Defensive Stocks Lose First Time Since 1999 Amid B
By Matt Walcoff
(Updates today’s trading in fifth paragraph.)
Feb. 9 (Bloomberg) — As global stocks return to a bull market, the losers in the U.S. are companies least tied to economic growth.
For the first time since 1999, Standard & Poor’s 500 Index utilities, phone companies and providers of consumer staples posted the only monthly losses, slumping at least 1.5 percent with dividends in January, and continued to lag behind this month. It’s a reversal from 2011, when the three defensive industries returned more than 6.3 percent as investors embraced stocks thought to do well during a slowdown.
Investors are shifting toward riskier assets as U.S. manufacturing expanded the most since June and the jobless rate fell to a three-year low of 8.3 percent. The MSCI All-Country World Index has risen 20 percent from its October low, meeting the definition of a bull market, while the dollar has weakened against 15 of its 16 major counterparts. In 2011, the global equity measure suffered its biggest losses since the subprime- mortgage crisis.
“Last year, investors tended to hide in things which are stable, paying reasonable dividends,” said Sudhir Nanda, a money manager and head of the quantitative equity group at T. Rowe Price Group Inc. in Baltimore, which oversees $489.5 billion. “This year, people looked at the U.S. and said, ‘Things are not really that bad.’ If the economy is humming, people tend to buy more of the sectors which will profit from growth, industrials, materials and things like that.”
Greek Agreement
The S&P 500 rose 0.2 percent to 1,351.95 today as Greek political leaders struck a deal on a package of austerity measures needed to secure international rescue funds.
Consolidated Edison Inc., Verizon Communications Inc. and Philip Morris International Inc. have all fallen in 2012 after rallying more than 12 percent last year. The S&P 500 has gained 7.3 percent this year, including 2.9 percent in February, for its best start since 1991. Indexes of financial, materials, technology, industrial and consumer-discretionary stocks have each outperformed the broader gauge.
S&P 500 phone companies posted the biggest decline in January, falling 3.9 percent. Utilities dropped 3.7 percent, the most since May 2010, after leading U.S. equities for the first time in 11 years in 2011. Consumer-staples stocks, which gained at least 10 percent in five of the previous six years, declined 1.7 percent. Procter & Gamble Co., the world’s largest household-products maker, slipped 5.5 percent for the biggest monthly drop in three years.
Unemployment Rate
Investors flocked to defensive industries in 2011 as the U.S. unemployment rate held at or above 9 percent until October and the European debt crisis led economists to cut forecasts for American and global growth.
Dividends became a bigger attraction for investors than low valuations given the perceived need for protection against losses and with bonds paying record-low yields, Tim Paulin, vice president of product management and investment research at Touchstone Securities Inc. in Cincinnati, said in a telephone interview.
S&P 500 telecommunications, utilities and consumer-staples stocks pay dividend yields of 5.74 percent, 4.18 percent and 2.93 percent, respectively. None of the other seven groups in the S&P 500 yield more than 2.17 percent.
The S&P 500 Telecommunications Services Index’s price- earnings ratio climbed 43 percent higher than the entire market’s valuation in October, the most since 2001. The MSCI World Utilities Sector Index began 2012 with a valuation 87 percent higher than the broader index. Between 1995 and September 2011, the group’s price-earnings ratio was 23 percent below the MSCI World Index’s on average.
Looking for Yield
“People were gravitating to dividend yields,” said Paulin, whose firm Replica Tag heuer Watches, a unit of Western & Southern Financial Group Inc., oversees $8.4 billion. “If things don’t work out from price appreciation in the short term, at least I get a 3, 4, 5 percent dividend yield. People bid up prices for dividend stocks.”
The jump in so-called cyclical stocks won’t continue all year, said John Wilson, a money manager at Sprott Inc., which oversaw about C$9.1 billion ($9.1 billion) as of Jan. 9. He’s planning to buy U.S. health-care companies because they sell products people have trouble giving up and aren’t as expensive versus earnings as utilities and the consumer-staples group.
‘More Difficult’
“The economy will be more difficult than people expect,” he said during an interview in Toronto. “Europe will weigh more on the economy than people think. That’s going to mean that companies that have visibility in their earnings and recurring revenue streams are likely to do better than those that are more cyclically oriented.”
The shift to riskier industries began as economic data improved. U.S. housing starts advanced to a 19-month high in November. The unemployment rate fell 0.2 percentage point for three straight months through January, the first time since 1984 that it dropped that much for so long. Bloomberg’s Consumer Comfort Index, based on a survey of U.S. consumers, increased the most in five years in the fourth quarter after retreating to near a record low.
“There’s been a glimmer of hope,” David J. Winters, the manager of the $1.43 billion Wintergreen Fund, said in a telephone interview from Mountain Lakes, New Jersey. The fund has beaten 99 percent of other funds in its category in the last five years, according to data compiled by Bloomberg. “People looked at unemployment improving and are afraid of being left out of the rush.”
Financials, Consumer Stocks
Myles Zyblock, the chief institutional strategist at Royal Bank of Canada in Toronto, raised his rating on U.S. financial stocks to “overweight” from “market weight” and cut his view on consumer staples to “market weight,” citing economic growth in a note yesterday to clients.
Dow Jones Industrial Average companies that posted the nine biggest gains this year declined in 2011, including cyclical companies such as Bank of America Corp., Caterpillar Inc. and Alcoa Inc.
“Investors are rotating back to stocks that are going to benefit from economic growth,” Eric Mintz, who helps oversee about $7 billion at Eagle Asset Management in St. Petersburg, Florida, said in a telephone interview. His firm favors software makers. “It’s important to have leadership from this group in a bull market.”
–With assistance from Lu Wang and Whitney Kisling in New York. Editors: Jeff Sutherland, Michael P. Regan
To contact the reporter on this story: Matt Walcoff in Toronto at mwalcoff1@bloomberg.net
To contact the editor responsible for this story: Nick Baker at nbaker7@bloomberg.net
Business Exchange E-mail Print READER DISCUSSION
Consumer Comfort in U.S. Increases to Highest in a
By Alex Kowalski
(Updates markets in eighth paragraph.)
Feb. 16 (Bloomberg) — Consumer confidence in the U.S. increased for a fourth straight week to reach the highest level in a year as more households believe the economy is improving.
The Bloomberg Consumer Comfort Index rose to minus 39.8 in the period ended Feb. 12 from minus 41.7 the previous week. It marked just the third time since April 2008 that the gauge has climbed above minus 40, a reading consistent with recessions or their aftermath. The monthly expectations gauge climbed to minus 7 in February, also a 12-month high.
Sentiment among those without a job was the strongest since April 2008, showing news of payroll gains and fewer job cuts is even lifting the spirits of households that have yet to benefit from the recovery. Higher stock prices so far this year may also be giving confidence a boost, helping offset rising fuel prices.
“Rising incomes, a slower pace of firings in the economy and a modest wealth effect due to the near bull market in equities likely combined to create the conditions that sent economic pessimism to its lowest reading in over a year,” said Joseph Brusuelas, a senior economist at Bloomberg LP in New York.
Claims for jobless benefits last week unexpectedly dropped to the lowest level in four years, showing the job market is on the mend, figures from the Labor Department showed today.
Applications for unemployment insurance payments decreased 13,000 in the week ended Feb. 11 to 348,000, less than the lowest forecast of economists surveyed by Bloomberg News and the fewest since March 2008. The median survey estimate projected an increase to 365,000.
More Houses
Builders began work on more houses in January, and wholesale prices rose less than forecast as food and fuel prices dropped, other reports showed.
Stocks advanced as the better news on the economy helped overcome concern about a Greek debt default. The Standard & Poor’s 500 Index gained 0.3 percent to 1 Replica Watches,347.8 at 11:04 a.m. in New York.
Two components of the weekly consumer comfort index improved, while the third was little changed. The measure of Americans’ views on the state of the economy rose to minus 72.1 last week from minus 76.6. An index of the buying climate increased to minus 47.4 from minus 48.4. The gauge of personal finances was at 0.2 after a reading of zero.
In a separate, forward-looking question, 23 percent of Americans said the economy was getting better, the largest share since April. Thirty percent said it was getting worse, bringing the monthly expectations gauge up to minus 7 in February from minus 19.
Yearly Averages
The weekly Bloomberg comfort index had been stuck below minus 40 since the end of February 2011. The index, which began December 1985, averaged minus 46.8 last year, compared with minus 45.7 for 2010 and minus 47.9 in 2009, the worst full-year reading on record.
Breaking out of the “recession zone” in the comfort index marked a “key milestone in its struggle to dig out of its deepest, longest downturn in a generation,” Gary Langer, president of Langer Research Associates LLC in New York, which compiles the index for Bloomberg, said in a statement.
Better labor and stock markets helped stoke confidence. Payrolls rose by 243,000 workers last month, the biggest gain since April, and the unemployment rate fell to a three-year low of 8.3 percent, the Labor Department said on Feb. 3. The Standard & Poor’s 500 Index this week climbed to the highest level since July.
Job Opportunities
The chance of landing a job may now be improving for out- of-work Americans. Sentiment among those not employed rose to minus 46.4 last week. Also, those with less than a high school degree were the most optimistic since December 2010.
“We have some decent economic news in the U.S. lately,” Ajaypal Banga, chief executive officer of Mastercard Inc. said on a Feb. 2 call with analysts. “This comes as consumer balance sheets have improved, following a period of deleveraging, and all this has had a positive impact on consumer spending.”
The share of consumers citing a “poor” buying climate fell last week to the lowest level since December 2007.
Sales at retailers excluding car dealerships climbed 0.7 percent in January, the biggest gain in 10 months, data from the Commerce Department showed earlier this week.
Confidence among households in the West, where Americans are most optimistic, rose 8.6 points to minus 25.4, the highest level since May 2009. Sentiment among men was the strongest since January 2011, while Republicans were the most optimistic since July. Homeowners were the most upbeat since December 2010.
Gasoline Prices
Increasing fuel costs could restrain further gains in sentiment. A gallon of regular unleaded gasoline climbed to $3.52 as of Feb. 14 from a 10-month low of $3.21 in December, according to AAA, the nation’s largest automobile association.
The Bloomberg Consumer Comfort Index is based on responses to telephone interviews with a random sample of 1,000 consumers 18 years old and older. Each week, 250 respondents are asked for their views on the economy, personal finances and buying climate; the percentage of negative responses is subtracted from the share of positive views and divided by three. The most recent reading is based on the average of responses over the previous four weeks.
The comfort index can range from 100, indicating every participant in the survey had a positive response to all three components, to minus 100, signaling all views were negative. The margin of error for the headline reading is 3 percentage points.
Field work for the index is done by SSRS/Social Science Research Solutions in Media, Pennsylvania.
–Editors: Vince Golle, Carlos Torres
To contact the reporter on this story: Alex Kowalski in Washington at akowalski13@bloomberg.net
To contact the editor responsible for this story: Christopher Wellisz at cwellisz@bloomberg.net
Business Exchange E-mail Print READER DISCUSSION
BNP Paribas to Continue With Bahrain Operations, D
By Donna Abu-Nasr
(Updates with AXA comment in last two paragraphs.)
Feb. 9 (Bloomberg) — BNP Paribas SA will continue operations in Bahrain, said Jean-Christophe Durand, the Paris- based lender’s head for the Middle East and Africa.
If the bank had taken a decision to pull out it would have informed the central bank, Durand said in a phone interview yesterday. “We haven’t done that.” Durand was responding to speculation that the bank may quit Bahrain after the Persian Gulf nation witnessed political unrest.
BNP Paribas, which has its regional headquarters in Bahrain, last year set up backup operations in Dubai as part of its policy to establish these centers worldwide Replica Omega watches, Durand said.
Societe Generale SA said last week it will move its private banking office in Bahrain to the United Arab Emirates as the French lender seeks to cut costs.
AXA Insurance Gulf’s revenue in Bahrain grew more than 10 percent last year amid the unrest, Jerome Droesch, chief executive officer for the Gulf and the Middle East, said in a phone interview from Dubai today, without giving details.
The company, which has its regional headquarters in the island nation, increased its staff by 5 percent to 100 last year Replica Rolex Watches, he said.
–With assistance from Stefania Bianchi in Dubai. Editors: Shaji Mathew, Ben Holland, Karl Maier.
To contact the reporter on this story: Donna Abu-Nasr in Manama at dabunasr@bloomberg.net
To contact the editor responsible for this story: Andrew J. Barden at barden@bloomberg.net
Business Exchange E-mail Print READER DISCUSSION
Bear Stearns, Deutsche Bank, Apple, Transocean in
By Elizabeth Amon
(Updates Bear Stearns in Verdicts section and Avon in Lawsuits. Adds Wells Fargo and BP in Lawsuits section and Stanford in Trials.)
Feb. 14 (Bloomberg) — Former Bear Stearns Cos. hedge-fund managers Ralph Cioffi and Matthew Tannin, acquitted in 2009 of criminal charges they misled investors, agreed to pay $1.05 million to settle a related civil case brought by the U.S. Securities and Exchange Commission.
Cioffi agreed to pay $800,000 and accept a three-year ban from the securities industry and Tannin agreed to a two-year ban and $250,000 payment, SEC attorney John Worland told U.S. District Judge Frederic Block in Brooklyn, New York, in a hearing yesterday.
In November 2009, a federal jury found Cioffi and Tannin not guilty of conspiracy and securities and wire fraud in the first criminal trial stemming from a federal probe of the collapse of the subprime-mortgage market. Cioffi, 56, was portfolio manager for the hedge funds. Tannin, 50, was their chief operating officer. The government said investors lost $1.6 billion.
“This case is being settled for Skirts, relatively speaking, chump change,” Block said at the hearing, adding that he was “inclined to sign off on it.” He asked lawyers for both sides to file more papers by next week.
The SEC’s lawsuit, alleging the two men misled investors about the funds’ deepening financial troubles and their own holdings in the investment pools, was set to go to trial yesterday.
After the hearing, Cioffi’s lawyer, Edward Little of Hughes Hubbard & Reed LLP, and Tannin’s lawyer, Nina Beattie of Brune & Richard LLP, declined to comment on the case. Cioffi and Tannin weren’t in court yesterday.
Cioffi’s payment includes having to give up $700,000 in illegal gains and pay a $100,000 penalty. Tannin’s includes disgorgement of $200,000 and a $50,000 penalty.
“On behalf of the SEC, I think this is a very good settlement,” Worland told the judge.
“These serious sanctions reflect the defendants’ misconduct Feather Dresses, their ill-gotten gains and other considerations, which we will set forth in the written submissions requested by the court,” John Nester, an SEC spokesman, said in an e-mailed comment.
The civil case is Securities and Exchange Commission v. Cioffi, 08-cv-2457, and the criminal case is U.S. v. Cioffi, 08- CR-00415, U.S. District Court, Eastern District of New York (Brooklyn).
For more, click here.
Deutsche Bank Said to Settle Kirch Case for About $1 Billion
Deutsche Bank AG and the heirs of media entrepreneur Leo Kirch are close to settling a 10-year-old dispute for about 800 million euros ($1 billion), according to a person with direct knowledge of the negotiations.
The settlement will end lawsuits over whether comments made in 2002 by Rolf Breuer, Deutsche Bank’s then-chief executive officer, caused the collapse of Kirch’s media group, according to the person, who declined to be identified because the agreement hasn’t been made public. The bank last year was said to have rejected a 775 million-euro settlement proposed by a Munich court.
“The case meant negative headlines for Deutsche Bank. It wasn’t so much of a business problem as a reputational one for the company,” said Michael Seufert, an analyst with Norddeutsche Landesbank Girozentrale in Hanover who recommends investors hold the stock. “It is advantageous for Deutsche Bank to have this long-lasting legal process behind them.”
Kirch, who died in July, pursued lawsuits against Breuer and Frankfurt-based Deutsche Bank seeking at least 3.3 billion euros. The lawsuits, which continued after Kirch’s death, claim his media group failed because Breuer questioned its creditworthiness in a 2002 Bloomberg TV interview.
In the interview, Breuer said “everything that you can read and hear” is that “the financial sector isn’t prepared to provide further” loans or equity to Kirch. Within months, Kirch’s group filed the country’s biggest bankruptcy since World War II.
Another person familiar with the talks said that Deutsche Bank’s management board would discuss the potential settlement yesterday or today. Details of the agreement aren’t finalized and there may still be obstacles in that process, the person said.
Deutsche Bank spokesman Christian Streckert and a spokesman for Kirch both declined to comment. The bank has always denied Kirch’s allegations.
For more, click here.
Italian Asbestos Trial Conviction ‘Historic,’ Minister Says
A court ruling sentencing Eternit AG’s former owner and also the company’s biggest shareholder to 16 years in prison in connection with asbestos-related deaths is “historic,” Italy’s health minister said.
“The ruling can be defined as truly historic as far as both the social aspects and the legal aspects are concerned,” Renato Balduzzi said in an e-mailed statement yesterday. “The fight against asbestos cannot end with a ruling, although a model one, but has to continue.”
A court in Turin, in northern Italy, ruled yesterday that Swiss billionaire Stephan Schmidheiny and Jean-Louis Marie Ghislain de Cartier, respectively Eternit’s former owner and its top shareholder, were partially responsible for hundreds of deaths and illnesses caused by asbestos in factories the company owned in Italy. The two men were also sentenced to pay damages to be determined in a separate civil proceeding to victims’ relatives and to a number of local authorities.
For the latest verdict and settlement news, click here.
New Suits
Apple Adds Patent Infringement Claims Against Samsung With Suit
Apple Inc.’s newest lawsuit against Samsung Electronics Co., set for a hearing May 2, increases the number of Samsung devices that Apple argues infringe its products.
Apple seeks a court order blocking the alleged infringement in smartphones such as Samsung’s Galaxy S II Skyrocket and Galaxy S II Epic 4G Touch, which use Google Inc.’s Android operating system, and Samsung’s Galaxy 4.0 and 5.0 media players.
In December, Apple lost a similar request for a court order blocking sales of Samsung’s 4G smartphone and Galaxy Tab 10.1 tablet computer. Trial for that case is set for July 30.
“Despite that lawsuit, Samsung has continued to flood the market with copycat products, including at least 18 new infringing products released over the last eight months,” according to the complaint filed Feb. 8 in federal court in San Jose, California.
“Samsung has systematically copied Apple’s innovative technology and products, features, and designs, and has deluged markets with infringing devices in an effort to usurp market share from Apple,” according to the complaint.
Samsung’s newer products infringe patents at issue on the previous case as well as additional patents Apple issued since the earlier case was filed, Apple said. “Apple is filing this suit to put an end to Samsung’s continued infringement,” according to the complaint.
Samsung continues to “assert our intellectual property rights and defend against Apple’s claims,” its Seoul-based spokesman Nam Ki Yung said yesterday.
The two companies have filed at least 30 lawsuits against each other, according to Samsung. The conflict began in April, when Apple filed the first San Jose lawsuit claiming the Suwon, South Korean company’s Galaxy devices copied the iPhone and iPad.
The case is Apple Inc. v. Samsung Electronics Co. Ltd., 12- cv-00630, U.S. District Court, Northern District of California (San Jose). The previous case is Apple Inc. v. Samsung Electronics Co., 11-01846, U.S. District Court, Northern District of California (San Jose).
For the latest new suits news, click here. For copies of recent civil complaints, click here.
Lawsuits/Pretrial
Wells Fargo Board Must Face Foreclosure Claims, Judge Says
Wells Fargo & Co. directors must face investors’ claims that largest U.S. mortgage lender failed to properly disclose details of its foreclosure practices to government investigators, a judge ruled.
U.S. District Judge Susan Illston in San Francisco rejected Wells Fargo’s request to dismiss shareholders’ allegations that directors wrongfully failed to disclose their opposition to a government probe of the bank’s mortgage lending and foreclosure policies.
“The fact that the company was allegedly stymieing the government regulators is certainly material to stockholders when considering whether to authorize a more serious internal investigation,” Illston said in Feb. 9 ruling.
That same day, Wells Fargo and four other banks reached a $25 billion settlement with state and federal officials to end a probe of abusive foreclosure practices stemming from the collapse of the U.S. housing bubble.
The accord included $20 billion in various forms of mortgage relief plus payments of $5 billion to state and federal governments. Wells Fargo officials said the bank’s share of the accord would total $5.3 billion. Other banks involved in the settlement included JP Morgan Chase & Co., Bank of America Corp and Ally Financial Inc.
Ancel Martinez, a spokesman for San Francisco-based Wells Fargo, declined to comment yesterday on Illston’s ruling in the investor suit.
Even after agreeing to resolve the government’s investigation into banks’ handling of foreclosures, which included “robo-signing” of mortgage documents, lenders still face years of litigation and billions of dollars in liability over their practices.
The case is Pirelli Armstrong Tire Corporation Retiree Medical Trust v. John G. Stumpf, C 11-2369-SI, U.S. District Court, Northern District of California (San Francisco).
For more, click here.
BP Loses Bid to Dismiss Investor Claims Spurred by Spill
BP Plc lost a court bid to dismiss fraud claims by investors who said the company lied before and after the 2010 Gulf of Mexico oil spill about its accident response capability.
U.S. District Judge Keith P. Ellison in Houston yesterday allowed holders of BP American depositary receipts to pursue claims alleging violations of U.S. securities law. He dismissed claims by investors who bought ordinary shares of London-based BP, saying his court has no jurisdiction over them.
The judge rejected the investors’ claim that BP lied about its commitment to safety, while finding the company may have exaggerated its ability to respond to a major spill.
“Plaintiffs have sufficiently pleaded facts to demonstrate that BP misrepresented the size of the spill it was prepared to respond to in the Gulf and misrepresented the company’s general spill response capabilities,” Ellison said in a 129-page decision. “They have sufficiently pleaded actionable misrepresentations related to BP’s ability to respond to an oil spill in the Gulf of Mexico.”
The investors, led by Ohio and New York pension plans, said BP publicly declared a commitment to safety while cutting budgets and personnel and rejecting internal complaints. BP also initially hid the true size of the oil-well blowout to limit the impact on its stock price, the investors alleged.
“Today’s decision is a victory for the plaintiffs and I am grateful that we will be able to move forward with our claims against BP,” New York State Comptroller Thomas P. DiNapoli said in an e-mail. “We believe that BP exaggerated its ability to prevent a catastrophic spill as well as its ability to respond to one should it occur”
Scott Dean, BP spokesman, declined to comment on the ruling.
The case is In re BP Plc Securities Litigation, 4:10- md-2185, U.S. District Court, Southern District of Texas (Houston).
For more, click here.
Transocean Asks Judge to Force BP Manager to Testify in Trial
Transocean Ltd., owner of the rig that exploded before the worst offshore oil spill in U.S. history in 2010, sought to force a BP Plc manager to explain what occurred at the well prior to the blowout.
Transocean asked the U.S. District Court in New Orleans to compel Donald Vidrine to testify. He was BP’s well site leader on the Deepwater Horizon rig when the Macondo well in the Gulf of Mexico exploded. Vidrine has cited medical-related problems for refusing to testify, in person or in writing, Transocean’s lawyers said in a court filing Feb. 12.
Vidrine “is a key source of information regarding critical events and operations that occurred immediately prior to the blowout,” Transocean said. “Mr. Vidrine’s medical issues do not provide a legal basis for his refusal to testify.”
The April 2010 Macondo well blowout and explosion killed 11 workers. The accident spurred hundreds of lawsuits against BP and its partners, including Switzerland-based Transocean, Halliburton Co., which provided cementing services for the project, and Anadarko, the owner of 25 percent of the well.
The case is In re Oil Spill by the Oil Rig Deepwater Horizon in the Gulf of Mexico on April 20, 2010, MDL-2179, U.S. District Court, Eastern District of Louisiana (New Orleans).
Avon Said to Be Focus of U.S. Grand Jury Investigation
Avon Products Inc. is the subject of a U.S. grand jury investigation into whether ex-employees in China paid bribes to officials in violation of U.S. anti-corruption laws, according to a person familiar with the matter.
Jennifer Vargas, a spokeswoman for New York-based Avon, the world’s largest door-to-door cosmetics merchant, declined to comment on the probe by the Manhattan grand jury.
In regulatory filings last year, Avon said it had fired four executives suspected of paying bribes to officials in China. The company also disclosed an internal investigation into its compliance with the U.S. Foreign Corrupt Practices Act. The ex-executives included the general manager and finance chief of the China unit, which generates 2 percent of Avon’s revenue.
The internal probe is focused on entertainment and gift expenses “in connection with our business dealings, directly or indirectly, with foreign governments,” according to one of its filings.
The U.S. Securities and Exchange Commission is also investigating, Avon said in October.
The U.S. probe disclosed by the person, who declined to be identified because the matter isn’t public, was reported earlier by the Wall Street Journal.
An internal Avon audit found several hundred thousand dollars in questionable payments to Chinese officials and third- party consultants in 2005, the newspaper reported.
Avon executives who saw the audit report didn’t disclose the findings to board audit or finance committees or the full board, the newspaper said.
Jerika Richardson, a spokeswoman for Manhattan U.S. Attorney Preet Bharara, declined to comment.
For more, click here.
Deripaska Claims Cherney Bribed Politicians in London Lawsuit
United Co. Rusal Chief Executive Officer Oleg Deripaska accused Michael Cherney, who is suing him for $4.3 billion, of making mysterious payments to politicians including Israel Deputy Prime Minister Avigdor Liberman.
The claims emerged at a London court hearing where Cherney’s lawyer said accusations made by Deripaska’s legal team were a “distraction.” The hearing indicates Deripaska, 44, will fight Cherney’s suit by painting him as someone who used his connections to extract protection payments from businessmen.
Claims that Cherney made “large, unexplained payments to politicians” including Liberman and a Bulgarian prime minister “don’t have any relationship to the facts of the case,” his attorney, Mark Howard said.
Cherney, now living in exile in Israel, filed a London lawsuit in 2006 claiming he was Deripaska’s partner and is owed a stake in Rusal. The trial, scheduled to begin in April, follows the three-month, $6.8 billion courtroom battle between Russian oligarchs Boris Berezovsky and Roman Abramovich.
“They say Mr. Cherney was the mastermind of the imposition of krysha payments,” on businessmen, Howard said, referring to a Russian word for protection. Cherney’s lawyers were seeking to prevent some of the claims being used in the trial.
Calls and e-mails to Liberman’s office weren’t returned. Deripaska’s spokeswoman, Idil Oyman in London, declined to immediately comment.
Judge Andrew Smith said the April trial may be delayed until the parties were better prepared.
The case is Cherney v. Deripaska, High Court of Justice, Queen’s Bench Division, Commercial Court 06-1218.
U.K. Files Extra Lawsuit Against ECB on Central Clearing Rules
The U.K. filed an additional lawsuit against the European Central Bank over its plans to block trades in some euro- denominated securities from being cleared outside of the 17 countries that share the currency.
U.K. authorities submitted a second case against the ECB at the European Union’s General Court in Luxembourg on Jan. 27, according to the court’s website.
The move follows an earlier complaint by the U.K. filed in October. The new action concerns comments made by the ECB since the original case was registered, according to the tribunal’s press service.
The Frankfurt-based ECB declined to comment on the latest lawsuit.
The case is T-45/12 pending case, United Kingdom v. ECB.
For the latest lawsuits news, click here.
Trials/Appeals
Stanford ‘Screaming’ About Bank Run Before Seizure, Aide Says
R. Allen Stanford ordered his communications chief to send investors reassuring letters and to rebut news articles that sparked a run on his bank two days before it was seized by regulators, a former aide said.
“He was screaming and saying people were taking their money out of the bank, and the bank was in trouble because of that,” Lula Rodriguez, Stanford’s former communications chief, told jurors in the financier’s $7 billion fraud trial in federal court in Houston. “It was like a perfect storm was coming together.”
Rodriguez, 63, testified that a day later she couldn’t find any senior company officers willing to sign the requested communications, which stated that Stanford International Bank Ltd. “remained a strong institution.” After Stanford’s finance chief, compliance officer and general counsel all refused to sign the drafts, she tracked Stanford down at his suite at the InterContinental hotel in Miami, she said.
“He told me people were trying to destroy him, but that things were going to be OK,” Rodriguez, who worked in Miami, recalled. “ We just needed to get over the hump.”
Rodriguez, who has said she had no knowledge of the alleged fraud scheme, testified that the company’s finance chief, James M. Davis, who has since pleaded guilty to helping Stanford defraud investors, was at the hotel in a meeting with Stanford.
Also present were the company’s general counsel and Stanford’s fiancé, Andrea Stoelker, with the couple’s dog. Davis “looked like death warmed over” and spoke “not a word” during the meeting, Rodriguez told jurors. The dog, Ras, named for the financier’s initials, “was the happiest thing in the room,” she said.
Prosecutors accuse Stanford, 61, of secretly borrowing $2 billion from his Antigua-based Stanford International Bank to fund a lavish lifestyle and invest in scores of speculative ventures ranging from Caribbean airlines and real estate developments to cricket tournaments. Holders of certificates of deposit in Stanford’s bank were told their money was in safe, liquid investments.
Stanford, who has been in custody as a flight risk since his June 2009 indictment, denies all wrongdoing. If convicted of the most serious charges against him, he could spend as long as 20 years in prison.
The criminal case is U.S. v. Stanford, 09cr342, U.S. District Court, Southern District of Texas (Houston). The SEC case is Securities and Exchange Commission v. Stanford International Bank, 09cv298, U.S. District Court, Northern District of Texas (Dallas).
Chaoda Chairman Denies Revealing Price Sensitive Information
Chaoda Modern Agriculture Holdings Ltd. Chairman Kwok Ho, a subject in a Hong Kong insider-trading probe, denied discussing an imminent share offering on conference calls with U.S.-based investors in 2009.
“Certainly, certainly not,” Kwok told Hong Kong’s Market Misconduct Tribunal yesterday in response to a question about whether he said on the calls that the Chinese vegetable supplier would “soon” do a placement. He also denied that he wanted to assess investor support for a share sale on the calls.
The tribunal is investigating whether material, non-public information was improperly disclosed on phone calls involving Kwok, Chaoda’s chief financial officer Andy Chan and U.S. institutional investors in 2009. George Stairs, then a portfolio manager at Fidelity Management & Research Co., took part in one of those calls and sold some of his Chaoda holdings ahead of the sale, according to Hong Kong’s government.
Stairs believed the share placement information he was given by Chaoda’s chairman and chief financial officer was public, according to a letter from Fidelity’s lawyers presented in evidence to the tribunal.
Stairs and Chan have denied any wrongdoing.
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–With assistance from Patricia Hurtado in New York; Kit Chellel in London; Karin Matussek in Berlin; Joe Schneider in Sydney; Thom Weidlich in Brooklyn, New York; Debra Mao in Hong Kong; Joel Rosenblatt in San Francisco; Jim Brunsden in Brussels; Laurel Brubaker Calkins in Houston; Margaret Cronin Fisk in Southfield, Michigan; Jef Feeley in Wilmington, Delaware; and Lorenzo Totaro in Rome. Editors: Mary Romano, Glenn Holdcraft
To contact the reporter on this story: Elizabeth Amon in Brooklyn, New York, at eamon2@bloomberg.net.
To contact the editor responsible for this story: Michael Hytha at mhytha@bloomberg.net.
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Goldie Hawn Goldie Hawn Pays Tribute To Late Cinem
Picture: Goldie Hawn and husband Kurt Russell during their annual Christmas holiday vacation in Aspen. Aspen Replica Rolex Watches, Colorado ….
Goldie Hawn Pays Tribute To Late Cinematographer Richard Waite
Actress Goldie Hawn has paid tribute to her longtime friend and celebrated cinematographer Richard Waite, who passed away on Saturday (18Feb12).
He died at the age of 78 but little details of his passing were made available at the time WENN went to press.
The director of photography was born in Wisconsin in 1933 and he went on to lend his artistic talents to a number of hit films, including Footloose, Sylvester Stallone thriller Cobra, Patrick Swayze drama Red Dawn and Eddie Murphy’s 48 Hrs.
Remembering her late pal with a post on Twitter.com on Sunday (19Feb12), The First Wives Club star writes, “My dearest friend Ric Waite Passed away yesterday. The movie industry lost one talented dr of photography, I lost a beloved soul mate. Rip”
Hugh Laurie Laurie Im Not Sick Of House
Picture: Hugh Laurie outside the BBC Radio 2 studios London Replica Omega watches, England ….
Laurie: ‘I’m Not Sick Of House’
Hugh Laurie has fired back at reports he’s to blame for the end of hit medical drama House – because he’s tired of playing limping grouch DR. GREGORY House on the show.
The British actor released a statement last week (ends10Feb12) confirming reports the current season of House will be the last – but he insists it has nothing to do with the fact he’s had enough of his TV character.
In a statement he sent to TV Guide magazine, Laurie writes, “For anyone who’s interested, I’d like to correct some naughty misrepresentations of the circumstances surrounding the end of the TV show House.
“Some newspapers, obviously dissatisfied by the sincere statement of fact and feeling that we released last week, have said that ‘the truth’ – modern journalistic slang for ‘not even remotely the truth but it sounds creepy so I’ll go with it’ – behind the decision was that I was sick of going to work. The ‘evidence’ (another technical term) for this was a remark I made five years ago about another subject, bent into an entirely different shape.
“Let me state, publicly and unequivocally, that I love my job, and work much harder at it than most journalists work at theirs. As described in the press release, we wanted to preserve some of the character’s mystique. We never wanted to out-stay our welcome. Very possibly, we could have continued with a re-worked formula – House gets a job in a shoe shop and high jinks ensue – but none of us wanted that. We wanted to keep the band together and go out with as much dignity as we could muster.
“That wish has not been fulfilled by this undignified and petty rebuttal, I know, but it had to be said nonetheless. The record should be put straight, even if it’s a record nobody wants to hear.”
And he concludes his missive by stating, “In the words of House himself: everybody lies.”
Alberta Counts on Oil to Close Budget Gap Ahead of
By Jeremy van Loon
Feb. 10 (Bloomberg) — Alberta, Canada’s third-largest economy, is counting on rising oil prices to pay for more spending on education and health care as the government maintains its current tax rate ahead of a provincial election.
The western province Fake Watches, which is home to the world’s third- largest oil reserves, forecast a shortfall of C$886 million ($890 million) in the fiscal year ending March 31, returning to surplus the next year, Finance Minister Ron Liepert said yesterday. The economy is forecast to grow 3.8 percent in 2012.
“Considering the impact the global economic slowdown is having in other jurisdictions, Albertans are very fortunate to be experiencing such growth,” Liepert said in a speech to lawmakers. The government is planning no new taxes or increases to current tax rates, he said.
Alberta, which relies on royalties and taxation of its oil and natural gas industry for about one-third of its revenue, has one of the fastest-growing economies and populations in Canada. With Exxon Mobil Corp., Suncor Energy Inc. and rivals making investments of about C$20 billion annually in the oil sands, the government is struggling to keep up with maintaining and expanding hospitals, universities and roads.
“Government and politics today is all about allocation of resources and squabbling over those resources,” said Keith Brownsey, associate professor at Mount Royal University in Calgary. “They want to portray themselves as good managers and that they’re cautious with our money. But they need to have a steadier stream of revenue than what they have now with oil.”
Oil Prices
The finance ministry projects an average price of $99.25 a barrel for West Texas Intermediate crude in fiscal 2012-13, rising to $106.25 the following year. Crude for March delivery yesterday gained $1.13 to $99.84 a barrel on the New York Mercantile Exchange, the highest settlement in three weeks. Prices averaged $95.11 last year. Natural gas will average C$3 a gigajoule, the finance ministry estimates. Natural gas for March delivery rose 2.9 cents, or 1.2 percent Watches Replica, to settle at $2.477 per million British thermal units on the New York Mercantile Exchange yesterday.
Higher oil prices have helped boost profit for Alberta- based oil companies. Suncor on Jan. 31 said fourth-quarter net income rose 14 percent to C$1.43 billion. Canada’s daily oil- sands output is expected to more than double to 3.5 million barrels in 2025, from 1.4 million in 2010, according to the Canadian Association of Petroleum Producers.
Premier Alison Redford, who took over as provincial leader in October, holds 67 of the 83 seats in the provincial legislature. She must call an election by 2013 and will probably ask voters to go to the polls as early as this spring, Mount Royal University’s Brownsey said.
Boosting Spending
Alberta will spend C$16.5 billion in public infrastructure over the next three years, including boosting outlays on highways, schools and municipal public transportation. The operating budget for healthcare will increase 7.9 percent to C$15.9 billion in fiscal 2012-13.
The western province has C$14.3 billion in outstanding bonds, according to Bloomberg data. The provincial treasury is scheduled to pay back about C$2.1 billion this year. There will be no new borrowing this year, finance ministry spokeswoman Robyn Cochrane said as the province plans to cover the shortfall by drawing down reserves.
The government said it will review its dependence on energy revenue, a plan the Calgary Chamber of Commerce applauded. “The province relies too heavily on volatile royalty revenue,” said Ben Brunnen, the group’s chief economist, in a statement. “Alberta needs a new fiscal framework that caps the amount of resource revenue used, restructures the Sustainability Fund, and commits to real savings into the Heritage and Savings Trust Fund.”
–Editors: Paul Badertscher, John Simpson
To contact the reporter on this story: Jeremy van Loon in Calgary at jvanloon@bloomberg.net
To contact the editor responsible for this story: David Scanlan at or dscanlan@bloomberg.net
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Replica Watches Russias Meat, Poultry Output Rose
By Marina Sysoyeva Replica Watches
Feb. 15 (Bloomberg) — Russia’s meat and byproducts output rose 6.9 percent to 87,800 metric tons in January compared with a year earlier, the Federal State Statistics Service said.
Poultry and byproducts output increased almost 17 percent to 262,000 tons last month, the service known as Rosstat, said in an e-mailed statement today.
–Editors: Sharon Lindores, John Deane
To contact the reporter on this story: Marina Sysoyeva in Moscow at msysoyeva@bloomberg.net
To contact the editor responsible for this story: Claudia Carpenter at ccarpenter2@bloomberg.net
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Cardigans Bahrain Security Chief Warns Against Pro
By Donna Abu-Nasr
Feb. 13 (Bloomberg) — Bahrain’s chief of public security warned Bahrainis against responding to calls for protests, saying that civil disorder and chaos won’t be tolerated.
The warning comes amid increasing protests by the mostly Shiite opposition ahead of the Feb. 14 anniversary of massive anti-regime rallies demanding more democratic representation and increased economic opportunities. Opposition groups have been urging followers in messages posted on Twitter and Facebook to head to the Pearl Roundabout, the center of the 2011 rallies. The roundabout has been off-limits to demonstrators since it was demolished by the government last year.
“Incitement through social media channels” creates disorder, Major-General Tariq al-Hassan said, according to a statement posted on the Interior Ministry’s website. “Any disturbance that arises will be treated according to the law especially if the safety of the nation or peoples’ lives are at stake,” he added.
Thirty-five people died last year in the government crackdown against protests. The opposition says many more have died from tear gas inhalation and torture, allegations the government denies. Authorities yesterday closed roads leading from Shiite villages to the roundabout and also clashed with demonstrators in several villages.
The ruling al-Khalifa family invited troops from Saudi Arabia and other Gulf Cooperation Council countries last year to help restore order. It accused Shiite-ruled Iran of encouraging the unrest Cardigans, a claim Tehran has denied. Shiites represent about two-thirds of the nation’s population, according to the U.S. State Department.
–Editors: Louis Meixler, Karl Maier.
To contact the reporter on this story: Donna Abu Nasr in Dubai at dabunasr@bloomberg.net
To contact the editor responsible for this story: Andrew J. Barden at barden@bloomberg.net
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Copper Falls as Moodys Downgrades European Nations
By Maria Kolesnikova Replica Watches
Feb. 14 (Bloomberg) — Copper declined for a third day in London after Moody’s Investors Service cut the debt ratings of six European countries, damping the region’s growth and demand outlook.
Market News:
– Moody’s Investors Service cut the debt ratings of six European countries including Italy, Spain and Portugal and said it may strip France and the U.K. of their top Aaa ratings, citing Europe’s debt crisis. NSN LZDFS607SXKX <GO>
– European equity futures and Asian stocks fell, while the dollar rose after Moody’s Investors Service cut debt ratings on six European countries. The yen weakened as the central bank expanded an asset-purchase program. NSN LZDG8W1A74E9 <GO>
– Japan’s central bank unexpectedly added 10 trillion yen ($128 billion) to an asset-purchase program and set an inflation target after an economic slide fueled criticism it has been slower to act than counterparts. NSN LZDBSS6JTSE9 <GO>
– The biggest U.S. banks captured the highest share of global trading revenue in at least two years as their counterparts across the Atlantic reduced risk in the fourth quarter amid a worsening sovereign-debt crisis. NSN LZCUEO07SXKX <GO>
– Oil fell from the highest price in almost five weeks on speculation that U.S. crude supplies are rising and demand for fuel may falter as Europe grapples with lower credit ratings. NSN LZDFPT0UQVI9 <GO>
Metals News:
– The largest glut of zinc in almost two decades is threatening to curtail a rally in prices as record production expands inventories to the highest since at least 1984. NSN LZDCDK6S9729 <GO>
– BHP Billiton Ltd., the world’s biggest mining company, and partner Rio Tinto Group approved a $4.5 billion expansion of Chile’s Escondida copper mine. NSN LZCRGN0YHQ0X <GO>
– China has approved a joint venture between UBS AG and the parent of the State Development & Investment Corp. to become the first fund to trade commodity futures through a managed account product. NSN LZD3NF6S9728 <GO>
– Aurubis AG reported first-quarter profit of 136 million euros ($179 million) and said copper prices will remain high and volatile. NSN LZDDEI6JTSE9 <GO>
– Zambia, Africa’s biggest copper producer, will have a power shortage as it closes a unit at Kariba North Bank plant for 14 days for maintenance, the country’s electricity utility said. NSN LZDGW76TTDS1 <GO>
– Freeport-McMoRan Copper & Gold Inc. is restoring operations at El Abra in northern Chile after heavy rainfall impacted the copper mine over the weekend. NSN LZCRPE6KLVR5 <GO>
– Goldman Sachs Group Inc. lowered its estimate of this year’s aluminum surplus to 486,000 metric tons from 775,000 tons. NSN LZDGEC6TTDS6 <GO>
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