Unstructured Finance

Tyrone Gilliams now tries his hand at the law

By Matthew Goldstein

Tyrone Gilliams, the self-styled online preacher, hip-hop promoter and commodities trader, who an investor claims misappropriated his $4 million, is now trying to be a lawyer.

For now, at least, the Philadelphia-based trader is representing himself in a civil lawsuit filed earlier this year in New York federal court by Cincinnati businessman David Parlin. In a court proceeding last week, Gilliams said he can’t hire a lawyer because a judge in a related lawsuit filed in New York state court has put a temporary freeze on some of his bank accounts.

A person familiar with last Thursday’s hearing before U.S. District Judge Jed Rakoff said Gilliams called-in to the proceeding by phone, even though he was expected to appear in court in person. The judge gave Gilliams another month to file an official response to Parlin’s complaint, which claims Gilliams misappropriated his $4 million investment and spent it largely on personal expenses.

Reuters last month reported on the allegations against Parlin and used it as a case study to highlight that even after Madoff and Stanford, dubious investment schemes continue to proliferate. And otherwise savvy investors continue to fall prey to schemes that boast super high returns–even if these investors should no better.

Federal authorities including the Securities and Exchange Commission and federal prosecutors in New York are said to be monitoring the matter, say several people familiar with the situation. But it’s too early to characterize the interest of U.S. authorities as an active investigation. It appears to be more of a wait-and-see kind of response to the Parlin lawsuit and the Reuters story.

Deals wrap: A deal brewing

Molson and Mexico’s Grupo Modelo are exploring a joint bid for Australia’s Foster’s Group, a source says, amid talk further suitors may emerge for the maker of VB and Cascade beer.

Italian fashion house Prada, which is preparing for an IPO of about $2 billion in Hong Kong, says it expects profit to rise as it widens its foothold in Asia. Here are some facts about Prada’s business history and a snapshot of the luxury fashion sector.

Japan Inc’s latest mantra is, with the domestic market shrinking, companies must hurry to make acquisitions abroad. But they should resist the temptation of international M&A adventurism, writes Breakingviews columnist Rob Cox.

Jobs and housing

By Matthew Goldstein

The jobs picture in the U.S. just got markedly worse based on the May unemployment report. And as long as job growth remains sluggish, anemic, pathetic–insert your own adjective–the housing market will remain in the dumps as well.

The only glimmer of good news is the nation isn’t shedding jobs–at least for now. But with the economy adding just 54,000 new jobs in May, that’s not nearly enough to work for all those recent college graduates hitting the labor market and the long-term unemployed who were early casualties of the financial crisis.

And the ugly truth is that until the jobs picture seriously improves the foreclosure crisis will show no signs of easing and may very well get worse.

Bankex falls 1.5 pct

The BSE Banking index ended the day down 1.5 percent with stocks like Yes Bank and ICICI falling more than 3 percent.

SBI shares however bucked the trend and ended marginally in green.

Worries about more rate hikes have been bothering this sector, and banking funds recorded a fall of more than 5 percent in May.

Do you think it is time to invest in banking stocks?

The ties that bind Dan Loeb and Jim Chanos

By Matthew Goldstein

Dan Loeb and Jim Chanos may not be the best of friends, but a five-year-old stock manipulation lawsuit filed by a Canadian insurer has revealed a one-time alliance of sorts between the hedge fund managers.

It appears Loeb followed Chanos’ lead in shorting–or betting against–shares of Fairfax Financial in 2002 after exchanging a series of emails about the Canadian insurer that summer.

Litigation papers in the lawsuit reveal that Chanos initiated the email exchange with Loeb, asking the Third Point hedge fund manager if he was shorting shares of Fairfax. Loeb responded to Chanos’ email by asking whether he should be. Chanos wrote back that in his opinion Fairfax’s  shares were “going to zero.”

Deals wrap: Interest in Borders

Private equity firm Gores Group is in talks to buy more than half of bankrupt bookseller Borders Group’s remaining stores, the Wall Street Journal reports, citing people familiar with the matter.

The Malaysian capital of Kuala Lumpur is shaping up as a hot, if somewhat unlikely, deal-making destination this summer, with investment bankers jostling for at least four plum advisory roles.

The NYT’s DealBook details the high price whistle-blowers pay for telling the truth.

Deals wrap: Selling U.S. banks

The Smart Money 30 group of top hedge funds spent the first quarter unwinding positions in major banks, one of their most successful bets of 2010, and shifting toward investments that can prosper in weaker economic times, like deep discount retailers. Find Reuters’ quarterly package of Smart Money stories here.

Carlyle Group is looking to pick banks to underwrite its planned IPO in the coming month, four sources familiar with the situation said, making it the latest buyout firm to tap the public markets.

Apartment building owner Archstone, whose $22 billion buyout in 2007 exemplified the excesses of the housing boom and helped bankrupt Lehman Brothers, is coming back to the market.