Morning Agenda: Cohen’s Legal Recruitment
Steven A. Cohen beat them. Now he wants them to join him, Matthew Goldstein writes in DealBook. The billionaire investor, who managed to fend off a criminal insider trading investigation of himself, if not of his former hedge fund, is looking for a former prosecutor and several agents from the Federal Bureau of Investigation to join his new $10 billion investment firm, Point72 Asset Management, said several people briefed on the matter, who spoke on the condition of anonymity.
Mr. Goldstein writes: “The prospective law enforcement hirings appear to be another chapter in Mr. Cohen’s continuing effort to prove to federal authorities that his new firm will not tolerate the kind of aggressive behavior that led to eight people who once worked for his former hedge fund, SAC Capital Advisors, to either plead guilty or be convicted of insider trading.” Vincent Tortorella, a former federal prosecutor who is now Point72’s chief compliance and surveillance officer, is overseeing the search to bring several F.B.I. agents into the firm.
Mr. Cohen’s recent recruitment effort is causing a stir in law enforcement circles, given the prominent role that Mr. Cohen and his former $14 billion hedge fund have played in the government’s insider trading investigation, the people briefed on the matter said. So far, none of the F.B.I. agents or former prosecutors approached about taking a job at Point72 have expressed any serious interest despite the promise of hefty salaries, the people briefed on the matter said. One person briefed on the matter said F.B.I. agents have “rebuffed” the overtures.
RUBLE DROPS TO RECORD LOW | Russia’s government is in the middle of an all-out fight to preserve the value of the ruble in the face of plummeting oil prices and Western sanctions over the crisis in Ukraine, The New York Times reports. In the boldest move yet to contain the damage, the Central Bank of Russia announced an abrupt rate increase in the middle of the night, raising its main deposit rate to 17 percent, from 10.5 percent when Russian banks closed for business on Monday. The increase echoes the drastic steps taken during the 1998 crisis, when Russia defaulted on its debt and devalued the ruble.
The question is whether the move ‒ announced on the central bank’s website at 1 a.m. in Russia ‒ will appease the markets. On Tuesday morning, the ruble briefly rallied more than 8 percent, before erasing its gains to trade at a record low beyond 70 a dollar. Stock markets in Asia ended lower, with the yen rising almost 1 percent. United States equity index futures were little changed. The ruble plummeted on Monday by more than 10 percent, to about 64 a dollar. The ruble has lost nearly half its value since the start of 2014.
Russia’s hope is that by stabilizing the value of the currency, the interest rate increase will reduce the sense of financial panic and rapid outflows of money. Russians have pulled more than $100 billion in capital from the country this year. Analysts and traders called the central bank’s move an aggressive effort to stop the ruble’s slide. “It’s a shock-and-awe approach,” one currency expert told The Financial Times.
S.E.C. LOOKS TO DISMISS HERBALIFE SUIT | The Securities and Exchange Commission on Monday sought to dismiss an insider trading lawsuit against a man who they say profited from betting against shares of Herbalife, DealBook’s Matthew Goldstein reports. In a filing, the S.E.C. asked an administrative law judge to dismiss the lawsuit the agency filed in September against Jordan Peixoto. The agency said it would not be able to proceed with the lawsuit because the two main witnesses it intended to call to testify are now in Poland and have no plans to return to the United States.
The S.E.C. had charged Mr. Peixoto with reaping $47,100 in illicit profits by trading ahead of William A. Ackman’s announcement in December 2012 that his hedge fund, Pershing Square Capital Management, had made a $1 billion bet that shares of Herbalife would collapse. The agency said Mr. Peixoto had learned of Mr. Ackman’s bearish bet before it was announced from a friend, Filip Szymik, who in turn learned it from his roommate, Mairusz Adamski, then an analyst for Pershing Square. An appeals court ruling last Wednesday that narrowed the definition of insider trading seemed to put the lawsuit against Mr. Peixoto in jeopardy even without the departures of the two witnesses.
ON THE AGENDA | The Federal Reserve’s policy-making committee convenes for its two-day meeting. Monthly data onhousing starts is out at 8:30 a.m. The Markit purchasing managers’ manufacturing index comes out at 9:45 a.m.General Electric holds its annual outlook investor meeting at 3 p.m. On Deck is expected to price its initial public offering. Happyfirst night of Hanukkah, for those celebrating.
MORE REGULATORY SCRUTINY FOR OCWEN | The mortgage servicer Ocwen Financial has run afoul of another regulator, Peter Eavis writes in DealBook. Joseph A. Smith Jr., the monitor of the National Mortgage Settlement, announced on Tuesday that his office could not rely on information provided by Ocwen. The settlement, struck in 2012, requires banks and firms like Ocwen to meet standards that aim to ensure that struggling borrowers are treated properly. Ocwen said it would work to address the monitor’s concerns.
The questions raised by Mr. Smith add to regulatory actions that have weighed on Ocwen’s business and helped cut its stock price by more than half this year. Benjamin M. Lawsky, the superintendent of New York’s Department of Financial Services, has assailed Ocwen on several fronts, most recently contending that Ocwenbackdated letters to borrowers. Mr. Smith said on Tuesday that he had asked Ocwen to correct any issues relating to backdated letters.
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