DealBook: Barclays Swings to Profit but 1nvestment Banking Revenue Falls

Photo Barclays' results were hurt by lower revenue from investment banking and higher provisions for improperly sold insurance.Credit Suzanne Plunkett/Reuters

LONDON – Barclays said on Wednesday that it had swung to a profit in the second quarter, but its results were hurt by lower revenue from investment banking and higher provisions for improperly sold insurance.

The bank posted net income of 161 million pounds, or about $273 million, compared with £168 million loss in the period a year earlier. The results exceeded analysts' expectations.

Barclays set aside an additional £900 million in the quarter to compensate clients who were inappropriately sold payment protection insurance. The bank has paid a total of £3.56 billion on such claims.

It also said that the United States Justice Department had extended until 2015 the period of review imposed after Barclays employees manipulated global benchmark interest rates, while prosecutors examine the bank's conduct as part of an industrywide investigation of the foreign exchange market.

Barclays is in the middle of a restructuring plan that includes eliminating up to 19,000 jobs over the next three years. The bank said in a call with reporters on Wednesday that its head count was at its lowest level since 2007 and that it had eliminated about 5,000 jobs this year.

"Structural cost reduction is vital to achieving strong returns, and we continue to make progress on reducing operating expenses while maintaining controls and improving customer and client experience," Antony P. Jenkins, the bank's chief executive, said in a statement on Wednesday.

For the first six months of the year, profit from the bank's continuing operations rose sharply, to £1.13 billion, from £671 million in the period a year earlier. On an adjusted pretax basis, its first-half profit fell to £3.35 billion from £3.59 billion in the first half of 2013.

Pretax profit in the investment banking unit declined by more than half, to £567 million, from £1.14 billion in the period a year earlier. The bank plans to drastically shrink the division by eliminating 7,000 jobs there by 2016.

The bank increased provisions for claims involving payment protection insurance by £900 million in the quarter. The insurance product has cost banks in Britain billions of pounds to compensate consumers who were improperly sold the insurance.

Barclays is facing a variety of legal challenges, including a lawsuit brought by the New York attorney general, Eric T. Schneiderman, over the bank's so-called dark pool, or private stock trading platform.

In June, Mr. Schneiderman accused Barclays of favoring high-frequency traders over other investors in its dark pool, known as Barclays LX. Barclays has asked that the lawsuit be dismissed, saying Mr. Schneiderman had overstepped his authority.

Deutsche Bank and UBS also are facing inquiries from Mr. Schneiderman's office regarding their dark pools.

In a conference call with journalists on Wednesday, Tushar Morzaria, the chief financial officer of Barclays, said the volume of trading in the bank's dark pool had increased after declining briefly on news of the lawsuit, and was up 42 percent in its most recent report.

Dark pools have grown in popularity in recent years, in part because they allow big investors like pension funds to place orders privately, without alerting the rest of the market to their intentions.

Barclays has been subject to a nonprosecution agreement with the Justice Department as part of a settlement with the American and British authorities over manipulation of global benchmark interest rates by its employees. Under the agreement, Barclays would avoid criminal prosecution if it refrained from any additional misconduct for two years.

But the bank, which agreed to pay $450 million as part of the settlement, said on Wednesday that the Justice Department had extended the period for the nonprosecution agreement for a year as it conducts an industrywide investigation into potential manipulation of the foreign exchange market. The extension, which relates only to conduct subject to the currency inquiry, will give the Justice Department until June 27, 2015, to determine whether Barclays' trading activities constituted a "United States crime" under the terms of the agreement.

The bank's common equity Tier 1 capital, a measure of its ability to absorb losses, rose to 9.9 percent at the end of the second quarter from 8.1 percent a year earlier.

European banks are required to have a minimum of 4 percent common equity Tier 1 capital under the so-called Basel III regulatory program, but larger banks are required to maintain a much higher minimum capital level, which is set by regulators.

source : http://rss.nytimes.com/c/34625/f/640316/s/3d00c3ae/sc/2/l/0Ldealbook0Bnytimes0N0C20A140C0A70C30A0Cbarclays0Eswings0Eto0Eprofit0Ebut0Esees0Edrop0Ein0Einvestment0Ebanking0Erevenue0C0Dpartner0Frss0Gemc0Frss/story01.htm

DealBook: Profit Soaring After Disgrace at Steven Cohen’s Hedge Fund

Photo Steven A. Cohen, the founder of the family office Point72 Asset Management, at a New York Knicks game last year.Credit Justin Lane/European Pressphoto Agency Related Links

Updated, 8:38 p.m. | Three months after his once-powerful hedge fund entered a guilty plea to insider trading charges, Steven A. Cohen is doing quite well.

This summer, Mr. Cohen and his family rented a yacht off the Greek islands for a vacation. An avid art collector, Mr. Cohen attended Art Basel in Switzerland in June. And last weekend, he and his wife, Alexandra, were guests at a charitable event at the Hamptons home of the comedian Jerry Seinfeld and his wife, Jessica.

Most of all, Mr. Cohen, 58, is continuing to do what he has done best for more than two decades: make an astounding amount of money from trading stocks and bonds.

His renamed firm, Point72 Asset Management, which manages $9 billion to $10 billion of his personal fortune, is proving to be nearly as profitable as his former hedge fund.

Over the first six months of this year, the firm generated a profit of nearly $1 billion, said two people briefed on the matter. In 2013, SAC Capital Advisors' last year as a hedge fund, Mr. Cohen personally made about $2.3 billion.

Credit John Marshall Mantel for The New York Times

The profits generated to date at Point72 are nearly equal to the $1.2 billion penalty that SAC paid to the federal government as part of its guilty plea. Mr. Cohen's new firm, which is prohibited from managing money for outside investors, is making money even as more than a dozen top portfolio managers or traders have left for jobs with other hedge funds.

Despite those departures, the stain on his reputation and a still unresolved civil action against him, little has changed for Mr. Cohen.

His new firm employs nearly 850 people, just 150 fewer than SAC did last summer when the then-$14 billion hedge fund was indicted and Preet Bharara, the United States attorney in Manhattan, called the fund a "magnet for market cheaters." Only one Wall Street firm — Deutsche Bank — has chosen to stop lending money and serving as a prime broker to Point72 after SAC's guilty plea.

Mr. Cohen's firm even plans to continue an annual Thanksgiving tradition begun by SAC — it will again sponsor a giant balloon inflation celebration and parade in downtown Stamford, Conn., on Nov. 22.

Photo SAC Capital Advisors in Stamford, Conn., was renamed Point72 Asset Management, and continues to generate money.Credit Suzanne DeChillo/The New York Times

There is a new sign outside the firm's 98,900-square-foot headquarters at 72 Cummings Point Road in Stamford and employees now don fleece vests emblazoned with the Point72 logo as opposed to the old SAC one. But those changes are largely cosmetic.

Federal authorities insist that SAC's guilty plea, combined with the insider trading convictions of more than 80 people, including eight who used to work for Mr. Cohen, serves as a powerful deterrent. But some say that message may travel only so far.

"The SAC affair put more fear into midlevel people than into billionaires," said Erik M. Gordon, a professor at the Stephen M. Ross School of Business at the University of Michigan. "If you are as rich as Cohen, you can survive huge fines and attorney fees and even an industry ban that leaves you managing your own billions. The only thing you fear is jail time."

Jonathan Gasthalter, a spokesman for Mr. Cohen, declined to comment. The firm this year has taken a number of steps to stiffen its compliance procedures and surveillance of traders to ensure that no more improper trading takes place.

It remains to be seen if Point72 will be able to continue its early success, especially if top traders continue to leave and the firm makes no new star hires to replace them.

The two most recent prominent departures are the portfolio managers Shoney Katz and Peter Avellone, who are joining a trading platform at Citadel, the large investment firm led by Kenneth C. Griffin, another billionaire investor. Mr. Katz and Mr. Avellone left Point72 within the last few weeks, said the people briefed on the matter who spoke on condition of anonymity.

Gabriel Plotkin, one of Mr. Cohen's most successful traders, recently wound down his onetime $1 billion stock portfolio to focus exclusively on raising money for his own hedge fund, which will start next year with up to $200 million in financial backing from Mr. Cohen. Mr. Plotkin seeks to raise up to $1 billion from other investors and intends to staff his new fund with the analysts and junior traders who have worked with him at Mr. Cohen's firm, these same people said.

Point72 has managed to hire just two established traders from the outside so far this year: Scott Braunstein, who came from JPMorgan Chase's asset management division, and Howard Man from Bank of America Merrill Lynch. For Mr. Man, who will be based in the Point72 office in Hong Kong, this is his second go-round working for Mr. Cohen.

Most of the hires at Point72 have been research analysts, many of them relatively junior employees. The firm has brought on about 30 new analysts this year, said a person briefed on the matter. This person, who spoke on condition of anonymity, said Mr. Cohen was looking to hire analysts over more experienced traders because he now preferred to groom his own trading force.

In effect, Mr. Cohen, a minority owner in the New York Mets baseball team, is looking to create his own internal farm team to develop the firm's traders of tomorrow.

But that strategy has risks, because it takes time for an analyst to mature into a trader knowledgeable enough to take the appropriate risk to make money. Hedge fund industry recruiters who did not want to be identified because they sometimes worked with Point72 said the firm's push to hire analysts also reflected the fact that top traders were still reluctant to join the firm so soon after SAC's guilty plea.

The billion-dollar profit that Point72 has made so far this year is a large one, but the firm is a very different creature now, and comparisons with hedge funds are inexact. Because it is what is known as a family office, the firm does not have outside investors to share profits and pay fees.

Through the end of June, Point72 was up a little over 9 percent, but that is a gross figure, said two people briefed on the matter. Hedge funds are normally judged based on their performance after paying fees and expenses. If Point72 were still operating as a hedge fund, its reported performance to outside investors would be closer to 4 to 5 percent.

A 4 percent gain would be enough to beat the average 3.2 percent return posted by all hedge funds as measured by the Hedge Fund Research indexes. A year ago, SAC ended June up 8.25 percent after paying fees and expenses. For the full year, the fund posted a 20 percent return.

By that standard, the current 9 percent gross return is good, but it is a far cry from the 25 percent average annual return SAC recorded during its 22-year history.

A version of this article appears in print on 07/30/2014, on page A1 of the NewYork edition with the headline: Profits Soaring After Disgrace at Hedge Fund.

source : http://rss.nytimes.com/c/34625/f/640316/s/3cfe0c42/sc/30/l/0Ldealbook0Bnytimes0N0C20A140C0A70C290Cafter0Einsider0Etrading0Escandal0Esteven0Ea0Ecohens0Efirm0Estill0Ehas0Estrong0Egains0C0Dpartner0Frss0Gemc0Frss/story01.htm

DealBook: Barclays Swings to Profit But Sees Drop in 1nvestment Banking Revenue

LONDON – The British bank Barclays said on Wednesday that it had swung to a profit in the second quarter, but that it was hit by lower revenue in its investment banking unit and by higher provisions for improperly sold insurance.

The bank posted net income of 161 million pounds, or about $273 million, for the three months that ended June 30, ahead of analysts' expectations. That compared with a loss of £168 million in the second quarter of 2013.

The bank set aside hundreds of millions of additional pounds for claims related to its selling of payment protection insurance in the quarter. It also said that the United States Department of Justice had extended the period of review related to the bank's employees' manipulation of global benchmark interest rates until 2015, while prosecutors review its conduct as part of an industry-wide inquiry into the foreign exchange market.

Barclays is in the middle of a massive restructuring, in which it plans to slash as many as 19,000 jobs over the next three years. The bank said that its headcount was at its lowest level since 2007 and that it had eliminated about 5,000 jobs so far this year.

"Structural cost reduction is vital to achieving strong returns, and we continue to make progress on reducing operating expenses while maintaining controls and improving customer and client experience," Antony P. Jenkins, the Barclays chief executive, said.

For the six months ended June 30, profit from its continuing operations nearly doubled to £1.13 billion, up from £671 million in the prior year period.

On an adjusted pretax basis, the bank posted a first-half profit of £3.35 billion pounds, down from £3.59 billion in the period a year earlier.

In its investment bank, pretax profit declined by more than half, to £567 million in the second quarter, from £1.14 billion in the period a year earlier. Barclays is dramatically shrinking the size of its investment bank, where it will cut 7,000 jobs by 2016.

In the second quarter, the bank increased its provision for payment protection insurance claims by £900 million.

The insurance product has cost banks in Britain billions of dollars in compensation for consumers who were improperly sold the insurance.

Barclays is facing a variety of legal issues, including a lawsuit by New York Attorney General Eric T. Schneiderman over its private stock market, or dark pool.

In June, Mr. Schneiderman accused Barclays of favoring high-frequency traders over other investors in its dark pool, known as Barclays LX. Barclays has asked that the lawsuit be dismissed, saying Mr. Schneiderman overstepped his authority.

Deutsche Bank and UBS also are facing inquires from Mr. Schneiderman's office regarding their dark pools.

In a conference call with journalists on Wednesday, Tushar Morzaria, the Barclays finance director, said that the volume of trading in its dark pool had increased after it briefly fell off following the filing of Mr. Schneiderman's lawsuit and was up 42 percent in its most recent report.

The bank's common equity Tier 1 capital, a measure of its ability to absorb losses, rose to 9.9 percent at the end of the second quarter from 8.1 percent at the end of the year-earlier period.

European banks are required to have a minimum of 4 percent common equity Tier 1 capital under the so-called Basel III regulatory program, but larger banks are required to maintain a higher minimum capital level, which is set by regulators.

source : http://rss.nytimes.com/c/34625/f/640316/s/3d00c3ae/sc/2/l/0Ldealbook0Bnytimes0N0C20A140C0A70C30A0Cbarclays0Eswings0Eto0Eprofit0Ebut0Esees0Edrop0Ein0Einvestment0Ebanking0Erevenue0C0Dpartner0Frss0Gemc0Frss/story01.htm

China 1nvestigating Microsoft for ‘Monopolistic Behavior’

By CHRIS BUCKLEY July 29, 2014

HONG KONG — The Chinese government announced that Microsoft faced investigation for possible violations of antimonopoly laws, and confirmed that officials had conducted surprise visits to the company's offices across the country, a statement released late Tuesday said.

The announcement, by the State Administration for Industry and Commerce, which enforces China's antimonopoly law, confirmed reports on Monday that Microsoft was under scrutiny and said "an investigation has been established into Microsoft Corporation on suspicions of monopolistic behavior."

The agency said it was acting on complaints from businesses that Microsoft's Windows operating system and Office software products were packaged and sold in ways that violated China's 2008 antimonopoly law.

Phone calls and an email to a Microsoft officer in Beijing were not answered. On Monday, after initial reports of surprise visits by officials, the company said, "We're happy to answer the government's questions."

The announcement made Microsoft the latest foreign high-tech company to come under pressure from China. Officials and state-run media have accused foreign tech companies of dominating the marketplace and abetting intelligence-gathering by the United States government.

President Xi Jinping has re-emphasized longstanding demands that China reduce its reliance on foreign technology suppliers. In June he said that "only if core technologies are in our own hands can we truly hold the initiative in competition and development."

Last week, Chinese media reported that the National Development and Reform Commission was investigating possible antitrust violations by Qualcomm, one of the world's largest makers of the chips used in mobile devices.

The State Administration for Industry and Commerce said that on Monday nearly 100 of its officers visited Microsoft premises across China, including Beijing and Shanghai. They questioned senior managers and sales staff, copied financial records and took data from computers. They also confiscated two computers.

The administration said it was acting on complaints made last year, and after an initial inquiry "could not exclude that the aforementioned conduct by Microsoft Corporation carried suspicions of monopolistic behavior." It also said that it wanted to question Microsoft employees who were abroad, but did not name them.

source : http://rss.nytimes.com/c/34625/f/640316/s/3cfefd71/sc/1/l/0L0Snytimes0N0C20A140C0A70C30A0Cbusiness0Cinternational0Cchina0Econfirms0Einvestigation0Eof0Emicrosoft0Eon0Epossible0Emonopoly0Eviolations0Bhtml0Dpartner0Frss0Gemc0Frss/story01.htm

As Sanctions Pile Up, Russians’ Alarm Grows 0ver Putin Tactics

Critics are saying that President Vladimir V. Putin overreached by suggesting that Russia could thrive without the West. By NEIL MacFARQUHAR July 29, 2014

MOSCOW — Russia, facing the toughest round of Western sanctions imposed since the Ukraine crisis erupted, has adopted a nonchalant public stance, with President Vladimir V. Putin emphasizing the importance of self-reliance and a new poll released Tuesday indicating a "What, me worry?" attitude among the bulk of the population.

But beneath that calm facade, there is growing alarm in Russia that the festering turmoil in Ukraine and the new round of far more punitive sanctions — announced Tuesday by both European nations and the United States — will have an impact on Russia's relations with the West for years to come and damage the economy to the extent that ordinary Russians feel it.

Until now, Mr. Putin's tactics seemed to be working. Russia was feeding the separatist insurgency in Ukraine without leaving distinct fingerprints — able to press Kiev to come to terms while avoiding a rupture with Europe that would alienate Russia's business elite. But that strategy is beginning to crumble, battered under successive shock waves generated by the crisis.

More frequent and prominent critics are saying that Mr. Putin and the hard-line leaders in the Kremlin overreached by suggesting that Russia, far more dependent than the old Soviet Union on international trade and financial markets, could thrive without the West.

Graphic | How Much Europe Depends on Russian Energy Map of European energy imports that come from Russia.

"They were not anticipating the West to make radical moves, costly moves," said Nikolai Petrov, an independent political analyst. "What is happening is different from what they wanted and what they expected."

He and others pointed to the downing of the Malaysia Airlines Boeing 777 over embattled southeastern Ukraine on July 17 as upsetting the balancing act that Mr. Putin had managed to pull off to maintain support from the public, hard-line nationalists, the security services, the oligarchs and the more liberal business community.

"Until this catastrophe, Putin's calculations were pretty good in terms of being able to win any tactical battle," Mr. Petrov said.

The Kremlin had been counting on its ability to maintain just enough instability in Ukraine to keep the country dependent on Russian good will, while making Europe and the United States cautious about intervening too assertively there.

Video | Kerry Meets Ukraine's Foreign Minister Secretary of State John Kerry and Pavlo Klimkin, Ukraine's foreign minister, spoke after meeting in Washington to discuss the conflict in Ukraine.

Right after this weekend, when the likelihood of more serious European sanctions materialized, Mr. Putin met with advisers to say that Russia needed to become self-reliant. He was referring to arms production previously done in Ukraine, but the sentiment echoed in other fields.

"No matter what the difficulties we may encounter, and to be honest, I do not really see any big difficulties so far," he said, according to a transcript on the Kremlin website, "I think that they will ultimately work to our advantage because they will give us the needed incentive to develop our production capability in areas where we had not done so yet."

Domestically, grumbling over the creeping isolationism has grown louder. Roughly 50 percent of the economy is state-run, and the loyalty of those who direct such companies to Mr. Putin remains absolute. But the rest are changing.

"It is still a very polite version: 'Maybe something is going wrong,' " said Sergei Petrov, an opposition member of Parliament and the founder of Rolf, one of the biggest car importers in Russia. "They would never say it to you, a foreigner, but I hear more and more critics."

A former finance minister and a close Putin ally, Alexei Kudrin, voiced rare public criticism of Kremlin policy in an interview last week with the state-run news agency ITAR-TASS.

Mr. Kudrin said he was worried that the Ukraine crisis would drive Russia into a "historic confrontation" that would retard the country's development across the board.

The business community was dismayed by the amount of anti-Western comments on television and radio, he said, indicating a "fundamental" shift that made the West Russia's adversary again.

"Things are different in business," he said. "Businessmen want to work, to invest, build factories and develop trade."

Some analysts saw that interview as a sign that Mr. Putin was looking for a way out, preparing to abandon the Ukraine separatists publicly. They linked it to a similar sentiment in a column in the newspaper Kommersant on Tuesday, by a journalist close to the president, suggesting that he had allowed the black boxes from the Malaysian airliner to be sent to the West because he did not fully trust the information he got from his advisers.

But there has been no direct indication from Mr. Putin that he wants to change tacks.

Officially, Russia tried to play down the airplane disaster, which killed all 298 people on board, although some news outlets raised questions from the start. The front page of the government-owned Russkaya Gazeta the day after the crash put the report on the bottom half — the top story was that Russians were eating less bread and potatoes.

The general sense here was that the West was again piling on Russia without evidence — that it was a political issue.

"In my opinion, we face a critical situation today," Lev Gudkov, the director of the Levada Center, an independent polling organization, told a weekend seminar audience. "But our society does not realize it against a backdrop of patriotic and chauvinistic euphoria."

That euphoria was rooted in the relatively bloodless, seemingly costless annexation of Crimea in March. The public expected that the rest of the crisis in Ukraine would be resolved with similar ease.

"The situation began changing dramatically after the crash of the Boeing," Mr. Gudkov said. "According to our research, reaction inside the country was quite weak, but the Western European public has drastically changed its attitude towards Russia."

Indeed, poll results released Tuesday by the Levada Center showed the Russian public barely concerned about sanctions. More than 60 percent of respondents thought they would have little or no impact on them. Mr. Putin remains hugely popular.

The official attitude was also calm. "We can't ignore it," the foreign minister, Sergey V. Lavrov, said at a news conference on Monday when asked about the expected sanctions. "But to fall into hysterics and respond to a blow with a blow is not worthy of a major country."

Mr. Lavrov also expressed disappointment that the Ukraine crisis was damaging relations between Russia and the West, but said repeatedly that it was the fault of Western capitals because they had encouraged Kiev to fight rather than negotiate.

"No one is pleased with the deterioration of relations between the partners," he said. "We are trying to influence the situation in Ukraine to move it from the military confrontation to political negotiations."

But others were less sanguine as the sanctions piled up.

Beyond sanctions, an arbitration court in The Hague ruled Monday that Russia should pay former Yukos shareholders $50 billion for breaking up the oil and gas company decade ago. The ruling added an element of uncertainly to dealing with Gazprom and Rosneft, the two state-controlled giants of the Russian energy economy that absorbed Yukos holdings.

Economic issues are likely to broaden the split between the more liberal economists and the conservative members of the security services, analysts said. Mr. Putin makes all the crucial decisions, however, and no one is likely to challenge him directly.

"There is a split, but the antiwar party lacks the instruments to force Putin into practical action," said Vladimir Milov, a former deputy energy minister turned opposition politician.

Kremlin officials seeking to break with the West believe that whatever financing they lose there, they can regain from China or India, Mr. Milov said, without realizing that neither banking system is geared to provide the billions in long-term credit that Russian companies routinely got from Western banks.

Indeed, at a recent dinner party, a Kremlin confidant said that the future would be all about "Russian might and Chinese wealth." Did the West not worry, he mused aloud, that China would be the big winner?

Over all, Mr. Milov said, the outlook seems bleak.

"We are sliding into something which is clearly becoming a long-term standoff, and Putin looks committed and not ready to give up," he said. "It is a bad sign that everything is becoming a long-term problem."

source : http://rss.nytimes.com/c/34625/f/640316/s/3cfe921d/sc/1/l/0L0Snytimes0N0C20A140C0A70C30A0Cworld0Ceurope0Cas0Esanctions0Epile0Eup0Erussians0Ealarm0Egrows0Eover0Eputin0Etactics0Bhtml0Dpartner0Frss0Gemc0Frss/story01.htm

DealBook: After 1nsider Trading Scandal, Steven A. Cohen’s Firm Still Has Strong Gains

Updated, 6:38 p.m. |

Photo Steven A. Cohen, the founder of the family office Point72 Asset Management, at a New York Knicks game last year.Credit Justin Lane/European Pressphoto Agency Related Links

Three months after his once-powerful hedge fund entered a guilty plea to insider trading charges, Steven A. Cohen is doing quite well.

This summer, Mr. Cohen and his family rented a yacht off the Greek islands for a vacation. An avid art collector, Mr. Cohen attended Art Basel in Switzerland in June. And last weekend, he and his wife, Alexandra, were guests at a charitable event at the Hamptons home of the comedian Jerry Seinfeld and his wife, Jessica.

Most of all, Mr. Cohen, 58, is continuing to do what he has done best for more than two decades: make an astounding amount of money from trading stocks and bonds.

His rechristened firm, Point72 Asset Management, which manages $9 billion to $10 billion of his personal fortune, is proving to be nearly as profitable as his former hedge fund.

Over the first six months of this year, the firm generated a profit of nearly $1 billion, said two people briefed on the matter. In 2013, SAC's last year as a hedge fund, Mr. Cohen personally made about $2.3 billion.

The profits generated to date at Point72 are nearly equal to the $1.2 billion penalty that SAC paid to the federal prosecutors as part of its guilty plea. Mr. Cohen's new firm, which is prohibited from managing money for outside investors, is making money even as more than a dozen top portfolio managers or traders have left for jobs with other hedge funds.

Despite those departures, the stain on his reputation and a still unresolved civil action against him, little has changed for Mr. Cohen.

His new firm employs nearly 850 people, just 150 fewer than SAC did last summer when the then-$14 billion hedge fund was indicted and Preet Bharara, the United States attorney in Manhattan, called the fund a "magnet for market cheaters." Only one Wall Street firm — Deutsche Bank — has chosen to stop lending money and serving as a prime broker to Point72 after SAC's guilty plea.

Mr. Cohen's firm even plans to continue an annual Thanksgiving tradition begun by SAC — it will again sponsor a giant balloon inflation celebration and parade in downtown Stamford, Conn., on Nov. 22.

There is a new sign outside the firm's 98,900-square-foot headquarters at 72 Cummings Point Road in Stamford and employees now don fleece vests emblazoned with the Point72 logo as opposed to the old SAC one. But those changes are largely cosmetic.

Federal authorities insist that SAC's guilty plea, combined with the insider trading convictions of more than 80 people, including eight who used to work for Mr. Cohen, serves as a powerful deterrent. But some say that message may travel only so far.

"The SAC affair put more fear into midlevel people than into billionaires," said Erik M. Gordon, a professor at the Stephen M. Ross School of Business at the University of Michigan. "If you are as rich as Cohen, you can survive huge fines and attorney fees and even an industry ban that leaves you managing your own billions. The only thing you fear is jail time."

Jonathan Gasthalter, a spokesman for Mr. Cohen, declined to comment. The firm this year has taken a number of steps to stiffen its compliance procedures and surveillance of traders to ensure that no more improper trading takes place.

It remains to be seen if Point72 will be able to continue its early success, especially if top traders continue to leave and the firm makes no new star hires to replace them.

The two most recent prominent departures are the portfolio managers Shoney Katz and Peter Avellone, who are joining a trading platform at Citadel, the large investment firm led by Kenneth C. Griffin, another billionaire investor. Mr. Katz and Mr. Avellone left Point72 within the last few weeks, said the people briefed on the matter who spoke on condition of anonymity.

Credit John Marshall Mantel for The New York Times

Gabriel Plotkin, one of Mr. Cohen's most successful traders, recently wound down his onetime $1 billion stock portfolio to focus exclusively on raising money for his own hedge fund, which will start next year with up to $200 million in financial backing from Mr. Cohen. Mr. Plotkin seeks to raise up to $1 billion from other investors and intends to staff his new fund with the analysts and junior traders who have worked with him at Mr. Cohen's firm, these same people said.

Point72 has managed to hire just two established traders from the outside so far this year: Scott Braunstein, who came from JPMorgan Chase's asset management division and Howard Man from Bank of America Merrill Lynch. For Mr. Man, who will be based in the Point72 office in Hong Kong, this is his second go-round working for Mr. Cohen.

Most of the hires at Point72 have been research analysts, many of them relatively junior employees. The firm has brought on about 30 new analysts this year, said a person briefed on the matter. This person, who spoke on condition of anonymity, said Mr. Cohen was looking to hire analysts over more experienced traders because he now preferred to groom his own trading force.

In effect, Mr. Cohen, a minority owner in the New York Mets baseball team, is looking to create his own internal farm team to develop the firm's traders of tomorrow.

But that strategy has risks, because it takes time for an analyst to mature into a trader knowledgeable enough to take the appropriate risk to make money. Hedge fund industry recruiters who did not want to be identified because they sometimes worked with Point72 said the firm's push to hire analysts also reflected the fact that top traders were still reluctant to join the firm so soon after SAC's guilty plea.

The billion-dollar profit that Point72 has made so far this year is a large one, but the firm is a very different creature now, and comparisons with hedge funds are inexact. Because it is what is known as a family office, the firm does not have outside investors to share profits and pay fees.

Through the end of June, Point72 was up a little over 9 percent, but that is a gross figure, said two people briefed on the matter. Hedge funds are normally judged based on their performance after paying fees and expenses. If Point72 were still operating as a hedge fund, its reported performance to outside investors would be closer to 4 to 5 percent.

A 4 percent gain would be enough to beat the average 3.2 percent return posted by all hedge funds as measured by the Hedge Fund Research indexes. A year ago, SAC ended June up 8.25 percent after paying fees and expenses. For the full year, the fund posted a 20 percent return.

By that standard the current 9 percent gross return is good, but it is a far cry from the 25 percent average annual return SAC recorded during its 22-year history.

source : http://rss.nytimes.com/c/34625/f/640316/s/3cfe0c42/sc/30/l/0Ldealbook0Bnytimes0N0C20A140C0A70C290Cafter0Einsider0Etrading0Escandal0Esteven0Ea0Ecohens0Efirm0Estill0Ehas0Estrong0Egains0C0Dpartner0Frss0Gemc0Frss/story01.htm

Wall Street Closes Lower, Pulled Down in Part by UPS

By REUTERS July 29, 2014

The stock market dropped on Tuesday as a weak financial outlook from UPS weighed on investor sentiment and pressured transportation stocks, though other corporate results limited the market's losses.

The Dow Jones industrial average fell 70,48 points, or 0.42 percent, to close at 16,912.11, according to preliminary figures. The Standard & Poor's 500-stock index lost 8.96 points, or 0.45 percent, to 1,969.95. The Nasdaq composite index dropped 2.21 points, or 0.05 percent, to 4,442.70.

Shares of United Parcel Service fell 3.7 percent to $98.86 after the world's biggest courier company slashed its earnings forecast for the year because of spending to increase its capacity. It also reported earnings that were below expectations.

Fedex, UPS's rival, dropped 1.6 percent to $147.14. The Dow Jones Transportation index, which is often viewed as a proxy for business activity, fell 1.38 percent.

UPS is the latest bellwether name to disappoint in its results, following Amazon.com and Boeing last week. Nonetheless, this earnings season has largely been a positive for equities. With more than half the S.&P. 500 having reported, almost 70 percent have topped earnings expectations, according to Thomson Reuters data, well above the long-term average of 63 percent. More than 63 percent have topped revenue forecasts, above the long-term average of 61 percent.

"If we started to see more negative outlooks, that would be a reason to pause, but so far this earnings season speaks to the health of corporate America and suggests markets still have room to run," said David Lebovitz, global market strategist at J.P. Morgan Funds.

Telecommunications stocks were by far the strongest of the day, up 2.2 percent after Windstream Holdings filed to spin off assets into a tax-efficient publicly traded real estate investment trust. Windstream's stock jumped 12.4 percent to $11.83 in its busiest trading day on record. Frontier Communications added 11.1 percent to $6.60.

Two Dow components, Merck and Pfizer, reported better-than-expected results. Merck's new drugs offset declining sales of ones facing generic competition and Pfizer was helped by growing sales of its cancer medicines. Merck rose 1.1 percent to $58.58, while Pfizer dropped 1.2 percent to $29.73.

Corning plunged 9.3 percent to $20 after reporting earnings that came in below estimates.

In economic news, consumer confidence jumped in July to a high not seen since October 2007, but single-family home prices dropped 0.3 percent in May on a seasonally adjusted basis, falling short of expectations.

The Federal Reserve began a two-day meeting on monetary policy. The Fed could make subtle yet telling changes to its policy statement due Wednesday, as it plans how and when to eventually raise interest rates.

source : http://rss.nytimes.com/c/34625/f/640316/s/3cfa6ac1/sc/2/l/0L0Snytimes0N0C20A140C0A70C30A0Cbusiness0Cdaily0Estock0Emarket0Eactivity0Bhtml0Dpartner0Frss0Gemc0Frss/story01.htm