TheChek News Flow

Hedge-fund manager Leon Cooperman paid $4.9 million to settle insider-trading charges in an unusual deal with securities regulators in which he didn’t admit wrongdoing but agreed that his firm’s trades will be monitored for five years.

The settlement between the Securities and Exchange Commission and Cooperman’s firm Omega Advisors ends standoff in which 74-year-old Cooperman had remained defiant in TV interviews about the case, insisting that he was innocent and that he would never pay a fine the SEC.

“Millions for defense, not one cent for tribute,” Cooperman told Bloomberg TV last October, quoting the 19th Century US Sen. Robert Goodloe Harper.

Under the deal, a compliance monitor will be able to review any trade that Cooperman’s firm makes, and will also require monthly certifications that no trades were made using inside information.

Nevertheless, the SEC, which filed its suit against Cooperman last September after a five-year investigation, didn’t get what it wanted, either. That included the return of ill-gotten gains and barring Cooperman from being an officer or a director at a public company.

“I am looking forward to putting this behind me now, instead of years from now,” Cooperman said in a letter to his investors Thursday.

The SEC had alleged in its civil suit that funds managed by Cooperman made more than $4 million in illegal profits in 2010 off trading in shares of Atlas Pipeline Partners.

From Misha Cohen, London, UK — This is Friday’s most read letter

Sir, An effective policy to curtail ransomware which has caused havoc in the UK’s National Health Service and elsewhere would be to ban the use of bitcoin and similar “cryptocurrencies”. Anonymity and fungibility have always made cash the favoured tool for illegal activities. Credit cards, cheques and bank transfers are too easily traceable. Bitcoin moves the criminal’s favoured financial tool online, with disastrous consequences.

The world now faces a historic choice: either allow cryptocurrencies to proliferate, until it is too late to ban them, or eliminate such tools and enjoy an era in which illegal activity online is circumscribed. Bitcoin was introduced in 2009. It has fulfilled no useful purpose in the financial system. Its only major effect has been to facilitate massive criminal activity. Yet with support from governments, such cryptocurrencies are thriving. The global value of bitcoins in circulation has increased from $3bn to about $29bn in the past two years. New currencies, such as Ethereum and Ripple, are growing even faster.

It is still possible to make all activity in cryptocurrencies an offence. Their worldwide value is $50bn — only 1.7 per cent of the value of the FTSE 100 stocks in London. Destroying this asset value would create few problems, and would strike a blow for justice as much of it is held by wrongdoers.

Absurdly, governments labour to bolster legality in anonymous physical cash, while encouraging unregulated use of its digital equivalent: the eurozone bans €500 bills, but allows criminals access to online bitcoin “notes” of unlimited value. India tries to uncover illegal funds held in banknotes, while leaving bitcoin stashes unchecked. The UK introduces high-tech pound coins to foil forgers, while allowing criminals use of higher-tech “pound bitcoins”. China attempts to control smuggling of cash, while letting bitcoin transfers flow freely.

Cryptocurrencies will soon become a large segment of the global financial system. Banning them would then threaten financial stability, but regulating them will be impossible. Meanwhile, life will become easier for people with the moral turpitude to destroy hospital IT systems. History will judge very harshly those who allowed this to happen.

The utility of a currency depends on confidence that it is accepted as a means of payment. If even one major economy banned cryptocurrencies, these would be hobbled. The UK should take the lead. Otherwise, the next time the NHS is crippled by an attack financed in bitcoin, the government will rightly be accused of complacency as sick people die.

Misha Cohen

National oil giant Saudi Aramco IPO-ARMO.SE expects to sign $50 billion of deals with U.S. companies on Saturday, part of a drive to diversify the kingdom's economy beyond oil exports, Aramco's chief executive Amin Nasser said.

Nasser was speaking to reporters at a conference of scores of senior U.S. and Saudi business executives, coinciding with the visit of U.S. President Donald Trump to Riyadh.

He said 16 agreements with 11 companies would be signed, including memorandums of understanding for joint ventures. Officials said earlier that many of the agreements would flesh out previously announced plans.

"We expect the deals signed today to provide a boost to bilateral trade between both countries," Nasser said, adding that Aramco currently spent $6.5 billion a year on goods and services from U.S. suppliers.

Among the deals, executives said, were a plan by Jacobs Engineering Group Inc (JEC.N) for a joint venture with Aramco to manage business projects in the kingdom, and a plan by McDermott International (MDR.N) to transfer some of its ship fabrication facilities from Dubai to a new shipbuilding complex which Aramco will build within Saudi Arabia.

Top Saudi economic policy makers, including the finance minister and head of the kingdom's main sovereign wealth fund, described ways in which they planned to attract U.S. capital and technology. Officials said they aimed to prepare new rules covering direct investment by foreign firms within 12 months.

"We want foreign companies to look at Saudi Arabia as a platform for exports to other markets," Energy Minister Khalid al-Falih told the conference.

The United States said on Friday it believed forces in a convoy targeted by U.S. military aircraft in southern Syria on Thursday were Iranian-directed, in a possible sign of increased tension between Washington and Tehran in the Syrian war.

Defense Secretary Jim Mattis told reporters at the Pentagon that the U.S. strike was defensive in nature. It was condemned by the government of Syrian President Bashar al-Assad, who has the backing of Iran and Russia.

A member of the U.S.-backed Syrian rebel forces told Reuters on Thursday the convoy comprised Syrian and Iranian-backed militias and was headed toward the garrison in Syria used by U.S. and U.S.-backed forces around the town of At Tanf.

The United States determined that the convoy posed a threat.

"It was necessitated ... by offensive movement with offensive capability of what we believe were Iranian-directed - I don't know there were Iranians on the ground - but by Iranian-directed forces," Mattis said at a news conference.

Rebel sources have warned of advances by Syrian army and Iranian-backed militia in the region near the strategic Damascus-Baghdad highway, which was once a major weapons supply route for Iranian weapons.

Mattis said he believed the Iranian-directed forces moved into the zone against the advice of Russia but that he was unable to confirm that with certainty.

"But it looks like the Russians tried to dissuade them," Mattis said.

A Western intelligence official, speaking on condition of anonymity, has said the strike sent a strong message to Iranian-backed militias that they would not be allowed to reach the Iraq border from Syria.

Syrian government negotiator Bashar al-Ja'afari said on Friday he had raised the incident with U.N. mediator Staffan de Mistura at peace talks in Geneva.

"We discussed the massacre that the U.S. aggressor committed yesterday in our country. This subject was widely discussed," Ja'afari told reporters.

Thursday's air strike did not on its own suggest a shift in the U.S. military's focus in Syria, which has been on battling Islamic State militants.

U.S. Marine General Joseph Dunford, chairman of the Joint Chiefs of Staff, said he had been working on ways to manage Syria's messy battlefield with Russia. There is no interaction between the U.S. and Syrian militaries.

"We had a proposal that we're working on with the Russians right now. I won't share the details," Dunford said.

"But my sense is that the Russians are as enthusiastic as we are to deconflict operations and ensure that we can continue to take the campaign to ISIS and ensure the safety of our personnel," he said, using an acronym for Islamic State

President Hassan Rouhani has taken an unbeatable lead in Iran's presidential election, an Iranian official source told Reuters on Saturday, citing an early unofficial tally, and is set to hand an emphatic defeat to his hardline rival Ebrahim Raisi.

In a briefing for reporters, interior ministry official Ali Asghar Ahmadi outlined a similar proportion of votes, which if confirmed would give the pragmatist cleric a second term in which to pursue Iran's re-engagement with the world.

"It's over, Rouhani is the winner," the source said on condition of anonymity.

One Rouhani supporter warmly welcomed the news, but said she expected him to provide greater social and economic freedoms, pledges he made when first elected in a landslide in 2013 by Iranians weary of economic decline and clampdowns on dissent.

"I am very happy for Rouhani's win. We won. We did not yield to pressure. We showed them that we still exist," said 37-year-old Mahnaz, a reformist.

"I want Rouhani to carry out his promises."

Rouhani won 21.6 million votes in Friday's hard-fought contest, compared to 14 million for Raisi, with 37 million votes counted, the source said, adding about four million more votes were still to be tallied.

Ahmadi, the interior ministry official, said that with 25 million ballots certified by the authorities so far, Rouhani had won 14.619 million and Raisi gained 10.125 million.

He said 40 million votes had been cast, indicating a turnout of about 70 percent, roughly similar to the showing in 2013. Ahmadi said final results would be announced later on Saturday.

The big turnout appeared to have favored Rouhani, whose backers' main concern had been apathy among reformist-leaning voters disappointed with the slow pace of change.

"The wide mobilization of the hardline groups and the real prospect of Raisi winning scared many people into coming out to vote," said Nasser, a 52-year-old journalist.

"We had a bet among friends, and I said Raisi would win and I think that encouraged a few of my friends who might not have voted to come out and vote."

CAUTIOUS OPTIMISM

Analysts expressed caution about how much Rouhani would be able to do to bring about broader reforms, despite his apparently decisive win, given the influence of security hardliners in Iran's hybrid clerical-republican system.

"The last two decades of presidential elections have been short days of euphoria followed by long years of disillusionment," said Karim Sadjadpour, senior fellow at the Carnegie Endowment who focuses on Iran.

"Democracy in Iran is allowed to bloom only a few days every four years, while autocracy is evergreen."

Rouhani, 68, who took office promising to open Iran to the world and give its citizens more freedom at home, faced an unexpectedly strong challenge from Raisi, a protege of supreme leader Ali Khamenei.

The election is important "for Iran's future role in the region and the world", Rouhani, who struck a deal with world powers two years ago to curb Iran's nuclear program in return for the lifting of most economic sanctions, said after voting.

Raisi, 56, had accused Rouhani of mismanaging the economy and has travelled to poor areas, speaking at rallies pledging more welfare benefits and jobs.

He is believed to have had the backing of the powerful Revolutionary Guards security force, as well as the tacit support of Khamenei, whose powers outrank those of the elected president but who normally steers clear of day-to-day politics.

"I respect the outcome of the vote of the people and the result will be respected by me and all the people," Raisi said after voting, according to the semi-official Fars news agency.

However, Raisi later appeared at the Ministry of Interior in Tehran on Friday and complained of a shortage of ballot sheets at many polling stations, according to Fars. More ballot sheets were subsequently sent out, the agency reported.

The Guards and other hardliners had hoped that a win for Raisi would have given them an opportunity to safeguard economic and political power they see as jeopardized by the lifting of sanctions and opening of the country to foreign investment.

During weeks of campaigning, the two main candidates exchanged accusations of corruption and brutality in unprecedentedly hostile television debates. Both deny the other's accusations.

Rouhani had urged the Guards not to meddle in the vote, a warning that reflects the political tension. Suspicions that the Guards and a militia under their control skewed voting results in favor of hardliner Mahmoud Ahmadinejad led to eight months of nationwide protests in 2009, which were violently suppressed.

STARK CHOICE

For ordinary Iranians, the election presented a stark choice between competing visions of the country.

Rouhani, known for decades as a mild-mannered establishment insider rather than a gung-ho reformer, had adopted the mantle of the reform camp in recent weeks, with fiery campaign speeches that attacked the human rights records of his opponents.

"I voted for Rouhani to prevent Raisi's victory. I don't want a hardliner to be my president," said Ziba Ghomeyshi in Tehran. "I waited in the line for five hours to cast my vote."

Many pro-reform voters are still lukewarm Rouhani supporters, disappointed with his failure to make broader changes during his first term. But they were anxious to keep out Raisi, who they see as representing the security state at its most fearsome: in the 1980s he was one of four judges who sentenced thousands of political prisoners to death.

For conservatives, the election represented a chance to restore the values of the 1979 revolution, which requires elected officials to be subordinate to the Shi'ite Muslim clergy and supreme leader.

Despite the removal of nuclear-related sanctions in 2016, lingering unilateral U.S. sanctions that target Iran's record on human rights and terrorism have kept foreign companies wary of investing, limiting the economic benefits so far.

Raisi focused his campaign on the economy, visiting rural areas and villages and promising housing, jobs and more welfare benefits, a message which could have resonated with millions of poor voters angry at the Tehran elite.

Iran’s President Rouhani Leads in Bid for Re-Election

The incumbent looks set to win a second term, with about 22.8 million of the roughly 39 million valid ballots counted so far

TEHRAN, Iran—Partial polling results showed Iran’s President Hassan Rouhani all but assured of beating his hard-line challenger by a comfortable margin and winning a second term Saturday, endorsing a leader who seeks better ties to the West.

The results were the first official indication of how Iranians voted on Friday. The pivotal election pitted moderate Mr. Rouhani against cleric Ebrahim Raisi, a figure who only recently emerged on the country’s political scene and is a close ally of Supreme Leader Ayatollah Ali Khamenei.

Mr. Rouhani was leading the race with about 22.8 million of the roughly 39 million valid ballots counted so far, an election official said on state television, while Mr. Raisi had about 15.5 million. While the result isn’t final, Mr. Rouhani’s lead looked insurmountable with turnout topping 40 million.

Polling results have shown Mr. Rouhani, 68, consistently in the lead, and a poll conducted Wednesday by the Washington-based International Perspectives for Public Opinion gave him 63% of the ballots among likely voters, based on a survey of about 1,200 Iranians.

Iran’s president is limited by the power the supreme leader wields as the final decision maker in most state matters. Presidents nonetheless play a meaningful role in domestic and foreign-policy choices, putting into action plans approved by the leader.

Before the results announcement, the Interior Ministry said turnout was high—above 40 million out of Iran’s 56.4 million eligible voters, or roughly 71%.

Strong turnout has appeared to benefit moderate and reformist politicians in past elections.

Turnout was about 73% when Mr. Rouhani won his first term in 2013, compared with some 60% when his predecessor, hard-liner Mahmoud Ahmadinejad, won his first term in 2005.

Friday’s vote presented Iranians with a stark choice, between continuing on Mr. Rouhani’s path of opening up to the world while allowing more space for freedom of expression at home, and Mr. Raisi’s more inward-looking, conservative outlook.

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The landmark 2015 Iran nuclear deal was the signature achievement of Mr. Rouhani’s first term. Agreed between Iran and six world powers including the U.S., it lifted sanctions on the Islamic Republic in exchange for new curbs on its disputed nuclear program.

The deal brought Iran out of isolation after years of crippling sanctions. Yet it posed a challenge for Mr. Rouhani in the months leading up to the election, as average Iranians said it hadn’t led to improved living standards.

His favorability slid since the deal, giving way to concern among supporters that engineering one of the most significant feats of diplomacy since the country’s founding 38 years ago wouldn’t be enough to win him a second term.

Mr. Raisi, a cleric who served for decades in Iran’s opaque judiciary, sought to capitalize on Mr. Rouhani’s vulnerabilities. Hard-liners coalesced around Mr. Raisi, 56, who has seen a rapid rise to prominence in the past year.

The supreme leader last year appointed Mr. Raisi to oversee the Astan Quds Razavi, a charity worth billions of dollars central to his business interests, which observers saw as an indication that he could be tapped as his successor.

Mr. Raisi promised to triple monthly cash handouts to the poor, offering people the kind of direct boost to their pocketbooks that Mr. Rouhani’s diplomacy couldn’t deliver.

In making his appeal to a base of mainly poor and religious Iranians, Mr. Raisi borrowed from the playbook of Mr. Ahmadinejad, the hard-line president who preceded Mr. Rouhani. Several prominent members of his campaign management are close associates of Mr. Ahmadinejad.

Yet many Iranians still remember the severe economic dislocations that accompanied the latter portion of Mr. Ahmadinejad’s eight years in office, including skyrocketing inflation and a major fall in their currency’s value.

As they voted Friday, some Iranians also said they feared Mr. Raisi would place cloying new limits on society and culture, and could adopt a confrontational posture toward the U.S. and other enemies.

“We’re scared a lot about the future,” Pedram Yazdani, 21, a first-time voter, said at a polling station in central Tehran. “You know, the president of America is Mr. Trump. I think if Mr. Raisi became president, we might see the third world war.”

LAS VEGAS — The billionaire investor Steven A. Cohen may be barred from managing outside money until next year, but he has already hinted that he plans to get back into the hedge game.

The most telling sign yet? Mr. Cohen’s unexpected appearance at a Las Vegas hedge fund conference this week.

Mr. Cohen was seen late Thursday night playing craps at a table in the casino of the Bellagio Las Vegas, one of the city’s most extravagant hotels. Mr. Cohen, 60, was rolling the dice with Ilana Weinstein, a sister of the hedge fund manager Boaz Weinstein, at a table with a maximum bet of $5,000.

Boaz Weinstein and his sister were featured speakers this week at the annual SkyBridge Alternatives Conference, known as SALT — a lavish multiday hedge fund conference that draws a slew of prominent money managers and politicians. This year’s featured guest was Joseph R. Biden Jr., the former vice president.

Mr. Cohen’s appearance at SALT — where he also dined privately with a small group of conference speakers, including the prominent short-seller Jim Chanos, the activist investor William A. Ackman and Mr. Biden — was a surprise, given that he was not featured in publicity for the event.

Mr. Cohen last attended in 2011, when he was interviewed onstage by the conference’s founder, Anthony Scaramucci. Two years later, Mr. Cohen’s highly successful SAC Capital Advisors was indicted in the biggest securities fraud case ever brought against a hedge fund.

On Thursday morning, Mr. Cohen was a featured speaker at an event for veterans at the Bellagio. In recent years, he has become a major benefactor to organizations helping wounded veterans.

Later, Mr. Cohen went to see Duran Duran play a private concert for conference attendees.

That Mr. Cohen attended other SALT events has renewed speculation that a small investment firm he established last year — Stamford Harbor Capital — will begin raising money from outside investors next year once a two-year ban he agreed to with the Securities and Exchange Commission expires in January.

Mr. Cohen agreed to the prohibition, which barred him from managing money for outside investors, to settle accusations of an administrative failure to supervise brought by the regulatory agency.

But the man viewed by many as one of the most successful stock traders of his generation was never charged by either prosecutors or regulators with insider trading. And his longtime prosecutorial nemesis, Preet Bharara, who once called SAC Capital a “magnet for market cheaters,” is no longer the United States attorney in Manhattan.

In an interview with The New York Times in October, Mr. Cohen gave the surest indication yet that he was looking to reopen a hedge fund, saying that he was “leaning” toward taking outside money from investors in 2018. But he added, “We haven’t made a final decision.”

Representatives for Mr. Cohen, who now oversees a $12 billion private investment firm called Point72 Asset Management, declined to comment on Mr. Cohen’s intentions for Stamford Harbor.

Mr. Cohen is not allowed to raise money while the industry ban is in place. But there’s nothing to stop him from mingling with potential investors — at conferences or in the casinos.

There were no obvious marketing people with Mr. Cohen at SALT, and he did not appear to come with much of an entourage.

But someone associated with Mr. Cohen was handing out invitations to a fund-raiser he will hold on Tuesday in Manhattan for Bo Dietl, the former New York police detective and media personality who is planning to run for mayor. Tickets for the event cost $4,950.

And Mr. Cohen has become increasingly active in raising and donating money for aiding injured veterans of the armed services. Last year, he committed $325 million to a program to help veterans who had suffered traumatic brain injuries through his Cohen Veterans Network, an organization he set up.

His network runs a number of clinics across the United States to provide mental health care to veterans. He became interested in helping veterans because one of his sons served as a Marine after graduating from college and did a tour of duty in Afghanistan.

Mr. Cohen’s Point72, which is run as a family office to manage his personal fortune, functions much as SAC did. It employs nearly 1,000 employees in SAC’s former office center in Stamford, Conn., and it has teams of portfolio managers trading mostly stocks and bonds.

He wound down SAC around the same time a federal judge accepted the firm’s guilty plea in 2014. In settling with federal prosecutors and the S.E.C., the hedge fund paid $1.8 billion in fines and restitution.

Still, there are reminders of the bad days for Mr. Cohen.

A federal appellate court recently heard arguments in a bid by a former SAC portfolio manager, Mathew Martoma, who is now serving a nine-year prison term after being convicted in 2014, to win a new criminal trial. Mr. Martoma was convicted in one of the biggest insider trading cases ever — a trial in which Mr. Cohen’s name frequently came up during testimony.

Last month, a New Jersey appellate court reinstated an 11-year-old lawsuit against Mr. Cohen’s former firm, which involves allegations that SAC conspired with other hedge funds to drive down the price of shares of Fairfax Financial, a large Canadian insurer. Fairfax is seeking billions of dollars in damages, claiming it was the target of a long-running scheme by hedge funds seeking to profit from a sharp decline in the company’s stock price.

And then there is “Billions,” the drama on the cable network Showtime that depicts a billionaire hedge fund manager doing battle with a federal prosecutor who is on a Captain Ahab-like quest to get his white whale.

Behind the scenes, the machinery for Mr. Cohen’s upstart hedge-fund-in-waiting quietly churns away.

He has selected one of his longtime employees, Perry Boyle, to run the new firm. Mr. Boyle runs Stamford Harbor in a building on the other side of the parking lot from Point72’s headquarters in Stamford.

Stamford Harbor currently manages $105 million of Mr. Cohen’s money; according to regulatory filings, he owns more than 25 percent of the new firm “through intermediate entities.”

At the Bellagio craps table, Mr. Cohen played for about 15 minutes before walking away — mostly likely to get away from the gaggle of onlookers who were beginning to gather.

Mr. Cohen left without speaking, but two women walked up to him and asked if he had won. A reporter could not hear his answer.

He was still wearing a purple glow stick around his neck, a souvenir from the Duran Duran concert he attended earlier in the evening.

Hunger for higher yields drives demand for $11bn sale to help finance NXP takeover

Investor orders for one of the largest corporate bond sales of the year stretched into the tens of billions of dollars on Friday as US chipmaker Qualcomm sewed up the financing for its $47bn takeover of NXP Semiconductors.

The interest underlined the appetite from investors across the globe for higher-yielding US corporate bonds, as more than $10.7tn of debt trades with a sub-zero yield. The $11bn bond sale, which tied as the year’s third-largest corporate debt deal, had attracted orders of more than $40bn, two investors with knowledge of the sale said.

Low global interest rates coupled with central bank easing in Europe and Japan have driven investors into the US credit market in their search for income. Investment grade corporate bond funds in the US have counted nearly $55bn of inflows this year, according to Lipper.

Andrew Forsyth, a portfolio manager with BNP Paribas Investment Partners, said that there was “strong demand” from both domestic and foreign investors for US corporate credit.

If a company is a “highly-rated credit . . . people are going to be all over it. Fund flows are still very positive,” he said.

The solid interest allowed underwriters to tighten Qualcomm’s borrowing costs across the nine-tranche transaction. Investors were initially marketed $2bn of new 10-year notes with a yield 125 basis points above benchmark Treasuries. That spread was cut to 105bp by the time banks closed their order books.

Existing Qualcomm debt due in 2025 last traded hands with a yield 77bp above similarly maturing Treasuries. The company issued new fixed- and floating-rate debt across two- to 30-year tenors on Friday.

Matt Brill, a portfolio manager with Invesco, characterised the demand as “off the charts”, particularly after a global equity sell-off earlier this week damped investor enthusiasm. US stock markets rebounded on Thursday and Friday, providing Qualcomm an opening for its $11bn bond sale, he said.

“The reach for yield has been exacerbated because Treasuries have held in and if you want additional yield you have to get . . . into credit,” he said. The yield on the 10-year US Treasury, which falls as its price rises, has declined 39bp from a March high. It was at 2.34 per cent on Friday.

“Just buying Treasuries won’t get you above your yield hurdle,” Mr Brill added. “It forces investors to take on additional credit risk.”

Companies and banks have borrowed more than $750bn through US debt markets this year, the second-fastest pace on record, Dealogic data show. Microsoft completed the largest deal of 2017 in January, raising $17bn, which is trailed by a $13.6bn bond sale by chipmaker Broadcom.