Reuters reports that federal authorities have “expanded” their insider trading investigation, having sent subpoena’s to “several large hedge funds” last week. Oddly, the government failed to leak the names of the firms to the press (a rookie mistake for which someone will fired), but no matter– we’ll just guess.

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As previously mentioned, in an interview with Forbes, WikiLeaks founder Julian Assange claimed that the next leak will be about a big US bank. Assange refrained from sharing details, saying only that the big reveal will be early next year and that its impact, ballparking it, could take down a bank “or two.”

Working under the assumption one is taking Mr. Assange’s threat seriously, the leak in question would obviously have to be pretty damn damning. Because I don’t know if Jules is aware of this, but in America, we don’t let banks fail (sorry, Lehman), even if they want to. Take Citi– they’ve tried as hard as possible and yet, still kicking. If Tim Geithner has to place a bank on a floating piece of debris while he freezes his ass off in the middle of the Atlantic Ocean to save it, he will.

Given that appears to be an intelligent, if slightly eccentric individual, though, Assange probably knows this and still makes the bold claim. So–can anyone even conceive of something that would be so bad that the government would say, “let’s let this one go?” Is there something a million times worse than a bank CEO starring in a night vision sex tape that includes lingering shots of him in the throes of passion with a couple of choice barnyard animals (which probably wouldn’t do it either)? Obviously we’re not talking about a little insider trading or front-running here, which would be shocking to find out financial institutions didn’t dabble in. Tell us which who will be on the bad end of this “shitty deal” and why. As a commenter pointed out earlier, it could be Bank of America, based on an interview Assange gave in 2009, but who knows.. Rampant speculation encouraged.

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Great news, Diamondback investors: your money has (mostly) not been tainted.

Last Monday, Diamondback Capital was the first hedge fund to be raid by the feds as part of the government’s Insider Trading Fest(ivus) 2010. Today clients were told that everything is cool. The FBI isn’t really looking to nail the fund, just have a little chat with one of its traders, who’s been asked not to come in for a while. Co-chief investment officers Richard Schimel and Lawrence Sapanski knew this last week but figured they’d save the good news for a few days. Keep everyone on their toes.

Dimaondback told investors in a letter Monday that it had put one of its employees on leave after receiving a subpoena for information on its trading and research activities. Diamondback said in the letter, “We were informed just before the holiday that Diamondback Capital Management, LLC is NOT a target of the government’s investigation.”

Diamondback, based in Stamford, Conn., said the search warrant, executed by FBI agents, appeared to be focused on a portfolio manager and a former employee who reported to that person. Neither of them was identified. The company said in the letter, written by Diamondback’s co-chief investment officers Richard Schimel and Lawrence Sapanski, that it would not provide any additional details.

Diamondback Says Its Not Target Of FBI Probe [Reuters]

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According to Charlie Gasparino, at least one of the aforementioned “low-level” Goldman employees rumored to be tied to the government’s Insider Trading Fest(ivus) 2010 “got roped into the investigation by ’some sort of association’ with Diamondback Capital Management LLC.” Still unclear: how low we’re actually talking (e.g. first years, summer interns, etc).

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From MarketWatch: SAC Capital Advisors LP told investors in a letter that it got a government subpoena, according to a person who received the update from the hedge fund.

SAC said in the letter, dated Nov. 23, that the government served identical “extraordinarily broad” subpoenas on a number of investment managers of different sizes and descriptions, including SAC. The subpoena does not focus on particular individual securities, sectors or strategies, SAC added. The firm said the subpoenas don’t “shed much light on whom or what the government may be investigating.” One focus appears to be on the use of consultants and soft dollars, SAC noted in the letter. SAC will respond to the government “in a professional and cooperative manner.” “Neither the subpoena nor any other information of which we are aware suggests that anyone at SAC has engaged in any wrongdoing,” the firm added.

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“One of the great pejorative terms that continue to be used is this thing of bailout which suggests that the country is in some way seeking not to meet its obligations, to meet its own debts,” Cowen said, rejecting the suggestion that Ireland will be unable to fund its obligation. “That is not the case.” He’s got some meetings set up re: this whole budget thing, they’ll sort it out, it’ll be fine, so just, shhh, relax.

Cowen indicated he doesn’t expect a concrete agreement tomorrow night in Brussels, echoing comments by Luxembourg Prime Minister Jean-Claude Juncker. “There’ll be further discussions there and, I’m sure, there’ll be discussions thereafter as well,” Cowen said. Ireland is due to publish details of a four-year plan to reduce its budget deficit and its 2011 budget within the next month. Cowen said that the plans will help provide confidence in Ireland. It will “provide further evidence that the government and the Irish nation and the country is determined to work our way through these issues,” he said.

Cowen Says Ireland to Discuss Banks With EU Tomorrow [Bloomberg]

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No, just messing. He thinks it sucks, big time.

“I think that’s disgraceful to say they don’t want me or shareholders to make money,” Greenberg told Deal Journal about the Treasury’s reported efforts to carefully select the price of converting its $49 billion in AIG preferred shares into what will be a 92% stake in AIG’s common stock. “It sounds like the old Soviet Union,” Greenberg said in another interview today. “When the government starts deciding who should make a profit and who should not, if you invested in a company, what kind of a message does that send?…I think it’s going to take years, maybe a decade or more, for [the government] to sell down over 90% of the company…I’m not going to spend even a nickel to buy any more shares with the government owning so much stock.” [Deal Journal]

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EMC (EMC) has been seeing lighter-than-expected third quarter bookings, William Blair analyst Jason Ader asserted in a research note this morning.
Ader, who maintains his Outperform rating on the stock, says that conversations with key industry contacts and resellers point to the company tracking behind plan largely due to the government [...]

Article courtesy of BARRONS.com: Tech Trader Daily

Earlier today on CNBC, Home Depot co-founder Bernie Marcus pitched a new TV series. “Take Timothy Geithner and put him in a new reality show,” Marcus told Squawk Box. “It’s called ‘Timothy Geithner Does Small Business’, something like ‘Debbie Does Dallas’, and it ends up the same way,” he said. ”Basically, what they [the government] is doing to small business is very similar in this case [to what ‘Debbie’ did to Dallas.]”

Marcus felt this was the best way to illustrate what he feels is “how out of touch Democrats’ policies are with the private sector.” Unfortunately, he didn’t get into any specifics with regard to the format of the show, in detail, scene by scene, etc. Does it start out with Tim Geithner going online or opening up the yellow pages and finding a small business that tickles his fancy? Does he then get in his van (you know the kind), drive over there, walk down the aisle of, for instance, the local hardware store, unbuckle and drop trou among the cans of varnish, do what he came to do and nonchalantly walk out? Does he talk to anyone before he leaves? These are the things we need answers to.

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He added that he’s just messing, “of course,” but seriously, think about it. Dare to dream. We can do this. And then together, we will dance.

Germans should consider the following thought experiment: withdrawal from the euro. The restored Deutschemark would soar, the euro would plummet. The rest of Europe would become competitive and could grow its way out of its difficulties but Germany would find out how painful it can be to have an overvalued currency. Its trade balance would turn negative, and there would be widespread unemployment. Banks would suffer severe losses on exchange rates and require large injections of public funds. But the government would find it politically more acceptable to rescue German banks than Greece or Spain. And there would be other compensations; German pensioners could retire to Spain and live like kings, helping Spanish real estate to recover.

Germany Must Reflect On The Unthinkable [FT]

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