Christian Plumb

More consolidation may be coming to the world of private equity lenders. Debt-laden Allied Capital solved its long-standing problems last week when it sold itself to Ares Capital. Rival American Capital, once an S&P 500 component but now struggling for survival, could be the next takeover target.

But some investors wonder if Allied got a raw deal. Ares paid $3.47 a share in stock for a company that had a book value of $7.49 in June. One law firm has already launched a "shareholder investigation". Similarly, American Capital's shares trade below $3, compared with a book value of $8.76 at the end of June.

Ares Capital is one of the rare healthy players in the field. It has a strong balance sheet and minimal liquidity concerns, and it has managed to pay a dividend throughout the worst U.S. recession since the Great Depression. For an Allied shareholder used to a continuous flow of bad news, swapping that stake for an investment in a healthy company must seem like a good move.

Like Allied, American Capital has suffered as the recession reduced the value of the companies it invested in. As a result, it's gotten harder to sell them except at distressed prices. That value reduction is a big blow for a cash-starved company that has already defaulted on $2.3 billion of debt.

Both American Capital and Allied have sold portfolio companies at heavy discounts to their purchase prices. Now with equity markets sharply up from their doomsday-scenario lows in March, American Capital is on an aggressive selling spree. Recently it sold components distributor Imperial Supplies to W.W. Grainger and life sciences equipment maker Axygen BioScience to Corning.

Unfortunately for American Capital, it may not have all that many more companies in its portfolio to sell at decent prices. Its best bet may be to find a healthy suitor for itself so it can return some capital to shareholders before it’s too late.

-- Anurag Kotoky

His past subjects have included Lehman Brothers' Dick Fuld, AIG's Hank Greenberg and Bear Stearns Jimmy Cayne.  So when Brooklyn-based artist Geoffrey Raymond, 55, decided to do a portrait of Ken Lewis it wasn't exactly something to celebrate for the embattled Bank of America CEO.

Like a grim reaper of high finance, Raymond was proudly exhibiting his latest work on a balmy Wednesday afternoon outside Bank of America's new Manhattan tower. His latest is a rendition of the now-famous photo from Lewis' Feb. 11, 2009 testimony before Congress.

Lewis is downcast, his scowl on full display.

Raymond's art is an interactive experience -- he encourages people to write on the portraits, venting their frustration, and Lewis' was no exception.

For Raymond, a painting -- the latest in a series of 18 -- that last year would have met with audience furor is now more muted.

After much wheedling and begging with a pair of women re-entering the building,  Raymond got one woman's opinion of Lewis, but had to write it for her after she whispered it in his ear.

"Nobody will know it's you," he said.

The resulting quote, referred to the bank's contentious buyout of Merrill Lynch last year: "I can't believe you sold BofA out. It's the little people who suffer 'cause the ML guys suck!"

Raymond's next project?

A series of paintings in same spirit, portaits of CNBC luminaries (he previously portrayed Maria Bartiromo as the Money Honey) like Erin Burnett, Jim Cramer and Charles Gasparino.

Leaving plenty of room for annotation, of course. -- By Joe Rauch

(Photograph, of a previous Geoffrey Raymond portrait, of Alan Greenspan, by Reuters)

This probably wasn't what Lloyd Blankfein had in mind when he reportedly asked Goldman Sachs employees to cut back on conspicuous displays of consumption.

The New York Post, which screamed the news about Blankfein's order to exercise restraint from its front page on Tuesday, reported on its Page Six gossip column Wednesday that his wife sent a rather different message at a charity event in the Hamptons last Saturday.

According to Page Six, Laura Blankfein and Susan Friedman, wife of Richard Friedman, a Goldman managing director,  "caused a huge scene" as they waited with lesser donors for the doors to open for a charity event for ovarian cancer research.

"Their behavior was obnoxious. They were screaming," one witness told the Post, who added that Blankfein said she wouldn't wait with "people who spend less money than me."

Of course it's not the first time that Wall Street wives' high-falutin' ways have gotten tongues wagging. Former Pan Am stewardess Susan Gutfreund, the free-spending wife of 80's era Salomon Brothers CEO John, was gossip column fodder, as was Henry Kravis' ex-wife, fashion designer Carolyne Roehm.

More recently, an anonymous Wall Street spouse penned a column for Portfolio.com entitled "Confessions of a Bailout CEO Wife" that bemoaned the inability to throw birthday parties at "Michelin hotspots" and other sad side effects of her vow of "financial abstinence."

(reporting by Steve Eder; photo by Reuters)

    The sprouting of privately-held alternative trading venues has seriously mucked up the trading landscapes in the United States and elsewhere, or so says Thomas Caldwell, chairman and chief executive of Caldwell Financial.
    Caldwell, founder of a major exchange investment firm, sees a world that has quickly evolved into one of nimble, electronic players coupled with more and more trading venues with the proliferation of alternative trading systems, or ATSs.
    (They're also called electronic communications networks (ECNs) in the United States and multilateral trading facilities (MTFs) in Europe).
    These new venues, which can include the ominously-named dark pools, or alternative venues, where they can secretly match buy and sell orders, leads to, among other things, "deeply flawed" pricing for market participants, in Caldwell's view.
    The idea of bank-backed stock trading venues is also suspect, says Caldwell.
    "Publicly-owned exchanges, open and visible trading, an auction market environment," he said during the Reuters Exchanges and Trading Summit in New York.
    "These are centerpieces if you really want an economy to grow and you want to encourage entrepreneurs with access to capital. The more we get into gamesmanship and side products and all this other stuff it depletes from this."
    (Posted by Jennifer Kwan)

It's a puzzle M&A bankers and corporate executives have been trying to solve for years: how far from your home market can an acquisition take place and ultimately stumble over cultural differences? It's a question that looms large as quintessentially Italian automaker Fiat prepares to swallow up Chrysler -- inventor of the K-car and the minivan -- and which reportedly haunts St Louis-based employees of Anheuser Busch in the aftermath of their company's takeover by the penny pinching Belgians and Brazilians at InBev.

Gary Katz, CEO of Deutsche Boerse unit International Securities Exchange, insisted during his appearance at the Reuters Exchanges and Trading Summit that all has been sweetness and light since the Germans assumed control of the upstart American options exchange and that there has been "nearly zero turnover" since the takeover.

But Thomas Kloet, Chief Executive of Canadian exchange powerhouse TMX, was one of several executives at the summit who insisted that cross border mergers can often be a recipe for disaster and that the ideal mergers are "domestic roll-ups" like CME Group's takeover of Nymex and the Chicago Board of Trade or indeed TSX Group's takeover of the Montreal Exchange, which created TMX.

Implicitly criticizing some of the first-ever cross border deals in the sector like NYSE's merger with Euronext, Kloet said: "there are significant regulatory differences that make cross border mergers pretty difficult to do, especially when they start passing over salt water, so to speak."

Listen to the attached recording to hear the former ABN AMRO senior managing director's ruminations on exchange M&A in full.

A fertile planting ground for tech, biotech and even some energy offerings, Nasdaq OMX has historically struggled to lure listings in some other areas, notably financial services.

Now, that could be about to change, Nasdaq OMX President Magnus Bocker said at the Reuters Exchanges and Trading Summit. As Nasdaq looks for ways to attract new listings and end a virtual drought in IPOs, it sees financial services firms as one of the most promising areas.

That Nasdaq would at least be hoping to narrow the gap in financial services listings with NYSE, the traditional ruler of the space, is not as out of left field as it might sound.

The exchange has already made some inroads and can point to some recent conquests like CME Group, which moved from a dual listing on Nasdaq and NYSE to a sole Nasdaq listing. Northern Trust, the fund administrator which has weathered the financial crisis with relative ease compared with some larger rivals, is another bright point.

And looking forward, such longtime NYSE stalwarts as Morgan Stanley and Citigroup have both recently been reportedly eyeing spinoffs of high risk units -- like Morgan Stanley's trading desk and Citigroup's Phibro energy unit. And there's even talk that Bank of America could eventually spin off Merrill Lynch.

Remember a couple of years ago, when it was discovered that an executive used his corporate American Express card to pay for $241,000 worth of "services" at a New York-based "gentleman's club" then tried to stiff AmEx on paying the bill?

How might someone explain a $241,000 charge on his or her statement, to his or her boss (or his or her spouse, for that matter)when it gets sent to the home office -- or worse, the home -- at the end of the month?

"Wow, those steaks really WERE expensive."

"We all had dessert."

"There must be a missing decimal point somewhere. I hope."

Well now, that problem might be a little easier to manage as American Express said on Tuesday it will no longer send paper copies of their bill to clients at large companies.

Now, some people like to get their AmEx bill in paper form and some people won't mind that bill floating around the office ... or the living room.

Anyway, what are your thoughts? Will you miss the paper statement or will the online version be just fine?  Should AmEx rethink this decision?

    JPMorgan is cutting 30 percent of its research department, according to two former employees, but the bank is keeping mum about its plans and declined to give details of the cuts.
    David DeRose and Leighton Thomas, co-founders of a Bear Stearns alternative research unit that moved to JPMorgan when that bank acquired Bear a year ago, said on Wednesday they sold the unit to an investment firm largely because they could not hire more staff under JPMorgan's management.
    "If you stay under a research division that's being cut 30 percent, we can't get any headcount," said DeRose.
    JPMorgan intends to shed 1,000 to 2,000 jobs from its investment bank this year, co-investment bank chief Steve Black said at the bank's investor day in February.
    It was unclear whether the cuts DeRose mentioned are included in these figures and a JPMorgan spokesman declined comment.
    Research staff may be an easy target for cuts, since it is hard to quantify their contribution to the bank's bottom line.
    And banks' research divisions across Wall Street have been shrinking since the Securities and Exchange Commission in 2002 banned firms from using banking fees to pay analysts.

By Elinor Comlay

The sunny, secretive Cayman Islands have an image to protect. Bracing for a crush of reporters looking for comments a few weeks before a G20 meeting that may target tax havens like the Caymans, the island's financial officials have a message for hedge funds and others who might get grumpy with a flood of nosy scribblers: don't muss us.

Among the presentation tips for dealing with "surprise" or uncomfortable encounters, the island's Portfolio of Finance & Economics sent around this week:

--Remain calm and pleasant.

--Keep eye contact with the reporter.  Do not look directly into the camera, especially when speaking.

--Do not put your hands over your face or push away a camera.  And do not in any way make physically aggressive movements.

--Use bridging statements to respond to inquiries: "We are not in a position to meet right now, but would be happy to take down your questions and get back to you with answers," which can then be provided in writing.  It's OK to repeat this sentiment ideally, varying the phrasing: "I'm not the best person for this topic but…"

Finally (and this was not in the memo) they can hold out the hope that the media's fascination with offshore funds will fade within a week. After all the G-20 meeting itself begins on April 2 in London and most of the producers, cameramen and scribes will reluctantly follow the story to that decidedly more inclement locale.

The advisory in full is attached below.