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Reports US

US stock market daily report (November 05, 2013, Tuesday)

November 6, 2013, Wednesday, 06:23 GMT | 01:23 EST | 10:53 IST | 13:23 SGT
Contributed by Millennium Traders


Jeff Sprecher, CEO of IntercontinentalExchange Inc. (ICE - NYSE) said on Tuesday that the markets are unfair to small investors and the little guys are getting ripped off. Sprecher is referring to the people who shuffle their holdings around occasionally as they save for retirement or their kids’ college tuition. Sprecher said, “People like you and I” although he did make more than $7 million in 2012.

Sprecher said that small investors are turning to exchanges “hoping that they will have a duty to care.” Sprecher added that, “But in reality those people are incented to take advantage of the people that are the weakest on the day they have to the trade, and I think that that is fundamentally wrong.” While trading on Wall Street has moved to the innovation of superfast computers that mine algorithms and process trades in milliseconds, to many small-time investors, it has only reinforced an uneasy feeling that trading is a game rigged against them.

These same small people, such as Main Street Americans, do not have access to the information available to professional or computerized traders. The high speed traders trading reams of stocks at speeds no human can come close to. Especially, Main Street Americans. Sprecher said Tuesday, “There is a sense, that things aren’t fair.”

Market models are designed to take advantage of the fact that small investors are locked into selling at certain times, such as when they want to cash in to start a business or buy a house.

Morgan Stanley Goes After Client List
Morgan Stanley (MS-NYSE) has filed a lawsuit on Halloween against a former financial adviser, Denis O’Brien. The lawsuit entails breach of contract and misappropriation of trade secrets against O’Brien.

In a lawsuit filed on Halloween, MS enclosed a copy of O’Brien’s employment agreement, where he agreed to not remove “Trade Secrets or other Company Records” from the bank and would not use such information “for any purpose other than the purpose of conducting the business of Morgan Stanley.” The Protocol for Broker Recruiting is a voluntary agreement signed by the bank, is administered by the Securities Industry and Financial Markets Association - SIFMA - which lays ground rules for when brokers switch employers. The agreement says that brokers can take a list of their clients if they leave their job with the firm however, they must leave a copy with their old employer as well.

The allegations against O'Brien include that, just before he quit his job with Morgan Stanley, he decided to take his clients with him by allegedly changing the customers phone numbers in the computer system of MS. According to MS, their IT team found that O’Brien had changed 206 phone numbers for 156 customer accounts, mostly by just a single digit.

According to Morgan Stanley, on October 25, O’Brien resigned without notice from the Mystic, Connecticut office, where he had worked for nine years. O’Brien left with the intention of working for Raymond James Financial, Inc. (RJF-NYSE). Upon O'Brien's departure, MS split his client list among four of their financial advisers who began calling them, in attempts of trying to persuade them to stay with Morgan Stanley instead of moving to Raymond James. It wasn't long after the advisors began making their calls and reaching consistent wrong numbers did they realize that O'Brien had made a switch.

The action by O'Brien delayed MS from contacting their clients right away. In the law suit MS said, “No price tag can be placed on the destruction of the benefits Morgan Stanley has accrued from such efforts and it is impossible to determine how much Morgan Stanley stands to lose as a result of O’Brien’s actions.”

Morgan Stanley wants O’Brien to return the list of correct phone numbers of the clients that he reportedly took with him and, the firm wants him to destroy any extra copies he may have kept for himself. In his employment agreement with MS, if O’Brien breaks the bank’s contract, he agrees to pay Morgan Stanley’s “reasonable attorneys’ fees.”

Deutsche Bank Executive a Suspect
In a long running dispute dating back to 2002, Jurgen Fitschen, the Co-Chief Executive of Deutsche Bank, has been named a suspect by German prosecutors investigating a court case with the Kirch Group. In a statement from Deutsche Bank, "The bank is absolutely convinced this suspicion will prove to be unfounded." The case dates back to a time when media mogul Leo Kirch claimed televised remarks by former Deutsche Bank CEO Rolf Breuer helped cause Kirch Group's bankruptcy. The Munich probe is looking into a "suspicion that incorrect information was deliberately provided" during a hearing into an appeal brought by one of the media group's units. Deutsche Bank reported a 94% drop in Q3 profit just last week as it set aside additional reserves for legal disputes, which include mortgage-related issues in U.S. shares.

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