$$$Gay Banker crunches numbers. [Things I Can't Tell Boyfriend Number 1]

$$$Married Wall Street'r seeks similarly attached for a relationship "without BS." [Craigslist]

$$$Trump on drugs . [The Trump Blog]

CNBC is reporting that talks between Citigroup and Amaranth have fallen apart. It had been reported that Citigroup was considering a large stake in the fund. The collapse of these negotiations—and the possibility that they collapsed because Amaranth is in even worse condition than its managers have let on—is likely to prompt even more redemption notices from investors.

Amaranth continues to claim that it plans to stay in business but many employees are reportedly not even showing up to work. One friend of ours at a prominent Wall Street firm tells us he's already had two Amaranth resumes cross his desk.

A couple of our readers complained that they were being deprived of the Merrill banker getty down and dirty on the beach with Daniella Cicarelli video because their firm blocks the website hosting it. So we're embedding it right here for even easier access. We apologize in advance for the terrible soundtrack.

One thing we noticed on our second viewing is that Daniella seems to be wearing the same bathing suit bottom in the video as she is in the picture we linked to below. Shouldn't her investment banker boyfriend spring for a second suit?

Not surpisingly, Thomas Hudson doesn't mention a word about the SEC investigation that many reports indicate prompted this weeks mass resignations at Pirate Capital. Instead, he makes it sound like it was a decision he made to bring the fund back to its "roots."

Click here to download a pdf of the whole letter Hudson sent to Pirate Capital investors.

And thanks to the folks at finalternatives.com for hooking us up with the letter.

We deplore this kind of privacy invasion. What is happening to the world when a super hot brazillian MTV personality cannot have sex with her boyfriend on a public beach in privacy?

The hottest topic on many Brazilian voters' minds isn't this weekend's presidential election. It's the video of a Merrill Lynch & Co. banker having a sexual encounter on a Spanish beach with an ex-girlfriend of Brazilian soccer star Ronaldo.

The video showing MTV host The hottest topic on many Brazilian voters' minds isn't this weekend's presidential election. It's the video of a Merrill Lynch & Co. banker having a sexual encounter on a Spanish beach with an ex-girlfriend of Brazilian soccer star Ronaldo.

The video showing MTV host Daniella Cicarelli, 27, a triathlete and model, with Renato Malzoni Filho, 33, a private banker at Merrill in Sao Paulo, has crashed computers on trading floors in Sao Paulo and Rio de Janeiro. The topic dominates office and party chat more than the future of President Luiz Inacio Lula da Silva, who is forecast to win a new term, said Brazilian gossip columnist Ricardo Boechat.

"This has become a sensation, and it's much more exciting than the election,'' Boechat said. "In Brazil, people find it hard to resist anything with a rich, handsome young man and a gorgeous young woman.''

The video, shot by a paparazzo, appears in many versions, including some with soundtracks or subtitles. It begins with the couple kissing on a beach in the resort town of Tarifa on Spain's southern coast, then slowly moving away from sunbathers and surfers toward a more secluded spot. There the couple -- he in a green, tight Speedo-style swimming brief and she in a string bikini -- stand by the water's edge and engage in a range of sexual acts as they enter the ocean.

Just kidding. Here's a link to the video.

Sex Video of Merrill Banker, MTV Host Eclipses Brazil Election [Bloomberg]

DealBook this afternoon provides a good guide to who blamed whom for the excesses of Hewlett-Packard's leak investigation. You get a good picture of why lawmakers seemed so frustrated yesterday by just comparing what Pattie Dunn said to what the executives at the company are saying.

Patricia Dunn

Position: Chairwoman

Still at the firm? No

What she says: Said she did not supervise the investigation and that, until six months ago, she believed that private phone records could be obtained legally by simply calling the phone company and asking for them. Suggested that she relied on Hewlett-Packard chief financial officer Bob Wayman for his “recommendations as to how the security issues at the board level […] could best be handled.” (See Bob Wayman, below.)

Bob Wayman

Position: Chief financial officer

Still with the firm? Yes

What he says: An H.P. spokesman told Reuters that “to the best of our knowledge, Bob Wayman had no involvement whatsoever in this leak investigation.”

He Said, She Said, and They Won’t Say [DealBook]

Opening Bell this morning mentioned that Hewlett-Packard somehow managed to get a deal done amidst all the leak investigation hoopla. In case you missed it, they bought the luxury gaming pc company Voodoo. This morning, Voodoo’s founder put up an item on his blog describing how the deal got done.

Project Vampire is about to Fly... [Rahul Sood's Blog]

If yesterday’s non-stop DealBreaker coverage of the Hewlett-Packard hearings didn’t quite satisfy your needs, you can hop on over to C-Span’s web presence for these two videos. Here’s the first clip. And here’s the second.

We were so busy with Hewlett-Packard and Pirate Capital updates yesterday that we completely overlooked the USA Today story on ethics at Harvard Business School. Time was that teachers were held accountable for the ethics of their students. Think Socrates.

There’s a serious question, however, about whether these ethics classes do any good. Lawyers have to pass a nation-wide ethics test. And look how much good that does.

Bad Harvard grads are poster boys for ethics classes [USA Today]

The Pirate Capital saga continues. Earlier this week, at least seven staffers jumped ship for comfortable ports.

Today Bloomberg is reporting that at least some of the departed are not happy with the letter from fund founder Thomas Hudson explaining the losses.

Hudson disclosed yesterday that analysts Zachary George and David Lorber resigned on Sept. 26, and Carl Klein, the firm's fixed-income portfolio manager, quit the next day. Hudson then fired analysts David Muccia and Matthew Goldfarb, according to his letter.

The letter didn't give a reason for the staff departures and Hudson declined to comment. Stephanie Tran, Peter Desloge, Glenn Haberfield and Chadd Kirk are still at Pirate Capital working with Hudson.

"What Hudson wrote in the letter to investors is a blatant mischaracterization of the circumstances of our departure,'' Goldfarb and Muccia said yesterday in a telephone interview. "We are currently exploring appropriate legal remedies.

Pirate Capital's Hudson Says He's Determined to Improve Returns [Bloomberg]

Okay. Look. At some point you are going to get this guy's resume. And you'll totally have to hire him. Because, let's face it, he is a champ.

Brock Fantasia is the only remaining person in the JPMorgan analyst class of 2002 to still work at JPMorgan, which is in no way testament to the work environment at JPMorgan. In fact, Brock likes to think of himself as the Highlander of his analyst class, wielding an indestructible claymore of corporate finance.

After “totally wrecking” (in his own words) the Analyst-to-Associate program in the M&A group, Brock was briefly moved to the Natural Resources group, due to increased deal flow in the M&A group. Brock graduated from the prestigious University of Pennsylvania Wharton with a degree in Finance and is working in investment banking until he can find a buy-side job. Brock has been interviewing for buy-side jobs throughout the past 3 years and has not been a “good fit” anywhere, despite his ever-burgeoning skill-set. [Editor's P.S.,- Some of this is true. But only some of it. Previous Ask Brocks are here. Send your questions to : brock AT dealbreaker DOT com]

Shalom! Brock here, so let’s Brock out with your stock out.

You may have noticed last Friday that several of your Jewish, semi-Jewish, or born-again Jewish colleagues at the bank left early, or were even absent, without even pretending to be orthodox. No, the Jews on Friday weren’t rushing off to see the matinee of All the King(David)’s Men, The (Broken) Covenant or even Jet Li’s Fearless, they were rushing off to celebrate the Jewish holiday of Rosh Hashanah. Friday afternoon was one of those rare periods in which one comes to appreciate the vast cultural diversity of investment banking, through countless hours of offloaded work. As I sat there Friday night toiling away on an extremely meaningful profile of the B2B Publishing industry, I questioned the dwindling of my deal team. Funny, I always thought my associate Saul Goldblumenthalenfeldberg was a goy. Maybe he was faking, which takes me to my advice for this week: if you work for an investment bank, pretend that you are Jewish.

Rosh Hashanah literally translates to “Head of the Year,” which is why Jamie Dimon celebrates it wearing a yarmulke emblazoned with a golden dollar-sign. Dimon, in another bold stroke of cost-cutting genius, removed all means of leavening bread from JPMorgan dining facilities, including 18-minute stoppers on all ovens, serendipitously ensuring that all JPMorgan starches are pro-Israel. Sans leavening agents, Dimon mistakenly believes that this will cut down on company medical expenses incurred by yeast infections, rampant among middle management, especially VPs and staffers, who are known to pee a little bit every time a managing director says something. On a side note, Dimon is considered an official member of the tribe by many New York Talmudic scholars in his inspired rabbinical attempts to actually circumcise JPMorgan. For Dimon, the removal of the corporate foreskin is the only way to reduce over-head.

Crime/Fraud/Legal/Investigations/Inquiries:
French national assembly approves cut in the state’s stake in Gaz de France, clearing the way for a planned merger with Suez [legal]
Hardball: GM wants billions from Renault-Nissan? Well, maybe they’ll just go to Ford instead [legal]
Sears extends bid for Sears Canada [legal]
Bank of America admits Manhattan branch allwed money laundering [legal]
Bernie Ebbers wants to take his appeal to the Supreme Court [legal]
SEC accuses three former executives of RenaissanceRe Holdings, a reinsurance company based in Bermuda, of accounting fraud [legal]
August A. Busch IV president and chief executive of Anheuser-Busch [legal]
H-P general counsel resigns [legal]

M&A: [? = not yet closed, problems with the deal, lingering questions, etc.]
Microsoft + eBay:?
Martinsa + Fadesa Inmobiliaria: ?
News Corp + two weekly paper groups

For Sale/ LBOs/ Going Private/ Auctions/ Offerings:
Nabi Biopharmaceuticals, bowing to pressure from Daniel Loeb’s Third Point hedge fund, is putting itself on the block [For sale]
Shareholders okay Univision deal [Sold]
What’s Icahn got planned for Federated? [Buying?]
William Ackman buying shares of McDonalds [Proxy fight?]
Vince Sportswear sold [Sold]
STMicroelectronics may be takeover target [LBO]
Royal & Sun Alliance sells US biz to Arrowpoint Capital [Sold]

People & Moves:
Amaranth lets energy trader Mark Hunter go [Fired]

Miscellaneous:
H-P hearing preview [Private equity]
Pension fund says private equity fees are too high [League tables]
Apollo plans European Mez fund [Private JH?equity]

China lets yuan rise a bit on dollar (China Daily)
You wouldn't exactly call it a floating currency, or anything like that, but the Chinese government is slowly letting the Yuan appreciate against the Greenback. The currency broke through the all-important -- but entirely psychological -- 7.9/dollar mark, a crucial level if we're ever going to reverse the trade deficit. And how important is this number? According to local economist Brad Setser, the RMB/dollar is the most important price in the world, more important than the price of oil or the treasury rate. All kudos to Hank Paulson for going over there and giving them what for about currency appreciation. But wait, doesn't this mean we'll have to start paying more for stuff made in China? Um... yay?

EU law violated in US banking data transfer scandal (EUobserver.com)
Remember that little mess from a few months ago, when the New York Times revealed that the US was monitoring the SWIFT international money transfer system? Right, you remember, the one that caused some politicians to suggest that the Times had engaged in treason. Even the Journal got into the act of Times bashing. Now Belgium's prime minister is saying that the system was a violation of Belgian law, though he acknowledged that SWIFT (based in Belgium) was in a legal "no-mans land". It's not clear whether Europe is really upset about the SWIFT breach or all of the European business execs on US jails. Let's just say, if I were America, I wouldn't be taking any stopovers in Europe for the time being... you know, just to be safe.

Wal-Mart employee health coverage downsized (CNNMoney)
Another day, another ludicrous article about Wal-Mart. As we mentioned recently, the company announced that it would lower the premiums on health insurance for its employees while raising the deductible. It sort of balances yet out, and might not seem like a big deal, but it's good for employees. It means the healthy ones get to keep more of their money, while the sick ones end up paying the same amount. Maybe the sick ones end up paying a little more, but that's ok, because they see the doctor more, so there's a logic to it. Because it's insurance though, it still does what insurance is supposed to do, which is to protect the individual from an unexpected calamity that wipes them out financially. But the critics, of course, see the whole thing as shameful, saying that the increased deductible "all but negates" the lower premiums. What does "all but negate" mean? And yes, it sort of should negate the lower premium. From Wal-Mart's stance, it says the majority of its insured employees wouldn't hid this deductible in the year, so the plan will save them money. The horror.

U.S. Fugitive in Options Case Displeased by His African Jail (NYT)
The more we hear about Kobi Alexander, the more we realize that he's pretty lame as far as fugitives go. After having the gall to try and get bail (ha!), he's now complaining about the quality of the food in his Namibian jail. We imagine it sucks too, but then again, that's the price you pay for fleeing to a country that doesn't even have an extradition treaty with the US. He could've gone to Italy or France if he'd wanted, where the food is probably better, but then he'd probably already be back in Brooklyn facing charges. And he's been spending the last several weeks at this resort and casino in Namibia. Ok, maybe he knew he was bound to get caught, and wanted to spend his last days of freedom in style. But if he were a serious fugitive, he'd have gone out into the country, and dropped off the grid, as opposed to staying at resort.

$$$Nick Maounis's unfortunate yearbook picture, circa band-geek years. [Wall $treet Folly]

$$$25 yo banker seeks date to the Latin Grammy Awards; rice and beans beforehand. [Craigslist]

$$$"ATTRACTIVE BANKER FOR SEXY LATE NIGHT OWL"; I can't think of anything offensive to say about owls. yet. [Craigslist]

Which private investment and advisory firm founded in 1985 by Peter G. Peterson and Stephen A. Schwarzman took the company Raytheon Hawker 800 to the embarrassingly déclassé (we're talking on the MySpace level) Southwest Florida Int'l Airport?

Which Forbes 400 octogenarian from Philadelphia flew her Gulfstream V to Luton (UK) Airport, phamaldehide and all?

Which Oracle CEO-- who Indian-gave Harvard $115 mm last year-- made the trip to San Fransisco Int'l on his Bombardier Global Express?

Both Pattie Dunn and chief executive Mark Hurd denied knowing about the techniques of Hewlett-Packard’s investigation, including pretexting and attaching tracer software in an email.

Dunn had a pretty rough time in front of the committee. She testified for more than four hours before a group of lawmakers whose attitudes ranged from skeptical to hostile. The subcommittee seems to have spent most of its energy questioning Dunn because by the time Hurd’s time came around, the panel appeared to have lost some of its fire.

Or, you know, maybe it was just because she’s a woman.

And, as we were writing this item, the hearing just wrapped up for the day.

Hewlett-Packard Chief Hurd Says Leaks Weren't His Top Priority [Bloomberg]

Kobi Alexander must not live in the same reality as the rest of us. In our reality, fugitives discovered hiding out on a distant continent don’t get released on bail when they are caught. In Kobi’s reality, the fugitives totally get set loose. Especially if they promise they’ll come back!

So which reality does controls the Namibian courts? We’ll find out on October 2nd, when Kobi has his bail hearing. Until then, Kobi is going to be staying in jail.

Comverse Ex-CEO Alexander Has Namibia Case Postponed [Bloomberg]

We’re asked a lot about how you can get started in hedge funds. Here’s your chance. According to Bloomberg’s updated report, Pirate Capital may be looking for an analyst to replace the four who resigned or were fired this week. Get those resumes together and send them up to Norwalk!

Here’s Bloomberg’s quick summary of who walked the plank this week, and who is still aboard Captain Thomas Hudson’s ship.

The letter said analysts Zachary George and David Lorber resigned on Sept. 26, and Carl Klein, the firm's fixed-income portfolio manager, quit the next day. Hudson then fired analysts David Muccia and Matthew Goldfarb, the letter said.

Still at Pirate are Stephanie Tran, Peter Desloge, Glenn Haberfield and Chadd Kirk, according to the letter. Hudson said he may hire one analyst.

Pirate Capital Says Half of Investment Staff Resigns [Bloomberg]

The New York Post has a story today on the daughter-marrying hedge-fund manager Bruce McMahan. There’s not a lot new in the story but it serves as a useful confirmation that this really happened .

It’s a bit easier of a read that the original New Times story too, so if you missed yesterday’s item you might as well start with this one.

One of our favorite parts of this story is that running a multi-billion dollar hedge fund is apparently a step-down on the ambition ladder for McMahan. He started out trying to found his own country. A country made of trash.

After graduating from the University of Southern California in 1960, he planned to sink a mothballed World War II ship off the California coast.

Then he'd pile on concrete, clay, landfill and garbage - to create an island outside American territory.

There, he and his partners were going to corner the world market on abalone fishing - and not have to pay a penny in taxes.

The plan never got off the ground - and it's not mentioned in his official biographies.

After bumming around Europe for six years, he washed up on Wall Street, at PaineWebber. He later moved to Bear Stearns where he became a partner.

He branched out on his own in 1980, when he started his own trading firm and fund.

A Father Who 'Married' His Daughter [New York Post]

+ +

Having burned all of our bridges with Connecticut, we really had to dig deep to come up with today’s installment of our twelve-part series, “Bro’ing Out With Bankers: The Commute” (today is part II; hunker down—we’ll get there, and we’ll do it together or so help me God I’ll pull this car over and you can walk). Yes, after crossing every town in Fairfield County off the dry erase board (like we care!) that ‘Breaker editor John Carney had so lovingly—albeit while hopped up on amphetamines and pure hate—printed out in his best cursive, we had our work cut out for us. We scraped the bottom of the barrel and Williamsburg by way of the New York Water Taxi was what we—John—decided upon. Per usual, this was not a trip we wanted to take alone. Unfortunately, Pete was busy lying in a pool of (what we can only hope was) his own vomit and all of our other friends either A. Claim to have jobs or B. Are egomaniacal pricks whose Pavlovian conditioning decrees that they only stand at attention when in the presence of either Junior Mint-toting hookers or women that remind them of their mothers (we’re looking at you, Tom, in particular; Joe Kelley, you’re also being watched), with a few—Rothbard—who encapsulate both, however, statistically speaking, constitute a very small percentage of the group—though you know we never say no to a Venn Diagram and we’ll include this one after the jump.

In the grand tradition of continuing to make money off of dead businesses in the eBay aftermarket (see here), a reader notes that Amaranth swag is now up for auction here.

The seller's description:

Get yourself a peice of the biggest hedge fund loss in history, Bloomberg news most ever searched item. Bought for marketing, sold here for memorabilia. Luxury large beach towel, quality polo shirt in 'Amaranth Green' and logo baseball cap, as worn by the infamous Brian Hunter himself. Halloween costumes? This is the chance to get into something really scary.Office partys, christmas parties, amuse your fellow traders or dealers. A percentage of profits made are guaranteed to maybe, perhaps,possibly, erm....might do, probably won't, not on your nelly, no 'kin chance, be donated to the impoverished hedge fund traders. The TRADERS.....THINK OF THE TRADERS.....WON'T SOMEONE JUST THINK OF THE TRADERS!!

Amaranth: 6 Billion Dollars Later and This is All That's Left [eBay]

Pirate Capital has been hit with redemption notices from at least three fund of funds, with more expected, according to a DealBreaker source. The redemptions are said to be prompted by poor performance in recent months.

The fund has lost its marketing department as well as their analysts, according to the source. Among those we're told have left the fund is Zachary George, who featured so prominently in last year’s New York Magazine story (and is pictured in the item directly below this one.

“It's a bloodbath,” the source says.

The best (unconfirmed detail) we've heard is that just last week Pirate Capital had a boatcruise that left from Chelsea Piers. At the end of it, we're told they handed out baseball caps emblazoned with the motto "SURRENDER THE BOOTY." Emphasis now decidedly on Surrender.

Update: Bloomberg confirms: "Pirate Capital LLC said five of its ten investment professionals resigned and it will close its funds to new investments, according to a letter to investors."

Update II: Reuters has more details.

Thomas Hudson, founder of the $1.7 billion fund, said in the letter that two analysts, Zachary George and David Lorber, have resigned from the firm. On Wednesday, fixed income portfolio manager Carl Klein resigned, said Hudson. Later on Wednesday, Hudson said he asked for the resignations of two other analysts, according to the letter.

"Effective Oct. 1, we are closing the funds to new investors," said Hudson in the letter. "I have no intention of liquidating positions or closing the firm. On the contrary, I fully intend to refocus, streamline and navigate the portfolio back to the positive performance I began the firm with."

Now CNBC's David Faber is reporting that all or most of Pirate Capital's analysts have left the fund following a dispute about handling the SEC investigation announced on Tuesday.

Zachary George, where are you?

Send tips to tips (at) dealbreaker (dot) com.

We've been hearing today that Pirate Capital might be imploding. Commenters have told us that "all of Pirate's analysts quit" and claimed that the SEC raided its offices this morning. Several calls this morning to people at Pirate Capital went directly to voicemail, and messages left went unreturned. A few moments ago we reached an actual human being at Pirate.

"No comment," the actual human being said. When asked to identify herself, actual human being said, "Well, I'm just a temp."

So the temps are handling press calls? That doesn't seem like a good sign.

On Tuesday, the Wall Street Journal reported that the SEC is investigating whether activist hedge fund violated securities laws by failing to properly disclose it was selling stocks.

If you've got anything on Pirate Capital please email us at tips (at) dealbreaker (dot) com. Thanks!

[Ed.--You may remember Pirate Capital as the smallish hedge fund ($200 mil under management) that was the primary narrative thread in this New York Magazine cover story, wherein they claimed 32% returns. Here's how they apparently explained hedge fund investings to the reporter:

To run money, which is how managers refer to what they do, requires little more than a few computers. Zach’s boss likes to say, “I could run $100 million by myself.” The theory is that they’ve got an almost athletic gift for investing. They’re the type who can, as one manager did, call the direction of the market correctly 22 days in a row.

SEC probes Pirate Capital over stock sales - WSJ [Reuters]

It was a bit shocking this morning when CNBC cut away from the Hewlett-Packard hearings in the middle of Patricia Dunn answering the first question the subcommittee asked her. Our first thought was that something really big must be breaking if they are going to pull away from Dunn's testimony so suddenly.

So what were they pulling away for? Power Lunch's field trip to the Four Seasons! Forget the biggest business news story of the morning, CNBC has a fluffy feature they've been hyping all week.

Bloomberg stayed on the hearings, of course. As did CSPAN.

But CNBC doesn't like to have its lunch interuptted by pesky stuff like business news.

Can we take a break from all this Hewlett-Packard business for a minute and talk about MySpace? We first heard about MySpace when one of our favorite rock-and-roll lawyers posted a bulletin to her friendster account announcing, “I’m outta here! Check me out on MySpace suckers!”

In the couple of years since then MySpace has gone from a niche space for emo kids and the bands they love to a genuine cultural phenomenon. And it's done this despite the fact that its search function is nearly useless and its user interface is completely heinous.

Yesterday RBC Capital analyst Jordan Rohan said that he believed MySpace could be worth $15 billion. This provoked gawking of disbelief from many observers, and flashbacks to 1999 for others.

Paul Kedrosky, however, has an even more cynical take. On his Infectious Greed blog he warns readers not to take the $15 billion valuation seriously. It was just analyst posturing, trying to get attention.

Like Henry Blodget during the bubble did with Amazon, and other analysts did with Qualcomm and others, putting up oversized estimates of a company's value is a marketing exercise for an analyst, not an exercise in financial valuation. The number doesn't matter; it is simply a piece of red meat to attract the media pack, like me saying, Draper-style, that one of my portfolio companies is worth a billion dollars (which it is, of course).

The most surprising thing about RBC analyst Jordan Rohan's comment that MySpace could be worth $10-$20 billion in a few years is that he deemed this assessment "audacious"--and the press seemed to agree. Why is this audacious? In little more than two years, MySpace has come out of nowhere to become the 7th biggest site in the U.S. Per NetRatings, it now has 50 million monthly users--closing in on half of Yahoo!'s domestic user base--and it is still growing at a fantastic rate (a reported 250,000 sign-ups a day). MySpace recently signed a $900 million multi-year search deal with Google, showing that the revenue is starting to follow. Etc. Given all this, the theory that, in a few years, MySpace could be worth less than half of what Yahoo is worth with its now-battered valuation seems eminently reasonable. On its current trajectory, in fact, MySpace could end up being worth a lot more.

Read that again and tell us that’s not the sound of a true believer speaking.

MySpace and the Analyst Posturing Game [Infectious Greed]

Could MySpace Be Worth $15 Billion? Easy [Internet Outsider]

Congresswoman DeGette is getting somewhere with her questions. She’s asking about the creation of a fictional disgruntled employee named “Jacob” in a “covert operation” directed against a reporter.

DeGette asks Dunn about Jacob. Dunn says that while she “initiated” the investigation at the board’s request, she did not want to get involved in approving or disapproving its operations. This was a management issue in her view. When staff members approached her for approval of Operation Jacob, she directed them to management.

Who at management? Mark Hurd!

That’s right. Pattie just stuck the “responsibility for investigative methods” scarlet letter on the CEO and chairman of H-P. Ka-pow!

Next up, under questions from Congressman Joe Brown, Pattie says that she initiated the investigation through the company's CFO, telling the subcommittee that he had oversite over all the functions at the company that would have been involved in the investigation.

It's all management fault! Take that H-P shareholders!

Subcommittee chairman Ed Whitfield begins the questioning with the obvious point: Come on, Pattie, you look like a smart girl. Did you really think your investigators accessed to private phone records without using deceit or fraud? Where did you think these things were publicly available?

Dunn’s answers were, let us say, unpersuasive.

The real action comes when Congresswoman Diana DeGette gets her turn. She asks Dunn a couple of questions, and when she decides Dunn is giving her the runaround, she cuts her off and moves on to questioning Sonsini. Bet it’s been a long time since anyone talked to Dunn like that. You aren’t in the board room anymore Pattie!

Former Hewlett-Packard chairwoman Patricia Dunn opens the second panel with a statement defending the need for an investigation into board room leaks. She backs away from taking responsibility for the investigation, however, saying she undertook it at the request of other board members, delegated it to others, and was deceived about the methods of the investigation.

“I’m neither a lawyer or an investigator,” she tells the committee, explaining she relied on others to assess the legality of the investigation.

Now for some non-substantive observations. Pattie has presence. She speaks with confidence, and you can see why someone would want her as the chair of a board of directors. Also, she’s pretty. When the camera pans out, you can see that she wears her tan suit well.

Larry Sonsini is up next. He spends most of his statement decrying pretexting, calling it “probably illegal” and saying it should be made “clearly illegal.”

Non-substance: Larry looks like the archetypical lawyer. Blue pin-striped suit, look of serious concern on his face. He’s handsome in his own way, exuding power and intelligence.

Fred Adler, a Hewlett-Packard security official, gives the third and final opening statement. He says he hopes his testimony will help “clarify the law.” Translation: what we did was not clearly illegal. It’s the fault of vague laws. Not H-P.

Non-substance: Watching Freddy speak after Pattie and Larry is illuminating. You sense immediately that he is not the executive type. His eyes lack that “master of the universe” confidence. He’s more or less a cop.

The first panel is at the witness table before the House committee looking into the leak investigation at Hewlett-Packard. The star witness is resigned-as-of-this-morning general counsel Ann Baskins (pictured left). Or she would be the star if she didn’t take the Fifth Amendment. Each witness declined to make an opening statement, a sure sign they will invoke their fifth amendment rights.

And sure enough, starting with Baskins, that’s exactly what they are doing. As the committee chair asks them a question about their actions in connection with the investigation, they each invoke the fifth amendment, confirm that they intend to invoke the fifth amendment to any questions asked and then are released from the committee.

Baskins, however, actually answered one question, confirming that she had resigned from Hewlett-Packard.

Next panel please!

[Next Up: Dunn, Sonsini and Adler. Prediction: No Fifth Amendment here. Pattie will come out swinging against board room leaks.]

We'll be posting a lot on the Hewlett-Packard hearings today, keeping you updated on the action. We're expecting it to get pretty hot.

Some predictions: Probably a half dozen or so witnesses will take the fifth amendment. Patricia Dunn will avoid responsibility. Larry Sonsini will get all lawyerly. Mark Hurd will, well, actually we're not sure what he's going to do. The suspense is killing us!

But we don't want you to be left out. Or to have to rely on CNBC's coverage. You can watch the hearings without commercial interuption on C-Span 3 today. Or you can play along at the office by listening to the hearings live right here.

We have no idea whether University of Florida Warrington College of Business lecturer is actually high in the two videos that turned up on Boing Boing. He sure sounds at least a little bit baked. But maybe he’s just really, really relaxed and totally goofy.

If he is high, we’ve got the feeling that this could be a new trend: twosed* business school professors. Somehow we doubt it will catch on at Wharton, however. Smoking up in Philadelphia just isn’t the same as smoking up in San Diego or Gainesville.

*[Editors Note: The word “twos” is our new favorite drug lingo. Here’s the official explantion from a good friend of DealBreaker: "Well, it started when we were in college. We'd roll joints. The person who rolled the joint would smoke first. The person who yelled "twos" first would be the person who got it next and that would determine the direction the joint was passed around in the circle. Pretty soon, smoking became getting twosed.” Please note, drugs are probably bad for you.]

Video: apparently-baked biz school prof who was soon fired [Boing Boing]

You know you want it.We’re bringing this back for the third day running. That’s right, you have yet another chance to take a moment to tell us a bit about yourself. You can even leave a comment in the reader survey to tell us what you really think!

And, yes, by popular demand, we’ve made Holly Valance the official mascot of the DealBreaker reader survey.

Click right here for the reader survey. Thanks!

Who are we kidding? There’s not going to be a quick summary of the news of today’s Hewlett-Packard action. We’re going to be sorting through the testimony of the various players at today’s congressional hearings for days to come. Just like everyone else.

Still, there’s some exciting news going into the hearings. Ann Baskins, H-P’s general counsel, has resigned. It’s said she’ll be taking the Fifth at the hearings, as will some of the investigators.

Pattie Dunn is going to testify that she had no reason to believe the investigation used illegal methods. Expect some tough questions on that one. Questions like: so you thought stealing the phone records of your board members was legal?

They’re in the hearing room right now. Some lawmakers are jabbering. It’s on!

Crime/Fraud/Legal/Investigations/Inquiries:
French national assembly approves cut in the state’s stake in Gaz de France, clearing the way for a planned merger with Suez [legal]
Hardball: GM wants billions from Renault-Nissan? Well, maybe they’ll just go to Ford instead [legal]
Sears extends bid for Sears Canada [legal]
Bank of America admits Manhattan branch allwed money laundering [legal]
Bernie Ebbers wants to take his appeal to the Supreme Court [legal]
SEC accuses three former executives of RenaissanceRe Holdings, a reinsurance company based in Bermuda, of accounting fraud [legal]
August A. Busch IV president and chief executive of Anheuser-Busch [legal]
H-P general counsel resigns [legal]

M&A: [? = not yet closed, problems with the deal, lingering questions, etc.]
Microsoft + eBay:?
Martinsa + Fadesa Inmobiliaria: ?
News Corp + two weekly paper groups

For Sale/ LBOs/ Going Private/ Auctions/ Offerings:
Nabi Biopharmaceuticals, bowing to pressure from Daniel Loeb’s Third Point hedge fund, is putting itself on the block [For sale]
Shareholders okay Univision deal [Sold]
What’s Icahn got planned for Federated? [Buying?]
William Ackman buying shares of McDonalds [Proxy fight?]
Vince Sportswear sold [Sold]
STMicroelectronics may be takeover target [LBO]
Royal & Sun Alliance sells US biz to Arrowpoint Capital [Sold]

People & Moves:
Amaranth lets energy trader Mark Hunter go [Fired]

Miscellaneous:
H-P hearing preview [Private equity]
Pension fund says private equity fees are too high [League tables]
Apollo plans European Mez fund [Private equity]

Chicago greets 1st Wal-Mart, but wonders where's Elmo? (Reuters)
After a lot of controversy and white-knuckle Alderman meetings, Chicago saw its first Wal-Mart open yesterday. By all accounts it was a smashing success. Shoppers lined up around the corner to get a chance to go into the store, and it was revealed that 15,000 people applied for the 400 positions to be had. What's not to like? Well Reuters founds something. Much to the chagrin of some shoppers, Wal-Mart did not have the hot toy TMX Elmo in stock. The company insists that it's at the mercy of the toy's maker for new shipments, but the not-so-subtle implication is that Wal-Mart is shafting its poor customers by not allocating any TMX Elmos to stores in poor neighborhoods. Or, perhaps the insinuation is that the store wouldn't have seen the lines that it did, had it not been for the expectation of a fresh stock of TMX Elmos. We'll be reporting as more word breaks.

Paris Auto Show to Preview 60 New Models (AP)
...and none of them will ever be seen on the road. That's right, auto shows are like fashion shows. It's the same reason you can't go into Macy's and buy that one-armed dress you saw at a London fashion show, or the seven-foot tall hat that one model was wearing. The clothes aren't made to be sold; they're made to be talked about, and shown on E! And so, at the Paris Auto Show, the premier event in the world (though we were always partial to the Geneva one, just a matter of taste) the world's struggling car makers will slap on a happy face, talk about fuel cells, talk about innovation, and perhaps show a car of the future. But you're still gonna be buying cars that get 19 mpg for some time. Better learn to enjoy what we got.

Mobile ESPN Is to End Venture, Seek New Strategy (WSJ)
Aww damn, now I can't get late breaking news, up-to-the-minute sports clips and highlights from Sportscenter on my phone. And how am I going to update my fantasy team with one push of a button!? After less than one year in business, ESPN has concluded that its foray into being a cell phone company was a total failure Despite constantly flogging itself on ESPN (the TV channel), the service never really took off... at all. That's ok though, we just hope the news doesn't stop the Bloomberg TV channel from doing its own mobile phone operations. Although, the screen size -- even on a Treo or Blackberry -- maybe a little small for the information its gonna pack onto the screen.

HP General Counsel Resigns (Business Wire)
As has been pretty much expected from the beginning, Ann Baskins, HP's General Counsel has resigned, effective immediately. Baskins had a 24-year career with the company, which all came crashing down when it got into the whole identity fraud business. So far, most of the attention has been on Dunn and Hurd, but from the beginning, the sharper eyes at identified Baskins as the one who could be in trouble. In fact, if charges ever end up being brought against people at HP (still waiting on that) Baskins could be in trouble.

$$$Butlers are people, too. And they have just as much a right to take part in insider trading as you do. Maybe even more. [Wall $treet Folly]

$$$Business dinners. As long as you don't fuck any waiters in front of your client, you're good to go. (Exceptions can, obviously, always be made). [Banker's Ball]

$$$If someone will fuck my boss, I'll get a 50k bonus at Christmas. Let's make a deal. [Craigslist]

It's just been one day since our "H-P Sympathy Watch" picked up on the "Patricia Dunn is the next Martha Stewart" trend. We had the feeling that this sort of thing was bubbling up from below. You could see it coming. The only solid evidence we had for the trend, however, was a post on the Conglomerate Blog titled "The Scapegoating of Patricia Dunn." It might have been a stretch to call one blog poast a trend but we try to stay ahead of the curve and spot trends as they develop.

Did we call it prematurely? Not at all. Today Conglomerate pushes the Martha meme even further.

I am interested in focusing on another potential "lesson from HP," raised by one of my colleagues at dinner last night. This colleague has had extensive experience as an affirmative action officer at a major university and as as an organizational scholar. She wondered whether the events at HP might be related to the fact that women were in charge. Of course, the investigations were spearheaded by Patricia Dunn, and one of the principal officers in charge of the investigations was General Counsel Ann Baskins.

Gender might figure into this story in several ways. For example, women who are outsiders to the clubby world of corporate directors may rely too much on formal procedures and not enough on informal mechanisms. Women leaders may feel the need to be overly tough or results-oriented to overcome stereotypes of weakness in a way that men don't. Or the reactions to mistakes by women might be more harsh, with less forgiveness for error, than reactions to men. I am not sure whether Viet Dinh's W$J commentary can be attributed fully to Tom Perkins, but the forgive-and-forget attitude toward Mark Hurd stands in stark contrast to the condemnatory attitude toward Patricia Dunn, especially since Hurd and Dunn consulted together on the investigations.

It's hard to know whether any of these speculations has traction, especially from this distance, but if Larry ever pursues a study of corporate governance scandals in the "good governance" era, I would suggest including gender as one of the variables.

Paul Atkins is our favorite SEC commissioner. When last we met him, Atkins was explaining how certain kinds of options timing schemes might not be quite the scandal they were being made out to be. Today he’s being quoted in the press saying that the Amaranth meltdown shows that the post-LTC risk controls work and no further regulation is needed.

"If you look at the latest one with Amaranth, it looked like the system worked as far as the prime broker getting nervous about exposure and taking steps to ensure it did not grow," Atkins told reporters during a tour of Europe.

"On the whole, from what I can see... the system worked."

Asked if new regulation was needed, Atkins said: "Not at all."

SEC's Atkins says risk system worked with Amaranth [Reuters]

When we last heard of Bruce McMahan, the president and CEO of the Argent funds, he was buying a watch that once belonged to Horatio Alger. Just another story of a hedge fund guy buying collectible art and artifacts. Kind of boring.

It turns out that there was a bit more to McMahan. Or less. McMahan married his 35-year-old daugher in 2004, according to a report in the Broward-Palm Beach New Times. The report says the fund manager initially seduced his daughter while showing her a video of Braveheart.

For more than a year, attorneys have been kept busy in Miami, New York, Mississippi, and San Diego with the fallout over the breakup of McMahan and Linda in five lawsuits involving not only father and daughter but also their legal spouses, as well as Linda's current boyfriend and soon-to-be father of her child. Details of McMahan and Linda's extraordinary wedding at Westminster Abbey and their years as lovers come from court documents as well as Linda's videotaped deposition, which New Times has made available on its website, browardpalmbeach.com.

In court papers, McMahan denies that he ever had a sexual affair with his daughter. But he doesn't explain how his and Linda's DNA turned up on a vibrator that Linda's husband uncovered in her luggage. McMahan also hints that Linda may not be his biological daughter, despite a DNA test he paid for showing with 99.7 percent probability that he is her father.

Ugh. More details are available in the full New Times story. Lots more. Disgusting details. Including court documents, wedding photos and videos. Too disgusting for us to summarize this early in the day. The media news and gossip website Gawker, however, picked up on one too-bizzare-to-be-true-but-true-nonetheless detail:

When Ewell made allegations in her divorce that McMahan had treated her cruelly, McMahan countersued and accused Ewell of engaging in affairs and "attempting to seduce mutual friends and associates," according to an appellate opinion in the case. Ewell tells New Times that one of those men was billionaire Jeffrey Epstein, who has been much in the news lately for allegedly hiring underaged women to strip topless and massage him at his Palm Beach mansion. At the time, in the early 1980s, McMahan and Epstein worked together at Bear Stearns in New York. Epstein didn't return a request for comment.

"Jeffrey Epstein worked with [McMahan]. He was, let's just say, in the divorce proceedings," she says. "I was asked to stop by Jeffrey's apartment to pick up some papers for Bruce. It didn't feel right, so I didn't even go in. I stood outside the door. And then, later, Jeff said I propositioned him. There were always allegations I was having to fight.

Emphasis obviously added. McMahan and Epstein worked together? Okay. We've got to ask. What the fuck were they putting in the water cooler at Bear Stearns?

The Argent funds manage around $3 billion in assets and operates our of offices in Connecticut (and four other US states), Bermuda, Dubai, Mumbai and London. Reports say the company has approximately 1,200 investors, mostly from outside the US.

Daddy's Girl: Fisher Island millionaire Bruce McMahan loved his daughter so much, he married her [Broward-Palm Beach New Times via Gawker]

OPEC is already grumbling about the decline of oil prices, and may schedule a special meeting in advance of its regular meeting in December. There are some who think that the meeting won’t be until the end of Ramadan on October 24th. But we haven’t seen much evidence that the Islamic holy days preclude having business meetings.

What’s more, former Democratic presidential candidate is predicting that the US will attack Iran before the midterm elections in November. Oddly enough, Ramadan probably will delay this attack until late October or early November. The Bush administration is actually very respectful of the religious sensitivities of the world’s Muslims.

October Surprise [Huffington Post]

Lawmakers issued five more subpoenas in connection with an upcoming hearing on Hewlett-Packard’s leak investigation, the Wall Street Journal is reporting. Yesterday, the U.S. House Energy and Commerce Committee issued two subpoenas to Hewlett Packard employees and one to a private investigator with the firm contracted to conduct the H-P prove. In addition, H-P CEO Mark Hurd, former chairwoman Patricia Dunn and outside counsel Larry Sonsini have been asked to testify before the committee.

The hearings are set to begin tomorrow. Looming question: who will take the Fifth Amendment and refuse to testify? Current odds say no Fifth Amendment moves from Hurd, Dunn or Sonsini. But its a distinct possibility for some of the investigators who may have directly engaged in pretexting.

House Issues More Subpoenas In H-P Leak-Probe Case [Hewlett-Packard]

Amaranth is contemplating liquidating its remaining assets or selling itself to a larger financial institution, according to a report in the Financial Times. In addition, the FT says Amaranth plans to let investors cash out regardless of various lock-up agreements.

Earlier Amaranth founder Nick Maounis had said that the fund plans said to stay in business. CNBC's Charlie Gasparino is reporting that he has heard the change of heart of Amaranth came after the fund met with major investors, including big Wall Street financial institutions. The investors were apparently not happy with the possibility of having to stick with the fund, raising the possibility of lawsuits against Amaranth.

It looks like the final chapter in the Amaranth affair is just about to be written.

Amaranth outlines its liquidation plans [Financial Times on MSNBC]

You know you want it. You’re sitting around watching the emails pour into your mailbox, listening to the guys at CNBC blather on about the Dow trading near a record high and looking for online games to play.

We’ve got a much better way to procrastinate. Tell DealBreaker how hot you are by filling out our reader survey. All the links in this post point to it, so you cannot go wrong.

[Editor's note: The picture to the left of Prison Break's Holly Valance represents, uhm, something to do with the survey. Who really cares?]

The Wall Street Journal’s report is a bit ambiguous when it comes to the legal status of Kobi Alexander’s possible extradition to the US from Namibia. It claims that “the Namibia government enacted a law to establish an extradition treaty with the U.S.” But, of course, there is no extradition treaty between Namibia and the U.S. and the government of Namibia cannot exactly just pass legislation creating one. There’s this troublesome thing called the U.S. Constitution which sets forth the requirements for enacting a treaty, including things like Senate approval. And, just to be clear, the Senate hasn’t approved any such treaty with Namibia.

So what’s going on? DealBreaker turned to our favorite extradition expert, Douglas McNabb of McNabb Associates for an explanation.

“There is no extradition treaty between the two countries. However, any country can expel anyone they want. If he’s in the country illegally, they can deport him to the US. If he’s there with a visa, they can revoke his visa,” McNabb said. “From this report, it seems that they have passed special legislation—a unilateral extradition statute—that allows for the extradition of someone the US wants,”

McNabb told DealBreaker that similar legislation has been passed in the UK. The US has an extradition treaty with the UK, but the parliament has also unilaterally passed legislation reducing the burden of proof required for extradition from probable cause to a simple presentation of charges against the accused. McNabb served as an expert witness in the NatWest Three extradition case.

McNabb also noted that Costa Rica—which also has a treaty with the US—often doesn’t bother to go through a formal extradition process. “In Costa Rica they just revoke your visa. It becomes an immigration issue rather than an extradition issue. At that point, you are in the country illegally and so they take you to the airport, where US Marshalls are waiting,” McNabb said.

There aren’t many place where a fugitive can hide from US law enforcement, according to McNabb. “In the first place, most places that don’t have a treaty with the US aren’t places you would want to be. Second, as this case shows, just because there isn’t an extradition treaty, doesn’t mean that the US won’t get you,” McNabb said.

International Extradition [McNabb Associates]

It looks like one of our favorite games—Where In the World Is Kobi Alexander—is finally coming to an end. He’s been arrested in Namibia, according to the Wall Street Journal, where he is being held pending extradition to the US.

You remember Kobi, right? He’s Comverse founder who was charged by the U.S. Attorney’s office in Brooklyn with fraud charges stemming from backdating allegations. When he failed to show up for court the FBI declared him a fugitive. He later allegedly turned up in Sri Lanka—which is not, as we explained, a very good place to hide from the long arm of American law.

Namibia wasn’t such a bad choice for Alexander. When he fled there, Namibia didn't have an extradition treaty with the U.S. But according to the Journal, after US authorities located Kobi there by tracking bank transactions “the Namibia government enacted a law to establish an extradition treaty with the US.”

So Kobi got his very own extradition law. Wonder whether they'll call it "Kobi's Law."

Fugitive Alexander Is Located in Namibia [Wall Street Journal]

Some of it is no doubt H-P counterspin but some of it strikes us as genuine concern that the criticisms of Hewlett-Packard have gone too far. Recall that yesterday the big debate was whether the debacle was mostly Pattie Dunn’s fault, mostly George Keyworth’s fault or arose from a widespread problem at the company.

Today Gary Weiss tentatively joins the “maybe we’ve gone too far” camp, citiing the “piñata principle.”

I think that the "piñata principle" applies here. That is, once the criticism of a company or executive reaches a tipping point, he is officially a "piñata" and will remain such until an effective counter-spin campaign commences.

During his pay controversy, Grasso was tranformed from "capitalist icon" into "grasping and overpaid bald man" and roughly the same thing has happened to the H-P dustup, which moved quickly from "big nothing" into a chairperson-displacing earthquake.

It’s a trend. Patricia Dunn is Martha Stewart! All of H-P is Dick Grasso!

Is the media overreacting on H-P? [Gary-Weiss.com]

Crime/Fraud/Legal/Investigations/Inquiries:
Kirk Kerkorian resumes back in court on Dailmer-Chrystler merger [legal]
GM wants billions from Renault-Nissan as price of alliance [legal]
Bioval demanded a Bank of America analyst be punished for “sell” rating [legal]
SEC tells lawmakers it is concerned about insider trading at hedge funds [legal]
H-P’s investigators made many attempts to get director George Keyworth’s cell phone records [legal]
Judge excludes AMD’s foreign commerce claims in suit against Intel [legal]
Citigroup trader pleads guilty [legal]
SEC investigating Pirate Capital [legal]
Mutual fund manager sued by AG Spitzer over trades [legal]

M&A: [? = not yet closed, problems with the deal, lingering questions, etc.]
Germans raise bid for Spanish utility following counter-offer
Warner Music + EMI:?
Volkswagon tells MAN to drop its id for Scania
Lions Gate hostile bid for Image Entertainment getting nasty
Vivendi Universal and Deutsche Telekom still fighting for control of Polska Telefonia Cyfrowa, a Polish mobile operator
Barrick still chasing Novagold
Woolworth picks up 10% of Warehouse Group

For Sale/ LBOs/ Going Private/ Auctions/ Offerings:
Danaher may join bidding for Vision Systems [Auction]
Crow Holdings sells$2.2 billion of its properties to G.E. Real Estate. [Sold]
Millenium wins Anormed auction [Sold]
Aer Lingus prices IPO [IPO]

Money Raising:
Intel commits $40M to Chinese startup [$$]
Goldman pours $18M into GridPoint’s $21M funding round [$$]

People & Moves:
Australian pols call for ouster of Telestra chief following a dispute between the government and company [CEO]
Shaper Image CEO tossed overboard [CEO]
Third Point calls for oust of Nabi Biopharmaceuticals Chief Executive Thomas McLain [CEO]

Miscellaneous:
Citigroup tops league tables for European deal; Goldman slides to second place [League tables]
Citigroup also tops league tables for capital markets and bond bookrunning [League tables]
KKR set to announce biggest buyout fund ever [Private equity]
LBO flood lifts cost of borrowing in Australia [LBO]
Wall Street bigs plan electronic trading platform for big block trades [Trading]
New York City’s Economic Development Corporation hires McKinsey & Company to compare the strengths and weaknesses of NYC and Londong’s financial service sectors [IPOs]

Canada's slipping on the world stage, WEF study shows (Globe & Mail)
Even with the commodities boom, and investors around the world converting their Dollars into Loonies so that they can invest in Alberta Oil Sands, Canada is in a long slow downward drift in terms of economic competitiveness. According to the World Economic Forum, Canada has fallen to 16th place from 13th place last year, and on a related survey that looks at business competitiveness, the country is in 15th. Of course, the country is still extremely rich by global standards, though people cite the chief reason for this as its proximity to the US. Then again, there must be something more, since it doesn't seem to do a whole lot for Mexico. The US owns the #1 spot for business competitiveness year after year.

GM reportedly demands billions for tie-up (WSJ)
GM apparently has some self-image issues. It wakes up every morning and brushes its teeth while looking in a rose-tinted, slimming mirror. How else to explain the fact that the company reportedly wants billions to join a Nissan/Renault alliance. Sure GM is big, but nobody would be foolish enough to confuse size with stature. We're not saying it needs Nissan or Renault, but it certainly looks like the more desperate party in all of this, and it's really unlikely that Team Ghosn will shell out billions to have GM join it.

Qwest Beats the Odds, So Far (NYT)
Last year, when Qwest was competing with Verizon to buy the re-formed MCI, there was not amount of money that it could offer that would would convince MCI shareholders that it was the superior choice. Everyone assumed that this was a desperate last flail from a company that had no future. Either it would go bankrupt itself one day, or it would be force to sell off too many assets. But, the Times brings our attention back to the company and finds that it's doing ok, socking away cash, cutting costs, and making a modest profit on a wireless reseller agreement that it has with Sprint. Now the company is trying to figure out what to do with its mountain of cash. It may buy a competitor, or perhaps it will send some cash the way of the shareholders. That being said, it's not like Qwest is out of the woodwork or anything. There's some major upheaval going on in its industry, and Qwest doesn't seem particularly well suited to thrive in it. But, it's done alright so far, and it'll be interesting to see how long it can play its luck.

Vioxx Is Cleared in Heart Attack (Bloomberg)
Chalk another one up for Merck. The company had two things going for it in this trial. For one thing, the plaintiff isn't dead. Yes, it sucks to have a heart attack, and there were probably a lot of medical bills and associated anguish. But it's hard to get the full sympathy of the jury if your wife isn't a widow, and your children aren't half-orphaned. Here you are, standing there, plainly alive for everyone to see. The other factor in Merck's benefit was that the man started using Vioxx after the company put a stronger warning label on the bottle, suggesting that the pills may increase the possibility of a heart attack. This was the first such case, and it's going to be hard for any of the post- warning label plaintiffs to argue that the company was still acting irresponsibly at that point.

Report: Chrysler could sell cars made by China's Chery in U.S. (AP)
Would any red-blooded American drive around a Chery? Probably not; that's why Daimler is in talks with the Chinese automaker to license one of its small, fuel-efficient models for sale in the US under the Chrysler name. Remember, Chery is the company that had been sued by GM for design piracy. It was only a matter of time before Chinese cars started hitting US streets. In general, there's nothing pathetic about the emergence of the Chinese auto industry on American shores, and we're not worried about the trade implications. But the fact that the American makers got caught so badly on the opposite side of trends -- totally failing to anticipate any meaningful demand for fuel-efficient cars -- and have to go out and license brands from upstart Chinese makers is a bit pathetic. And just in case you thought trade with China was getting to one-sided, Toys R Us is looking to open its first store in the country later this year.

Oil Falls Below $60 on Iran Talks, BP Plan to Restart Prudhoe (Bloomberg)
Whatever you think about the Iran situation -- whether you think we should pursue a diplomatic solution or the bomb -- we can all agree that it's hard to put too much faith in what the country's president has to say. He obviously wants Iran to have a nuclear program, and as an ideologue, it's unlikely that any diplomacy he enters into will be done in good faith. Yet, ostensibly, the oil markets buy it hook-line-and-sinker, as price per barrel drop every time he says something about wanting to restart talks. So gullible. One analyst says the "Iran premium" has completely evaporated. Maybe. Or, we could just be heading into a recession, and demand for commodities is slowing. But it's Monday, we can choose to look on the bright side.

Morgenson: blowing hot air on natural gas (Ideoblog)
One of our favorite weekend readings is Larry Ribstein's weekly critique of the most latest Gretchen Morgenson column. The Time's Gretchen Morgenson has the unfortunate combination of being singularly obsessed with a topic about which she's poorly informed, or, at least open to a lot of criticism (we'll opt with the former, but we're hedging in case we run into her at a party). Typically, she writes about the evils of high CEO pay (snooze button please). But, in the wake of Amaranth, she uses the opportunity to agitate for more oversight and more regulations (duh). And she's not averse to using some misleading hyperbole either. Ribstein accurately susses out the worst line "...as last week's implosion of Amaranth shows, Enron's' troubling legacy lives on". Ugh. It's really not an exaggeration to say that there are many who want to criminalize failure. That's a cliche, but an accurate one. If the Gretchen Morgenson's of the world really set policy, any bankruptcy or loss of money would probably be a crime -- or at least presumed to be one. We should be grateful she's consigned to the Times, and that the paper of record's influence is on the wane.

Inco backs all-cash takeover by Brazil's CVRD (Globe & Mail)
This was pretty much expected. Nickel miner Inco has recommended to shareholders that they accept a buyout offer from Brazilian copper miner CVRD. After a pitched battle between CVRD, TeckCominco, and PhelpsDodge, CVRD remained the last mine standing. And after a month of looking in vain for an even more hostile bid to save it from CVRD, Inco relented. The finaly buyout price stands at $19.4 million.

One of our favorite sources just passed on more about Amaranth’s asset sales. It seems it’s not exactly a fire-sale. Despite its troubles, Amaranth is doing pretty well in selling some of its assets.

Just heard from other colleagues that Amaranth unwound their asset-backed "residuals" portfolio. Was marked in mid-$500 million valuation and it got sold at just under $500 million. Pretty decent realization for such an illiquid set of assets.

People's first reaction to Amaranth blowing up is to say -- and this seems like natural reaction -- that counterparties are going to be a lot more cautious about hedge fund exposure. I think that the lesson may actually wind up to be the opposite. If a fund can blow up so hugely, losing 65% of its value in a couple of day, and yet get unwound in orderly fashion, counterparties (if not investors) may in fact become more relaxed about hedge fund exposure.

One aspect of funds counterparties have been showing concern about is the increasing level of illiquidity in HF portfolios. Well, if Amaranth can blow out of a large Asian convert book and half a billion dollars of asset-backed residuals in less than a week at discounts of less than 5%, then one might ask the question: how illiquid really are illiquid instruments?

In reality, it seems that illiquidity has less to do with the instrument in question than with the environment into which the holder needs to sell. Amaranth blowing up was a result of its own mistakes and not an exogenous shock that had a parallel effect on many funds. Plenty of funds were ready to pounce on Amaranth's "illiquid" portfolio.

Anyone else have any tales to share from the Amaranth meltdown? Bought any Amaranth assets? Tried too? Let us know. Email tips (at) DealBreaker (dot) com. Thanks!

$$$It's like we've always said: Millionaires = poor people. [DealBook]

$$$Sell on Rosh Hashana, buy on Yom Kippur, then party like it's 5767 by blowing that hard earned cash on a limo full of strippers and a bottle of Manischewitz's finest-- nothing before 5750. [Seeking Alpha]

$$$Let out your inner B 'n T: Two Bankers in North Jersey looking for 3rd tonight. [Craigslist]

The story just flashed up at the Wall Street Journal. Patricia Dunn is not only stepping down as chairman, she’s off the board. As of now.

Hewlett-Packard said Patricia Dunn has resigned as chairman and board member, effective immediately, in the wake of the company's ill-fated investigation of media leaks. She will be replaced as chairman by Chief Executive Mark Hurd…

H-P had earlier said Ms. Dunn, who authorized the leak investigation, would step down from the chair in January and be replaced by Mr. Hurd, but remain a member of the board.

H-P Chairman Dunn Resigns In Wake of Media-Leak Probe [Wall Street Journal]

Like obituaries, the business pages used to be the sort of place you stored reporters who were hitting the bottle a little too hard. They couldn’t cause too much trouble there, the job was mostly just reporting from press releases, and nobody read anything from the business section besides the stock quotes anyway.

These days, however, the financial press takes itself a bit more seriously. The various financial news organizations compete for stories, pride themselves on scoops, and practice habits they picked up from other journalists—like fact checking. (Sometimes. Every now and then we feel like we’re back in the days of the gin soaked business hack calling his story in from the payphone Costello’s.)

But what’s the point of competing if you don’t have a winner? So today initiates our first ever DealBreaker Business Press Reader Poll. Here’s how it works. Every week we’ll take the biggest business story and ask which news organization covered it the best. Sometimes we’ll focus on the wires, sometimes on television, sometimes on the glossies. And sometimes we’ll mix it up.

Since this week was mostly about Amaranth that’s where we’re starting: Who Covered The Amaranth Meltdown Story The Best?

Amaranth has cancelled its cancelled recruiting presentation at the Chicago Graduate School of Business, according to a source. Even as Amaranth’s founder Nick Maounis said earlier today that he intends to keep the troubled hedge fund in business, there is widespread speculation that the fund may fold. Maounis acknowledged in a 12-minute conference call for investors that the fund has received many redemption notices, and rumors are circulating that fund employees have been emailing resumes and burning up phone lines looking to reach dry land before the fund sinks. The Chicago recruiting session was scheduled for Tuesday, according to our source.

Got any stories about recruiting season at your school? Send 'em our way. Tips (at) dealbreaker (dot) com. Thanks!

Did you know that the 7,000 pound bronze bull at the end of Broadway—one of the now iconic symbols of Wall Street—was illegally placed in front of the New York Stock Exchange in 1989 by its maker, sculptor Arturo Di Modica? Or that he still owns the copyright covering the statute, and that it is merely on loan to the NYC Parks Department?

Neither did Wal-Mart, apparently. A lawsuit alleges that the chain has been infringing on Di Modica’s copyright by selling reproductions of the sculpture.

Wal-Mart Stores Inc., North Fork Bancorp and eight other companies were sued by the sculptor who created the ``Charging Bull'' statue near Wall Street for unfairly profiting from his copyrighted work.
Arturo Di Modica claimed the companies are selling knockoff copies of his sculpture or using images of the famous statue in ad campaigns without his permission, according to a lawsuit filed yesterday in Manhattan federal court.

We noted earlier how the evolving story on Hewlett-Packard weird, paranoid and possibly illegal investigation into leaks is itself now being driven by leaks. The New York Times has reported stories based on “people briefed on the internal investigation” and other insiders. The Washington Post is reporting on internal H-P emails. It seems every financial news organization now has a source inside the company.

Since this all started as a campaign to plug leaks at H-P, the flood of leaks is ironic. But is a highly logical sort of irony. If you are an insider at H-P, you probably now have nothing to fear from leaking. There is zero chance the company is now going to launch any kind of thorough investigation to discover these leaks. It’s way too much trouble.

We wouldn’t be surprised to see widespread leaking from other companies as well, particularly those in the Bay Area. No one wants to be the next Hewlett-Packard, so no company will risk going to extraordinary lengths to find leakers. As the probability of getting caught leaking declines, the temptation to leak will only grow.

So, blame Hewlett-Packard if a new round of corporate whispering breaks out.

The buck is supposed to stop with guys at the top, according to more than a third of DealBreaker readers voting in our most recent Reader Poll. Thirty-seven percent of you said the blame for Amaranth’s meltdown should rest upon the shoulders of the fund’s founder, Nick Maounis. Brian Hunter, the man who ran the energy trades that landed the fund in hot water came in a distant second place, garnering just twenty-two percent of the votes, just ahead of Canada, which got twenty percent of the votes (presumably all coming from South Park fans).

After the jump, you can view the full results of the poll.

Sponsored by Chicago Board Options Exchange

An independent trader with Schonfeld and Co., Peter Milman agreed to be the first subject of DealBreaker’s new Better Know A Banker feature. We will run one of these a week. If you think you’d make a good subject, or want to nominate someone else, please email us at tips (at) dealbreaker (dot) com (subject line: “Better Know A Banker”). Here Peter talks about what he does, how he got started and the best way to learn the skills of a successful trader.

In Bonfire of the Vanities, Sherman McCoy attempts to explain to his four-year-old daughter what he does for a living. How would you explain to a four-year-old what you do?
Hmmmm. I work on wall street, investing in different companies on a daily basis, buying and selling shares of the company.

How did you get your first job in finance?
After graduating business school, I wanted to trade the markets, and I was lucky enough to get a loan from my brother who was employed in the finance field as a trader.

If you were starting out in your career now, where would you want to work?
I would want to work at a top hedge fund, having unlimited capital to work with and access to the best information on the street.

What is your favorite career accomplishment/best trade ever?
April 4th, 2000. Best day of all time. [Editorial note: One of the busiest trading days in Wall Street history, when the the NASDAQ crashed 574-points or 13.5 percent and then made an almost total recovery.]

Who are your heroes or role models, fictional or real?
Role model? My dad, he's hysterical.

What is the most important quality a trader should have?
It's many qualities put together. But if I had to put down just one: focus.

What is the worst character fault for a trader?
Stubborness, being opinionated and arrogance.

Tell us about the lowest of low points, the time you thought should just give it all up and take a simpler, easier job?
2004 was a bad year for me. I had to relearn to trade. My style was not working and I needed to say no to my old style and start again with new ideas. It was changing styles that was the hardest for me.

What job would you have taken?
If I quit I would look to work for a hedge fund or a big brokerage on the street.

What's your 'exit strategy'—how long until you retire or move on?
Good question. Sometimes I feel like I want to move on asap, but I'm learning to trade only when markets are moving, with volume, otherwise stay away. I've been able to survive these markets and I believe that at some point they will turn around for the better, and I will be right on 'em.

What is your motto?
It's never too expensive to buy and never to cheap to sell.

Whose teachings are more useful in your business—Machiavelli, Sun Tzu, Jesus Christ or Marquis de Sade? (Feel free to nominate another choice.)
You have to teach yourself through trial and error.

Yesterday’s revelations that Hewlett-Packard CEO Mark Hurd directly approved a sting-operation against a reporter arose after the Washington Post got hold of some internal company emails.

Hewlett-Packard Co. chief executive Mark V. Hurd approved an elaborate "sting" operation on a reporter in February in an attempt to plug leaks to the media, according to an e-mail message sent by HP Chairman Patricia C. Dunn.

The document, one of more than two dozen e-mails obtained by The Washington Post, for the first time links Hurd to an internal investigation of media leaks that has led to criminal probes and will be the subject of a congressional hearing next week.

Internal e-mails show senior HP employees who were given the task of identifying anonymous news sources concocted a fictitious, high-level HP tipster who sent bogus information to a San Francisco reporter in an attempt to trick her into revealing her sources.

Just to keep things straight, let’s recap. Someone at H-P is leaking to the press internal documents about H-P’s investigation into who at H-P was leaking to the press. Clearly what H-P needs to do is investigate who is leaking information about the investigation about the investigation about who was leaking information about H-P. Ouch. It hurts just to think about that.

HP CEO Allowed 'Sting' of Reporter [Washington Post]

As we mentioned the other day, the Wall Street Journal has its business school rankings out this week. As usual, Michigan and Dartmouth are in the top slots. But then we started wondering: is this right? Or has the Journal’s methodology gone awry?

We asked some business school friends but they all fall into three camps. Coincidentally their opinions were very well correlated with where they went to school. The Dartmouth MBAs said the list was awesome except that Michigan isn’t better. The Wharton MBAs said the entire list had been broken for years. The Columbia MBAs were too busy to return our calls.

So here’s how we’re getting to the bottom of this. Below you’ll find the Journal rankings of the top ten. In the comments we invite you to place the schools in the order you think make the most sense.

1 University of Michigan (Ross)
2 Dartmouth College (Tuck)
3 Carnegie Mellon University (Tepper)
4 Columbia University
5 University of California, Berkeley (Haas)
6 Northwestern University (Kellogg)
7 University of Pennsylvania (Wharton)
8 University of North Carolina, Chapel Hill (Kenan-Flagler)
9 Yale University
10 Massachusetts Institute of Technology (Sloan)

Well, it’s a Brian Hunter. But we have nothing but circumstantial evidence indicating it’s the Brian Hunter. He looks about the right age. Same name. And he’s in Canada. So, like, maybe, right?

Yesterday we asked: Who is to blame for the Amaranth meltdown? With hundreds of votes cast, you are mostly casting your stones in the direction of Amaranth founder Nicky Maounis. Brian Hunter, the young man who ran the energy trading desk at the fund, trailed his boss closely for most of Thursday until falling behind overnight. He’s now running about 13 points behind Maounis. And about twenty percent of you Blame Canada for the hedge fund’s losses.

We’re going to keep the poll open for a few more hours before declaring a winner. So get your votes while you still can!

The Financial Times delivers this news (but we picked it up from Crossing Wall Street):

Market gossip is to take on a more high-tech form thanks to a new automated system that will trawl through more than 40m internet sources – from blogs to regulatory filings – on behalf of hedge funds. Due for an official launch early next year, the platform is being run by a former Deutsche Bank executive and has received financing from, among others, Draper Fisher Jurvetson, the venture capital firm that backed Skype before it was sold to Ebay for $4.1bn last year. Ten hedge funds are trying out the system.

Called Monitor110, the platform acts as an aggregator and a filter for hedge funds trying to keep up with the explosion of information sources on the internet, such as blogs. The blog search engine Technorati currently tracks 50m blogs, with about 175,000 new ones created every day.

Note: if your hedge fund starts investing based on advice from, say, Muffie or Brock's DealBreaker articles, you might want to reconsider your choice of money managers.

Market gossip goes high-tech [Financial Times]

Crime/Fraud/Legal/Investigations/Inquiries:
Boards of directors are so over [legal]
NYSE addressing concerns that Euronext deal will expand US regulatory reach, including SOX, into Europe [legal]
Amaranth: Stop me if you’ve heard this one before [legal]
Cablevision gave stock options to dead employee, backdated to when he was among the living [backdating]
Samsung official accused of price-fixing pleads guilty [legal]

M&A: [? = not yet closed, problems with the deal, lingering questions, etc.]
JP Morgan + Washington Mutual: ?
MTV + Harmonix Music Systems
Merck + Serono
Yahoo + Facebook:?
Hospira + Mayne Pharma
Lehman Brothers buys a minority stake in BATS Trading

For Sale/ LBOs/ Going Private/ Auctions/ Offerings:
Tribune to consider selling media properties [For sale?]
What is YouTube really worth to Yahoo? [For Sale?]
March & McLennan may be considering a breakup deal [Breakup?]
Dutch government sells its remaining 8 percent stake in Royal KPN [Sold]
KKR consortium planning big bond deal [Offering]

People & Moves:
Could Goshn end up with Ford? [Partnerships?]
Andrew Clarke has resigned from law firm Allens Arthur Robinson to become head of Citigroup’s Australian M&A group [Upgrade]

Miscellaneous:
For the first time, it takes a minimum of $1B to get on Forbes 400 list [Wealth]

How much did he know? Focus is on Hurd as HP stock price reacts to troubles (San Francisco Chronicle)
As we anticipated in yesterday's Opening Bell, the inclusion of CEO Mark Hurd in the scandal at HP took a shot at the company's stock for the first time. All those traders who thought they were so damn clever for buying up HP as soon as the initial scandal broke are now down on their bets, because they weren't clever enough to realize that this could be bigger than just the board. But while nobody likes trouble in the C-suites, maybe the real contrarian play is to realize that Hurd is not as important to HP's success as everyone else believes. Or, maybe people should realize that HP's turnaround is a bit of a fraud; by far the majority of its op income still comes from selling freakin' printer ink. And when your competitor's laptops blow up, yeah, you're going to look like your doing ok.

Billionaires rule US richest list (BBC)
Awesome, for the first time everyone on the Forbes list of the 400 richest Americans is a billionaire. Finally the least means something. Of course, Bill Gates came in at #1, and Buffett at #2. But #3 might be a bit of a surprise, as it goes to casino magnate Sheldon Adelson, who had been #15th. What's really interesting is that if you look at the global list (just keep clicking refresh on Forbes.com, they're bound to have that list up soon, right?), the number of gambling related billionaires has skyrocketed. As the world gets richer, people like to throw their money down the toilet, it seems.

Cablevision Gave Backdated Grant To Dead Official (WSJ)
If the dead can vote, why shouldn't they be allowed to receive stock options? Really, people are all up in arms -- including self-appointed corporate governance experts -- because Cablevision has admitted to backdating options to prior to a VP's death. As one critic, a prof at Columbia, put it, "Trying to incentivize a corpse suggests they were not complying with the spirit of shareholder-approved stock-option plans." Well, ok, maybe you can't technically incentivize a corpse, we don't really know.

Herman Miller as Contrarian Indicator (Infectious Greed)
Is it a worrisome sign that Herman Miller is once again reporting blow-out quarters? Oh, allow us to rephrase that. Is it a worrisome sign that the maker of the Aeron Chair is once again reporting blow-out quarters? Or is an Aeron chair no longer the luxury item it once was; is it really a requisite piece of furniture for the modern office. Really, what's a few hundred dollars on a chair, if it means your employees don't have to take off early once a week for a visit to the chiropractor.

$$$34 year-old investment banker's girlfriend needs a girlfriend. Help a brother's sister out. [Craigslist]

$$$Dick Parsons: I wouldn't wipe my ass with FaceBook, let alone pay $1 billion for it. [DealBook]

$$$Wear your Carolyn-hate on your sleeve: more Team Trump T's [Cafe Press]

Warren Buffett: Tampa Int'l to Palm Beach Int'l on his Gulfstream IV

Warren Buffett going to Palm Beach wouldn’t normally mean jack to us except for the fact that it’s actually part of an elaborate plan on his part to get out of going to hell, like polling shows he’s ultimately destined to do. Palm Beach, tragically, is now party to WB’s tawdry sex game scheme in which the Berkshire Hathaway Grand High Poobah tries to—and here’s where it gets sick—make us believe he’s a Jew. Jews, you’ll all recall, can do whatever we want because guess what? We don’t believe in that fiery place. Doesn’t exist. Talk it up all you like, Christies, because for us J’s, it ain’t happening. And that’s why Buffy wants in. His casual little, “Oh, look at me, I’m flying to Palm Beach to hang with my fellow Heebs like I always do” trip is right on the heels of GHP’s visit to Israel, where he just happened to have stayed at the King David Hotel, and just coincidentally happens to be one day before Rosh Hashana, the Jewish New Year. And perhaps a bit too coincidentally, if you ask us; it’s like he’s trying to get us to think that flying to Palm Beach isn’t even something he thinks about but, rather, is totally innate—because he’s Jewish. He might’ve had you all fooled up until now but we’re here to break this party up and say: no dice. Give our regards to Broadway, Buffski. This is one sell you’re not going to make.

Unwinding Amaranth’s energy trades is getting more expensive everyday. Yesterday the losses were $4.5 billion. Today they are said to be $6 billion. It’s kinda hard to imagine those kind of numbers. So look at it this way. Yesterday Amaranth’s losses added up to a hole in the Caribbean opening up and swallowing the Bahamas. Today Barbados fell into the abyss too.

But Thursday wasn’t only about even bigger losses. Today came with news about a possible buyout, more trouble at pension funds, lawsuits and an analysts warning that JP Morgan might not be able to manage to energy positions it bought from Amaranth.

• Amaranth losses now at $6.5 billion. [Bloomberg]

• An analyst at Pru warns that JP Morgan might not have the expertise to handle the volatile Amaranth trades it just took on. [MarketWatch]

• Citigroup talks buyout/bailout with Amaranth. [Associated Press]

• Amaranth’s Wednesday letter to investors. [Reuters]

• Pennsylvania and New Jersey pension funds hit by Amaranth losses. [Associated Press]

• Amaranth readies itself for the inevitable lawsuits. Hires Skadden. [Financial Times]

• Banks still scrambling to ramp up their energy trading units. [Forbes]

We love the media cliché where you go and ask a murderer’s neighbors about him and they say, “He was a quiet boy. Kept to himself. I can’t believe he did anything like this.” We love it because it is so reliable. Happens almost every time.

Another reason for our love: because it is so creepy. Who doesn’t have a quiet neighbor who keeps to themselves?

So we’re hoping that this new one catches on. It’s the one where you ask the childhood friends of a financial bigshot to speculate on his finance prowess. Completely, wonderfully inane.

Anyway, here’s the Stamford Advocate’s version inspired by the meltdown of Nick Maounis’s Amaranth hedge fund.

Can Maounis lead Amaranth back? Rose said the boy who grew up next door is up for the challenge.

"I've been a neighbor for a long time, and I really have the utmost respect for his accomplishments."

We already know Amaranth sold off its energy portfolio to Citadel and JP Morgan Chase and had to liquidate about half its European bond portfolio to cover the energy trading losses. So what else is Amaranth selling off? A DealBreaker reader writes in with a firsthand account of Amaranth selling Asian assets.

Stuck here in HK, sitting next to our Asian converts trader.

Apparently, Amaranth's death throes attracted a school of hedge fund sharks trying to gobble up their Asian converts portfolio. By the time we got in touch with the Amaranth trader, they had 16 bidders, mix of hedgies and banks. The guy basically told us, "too late, piss off."

Nice to know his arrogance has survived the erasure of his deferred comp and job. In the end, the book traded to one buyer (identity not clear) at approx 2% discount "to where it was marked last week."

Got anymore good (or bad or ugly, for that matter) Amaranth stories? Send 'em our way. Tips (at) dealbreaker (dot) com. Thanks!

The finger pointing and buck-passing over Amaranths enormous--and still growing--losses has officially begun. We thought we'd get ahead of the game and settle the issue right now. And how do we arrive at the ultimate truths here at DealBreaker. By appealing to the highest authority: You!

That's right. It's time for another DealBreaker Reader Poll. Vote below and check back frequently for results. And remember, you can always vote other by leaving a message in the comments section.

There are just about three hours left before we slam shut the nominations window in the Bond Biz Hotties Contest. So while we’re still accepting nominations, you’d better get them in quick. Time is running out!

So far we’ve got some strong contenders for the male category and almost none for the females. That’s just plain sexist. Surely you people aren’t saying that there are no attractive women working in fixed income? Doesn’t “bond girl” imply hotness?

So get on it, folks. Send your entries in to tips (at) dealbreaker (dot) com.

In case you missed it, here are the rules.

Sometimes we don’t even recognize America. What kind of country is this if you can’t get drunk while waiting to go to jail for what might very well amount to a life sentence?

Former Enron CEO Jeffrey Skilling was arrested and accused of public intoxication in Dallas earlier this month, but he will not go to jail early for violating the terms of his $5 million bond.

According to a Dallas Police Department report, Skilling was arrested about 1:45 a.m. on Sept. 9, in the 3600 block of McKinney Avenue.

Skilling was not drinking when he was arrested and did not resist arrest, according to the police document, obtained by the Houston Chronicle and first reported on Chron.com.

Skilling arrested in Dallas on Sept. 9 [Houston Chronicle]

Time was, business reporters had to worry about their information being stolen by insider-trading types. Now those days seem almost quaint. The Hewlett-Packard "place a mole in the newsroom" plot has Gary Weiss reflecting on his own security measures from years gone by.

Years ago, while working on a sensitive story at Business Week, I actually hid my notes and other source materials so that they not be found by any intrusive cleaning women.

Afterwards I thought I was being a little silly, not to mention paranoid.

Not any more. The New York Times reported today that good old Hewlett-Packard (definitely not in the running for any "friend of the First Amendment" awards) was thinking of doing just that.

Seems far-fetched. But the whole thing seems far-fetched, so we’re not writing it off entirely. Maybe this thing is actually a widespread but hushed up practice in Silicon Valley. Is spying the next backdating?

The Advantages of Paranoia [Gary-Weiss.com]

Brock Fantasia is the only remaining person in the JPMorgan analyst class of 2002 to still work at JPMorgan, which is in no way testament to the work environment at JPMorgan. In fact, Brock likes to think of himself as the Highlander of his analyst class, wielding an indestructible claymore of corporate finance.

After “totally wrecking” (in his own words) the Analyst-to-Associate program in the M&A group, Brock was briefly moved to the Natural Resources group, due to increased deal flow in the M&A group. Brock graduated from the prestigious University of Pennsylvania Wharton with a degree in Finance and is working in investment banking until he can find a buy-side job. Brock has been interviewing for buy-side jobs throughout the past 3 years and has not been a “good fit” anywhere, despite his ever-burgeoning skill-set. [Editor's P.S.,- Some of this is true. But only some of it. Previous Ask Brocks are here. Send your questions to : brock AT dealbreaker DOT com]

Auf wiedersehen amigos! It’s me, Brock here, so let’s Brock it like it’s hot.

As summer is a day from officially ending, it’s finally time to get serious after the frivolity of September and its many celebrations. It is time to emerge from the “hangover grande” caused by Mexican Independence Day on the 16th, put away those soiled Tom Brady jerseys that lubricated the joy of Patriot Day on the 11th and go back to letting your grandparents feebly succumb to the ravaging spectre of age after the respite of widely-celebrated Grandparents Day on September 10th. It is also time to stop wearing white.

While you’re busy getting the deal team back together to start making Lucite babies in the Electronics Manufacturing Services (EMS) sector, nothing can Bogart your deal-joint quite like a bad case of the flu. As flu season rapidly approaches, it’s important to stay as protected as your job at JPMorgan during a down-turn, so that’s why I, Brock Fantasia, like to avoid flu shots like the virulent plagues they profess to protect against.

Outgoing Hewlett-Packard chairwoman Patricia Dunn has agreed to go before the Congressional panel looking into the scandal. This should be the show to watch next week, barring anymore developing world coups or major financial meltdowns.

As new revelations about Hewlett-Packard Co.'s director spying scandal cascade, Chairwoman Patricia Dunn and the company's general counsel have agreed to testify next week before a House panel investigating the affair.

With federal and California prosecutors conducting criminal investigations of HP's use of deceptive tactics to find a boardroom leaker, some experts say the executives' testimony to Congress could be fraught with legal peril.

On the other hand, the risks of invoking their Fifth Amendment privilege against self-incrimination -- as a parade of corporate executives have done on Capitol Hill in recent years -- could be even greater, according to others.

So we’re going to compile a list of questions for Patty. Once we’ve assembled them, we plan to email the questions to various members of Congress. What would you ask Patty? Leave you questions in the comments or email us at tips (at) dealbreaker (dot) com. (Subject line: WWYAP)

HP executives testify for Congress [Associated Press in Business Week]

ESTRAGON: Nothing to be done.

VLADIMIR: (advancing with short, stiff strides, legs wide apart). I'm beginning to come round to that opinion. All my life I've tried to put it from me, saying Vladimir, be reasonable, you haven't yet tried everything. And I resumed the struggle. (He broods, musing on the struggle. Turning to Estragon.) So there you are again. The A380 is delayed again.

The inability of Airbus to deliver its super jumbo jet is becoming just plain weird. To put it more philosophically, the Airbus A 380 is in a constant state of Becoming but it never seems to arrive at Being.

Airbus SA, maker of the yet-to-be-delivered A380 super jumbo passenger jet, is about to announce another production delay, a report said Wednesday.

French newspaper Les Echos said that Airbus would announce, perhaps this week, a new A380 delivery delay.

Airbus will reveal that it will only be able to deliver four of the nine A380s it has promised for next year, the BBC reported.

The A380, which cost $14 billion to develop, is the world's largest passenger airliner with a seating capacity of more than 800.

Airbus expects another A380 delay [UPI in the Washington Times]

Crime/Fraud/Legal/Investigations/Inquiries:
Former HSBC chairman advising Bill Ford, Jr. [legal]
SEC investigating options at Electronic Arts [backdating]
ImClone set for leadership battle [legal]
Rebellion at the LA Times [legal]
Investigators sought meeting with H-P chiefs [legal]
H-P’s Patricia Dunn receives leadership award [surreal]
California sues automakers for warm weather [legal]
Judge proposes 27-month term in front-running case [legal]
Google defies Belgian court [legal]
Skilling gets drunk, gets arrested [legal]

M&A: [? = not yet closed, problems with the deal, lingering questions, etc.]
Lots of speculation about deals for Facebook and YouTube
Citigroup may take control of Amaranth
Merck + Serono
Yahoo + Facebook:?
Hospira + Mayne Pharma
Lehman Brothers buys a minority stake in BATS Trading.

For Sale/ LBOs/ Going Private/ Auctions/ Offerings:
YouTube has $1.5B pricetag [For sale?]
Hilton sells five hotels [Sold]

Money Raising:
SoonR nabs $6M [$]

People & Moves:
Former Citigroup chief named AIG boss [CEO]
Bear Stearns names Bruce Lisman and Steven Meyer as co-heads of global equities [Upgrade]

Miscellaneous:
Grumbling shareholders at sovereign get word from chief [MBAs]

Calif. sues over auto emissions (Detroit News)
There had already been talk that Bill Lockyer, the California Attorney General was the Spitzer of the west coast. Any doubt has now been put to rest. Lockyer, who is is currently in an election, looking to make a horizontal shift over to State Treasurer, announced a lawsuit against all the major automakers for selling products that contribute to global warming. How absurd. How... California. At least Spitzer, when pressed insists that he simply goes by the law on the books. Lockyer is just inventing law as he goes along. We wonder how it would go over politically if he sues every resident of California who drives a car.

HP CEO Allowed 'Sting' of Reporter (Washington Post)
If you ask us, there aren't too many scandals worthy of a -gate suffix. It's thrown about way too often. But Pretextinggate, as it's been called a few times is certainly one of them, as the All The Presidents Men-like quality of the scandal spirals on a daily basis. For the first time, CEO Mark Hurd is said to have had involvement with the spying. Memos obtained by the Post suggest he approved the sting operation to determine the leaker, though it's not clear that he knew of any of the investigation's tactics at this time. If he did, or if he was kept apprised, then that will come out. And for the first time, now, this scandal has the potential to affect HP stock. The shareholders love Hurd, who is widely viewed as having rescued the company from the Carly-induced wilderness. If he goes, or is damaged, that'll hit shareholder confidence.

Wal-Mart to Test Price Cuts on Range of Generic Drugs (NYT)
The latest argument employed by the anti-Wal-Mart crowd, as we've mentioned is that the company isn't a monopolist, but a monopsonist. It's a buyer, so large, the critics argue, that its ability to dictate pricing to its suppliers is akin to price controls in a communist country. First of all, it's not. Second of all, why do these bleeding hearts care more about Wal-Mart suppliers than Wal-Mart customers? Now comes word that the company will make similar moves in the drug market, drastically lowering the price of generic drugs. This will cause some people's head to explode, since the one bete noir that people hate more than Wal-Mart is the drug companies. And the high cost of drugs is one that people routinely harp on. So if Wal-Mart uses its considerable presence in the pharmacy business to squeeze drug sellers, what will people say?

Former Enron CEO Arrested in Dallas (AP)
Ken Lay was alive all this time, and they finally caught him! No. Once again, Jeff Skilling is in trouble for public intoxication. Last time it was in our fair city, the Upper West Side, if memory serves. This time it was in Dallas at 1:45. Fortunately for Skilling the arrest -- made at 1:45 in a "swanky" neighborhood -- won't send him immediately to jail. But a judge did insist that he make more regular trips to an alcohol counselor. Why? Why not let him leave out his life in a drunken stupor if that's what he desires? Surely that's just adding insult to injury, if in the final few months before he's to spend the rest of his life in prison, he has to meet with a counselor to discuss his drinking problem. "You know doc, I gotta be honest, I really want to get out of here quickly today, have some other shit I need to get taken care of".

$$$THNX 4 THE ADD!!! MySpace Expands In China So That Murdoch May More Effectively Select Next Wife. [DealBook]

$$$Some of you will be breaking out the Kleenex to wipe away the tears and some you will be doing so for the purposes of clean up: B-School rankings are in. [WSJ via Wall $treet Folly]

$$$How To Ruin Your Relationship While In Banking (some people just don't get that an "I Blow A Workaholic/Misogynistic/Coked-Out Banker and All I Have To Show For It Is This Lousy T-Shirt" is something for which one must make sacrifices, do they?) [Banker's Ball]

Why are there no good new sitcoms? Probably because no one in Hollywood is bright enough to hire Leveraged Sellout, who has written a treatment for a new sitcom about four friend’s living in Murray Hill. Two are investment bankers, one is a strategy consultant and the other a derivatives trader.

No summary will do the treatment justice. Better hop on over to Leveraged Sellout and ">read the whole thing. But here’s a taste below.

Oh, we guess we should give you a brief set up. Like they do when they show clips of movies on the late night talk shows. Here goes: two roommates, Steve and Gopal (the investment bankers), are preparing for a night of drinking at home. The problem is that Gopal was in charge of beverage provision and came home with Sparks. Chaos insues.

Steve stared at his roommate for 5 long seconds. The look on his face was one of utter disgust. He scrounged up a wad of phlegm and spit on the West Elm sofa.

“What! You douche!” he finally exploded. “I saw some chick wearing a Strand bag and mismatched checkered Converses drinking that crap the other day when I was lost downtown.”

“I can’t believe you brought that fucking h-hipster shit into this house!” he continued as he got up from the couch, enunciating each word and shaking his head, furious. He stumbled over the H-word as if it was physically draining for him to speak it.

He persisted, now just as disappointed as he was angry, “This is Murray Hill, man, not fucking Bushwick. This is a BANKER household! How hard is it for you to get some freakin Amstel?” he scolded.

Gopal rehid behind his hands. “What’s Bushwick?” he asked, apologetically.

Cue the effin’ laugh track.

Murray’s Hill - 1.01 Pilot - Banker Fight [Leveraged Sellout via Curbed]

Tim Carney latest column in the Washington Examiner points out that one of Alan Mulally’s greatest accomplishments at Boeing seems to have been squeezing a great deal of money from the marble pillars of our nation’s capital. Is this how Mulally will solve Ford’s troubles—through political entrepreneurship rather than effective business strategies?

Alan Mulally comes to Ford from Boeing, where he was CEO of the commercial aircraft division. The 61-year-old executive enters an ailing company that drastically needs a turnaround. The choice seems a bit odd on some scores. Mulally made and sold aircraft in an industry with exactly two participants — Boeing and Airbus — and in which he was selling to airlines, not consumers. A different skill set would seem to be in order for running a carmaker.

In his favor, Mulally presided over two key turnarounds at Boeing. A closer look at those turnarounds — and at Boeing’s modus operandi — raises suspicions that Ford might soon become another beggar at the federal trough of handouts.

[Note: Tim Carney, author of The Big Ripoff: How Big Business and Big Government Steal Your Money, is the brother of DealBreaker's John Carney.]

It’s been…what…an hour-and-a-half since we wrote about the Amaranth debacle? We’re sorry for leaving you in the dark for so long when so much is happening. Here’s the second part of our Amaranth Roundup for today.

• You knew it wouldn’t be long before the white hat of Johnny Lawman appeared coming over the crest of the hills, right? Connecticut Attorney-General Richard Blumenthal has raised the specter of “alleged representations” by Amaranth. His office is in the process of gathering evidence. Everyone’s friggin’ Eliot Spitzer these days. [Globe & Mail]

• And, of course, Congress is looking to get into the action. Amaranth’s troubles may prompt lawmakers to renew the push to regulate hedge funds. [CnnMoney.com]

• A Goldman Sachs fund listed on the London Stock Exchange was in to Amaranth to the tune of $25 million, about 5% of the firm’s total office. [Reuters]

• 3M’s pension fund was in to Amaranth too. [Bloomberg]

• Moody's says Amaranth’s loses will not risk the credit ratings of dealers who dealt with the hedge fund. [Reuters]

Okay. Fine. We get it. Some of you find DealBreaker’s Bond Biz Hotties Contest—our totally, almost but not really at all scientific quest for the most attractive bond traders, sales folks and operations peeps—a little bit creepy. And that’s okay! As Abovethelaw's David Lat says, “To each her own. The blogosphere is a very big place.”

More importnatly, we’re getting plenty of nominations, which means many of you think this is a very, very good idea. We’re totally excited that you’re excited about the contest! May the hottest win!

So we’re giving you one last warning. The window for nominations closes tomorrow: Thursday, September 21, at 5 p.m. (Eastern time).

So, if you've been meaning to nominate a hot bond biz babe or bud but haven't gotten around to it, don't delay! Send us that nomination ASAP, by email (subject line: "Bond Hotties"). Guidelines for making nominations are listed here.

Thanks!

Amaranth is out of the energy trading business all together (at least for now), according to CNBC's David Faber. Its entire energy portfolio has been off-loaded to Citadel and JP Morgan Chase, Faber reported moments ago. Those assets are even now most likely working their way into the broader markets.

No word on whether Brian Hunter, who headed the fund's energy trading operations and is said to be responsible for the enormous losses it recently suffered, still has a job.

This Hewlett-Packard spying scandal keeps getting more and more sinister. Now we learn that H-P may have considered placing spies inside the newsrooms of the Wall Street Journal and C-Net.

Hewlett-Packard conducted feasibility studies on planting spies in news bureaus of two major publications as part of an investigation of leaks from its board, an individual briefed on the company’s review of the operation said yesterday.

The studies, referred to in a Feb. 2 draft report for a briefing of senior management, are said to have included the possibility of placing investigators acting as clerical employees or cleaning crews in the San Francisco offices of CNET and The Wall Street Journal.

It gets even creepier with the next sentence: “It is not clear whether the plan described in the documents, which were read to a reporter, was ever acted upon.”

Uhm, okay. This is something H-P needs to address right away. Did they actually place spies at business news organizations reporting on them? Also: how did this East German level of paranoia take hold at the highest levels of H-P and what is the company doing to reverse this development?

It’s not just batshit insane. It’s batshit insane on crack.

H.P. Said to Have Studied Infiltrating Newsrooms [New York Times]

The government wants you to think that doing drugs will inevitably make you a loser with no friends and no job prospects. Then it goes and arrests the dean of the the Business School of the University of San Diego on drug charges, which kind of disproves that whole drugs will totally ruin your life thing.

A dean at the University of San Diego was arrested and is facing drug charges after authorities say he met with a suspected drug trafficker at an Ohio hotel.

Mohsen Anvari, 57, dean of the University's School of Business Administration, was taken into custody at the Hilton Inn in Beachwood, Ohio, on Saturday by officers who were conducting an ongoing narcotics investigation, the Beachwood Police Department said.

Anvari was charged with complicity to possess drugs, police said.

Also arrested was 45-year-old Eric M. Edwards of East Cleveland who was being charged with drug trafficking.

Authorities would not say what types of drugs were involved.

Anyone want to guess what drugs were involved? The Business school connection would suggest cocaine. San Diego kind of indicates the pot. The ages of both the dean and his dealer, however, argues for pain-killers. Meanwhile, Iranian origins suggest opium.

We were speaking to one of our trader friends yesterday who told us he was frantically buying up anything having to do with Thailand that slipped during the initial coup news-cycle. His figured that the risk of a coup had already been priced in, some of the selling was coming from irrational panic and now that the coup had actually happened, well, that was one source of risk that Thailand had put behind it.

Today we learned that it’s not just our independent trader friends who think like this. Bear Stearns, among other major financial institutions agrees.

Bear Stearns has raised its recommendation on Thai stocks to overweight from market weight and cut Indonesian equities to market weight from overweight.

"While any descent from constitutional democracy (however imperfect) is regrettable, we think the developments in Thailand set up a net reduction in political uncertainty and could speed a resumption of decisive governance that boosts already sagging consumer and business spirits," the investment house said in a Wednesday report.

"Investors have heavily penalized Thai stocks since last year amid deepening political uncertainty, with the benchmark SET index having gained just 9% in U.S. dollar terms since January 2005, versus a 38% (advance) for the S&P/IFC regional benchmark and 50% for Jakarta stocks," Bear Stearns said, adding that Thai stocks now offer some of the region's deepest valuation discounts.

So much Amaranth news and commentary, so little attention-span. Fortunately, DealBreaker is here to deliver a quick round-up of today’s Amaranth news.

• There’s a domino loss effect going on at Amaranth. The fund was forced to sell half of its European loan portfolio to cover to cover the natural gas trading losses. The arranging banks bought these back at 96 to 96.5 percent of face value, delivering a two percent loss after fees. The losses could be even worse, depending on how much leverage Amaranth used to buy the loans. [Reuters]

• San Diego County’s pension fund may have been hit hard by Amaranth’s losses. The pension fund had about $160 million invested in Amaranth. [New York Times in Sydney Morning Herald]

• Amaranth’s clearing house is not in trouble, according to NYMEX. Anyone know which clearing house Amaranth uses? [Dow Jones Newswire in the New York Sun]

• Reuters profiles Brian Hunter. [Reuters]

• Chris Cox says Amaranth is a reminder of hedge fund risks. [Reuters]

• Amaranth’s losses seem to have given Cinram International Income Fund the balls to stand up to its largest shareholder. Yesterday it publicly rejected calls from Amaranth to put itself up for sale. Cinram Rejects Amaranth's Request to Hire Adviser [Bloomberg]

• Man Group fund exposed to Amaranth losses. It had 2.35 percent of its assets in Amaranth. Man business hit by Amaranth losses. [Times]

• Amaranth says it has reached an agreement to transfer all of its energy trades to a third party. Anyone know who? [Bloomberg]

• Funds of funds opeated by Morgan Stanley, Credit Suisse, Bank of New York and Deutsche Bank all recently had stakes in Amaranth ranging from 4 percent to seven percent of their assets. [New York Times]

• Amaranth’s meltdown is “not entirely unrelated” to Long-Term Capital [Jeff Matthews In Not Making This Up]

There is frustratingly little good information out there on exactly what is behind the military coup in Thailand. The coupsters don’t seem to be all that bad—except, you know the whole “take over the country with our guns” thing—and the word is that they plan to reopen the financial markets tomorrow. They don’t seem to be about the cancel their countries bonds or nationalize industry. They keep saying things like they are just going to run the country until a new leader can be chosen.

We’ve heard a few different explanations. One of our friends thinks the Thai coup is an ethnic conflict between the Thai military and the ethnic Chinese who have done so well in business there. The ousted president was born to two Chinese parents. Another friend said it is just competing business factions—one based in the military, the other in the civilian government—taking the competition to the next level. Yet another says the military are simply good government reformers who were worried their country was being plundered by its leadership.

But this is DealBreaker, so we’ve been digging into the financial effects of the coup. The cost of credit-default swaps on Thailand’s debt jumped more than 100% yesterday, from $36,000 to $75,000 for a $10 million contract, before settling down to a $54,000. That’s not exactly a panic premium from the coup.

Reports from the Stalwart seem to confirm the market’s reading of the situation. Half the Stalwart team is in Thailand and reporting that the day after the coup was declared an official holiday and that Starbucks was still open.

Coup? What Coup? Got My Starbucks [The Stalwar]

When we were visiting our friends in the Bay Area in the late nineties, they always mentioned how great the lifestyle was out there. But as far as we could tell they only took part in those lifestylish kind of things—mountain biking, hiking around the Muir woods, fishing—when friends from back East come to visit. Otherwise they were living in overcrowded shopfront apartments in the Mission, working on esoteric projects that they hoped would make them rich someday and drinking with Mexicans in local bars.

They imagined they were lifestyle immigrants but in fact they were economic immigrants. The main benefit of living in the Bay Area wasn’t the “lifestyle”—it was access to venture capitalists and tech talent that had gathered nearby.

All this was brought to mind by Paul Kedrosky’s observations about the dangers of hiring lifestyle immigrants.

One of the unique perils of being involved with early-stage companies in San Diego and Vancouver, BC, is that we have to beware of lifestyle immigrants. While it's nice to see that people want to move to either place for lifestyle reasons, it's a shitty reason to take a job.

Why? Look at it this way. No sane adult moves to the Bay Area for lifestyle; they move there because they think they can make money. So, while I think it's nice people like to ski, hike, bike, climb, surf, and golf, I don't care. I want people who are greedy , competive bastards who would move to Fargo in January to make money, and who don't know any other way to work than hard. The rest of it is a distraction.

So, ask when interviewing. You'd be amazed at how many people will tell you -- upfront -- that they're moving for lifestyle reasons. While they may be the ones wanting to run, you should run away.

If you’re one of those looking for a job, it’s probably a good idea to keep this in mind. Don’t say you are going for the lifestyle. Do say you are going because you want to work in a dynamic, cutting-edge tech company and plan to make lots and lots of money.

Beware of Lifestyle Immigrants [Infectious Greed]

Crime/Fraud/Legal/Investigations/Inquiries:
US regulators visit E&Y’s London office for SOX inspection [SOX]
Tribune hit with shareholder lawsuit [legal]
Silicon Grapics gets court approval to exit bankruptcy [legal]
H-P said to have studied spying on newsrooms [legal]
Citigroup operator tapped as AIG chief [legal]
Broadcom CFO resigns over backdating [backdating]
SEC clarifies backdating accounting [legal]
COX on SOX [SOX]

Miscellaneous:
MBAs are cheaters [MBAs]
MySpace going to China [China]

[Note: This is an extremely abridged version of DealBook today. The servers at the Times seem to be having problems this morning. After the jump you can read DealBook's error message. Come on, Andrew! Get the site up!]

[Update: All the New York Times blogs are down. So it looks like it's not just our beloved DealBook that is offline right now.]

IUC buys Denison to form $1-billion player (Globe & Mail)
What's the only thing that could be sexier than the copper wars, when every company had a bid to buy every other company? Uranium wars. It looks like we may be on the brink of a rapid consolidation of the uranium sector. Vancouver's International Uranium Corp is buying out Toronto's Denison in a $511 million all stock deal. Like other commodities, uranium has had a fantastic run in the last few years, surging from $7 a pound in 2001 to $50 in the last month. And that's not all. Just yesterday, Warren Buffett pledged to spend $50 million to help jumpstart and international uranium fuel bank, so that companies could get access to nuclear power without having to do the enriching themselves. Yes, this sounds to us like a Utopian vision made by a rich guy, too. And then, of course, there's the whole Iran thing. So, memo to banks (particularly Canadian ones): get your uranium divisions ready to make some more deals.

TRIBUNE CO.: Shareholder files suit over repurchase plan (Chicago Tribune)
A lawsuit has been filed against the Tribune Company by a shareholder relating to the company's use of stock buybacks. Specifically, the complaint says "The share repurchase plan was designed to and has had the effect of creating a defensive barrier . . . akin to a `suicide pill,' that significantly decreases the likelihood that any potential acquirer will make an offer for the company." We recently pointed to a study predicting that share buybacks would be the next corporate governance scandal. Then there were two events in short order; Dell announced that it would halt its buyback program in connection with an SEC investigation, and now this. It's small so far, but it feels like it's picking up steam. If companies are using buybacks for purposes other than directly directly increasing shareholder value -- even if it's all clear and spelled out -- private lawyers and the SEC are going to have a field day.

Thai military coup rattles markets (AP)
Maybe the Thai coup isn't such a big deal. Yes, markets were rattled on the news, but hardly roiled. Word is there isn't going to be a junta, and that the military simply wants to expedite the political process. Of course, anyone in a military coup would say that. The good news, perhaps, is that unlike in a typical coup, there's no radical or socialist element at play -- just two business forces looking for a slice of the action. So don't expect price controls, or withdrawals from any trade treaties or alliances. The Thai market was closed today, and maybe when it reopens, the pain will be minimal.

Crude Oil Declines on Iran Talks, Rising U.S. Fuel Inventories (Bloomberg)
Did anyone happen to catch Ahmadinejad's speech yesterday, before the UN. It's weird that he was right here in New York. We've been checking the gossip rags and blogs for any pictures of him dining or clubbing, but so far nothing. Surely someone has to have a sighting. We caught about two minutes of it, and then flipped it over to ESPN for the World Series of Poker; they're nearing the final table, so the states are pretty high. Yeah, the stakes are high here too but they're declining. Bush's indication that he would be willing to further talks with Iran only hurt the oil market, which is hoping for sanctions. It had to be awkward at the UN yesterday, with both Bush and him there. Sort of like a party that you suspect your ex-girlfriend will show up at. Though not as dramatic, Bush did apparently bump into old pal President Clinton, whom he proceeded to with in his way.

$$$Business Bibs: 1/2 a suit for 1/2 a man. Or a eunuch. [Banker's Ball]

$$$ Dear Investors,
As CEO of Amaranth Advisers, it falls to me to pass along
some news. Happily, my youngest, Trip, began his Senior
year at Choate without incident -- fingers crossed he'll be
Harvard's problem next year! Judy and I celebrated our
second anniversary in Mustique, and since she's 21 now,
we were even allowed to celebrate with some champagne!
And our hedge fund lost $3 billion. [Shaking Her Assets via Gawker]

$$$Have sex with an investment banker tonight. He may have latent
incestual tendencies, but that's not your problem. [Craigslist]

Donald Trump: Cecil Field to Pease Int'l Tradeport (NH) on his Boeing 727-100

(This isn't the first time The Donald's been to New Hampshire this year but it's the first time we've addressed the jaunt with more than a yawn stifled by a "who gives a fuck." New Hampshire-- boring and dull, until you start to realize it's the perfect place to dump a body. Maybe the body of a disgruntled employee, perhaps? Maybe the body of a recently fired disgruntled employee, even? Donny: you really had us going with that whole "look at me I go up the country and I swim in a lake and I buy antiques and I bottle my own maple syrup" routine, you sick sick sicko. Touché, Rug Boy. Touché indeed.)

John Travolta: Hamilton to Reno Tahoe Int'l on his Boeing 707-100

(Ah, yes. The old "fly to Vegas to create the illusion that I'm about to engage in some casual heterosexual cheating on my wife with a show girl, gambling like a 50 year old frat boy" shtick. John? Not on our watch.)

Blackstone Group: Bermuda Int'l to Southwest Florida Int'l on its Raytheon Hawker 800

(Don't even get us started.)

Bruce Carton over on Securities Litigation Watch points out that the latest issue of Fortune magazine has an article on our favorite (alleged) Insider Trading scammers. It’s got everything! Juicy details from the SEC interview with David Pajcin to the first ever media interview with Eugene Plotkin. Hotness.

The article states that in response to the SEC's question, Pajcin

admitted advising many of the people involved in the case to buy Reebok, but only because he thought the stock was a bargain, not because he knew anything about a pending merger.

Plotkin held forth for the better part of seven hours on that subject, talking at mind-numbing length about the metrics he said he had applied to the stock. The SEC's Black then summarized this at length, concluding, "Have we covered all the components of your analysis with respect to Reebok specifically that you can remember, sitting here today?"

Pajcin added a few things: "The correlation of volatilities, historical and implied in terms of the S&P and just a general strong dropoff in the five-day volatility, making new highs, so those are all things I look at."

Pajcin might be a crook but at least he’s a crook whose got nonsense financial speak down cold.

Alleged crook. Whatever.
Fortune Article: "Partners in Crime" [Securities Litigation Watch]

Have you checked out one of our niftiest new features, the DealBreaker Forums? Over to your left you'll find a link to the place where DealBreakers, DealMakers and DealShakers go to post about whatever is on their mind. Go check it out. It's the reader controlled area of your favorite website--where you call the shots.

One recent discussion was sparked by someone using the handle "Black Capitalist" asking how he could get work at a hedge fund. Our favorite answer so far came from reader PinstripePikey: "The way I did it was to get a degree in the geekiest subject known to man, particle physics, and then take aim at the quant-driven funds. Not sure this is for everyone though."

String Theory is the new Black-Scholes.

What's the best way to break into hedge funds? [DealBreaker Forums]

Over on Wall $treet Folly we just came across this bright and shiny news—more than half of you MBA types are effin’ cheaters!

When it comes to cheating in graduate school, a new study finds that M.B.A. students are the champs. A survey of 5,331 students at 32 graduate schools in the United States and Canada found an "alarming" amount of cheating across disciplines, but more among the nation's future business leaders. Fifty-six percent of graduate business students admitted they had cheated at least once in the last year, compared with 47 percent of non-business students.

The students, who were surveyed between 2002 and 2004, told researchers from Pennsylvania State, Rutgers and Washington State Universities that the most important reason for cheating was that they thought that other students were doing it.

It’s not hard to see how you get from “other students were doing it” to the “everyone was doing it” defense of backdating.

Survey: M.B.A. students more likely to cheat [Philadelphia Inquirer via Wall $treet Folly]

Gary Weiss, author of Wall Street Versus Americapoints out that today is the close of the comment period for the Securities and Exchange Commission rule proposal on "fails to deliver" securities—basically, the anti-naked short regulation.

As he notes, the National Coalition Against Naked Short Selling—described by Weiss as an “”astroturf’(phony grassroots) group pushing the agenda of penny stock promoters and CEOs of foundering companies”—has submitted a 23 page comment letter. We were just about to pull it up to see exactly what NCANS were going to say, but fortunately Weiss saves us the trouble.

...I was looking forward to seeing that evidence when the anonymous NCANS said on its various anonymous websites it has got 1,100 actual people to send in their signatures to the SEC. I said to myself, "Surely these people are going to scribble in a note about what happened to them!"

But when I saw what the NCANS was sending in, all I saw were signatures below a statement saying that "The undersigned have been negatively affected by delivery failures of equity securities in the U.S. markets, and by the crediting of security entitlements in quantities far in excess of the issued securities they claim to represent."

Just name and address. No space for "what happened" or "what stock I owned that got counterfeited or naked shorted or stuff."

So they still haven't provided a single example of a company being hurt by "stock counterfeiting" or "naked short selling."

Annals of Baloney (continued) [Gary-Weiss.com]

Wall Street Journal reporter Ann Davis has a long profile in today’s paper on Brian Hunter, the energy trader whose energy trades brought Amaranth’s assets from $9 billion to around half that. It’s too long to properly excerpt, so go read the whole thing. The interviews with Brian (we’ve been thinking about him so much lately we’ve decided we’re on a first name basis) seem to have taken place months before his recent troubles but it is still fascinating to read.

The juiciest bits details Brian’s fiery relationship with his former employers, Deutsche Bank.

Mr. Hunter personally generated $17 million in profit in 2001 and $52 million in 2002, according to a complaint he later brought in state court in New York. By 2002, he pulled down more than $1.6 million in salary and bonus and began supervising the gas desk in 2003.

In December 2003, just as his group was close to ending the year up $76 million, he claimed in the suit, things went awry. In a single week, they had losses of $51.2 million, he said in the suit. He blamed "an unprecedented and unforeseeable run-up in gas prices" along with "well-documented and widely known problems with" Deutsche Bank's electronic-trade-monitoring and risk-management software, which he said hurt traders' ability to extricate themselves from bad trades. Deutsche Bank denied its systems were to blame.

Mr. Hunter argued that even though the desk as a whole posted a loss, he personally made trades that netted the bank $40 million that year. He and his natural-gas colleagues got no bonus. By February 2004, relations had soured to the point that supervisors locked him out of the trading system and made him an analyst, moving him off the desk. Mr. Hunter left in April and subsequently sued over the withheld bonus and claimed Deutsche Bank defamed him. It denied the allegations. The suit is pending.

There are also hints that the seeds of Amaranth’s current troubles may have been planted when the much more conservative energy trader Harry Arora left the fund to start his own energy trading outfit last spring. Brian became the head of the energy trading desk at Amaranth, and moved operations up to Calgary.

Mr. Maounis, the head of Amaranth, took a chance on Mr. Hunter. Amaranth was one of the first hedge funds to build an energy desk soon after the demise of Enron, under the leadership of former Enron energy trader Harry Arora. Messrs. Arora and Maounis hired Mr. Hunter and initially kept him on a tight leash. Mr. Maounis says the firm knew of Mr. Hunter's history at Deutsche Bank but did extensive checks and found "nothing that made us uncomfortable."

Mr. Arora was relatively conservative and sought to make diversified commodities investments. He brought Mr. Hunter along and the energy group posted steady annual returns of 20% to 40%.

Mr. Hunter wanted to make bigger bets in his main market, gas. He had an ability to keep calm with huge bets on the line and markets were going berserk. In July 2005, for instance, he was in Calgary at Stampede, a rodeo festival, when the gas market began moving erratically. Mr. Sabad, his former TransCanada colleague, says Mr. Hunter got on the phone a few times but didn't panic or trade from his hotel room. "He asks himself, 'Do I still like my position?' If he does, he adds more," Mr. Sabad says.

Around that time, Amaranth agreed Messrs. Hunter and Arora could separate their trading "books," each controlling his own trades. Then late last year, the double-whammy of Hurricanes Katrina and Rita made Mr. Hunter a hero at Amaranth and a minor legend on Wall Street, as he made $1 billion for Amaranth.

You have to wonder whether the fund would have placed as risky bets as it did if Arora was still there.

How Giant Bets on Natural Gas Sank Brash Hedge-Fund Trader [Wall Street Journal; subscription required]
[Free Version of the Same Article]

The “Wasserstein 2006 Reunion” was the kind of party you’d only want to attend if you were being paid to do so and lucky for me, I was. Cash bar, a bizarrely decorated alleyway type venue in midtown, and a Mariachi band: it had all the trappings of disaster. (Actually, that’s not fair; in the right setting, a Mariachi band can be a real crowd pleaser. Here, though, they just looked uncomfortable). A man who plunked down $26.5 million on an apartment, whose magazine (New York) is said to be losing money, who “should be embarrassed about his clumsy attempt to cash in on Carl Icahn’s failed take-over of Time Warner,” as reported by Vanity Fair, is in no position to be throwing a soiree, unless it’s the kind where guests are expected to bring canned goods and warm blankets from which the host can benefit. Unfortunately, I’d recently gone on strike regarding Graydon C.’s publication, after the assault on the senses that was Jane Sarkin’s “They’re Not Crazy, Everyone Else is Crazy, Sick, Even” Tom and “Kate” Cruise piece—truly, it’s a wonder I can still see, feel, smell, live—and having not read the elucidating sound bites beforehand, was unaware of what I was getting myself into.

Yes, I skipped out of work Thursday afternoon thinking happy thoughts like “open bar” and “nice décor” and “swing band,” only to be smacked in the face by heavy hand of reality upon my arrival at “Moda.” Oh how I thought about turning on my heels and saying “No, John, this is where I put my foot down. The balloon animals, the baby goats, the bookie named Snakes, all that I said yes to, but this is where I draw the line.” But I couldn’t, because I was being paid to go inside; and if I had to go inside, then damn it, I was going to take a friend in with me. But who? Such an event was only worthy of one kind of friend: the kind who still hadn’t been adequately punished for throwing up in his suitemate’s bed, say, two nights before graduation last May. Lucky for me, I had one such friend. So I made a call, waited outside kind of sketchily, and at 6:15, Pete and I braced ourselves for the worst, him more so, because he was doing this without compensation. But whatever the terms, we—me as the prostitute and he as the whore—were in this together for the long haul.

Floyd Norris writes today about the Los Angeles Times standoff with the Tribune Company, which has demanded layoffs at the paper. Unfortunately, Floyd Norris’s blog is buried behind the Times Select firewall (you know, that weird system in which the Times jams its own signal so that no one can find out what some of its most interesting writers are saying).

Fortunately, Romenesko today provides some choice excerpts. Our favorite is the claim that "Companies that follow [Wall Street's] advice, and still do not produce results, are treated far worse than those that produce results after ignoring Wall Street."

This strikes us as fitting into the category of probably true. We haven’t seen any studies on it—it’s hard to figure out how to even begin to quantify something like “following Wall Street’s advice—but it makes sense. If a company balks at the Street’s advice and continues to have trouble, well there’s probably still some value left in the company just waiting to be unleashed by better management (ie, management that will listen to Wall Street). If a company follows the Street’s advice and still fails, well you might just have a broken company on your hand.

"Trying to keep Wall Street happy did little for Tony Ridder" [Romenesko]

A military coup is apparently underway in Thailand. Tanks have surrounded the main government building in Bangkok. Thai Prime Minister Thanksin Shinawatra is in New York for the United Nations General Assembly, which is said to be changing its schedule to allow him to address the body tonight.

According to a Red Alert from Stratfor:

“The tanks moved in shortly after Thaksin issued a state of emergency and ordered army Commander in Chief Sondhi Boonyaratkalin to report to Deputy Prime Minister Pol. Gen. Chidchai Wannasathit. It is unclear whether this is an attempted coup, preventative military action or a countercoup.

Meanwhile, things are relatively calm in Bankgkok. No soldiers have been patrolling the streets, no curfew has been declared and the airport is open.”

Thanksin is a wealthy businessman who has championed free-markets, economic stimulus and welcomed foreign investment. He has been popular in Thailand but has recently come underfire for corruption after his family sold a $1.88 billion stake in Shin Corp, the conglomerate he founded in 1983, to the Thai government. It apparently didn’t make opposition members any happier when it was revealed that the entire transaction would be tax-free and was made when share prices were at an eleven-year high. Thanksin defends the sale by saying it was an effort to eliminate conflicts-of-interest stemming from his family’s business connections.

The US and Japan are major trading partners with Thailand. The US is the largest importer of Thai goods and Japan is the largest exporter into Thailand.

So which US companies or investment funds have the most to lose in a Thai coup? We’re gathering together what information we can. Send us any information you might have: tips (at) dealbreaker (dot) com.

For now we’re trying to reach Quest Management’s Lance Depew and Doug Barnett, who run the only Thailand-specific foreign hedge fund—the $225-million Thai Focused Equity Fund.

Military Launches a Coup in Thailand [Associated Press]

A key part of Dick Grasso’s defense against Eliot Spitzer’s lawsuit is the claim that the directors of the NYSE understood what they were doing when they approved Grasso’s compensation. We always figured this was a pretty strong line of defense—the folks on the NYSE board were hardly financial innocents and it seems pretty likely they didn’t just accidentally hand Grasso $190 million.

Reading about this exchange at a recent hearing, however, has got us rethinking this.

New York Supreme Court Justice Charles Ramos in a hearing yesterday asked Grasso's lawyer to name members of the NYSE's compensation committee who said they were aware of how the exchange determined Grasso's pay and benefits. New York Attorney General Eliot Spitzer is seeking more than half of Grasso's $190 million in compensation, claiming it wasn't properly disclosed to directors.

"We impose a duty upon CEO's to be transparent," Ramos said during the two-and-half-hour hearing in Manhattan. "Shouldn't Mr. Grasso have said, 'Let's show them the range of consequences that flowed from this compensation'? Richard Grasso has to have had an idea of what was going on. Wasn't any effort made to inform the board?"

Grasso's lawyer Gerson Zweifach said NYSE directors have testified under oath that they knew how the total pay package was calculated when it was approved.

"Lots of directors testified they understood the formula and they knew what they were doing," said Zweifach.

And, on an almost completely unrelated note: do you think Grasso is hoping Spitzer gets elected Governor? After all, if Spitzer is gone from the Attorney General’s office, it might become easier for Grasso to convince the new AG to drop the case or settle on the cheap. Then again, Grasso could be so bitter at Spitzer that he doesn’t want to see the guy rise to higher office.

Grasso Judge Focuses on NYSE Board [New York Post]

Talk about burying the lede! This Wall Street Journal article about the legal case against those involved with the Hewlett-Packard pretexting scandal spends lots of time going through boring legal stuff before it gets to the juice—HP’s outside lawyer Larry Sonsini was pretexted!

This is more than a little ironic because Sonsini wrote emails to a board member which seemed to defend the practice. We wonder if he knew he was a victim himself.

What’s more, we wonder if his other clients knew this. Has Sonsini informed his other clients about possible confidentiality breaches? If private investigators have records of his calls, they know exactly who he was talking to and when. In the world of high-powered lawyering, this information can be very valuable (to snoopers) and hazardous (to clients).

We asked earlier if Sonsini was a villian or a scapegoat in the Hewlett-Packard scandal. Now we know he was also a victim!

Internal Security Expert Told H-P Its Leak Probe Might Be Illegal [Wall Street Journal]

Our first thought on reading that Stanley O’Neal, CEO of Merrill Lynch, was going to be deposed in a discrimination case brought by a black employee in the bank's Nashville office was: huh?

If you were bringing a case alleging racial discrimination, would you really want to bring attention to the fact that the CEO of the company you are suing is black? Or that the company you are suing is the only major Wall Street firm lead by an African American? Seems kinda like a bad idea.

Our second thought: pure effin genius.

O’Neal joined Merrill in 1986 as a vice-president and undoubtedly must have encountered some bigotry in his time there. As hard as it may be to understand in this age of mandatory diversity training and affirmative action, in 1986 we were less than twenty-years away from the passage of the civil rights act. There were still a lot of people working at the bank who could remember the days when racial discrimination was not only legally honky-dory but actually mandatory in some parts of the country.

This is speculation. We have no idea whether O’Neal personally encountered discrimination at Merrill. We do know he is on record as not being satisfied with the progress of diversity at his bank. And this itself might be useful to the plaintiff, George McReynolds. After all, if progress has been slower than the CEO would want, it definitely opens the question: how come?

So bringing in O’Neal to testify may be a very, very good idea.

Merrill Lynch CEO to Give Deposition [Associated Press in the Houston Chronicle]

It had to happen sooner or later. The nomination phase of our Bond Biz Hotties Contest is quickly drawing to a close. We are setting a deadline for nominations: Wednesday, at 5 PM.

You still have time to submit your favorites. Remember this contest is open to anyone in the bond business. Sales, trading, even back-office administration. So get your nominations in now. Don’t delay!

A request: The nominations are coming up a bit short when it comes to the ladyfolks. So please send in some female nominations.

Here’s a quick reminder of the rules.

And a quick note: You don’t need anyone’s permission to nominate him or her. In fact, you probably shouldn’t even tell your hotties you are nominating them. You see, we have an iron rule that we will not honor requests from the nominees that they be removed from the contest. So go on and nominate those hotties. They can’t do a thing about it. (We're even going to keep the identities of the nominators secret unless they request otherwise.)

Well, that’s just about everything you need to know about the first ever DealBreaker Hottie Contest. Just send us more nominations for America's hottest bond boys and girls, by email (to tips AT dealbreaker DOT com, subject line: "Bond Hottie"). Thanks in advance for your submissions!

Crime/Fraud/Legal/Investigations/Inquiries:
KPMG suing former employees seeking compensation for costs of tax shelter law suit [legal]
CA may recover some money lost to executives in accounting scandal [legal]
The story of how the court approved overseer came to recommend Bristol-Myers Squibb dismiss its CEO [legal]
Ex-Enron executive gets sentenced to two-and-a-half years [legal]
Now Europe is getting in on the anti-online gambling arrest game [legal]
Richard Volpe, former NYSE trader accused of fraud, found not guilty [legal]
HP criminal cases may be very difficult to prove [legal]

M&A: [? = not yet closed, problems with the deal, lingering questions, etc.]
GE and Lonestar target Japanese bank for takeover

For Sale/ LBOs/ Going Private/ Auctions/ Offerings:
Big week for IPOs [Offering]
Guidance files for IPO [Offering]
Dick Parson’s readies for cable company IPO[For sale]

Money Raising:
PeakStream raises $17M [$$]

Earnings:
Wall Street’s big five still going strong [Earnings]

People & Moves:
Echostar names vice-chairman as president [Upgrade]
Revlon ousts chief executive [Ouster]
Home Depot chief may get a pay cut [Pay cut]

Miscellaneous:
Amaranth losses rattle nerves but not quite a LTC [Hedge funds]
Warren Buffett gets hit with competition from private equity [Private equity]
Three former TL Ventures partners running Guggenheim Partners‘ new venture capital biz [Venture capital]
Richard Branson opening US Charity [Charity]
Carl Icahn getting more seats on ImClone board [Boards]
Ed Rogers launching Japanese hedge fund [Hedge fund]

Retailers See Strong Sales for Holidays (NYT)
Chalk it up to season creep. We're barely out of Summer Driving Season, and we're already talking about Winter Shopping Season, the time when people of all faiths go deep in to debt to buy junk for their loved ones. The more cynical among us might even describe it as Economic Fallacy Season, as reporters buy hook, line, and sinker the idea that consumer spending is good for the economy. Never mind the fact that credit card debt only contributes to our savings problem. Never mind the fact that people don't get as much utility out of gifts as they get out of products they buy for themselves. And never mind the fact that the Holiday causes a major disruption to industrial output. And then there's all of the economic friction associated with temporary employment, parking, headaches, family fights, stores shutting down, etc. Still, do your part and help the needy... a needy retailer that is. Rumor is that Eddie Lampert wants a stake in the Gap. Help them out.

Fed Confusion on Policy Impact May Increase Dangers for Economy (Bloomberg)
Is it that outrageous, considering the impact that the Fed members have on our economy, that we expect them to be soothsaying oracles? It seems like a pretty reasonable request to us; if you're gonna make such important decisions, then get it together. But as we wait today, on Fed eve, it's apparent that not even the Fed itself knows what its thinking, or understands what's going on with the economy. It's nearly unanimous among economists that at tomorrow's meeting the Fed will keep rates steady, but as usual, it's all about the cryptic language that follows. And since many of the Fed governors are in disagreement about what's going on, or in what direction the Fed should take rates, expect some maddeningly deliberate obfuscatory language to happen. We'll be here to parse for your benefit.

Amaranth’s Loss Rattles Nerves, Not Markets (Dealbook)
There was a lot of talk about the big blowup yesterday, Amaranth's staggering losses due to natural gas bets made the wrong way. Comparisons to LTCM were made, and all of the financial news houses trotted out their old standby article examining whether a hedge fund collapse -- or many of them in succession -- could trigger any sort of confidence crisis or even meltdown of the global financial system. But all the chatter was just chatter; the markets didn't seem to notice. And it's not like Amaranth was small; it's losses were equal to those of LTCM! The biggest blow to the economy might be if the Amaranth loss induces further regulatory scrutiny of the industry.

Whole hog (Oligopoly Watch)
Unabashed agricultural commodity sluts that we are, we'd be remiss not to mention a significant merger in the pork products industry. This week, Smithfield Farms, the the #1 hog producer and #1 pork packer announced the buyout of Premium Standard Farms #2 hog producer and #6 pork packer. The move comes amid significant consolidation in the industry, and lets Smithfield play both sides of the pen, so to speak. It's now playing both the processing and supplier sides of the business, which increases both the risk and, naturally, the opportunity for upside.

$$$National Lampoon on Ken Lay's last day. (Obviously, somewhat of a conflict of interest for us, considering the fact that we've got proof that K-Lay's alive and well and adding pictures to his Flick'r account from the Jersey shore). [Wall Street Folly]

$$$Clubs slightly more exclusive than the West Garden Spa, but with same amenities. [Forbes]

$$$5'8" investment banker who scored "You are Walter 'Gib' Gibson" on his "What John Cusack Character Are You" Quiz seeks 5'4" Diane Court, maybe Cassandra Eldridge, but NO FUCKING Alison Bradburys. [Craigslist]

We once had dinner with a cynical old man who told us that one of the main purpose of legislative hearings was to solicit political donations from the industry being scrutinized. The same guy also told us that it was wrong to think of regulatory agencies as being captured by special interests over time. Those agencies are created by legislators at the behest of the industries that have paid them off. We’d like to think this was all just political paranoia, but the man also happens to be one of our most prominent federal appeals court judges.

We’ve never seen a better example of this than the hedge fund regulatory mess. Reading the story of how more and more hedge fund money is being sucked into Washington DC reminds us of the scenes from the Godfather II where the young Vito Corelone learns how Don Fanucci controls the neighborhood. Political scientists have a technical term for this kind of thing: shakedown.

Hedge fund cash flows ahead of U.S. election [Reuters on MSNBC]

The Vault.com’s annual employer survey is out. They interviewed 600 bankers and produced a list of the the top 50 banks. The top ten:

Goldman Sachs
Morgan Stanley
The Blackstone Group
Citigroup's Global Corp. & Inv. Bank
J.P.Morgan Chase
Merrill Lynch
Lehman Brothers
Citigroup
Credit Suisse First Boston
Lazard

Click here for the entire list.

The Vault survey also asks other interesting questions, such as which bank’s employees are most satisfied with their compensation (Goldman), which managers treat the employees the best (Lehman) and which is the gayest bank (Well Fargo).

But speaking of compensation, it’s just about time to crank up the old Bonus Tracker machinery. This year is set to be a big year for bonuses, and we need to know everything. When are bonus announcements going to be made, who is getting paid how much and what kind of rumors are already circulating. Email us the information. We’ll keep protect your identity with the famous DealBreaker Guaranteed Anonymity. ™

Top 50 Banking Employers: 2006 Rankings [Vault.com]

The Steven Cohen profile we mentioned earlier is not surprisingly drawing increased attention to Cohen’s investments. One of the first things we did after reading the story was pull up the SEC website and search for filings disclosing SAC investments. (Ed: Hey—maybe this is the whole reason Cohen opened up to the journal, because he wanted to attract some attention, and additional investment money, to the investment’s he’s already made. JC: Woah. Slow down there. Even we aren’t that cynical. Yet.)

Today Peter Cohan of Blogging Stocks takes a look at SAC accumulation of more than 5% of AC Moore Arts & Crafts Inc, a money losing arts and crafts company. Cohan tries to figure out what Cohen might be thinking in making such a large investment in the company (although he admits that if he knew why Cohen made his investment decisions he’d probably live in a bigger house).

The short of it is that Cohen may be looking at three factors: timing (the stock was way down when he bought it and rose shortly afterwards), undervaluation (six analysts were projecting big growth for the company when Cohen bought in), and seasonality (the company tends to do well in the fourth quarter while losing money in the first three). Each is more fully explained on Blogging Stocks.

This kind of analysis goes along with what the Journal article suggests—that Cohen may be adopting a more fundamental based investment strategy.

Who is Steve Cohen and why is he betting on art supplies? [Bloggingstocks.com]

Warren Buffett is in Israel now, touring the facilities of Iscar Ltd., the metal-cutting tools company his investment company acquired for $4 billion two-and-a-half months ago. The company is located near the Lebanese border and was briefly shuttered during the recent outbreak of warfare there.

Buffett has reserved the entire King David Hotel in Jerusalem for his entourage. It certainly sounds grand but according to some recent visitors it is less than kingly. As the blog Hotelchatter explains:

Will the King David Hotel be ready to serve an American billionaire and his entourage? Based on the hotel's track record the chances of this are slim to none. The hotel staff has been painted as one horrible picture by many recent past guests. On top of that, many find the hotel in desperate need of renovations and better food. None of this is hard to believe since the royal suite is shamelessly boasting a VCR. Who is Buffet's booking agent anyway?

But this might be unfair. The hotel’s “roytal suite” boasts a “VCR and FAX.” It doesn’t really get much better than that. Oh, wait, it does. He’s got a “jacuzzi bath” in his suite.

This probably makes DealBreaker’s infamous inquiry into whether Warren Buffett is going to hell a bit outdated. He may already be there.

Warren Buffet Likes Outdated Hotel Suites [HotelChatter.com]

When we started this thing over here at DealBreaker, one of our metrics for determining whether the existing financial journalism was doing a good job was whether or not people knew the name Steven Cohen. A man whose hedge fund, SAC Capital, can be responsible for up to 2% of all Wall Street trading activity on a given day surely deserves to be a household name. But, sadly, we discovered almost no-one outside of the immediate world of Wall Street and hedge funds knew about Cohen.

Part of this was Cohen’s doing, so it’s not entirely fair to blame the financial press. He’s been famously media shy. So we were pleasantly surprised on Saturday morning to open up our copy of the Wall Street Journal’s weekend edition and find a profile of the Greenwich resident. Not just any profile—but a lengthy profile that included interviews with Cohen, his family members, as well as looks inside his home and office.

Our favorite part was learning that Cohen’s mother—until her death last year—regarded Cohen as lazy. She believed that the family’s foremost financial expert was Cohen’s brother, a Florida accountant. Never mind that Cohen was the fourth highest paid hedge fund manager. Why wasn’t he in a nice, normal and secure profession like accounting?

Less juicy, but perhaps more relevant to the markets, is the news that Cohen might be switching strategies. Long famous as a fast-trigger trader, getting in and out of positions quickly based on market direction predictions, Cohen indicates he may be moving to other strategies, including holding some positions for up to a year. His reasoning is clear enough—with more and more funds looking to make fast money on under-priced assets, the opportunities are becoming ever scarcer.

The Hedge-Fund King Is Getting Nervous [Wall Street Journal]

So who is this Brian Hunter we mentioned in the previous item about the huge losses at Amaranth Advisers? We haven’t been able to track down a picture of him yet but we’ve collected some details on young man who came to head his fund’s energy trading desk at the age of thirty-two.

Earlier this year, Trader Magazine ranked him at 29 in its list of top one hundred traders. He’s said to have made $800 million for the fund in 2005—much of it from the skyrocketing price of natural gas in the wake of hurricane Katrina—and was paid somewhere between $75 and $100 million. When he decided he wanted to leave New York for his native Calgary, Amaranth set up an office there for his team.

Hunter’s role in the losses his fund expects to suffer as it unwinds its natural gas position is not yet known. One source familiar with the market for energy trades told DealBreaker he believed Hunter had made trades this year similar to his winning 2005 bets and got caught out when 2006 produced a much calmer hurricane season and new oil discoveries in the Gulf of Mexico.

Calgary trader, 32, among world's best [Financial Post]

Bad bets on natural gas have led to giant losses at Amaranth Advisers, CNBC’s David Faber is reporting this morning. Until August, the Greenwich, Connecticut hedge fund so its assets grow 22% this year, to around $8 billion. Now its natural gas trading has the fund down 35% . Faber also reports that Amaranth is in the process of unwinding its natural gas positions and has thus far made all margin calls. So despite outsized losses, it isn’t yet completely melting down.

The energy trading desk at Amaranth has been led by Brian Hunter since Harry Arora left the fund in March of this year.

At least for now. Ford has announced that it will continue production of Wall Street’s favorite chariot, moving production to Canada when it shutters a Michigan plant where the car had been produced. So it looks like we won’t all be confined to Goldman Sachs-style hybrids just yet.

Oh Happy Day: Town Car Keeps Rollin [New York Post]

Crime/Fraud/Legal/Investigations/Inquiries:
Aeneas Capital Management under investigation by regulators in the U.S. and Malaysia [legal]
Refco creditors will receive about $2.1 billion out of $3.6 billion owed [legal]
Judge allows AIG lawsuit against Hank Greenburg to go forward [legal]

M&A: [? = not yet closed, problems with the deal, lingering questions, etc.]
Ford + GM: ?
Liberty Media’s swap for DirecTV.
Telecom Italia buying Time Warner’s AOL Germany division
Talk of airline mergers spreads
EMC buying partner

For Sale/ LBOs/ Going Private/ Auctions/ Offerings:
Ventana Medical Systems declines to raise big for Vision Systems [Auction]
Motorola looks like it will win Systems Tech auction [Auction]
Sunlife looks for a partner [For sale]

Miscellaneous:
Warner Music signs deal with YouTube [Video]
Drier acquires boutique bankruptcy firm [Lawfirm]
CA directors under fire before shareholder meeting [directors]
Putin reacts to slaying of central banker [Russia]
HP spying scandal goes even deeper than you think [HP]
Boston not so impressed by Philippe Stark [Building]

US Treasury chief backs strong dollar (AFX)
As we've said before, we've never been quite sure what the Treasury Secretary really does other than to jib-jab, jibber-jabber, and jawbone the dollar. If that were his job description, for real, it would explain why most articles about anyone in that position concern their opinion of the dollar. And most of the time, they claim to support a strong dollar. Even when they support a weak dollar, they actually support a strong dollar. Like when John Snow would say "The dollar needs to weaken for us to close the trade gap... but I still support a strong dollar." What the hell was that? It seems they can't really do their job, since somehow it's unpatriotic to support a weak dollar. So, just in case there were any question about it, Hank Paulson supports a strong dollar. Good man.

Ford, GM said to have talked about combining (Reuters)
A Monday without several merger announcements always feel a little bit hollow, doesn't it? It makes you wonder what all the executives and bankers were doing over the weekend? Must've been wasting their time. To be fair, it was a great summer weekend in NYC, and there won't be too many more like it this year, so perhaps all the bankers insisted on postponing all the deals one more week. So, in the absence of a merger, here's an interesting story alleging that GM and Ford have talked about combining, though the talks aren't ongoing, and they haven't gone all that far. It's hard to imagine that the combination would yield anything more than a heaping pile of garbage, which was probably recognized early on in the talks.

Warner opens video library to YouTube (FT)
Recognizing the power that YouTube has a promotional tube, Warner Music has agreed to open its videos up for the site, and make them available to fans for, ahem, mashing up. That's when kids, like the guy on the Apple vs. PC ads take a video and re-edit it in some way (usually to make it worse). It's great that people will be allowed to do that -- for real it is -- but we shudder to think of the word mash-up getting bandied about during a high level legal discussion between the two companies. Did the suits at Time Warner have some 19-year old kid sit in on the discussions translating all the new netspeak for them?

Is 'Dr. Z' Kaput as Chrysler's TV Pitchman? (WSJ)
Say it ain't so. It looks like Chrysler may move on from the 'Dr. Z.' ads featuring CEO Dieter Zetsche. We like ads with chief executives in them. Others, though, have seen the ads as duds. As one advertising expert put it "Dr. Z was a crazy move, We are not in an era where CEOs are seen as rock stars." Yes we are goddammit. And if we're not, we should be. Thankfully, nothing is official yet. But recent announcements of steep losses at Daimler may push the company to go in a new direction advertising-wise. One humorous result of the commercials is that many viewers mistakenly assumed that Dr. Z was a made up person. Hmm, did people think that the Dunkin Donuts man wasn't the CEO either? He was, right? Right?

$$$Jim Cramer's bobblehead dolls are the 3rd most popular item on NBCUniversalStore.com, which he no doubt has us to thank for. Buy yours while you still can. [Page Six]

$$$Throw this gem in the cart too, while you're at it.

$$$Swiss Re building for sale, DealBook taking liberties with synonyms for male genitalia. [DealBook]

$$$Suits. (Lay off me, it's Friday). [Banker's Ball]

We're not really ones for CNBC. We interned there a few summers ago on the wildly successful "McEnroe Show" and caught a glimpse of Maria up close without her make-up on one time and kind of got turned off to the whole thing entirely. Later, after the trauma counseling, we tried to force ourselves into a little Mad Money every now and then, but it just didn't take. Nonetheless, some important changes are happening over in Englewood Cliffs and it would be grossly negligent on our parts if we didn't keep you in the loop. You've got to have your fingers on the pulse of this red hot network, we know, we know.

+Glen Rochkind: CANNED
+Patti Domm: New supervisor of markets and economics coverage
+Steve Lewis: Desk's chief planning officer
+Tom Busby: Principal assignment manager
+Jim Connor: "The quarterback on the Desk between 10 a.m. and 5 p.m."

We've also got the memo Senior VP Jonathan Wald sent to staffers, per changes. It's less about trust falls and hand holding and more about "I raised you to be a winner, so dammit boy, win!" The "anniversary of 9/11" is, of course, cited as an obstacle the team should pat itself on the back for successfully overcoming.

Changes on the CNBC Biz News Desk [TV Newser]

Full pump-up speech after the jump.

Following the merger of its US and British hotel division, Hilton Hotels has started to identify partners in China, as part of its much hyped international expansion. Co-chair and chief executive Steve Bollenbach said that the company is aiming for a 7% growth, with its focus on development in China, India and Eastern Europe.

President and COO, Matt Hart noted: "We are going to target the big opportunities in the big markets. If our target was to have 200 hotels open, we would like to do that in big slugs - 50 to 75 hotels in three different countries, versus five hotels in 20 or 40 countries. We outgrow everybody in the US ... We will continue to grow in the US. This year we will add 225 hotels. But growth 10 to 20 years from now [must] come from outside the US."

Hilton Seeking China Partners for Expansion [Financial Times]

In a move that we find to be offensively below the belt, as it were, Dick Grasso tried unsuccessfully yesterday to remove Judge Charles E. Ramos-- Chuckles, to us-- from his trial versus New York attorney general, Eliot Spitzer. Pint-size Dick (seriously, the guy's like 5'2") claimed that Ramos was too involved in the case, citing the fact that his résumé had been circulated not once but twice to the NYSE by a placement service. Ramos, because he's freaking awesome, gave Dick the proverbial finger and denied the motion. Spitzer, who's got his panties in a bunch over the former NYSE chair's compensation package, called Mr. Grasso's attempt "deceitful, disingenuous and dishonest."

[Full disclosure: We've got a well-documented thing for Charles Ramos]

Judge in Grasso Pay Lawsuit Refuses to Remove Himself [New York Times]