In \'Supercapitalist,\' Wall Street Is Back as a Villain

We at DealBook often dream of reviewing movies for The New York Times (A.O. Scott, we're available if you want a vacation). And once in a while, a finance-oriented film comes along to pique our interest.

A new independent movie, “Supercapitalist,” incorporates modern-day tools (smartphones, computer data dumps) to the familiar villain of Wall Street greed. The film also touches on many of the business themes familiar to Wall Streeters: poison pills, short-selling, bets on Fed monetary policies and of course, wealth.

Though it may seem that financiers would shun anything that would cast them in a harsh light, the film's executive producers include Sam Kwok, who is a director at a venture capital firm focused on early-stage media and technology investment, and John Hsu, who manages his family's investment portfolio of stocks hedge funds, properties, private equity and venture capital.

The director, Simon Yin, also nods to the globalization of money that has shifted financial centers to other parts of the world. Although New York plays a major role, it is now Hong Kong that is main backdrop as Asia is the center for wealth and success.

Derek Ting â€" who is also producer and writer - plays Conner Lee, a smart, up-and-coming hedge fund trader in New York at a firm not-so-subtly named Supercapitalist Inc. Linus Roache assumes the role of the hedge fund's boss - a clean-cut Wall Streeter named Mark Patterson â€" while channeling a modern-day Gordon Gekko from the Oliver Stone film “Wall Street.”

In the opening scene of “Supercapitalist,” Mark declares to clients the insider trading that is at the heart of “Wall Street.”

“Back in the '80s and '90s, information was key,” he says with a gravelly voice. “Now it's a whole new game.” He soon adds, “Hedge funds, gentlemen, are the future.”

Mark does business in a private jet, in a hotel room while having a romantic encounter and on th e patio of his Manhattan apartment, doing yoga with Apple ear buds in place. He and others in the film are recognizable characters of high finance, but their egomaniacal ways stoke a culture clash abroad.

Seeing Mark as a father figure and being the good solider, Conner trots out to Hong Kong, with just enough naïveté to see his mission - of managing a struggling investment, the fictional trading firm Fei & Chang - as a noble goal.

Conner also becomes a stand-in for the cold-hearted American business practices, as he proposes that the big family-run company in Hong Kong fire a good portion of its managers and sell assets to improve the bottom line.

In one scene in Hong Kong, an investment banker, Michael Baker (Jake Boswell), tells how he and his “banker friends” muscled a local eatery into adding English to its menu. “Classic M.&A.,” he says. Conner asks how the locals felt about the changes. “Locals? Who cares?” Michael says.

The Weste rn financiers treat Hong Kong as a playground. Conner's colleague, Quentin Wong (Darren E. Scott), has a loose interpretation of Guanxi, the Chinese concept of business relationships. To him, the practice involves projecting an image of excess wealth and using bribery to ferret out business information.

The film occasionally winks to the classics of the genre. In one scene, a boy shows off a computer game that lets players buy and sell companies. In one corner of the screen is a green button with three words: “Purchase Gekko Bonds.”

While finance is at the heart of the movie, ultimately, it is family that is the core message of the movie, rather than greed is good.

“Supercapitalist” opens on Friday in New York, and later in Washington, San Francisco and Los Angeles, and is also available on video on demand on cable and on iTunes.

Swift Rescue in U.S. Provides Lessons for Europe

Lee Sachs, chief executive of Alliance Partners, is former counselor to the secretary of the Treasury and was head of the financial crisis response team in the Obama administration.

The most recent commitments by European leaders to do “whatever it takes” to end Europe's financial crisis and preserve the euro are encouraging. Now, they must follow through on those words with specific actions.

The first rule of financial crisis management dictates that the earlier, more comprehensive and forceful a response is, the better the outcome is for the economy, households and taxpayers. As we learned in the United States, the necessary steps are often deeply painful and unpopular. But as we are learning in Europe, the consequences of a delayed or inadequate response are far worse.

In the United States, two administrations acted in concert with Congress and the Federal Reserve to quickly put out the financial fires in late 2008 and 2009. American political an d economic leaders moved swiftly and aggressively to stabilize the banking system, reopen frozen credit markets and offset the effects of enormous global deleveraging with a series of financial programs. Though these involved initial outlays, the investment proved to be worthwhile, and taxpayers have recouped most of their investment.

These financial stability programs were coupled with aggressive fiscal and monetary policy to support growth.

None of these measures would have worked in isolation. They reinforced each other. And together, they stemmed the crisis and helped avert a second Great Depression.

Policy makers here still have more work to do to strengthen the economy and promote job growth. But had we failed to act, or simply delayed the tough but inevitable choices we had to make during the crisis, it is likely that hundreds of thousands more businesses would have disappeared, millions more families would have lost their jobs and homes, and trillio ns more in savings would have been erased.

Even today, many of these programs remain deeply unpopular because of the misperception that stabilizing Wall Street was an end goal, rather than a means to protect Main Street.

In early 2009, the United States government put the nation's largest banks through rigorous stress tests to assess their health. With that transparency, and the confidence it engendered, private investors â€" not the taxpayers - recapitalized the banks so that they would have the capacity to make new loans. And with the Fed, we unclogged the pipes of our financial system so that credit could resume flowing.

The connections between these policies and the people they affect are not as well understood as the auto industry rescue, which saved over a million jobs, or mortgage refinancing and modification programs, which are helping to keep millions of families in their homes. However, they are no less consequential.

Today, parents prepari ng for back-to-school shopping can get a credit card. Families wanting to buy a car can obtain an auto loan. Prospective homeowners can secure a mortgage. And businesses looking to hire and expand can finance their payroll and investments. All of these sources of credit would have been substantially more difficult â€" and in many cases impossible â€" to access if our financial system had been allowed to collapse.

Had we simply hoped the financial fires would burn out on their own or taken incremental steps out of fear of the political backlash, we would have caused more damage to the families and businesses we were trying to support. Had we allowed public anger, however justified, to dictate public policy, it would not have helped us turn around our economy any faster.

Europe provides a good object lesson in the harm to ordinary citizens of a “kick the can” crisis response. Euro zone economies are stalled or shrinking, while the United States economy has been growing for three straight years. The euro zone has lost jobs since early 2010, while businesses in the United States have added more than 4.5 million workers over the last 29 months.

The contrast is even starker where the crisis has been most acute. Consider the effect of Europe's muddled response to Spain, a country whose troubles stem largely from the same type of collapse in its housing market that we experienced here. In Spain, lending to businesses has dropped 7 percent in the last two years and continues to fall, while lending to businesses in the United States is up 15 percent since then and continues to rise. Spanish auto sales were 13 percent lower in the second quarter compared with a year ago, while American auto sales were 16 percent higher. More than one in four Spaniards are out of work. The United States unemployment rate, while still high at 8.3 percent, has come down from 10 percent in late 2009.

European leaders are certainly facing economic a nd political challenges beyond those we faced in the United States, and their solutions require the consensus of multiple governments â€" not just one. Their choices are not easy. But they will not become simpler the longer they wait, and they will not resolve themselves.

The price of further delay will almost certainly be a continued rise in unemployment, a deeper recession and a greater cost to taxpayers. Eventually, worsening conditions will force European leaders to act. Or they can choose to act on their own terms by moving quickly, decisively and comprehensively to do whatever it takes.

Manchester United Opens at $14.05 in First Day of Trading

Shares of Manchester United kicked off life as a newly public company on Friday by rising slightly above their initial public offering price, at $14.05.

One of the world's most popular sports franchises, Manchester United priced its initial public offering on Thursday night at $14, below its expected price range. The offering valued the club at about $2.3 billion.

By going public - while remaining firmly under the control of its majority owner, the Glazer family - Manchester United is hoping to challenge the history of sports teams that trade on stock exchanges. Namely, that such stocks are losers.

The Boston Celtics went public in 1986 and the Cleveland Indians in 1998. But the stocks struggled, and both were taken private in the last decade. And many English Premier League soccer clubs were publicly traded at one point or another, and performed miserably.

Through its stock sale, Manchester United raised money to pay off some of the debt it incurr ed when Malcolm Glazer bought the club in 2005. The Glazers are also selling some shares in the offering.

British Regulators Plan Major Overhaul Of Rate System

LONDON â€" The system at the center of the rate-rigging scandal will be overhauled as regulators respond to public anger over the manipulation of the London interbank offered rate, or Libor.

Martin Wheatley, the British regulator in charge of overhauling the rate-setting process, outlined plans on Friday that could lead to wholesale changes to Libor, which is used as a benchmark for more than $360 trillion of financial products, including mortgages and loans.

The reforms may lead to the scrapping of the current system, which is overseen by the British Bankers' Association, a trade body, and making it a criminal offense to manipulate benchmark rates.

“The existing structure and governance of Libor is no longer fit for purpose and reform is needed,” said Mr. Wheatley, who is managing director of the Financial Services Authority, the British regulator. “Trust in a vital part of the financial system has been badly damaged and timely action is needed to restore it.”

The tough words from British authorities come after one of the country's biggest banks, Barclays, agreed to a $450 million settlement with American and British officials after some of its traders and senior executives were found to have manipulated the rate for financial gain.

A number of other global financial institutions, including Citigroup and HSBC, are currently under investigation for their role in the scandal. Analysts estimate the combined fines and penalties for the financial services industry may total more than $20 billion.

Mr. Wheatley is in charge of a British government review of the Libor-setting process, which will offer recommendations in late September about how the rate could change.

On Friday, the British regulator said the inquiry would likely lead to major changes to Libor, including the use of actual trading data to set the daily benchmark rate.

Currently, a number of banks are polled each day about what th eir lending costs may be if they tapped the financial markets for funding. During the recent financial crisis, so-called interbank lending between firms was drastically curtailed, which led bank executives to submit incorrect data for Libor, according to regulatory filings.

“Libor is also intended to represent unsecured interbank borrowing costs for a range of maturities, but as this type of lending has severely declined since the financial crisis, submissions are more heavily reliant on judgment,” Mr. Wheatley said.

The review will center on potential criminal sanctions against individuals that manipulate the rate. American and British authorities are currently considering the prosecution of traders implicated in the scandal, though European officials want to write new legislation to make the manipulation of Libor and other benchmark rates a criminal offense.

The overhaul of Libor also will focus on increasing governance of the rate-setting process, af ter authorities found deficiencies in how the system was overseen. In discussions dating back to 2008, American and British central bankers had raised concerns with the British Bankers' Association about how the rate was governed. In response, authorities forced the trade body to increase the auditing of banks' Libor submissions from late 2008 to improve transparency.

“Any new governance framework should ensure that the compilation process itself is subject to a much greater degree of independence, transparency and accountability,” Mr. Wheatley said on Friday.

British authorities said they would be working with American and other international counterparts as part of the wide-ranging review. Banks are expected to provide feedback on the potential reforms by early September.

With regulators continuing their investigations into the activities of global firms, banks will likely face pressure to support the changes to Libor.

“The past few months hav e presented a series of very significant reputational challenges for the financial services industry,” Mr. Wheatley said. “It's clear from the reaction to the Libor scandal that consumers think it's important.”

Dai-ichi Buys Big Stake in Janus Capital

By Taiga Uranaka

TOKYO | Fri Aug 10, 2012 4:57am EDT

(Reuters) - Dai-ichi Life (8750.T), Japan's largest listed life insurer, has struck a deal to buy an up to 20 percent stake in U.S. asset manager Janus Capital Group (JNS.N), the latest move by a Japanese financial company to counter slowing growth at home by expanding overseas.

Based on the current market price of Janus, a 20 percent stake would cost about $300 million.

The deal could give a boost to Janus, a fabled stock fund manager of the 1990s, that has lost its shine in the past decade after being involved in an industrywide mutual fund trading scandal and after suffering outflows from its funds over the past several years.

Dai-ichi and Janus said in statements on Friday the Japanese company would acquire more than 15 percent but up to a maximum 20 percent of Denver-based Janus within a year from the market and by exercising stock options.

Janus has sold to Dai-ichi conditional options for the Japanese company to buy up to 14 million shares of Janus. The U.S. fund firm will buy back its shares to offset the share dilution from that transaction.

The financial details of the stake agreement were not disclosed.

Dai-ichi will take one board seat at Janus after acquiring a 15 percent stake.

Under the deal, Dai-ichi will also put $2 billion of its clients' assets under Janus' management and will sell the U.S. company's products in Japan through DIAM Asset Management, a joint venture between Dai-ichi and Mizuho Financial Group (8411.T).

Mizuho Securities and Evercore Partners were advising Dai-ichi. It was not immediately known who was advising Janus.

Janus, which had $152.4 billion in assets under management as at June 30, has previously been the subject of takeover rumors. Bigger rival Franklin Resources (BEN.N) has in the past been talked about in the market as a suitor.

With weak gro wth prospects at home, Dai-ichi and rival Japanese life insurers have been exploring acquisition opportunities overseas both in life insurance and asset management businesses.

Dai-ichi is also among bidders for ING's (ING.AS) insurance operations in Southeast Asia.

"We would like to consider further acquisitions if there are good deals in the area of asset management," a Dai-ichi spokesman said.

In January this year, Japan's largest life insurer Nippon Life Insurance NPNLI.UL agreed to pay $290 million for a 26 percent stake in the asset management unit of India's Reliance Capital Ltd (RLCP.NS).

(Additional reporting by Chikafumi Hodo; Editing by Muralikumar Anantharaman)

Yahoo\'s Chief Reviews Plan for Alibaba Proceeds

Marissa Mayer, Yahoo's newly minted chief executive, is reworking the company's playbook and nothing seems off limits.

According to a filing submitted on Thursday, Ms. Mayer - who joined Yahoo last month - was “reviewing the company's business strategy.”

The filing to the Securities and Exchange Commission said that she was assessing the company's restructuring plan, its acquisition strategy and its plans to spend the billions in proceeds that it expects to reap from its pending deal with the Alibaba Group. Yahoo, which is waiting to complete a deal to sell a large block of Alibaba shares back to its Chinese partner, has previously said that it would distribute those proceeds to Yahoo shareholders, perhaps through a buyback program.

That plan, however, is now up for debate. “This review process may lead to a re-evaluation of, or changes to, the company's current plans, including its restructuring plan, its share repurchase program, and its previous ly announced plans for returning to shareholders substantially all of the after-tax cash proceeds of the initial share repurchase by Alibaba Group,” the company said in the filing.

Yahoo did not respond to requests for comment. Shares of Yahoo, which slipped 1 percent on Thursday to close at $16.01, continued to fall in after-hours trading.

Alibaba, the Chinese e-commerce giant, is close to raising about $8 billion to buy back a 20 percent stake that Yahoo owns. From the deal, Yahoo will reap about $7.1 billion, before taxes.

Ms. Mayer, a former Google executive, is trying to lay out a clear road map for Yahoo, which has been bruised by a string of management shuffles. So far this year, three executives have led Yahoo, including Scott Thompson, the former president of PayPal who left in the wake of an inquiry into his academic credentials, and Ross Levinsohn, who briefly served as the company's interim chief executive. Ms. Levinsohn, who ran Yahoo's media business, resigned last week.