It may be the awakening we all experience in the spring, but this month two different class actions against previous financial giants were started by a bunch of pension schemes. In both cases a small group of such previously semi-obscure institutions have de facto come under the spot light for suing companies– and their executives– which they say have been less than straight about their financial shape and lost them millions.

Earlier this week five schemes, including Europe’s second largest one, clubbed to become lead plaintiff in a class action over about $274 million losses incurred since Bank of America took over Merrill Lynch.

Earlier this month two public pension schemes in the UK, Merseyside and North Yorkshire, started a class action against Royal Bank of Scotland and former chief executive Fred Goodwin. The legal firm working on the case, Coughlin Stoia Geller Rudman & Robbins, hired Cherie Blair. One of its lawyers even told Reuters: “Never underestimate Cherie Blair,” leaving a faint promise for fire works.

The UK schemes are seeking damages for the losses that followed the fall in the value of their investments when RBS was bailed out by the UK government.

Banks are not the only focus of pension schemes’ ire (or the more general ire of investors, for that matter). It looks like hedge funds may be the next and this time it is much more than public pillorying. Once again, it may all end up in court.

It appears hedge funds could face rules allowing investors to sue if hedge fund fees and manager pay do not match performance over the longer term.

It is not a lawyer or an ebullient trustee saying this, rather it is Michael Hintze, chief executive of hedge fund firm CQS. Hintze reckons a hedge fund manager who makes big gains one year but big losses the next could be sued if they take home a big pay packet the first year but give investors none of this back the next.

It’s a long shot, but ‘pension fund’ could become the synonym for ‘action hero’ this spring.

Morgan Stanley’s jump from 10th to first in our M&A league table should put them on cloud nine. The first quarter was busy with drug deals, and Morgan Stanley was in on the biggies: advising Wyeth on its $64.5 billion acquisition by Pfizer, and Schering Plough on its $46 billion takeover by Merck. And with the ink still to arrive on the paper of both deals, more good stuff could be on the horizon. The trick for Morgan Stanley, and anyone wanting to take down the king of the hill, is to spot and exploit the trend.

If drug deals remain du jour — and many expect the sector to stay hot, despite all the swallowing going on — the trend will certainly be toward Biotech. The markets for biologics and pipeline-filling cancer treatments have been strong in the face of expected government action to lower doctor and drug bills.

The heightened merger activity in Big Pharma has switched the tables a bit in the sector. After Roche’s nearly $47 billion acquisition of Genentech, analysts became increasingly convinced that the remaining big biotechs like Celgene, Gilead, Genzyme, Biogen Idec and Amgen could emerge as buyers, given that traditional Big Pharma is either digesting deals or just not so big anymore.

Christopher Kaufman; DealZone Editor

Deals of the Day:

* Drug maker Lupin Ltd said it has acquired a 51 percent stake in Multicare Pharmaceuticals Philippines Inc, marking the Indian firm’s foray into the $2.5 billion Philippines pharmaceuticals market.

* Britain-based dairy products maker Dairy Crest said it had sold its 49 percent stake in Yoplait Dairy Crest (YDC) to the Yoplait Group for 63.5 million pounds ($92.66 million) and that it would use the cash to reduce debts.

* Austrian steelmaker Voestalpine said its North American unit, VAE Nortrak had acquired U.S-based Leading Enterprises Inc, a supplier of speciality components for railway tracks, as part of a plan by the company to expand its railway division.

(PHOTO: A sign is pictured on Wall St. near the New York Stock Exchange in New York November 25, 2008. REUTERS/Lucas Jackson )

Preliminary first-quarter data from Thomson Reuters on mergers and acquisitions (M&A) and capital markets are out. And unsurprisingly, spring has not sprung in investment banking, with the big exception of a record deluge of corporate bonds.

Fees across investment banking (M&A, loans, and debt and equity capital markets) halved, while fees for completed M&A topped that with a 68 percent fall. Overall announced M&A fell by a third, compared to the same period last year, to $444 billion.

And even that figure is flattered by two huge pharma deals, which bankers doubt will be followed by more of the same, and a flurry of bank bailouts.

Still, some houses will find reasons to be cheerful — Morgan Stanley, for example, which is no. 1 globally and in the United States, up from a dismal 10th a year earlier.

You can see a full round-down of previous quarters (and eventually of this quarter) here.

General Electric Capital Corporation has asked the federal bankruptcy court in Delaware for permission to repossess bankrupt housewares retailer Gottschalks‘ Cessna Citation jet, which was used as collateral for a $3 million loan because Gottschalks has stopped making its monthly payments, according to court documents filed Thursday.

GE Cap said Gottschalks, which filed for Ch. 11 in January, still owed it $2,304,671 as of March 19, 2009.

GE Cap, which was downgraded this week, estimates the jet could be sold for $1.7 million, but faulted Gottschalks for “numerous material maintenance deficiencies” that have lowered the plane’s value.

In its motion, GE also said: “The fact that there are so many Cessna Citation jets on the market for sale at this time has also caused the value of the Airplane to be steadily decreasing.” (That is hardly surprising given all the pressure on some companies, particularly banks like Citigroup, to sell their corporate jets or cancel new orders.)

GE Cap acknowledges that the plane could be one cheap flying machine, but anything would help the company cut its losses, especially if the odds of retrieving more money from Gottschalks seem low.

(Photo: Reuters)

With just a few days left, the first quarter of 2009 has been as miserable for the U.S. IPO market as the last few quarters were.

The first three months of the year saw one solitary IPO- a grand slam to be sure, an $828 million (including over-allotments) deal by kids food maker Mead Johnson Nutrition. In contrast, the first quarter of 2008, when IPO flow was already starting to fall off a cliff, had 10 deals yield a total of $20.6 billion.

It was the second quarter in a row to see only one deal, the first time such a six-month drought has happened this decade.

(U.S. IPO investors might find some solace knowing things were even worse outside the U.S.- total IPO volume for the first quarter was $510.6 million on 41 deals, down from $15.4 billion from 150 deals in the first quarter of 2008, according to Thomson Reuters data. Ouch.)

But the Mead Johnson IPO was an anomaly: it was spun off by a well known company, Bristol Myers Squibb, and has robust sales in an industry considered relatively recession proof.

Part of the problem is that some companies are still in denial about how much their IPO can raise, leading them to wait for the better times that are taking a long while to get here.

Here’s what Tom Fox, the head of equity capital markets at UBS told Reuters: “With the markets off by 50 to 75 percent, depending on the sector, there’s a recalibration that has to take place. People have to get used to the levels at which stocks are trading and companies being valued at lower levels. That makes it more digestible to think about going out.”

And even with this week’s rally, the markets remain jumpy. The VIX volatility index is still above 40, far above the 20 range many bankers say is conducive to IPOs.

So his outlook is not very promising: “Our expectation is that the earliest we’ll see a more active IPO market is in the fourth quarter. And that presumes companies are ready to press the button in September or October. But it’s very likely we won’t see a truly active market until 2010.”

Sure enough, there were only three new IPO registrations during Q1 (and only one since the Mead Johnson deal), while 14 companies pulled themselves out of the pipeline.

But one of those new registrations, by Changyou.com, a Chinese online game company being spun off by Sohu.com, is set to price April 1. So it may well be that Q2 will see one deal. But maybe one deal only.

(PHOTO: Foreign tourists near Dakhla oasis in Egypt’s Western Desert, in Sept. 2008. REUTERS/Goran Tomasevic)

A casual glance at financial markets circa, say, 2005, finds smart money scooting around regulators (the SEC, the IRS, etc) to swim in black pools, park itself in off-shore tax havens and invest in assets so hot they would become radioactively toxic in just a few months. Market professionals were paid a pretty penny, and in many cases worked very hard, to perform feats of financial wizardry that would keep the smart money where it belonged – out of sight.

Here we are in 2009 and Treasury Secretary Timothy Geithner is preparing to lobby Congress for a huge boost to the regulatory arsenal that the government can wield in its herculean effort to contain the natural inclination of money to find a way around the rules. Mobs are scouring Connecticut looking to shame the money magi of yesteryear into returning their earnings. America is wracked with fear. Talk of government-ensured employment is burbling around Washington, and bonuses are a bad thing.

Prognosticate yourself forward a few years … how many is anybody’s guess. Financial wizards likely will be wielding even more complex instruments to wend their way through the gaps and inefficiencies of a reinvigorated regulatory framework — and commanding more exotic fees. After all, this is America. We reward innovation.

Deals of the Day:

* Japan’s Mitsubishi UFJ Financial Group and investment bank Morgan Stanley will merge their Japanese brokerage units to chase industry leaders Nomura Holdings and Daiwa Securities Group. MUFG will take a 60 percent stake in the venture, to be formed by March 2010, the two banks said.

* Intel Corp Chief Executive Paul Otellini said IBM’s discussions to acquire Sun Microsystems Inc are likely to succeed for one ringing reason: Money Talks.

* Corriente Resources Inc is near closing a sale deal with China’s Tongling Nonferrous Metals, senior Ecuadorean officials with direct knowledge of the negotiations told Reuters.

(PHOTO: U.S. Treasury Secretary Timothy Geithner is seen speaking on a television monitor in the overflow room of the Council on Foreign Relations in New York, March 25, 2009.   REUTERS/Shannon Stapleton)