Unstructured Finance

Stevie, SAC and that ticking redemption clock

By Matthew Goldstein and Svea Herbst-Bayliss

The WSJ is out today with a big story saying Stevie Cohen and SAC Capital are bracing for up to $1 billion in redemptions, or roughly 16 percent of the $6.3 billion it manages for outside investors. That’s a lot of money but sources are telling us redemptions will likely come in lower than that—think more in the $500 million range.

And more important, no matter what the figure is, don’t look for it to put much crimp in Cohen’s operation.

The deadline for submitting redemptions is Feb. 15, so there is still plenty of time for outside investors make a decision about sticking around or leaving. And even if an investor puts in a redemption notice now, those requests to withdraw money can get pulled at the last minute if the investor has a change of heart.

So far, the most notable redemption request comes from Titan Advisors, the investment fund run by George Fox, a friend of Cohen. Titan, as we noted has been pulling money from big funds for a while, so the decision may be motivated as much by the latest headlines in the insider trading investigation as much as a strategic shift by the investment firm.

Titan, which had been with Cohen for many years, is believed to have had between $75 million and $150 million with SAC Capital, sources say.  Titan hasn’t yet sent investors  a year end letter formally explaining its rationale for bailing on SAC Capital.

The gold rush in foreclosed homes picks up steam as mad money flows freely

By Matthew Goldstein

Institutional money keeps rushing into the market for foreclosed homes, with some big players snapping up homes at breakneck speed. But the question is whether the big buyers are throwing money around indiscriminately and Wall Street’s big housing long will come up a bit short.

The other day Bloomberg reported that Blackstone Group has already spent $2.5 billion to buy 16,000 homes to manage as rentals and eventually sell them when prices appreciate high enough. Blackstone says it’s finding that the going price for homes sold at foreclosure auctions and out of bank inventories are rising quicker than anticipated.

But Blackstone, which some believe could spend up to $5 billion on single family home space, isn’t alone in racing to snap-up foreclosed homes in states like Florida, Georgia, California, Nevada and Arizona. American Homes 4 Rent, a firm that has $600 million from the Alaska Permanent Fund, is buying up hundreds of homes a month, industry sources say. Colony Capital, the other big institutional player is no less aggressive.

Essential reading: Public goals, private interests in ‘Fix the Debt’ campaign, and more

Welcome to the top tax and accounting headlines from Reuters and other sources.

* Public goals, private interests in debt campaign. Nicholas Confessore – The New York Times. Many members of the ‘Fix the Debt’ campaign are juggling their private interests with their public goals: they are also lobbyists, board members or executives for corporations that have worked aggressively to shape the contours of federal spending and taxes, including many of the tax breaks that would be at the heart of any broad overhaul. Link

* As tax hikes loomed, some CEOs sold stock. Scott Thrum – The Wall Street Journal. As Congress mulled higher tax rates last month, dozens of corporate executives sold big chunks of stock, saving themselves millions of dollars in taxes. A Wall Street Journal review of securities filings found that 58 executives sold stock valued at $10 million or more in December as talks intensified over raising tax rates. Link

* UK Executives split by company tax dispute. Brian Groom and Vanessa Houlder – The Financial Times. Half of the chairmen of the largest FTSE 100 companies believe the public is justified in being angry about how some multinationals minimize their tax bills, a survey has found. Link

Virginia plan to end gas tax quickly panned

Virginia Governor Bob McDonnell, entering his last year in office, offered on Tuesday a bold plan to finance badly needed road work and transportation expansion in the state.

His plan, to end the state’s 17.5 cent per gallon gas tax and replace it with a 0.8 percent increase in the state sales tax, was quickly booed by tax experts, however.

Their argument: removing the tax’s connection to gas would shift the burden of road repairs and upgrades to the broader population from the daily drivers who use roads most.

Essential reading: After Sandy, tax cuts fade from Christie plan, and more

Ortley Beach, New Jersey after super storm Sandy REUTERS Tom Mihalek

Welcome to the top tax and accounting headlines from Reuters and other sources.

 * After Sandy, tax cuts fade from Christie plan. Heather Haddon – The Wall Street Journal. In his annual address to the state on Tuesday, New Jersey Gov. Chris Christie laid out what he said would be a difficult road ahead as the state recovers from Sandy—a somber departure from last year, when he extolled the state’s economic health and centered his agenda around an aggressive income-tax cut. Link

* Despite promise, federal tax-refund debit cards a no go. Ann Carrns – The New York Times. Giving consumers who lack accounts at a bank or credit union the option of getting tax refunds on multiuse, prepaid debit cards may help bring them into the financial mainstream, a report from the Urban Institute finds. But the accounts must be low-cost, easy to use and available early in the tax season to encourage their use. Link 

 * Mega-millionaire, 79, admits offshore tax evasion. Kevin McCoy – USA Today. A Palm Beach heiress and charity benefactor pleaded guilty Tuesday to using foreign bank accounts to hide more than $43 million from the IRS in one of the largest cases in the continuing U.S. crackdown on offshore tax evasion. Link  

Essential reading: Insiders benefited from special dividends, and more

Welcome to the top tax and accounting headlines from Reuters and other sources.

* Insiders benefited from special dividends. Maxwell Murphy and Emily Chasan – The Wall Street Journal. Many big companies raced to pay special dividends in the fourth quarter, ahead of potentially large tax increases on cash distributions this year. Most of the one-time payouts, however, came from smaller companies that had higher-than-average ownership by their management, employees and directors. Link 

 * Dealing on a deadline. Carmel Melouney – The Wall Street Journal. With an increase in capital-gains tax looming over the market, commercial property sales volume spurted in the weeks leading up to the new year. Sellers scrambled to close deals, worried that if they waited until 2013 their tax bill on the transactions would be higher. Link 

 * Actor Depardieu denies leaving France for tax reasons. John Irish – Reuters. Film star Gerard Depardieu denied that he was leaving his homeland for tax reasons on Monday, saying that, although he now had a Russian passport, he was still very much French. Link

Goldman: 1, Volcker: 0

By Lauren Tara LaCapra

There’s an interesting article out today from Bloomberg, which accuses Goldman Sachs of skirting the yet-to-be-defined-or-implemented Volcker rule, and accuses its top executives, including CEO, Lloyd Blankfein, of being a hypocrite.

Bloomberg reporter Max Abelson has done some good work on the subject. His article is well written and well sourced—he spoke to at least 20 people and got many of them to go on the record about their former employer and describe how Goldman continues to place bets with the firm’s own money.

Abelson concludes “Goldman Sachs has worked around regulations curbing proprietary bets at banks. “ But what the article really points out is that Wall Street will keep finding new ways to move the goal posts in its favor when it comes to defining and clamping down on prop trading.

Essential reading: More tax revenue to IRS before cliff, and more


Welcome to the top tax and accounting headlines from Reuters and other sources.

* U.S. tax bonanza may be tapped out. Spencer Jakab – The Wall Street Journal. All the talk about the fiscal cliff and the inadequacy of the last-minute deal to avert it obscures one fact: It probably provided the government with tens of billions of dollars in unexpected tax receipts. Link

* Tax code may be the most progressive since 1979. Annie Lowrey – The New York Times. With 2013 bringing tax increases on the incomes of a small sliver of the richest Americans, the country’s top earners now face a heavier tax burden than at any time since Jimmy Carter was president. Link

* France says no tax rises planned. Inti Landauro – The Wall Street Journal. French Budget Minister Jerome Cahuzac said on Sunday the government isn’t planning any tax increases for the next few years as it tries to offer stability to companies and taxpayers following the exit of high-profile citizens such as actor Gerard Depardieu. Link


Some important tax and accounting dates in the week to come:

Tuesday, Jan.8

* Panel discussion of the fiscal cliff debate and what is likely to happen on taxes in 2013. 12 noon – 1:30 p.m. ET, Urban Institute. Washington.

* The American Petroleum Institute president Jack Gerard will give a speech on policy recommendations for the new Congress and administration. 12:15 p.m. ET, Andrew Mellon Auditorium. Washington.

Wednesday, Jan. 9

* State and local tax year end review. 12 noon – 2 p.m. ET, D.C. Bar Conference Center. Washington.

Essential reading: Inquiry into tech giants’ tax strategies nears end, and more

Welcome to the top tax and accounting headlines from Reuters and other sources.

 * Inquiry into tech giants’ tax strategies nears end. Charles Duhigg and David Koieniewski – The New York Times. Congressional investigators are wrapping up an inquiry into the accounting practices of Apple and other technology companies that allocate revenue and intellectual property offshore to lower the taxes they pay in the United States. Link  

* Step 1: Corporate tax giveaways. Step 2: Outcry. Step 3: Profit. Suzy Khimm – The Washington Post. Pundits on both left and right were outraged when they realized a whole flotilla of corporate tax giveaways were buried in the fiscal cliff deal, ranging from a tax break for race-car track owners to electric-scooter makers. Link  

* IRS quick to issue withholding rules after the tax deal. John McKinnon – The Wall Street Journal. Hours after President Barack Obama signed the bill averting the fiscal cliff, the Internal Revenue Service issued new guidelines for employers on how much to withhold from workers’ paychecks this year. Link