McGraw-Hill’s Scandal and All the Top Stories Affecting Financial Stocks This Week

Here’s your Cheat Sheet to this week’s top financial industry business headlines:

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The Blackstone Group (NYSE:BX): Current price $18.02

Blackstone, the alternative asset manager, has discretely obtained a securities underwriting license while its expanding capital markets operation moves into investment banking. This move represents the most recent phase in the transformation of large listed private equity groups becoming more broadly based alternative asset managers.

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JPMorgan Chase & Co. (NYSE:JPM): Current price $48.63

At the moment, Chief Executive Jamie Dimon is not that unhappy with how Dodd-Frank is working out — for his bank, anyway. Dimon sees the new set of rules – higher capital rules, Volcker, and OTC derivative reforms longer-term – as helping out the big banks by causing the cost of regulatory compliance to be  so expensive that smaller rivals are unable to compete. JPMorgan’s margins might shrink a bit, but at the same time, its market share increases as the smaller rivals just can’t hack it. His advice to them is simply, “Grow.”

JPMorgan paid investment bankers and traders about 3 percent less in 2012 as economies in the United States and Europe put the brakes on deals, say sources to Bloomberg. Other sources added that portfolio managers and other executives in asset management received on average a 6 percent increase in salary and bonuses.

JPMorgan has reclaimed the top title by market value as investors expect on a rebound by investment banking, says Bloomberg. Shares are up 2.4 percent this week, valuing the bank at $185.04 billion as of Friday and surpassing the $184.2 billion for Wells Fargo & Co.

Barclays (NYSE:BCS): Current price $18.85

On Sunday, the bank announced that its Chief Financial Officer, Christopher G. Lucas, and its General Counsel, Mark Harding, are stepping down upon replacement, marking the latest exits following the firm’s involvement in a number of scandals including an inquiry into the manipulation of world interest rates. Just how Barclays raised capital from a Qatari fund during the financial crisis is the latest question that is bound to be probed, and Lucas is likely to be questioned.

Bank of America Corporation (NYSE:BAC): Current price $11.76

BofA has had plenty of time to regret its purchase of the subprime mortgage lender Countrywide Financial back in 2008, and the residuals keep on coming on. Thus far, the giant bank has set in reserves around $40 billion through which to resolve claims of mortgage misconduct which occurred when Countryside was on its own. However, new documents filed in state Supreme Court in Manhattan late on Friday allege that a proposed $8.5 billion resolution that Bank of America reached in 2011 to settle claims over Countrywide’s mortgage abuses is far too low and deprives thousands of ordinary investors of the relief they deserve. The documents were submitted by three Federal Home Loan Banks in Boston, Chicago and Indianapolis and also Triaxx, an investment vehicle that bought mortgage securities.

Don’t Miss: Here’s Bank of America’s $40 Billion Backpack.

Berkshire Hathaway (NYSE:BRKB): Current price $97.25

It looks as if Berkshire Hathaway has returned to bond-insurance for the present, as the company is reviving its dormant bond-insurance division as it backs municipal bonds tied to a large mixed-use development in Texas, according to bond-offering documents. This is the first insurance policy sold by the unit, Berkshire Hathaway Assurance Corp., on new municipal bonds in more than three years, but it certainly could be an isolated deal, and not a real return to routine backing of the bonds.

The company’s bond-insurance arm has backed its first municipal bond in more than three years and is meeting with good demand from investors on Wednesday, according to market participants. Berkshire Hathaway Assurance Corp. is insuring $106 million in taxable bonds sold to finance a 433-acre mixed-used development in the Colony, Texas, which is outside of Dallas.

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Hartford Financial Services Group (NYSE:HIG): Current price $24.17

For the three months ended December 31st, Hartford posted a net loss of $46 million, or 13 cents per diluted share, compared year-over-year from 2011 with net income of $118 million, or 23 cents per diluted share. This decline was because of higher catastrophe losses, largely from Sandy, restructuring and other expenses, hedging losses on runoff annuity blocks, and increased net realized capital losses because of the sales of the Retirement Plans and Individual Life divisions. This from a press release by the company.

Morgan Stanley (NYSE:MS): Current price $23.32

The firm’s world chief of corporate affairs, Jeanmarie McFadden, is retiring. McFadden’s duties included managing media relations, marketing and community affairs, according to an internal memo from Chief Executive James Gorman, obtained Monday by Bloomberg News. The acting chief will be the deputy head of corporate affairs Wesley McDade.

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UBS (NYSE:UBS): Current price $16.84

On Tuesday, UBS said that it is making a cash tender offer in regards to certain euro- and Italian lira-denominated senior unsecured securities for a maximum total principal amount of €2.25 billion, along with a cash tender offer in relation to certain US dollar-denominated senior unsecured securities for a total principal amount of $2.5 billion. The offers correspond in total to approximately 5 billion Swiss Francs, based on Monday’s exchange rates, and are subject to increase and other conditions as set out in the tender offer memorandum.

According to UBS, it owes Brazil a minimum of $1.2 billion in back taxes dating back to when the lender owned an investment bank there. In its yearly financial statement released on Tuesday, UBS said that BTG Pactual Group, which was created when it divested the investment bank in 2009, had submitted “contractual indemnification claims” worth that amount, among which includes interest and penalties. UBS subsequently sold the division to a group led by Brazilian financier André Esteves for $2.5 billion in 2009, so as  to raise money for credit-related losses in the aftermath of the world financial crisis of 2008.

UBS has been hired by BHP Billiton to  find a buyer for its Gregory Crinum coking coal mine in Queensland state, acording to Australian Financial Review on Thursday. The owner closed the Gregory open pit at the operation in 2012, but the Crinum underground mine is still open and might worth about $826 million. The paper quoted a BHP spokeswoman as saying that any decision to go forward with a sale will probably not be made for six to nine months and then, it would depend on market interest and other factors.

The Royal Bank of Scotland Group (NYSE:RBS): Current price $10.80

After political pressure to target someone prominent, the chief of the firm’s investment bank will forfeit some £4 million in past share awards for the group’s involvement in the worldwide Libor-rigging scandal. Sky News reported Tuesday that John Hourican, who was recruited to rescue the company after it was bailed out by British taxpayers in 2008, will surrender the share options awarded to him based on past performance. However, he will receive a year’s salary in lieu of notice, worth about £700,000. Hourican will leave the bank at the end of February, having managed a massive winding-down of RBS’s investment banking operation during the last four-and-one-half years.

There were a large number of documents published this week in connection with the endeavors by RBS to rig the Libor, but the only trader pointed out by name was the “Rain Man”, Tom Hayes. Regulators say that Hayes was the connection among pervasive attempts by several banks to swell their trading profits by manipulating the rate and that he was the one who moved from one bank to the other with the contracts.

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Don’t Miss: Here’s Bank of America’s $40 Billion Backpack.

McGraw-Hill Companies (NYSE:MHP): Current price $42.67

On Tuesday, Attorney General Holder announced a lawsuit against Standard & Poor’s and its parent company McGraw-Hill. The charges accuse S&P of defrauding investors in residential mortgage-backed securities and collateralized debt obligations of more than$5 billion. The lawsuit by the Justice Department was brought under the Financial Institutions Reform, Recovery, and Enforcement Act of 1989, which gives the Justice Department the power to seek civil penalties corresponding to the losses suffered by federally insured financial institutions.

This week, New York state Attorney General Eric Schneiderman issued a subpoena to McGraw-Hill’s unit Standard & Poor’s, said an inside source to Reuters. What is more, his office sent formal requests for information to two other major credit rating agencies, Moody’s Corporation (NYSE:MCO) and Fitch Ratings. The officer wants information in regards to the agencies’ behaviors in rating mortgage-backed securities and as to whether the firms kept agreements in 2008 to make certain reforms.

TICC Capital Corp. (NASDAQ:TICC): Current price $10.33

TICC announced Tuesday that it has begun a public offering of 3 million shares of its common stock. Regarding the proposed offering, the firm will grant the underwriters for the offering an option through which to buy as many as 450,000 additional shares . Barclays Capital will serve as the sole book-running manager for the offering.

TICC on Wednesday said that it has priced a public offering of 5.5 million shares of its common stock at a public offering price of $10.36 for aggregate gross proceeds of about $57 million. The closing should take place on February 11th. The firm has granted the underwriters an option to buy up to an additional 825,000 shares.

Don’t Miss: Goldman Sachs Bids Its Cash Cow a Fond Farewell.

American International Group (NYSE:AIG): Current price $38.79

The consumer-lending joint venture of private-equity firm Fortress Investment Group (NYSE:FIG) and the insurer American International Group is developing a rare securitization of subprime personal loans as soon as this week, in the latest example of risk appetite for asset-backed bonds, where increasing demand has pushed yields to record lows. The $604 million issue from the consumer lender Springleaf Financial will bundle together approximately $662 million of loans secured by assets like boats, cars, furniture and jewelry into ABS, according to a term sheet.

Are these stocks a buy or sell? Let us help you decide. Check out our Stock Picker Newsletter now.

Goldman Sachs Group (NYSE:GS): Current price $151.60

In the wake of Goldman Sachs’ divestiture of a $1 billion interest in Industrial & Commercial Bank of China, that country’s biggest bank, President Gary Cohn said he’s “bullish” on China, commenting to Bloomberg Television’s Susan Li in Hong Kong Tuesday that, “You can absolutely still make money off Chinese banks. We are very positive and optimistic, but cautious, about where China’s going.”

For the past 20 years, Goldman pursuaded its clients to invest in its private-equity funds, given the assurance that the firm itself and its partners were in the same boat as it invested heavily in the funds as well. The upcoming “Volcker rule” should force Goldman and others to significantly reduce their  investments in their own funds and this new reality is forcing Goldman to make major modifications in a $50 billion business from which it has reaped big bucks for itself and for its employees and clients.

Don’t Miss: JPMorgan: Shifting Profits, Shifting Salaries.

Citigroup (NYSE:C): Current price $42.68

Worldwide alternative asset management platform, Citi Capital Advisors, reports that significant progress has been made towards separating certain of its units from Citigroup, which will create a new independent asset management company to be called Napier Park Global Capital. Already, connected regulatory approvals have been obtained and the investor and counterparty consent process is almost finished. Upon completion during the first quarter, Napier Park Global Capital will be majority owned by its employees and offer a diversified product mix such as hedge funds, bespoke client solutions, CLOs and private investing. The company should have roughly $6.8 billion worth of assets under management at its inception.

Are these stocks a buy or sell? Let us help you decide. Check out our Stock Picker Newsletter now.

IntercontinentalExchange (NYSE:ICE): Current price $149

IntercontinentalExchange estimates that its 2013 adjusted consolidated expenses will rise between 3 and 5 percent from the 2012 adjusted consolidated expenses. Further, the firm expects that purchase-related transaction costs for the first quarter in the range of $10 million to $12 million, mostly connected with the NYSE Euronext (NYSE:NYX) transaction. ICE believes that 2013 operational capital expenditures and capitalized software development costs should be between $60 million and $70 million.

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