s Amoruso does not agree. “They’re two different business models,” he says. “They shouldn’t have the exact same rule structures as exchanges.”

Equity wholesale operations, which execute trades by buying stock themselves and selling from their own inventories, represent another challenge for public exchanges. Run by companies including Citigroup (C), UBS (UBS), and Citadel, they attract business from TD Ameritrade (AMTD), Charles Schwab (SCHW), and other brokers that process a lot of small orders from individual investors. Their appeal is that they can offer slightly better prices—a fraction of a cent higher for sellers and lower for buyers. SEC rules require public exchanges to quote prices in increments of at least one cent.

In October, NYSE asked the SEC for permission to provide prices in fractions of a cent so it can compete with wholesalers for retail traders. “We just want to be able to replicate” what the wholesalers do, says Leibowitz. The SEC is considering the proposal. Nasdaq says it may ask the agency for similar flexibility to allow it to compete for trades from individual investors. Knight Capital and the Securities Industry and Financial Markets Association, a lobbying group that represents big Wall Street banks, strongly oppose the plan. UBS has told the SEC it generally supports the NYSE proposal but believes it should also be approved for dark pools and other trading venues. “UBS welcomes competition,” says spokesman Christiaan Brakman.

Whether or not the proposal is approved, NYSE and Nasdaq will keep up their crusade against off-exchange trading. “The real way to deal with this is to take it up as a public policy issue,” Leibowitz says. “It’s not a major impact on our bottom line if we go from 25 percent to 27 percent” market share in equities trading. “This is about the quality of the public markets.”

The bottom line: The share of stock trading taking place off public exchanges has grown to 32 percent from 26 percent four years ago.

View the original article here

High-Speed Trading: My Laser Is Faster Than Your Laser

(A previous version of this story suggested the new cable had achieved an execution time faster than 60 milliseconds. That speed is expected later in 2012.)

A few weeks ago I wrote about Project Express, a new fiber-optic cable being built across the Atlantic that will give a select number of high-frequency traders a tiny speed advantage in trading times between New York and London. Currently, data take 64 milliseconds (give or take a few fractions of an eye blink) to travel round-trip between New York and London along a cable built in 1998 called the AC-1.

According to its New Jersey-based operator, Hibernia Atlantic, the $300 million Project Express will be 5.2 milliseconds faster than the AC-1, with an execution time of 59.6 milliseconds. That will make Project Express the world’s fastest transatlantic cable when it opens in 2013 and the first to achieve round-trip trading speeds of less than 60 milliseconds. Unless someone beats them to it.

As of this morning, it appears someone will. A small company called Perseus Telecom, in partnership with a subsidiary of India’s big telecom company, Reliance Communications, has announced the launch of QuanTA, a fiber-optic cable stretching from Long Island to the U.K. with an expected round-trip execution time of less than 60 milliseconds by the end of 2012. Rather than build a brand-new cable like Hibernia-Atlantic did, Perseus made improvements to an existing cable called the FLAG Atlantic-1 North, or FA-1 North, a small portion of a 17,000-mile underwater fiber-optic cable stretching from the east coast of North America to Japan. Until now, the FA-1 North was the second-fastest transatlantic cable after the AC-1.

To make the FA-1 North faster, Perseus first upgraded the cable’s “submarine optical systems,” which essentially means equipping it with faster lasers. The company also improved the backhaul systems connecting the core cable to various land-based subnetworks that spread to trading exchanges and data centers. It will next insert a giant router, or branching unit, a few hundred miles off the coast of Nova Scotia to build a shorter route to New York. With the help of submersible vehicles, a grappling hook hauled the cable off the bottom of the North Atlantic about 10,000 feet below the surface and inserted the branching unit, described as a Y-shaped device roughly the size of a conference room table.

The result will be a shorter cable powered by faster lasers. It cost $10 million to upgrade the lasers and the back-end connections. Asked how much it will cost to insert the branching unit and shorten the cable, Perseus Chief Executive Officer Jock Percy offers the following opaque calculation: It is 125th the cost of the new length of cable. Percy will say neither how much that new length costs nor how long it is. Just like the high-frequency trading industry it serves, the business of building submarine fiber-optic cables can be secretive—and highly competitive.

Although Perseus announced in January it was expanding its footprint in the data center hub at 60 Hudson Street in lower Manhattan, the company built QuanTA on the sly, announcing the project after it was done. That’s what Spread Networks did with the Chicago-to-New York underground trading cable it completed in 2010 after three years of boring through 825 miles of mostly rural, mountainous terrain in secret. Like Spread Networks and Hibernia-Atlantic, Perseus won’t disclose the identity of the trading firms it charges to use its cable, nor will it say how many there are or reveal its fees. CEO Percy will say his new project is highly cost-effective and he’s able to pass savings on to speed-trading clients.

“Market participants are always looking for advantages,” says Percy, meaning that speed traders continually look for ways to trade faster. “The cost of that advantage, though, is significant. The success of a trading strategy relies on how effectively people are able to achieve those last few milliseconds, and so a cost-effective way of delivering [faster speed] is really valuable, because just throwing money at the problem doesn’t solve it.”

The problem these new cables are solving is one of speed, not capacity. There’s plenty of fiber-optic capacity connecting most of the world’s big trading hubs, thanks to the fiber boom of the 1990s and early 2000s. Those cables were built before the era of high-frequency traders, so they rarely adhere to the shortest distance between two points: a straight line. Other than improving the caliber of the lasers shooting beams of light through these miles of cables, the only way to make them faster is to make them shorter.

Percy reckons that through a combination of improved lasers and shortened cables, the day may soon come where traders can execute a trade between New York and London at close to 40 milliseconds. Anything faster is physically impossible, save for drilling through the planet.

Assuming Einstein’s theory of relativity is correct, which the Large Hadron Collider in Europe recently reaffirmed, there’s no going faster than the speed of light, about 300 million meters per second. Since the surface of the earth is curved, a cable running along the bottom of the ocean isn’t flat. To straighten it, and thus shorten it, you’d have to drill through the earth’s crust. “If you did that you could get below 40 milliseconds,” says Percy.

So when will he finish that project? “No comment.”

View the original article here

‘Criminal Club’ Charged in $62 Million Trading Scheme on Dell

January 19, 2012, 12:06 PM EST By Patricia Hurtado and Bob Van Voris

Jan. 19 (Bloomberg) -- Seven men, including fund managers and analysts, were charged by the U.S. with forming a “criminal club” of friends and co-workers who reaped almost $62 million from insider trading in Dell Inc. shares.

Manhattan U.S. Attorney Preet Bharara alleged that the scheme included one trade that earned a $53 million illegal windfall for Level Global Investors LP co-founder Anthony Chiasson and his fund. The insider-trading ring, which involved five different hedge funds and investment firms, is the largest identified by the U.S. to date to involve a single stock, federal authorities said.

Chiasson, Todd Newman, a portfolio manager formerly at Diamondback Capital Management LLC, Jon Horvath, a hedge fund analyst in New York, and Danny Kuo, a fund manager for Whittier Trust Co. in South Pasadena, California, were taken into federal custody yesterday, said Janice Fedarcyk, head of the Federal Bureau of Investigation’s New York office.

The charges “paint a stunning portrait of organized corruption on a grand scale,” Bharara said yesterday at a news conference. “It describes a circle of friends who essentially formed a criminal club, whose purpose was profit and whose members regularly bartered lucrative inside information. It was a club where everyone scratched everyone else’s back.”

Galleon Group Scale

The U.S. said the illegal profits earned as a result of the scheme were almost of the same “magnitude of fraud we proved in the Galleon Group insider trading scheme,” Bharara said.

A five-year insider-trading probe by Bharara’s office and the FBI has resulted in charges against 63 people, Fedarcyk said. More than 50 have pleaded guilty or been convicted after trial since 2009, including Galleon Group LLC co-founder Raj Rajaratnam.

Rajaratnam, was found guilty in May and is serving 11 years in prison, the longest ever for insider trading. He made $72 million from his illicit tips, evidence showed. Several other technology company employees and fund managers have been convicted of receiving nonpublic information as a result of the probe.

At yesterday’s press conference, Bharara displayed a flowchart placing Sandeep Goyal, a former Dell employee, at the center of the ring. According to the U.S., an unnamed person in the Dell investor-relations department passed secret earnings information to Goyal, who passed it on to Jesse Tortora of Diamondback.

Circle of Friends

Tortora, Horvath, Kuo and Spyridon “Sam” Adondakis, a Level Global analyst, were friends who shared inside information on public technology companies, including Dell, prosecutors said. The ring traded the information in 2008 and 2009, according to the U.S.

Tortora passed the inside information on Dell to Newman before the computer maker announced its first- and second- quarter 2008 earnings, according to the U.S. Newman made $3.8 million in illegal profits for his hedge fund from trading on the information, according to the U.S. Tortora also passed tips to Kuo, Horvath and Adondakis.

Adondakis passed the Dell information to his colleague Chiasson and others at Level Global, according to the charging documents. They allegedly traded on the tips for $57 million in illegal profits.

Adondakis, Tortora and Goyal pleaded guilty last year to securities fraud and conspiracy charges that were unsealed yesterday, Bharara said. They are cooperating with the government’s investigation, he said.

‘More Disturbing’

Robert Khuzami, the head of enforcement at the U.S. Securities and Exchange Commission, which filed a related suit yesterday against the defendants, said the cases describe actions “far more disturbing” than insider trading committed by someone who obtains one illegal tip.

The actions by the SEC and prosecutors “lay bare an organized network of analysts and fund managers who set up and used a corrupt network to obtain inside information,” Khuzami said. “These cases, along with Galleon and expert networking cases, reflect systemic dishonesty and exposes a deeply-embedded level of corruption.”

Horvath, 42, is an analyst at Connecticut-based hedge fund Sigma Capital Management LLC, said a person with knowledge of the matter who wasn’t authorized to speak because the information wasn’t public. He was arrested by the FBI yesterday at his home in Manhattan, the U.S. said, and released on a $750,000 bond after a court appearance before U.S. Magistrate Judge James Cott in New York.

‘Honesty and Integrity’

“Throughout a more than 10-year career as a respected investment analyst, Jon Horvath has conducted himself with honesty and integrity,” Horvath’s lawyer, Steven Peikin, said after court. “He has done nothing wrong,’” and the charges against him “will be shown to be meritless,” Peikin said.

Chiasson, 38, used inside information to win for his Level Global fund what the U.S. said was a single “enormous bet” of $53 million on Dell earnings, prosecutors claimed.

“This is the largest single trade ever charged in the Southern District in an insider-trading case,” Assistant U.S. Attorney David Leibowitz said yesterday at a bail hearing, referring to the federal jurisdiction that includes Wall Street.

Greg Morvillo, Chiasson’s lawyer, argued that Leibowitz was attributing to his client trades made by others at Level Global.

Chiasson’s Bail

Chiasson, who turned himself in to U.S. authorities yesterday morning, was released on $2.5 million bond to be secured by $1.25 million in cash or property and three co- signers. Morvillo said in court that his client is innocent of the charges.

“He will be here to defend these charges, whether it’s tomorrow, next month or next year,” Morvillo told Cott.

Newman, 47, was released on a $3 million bond after appearing in U.S. District Court in Boston yesterday.

Kuo, 36, who was arrested yesterday in California, was released on $300,000 bond after appearing in federal court in Los Angeles.

Newman of Needham, Massachusetts, Chiasson of New York, Horvath of New York and Kuo of San Marino, California, are each charged with one count of conspiracy to commit securities fraud and one count of securities fraud. They face as long as 25 years in prison if found guilty, prosecutors said.

Goyal is a former junior technology analyst at Neuberger Berman, said Alexander Samuelson, a company spokesman. Goyal left the firm this month. Goyal, who didn’t trade on the information, was paid about $175,000, by Tortora through an intermediary, for the tips, Bharara said. Goyal worked for Dell at its corporate headquarters in Round Rock, Texas, from 2003 until the summer of 2006, prosecutors said.

Justine Harris, a lawyer for Adondakis; Jessica Margolis, who represents Goyal; Alfred Pavlis, who represents Newman; and Ralph Caccia, who represents Tortora, didn’t return phone messages seeking comment yesterday.

FBI Searches

In November 2010, FBI agents from New York and Boston executed search warrants at the offices of Level Global and Diamondback, hedge funds founded by former employees of SAC Capital Advisors LP.

Level Global told clients last February that it was shutting down -- eight years after David Ganek and Chiasson founded the hedge fund -- because of the U.S. probe.

Steven Goldberg, a spokesman for New York-based Level Global, didn’t return a call seeking comment on the arrests.

Diamondback, in a letter to investors yesterday, said it has cooperated with U.S. authorities. It said Newman left the firm after the 2010 search and Tortora resigned in April 2010.

Civil Complaint

The SEC’s civil insider-trading complaint was filed in Manhattan federal court against all seven men, Diamondback Capital and Level Global. In addition to the alleged Dell insider trades, the SEC claims members of the ring traded on inside information about chipmaker Nvidia Corp. Level Global made at least $15.6 million in illegal profits on its Nvidia trades, the agency claimed.

Peter Neiman, of Wilmer Hale, a lawyer for Diamondback Capital, declined to comment on the SEC lawsuit. MaryJeanette Dee, a lawyer for Level Global, didn’t immediately return a voice-mail message left at her office seeking comment on the suit.

During the trial last year of James Fleishman, a former executive at Primary Global Research LLC, witnesses testified that he helped employees of technology companies pass nonpublic information to his expert-networking firm’s fund manager clients. Fleishman was convicted of conspiracy charges related to insider trading.

One witness, Mark Anthony Longoria, a former Advanced Micro Devices Inc. employee, described how he passed secret tips and other information about his company to fund managers, including Adondakis.

Primary Global

Bob Nguyen, a former Primary Global analyst who pleaded guilty and agreed to cooperate with the U.S., testified at Fleishman’s trial that Tortora was a client of Fleishman’s who got nonpublic information about technology companies through the Mountain View, California-based research firm.

Daniel Devore, a former global supply manager of Dell, pleaded guilty and is cooperating with the U.S. insider-trading investigation.

The criminal case is U.S. v. Newman, 12-00124, U.S. District Court, Southern District of New York (Manhattan). The civil case is Securities and Exchange Commission v. Adondakis, 12-00409, U.S. District Court, Southern District of New York (Manhattan).

--With assistance from Saijel Kishan, Katherine Burton and Edmund Lee in New York, Janelle Lawrence in Boston and Edvard Pettersson in Los Angeles. Editors: Andrew Dunn, Peter Blumberg

To contact the reporters on this story: Patricia Hurtado in New York federal court at pathurtado@bloomberg.net; Bob Van Voris in New York federal court at rvanvoris@bloomberg.net

To contact the editor responsible for this story: Michael Hytha at mhytha@bloomberg.net

View the original article here

Banks Curb Carbon Trading

Tanking: Carbon Credits

By Ben Sills

Greenhouse gases aren’t rising to the top of most agendas right now. Emission caps established under the Kyoto Protocol are set to expire at the end of 2012, and a United Nations-led effort to forge a new global compact is inching forward. The European Union, which runs the world’s biggest carbon trading market, has other things on its collective mind. One side effect of all this is a 47 percent drop this year through Dec. 12 in the value of C0? allowances issued under the EU’s Emissions Trading Scheme. The permits, which mostly go to utilities and other industrial companies, can be banked or traded.

The biggest banks, trying to recover from trading losses and a regulatory clampdown on using their own money to make bets, are scaling back their carbon trading operations. “People are leaving the industry because they’ve been fired or because they see no prospects,” says Emmanuel Fages, head of energy research for Europe at Societe Generale in Paris. “That is the sad story.”

The latest casualties include Odin Knudsen, managing director for environmental markets at JPMorgan Chase, who in October left his New York post after his team was shrunk. The previous month, UBS Securities fired Vice-Chairman Jon Anda and the rest of his Stamford (Conn.)-based climate policy team. Anda and Knudsen confirmed their departures in interviews. JPMorgan would not comment. UBS spokesman Christiaan Brakman said in an e-mailed response to questions that UBS “remains committed to address climate change.” Fages’s employer, Societe Generale, announced on Nov. 25 that it had agreed to sell its 50 percent stake in carbon trading joint venture Orbeo to partner Solvay Group, a chemical maker.

In Europe, demand for emissions permits has been crimped by the economic slowdown, which has forced industry to idle plants. The value of carbon trading fell 8 percent, to €23.7 billion ($32 billion), in the third quarter from the previous three months as the price of permits tumbled, according to Bloomberg New Energy Finance data.

A carbon offset program operated by the UN is in jeopardy as a result of the expiration next year of greenhouse gas caps set by the Kyoto Protocol. Under the UN program, companies and nations can earn credits to offset fossil-fuel emissions by sponsoring renewable-energy projects. A follow-up treaty to Kyoto won’t come into force until 2020 at the earliest. Japan, Russia, and Canada have refused to accept new limits in the meantime.

The carbon trading industry’s dimming outlook can be seen in the thinning membership rolls of the International Emissions Trading Assn. About 10 institutions have quit the Geneva-based trade group this year, cutting membership to around 150 companies. “There are shakeouts and departures happening as you would expect to be the case during any market that was a little bit unsure about where it was going,” says Henry Derwent, the organization’s president. Carbon trading “is currently suffering, as so many other markets are, from low economic activity in the main area, which is the European Union.”

The bottom line: Europe’s sovereign-debt crisis and lack of progress in global climate talks are leading some investment banks to ax carbon trading.

Sills is a reporter for Bloomberg News.

View the original article here

Strategic Stock Trading: Master Personal Finance Using Wallstreetwindow Stock Investing Strategies With Stock Market Technical Analysis

Many say few know more about stock trading than Michael Swanson, who ran a top ranked hedge fund for four years and has built up a huge audience of readers on his website WallStreetWindow.com thanks to the accuracy of his market calls and investment acumen, including making over 50% in 2008 in one of the worst years for the stock market ever. His book Strategic Stock Trading demystifies the stock market by explaining what truly makes the stock market and individual stocks move the way they do and shows you how you can take advantage of it. The book explains the principles required for you to become an elite trader in the stock market, including what and when to buy and sell using the Two Fold Formula, how to manage risk, and how to be able to foresee real changes in the overall trend of the market before the crowd does. There are many investment books that describe aspects of technical and fundamental analysis. This one puts them together and shows you have to really use them in a strategic way backed by real life experiences and examples. It also discusses the psychology of investors in the market and how hedge funds and institutional investors now influence the stock market more than ever before and what the individual investor must do in this type of market to succeed.

Price: $14.95

Click here to buy from Amazon