It’s been a good couple months for Joe Perella and Terry Meguid, the former Morgan Stanley investment-banking stars who are setting out to start their own firm investment firm and have been busy raiding their old firm for talent.  Earlier in the week, they poached Paulo Pereira, Morgan’s London based head of M&A. Before that, they brought informer Morgan alum John Anda, as well as Peter Weinberg, the former head of Goldman Sach’s European advisory business. People at Morgan say they expect more defections in the weeks and months ahead.

The Perella-Meguid team isn’t just stealing talent from major Wall Street firms; they’re also busy raising money for their new investment business. CNBC has exclusively obtained an official summary of their new business venture that has been sent to various potential investors in the investment company that will be called NewCo. If some of the assumptions in the document prove accurate, there’s a good reason why so many people at Morgan are calling on Perella and Meguid for jobs.

According to the document, NewCo will operate from New York, London and the Middle East. It was have three principle lines of business: Advising corporations on M&A, and other investment-banking type matters; something called strategic investments, which sounds like private equity; and a massive “multi-manager global hedge fund.”

One of the most interesting parts of NewCo’s plan is their financial projection for the individual businesses. They expect their investment banking business to more than double in five years from $120 million in year one to $254 million in year five. Strategic investments will explode, they say from around $14 million in year one to $193 million in year five. Likewise they expect similar growth in their hedge funds: $11.5 million to $157 million.  Profits are projected to soar from $12m to $188m in year five.

Now some of this might sound like pie-in-the-sky. The document points out that the company wants to raise around $1 billion both to run the business and the make the investments, and this plan is floating around Wall Street right now for that very purpose. According to the document, the partners will put in $50 million of their own money, but people close to the company say it’s now higher.

That said you don’t want to bet against these guys. “Branding is very important,” as the document point out and “Perella is a known brand.” Joe Perella is probably the top investment on Wall Street, a guy who can get just about every top corporate executive on the telephone. And remember he’s done this before successfully. He left First Boston in the 1980s to start one of the most successful investment-banking boutiques, Wasserstein Perella.

The plan here is to focus on 280 of the top companies, the document says because they think a least a quarter of these often hire not just a big Wall Street firm as an advisor, but also a “second independent advisor.”

We shall see.

One of the biggest horse races on Wall Street these days is the battle between Nasdaq and the New York Stock Exchange over new listings. Nasdaq’s Chairman Bob Greifeld has made great headway in eroding the NYSE’s prior dominance, snatching companies like Schwab and Cadence Designs from the NYSE. Just yesterday, UAL said it would list on the Nasdaq when it comes out of bankruptcy next week. The NYSE has a higher bar for new listings, which UAL met, and after both sides competed for the listing, Nasdaq came out on top.

            But inside Nasdaq, people are saying that another listing battle is set to begin now that Disney has agreed to buy Pixar Animation Studios for $7.4 billion. Disney is listed on the exchange, and Pixar on the Nasdaq, but with Pixar CEO Steve Jobs now the largest shareholder and a board member, people inside Nasdaq say the company’s listing is in play.

            Of course, it seems like a long shot that Jobs will begin his new gig by making the company’s listing a major priority, particularly given all the other integration issues he and Disney CEO Bob Iger need to deal with. Disney, after all, bought Pixar, and its board remains largely the same. Disney has been a loyal NYSE member for as long as anyone could remember.  Still, people at Nasdaq say the deal and Jobs’ new role at the company provides an opening to steal one of the crown jewels of corporate America away from the New York Stock Exchange. Jobs has been a loyal Nasdaq guy for years; Pixar as well as Apple Computer list on the Nasdaq and he resisted several attempts by former NYSE Chairman Dick Grasso to switch to the exchange.

            Given the timing of the deal late yesterday (Tuesday) it’s unclear if Mr. Greifeld has made a call to Jobs just yet. If he hasn’t, senior people at the Nasdaq say he will in the coming days. 

Charles Gasparino - CNBC 

General Eliot Spitzer into alleged accounting irregularities at the company.

            At 80 years old, you would expect Greenberg to be relaxing and enjoying his enormous wealth, or at the very least, spending most of his time dealing with the federal and state investigations into AIG’s accounting; Greenberg has been charged in a civil suit brought by Spitzer for allegedly using improper accounting techniques to boost the company’s bottom line.

            Instead, Greenberg said he’s working like never before at his insurance company and investment firm, CV Star, which he says is eying investments in China and around the world. And he’s working out, recently switching to weight-training regimen called “serious strength” that involves pushing weights until you’re exhausted.

            While we’ve all read published reports that AIG is nearing a settlement with Spitzer, agreeing to pay between $1 billion and $1.5 billion, Greenberg told me he’s going to keep fighting, and it’s getting personal. He called Spitzer a “thug” for some of his heavy-handed tactics, including accusing Greenberg of committing fraud on national television even before he filed charges, and the allegations that Spitzer threatened his friend, former Goldman Chairman John Whitehead after Whitehead penned an article defending Greenberg amid Spitzer’s public attacks.

            He was a little less antagonistic when it came to the new management of AIG, the company he founded and grew into one of the world’s largest insurance companies, but not much. He said current management “is destroying the culture of the company,” by becoming too bureaucratic and losing its “entrepreneurial culture.”

He also said he expects a shareholder lawsuit if the company settles with Spitzer for the $1 billion to $1.5 billion as had been reported. “If you agree to a settlement with no wrong doing (most civil settlements have that clause) and you pay a large fine, shareholders are likely going to sue because they are paying a fine, but they (AIG) are saying they did nothing wrong. Who does that money belong to if not the share holders?”

While nothing is imminent on either side, these discussions have been described as the first step toward more formal talks, which are likely to take place in the coming months as the Nasdaq eyes a more global expansion of their domestic markets, sources are telling CNBC. The recent move of the Nasdaq to separate from its regulatory arm, the NASD, was a sign that the market wants to expand into Europe (it’s easier to buy a European exchange without being attached to a US regulator)

There are, of course, obstacles to any deal. Greifeld is said to be worried about the price tag of a deal, which could run into the billions. A private equity group as recently courted the LSE, so any deal would come amid a bidding war.

That said Greifeld’s intentions are real, people close to the matter say, though they won’t put a time frame on when discussions could reach a more critical stage. If Greifeld wants the LSE he should move fast. People at the New York Stock Exchange say that once the exchange goes public in the middle of February, CEO John Thain will also be looking at overseas expansion. The LSE is clearly on his list, as is the Deutsche Bourse.

Both the NYSE and Nasdaq declined to comment.

One of the things that struck me about our interview with Nasdaq Chief  Bob Greifeld yesterday was how much confidence he had when it comes to competing with the New York Stock Exchange for new listings. At one point off camera, Greifeld said that he wants to turn the floor of the stock exchange into a “bowling alley.”

            That may appear to be bravado, but people at the Nasdaq and around the market I spoke with yesterday say Greifeld has good reason to be optimistic about the Nasdaq’s future versus the NYSE. These people say that the Nasdaq is close to securing another major switch, convincing a company that listed on the exchange, to leave the Big Board and list only on the Nasdaq. The switch, if it comes, could be announced in the coming days, our sources say.

            I asked Greifeld yesterday if the company looking to move was Hewlett Packard, which currently lists on both the Nasdaq and the NYSE. While he confirmed that he recently met with HP, the impression I had from a subsequent interview was that he’s actually closer to bringing over another company, and that the decision is right up in the hands of the company’s board of directors.

            If and when the Nasdaq gets the switch it would be a major blow to the stock exchange as it moves toward becoming a public company with its merger with electronic-trading company Archipelago. Losing major listings will be one of the factors affecting the Big Board’s stock price, which based on Archipelago’s current price of around $50 a share, many people I speak with say is over valued.

CNBC has learned that the Securities and Exchange Commission has ramped up its inquiry into allegations that it inflated what’s known as “return to vendor” payments in stores throughout the country, a potentially huge blow to the nation’s largest home merchandising company as Wall Street top cop examines whether alleged of fraud occurred on a nationwide basis.

            Home Depot, with 2,000 stores nationwide, denies that it has done anything improper, but the SEC’s investigation is serious. After asking the company to turn over documents in August, the commission’s enforcement staff in New York City, just last week asked for additional documents, this time from a former Home Depot employee, Michael Davis, who said he was fired from the company for blowing the whistle on the practice. CNBC has learned that the probe is wider than originally thought; although HomeDepot said its nothing more than an “informal inquiry,” SEC is examining whether the practice that Davis has described occurs throughout the country.

            At issue is whether Home Depot falsely inflated its revenues by telling its employees to make up cases of customer returns and then billing vendors for those phony returns. At least that’s the contention of Davis, a former clerk at the company who laid out his allegations in a lawsuit filed with the Department of Labor under the section of Sarbanes-Oxley law that protects people who blow the whistle on alleged accounting fraud.  The reason Home Depot can get away with the practice is that many vendors don’t investigate the return claims made by the store, particularly those under $1,000.

            CNBC has learned that what has piqued the SEC’s interest is that Davis alleges that the practice just didn’t occur in the store he worked out of in suburban Washington DC. When he confronted management about what he though was unethical behavior, he says he was told that this is standard practice throughout the Home Depot system. Davis says that he believe the improper charges amount to about $25,000 a week out of the store where he worked. That’s about $1.3 million. Extending that out to all the stores in the HomeDepot empire and you’re talking more than $1 billion.

            Before investors begin unloading shares of Home Depot, they should consider the following: The SEC’s investigation, CNBC has learned, is only in its beginning phases. Although the commission has asked for documents and depositions that Davis’s attorney, Mark Schwartz, it has yet to interview Davis himself. And then there’s Home Depot’s explanation of what went on. The company told CNBC that in many of its vendor agreement returns are pre negotiated, meaning that the vendor gives Home Depot an annual allowance for returns that’s “pre negotiated.”

            Anyway, we’re going to have an interview later on with both Schwartz and Davis. Home Depot declined CNBC’s request for equal time on the air.

Charles Gasparino -CNBC

          So the Bob Woodward of TV-Financial-Early-Morning broadcasting (note all the qualifiers) Matt Greco did a little digging to find out what Wall Street firms are “stripper friendly,” allowing their employees to use strip clubs as a way of getting business, and which were not. The results will surprise you.

          Nearly ever major Wall Street firm appears now to be following Morgan Stanley’s lead and telling their employees to stay away from “adult entertainment establishments,” including Merrill Lynch, Bear Stearns, Citigroup, and Bank of America. (Lehman never called back with an answer). They offered up relatively similar explanations, that using “adult entertainment establishments” to gin up business is “inappropriate,” “unprofessional,” ect., ect., ect.,

          But what we found interesting was the one firm that appears to have no problem with stripper clubs: Goldman Sachs. Apparently those white shoe bankers at Goldman have no problem taking their white shoes into places like Scores in New York City, or Skin, the Phoenix-area strip joint that got the Morgan Stanley guys fired. A Goldman Sachs spokesman we “expect our people to use good judgment at all times,” though he added that at Goldman you can be fired for stupidity, meaning that anyone getting their names in the paper for attending an “adult entertainment establishment” could be looking for another job.

          Ironically, the source of these very strict stripper-club rules is not the market’s two self-regulatory organizations, the NASD or the NYSE. Both say they don’t have specific rule prohibiting stripper clubs as a business venue.

Charles Gasparino - CNBC

As much as I hate the all the hype about Google and all those insane price targets, I’m starting to be convinced that maybe, just maybe, that stock is worth the roughly $550 a share that most Wall Street analysts are calling. That’s because the ultimate contra-indicator has weighed in saying that Google could be a $100-share stock.

          That prediction comes from Henry Blodget, the disgraced-stock market analyst, the guy who called all those Internet stocks such nasty names (not even fit for cable TV) while promoting them to the general public. Blodget posted his prediction in his blog, “The Internet Outsider,” and aside from his analysis, which based on past experience has always been suspect, he made a mistake in the first paragraph, saying that “no one else is writing” a bearish scenario on Google. Once again, check your facts Henry: A day before your blog was published, NY Post Columnist Chris Byron also said the company’s stock was way over priced.

          Anyway, I had an editor who used to tell me that when reporters get little things wrong, you shouldn’t trust the rest of the story. Enough said.

Believe it or not, if we were going to give an award for the most dysfunctional securities market in the world, it wouldn't go to the New York Stock Exchange. Despite multiple lawsuits, a challenge by financier Ken Langone to its upcoming IPO, and Goldman Sachs's virtual takeover of every aspect of the NYSE's operations, there is actually a securities exchange that is even more dysfunctional than the Big Board: The New York Mercantile Exchange, also known as the NYMEX.

        Keep in mind that the NYMEX isn't some second-rate player in the global financial system. It's place where the world-wide prices of oil, gas, gold and silver are set, but it's being run like a third-rate frat house; warring factions have prevented at least two outside parties -General Atlantic Partner and the Chicago Mercantile Exchange -- from completing a deal to make a sizable investment into the NYMEX, a precursor to the exchange going public later this year.

        Last week, a group of seat holders gave the NYMEX board until February 1^st to sort out its problems and decide which direction it wants to go. The effort was led by seat holder Cataldo Capozza who says he has enough support from other seat holders to call a meeting that could lead to an ouster of the NYMEX board and stage a coup. We understand that Capozza's end game is to force the NYMEX to consider a bid from the rival CME over the one from General Atlantic because he feels the GA bid is too low. Giving Capozza a big boost in his efforts, CNBC has learned that former NYMEX Chairman Michel Marks is a behind-the-scenes supporter. He has told people that he agrees in principle with Capozza's efforts. Marks owns 11 seats and could provide crucial votes to oust the board and current management in the days and weeks ahead.

        The controversy continues to grow. The NYMEX board is meeting tonight (Weds) to discuss the various proposals about its future and a decision could be made Thursday just in time for a scheduled debate on Squawk Box on the matter. One issue on the table will be whether the NYMEX, in which floor traders bid on futures through "open outcry," should begin to embrace electronic trading of futures contracts, ala the New York Stock Exchange, which is merging with electronic-trading outfit Archipelago and introducing a "hybrid" specialist system that mixes humans and computers to match buyers and sellers of stocks.

        But comparing the NYMEX to the NYSE is like mixing apples and oranges; the NYSE "seat holders," the technical owners of the exchange often lease out their seats and the right to trade stocks to professional traders while they sip martini's in Boca Raton. The NYMEX seat holders are virtually all professional futures traders who make a living in the markets. For that reason, many are loathe to embrace a system like the CME that might cost them their jobs.

        Anyway, the debate should be lively, so tune in.

Charles Gasparino