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Facebook’s debut is modest, high volumes cause problems

Alexei Oreskovic/Reuters — Fri, 18 May 2012 19:41:00 +0000

San Francisco: Facebook Inc shares rose less than expected on their first day of trade on Friday and huge order volume caused technical problems that marred the coming out party of the No. 1 online social network.

Its shares were up 8% in early afternoon trading on the Nasdaq, after opening 11% higher and then rapidly heading south to touch their initial public offering price of $38. The gains were below market forecasts of as much as a 50% jump.

“We have got some unhappy guys out there,” said Wayne Kaufman, chief market strategist at John Thomas Financial, a retail broker on Wall Street. “They were hoping for Facebook to be considerably better. I bet there are a lot of disappointed people in the market.”

Facebook, which has about 900 million users globally, priced its IPO at the top end of its target range, becoming the first US company to go public with a valuation greater than $100 billion. If a greenshoe option to underwriters is exercised, Facebook will raise as much as $18.4 billion by selling an 18% stake, the second-biggest IPO in US history after the one by Visa Inc.

Analysts blamed the poorer-than-expected first-day showing on the vast number of shares floated and market weakness. General Motors’ decision to pull paid-advertising from the social network, announced this week, also hurt.

After a delay in the opening print that drove up anxiety levels among traders and onlookers outside the Nasdaq, the closely watched stock began trading at $42.05, rose to as high as $45 and then rapidly retreated. The Nasdaq exchange said it was investigating an issue with execution of trades.

Facebook’s IPO had been heavily oversubscribed, particularly by retail investors, despite concerns about slowing growth in the last quarter, whether the company can make money from mobile advertising, and the immense control chief executive Mark Zuckerberg has over on the company.

Others warned that the IPO price, equivalent to over 100 times historical earnings versus Apple Inc’s 14 times and Google Inc’s 19 times, makes Facebook a risky bet.

Early fanfare

For Facebook, Friday began with much fanfare. To rapturous applause from employees, Mark Zuckerberg - flanked by chief operating officer Sheryl Sandberg and Nasdaq chief executive Robert Greifeld - rang the bell to kick off trading at the company’s Silicon Valley headquarters at 6:30 am Pacific time.

The 28-year-old billionaire founder, wearing his trademark black hoodie, hugged and high-fived Sandberg and other employees in celebration after he pressed the remote button.

The area outside Facebook’s offices was packed with throngs of photographers, more than a dozen television trucks, and a TV news helicopter hovering overhead as the excitement reached fever pitch.

The fizzling of Facebook’s early gains put pressure on other social media stocks. Zynga, which depends on Facebook for much of its revenue, dived 13% before it was halted. LinkedIn Corp was off 3% at midday.

“When you see what’s happening with other social media stocks today, which are significantly down, as well as looking at Facebook trading flat, we think it has traded obviously at the high end,” said Destination Wealth Management CEO Michael Yoshikami.

“It’s a rich valuation, particularly given the advertising pressure they’re under now. Advertising revenue has grown significantly slower over the past few years, and that’s punctuated by GM’s decision to stop advertising on Facebook.”

“We’re not buyers at $38, particularly considering that most of their business is in mobile and they haven’t figured out how to make money yet.”

Also Read |Facebook IPO a jackpot for backers and insiders

Facebook’s debut is modest, high volumes cause problems

Facebook fizzles on debut, shares skirt IPO price

Reuters — Fri, 18 May 2012 16:39:00 +0000

San Francisco: Facebook Inc shares fizzled on their first day of trade on the Nasdaq, erasing early gains of as much as 18% to trade close to their initial public offering (IPO) price.

The stock opened 11% higher and rose to $45 before rapidly heading south in frenzied trade, touching its initial public offering price of $38. The No. 1 online social network raised as much as $18.4 billion in one of the biggest initial public offerings in US history.

After a delay in the opening print that drove up anxiety levels among traders and onlookers outside the Nasdaq, the company’s closely watched stock began trading at $42.05, compared with an IPO price of $38.

To rapturous applause from employees, Facebook chief executive Mark Zuckerberg -- flanked by chief operating officer Sheryl Sandberg and Nasdaq chief executive Robert Greifeld -- rang the bell to kick off trading at the company’s Silicon Valley headquarters at 6:30 am Pacific time.

The 28-year-old billionaire founder hugged and high-fived Sandberg and other employees in celebration after he pressed the remote button.

The area outside Facebook’s offices at 1 Hacker Way was packed with throngs of photographers, more than 12 television trucks, and a TV news helicopter hovering overhead as the excitement reached fever pitch.

With a value of $104 billion, Facebook became the first American company to debut at over a $100 billion. It is larger than Starbucks Corp and Hewlett-Packard combined.

“A 15 to 20% pop is in the realm of possibility,” said Tim Loughran, a finance professor at the University of Notre Dame, before the start of trade.

“Given they already moved their IPO range up and increased the size, that’s bullish to begin with.”

Facebook priced its offering at $38 a share on Thursday, but the price could be higher when shares begin trading under the FB symbol on the Nasdaq at 11 am Eastern time (1500 GMT).

On Twitter and in office elevators the morning talk was betting how much Facebook’s initial price would rise by the end of trading.

Some expect shares could rise 30% or more on Friday, despite ongoing concerns about Facebook’s long-term money-making potential. An average of Morningstar analyst estimates put the closing price for Facebook shares on Friday at $50.

The IPO, expected to mint more than a thousand paper millionaires at the company, has received wall-to-wall media coverage and sparked hopes of a boom in sales of everything from San Francisco Bay area real estate to automobiles.

Facebook employees marked the event with an all-night “hackathon” at the company’s Menlo Park, California, headquarters starting on Thursday evening, a tradition in which programmers work on side projects that sometimes turn into mainstream offerings.

The website, founded in a Harvard dorm room in 2004, has grown into the world’s dominant social network with 900 million users.

At $38 a share, Facebook would trade at more than 100 times historical earnings versus Apple Inc’s 14 times and Google Inc’s 19 times.

For all the high expectations surrounding Facebook, the company faces challenges maintaining its momentum.

Some investors worry the company has not yet figured out a way to make money from the growing number of users who access Facebook on mobile devices such as tablets and smartphones. Meanwhile, revenue growth from Facebook’s online advertising business, which accounts for the bulk of its revenue, has slowed in recent months.

General Motors said on Tuesday it would stop placing ads on Facebook, raising questions about whether display ads on the site are as effective as they are in traditional media.

Facebook fizzles on debut, shares skirt IPO price

Zuckerberg rings bell to mark Facebook IPO

AFP — Fri, 18 May 2012 13:52:00 +0000

New York: Mark Zuckerberg, wearing his trademark hooded sweatshirt, remotely rang the bell to open trade Friday on the Nasdaq, marking a record-setting public offering for Facebook.

Amid a crowd at the social network’s California headquarters, Zuckerberg and hundreds of Facebook employees cheered the market open. Facebook shares were to start trading later in the day in the largest offering for a technology firm.

Zuckerberg rings bell to mark Facebook IPO

HSBC doubles turnaround target to $2 bn

Reuters — Thu, 17 May 2012 13:40:00 +0000

Hong Kong/London: HSBC doubled the annual revenue boost expected from its turnaround plan to $2 billion, as Europe’s biggest bank picks 22 markets to drive its growth and eyes more cost cutting to cope with new regulations in the wake of the financial crisis.

Chief executive Stuart Gulliver said on Thursday that, one year into a three-year recovery plan, HSBC was on target to meet profitability and cost savings targets.

Gulliver said his biggest external worry “is absolutely how the euro zone plays out and whether Greece stays in, whether firewalls are high enough to protect Spain and, frankly, whether markets take things into their own hands before June 17,” when Greece holds new elections.

A file photo of HSBC CEO Stuart Gulliver.

Gulliver wants to streamline HSBC and focus more on its fast-growing Asian markets.

It faces regulatory pressure to reduce its risks and has conceded it has more work to do to revive its lagging European and US businesses.

“Investors have been sceptical about our ability to get our hands around HSBC. The scepticism was about anybody’s ability to move such a large firm and change its direction,” Gulliver told reporters before a presentation to analysts.

“At the year one report card we can evidence that on things we can control we are demonstrating significant traction. We are delivering with good momentum given a difficult backdrop.”

Analysts said the update was reassuring, but think it will be a challenge hitting cost targets.

“HSBC should come out and be honest about it. In reality, there was a force majeure in Europe blowing up, and they will need more than three years to meet their targets,” said Mizuho Securities analyst Jim Antos in Hong Kong.

HSBC’s London-listed shares were down 1.7% at 525 pence at 1040 GMT, its lowest level for four months, and compared to a 2.5% fall by the Europe bank index as the sector was rattled again by fears over the euro zone.

The bank has achieved annualised cost savings of $2 billion, absorbing $1.2 billion of wage inflation in emerging markets and $400 million of extra regulatory costs last year. It expects savings to rise to $3.5 billion by 2013.

HSBC has sold 28 businesses, taking 15,000 staff off its payroll, and releasing about $55 billion risk-weighted assets, the bank said. The sales brought in $5.9 billion.

A return to higher interest rates will substantially boost revenues, Gulliver said. HSBC makes money from the massive excess deposits it holds, but Gulliver said it steered clear of risk. Rival JPMorgan last week shocked investors by revealing a $2 billion trading loss as it attempted to make higher profits from its excess deposits.

HSBC’s balance sheet management unit does not take synthetic credit risk, and its low risk appetite was why it had $153 billion on deposit at central banks, Gulliver said.

22 Key Markets Identified

Having focused on shrinking the bank, Gulliver is also attempting to show the bank’s growth potential.

In addition to its core “home” markets of Britain and Hong Kong, he identified 20 priority growth markets, including China, India, Indonesia, Germany, Turkey, the United States and Brazil.

Those markets account for about 92% of group profit. “Those are the 22 countries we are going to focus our investment on,” Gulliver said, signalling no appetite for acquisitions.

HSBC has 89 million customers in 85 countries and has been accused of “planting flags” around the world without enough attention on economic returns.

Gulliver set out targets a year ago to get return on equity - a key measure of profitability - above 12%, and to cut costs below 52% of revenue. The bank improved both in the first quarter, with an underlying RoE near 11% and cost efficiency at 55%.

HSBC said the integration of its four businesses - retail banking and wealth management, commercial banking, global banking and markets, and private banking - would deliver incremental revenue of $2 billion, doubling the target it set last year.

Gulliver said commercial banking and GBM should each provide 30-40% of group profits in future, with retail banking contributing 20-30% and private banking 5-10%.

It is moving out of businesses that lack scale, do not make money or do not connect with other areas.

Gulliver is looking at selling parts of its US real estate portfolio to accelerate the run-down of the business, and said he expects a first sale by the end of June.

It has sold its U.S. credit card arm and half its U.S. branches. It has sold or plans to sell businesses in Europe and Latin America, and in Asia too, including Japan, Thailand and South Korea.

HSBC’s Hong Kong shares fell 1%, adding to a 3.4% fall on Wednesday, their biggest one-day fall this year.

HSBC doubles turnaround target to $2 bn

HSBC chief says costs cut by $2 billion, strategy on-target

Reuters — Thu, 17 May 2012 04:40:00 +0000

Hong Kong: HSBC CEO Stuart Gulliver said in a strategy update on Thursday that Europe’s biggest bank is still on track to meet his return on equity (RoE) target of above 12%.

A file photo of HSBC CEO Stuart Gulliver.

Gulliver said HSBC is on target with its cost cutting plan, having announced the sale of or exit from 28 businesses since he launched the initiative at the start of 2011. The goal is for HSBC to get costs below 52% of the company’s revenue, and to achieve a common tier 1 equity ratio of 9.5 to 10.5%.

HSBC is Europe’s largest bank by assets ($4.1 trillion at end-2011) and market value ($160 billion as at 15 May).

Plotting the recovery for the bank’s European and US businesses is a key part of Gulliver’s strategy, as he seeks to bolster confidence in a turnaround plan that has shown progress through cost cutting and asset sales. The bank late last year proposed to cut 35,000 jobs.

London-listed HSBC shares closed down 2.5% on Wednesday at a 15-week low. The stock is up a little over 9% so far this year, outperforming the benchmark FTSE 100, which is down more than 3%.

HSBC chief says costs cut by $2 billion, strategy on-target

Vodafone plans Europe revamp on Combes’s exit

Jonathan Browning/ Bloomberg — Wed, 16 May 2012 17:44:00 +0000

London: Vodafone Group Plc is considering a reorganization after the departure of European chief Michel Combes, potentially setting out succession candidates at the world’s largest mobile-phone company, two people with knowledge of the matter said.

Michel Combes, CEO, Vodafone Europe. Bloomberg.

One scenario involves separating Vodafone’s European operating companies into a group consisting of western Europe and a second entity made up of Turkey, central and eastern Europe, the people said, declining to be identified because the deliberations are confidential. A third group would include Vodafone’s assets in southern Africa and India, said the people, adding that the discussions are at an early stage.

“Paolo Bertoluzzo, 46, who runs the Italian unit, and Serpil Timuray, the head of Vodafone Turkey, are among internal executives seen to take on greater responsibilities, alongside Michael Joseph, the former chief executive officer of Vodafone’s Kenyan subsidiary who is now director of global payments, said Will Draper, an analyst at Espirito Santo Investment Bank in London.

Bertoluzzo is also a board member of Vodacom Group Ltd, the South African division of Newbury, England-based Vodafone.

“After Combes’s departure, any person who fills that similar position has the potential to move to a bigger role,” said Guy Peddy, an analyst at Macquarie Securities in London. “That’s the opportunity that’s now been provided.”

McKinsey roots

Simon Gordon, a Vodafone spokesman, declined to comment on a replacement to Combes and any potential reorganization or succession plans.

Vodafone shares declined as much as 1.4% and traded 1% lower at 168.75 pence as of 2.40 pm in London. The stock has fallen 4.7% this year through Tuesday.

Chief executive officer (CEO) Vittorio Colao, a former McKinsey and Co. partner, is embarking on his third revamp of Vodafone’s structure since taking over in 2008. Combes, the former Europe CEO, will leave Vodafone at the end of July to run Vivendi SA’s SFR French wireless unit. Colao formerly held both positions of deputy CEO and Europe chief when he rejoined Vodafone in 2006. He hasn’t said how long he plans to remain as CEO.

Vodafone is seeking to refocus on western Europe, its largest market by sales, as service-revenue growth slows, held back by declining spending in Greece, Spain, Italy and Portugal. A new western Europe unit would have revenue of more than £14 billion in the six months through September 2011, followed by India and Vodacom with sales of about £4.9 billion. Vodafone is scheduled to release full-year earnings on 22 May.

Verizon dividend

Vodafone is also waiting upon US partner Verizon Communications Inc. to consider a dividend from their wireless venture for the second year in a row. Vodafone has a 45% stake in Verizon Wireless, the largest US mobile carrier.

The Turkish operations, which had the fastest growth in service revenue last quarter, doesn’t fit within the current structure, Colao said last week.

Vodafone said on Wednesday deputy chairman John Buchanan will stand down from the board this summer. Buchanan, a Vodafone director since 2003, was appointed chairman of British semiconductor designer ARM Holdings Plc this month. Luc Vandevelde, the former Marks and Spencer Group Plc chairman, will become a senior independent director.

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Vodafone plans Europe revamp on Combes’s exit

Shareholders sue JPMorgan over trading loss

Reuters — Wed, 16 May 2012 14:53:00 +0000

New York: JPMorgan Chase & Co was the target of two separate lawsuits by shareholders on Wednesday, accusing the bank and its management of excessive risk that led to trading losses of at least $2 billion.

A spokesman for JPMorgan Chase declined to comment on the lawsuits, which were filed in US district court in Manhattan, days after chief executive Jamie Dimon’s 10 May statement that a “failed hedging strategy” caused the massive loss over the last month.

“What the company did not reveal was that those losses were the result of a marked shift in the company’s allowable risk model, undisclosed to investors, and the similarly clandestine conversion of a unit within the company that was touted as providing a conservative risk-reduction function into a risky, short-term trading enterprise that exposed the company to large losses instead,” said one of the complaints.

It was filed derivatively by California shareholder James Baker on behalf of JPMorgan Chase against Dimon, Chief Financial Officer Douglas Braunstein and board members.

The lawsuit charged the JPMorgan defendants with breach of fiduciary duty, waste of corporate assets and unjust enrichment.

A separate lawsuit was filed at the same time by shareholder Saratoga Advantage Trust financial services portfolio on behalf of owners of common stock.

It said Dimon and Braunstein made “materially false and misleading statements and omissions” on an 13 April 2012 earnings conference call with investors.

“Defendants misrepresented the losses and risk of loss to the company arising from massive bets on derivative contracts related to credit indexes reflecting interest rates on corporate bonds,” the complaint said. “These derivative bets went horribly wrong, resulting in billions of dollars in lost capital for the company and billions more in lost market capitalization for JPMorgan shareholders.”

The cases are James Baker, derivatively on behalf of JPMorgan Chase & Co v James Dimon, et al in US district court for the southern district of New York, No. 12-3878 and Saratoga Advantage Trust v JPMorgan Chase & Co in the same court No. 12-3879.

Also Read | JPMorgan investment unit played by different high-risk rules

Shareholders sue JPMorgan over trading loss

JPMorgan investment unit played by different high-risk rules

Reuters — Wed, 16 May 2012 11:26:00 +0000

London/Frankfurt: The JPMorgan Chase & Co. unit that lost more than $2 billion through a failed hedging strategy had looser risk controls than the rest of the bank, according to people familiar with the situation.

The risk of losses is tallied by the bank using a so-called value at risk (VaR) calculation. However, the Chief Investment Office, the unit responsible for the high-profile loss that JPMorgan disclosed last Thursday, had a separate VaR system.

It used a less stringent calculation that gave a lower risk assessment of its trades, according to people who previously worked at the bank.

Finance minister Pranab Mukherjee. Photo: PTI

The unit also reported directly to CEO Jamie Dimon, a factor which allowed it to maintain a separate risk monitoring set-up to other parts of the investment bank, these people said.

Despite repeated warnings from executives inside the firm as long ago as 2005, the CIO unit remained notably free from oversight.

A source with knowledge of the situation said that these warnings included the size of the CIO, the fact that its risk reporting was not transparent and the scope for the unit to get “bigger and bigger” because it had a lower cost of funding than the rest of the investment bank.

Until April, the CIO unit’s unusual autonomy allowed it to build up risky positions without triggering alarms.

Indeed, the unit was encouraged to be a profit center, as well as hedging against risk, a source with direct knowledge of the unit said. Ina Drew, who headed the unit, earned more than $15 million in each of the past two years, making her among the highest-paid executives at the bank and one of the most compensated women on Wall Street.

Drew could not be reached for comment, and declined to speak with a reporter who visited her house.

“It created incentives to take extraordinary risk in one pocket of the bank” that was different from the rest, the source said. “If someone’s getting paid $15 million, it’s a profit center.”

JPMorgan declined to comment on the CIO unit or its trades.

Risk Variations

While the bank didn’t completely ignore risks at the unit, any assessment can overlook problems if it is measuring risk with the wrong yardstick.

When reports surfaced last month that one of JPMorgan’s CIO unit traders in London had taken a huge position in credit derivative markets, JPMorgan officials were prompted into taking a closer look at the risk in the CIO unit, banking sources, including a former CIO employee, told Reuters.

About two weeks ago, the bank finally applied its more stringent risk model to the CIO’s trades. It got a nasty surprise: the model revealed that the maximum amount the CIO could lose in a single day had soared, one of the sources said.

Recent regulatory filings illustrate the rise in risk. A filing from 13 April showed a daily VaR for the CIO unit of $67 million. But a 10 May filing, showed it had risen to $129 million. That means the amount the unit could lose on most days had nearly doubled, and on some days it could lose much more.

By the time the increase was discovered, its positions had grown to a size that made it impossible for the bank to quickly unwind the trades, the sources said.

The trader in question, Bruno Iksil, was dubbed the “London Whale” because JPMorgan’s positions were so large that other market players could detect them easily. That made the bank a sitting target for hedge funds who wanted to trade against the positions. Iksil could not be reached for comment.

The CIO unit also had a lower cost of capital than other parts of the bank, an artificial advantage that gave it an incentive to take more risk and behave in a less disciplined way, people familiar with the unit said.

“It was very large, but was never very transparent, and it wasn’t clear that they had an appropriate funding cost,” said the source with direct knowledge of the CIO. “They were running more risk than the investment bank - and with no peer review process (from those in the investment bank).”

Another warning came in March 2011, when a labor union-backed group said the board lacked expertise on its risk policy committee, the board level body responsible for overseeing risk.

The analysis, by CtW Investment Group on behalf of union pension funds, said JPMorgan’s board had “serious deficiencies” compared with the boards of other banks.

Ironically, JPMorgan invented value-at-risk as a tool for measuring exposure to trading losses.

The tool emerged in the wake of the 1987 stock market crash when Sir Dennis Weatherstone, JPMorgan’s British-born chairman, asked his division chiefs to put together a briefing to answer the question: “How much can we lose on our trading portfolio by tomorrow’s close?”

JPMorgan investment unit played by different high-risk rules

JP Morgan CIO chief Drew quits after trading loss

Matt Scuffham & David Henry/Reuters — Mon, 14 May 2012 14:03:00 +0000

London/New York: JP Morgan Chase & Co sacrificed investment chief Ina Drew on Monday in response to trading losses that could reach $3 billion or more and which have tainted the reputation of the bank’s high profile chief executive Jamie Dimon.

Ina Drew

The biggest bank in the United States by assets said Drew, its New York-based chief investment officer and one of its highest-paid executives, would retire. The statement confirmed what sources close to the matter had previously told Reuters, that Drew would depart the firm.

It also said Matt Zames would take Drew’s position, while Daniel Pinto, currently co-head of global fixed income with Zames, would become sole head of the group.

Mike Cavanagh, CEO of the Treasury & Securities Services (TSS) group, will lead a team of executives overseeing and co-ordinating the group’s response to the recent losses.

The statement made no mention of two of Drew’s subordinates who were involved with the costly derivatives trades, London-based Achilles Macris and Javier Martin-Artajo, who the sources had also said were expected to leave.

Neither could be reached for comment earlier on Monday. A woman who answered the door at Macris’s London apartment in a grandiose 19th century mansion block overlooking Westminster Cathedral said he was at work.

JP Morgan said Cavanagh “will ensure that best practices and lessons learned are carried across the firm.”

The departure of Drew after 30 years at JP Morgan comes after the unit she ran, known as the chief investment office (CIO), mismanaged a portfolio of derivatives tied to the creditworthiness of bonds, according to bank executives.

The portfolio included layers of instruments used in hedging that became too complicated to work and too big to quickly unwind in the esoteric, thinly traded market.

One hedge fund manager who previously ran a proprietary (or prop) trading book at JPMorgan said the bank’s public commitments to trim balance sheet risk were at odds with its network of trading silos, who were making bets independently with only a handful of the bank’s most senior executives notified of their vast, complex exposures.

“This (CIO) group was completely separate, completely distinct from the prop trading unit. We had no clue about their prop book and they would have no clue about ours for that matter,” the manager said.

“They were all totally independent. All the activities were reported to New York and they ran the allocation of capital to each and every strategy ... those decisions were definitely not taken in London. These things were very, very opaque. Every bank is, whether you’re Goldman, Morgan (Stanley) or JP.”

Past Performance

Drew had repeatedly offered to resign in recent weeks after the magnitude of the debacle became clear, according to one of the sources, but the resignation was not immediately accepted because of her past performance at the bank.

Until the loss was disclosed late on Thursday, Drew was considered by some market participants as one of the best managers of balance sheet risks. She earned more than $15 million in each of the last two years.

“Ina is an amazing investor,” said a money manager who knows Drew, but who declined to be quoted by name. “She’s done a really good job over a lot of years. But they only remember your last trade.”

Departures had been on the cards in the wake of the trading losses, though in disclosing the losses on Thursday, CEO Jamie Dimon said only that the bank was continuing to investigate and would take disciplinary action with those involved.

Dimon said the bank’s losses could reach $3 billion or more as it unwinds the positions in coming months.

The losses have marred JP Morgan’s reputation for risk management, prompted a downgrade in its credit ratings and thrown an unflattering spotlight on Dimon, a critic of increased regulation who had become one of America’s best-known bankers.

On Sunday, Dimon’s reputation was tarnished when the New York Times reported remarks he made recently at a dinner party in Dallas. Dimon called arguments about too-big-to-fail banks - arguments made by former Federal Reserve chief Paul Volcker and Richard Fisher, president of the Federal Reserve Bank of Dallas - “infantile” and “nonfactual,” according to the Times.

Stop The Cycle

Dimon is himself a board member of the Federal Reserve Bank of New York. Elizabeth Warren called for him to resign that post on Sunday. Warren, who chaired the congressional committee that oversaw the bank bailout program known as TARP and is running for the Senate, said he should not be on the panel advising the Fed on bank management and oversight.

“We need to stop the cycle of bankers taking on risky activities, getting bailed out by the taxpayers, then using their army of lobbyists to water down regulations,” Warren said.

Dimon has struck a more contrite pose since revealing the losses. In an interview that aired on Sunday, he told NBC’s “Meet the Press” the bank’s handling and oversight of the derivative portfolio was “sloppy” and “stupid” and that executives had reacted badly to warnings last month that the bank had large losses in derivatives trading.

He said executives were “completely wrong” in public statements they made in April after being challenged over the trades in news reports. “We got very defensive. And people started justifying everything we did,” Dimon said. “We told you something that was completely wrong a mere four weeks ago.”

The loss, and Dimon’s failure to heed the warnings, have become major embarrassments and have given regulators new arguments for tightening controls on big banks and requiring them to hold more capital to cushion possible losses.

Issues relating to the bank’s internal controls were raised in 2010 when it was fined £33 million by Britain’s Financial Services Authority for failing to segregate client month from its own in the UK - an incident that also led to its auditor PwC being fined 1.4 mn by its professional body for failing to spot the transgression.

No-one at PwC, JPM’s global auditor, could immediately be reached for comment.

JP Morgan lost $15 billion in stock market value the day after the latest loss announcement.

Dimon is scheduled to speak on Tuesday at the bank’s annual meeting in Tampa, Florida.

JP Morgan CIO chief Drew quits after trading loss

Yahoo shares up after CEO exit

Reuters — Mon, 14 May 2012 13:40:00 +0000

Yahoo Inc shares jumped 2% in premarket trading on Monday after the exit of chief executive Scott Thompson following questions about his academic record.

The Internet company said on Sunday that Ross Levinsohn will become interim CEO and that it is giving three board seats to the activist hedge fund headed by Daniel Loeb, settling a looming proxy fight. Yahoo chairman Roy Bostock is also stepping aside.

Thompson’s departure caps another of many tumultuous episodes involving Yahoo management over several years. It comes as Yahoo struggles to regain relevancy and revive growth amid fierce competition from Google Inc and Facebook.

Scott Thompson. Reuters.

“Investors are likely to take comfort in fresh leadership, particularly at the board level, as eight of the 11 board seats were named in the past year,” wrote Evercore Partners analyst Ken Sena in a note.

Thompson exited the company 10 days after Loeb’s hedge fund, Third Point, accused him of padding his biography by faking a computer science degree. Third Point is one of Yahoo’s largest shareholders, with a 5.8% stake.

While he said the management changes were necessary after “Resumegate,” Macquarie analyst B en Schachter s aid in a research note he was disheartened that Yahoo would essentially be starting from scratch again with its strategy.

“As a practical matter, what this means for the company is that the past four months have been little more than a false start, and it must once again start at the beginning in terms of establishing a strategic direction,” Schachter said.

Before resigning Thompson disclosed to the board he had been diagnosed with thyroid cancer, the Wall Street Journal, reported, citing sources.

Yahoo representatives did not immediately respond to requests for comment on the report.

Shares of Yahoo, which closed at $15.19 on Friday, were trading at $15.54 in premarket dealings.

Yahoo shares up after CEO exit