The city of Providence in Rhode Island has sued Bank of America (BAC), Virtu (VIRT), the New York Stock Exchange (NYX, ICE) and numerous other exchanges, brokerages and traders over high-frequency trading (HFT).
Providence argues that the defendants have siphoned off billions of dollars by rigging the securities markets, as Michael Lewis has claimed in his new book, "Flash Boys."
Providence is seeking unspecified damages from 42 defendants on behalf of all public investors that traded stocks in the last five years.
Virtu Financial (VIRT) has suspended its IPO plans amid market volatility and controversy about high-speed trading (HFT) firms after Michael Lewis accused them of rigging the market in a new book, the WSJ reports.
Virtu's move also comes as regulatory scrutiny on HFT increases, with the SEC, FBI, and the state of New York investigating the sector. Virtu has received a letter from the latter's Attorney General's office asking for information about its trading operations
Virtu had intended to raise over $200M in its IPO at a market cap of about $3B and hoped its shares would debut by mid-April.
"There is vivid interest already from both hedge funds and institutional investors," says Petros Christodoulou, deputy CEO of National Bank of Greece (NBG +4.4%). The €750M senior unsecured bond will be the first such issue by the bank in nearly 5 years, and it's expected to have a 5-year maturity and be priced to yield around 4.5% (the government just sold 5-year paper last week at 4.95%).
The bond sale comes alongside an expected €2.5B equity offering aimed at filling the large capital hole in the bank.
The moves comes as Piraeus Bank - the largest Greek lender - last month raised €500M in debt, followed by a €1.75B equity sale. Third-ranked lender Alpha Bank has also raised €1.2B in capital and #4 Eurobank has an investor group ready to anchor a €2.9B stock sale later in April.
On the surface, Morgan Stanley's (MS +3.5%) Q1 results appear far better than those of Goldman Sachs (GS +0.6%), with FICC revenues up 9% Y/Y vs. a decline at Goldman. But Oppenheimer's Chris Kotowski notes Morgan had an especially easy comparison since 2013 Q1 was particularly weak. "Nonetheless, it is always nice to see year-over-year growth, and Morgan Stanley's is the best we have seen so far."
Kotwoski also takes note of return on tangible common equity - 11.1% at Goldman vs. 10.9% at Morgan. Despite the lower ROE, Morgan trades for 10.3x 2015 estimates vs. 9.4x for Goldman. Investors may want to have to take a harder look at which one to buy.
Sold is SPL Acquisition Corp. to Shenzhen Hepalink Pharmaceutical. American Capital (ACAS +0.9%) realized a 15% compounded annual rate of return over the seven-plus year life of its debt and equity investments in the company.
NIM fell 15 bps in Q1 even as funding costs dipped 7 bps, and management expects continued pressure. EVP David Anderson on the earnings call (transcript): "The larger pressure remains the competitive environment and fixed-rate loans renewing at current market yields."
Recognizing a window of opportunity when it sees it, Greece's bank bailout fund (also the majority shareholder in the bank) gives the green light for National Bank of Greece (NBG) to move forward with a capital raise of up to €2.5B. The offering will not include preemption rights for shareholders, including the rescue fund.
Off about 25% since the share sale was floated a few days ago, NBG is ahead 3.6% in premarket action.
On the surprising strength in FICC revenues in Q1, Morgan Stanley (MS) CFO Ruth Porat - speaking on the earnings call - says weather-related volatility played a big factor in strong commodity business, but credit corporates and mortgages continued to be strong areas for the bank.
On HFT: “We’ve advocated for increased transparency and trading protocol ... So we welcome ongoing enhancement (in) equity market structure."
Asked by Mike Mayo to break out the numbers in prime brokerage, Porat declines, saying it's not company policy to break out components within units. "Client balances and revenues are up quarter over quarter and year over year ... (the) highest balances since the crisis."
Net income available to common shareholders of $309M or $0.36 per share vs. $413M or $0.46 per share a year ago, with litigation reserve charges of $51M this quarter vs. $9M a year ago.
Net interest income of $898M up 1% from a year ago with net interest margin of 3.22% up one basis point. Noninterest income of $564M down from $703M a year ago thanks to last year's $137M benefit from the value of the Vantiv warrant.
Noninterest expense of $950M falls from $989M despite continued high litigation costs.
Q1 net charge-offs of $168M (0.76% of loans and leases) up from $133M (0.67%) one year ago; $60M of Q1 charge-offs related to three loans. Q1 provision expense of $69M vs. $62M a year ago.
Tier 1 common ratio of 9.51%. Tangible book value per share of $13.40 up 6% Y/Y.