Sayeth the ratings agency:

Standard & Poor’s Ratings Services said today that it affirmed its ‘AAA’ long-term and ‘A-1+’ short-term sovereign credit ratings on the U.S. Standard & Poor’s also said that it revised its outlook on the long-term rating of the U.S. sovereign to negative from stable. Our ratings on the U.S. rest on its high-income, highly diversified, and flexible economy. It is backed by a strong track record of prudent and credible monetary policy, evidenced to us by its ability to support growth while containing inflationary pressures. The ratings also reflect our view of the unique advantages stemming from the dollar’s preeminent place among world currencies.

“Although we believe these strengths currently outweigh what we consider to be the U.S.’s meaningful economic and fiscal risks and large external debtor position, we now believe that they might not fully offset the credit risks over the next two years at the ‘AAA’ level,” said Standard & Poor’s credit analyst Nikola G. Swann. “More than two years after the beginning of the recent crisis, U.S. policymakers have still not agreed on how to reverse recent fiscal deterioration or address longer-term fiscal pressures,” Mr. Swann added.

In 2003-2008, the U.S.’s general (total) government deficit fluctuated between 2% and 5% of GDP. Already noticeably larger than that of most ‘AAA’ rated sovereigns, it ballooned to more than 11% in 2009 and has yet to recover.

On April 13, President Barack Obama laid out his Administration’s medium-term fiscal consolidation plan, aimed at reducing the cumulative unified federal deficit by US$4 trillion in 12 years or less. A key component of the Administration’s strategy is to work with Congressional leaders over the next two months to develop a commonly agreed upon program to reach this target. The President’s proposals envision reducing the deficit via both spending cuts and revenue increases.

Key members in the U.S. House of Representatives have also advocated fiscal tightening of a similar magnitude, US$4.4 trillion, during the coming 10 years, but via different methods. House Budget Committee Chairman Paul Ryan’s plan seeks to balance the federal budget by 2040, in part by cutting non-defense spending. The plan also includes significantly reducing the scope of Medicare and Medicaid, while bringing top individual and corporate tax rates lower than those under the 2001 and 2003 tax cuts.

We view President Obama’s and Congressman Ryan’s proposals as the starting point of a process aimed at broader engagement, which could result in substantial and lasting U.S. government fiscal consolidation. That said, we see the path to agreement as challenging because the gap between the parties remains wide. We believe there is a significant risk that Congressional negotiations could result in no agreement on a medium-term fiscal strategy until after the fall 2012 Congressional and Presidential elections. If so, the first budget proposal that could include related measures would be Budget 2014 (for the fiscal year beginning Oct. 1, 2013), and we believe a delay beyond that time is possible.

Standard & Poor’s takes no position on the mix of spending and revenue measures the Congress and the Administration might conclude are appropriate.

But for any plan to be credible, we believe that it would need to secure support from a cross-section of leaders in both political parties. If U.S. policymakers do agree on a fiscal consolidation strategy, we believe the experience of other countries highlights that implementation could take time. It could also generate significant political controversy, not just within Congress or between Congress and the Administration, but throughout the country. We therefore think that, assuming an agreement between Congress and the President, there is a reasonable chance that it would still take a number of years before the government reaches a fiscal position that stabilizes its debt burden. In addition, even if such measures are eventually put in place, the initiating policymakers or subsequently elected ones could decide to at least partially reverse fiscal consolidation.

In our baseline macroeconomic scenario of near 3% annual real growth, we expect the general government deficit to decline gradually but remain slightly higher than 6% of GDP in 2013. As a result, net general government debt would reach 84% of GDP by 2013. In our macroeconomic forecast’s optimistic scenario (assuming near 4% annual real growth), the fiscal deficit would fall to 4.6% of GDP by 2013, but the U.S.’s net general government debt would still rise to almost 80% of GDP by 2013. In our pessimistic scenario (a mild, one-year double-dip recession in 2012), the deficit would be 9.1%, while net debt would surpass 90% by 2013. Even in our optimistic scenario, we believe the U.S.’s fiscal profile would be less robust than those of other ‘AAA’ rated sovereigns by 2013. (For all of the assumptions underpinning our three forecast scenarios, see “U.S. Risks To The Forecast: Oil We Have to Fear Is…,” March 15, 2011, RatingsDirect.

“Our negative outlook on our rating on the U.S. sovereign signals that we believe there is at least a one-in-three likelihood that we could lower our long-term rating on the U.S. within two years,” Mr. Swann said. “The outlook reflects our view of the increased risk that the political negotiations over when and how to address both the medium- and long-term fiscal challenges will persist until at least after national elections in 2012.”

Some compromise that achieves agreement on a comprehensive budgetary consolidation program–containing deficit-reduction measures in amounts near those recently proposed, and combined with meaningful steps toward implementation by 2013–is our baseline assumption and could lead us to revise the outlook back to stable. Alternatively, the lack of such an agreement or a significant further fiscal deterioration for any reason could lead us to lower the rating.

[via MarketWatch]

Article courtesy of Dealbreaker

The U.S. is the only large AAA-rated country that saw its debt rise during the crisis that until recently had no plan that would reverse the trend, said Steven Hess, senior credit officer at Moody’s. Budget cuts would mean the U.S. wouldn’t likely sell as much debt, which has grown to $9.13 trillion in marketable Treasuries from $4.34 billion in mid-2007 as the government boosted spending to pull the economy out of recession. “It seems both sides of this debate are now targeting lower debt and lower deficits,” said Hess, based on the president’s speech today. “We do see this as a turning point in terms of the debate. We would view that as a positive, but we’ll have to wait to see the outcome.” [Bloomberg]

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Obama Girds for Struggle With Republicans Over Debt Limit (Bloomberg)
The U.S. government is projected to slam into the $14.3 trillion legal cap on government borrowing sometime this spring. As the price of their vote to allow the government to go further into debt, congressional Republicans are demanding far deeper cuts than the $38 billion they got last week in the deal to fund the government for the last six months of the 2011 fiscal year. Failing to raise the debt ceiling would have much more dire consequences than a shutdown, with Treasury Secretary Timothy Geithner predicting last week that it would “call into question the willingness of the government of the United States to meet its obligations,” and “shake the basic foundations of the entire global financial system.”

PIMCO goes short US government debt, raises cash holdings (Reuters)
The portion of PIMCO’s $236 billion Total Return Fund held in U.S. government debt, including U.S. Treasuries, was -3 percent of total assets in the fund as of March, down from zero in February.

JPMorgan Accused Of Breaking Its Duty To Clients (NYT)
In the summer of 2007, as the first tremors of the coming financial crisis were being felt on Wall Street, top executives of JPMorgan Chase were raising red flags about a troubled investment vehicle called Sigma, which was based in London. But the bank chose not to move out $500 million in client assets that it had put into Sigma two months earlier. Sigma collapsed a year later. Now, new documents unsealed late last month as part of a lawsuit by bank clients against JPMorgan show for the first time just how high the warnings about Sigma went — all the way to the office of the bank’s chief executive, Jamie Dimon. While the clients lost nearly all their money, JPMorgan collected nearly $1.9 billion from Sigma’s demise, according to the suit.

China Inflation Is `Somewhat Out of Control’ on Weak Currency, Soros Says (Bloomberg)
“It would be very advantageous to allow the currency to appreciate as a way of controlling inflation,” Soros said. “The authorities missed that opportunity. You now have inflation somewhat out of control, and causing some serious danger of wage-price inflation.”

NYSE Rejects Nasdaq Offer (WSJ)
In a statement Sunday, NYSE Euronext called the bid by Nasdaq and partner IntercontinentalExchange Inc. “strategically unattractive” and entailing “unacceptable execution risk.” The NYSE reaffirmed its commitment to a $9.7 billion merger with Deutsche Börse announced in February, itself fraught with political and antitrust issues in both Europe and the U.S.

Nomura’s Stock-Backed Loans Jump 50% as Japan Quake Spurs Demand for Cash (Bloomberg)
Daily loan transactions jumped to about 150 from 100 and credit volume also climbed 50 percent as customers sought funds following the disaster, Naoshi Sakai, an executive director of Tokyo-based Nomura’s banking and trust agency services unit, said in an interview.

U.K.’s ‘Moderate’ Bank Report Calls for More Capital, Sales (Bloomberg)
“The universal banks such as RBS and Barclays fare best from the report,” said Joseph Dickerson, a banking analyst at Espirito Santo Investment Bank. “The key negative in the report is the prospect of further branch divestitures at Lloyds which is currently unquantifiable.”

From Behind Bars, Madoff Spins His Story (FT)
He says he gets lots of mail from well-wishers, but no hate mail. “I spend most of my time in my room, reading,” he adds. “And – this is my secret – Danielle Steel.” We all laugh. “Yes, Danielle Steel.”

Economists See Growth Accelerating Later This Year (WSJ)
On average, the 56 economists polled downgraded their estimate of first-quarter growth in gross domestic product to 2.7% at a seasonally adjusted annual rate. That is down from an average first-quarter forecast of 3.6% just two months ago. The economy grew at a 3.1% rate in the fourth quarter.

Economist: Spain Will Not Escape Europe’s Debt Woes (CNBC)
“The fact is that nobody knows whether the country (Spain) will need external help in the months that lie ahead. But what everybody knows is that the European Central Bank’s decision to raise interest rates will intensify its difficulties,” said Roger Nightingale, a global economist at Pointon York in London in a note to clients.

Glencore Eyes Big Mergers After IPO (FT)
CEO Glasenberg told the Financial Times that the launch of the offering – the largest ever in London – was “imminent” after it received robust support from big institutional investors. Glencore plans to sell a 20 per cent stake worth about $10 billion-$12 billion, valuing the whole company at around $60 billion, bankers said.

Insider Trading in China Thrives With Selectively Disclosed Economic Data (Bloomberg)
“In China, it’s better to be prepared than to be surprised,” said Shi, 42, an investment manager with Nanjing 21st Century Investment Group, a property developer in eastern China. “There is a window for speculation.”

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Obama Demands Budget Deal To Avert Government Shutdown (Bloomberg)
fter meeting with House Speaker John Boehner and Senate Majority Leader Harry Reid, Obama said issues remained unresolved and he hoped for a breakthrough that would prevent a shutdown, set to begin at midnight tonight. “I’m not yet prepared to express wild optimism but I think we are further along,” he told reporters. “My hope is, is that I’ll be able to announce to the American people sometime relatively early in the day that a shutdown has been averted.”

SEC May Relax Limits On Shares In Private Firms (WSJ)
According to the letter and people familiar with the matter, the likely changes would include raising from 499 the number of shareholders private companies can have without being required to open their books, and also making it easier for such companies to publicize share offerings.

Portugal To Face Strict EU Aid Terms Amid Political Storm (Bloomberg)
In an unprecedented intervention in national politics, euro-area finance ministers said Portugal can win relief by mid- May as long as it makes cuts that go beyond measures that failed to pass parliament in March and led to the government’s downfall.

EU Stress Tests To Examine 90 Banks, 5% Capital Pass Rate (Bloomberg)
“Make no mistake, 5 percent of Core Tier 1 is harder in comparison with last year,” James Babicz, head of risk at SAS, a business analytics company, said in telephone interview in London today. “But I think you have to look at how risky a bank is rather than look at a static capital threshold.”

Marc Faber: Gold Is Still Cheap Despite Record Surge (CNBC)
Faber rejected the notion that gold is in a bubble even as it begins to approach $1,500 an ounce. “If it were a bubble a lot of people would have gold. The whole world would be trading gold 24 hours a day,” he said. “But I don’t think it’s really a bubble. I think gold is maybe cheaper today than it was in 1999, when it was $252.

Why London Can Live Without Its Big Banks (Reuters)
“One or two of them might change their corporate headquarters for tax purposes but if they do go we probably won’t even notice. There won’t be a great outflow of workers and Canary Wharf won’t turn into a ghost town.”

Corporate Jets Often First Thing To Go After Leveraged Buyouts (Bloomberg)
Companies bought by private-equity firms are 32 percent less likely to have a jet in the three years after the deal closes than in the year before, according to a paper written by the Federal Reserve Board’s Jesse Edgerton. The study, published Jan. 21, found that jet fleets at LBO-backed companies are at least 40 percent smaller than at similar publicly traded firms.

Jefferies Expands (Breakingviews)
Jefferies’ lineup now includes municipal bonds and an enlarged investment bank. Staffing has increased by more than a third since the financial crisis struck. Now it’s adding commodities and futures, by buying Prudential Bache for $430 million. Jefferies is still far from joining the big boys. Net profit last year was just $280 million, far less than what Goldman harvested. There’s still scope to grow, however. New hires arguably have not yet settled in enough to crank out their full earnings potential. Shareholders appear to have baked in a better relative performance at Jefferies: the stock trades at about 1.7 times book value, double Morgan Stanley’s multiple and a third better than Goldman’s.

An Aggressive Fed? More Of Street Betting On It (Reuters)
The survey found that about a third of the economists, fund managers and strategists who responded to the survey see the Fed hiking interest rates this year, double the percentage from the March survey. About 27 percent believe the Fed will begin selling assets in the second half of 2011, to reduce the size of its portfolio, up from around 16 percent in the prior survey.

How To Pay No Taxes (BusinessWeek)
Some tips.

Asian Central Banks Intervene As Currencies Rise (WSJ)
Asian currencies rose against the dollar Friday, prompting a number of regional central banks to intervene, as the U.S. currency fell over that nation’s budget woes and a rise in the euro spurred the region’s currencies higher. The move follows Thursday’s rate increase by the European Central Bank, its first tightening since 2008. While the move was widely expected, it suggests world economic growth will continue to improve.

Speed Trading May Be Heading Out To Sea, Literally (CNBC)
In many cases, the best places to maximize chances of buying low in one place and selling high in another (for example between New York and London) were located in the world’s oceans. So could this be the end of traditional fixed stock exchanges in the world’s biggest cities and the rise of floating exchanges in the mid-Atlantic ocean? Wissner-Gross believes that floating trade centers could be a reality of the future.

Article courtesy of Dealbreaker

Are you a wealthy individual who hasn’t exactly paid taxes, per se, or as much as you should have, in quite some time? Did you do so via HSBC India, which set you up with some secret accounts? Did you think you were being pretty clever, not going with UBS, which would’ve been like sticking a sign on your back proclaiming “I owe the government millions in taxes and unpaid parking tickets”? The DOJ would like to let you know that time’s up, smart guy.

The Justice Department is expected to file a lawsuit Thursday that seeks to force HSBC India to reveal the names of U.S. customers with secret accounts, according to a person familiar with the matter. The department is expected to file the legal action in a San Francisco federal court, this person said. The move opens up a new front in the U.S. crackdown on tax evasion and comes days before the April deadline for taxpayers to file individual returns. To date, U.S. efforts against offshore tax evasion have focused heavily on Swiss bank accounts.

[WSJ]

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David Sokol’s Ways Questioned In Past Suits (NYT)
The most serious lawsuit centered on the accounting of an irrigation project by MidAmerican Energy, where Mr. Sokol was chief executive when Berkshire bought it in 1999. In a rebuke last year, the judge ruled in that case that MidAmerican had improperly changed its accounting on the project and criticized Mr. Sokol directly. The change in accounting was “intended to eliminate the minority shareholders’ interests,” the judge wrote, awarding more than $32 million to the minority shareholders. The case had taken more than five years to work its way through the courts. During that time, Warren E. Buffett, the chief executive of Berkshire, expressed confidence in Mr. Sokol by broadening his portfolio beyond MidAmerican to include Netjets, a company that sells fractional use of private aircraft.

Bernanke Downplays Inflation (WSJ)
Bernanke said the recent rise in prices of oil, grains, and other global commodity prices is likely to be temporary and won’t translate into a broader inflation problem. However, the Fed chief was quick to add that if his prediction is wrong and inflation begins to mark strong gains, the central bank would respond. “I think the increase in inflation will be transitory,” Bernanke said. He attributed the sharp increases in prices for oil and food to “global supply and demand conditions,” adding he reckoned these prices “will eventually stabilize.”

Geithner Sees ‘Severe Hardship’ If Debt Limit Isn’t Reached (Bloomberg)
Congress needs to raise the limit to maintain vital services and avoid “questions about our ability to defend our national security interests,” Geithner said. The U.S. would face sharply higher interest rates and would have to stop or delay payments to the military, retirees and others, he said. “Default would cause a financial crisis potentially more severe than the crisis from which we are only now starting to recover,” Geithner said. “For these reasons, default by the United States is unthinkable.”

Apple Crunched In Nasdaq Rebalance (WSJ)
In a move likely to ripple across the stock market, Nasdaq OMX plans to announce Tuesday a rare rebalancing of its Nasdaq-100 index, which will reduce the big weighting of Apple Inc. The company currently makes up more than 20% of the index.

Barclays Chief Set To Raise Appetite For Risk (FT)
Bob Diamond has decided Barclays must increase its risk appetite amid internal expectations at the bank that a key measure of its profitability will fall or stay stagnant this year. Barclays’ new chief executive is considering increasing the bank’s risk profile, in order to hit profitability targets over the next three years, according to people familiar with the bank’s thinking. Mr Diamond, who began in his job in January, has set a target of achieving a 13 per cent return on equity by 2013.

Santander Tops Goldman As Greenest Bank (Bloomberg)
At Banco Santander SA headquarters on the outskirts of Madrid, Joaquin de Ena says he’s gotten used to wearing his sweater vest indoors after the bank turned down the heat to trim power use and greenhouse-gas emissions. “This is OK,” de Ena, director of corporate social responsibility, says with a laugh as he looks at a conference room thermostat as a chilly wind blows through the capital on an early March day. “I’m not sure if it should go any lower.” Santander’s in-house conservation and ecominded investments won it top billing in Bloomberg Markets’ inaugural ranking of the world’s greenest banks…Goldman Sachs was second overall and topped the list for green investing. New York-based Goldman, along with No. 4 bank Credit Suisse, managed the $3 billion initial public offering of Enel Green Power SpA, Rome-based operator of wind, geothermal and hydropower plants. Goldman also co-led the IPO of Tesla Motors, the Palo Alto, California, maker of the $109,000 all-electric Roadster. Read the full story

$$$ Libya-Owned Bank Drew at Least $5 Billion From Fed‎ [Bloomberg]

$$$ In testimony on Thursday, former Galleon portfolio manager Adam Smith acknowledged that the hedge fund had been awash with speculation about a possible merger of chipmakers Advanced Micro Devices and ATI Technologies months before the announcement of a $5.4 billion deal on July 24, 2006. But Smith said: “The speculation was public. The fact that it was happening was not public.” [Reuters]

$$$ Falcone-backed telecom hires Ed “We’re a nation of wusses” Rendell to lobby for LightSquared [Reuters]

$$$ “We need to get the owners of banks to behave like they own them. Institutions are turning over their bank shares every six months or so. They don’t consider themselves owners. I think we should get capital requirements up in the future but allow them to grow at the moment, and in the meantime make sure shareholders own shares for longer and engage with management. The job of policing management shouldn’t be left to the government. It should be the owners that do that. But we lost that. Again, maybe we need another tax to make shareholders hang on longer. I would call it the Warren Buffett Tax.” [Fortune]

$$$ Moody’s Cuts Tepco’s Credit Rating [WSJ]

$$$ Fed’s Tarullo: Banks Need Tough Capital Standards [CNBC]

$$$ Will Goldman’s Special Situations Group Survive Dodd-Frank? [BW]

$$$ $5 Fees May Be Coming to an ATM Near You [CNBC]

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Dimon Kicks Off Wall Street Pressure On Global Competitiveness (Bloomberg)
Dimon is the keynote speaker today at a conference on global capital markets competitiveness hosted by the U.S. Chamber of Commerce in Washington. “If America adopts a lot of things very different than the rest of the world,” U.S. competitiveness will be damaged, Dimon told investors at a Feb. 15 meeting at JPMorgan’s New York headquarters. JPMorgan’s chairman and CEO said forcing banks to spin off some derivatives business is “absurd” and other changes in last year’s Dodd-Frank Act are a “terrible shame.”

Microsoft Cofounder Hits Out At Gates (WSJ, excerpt)
Bill Gates schemed to take shares in Microsoft Corp. from his co-founder during the early days of the software company following his partner’s treatment for cancer, according to a new memoir by the billionaire co-founder, Paul Allen…In the book, Mr. Allen reveals that his decision to leave Microsoft was prompted largely by his growing disenchantment with the behavior of Mr. Gates, whom he portrays as a confrontational taskmaster who clashed with Mr. Allen’s low-key style. Past histories of Microsoft have said Mr. Allen’s departure from the company was sparked by his first brush with cancer in 1982, when he was diagnosed with Hodgkin’s disease. In that year, Mr. Allen says he eavesdropped on a discussion in the Microsoft offices in Bellevue, Wash., between Mr. Gates and Steve Ballmer, now the company’s CEO, in which he heard the two men talking about Mr. Allen’s recent lack of productivity and how they might dilute his equity in the company by issuing options to themselves and other shareholders. Mr. Allen said he burst into the room and confronted Messrs. Gates and Ballmer, both of whom later apologized to him and backed down from their plan.

Trader Outlines Two Faces Of Galleon (NYP)
Former employee Adam Smith testified that the culture at Galleon was such that Rajaratnam encouraged employees to communicate openly about their trading ideas and stock tips — unless it came to “sensitive” inside information. In those cases, Rajaratnam “admonished” workers who were too specific and told them never to put anything in writing unless they could keep it “vague,” Smith testified.

Merrill Lynch To Pay $1.2M To Former Co-President (WSJ)
Ahmass L. Fakahany, Merrill’s former co-president and chief operating officer, filed the arbitration claim in December 2008, alleging the firm benefited financially at his expense, among other things, according to a ruling by a Financial Industry Regulatory Authority arbitration panel. The ruling, entered on March 24, didn’t explain the basis for Fakahany’s arguments, or the panel’s decision, as is customary in arbitration cases. Fakahany, who left the firm in February 2008, sought $70 million in damages from Merrill Lynch & Co., in addition to John Thain, its former chairman and chief executive, members of its board of directors, and Banc of America Securities.

Deal Rush Pushes Takeovers To Most Expensive Since Lehman (Bloomberg)
Acquirers paid a median 9.2 times earnings before interest, taxes, depreciation and amortization for companies in thefirst quarter, the most since the second quarter of 2008, according to data compiled by Bloomberg. Valuations are still lower than during the last M&A boom, when they peaked at 11.4 times Ebitda.

Jim Rogers: Oil To Rise; Nuclear Energy Will Come Back (CNBC)
Uranium and nuclear power stocks are likely to be good buys only in two or three years, when things calm down, Rogers, who together with George Soros co-funded the Quantum Fund, said in an interview. “Unless we find something to replace oil and coal, we have to have nuclear… whether we like it or not,” he said. Rogers, whose portfolio is mainly in commodities and currencies, said oil prices will rise.

Where The Bailout Went Wrong, By Neil Barofsky (NYT)
“Worse, Treasury apparently has chosen to ignore rather than support real efforts at reform, such as those advocated by Sheila Bair, the chairwoman of the Federal Deposit Insurance Corporation, to simplify or shrink the most complex financial institutions. In the final analysis, it has been Treasury’s broken promises that have turned TARP — which was instrumental in saving the financial system at a relatively modest cost to taxpayers — into a program commonly viewed as little more than a giveaway to Wall Street executives.”

G-20 Criticism of Fed Easing May Be Muted at China Meeting (Bloomberg)
Chinese criticism of the Federal Reserve for flooding the world with money may get little traction among Group of 20 finance chiefs meeting in China as Europe’s debt crisis and Japan’s disaster take precedence. Timothy Geithner, French President Nicolas Sarkozy, Chinese Vice Premier Wang Qishan and European Central Bank President Jean-Claude Trichet will gather in Nanjing for a one-day seminar on the international monetary system tomorrow. A Chinese state economist called for an end to the dollar’s dominance in a paper posted on a website yesterday, blaming the U.S. for fueling inflation. A 9.0-magnitude earthquake in Japan, armed NATO intervention in Libya, and the heightened prospect of a bailout of Portugal are among developments since Sarkozy proposed the meeting seven months ago.

State Tax Revenue Snaps Back (WSJ)
Total tax receipts for state and local governments hit $1.29 trillion in 2010, just 2.3% shy of the $1.32 trillion taken in during 2008, not adjusted for inflation, according to Census Bureau data.

Apollo Global Raises $565.4 Million in Expanded Share Offering (Bloomberg)
Apollo Global Management LLC raised $565.4 million, 13 percent more than it sought, pricing its share sale at the top end of the marketed range and increasing the number of shares sold. The private equity firm founded by Leon Black sold 29.8 million shares at $19 each, the company said yesterday in a statement. Apollo had offered 26.3 million shares at $17 to $19 apiece, according to a filing with the U.S. Securities and Exchange Commission. Proceeds will be used for general corporate purposes and “to fund growth initiatives,” the prospectus showed.

Private-Sector Job Growth Continues; Layoffs on Decline (CNBC)
The private sector added 201,000 jobs from February to March, according to a report from ADP that sets the stage for what is expected to be a similarly solid nonfarm employment report from the government later this week…The report signals “across-the-board strength by industry and by size,” Joel Prakken, chairman of Macroeconomic Advisors, said on CNBC. In particular, he said the surge in service jobs helps balance the recovery and indicates that critical areas are catching up.

Real Estate Adds To Mets Owners’ Headache (WSJ)
Last year, a loan servicer filed to foreclose on two office buildings in Fairfield, N.J., where the $609 million Sterling American Property V fund defaulted on a $35 million mortgage, according to loan research service Trepp LLC.

Five charged with using children’s coloring books to smuggle drugs (PAC)
Disney-character coloring books arriving at the Cape May County Correctional Center and addressed “To Daddy” in a child’s handwriting were saturated with a narcotic drug as part of a smuggling operation, authorities said Monday. Two inmates at the correctional center, a state prison inmate and two others were charged with distribution of a controlled substance after they allegedly turned Suboxone, a prescription drug designed to treat opioid addiction, into a paste. The paste was then painted onto children’s pictures and sent through inmate mail, Cape May County Sheriff Gary Schaffer said Monday.

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Shortly after Raj Rajaratnam was arrested on Oct. 16, 2009, his brother Rengan went into the Galleon Group LLC’s co-founder’s office and removed his sibling’s private notebooks, former Galleon trader Adam Smith told prosecutors, according to a court filing made yesterday. Raj Rajaratnam’s lawyers yesterday filed a legal request asking a judge to bar Smith from testifying about Rengan Rajaratnam’s actions on Oct. 16. Prosecutors wanted to offer the account from Smith, who may testify for the government this week, “to prove the existence of the charged conspiracy and Rengan’s membership in it,” they wrote in court papers. [Bloomberg, earlier]

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Here’s some news that should be comforting not only to former Goldman Sachs board member Rajat Gupta, but anyone who has in the past or is considering in the future leaking non-public details about a company to a hedge fund manager who’ll proceed to trade on them– should you be caught on tape doing just that, criminal charges are unlikely.

Prosecutors in the trial of Rajaratnam this week played a tape of the call in which the former Goldman Sachs board member chatted casually with the hedge fund manager about the bank’s talks on buying Wachovia or AIG…The exchange, along with additional government allegations divulged in recent weeks, isn’t a smoking gun that shows Gupta meant to break the law, said Tom Dewey, a lawyer at New York’s Dewey Pegno & Kramarsky LLP. Richard Scheff, who practices criminal law and isn’t involved in the case, called the prospect of charges “unlikely.”

Early in the trial, prosecutors displayed a photograph of Gupta on a video screen while Assistant U.S. Attorney Jonathan Streeter told jurors he was a “co-conspirator” who leaked tips about Goldman Sachs’ earnings and a 2008 investment in the bank by Warren Buffett’s Berkshire Hathaway Inc. Within minutes of attending two board meetings, Gupta, 62, called Rajaratnam, 53, who traded on the tips, Streeter said. Prosecutors on March 15 played a wiretap recording of the July 29, 2008, telephone call between Gupta and Rajaratnam. In it, Rajaratnam asked about a “rumor that Goldman may look to buy a commercial bank.” In response, Gupta said, “Yeah, this is being discussed” and that the board was “divided” on suggestions that it purchase Wachovia…Streeter said the government also has an October 2008 wiretap recording of Rajaratnam in which the fund manager tells “employees” that “he was told by a Goldman Sachs board member that the investment bank was losing $2 a share,” Streeter said.

So the key takeaway here seems to be that if you act natural, if you keep things “casual,” like you’re just calling to say hey, shoot the breeze, mention some stuff that’s been going on at work and see what’s on tap for the weekend, you should be okay.

Gupta Tapes Not Enough For Charges In Galleon Case [Bloomberg]

Earlier: Goldman Sachs Board Member Couldn’t Wait A Single Second To Pass Insider Information To Raj Rajaratnam

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