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November 12, 2007

 Past Issues

Cover Story

What's Next?

Banking institutions once eschewed risk, but no more. The credit market-induced storm that has washed over Wall Street is a direct result of the big banks' increased - nearly insatiable - appetite for more risk over the past decade. As one bank after another came up with a new-fangled product or rejiggered its structure to capture returns and fees on the investment community's latest invention, risk management expertise, not to mention common sense, was often relegated to the backburner. Now, it's payback

Carlyle Hops on Infrastructure Bus

Washington's Carlyle Group has gotten on the infrastructure bandwagon with the launch of its first infrastructure-oriented fund, raising $1.15 billion in commitments and targeting investments in transportation and other infrastructure areas in the US and Canada. The Carlyle Infrastructure Partners fund, an investment vehicle established in March 2006 with a staff of 14 investment professionals spread between New York and Washington, will deploy capital in infrastructure projects valued from $100 million to more than $1 billion. More specifically, it will invest in airports, bridges, ports, roadways, tunnels, water and wastewater treatment facilities, transit projects and other public infrastructure.

Investment Banking

Merrill's Other Issue

Following reports alleging that Merrill Lynch off loaded some of it subprime assets into hedge funds to scrub its balance sheet, and on the heels of the ousting of the firm's CEO, Stan O'Neal, the Securities and Exchange Commission has launched an investigation into the firm, industry sources say. The SEC declined to either confirm or deny such an investigation.

Credit Derivatives

CIBC Heads Home

CIBC's agreement to sell its US investment banking business, among other operations, to Oppenheimer Holdings has resonated deeply in the Canadian investment banking community. In addition, the transaction has positive connotations for Oppenheimer's growth. As part of the deal, announced on Nov. 4, CIBC is giving up its US investment banking, institutional sales and trading, corporate syndicate, equity research, options trading, convertible bond trading, high yield origination and trading and loan syndication operations. The transaction also includes CIBC's broker-dealer subsidiary in Israel and certain capital markets businesses in the UK and Hong Kong.

Boutique Sees Opportunity in Street Turmoil

There may be turmoil within the ranks of Wall Street's investment banks, but some boutique banks are holding their own, and one such firm, Stamford, Conn.-based J Giordano Securities Group, has expansion plans. James Giordano, president of the firm, wants to expand his shop's banking and equity capital markets groups. The bank's niche is small and micro-cap companies. J Giordano Securities advises mergers and acquisitions and helps underwrite convertible debt and preferred stock offerings.

California Dreamin'? Not for Hedge Funds

Federal and state regulators have long wrestled with the issue of how to keep an eye on the $1.8 trillion hedge fund industry and now California has become the latest state looking to improve oversight of the industry. California proposed a rule last month requiring hedge funds with $25 million or more in assets and fewer than 15 clients to register with the state. The proposal aims to reverse a 2002 rule that exempted these funds from having to register with the state. Funds with $25 million in assets are already required to register with the Securities and Exchange Commission.

Wanted: Big Pay, with Little Experience

Does the hedge fund industry have a problem? That's the question posed by David Kochanek, president of Job Search Digest, the San Diego, Calif.-based publisher of Hedge Fund Search Digest, a compensation survey of hedge fund professionals that found high employee turnover in the industry. The survey, narrowed down to 232 qualified responses from industry professionals at 220 well-recognized institutions such as ABN AMRO, American Express, Credit Suisse, Deutsche Bank, Goldman Sachs, and Morgan Stanley, found that more than 75% of respondents were dissatisfied with their current compensation packages.

Thomas Lee & Liz Taylor, But No Credit Crisis

When financier Thomas H. Lee offered his take on Wall Street's credit market problems to an audience of attorneys and law academics last week, the first frame of his slide show - a still from Elizabeth Taylor's film "Suddenly Last Summer" - provoked nervous titters of amusement in the audience. On the screen was a voluptuous Taylor, baring her shoulders and sitting with drink. Thomas Lee's audience - the Alumni Association of the Benjamin N. Cardozo School of Law - sipped their own drinks in Manhattan's Rainbow Room as Lee offered his take on the subprime crisis.