Nasdaq Prevails in Lawsuit Over Alleged ETF Theft; Fed Confronts Lack of Diversity in Its Ranks

Dec 23, 2019

First Read

Hits & Takes
By JLN Staff

The Association of Financial Markets in Europe (AFME), Futures Industry Association (FIA), International Capital Market Association (ICMA), International Swaps and Derivatives Association, Inc. (ISDA) and International Securities Lending Association (ISLA) have published a new agreement intended to simplify reporting across different European Union regulatory regimes.~JJL

The slow-drip torture known as CFTC v. Jittesh Thakkar and Edge Financial (working subtitle: “bleeding the defense”) presented its latest installments last week. On Tuesday, the two sides filed a joint status report whose first few pages documented some minor agreements having to do with discovery. Then the next ten pages were back to the tussling. On Thursday Judge Andrea Wood granted most of the CFTC’s requests for depositions, putting the lie to her statement that she wanted to expedite and narrow the questioning. The CFTC will depose Thakkar and four former employees of Edge, one of them speaking Mandarin. The prosecutors also get a shot at some former customers of Edge as well as two competitors from 2011. These endeavors will surely bear much fruit for the prosecution, because how could three hours (per person) of questioning people who had no knowledge of what Edge produced for Sarao in late 2011 not produce compelling and useful testimony? Status hearing on February 4. ~Thom Thompson is reporting that CNBC Veteran Bill Griffeth will be stepping away from full-time anchor duties. Twenty-eight years is a pretty good run.~JJL has five questions for Innovate Finance’s Charlotte Crosswell.~JJL

The Financial Times has a list of “The big market moments of 2019,” including the leap in the Japanese yen, the drop in the renminbi, and HKEX’s abandonment of its offer to buy the LSE.~SR

Coindesk’s Michael Casey has written an article “A Decade of Quantitative Easing Has Paved the Way for the Age of Digital Currency.”~JJL

Mike Wilkins is moving on after 8 years at Fidessa/ION Markets.~JJL


Out With the Old…

This week on The Spread, as we say goodbye to the 2010s, we take a look at a few changes coming ’round the bend.

Watch the video »


Intercontinental Exchange Appoints Mike Blandina as CEO of Bakkt and Adam White as President of Bakkt; Leadership team provides strong continuity to build on company’s early achievements
Intercontinental Exchange, Inc.
Intercontinental Exchange, Inc. (NYSE:ICE), a leading operator of global exchanges and clearing houses and provider of data and listings services, has appointed Mike Blandina as CEO of Bakkt, the digital assets trading and payments platform that is majority-owned by ICE. Adam White will serve as President of the company. The appointments took effect December 20, following the departure of founding CEO Kelly Loeffler, who has been appointed to the United States Senate to fill the seat of retiring Sen. Johnny Isakson.

*****Who can fill Kelly Loeffler’s shoes? Mike Blandina.~JJL


The City of London Starts to Crack Over Brexit; The U.K. finance industry is becoming divided on Brexit. That is far from ideal as Britain moves into the crucial stage of EU trade talks.
Elisa Martinuzzi – Bloomberg
Boris Johnson’s triumphant U.K. election victory makes Brexit a near certainty next month. For the City of London, Britain’s split from its biggest trading partner is a huge leap into the unknown; one that will test its cohesion like never before.

*****A huge leap into the unknown is a good way to put it.~JJL


Suspicious Market Movements Wane After U.K. Bans Early Peeks at Data; Since the U.K. stopped giving hundreds of officials early access to economic data, signs that some traders may know the figures ahead of time have dissipated
Mike Bird – WSJ
Sharp movements in the British pound shortly before the release of U.K. economic data have dissipated since the government curtailed officials’ access to nonpublic information, according to a new academic study.

*****The best kept secrets everyone knew.~JJL


It Seemed Like a Popular Chat App. It’s Secretly a Spy Tool; ToTok, an Emirati messaging app that has been downloaded to millions of phones, is the latest escalation of a digital arms race.
Mark Mazzetti, Nicole Perlroth and Ronen Bergman – NY Times
It is billed as an easy and secure way to chat by video or text message with friends and family, even in a country that has restricted popular messaging services like WhatsApp and Skype. But the service, ToTok, is actually a spying tool, according to American officials familiar with a classified intelligence assessment and a New York Times investigation into the app and its developers. It is used by the government of the United Arab Emirates to try to track every conversation, movement, relationship, appointment, sound and image of those who install it on their phones.

*****Guess what, you are being watched. ToTok, TickTock.~JJL


Cross-Border; ICO; Accredited Investors, Kant; Seinfeld
Gary DeWaal – Bridging the Week
The Commodity Futures Trading Commission proposed new rules addressing cross-border swap transactions. In response, Chairman Heath Tarbert invoked the German philosopher Immanuel Kant to support the CFTC’s proposal while Commissioner Dan Berkovitz relied on the comedic philosopher Jerry Seinfeld to help frame his opposition. Separately, the Securities and Exchange Commission brought and settled an enforcement action against a company that sold digital tokens to raise funds for the development of a bitcoin blockchain-encoded integration platform to enhance the security and ease of use of the distributed ledger system. Although no fraud or deception was alleged, the SEC considered the sale an illegal securities offering.


Friday’s Top Three
Our top story Friday was the good news for Terry Duffy in Crain’s Chicago Business’ CME’s Duffy extends contract, gets bigger bonus. Second was The Wall Street Journal’s Robinhood Settles Claims It Didn’t Ensure Best Prices for Customer Trades. And third was Bloomberg’s The Hacker Who Took Down a Country


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Lead Stories

Nasdaq Prevails in Lawsuit Over Alleged ETF Theft; Judge rules against ETF Managers Group, resolving long legal battle
Alexander Osipovich – WSJ
Nasdaq Inc. prevailed in its lawsuit against a former business partner it accused of stealing more than $1 billion in exchange-traded funds, including a popular cybersecurity ETF.

Fed Confronts Lack of Diversity in Its Ranks; Economics profession is reckoning with perceived hostility to women and minorities
Nick Timiraos – WSJ
The economics profession embarked this year on a soul-searching appraisal of perceived hostility to women and minorities in its ranks, and the Federal Reserve—the nation’s largest employer of Ph.D. economists—wants to get ahead of the curve.

Europe’s Money-Laundering Crackdown Is Expanding Beyond Banks
Ott Ummelas, Milda Seputyte, and Aaron Eglitis – Bloomberg
A new front is opening up in Europe’s battle with money laundering. After dirty-cash scandals involving hundreds of billions of euros rocked some of the continent’s biggest banks, the Baltic region — where one of the biggest cases yet erupted — has begun a fresh clampdown.

Do Negative Rates Work? Yes, but Not by Much; Two major central banks are going in opposite directions on negative rates, intensifying the debate about how best to counter the next recession
James Mackintosh – WSJ
Federal Reserve policy makers opposed to taking interest rates negative in the next recession might take comfort from the end of Sweden’s dalliance with below-zero rates.

How asset managers turned into business agitators; A change of heart about investing that looks beyond profits seems to have taken hold
Attracta Mooney – FT
For decades, fund managers making investment decisions have focused on financial performance to the exclusion of almost everything else.

Repo is Wall Street’s big year-end worry. Why?
The $2.2 trillion repurchase agreement market – part of the inner workings of the U.S. financial system – is facing what could be another strain as the year comes to a close. That could have wider implications than just Wall Street.

The Fed Is Entrenched in the Repo Market. How Does It Get Out?
Alex Harris – Bloomberg
The central bank has plans to keep intervening into 2020; Participants want answers from Fed about long-term plans
At the Federal Reserve, 2020 will be all about making the repo market boring again. Policy makers will find this easier said than done.

HSBC and JPMorgan Traders Accessed BOE Audio Feed, FT Says
Joe Mayes – Bloomberg
Banks try to establish whether staff used feed probed by FCA; Livesquawk asked question at BOE press conference: Times
Traders at HSBC Holdings Plc and JPMorgan Chase & Co. are among those who accessed a high-speed audio feed of Bank of England press conferences, according to the Financial Times, which cited an unidentified person.

Interim candidate lined up to succeed Bailey at FCA; Acting CEO could lead troubled watchdog for most of 2020
Caroline Binham – FT
The Financial Conduct Authority finds itself in want of a chief executive for the third time in almost as many years following Andrew Bailey’s appointment as governor of the Bank of England.

Bank of England slip-up shines light on traders’ rapid-fire audio news; Cottage industry in focus after allegations of inappropriate use of backups
Philip Stafford, Katie Martin and Laurence Fletcher – FT
Ten minutes of silence on LiveSquawk, the audio news provider, was punctuated at 12:13pm on Friday when a man with a flat English accent announced: “Just be aware that President Trump has just started tweeting today.”

Bank of England steps up monitoring of Lloyd’s whistleblowing systems
The Bank of England has stepped up its monitoring of Lloyd’s of London’s SOLYD.UL whistleblowing systems, the central bank said on Monday, after reports this year about sexual harassment and bullying at the 330-year old insurance market.

The TRADE’s best of 2019: Technology; John reviews the best of The TRADE News’ coverage of technology over the past 12 months.
John Brazier – The Trade
Projects around the expansion of data have been a focus of attention for the industry this area, particularly when it comes to cloud technologies. As the volume and complexity of data continue to increase, the buy-side is investing heavily in cloud technologies to keep up with their data management operations, although this trend is not completely limited to the asset management community. With the demand for more sophisticated and powerful cloud capabilities only set to increase, the presence of technology giants Amazon Web Services (AWS) and Google Cloud have become more pronounced in this space, with partnerships between the former and Bloomberg, and the latter and both CME Group and Deutsche Börse being launched this year.

The TRADE’s best of 2019: Buy-side; John reviews the best of The TRADE News’ coverage of the buy-side over the past 12 months.
John Brazier – The Trade
It’s been topsy-turvy year for the buy-side, primarily due to the ongoing headwinds the industry is contending with and the deeply unstable, and often chaotic, influence of geopolitical events, such as the US/China trade war and Brexit.

Credit Suisse CEO Exonerated Second Time as Bouee Takes Fall
Marion Halftermeyer, Hugo Miller, and Patrick Winters – Bloomberg
Bank says no indication others were aware of Bouee’s decisions; Second spy incident surrounds surveillance of former HR head
Credit Suisse Group AG blamed an ousted executive for a second spying scandal that’s shaken the bank, again painting former Chief Operating Officer Pierre-Olivier Bouee as a rogue operative who kept all executives and directors in the dark about his activities.

Exchanges, OTC and Clearing

Nasdaq Awarded $78M by Manhattan Federal Judge in Breach of Contract Lawsuit; The court said that Nasdaq had “established, in multiple respects,” that Exchange Traded Fund Managers Group had kept millions of dollars in management fees, including a $1.5 billion cybersecurity fund known by its ticker symbol HACK.
Tom McParland –
A New York federal judge on Friday awarded $78 million to Nasdaq Inc. in a civil breach-of-contract lawsuit that accused the manager of several exchange-traded funds of misappropriating profits.

ETF Issuer Ordered To Pay $80M To Nasdaq
Asjylyn Loder –
A two-year court battle over the allegedly stolen ETF fees came to a head Friday when a judge ordered ETF Managers Group (ETFMG) to pay almost $80 million to its former partner Nasdaq Inc.

SGX to report 2Q FY2020 results on 23 January
Singapore Exchange (SGX) is reporting its second-quarter (2Q) results for Financial Year 2020 (FY2020) after the market closes on 23 January 2020.

BME: IGBM Index New Composition For The First Half Of 2020; Grenergy becomes an IGBM constituent while Natra and Parques Reunidos are excluded from the index
The Indice General de la Bolsa de Madrid (IGBM) Management Committee has decided, during its ordinary index review meeting, that the IGBM and the Indice Total indices will be made up by 124 listed companies in the first half of 2020, following the inclusion of GRENERGY and the exclusion of NATRA and PARQUES REUNIDOS.

Singapore’s banks eye LCH membership; London CCP’s move to clear for stranded SGX clients pays off, amid broader Apac membership push
Aileen Chuang –
Singapore’s largest banks are weighing direct clearing membership at LCH’s SwapClear, with the London-based central counterparty’s (CCP) move to scoop up their local currency interest rate swaps earlier this year after rival Singapore Exchange (SGX) pulled out of rates clearing helping to fuel a rise in volumes at the CCP.


Machine learning: the big risks and how to manage them; There is no precedent for how this type of trading, which adapts based on experience, might play out
Mark Yallop – FT
Algorithmic trading has been prevalent in equities trading for more than two decades. It is also now well entrenched in fixed income, too. It has created new opportunities by speeding up execution of orders, cutting costs and increasing volumes. But it has also introduced new hazards for market participants and created the occasional “flash crash”. We have also seen trading algorithms being programmed to manipulate markets.

Fintech’s next decade will look radically different
Nik Milanovic – TechCrunch
The birth and growth of financial technology developed mostly over the last ten years.
So as we look ahead, what does the next decade have in store? I believe we’re starting to see early signs: in the next ten years, fintech will become portable and ubiquitous as it moves to the background and centralizes into one place where our money is managed for us.

Who will the winners be in the future of fintech?
Nik Milanovic – TechCrunch
So what happens when fintech ‘brings it all together’? In a world where people access their financial services through one universal hub, which companies are the best-positioned to win? When open data and protocols become the norm, what business models are set to capitalize on the resulting rush of innovation, and which will become the key back-end and front-end products underpinning finance in the 2020s?


Blythe’s back, but has she said bye-bye to blockchain?
Jemima Kelly – FT
She was once the darling of blockchain in finance. She would travel the globe espousing its virtues at conferences, calling blockchain “email for money”; would appear on magazine covers under the headline “it’s all about the blockchain”; and was the CEO of one of what has been called a “seminal enterprise blockchain startup”.

A Human Rights Activist Explains Why Bitcoin Is So Important to His Work
Joe Weisenthal and Tracy Alloway – Bloomberg
When people think about Bitcoin, they often think about neo-goldbugs who hate inflation and the Federal Reserve. But beyond the financial case for it, there’s a moral, human rights case as well. On this week’s podcast, we talk with Alex Gladstein, the Chief Strategy Officer at the Human Rights Foundation. He explains why he sees Bitcoin as an essential tool in his fight for human rights all around the world.

At 8,990,000% Gains, Bitcoin Dwarfs All Other Investments This Decade
William Suberg – Cointelegraph
Bitcoin (BTC) has beaten gold in terms of returns by such a large amount this decade that investors have firmly dismissed recent price declines. Data from monitoring resource Blockchain shows that since 2010, Bitcoin has delivered profits of almost 9 million percent.

The Most Common Crypto Questions And Why You Should Care
Rachael McCrary – Forbes
There’s a new language developing around the world of cryptocurrency, and many people are already confused. If you’re not well-versed in this brave new world, you are not alone. Hopefully, this article will answer your questions and help you build your cryptocurrency vocabulary.

Russia Loses Bid to Keep Cyber Suspect Out of French, U.S. Hands
Eleni Chrepa – Bloomberg
Greece agreed to hand over a Russian citizen accused of cryptocurrency-related charges in several countries, a move that could bring him closer to facing trial in France or the U.S. The Russian, Alexander Vinnik, will be extradited to France, the Russian embassy in Athens said in social media postings on Friday that sharply accused Athens of ignoring Moscow’s request for Vinnik’s return home. Vinnik was arrested in Greece in 2017 and has since been held by authorities there, prompting an extradition battle among France, Russia and the U.S., each of which has brought charges against him.

Bitcoin Options Introduction Subdued in Wake of Futures Letdown
Olga Kharif – Bloomberg
Bitcoin advocates are taking a more measured approach over the introduction of options for the world’s largest cryptocurrency after the wild ride they took with futures. While the contracts that provide the right, but not the obligation, to buy or sell a specified amount of coins within a set time period have been available on some online exchanges, they’re heading for the mainstream, just as futures did during the height of the crypto mania in 2017.

Coinbase to begin ‘sunsetting’; will focus on Coinbase Earn product
The Block
Eighteen months after its reported $100M acquisition of micro-task platform, Coinbase has announced via an email to customers that the exchange will be “sunsetting to focus exclusively on Coinbase Earn.” Coinbase Earn enables users to earn cryptocurrencies by completing educational tasks. This year the platform taught users how to open MakerDAO CDPs, how to use the Brave browser, and how various blockchain platforms work. According to Coinbase, the Coinbase Earn product “has allowed nearly a million unique users in 115+ countries to earn their share of hundreds of millions of dollars in crypto.”

Tron Foundation partner sought U.S. trademarks but Disney pushed back and won
Yilun Cheng – The Block
The U.S. Patent and Trademark Office last month rejected three trademark applications sought in connection with the cryptocurrency platform Tron after American media giant Disney filed notices of opposition and argued that approval would lead to brand confusion. Tron Foundation’s China partner Raybo Technology first filed its requests to trademark “TRON,” “TRONNETWORK,” and “TRONIX in February 2018. When Disney pushed back with formal filings in August, Raybo Technology failed to respond, and the USPTO found in favor of Disney.

Members of Congress push IRS for tax clarity on crypto airdrops, forks
Mike McSweeney – The Block
Eight members of the U.S. House of Representatives have sent a letter to the commissioner of the Internal Revenue Service, asking for the agency to expand and clarify its guidance around token airdrops and blockchain network forks. The letter – drafted by Reps. Tom Emmer, Bill Foster, David Schweikert, Darren Soto, Lance Gooden, French Hill, Matt Gaetz and Warren Davidson – is dated December 20 and expresses concern over the current level of guidance around these issues. It follows a previous letter, issued in April, that pushed the U.S. tax authority to improve its informational offerings to taxpayers about their crypto-related obligations.

Poloniex exchange drops KYC for withdrawals of up to $10,000 per day
Yogita Khatri – The Block
Poloniex, the cryptocurrency exchange that recently spun off from its parent firm Circle, has introduced a new “level 1” account tier that has no KYC (know-your-customer) requirements.

Starling co-founder to launch crypto digital bank; Digital bank Starling has lost a number of top executives in 2019
Ryan Weeks – Financial News
A former co-founder and chief technology officer at Starling Bank has launched a new cryptocurrency venture — becoming the latest of several former executives at the digital bank to go it alone.

Bitwise writes to SEC again, saying it is ‘committed’ to creating a bitcoin ETF
Yogita Khatri – The Block
Cryptocurrency asset management firm Bitwise has written a new letter to the U.S. Securities and Exchange Commission (SEC), saying that it is “committed” to creating a bitcoin exchange-traded fund (ETF). The letter, submitted by Bitwise on Wednesday and published by the SEC on Friday, is the firm’s response to the regulator’s 112-page disapproval order of its bitcoin ETF in October. Penned by Bitwise’s executive team – Hunter Horsley (CEO), Hong Kim (CTO), Teddy Fusaro (COO) and Matt Hougan (global head of research) – the letter tries to address the SEC’s concerns of market manipulation and surveillance sharing for approving a bitcoin ETF.


Christian Editor Doubles Down on Trump as Being ‘Morally Unfit’
Daniel Flatley – Bloomberg
Editorial on impeachment drew president’s ire on Thursday; Evangelical leaders close ranks around Trump, who’s popular
The editor-in-chief of evangelical magazine “Christianity Today” doubled down Sunday on his rebuke of Donald Trump. Mark Galli appeared on CBS’s “Face the Nation,” days after arguing in an editorial that Trump should be removed from office because the nation’s trust was betrayed by his attempts to “use his political power to coerce a foreign leader” to discredit one of his political opponents.

Boris Johnson’s Tories Abandoned Scotland to Win Their Big Victory
Tim Ross – Bloomberg
Strategy to focus on England dates to Cameron’s 2015 campaign; English voters deserted Labour in 2019 as Brexit splits U.K.
It was November 2014. An election loomed and David Cameron was in trouble. The polls put the British prime minister’s Conservatives on course to lose a knife-edge vote to the Labour Party.

House Democrats Pass High-Water Mark in Fights Against Trump
Billy House and Steven T. Dennis – Bloomberg
Election year begins as inquiry goes to Trump-friendly Senate; Court cases and other House probes of Trump will continue
Democrats scored a series of damaging revelations about Donald Trump when they launched their impeachment investigation, but now they’ll begin a crucial election year with the challenge that the most dramatic moments are likely behind them.

Buttigieg leads 2020 rivals in Wall Street contributions
Alexandra Jaffe – AP
The financial sector, blamed by progressives for spawning the 2008 economic collapse, is lining up behind Pete Buttigieg’s presidential campaign.

Column: Trump’s tax cut was a mammoth fraud
Steve Chapman – Chicago Tribune
Decades from now, many Americans will have to consult history books to gain an appreciation of the lowest point of Donald Trump’s presidency: his impeachment. But they will be able to feel the effects of his highest point: the 2017 tax bill, which he signed into law two years ago Sunday. That’s because they will still be paying for it.

Lobbying by incoming Georgia senator’s firm under scrutiny
Greg Bluestein, The Atlanta Journal-Constitution
Before Republican Kelly Loeffler emerged as Gov. Brian Kemp’s pick for a U.S. Senate seat, the powerful financial firm where she’s long served as a senior executive spent millions of dollars to lobby the congressional lawmakers she’ll soon join and the government agencies she’ll soon influence.

Congress Considers Federal Crypto Regulators In New Cryptocurrency Act Of 2020
Jason Brett – Forbes
As Congress prepares to recess for the holidays, it is a fitting end to 2019, notably marked by the reaction of U.S. lawmakers to the introduction of Project Libra by Facebook, that a bill has surfaced that would provide a sweeping regulatory framework for digital assets including cryptocurrencies.


ASIC’s focus in superannuation
Jane Eccleston, Senior Executive Leader – Superannuation, ASIC*
As ASFA has noted, there are five fundamental forces impacting the superannuation industry today – culture, customers, compliance, competition and change. ASIC is focused on how these forces manifest in the behaviour of trustees day to day, particularly in dealing with members – in other words, conduct.

Environmental Group amends acquisition accounting
ASIC notes the decision by The Environmental Group Limited (Environmental Group) to amend the accounting for its acquisitions of RCR Energy Services and Baltec East during the year ended 30 June 2019. Acquisition costs of $313,358 previously recorded in goodwill have been expensed.

Interim asset restraint orders made against Corporate Authorised Representatives of OTC derivatives provider
ASIC has applied to the Federal Court in Sydney for orders (pursuant to section 1323 of the Corporations Act) to protect customers while an investigation is underway.

ESMA extends recognition decisions for 3 UK CCPs in the event of a no-deal Brexit
The European Securities and Markets Authority (ESMA) has today announced that it has extended the recognition decisions for the three central counterparties (CCPs) established in the United Kingdom (UK) to reflect the extension of the expiry date of the Implementing Decision (EU) 2018/2031 of the European Commission on the equivalence of the UK CCP legal framework.

CFTC Charges Executive at Global Investment Bank with Manipulation and Fraud in Connection with Swaps Related to a Bond Issuance
The U.S. Commodity Futures Trading Commission today filed a civil enforcement action in the U.S. District Court for the Southern District of New York against Christophe Rivoire, a French national, charging him with engaging in a deceptive scheme to manipulate the pricing of an interest rate swap between a bond issuer and a global investment bank. Rivoire was employed as the Head of North American Rates in the New York office of the bank.

FCM and RFED filing requirements for Christmas and New Year’s Day—Reminder for upcoming holidays
This is a reminder that the following futures commission merchant (FCM) and retail foreign exchange dealer (RFED) regulatory filings will be impacted as follows by the Christmas and New Year’s Day holidays:

SD holiday filing requirements
Visit NFA’s website to view the schedule of 2020 swap dealer (SD) holiday filings. We recommend viewing the calendar and keeping this Notice as a reference for the upcoming 2020 holiday filing requirements.

SEC Probes Listings of Slack, Other Unicorns on NYSE; Regulators focusing in part on first day of trading in wide-ranging review of IPOs
Alexander Osipovich, Corrie Driebusch and Dave Michaels – WSJ
The Securities and Exchange Commission is investigating the listings of Slack Technologies Inc. WORK 1.32% and other major companies on the New York Stock Exchange, in a probe looking at how trading was handled on the first day, people familiar with the situation said.

Investing and Trading

George Mitchell, transformer of the energy market; The late father of fracking is my industry personality of the decade
Nick Butler – FT
Few people can seriously claim to have transformed the world energy market. The late George Mitchell, pioneer of fracking technology, was one of the very few who justifiably could. His achievement has already transformed the pattern of energy trade and reduced the prices of both oil and gas — and there is more to come, with consequences that could be even more profound.

EY deals partners accused of bullying and discrimination; Whistleblowers say culture protects partners from complaints over conduct
Tabby Kinder – FT
EY whistleblowers have complained of discrimination and inappropriate conduct after a senior transgender employee left the accounting giant over bullying and a partner was fined for making a sexually offensive remark to a junior woman.

Stocks Face 50% Odds of Correction in 2020, Vanguard’s Davis Says
Joanna Ossinger – Bloomberg
The $5.6 trillion manager says it’s ‘time to be guarded’; Davis says markets may be getting ahead of themselves
U.S. stocks face a greater-than-usual risk of a sell-off next year, with investors overconfident in an economic resurgence, according to Vanguard Group Inc.’s investment-strategy chief.

Master Stockpicker Peter Lynch: If You Only Invest in an Index, You’ll Never Beat It
Leslie P. Norton – Barron’s
“Invest in what you know.” Those five simple words from Peter Lynch helped launch a nation of stockpickers.

The Fund That Does a Lot by Doing Nothing; Voya Corporate Leaders Trust hasn’t made a major change to its portfolio since 1935, but it’s still going strong
Jason Zweig – WSJ
Rip van Winkle, who took a drink from the wrong keg and spent the next 20 years snoring, was a newbie at sleeping. Let me tell you about a mutual fund that bought a few stocks 84 years ago and hasn’t moved a muscle ever since.

Invesco to Close Dozens of ETFs in 2020 as Fund Shakeout Continues; Fund manager said it will close 42 exchange-traded funds by February
Michael Wursthorn – WSJ
Invesco Ltd. IVZ -2.44% plans to shut down dozens of exchange-traded funds next year, the latest sign that an ETF shakeout is picking up speed.


Banks Get Tough on Shale Loans as Fracking Forecasts Flop; Oil and gas companies face tightened credit after wells produce less than projected
Christopher M. Matthews, Bradley Olson and Allison Prang – WSJ
Some of the banks that helped fuel the fracking boom are beginning to question the industry’s fundamentals, as many shale wells produce less than companies forecast.

Deutsche Bank-Cerberus Advisory Agreement Set to End; Cerberus has been a paid adviser and a top shareholder of the German lender
Jenny Strasburg – WSJ
An advisory agreement between Deutsche Bank AG and Cerberus Capital Management LP is expected to end at the end of 2019, people familiar with the matter said, terminating an unusual relationship that drew both praise and scrutiny.

Ex-hedge fund BlueCrest extends winning run with 50% gain this year; Investment house has trounced returns of around 9% in broader industry
Laurence Fletcher – FT
BlueCrest Capital, the private investment firm headed by billionaire trader Michael Platt, has chalked up gains of around 50 per cent this year, continuing a run of blistering performance since returning outside investors’ money four years ago.

Why McKinsey alumni don’t always make good bankers; Growing numbers of financial service businesses are helmed by former consultants from the firm
Patrick Jenkins – FT
When US drugmaker Valeant collapsed nearly four years ago, there was no shortage of name-calling and blame-gaming. But one narrative cut through the noise: Valeant had gone spectacularly awry under unusual leadership. A few years earlier, the group had hired as its boss a McKinsey executive named Mike Pearson, who had spent 23 years at the consultancy before being parachuted into the real world of running a pharmaceuticals company — with no operational experience.

Credit Suisse to Borrow from Khan Playbook in Latest Scandal
Jan-Henrik Foerster and Patrick Winters – Bloomberg
Bank may seek to pin blame for latest spying on former COO; Allegations that bank has had several ex-exmployees followed
Credit Suisse Group AG’s second investigation into a spying crisis may conclude exactly the same way as the first: with the bank saying a rogue operative acted alone without the board or chief executive’s consent in ordering the surveillance of former executives.

Will Standard Life Aberdeen Be a Winner or a Zombie? Now that he’s flying solo as CEO, Keith Skeoch has got to get cracking on retaining clients, boosting returns and selling assets.
Mark Gilbert – Bloomberg
It’s showtime for Keith Skeoch. Almost three years since he and Martin Gilbert agreed to create Standard Life Aberdeen Plc, he’s now flying solo as chief executive officer of the U.K.’s biggest standalone asset manager. For the fund behemoth to be valued by investors and analysts at more than the sum of its parts, it needs to either consistently outperform its benchmarks, or unlock the value of its captive assets — or, better yet, both.

BlackRock, Temasek to take majority stake in wealth management JV with CCB: sources
U.S. asset manager BlackRock Inc, Singapore state investor Temasek Holdings (Pte) Ltd and China Construction Bank Corp (CCB) have agreed to set up a wealth management joint venture in China, said people with direct knowledge of the matter.

The ‘Striking Blond’ Joins Spies Haunting Credit Suisse
Patrick Winters and Hugo Miller – Bloomberg
Fresh spying allegations put spotlight on the bank’s practice; Ex-employee says she was followed in Manhattan, Long Island
Just before midnight on Sept. 25, former Credit Suisse Group AG executive Colleen Graham e-mailed Chief Executive Officer Tidjane Thiam and Chairman Urs Rohner, detailing how she’d been followed in Manhattan and Long Island by a “striking tall blond” two years earlier.


Australian wheat exporter comes a cropper on hedges; Changing weather is making it more tricky to manage commodity price risk
Emiko Terazono – FT
Australia’s largest wheat exporter has been hit by big losses on futures contracts in a demonstration of how increasingly erratic weather patterns are making it more difficult to hedge commodity price risk.

Mexico plans crackdown on private electricity market; Renewables companies targeted in move to consolidate state control
Jude Webber – FT
Mexico’s state-owned electricity utility has drawn up plans to curb private participation in the energy market as the nationalist government seeks to consolidate power generation in state hands.

South Africa’s competition watchdog seeks power to prosecute foreign banks over currency rigging
Elliot Smith – CNBC
South Africa’s Competition Commission is seeking extraterritorial powers to prosecute foreign banks whose actions affect South Africans.

China beware, the road to an open financial system is paved with Asian casualties; From Japan’s burst bubble to Thailand’s battered baht, past attempts at financial liberalisation by Asian economies highlight the pitfalls ahead
Yang Xu, Donald Low – South China Morning Post
In recent years, the Chinese government has announced a series of measures to open up the financial sector, both to attract foreign investments and to develop its financial system.

Have anti-government protests cooked Hong Kong’s financial goose? Half a year has passed since the turmoil began, bringing disruptions to business, a retail sales slump and a recession in the third quarter
Kinling Lo – South China Morning Post
Shifting jobs from a media company to a Hong Kong financial services business seemed like a good move to Lau. His wife had just had a baby and the new job offered flexible hours and better earnings. That was a year ago, but it didn’t pan out like he planned.


U.K. Minting Brexit Coins Again After Delays Triggered Meltdown
Jess Shankleman and Edward Evans – Bloomberg
The U.K. government reckons it will be third time lucky for its ill-fated Brexit coins. Earlier this year, then Chancellor Philip Hammond planned a batch of 50 pence coins to commemorate the original March 29 Brexit day. When the U.K.’s exit from the European Union was delayed, his successor Sajid Javid produced about one million of the seven-sided coins stamped with the Oct. 31 date.


How a Banker Helped Save N.Y. (and Why It Will Never Happen Again); Felix Rohatyn was from a different era, when an ambitious rich man could be content to rescue a city and not run the world.
Ginia Bellafante – NY Times
On Tuesday morning at Frank E. Campbell, the Madison Avenue funeral home, Michael R. Bloomberg (former mayor, current presidential candidate) delivered a eulogy in memory of Felix G. Rohatyn — banker, writer, urbanist, savior, mensch.

Pope denounces ‘rigidity’ as he warns of Christian decline
Nicole Winfield – AP
Pope Francis warned Saturday that “rigidity” in living out the Christian faith is creating a “minefield” of hatred and misunderstanding in a world where Christianity is increasingly irrelevant.

More Than 1 in 5 U.S. Papers Has Closed. This Is the Result.; Readers across the country told us how they were affected by the decline of local news: “Our community does not know itself.”
Lara Takenaga – WSJ
City Council and school board meetings. Small-town sports and politics. Local government corruption. These are a handful of the news and issues that go unreported when small newspapers close or are gutted by layoffs. Over the past 15 years, more than one in five papers in the United States has shuttered, and the number of journalists working for newspapers has been cut in half, according to research by the University of North Carolina’s School of Media and Journalism. That has led to the rise of hollowed-out “ghost papers” and communities across the country without any local paper.

That Junk in the Air Is Really Bad for Us; New research shows the harm caused by microscopic particles, especially to the brains of children.
Noah Smith – Bloomberg
Amid all the hubbub about climate change, Americans don’t think much about regular old air pollution these days. The coal smoke that once choked cities such as Pittsburgh now exists only in old photographs, and even famously hazy Los Angeles has much less smog. A long string of laws passed during the past 70 years has strengthened government regulation of air quality. As a result, most types of pollution have decreased significantly, especially coarse particulate matter, sulfur dioxide and nitrogen oxides. And Americans’ health has improved in a variety of ways as a result.

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