Federal regulators on Thursday filed insider-trading charges against six people they say worked for an expert-networking firm and passed on confidential corporate information to investors.
Expert networks connect analysts and experts with investors seeking information, for a fee. They are playing a growing role on Wall Street.
The Securities and Exchange Commission announced the civil charges against the six, accusing them of passing tips to hedge funds and other investors that enabled them to make about $6 million in illegal profits. They had previously been named in criminal cases brought by federal prosecutors, as part of what authorities say is the biggest hedge fund insider-trading case in history.
The SEC said four of the six were employees of technology companies who moonlighted as consultants and exploited their access to confidential information about Advanced Micro Devices Inc., Apple Inc., Dell Inc. and other companies.
The six were consultants or employees of Primary Global Research, based in Mountain View, Calif., which connects experts and consultants with investors seeking information in the technology, health care and other industries. Prosecutors have portrayed the firm as an incubator for insider trading.
Named by the SEC were Mark Anthony Longoria, Daniel DeVore, Winifred Jiau, Walter Shimoon, Bob Nguyen and James Fleishman.
The U.S. attorney’s office in Manhattan announced that an indictment was returned Thursday against Fleishman on criminal charges of conspiracy to commit securities fraud and conspiracy to commit wire fraud.
His attorney, Ethan Balogh, said “Mr. Fleishman is innocent of these charges, and we intend to contest them and establish his innocence at trial.”
Balogh declined to comment on the SEC charges, saying he hadn’t yet seen the civil lawsuit.
Nguyen and DeVore pleaded guilty to similar charges in federal court in Manhattan in recent months.
The six Primary Global consultants and employees “schemed to facilitate widespread and repeated insider trading by several hedge funds and other investment professionals,” SEC Enforcement Director Robert Khuzami said in a statement payday loan.
The SEC is seeking unspecified restitution and civil fines from the six; the agency also seeks to bar Longoria, DeVore and Shimoon from serving as officers or directors of any public company.
Attorneys representing Longoria, DeVore, Jiau and Nguyen declined to comment Thursday. Shimoon’s lawyer didn’t return a telephone call seeking comment.
The networks of industry analysts, experts and consultants channel details between corporate America and Wall Street about what companies are up to _ potentially giving some investors an unfair edge. The networking firms set up meetings and calls between current and former managers, and traders who want an investing edge.
The government’s investigation targeting financial industry players accused of masking inside information as legitimate research is an offshoot of what’s been called the biggest hedge-fund insider-trading probe in history. That probe of the Galleon group of hedge funds, revealed with arrests last year, accused more than two dozen defendants of conspiring to share secrets that led to over $50 million in illegal profits.
Among those arrested was Raj Rajaratnam, a one-time billionaire who founded the Galleon group. Free on $100 million bail, he has pleaded not guilty and maintains that he only traded on publicly available information. A person familiar with the probe said Wednesday that the government has identified Rajaratnam’s brother, Ragakanthan, as a co-conspirator in the scheme.
__
Associated Press writer Larry Neumeister in New York contributed to this report.
Manufacturing in the Philadelphia region expanded in January for a fourth month as orders grew the most since September 2004 and employment picked up.
The Federal Reserve Bank of Philadelphia’s general economic index slipped to 19.3 from 20.8 last month. The gauge was forecast to hold at 20.8, according to the median estimate in a Bloomberg News survey. Readings greater than zero signal expansion in the area covering eastern Pennsylvania, southern New Jersey and Delaware.
Demand for new equipment and more exports to countries like China are boosting sales at manufacturers such as International Business Machines Corp. Gains in consumer spending, which accounts for about 70 percent of the economy, may keep factories expanding and lead to the job growth needed to accelerate the expansion.
“Manufacturing is continuing to see a particularly good period at present,” said David Semmens, a U.S. economist at Standard Chartered Bank in New York. As a result, there is a “large potential for hiring to pick up,” he said.
Estimates for the manufacturing gauge in the Bloomberg survey of 56 economists ranged from 12.5 to 25.
Stocks fell on concern China will raise interest rates to cool its economy. The Standard & Poor’s 500 Index dropped 0.4 percent to 1,276.5 at 10:37 a.m. in New York. Treasury securities fell, pushing up the yield on the benchmark 10-year note to 3.42 percent from 3.34 percent late yesterday.
Leading Indicators
Separate figures from the Conference Board showed the economy is gathering momentum. The New York-based group’s index of leading economic indicators rose 1 percent in December after a 1.1 percent gain in November.
The National Association of Realtors said purchases of previously owned homes rose 12 percent in December to a 5.28 million annual rate, the fastest since May.
The Labor Department said today that fewer Americans filed claims for jobless benefits last week, a sign of an improving labor market. Applications for unemployment insurance dropped by 37,000 to 404,000 in the week ended Jan. 15.
The Philadelphia Fed bank’s new orders measure rose to 23.6, from 10.6 in December. The employment index increased to 17.6, the highest since April 2006, from 4.3 last month. A measure of the average workweek fell to 10.6 in January from 16.8.
Sales, Prices
The shipments gauge increased to 13.4 from 5.2 last month. The index of prices paid jumped to 54.3, the highest since July 2008, from 47.9 the prior month, while the measure of prices received rose to 17.1 from 9.4.
The overall Philadelphia Fed’s index isn’t composed of the individual measures, so some economists consider it a gauge of sentiment among manufacturers fast cash online. The New York Fed’s factory measure, released Jan. 18, rose to 11.9 this month from 9.9 in December.
Economists monitor the New York and Philadelphia Fed factory reports for clues about the Institute for Supply Management national figures on manufacturing during the month.
The ISM will release its report on Feb. 1. The measure last month increased to 57, a seven-month high, from 56.6 in November.
Business Spending
Manufacturing makes up about 11 percent of the economy and is getting a boost from expanding world trade. Exports rose 0.8 percent in November to the highest level since August 2008, according to Commerce Department data released Jan. 13. Business spending on equipment and software advanced at a 15.4 percent annual rate in the third quarter.
IBM, the world’s largest computer-services provider, said this week that fourth-quarter hardware revenue climbed 21 percent to $6.3 billion, as a mainframe computer introduced in July helped boost sales in that product category by almost 70 percent.
“The improvement in our revenue growth was driven by the hardware and software transactional businesses,” Mark Loughridge, chief financial officer of the Armonk, New York- based company, said on a Jan. 18 conference call. “We see customers starting to spend more in their base business as we exit the recession.”
The U.S. is moving to strengthen economic ties with China as a way to boost American exports. President Barack Obama said the U.S. and China both reap “substantial benefits” from cooperation on economic and strategic issues even as friction remains over currency, trade and human rights.
Following a meeting with business leaders from both countries yesterday, Obama said that a prosperous and growing China is an important market for U.S. goods, and the administration highlighted deals to sell Boeing Co. airplanes and General Electric Co. locomotives.
“We want to sell you all kinds of stuff,” Obama said at a White House news conference with Chinese President Hu Jintao. “We want to sell you planes, we want to sell you cars, we want to sell you software.”
Starbucks Corp. has opened its first store in Hungary.
The Seattle-based coffee giant (NASDAQ: SBUX) created a joint venture with Amrest, a restaurant operator in in Central and Eastern Europe, to manage the store, located in Budapest.
“We have great respect for the longstanding and colorful Hungarian coffeehouse culture and are excited to become a part of the community,” said Vladan Armus, Starbucks Brand President for Central and Eastern Europe, in a statement.
Full Starbucks press release below.
BUDAPEST, Hungary–(BUSINESS WIRE)–Starbucks Coffee has opened its first store in Hungary in the lively and popular WestEnd Mall.
AmRest Kavezo KFT, a joint-venture company between Starbucks Coffee International, Inc. a wholly-owned subsidiary of Starbucks Coffee Company (NASDAQ: SBUX), and AmRest Sp. z o.o., a wholly-owned subsidiary of AmRest Holdings S.E. (AmRest, WSE: EAT), will manage the daily operations.
“We have great respect for the longstanding and colorful Hungarian coffeehouse culture and are excited to become a part of the community,” said Vladan Armus, Starbucks Brand President for Central and Eastern Europe. “Over the past few years, coffeehouses have regained their popularity in Hungary, and we look forward to introducing our customers to our high quality coffees and the unique Starbucks Experience.
“WestEnd Mall is a vibrant and dynamic location in the heart of Budapest where people love to shop and meet,” continued Armus. "We think it will be an ideal location for people to enjoy a place where they can rest, relax and chat with friends over a great cup of coffee.”
Starbucks and AmRest have worked together since 2008 opening stores together in the Czech Republic and Poland. They now operate 16 stores across the three markets.
“We are excited to open our first store in Hungary and are committed to being part of the community, a good neighbor and a force for bringing our partners (employees), customers and their communities together,” said Buck Hendrix, president of Starbucks Europe, Middle East and Africa. “Our expansion into Hungary with our trusted partner AmRest is another positive step forward in growing our presence in markets that have a longstanding coffeehouse tradition throughout Central and Eastern Europe.”
Customers in Budapest will be able to enjoy Starbucks full range of offerings including hot and cold beverages made from 100% Fairtrade certified espresso, brewed coffee, and a full range of Tazo Teas. Starbucks will also offer a selection of 16 different varieties of the world’s finest whole bean arabica coffees sourced from farms across Latin America, Africa and Asia Pacific.
Starbucks will offer traditional coffeehouse fare like cakes, muffins, donuts, sandwiches and salads. Exclusive to Starbucks Hungary will be a selection of local favorites including Reform Triangle Sandwiches, Sausage Sandwiches and Pick Salami Sandwiches. Starbucks Hungary is very proud to feature Cheese Pogácsa and Almond Nougat Cake baked by the treasured local patisserie, Gerbeaud Confectionery.
Since 1971, Starbucks Coffee Company has been committed to ethically sourcing and roasting the highest quality arabica coffee in the world. Today, with stores around the globe, the company is the premier roaster and retailer of specialty coffee in the world. Through our unwavering commitment to excellence and our guiding principles, we bring the unique Starbucks Experience to life for every customer through every cup. To share in the experience, please visit us in our stores or online at www.starbucks.com.
AmRest is the largest independent restaurant operator in Central and Eastern Europe. It manages KFC, Pizza Hut, Burger King, Starbucks, Applebee’s, freshpoint and Rodeo Drive sites in Poland, the Czech Republic, Hungary, Bulgaria, Serbia and Russia. The company will operate Starbucks coffeehouses in Poland, Hungary and the Czech Republic. For more information, please visit www.amrest.eu.
BERLIN — A dark cloud has settled over the world’s financial markets, as growing numbers of people conclude that the debt crisis in Europe could hammer global growth — and even bring back recession barely a year after a patchy recovery took hold.
Government officials — whose job it is to boost confidence — downplay that risk, but many economists are warning that a much-feared "double dip" recession could be starting from Europe.
It would be the next ugly chapter in the global financial and economic turmoil that began three years ago. And now as then, what is striking is the inter-connectedness of everything — how near-default in Greece and weeks of dithering in Germany have affected commodities such as oil and gold and, with demand and confidence waning, have bludgeoned stock markets around the world in a way that rattles ordinary people saving for retirement from Korea to California.
In 2007, the bad debt connected to repackaged subprime mortgages started undermining banks and hedge funds, and by early 2008 confidence in the system was slipping fast. This time it is the exposure of banks everywhere to sovereign debt — the IOUs of governments — whose value has been falling for months.
The sheer size of the European economy is a factor, said Mauro F. Guillen, director of the Lauder Institute at The Wharton School in Pennsylvania. "If European demand goes down, global growth will slow down," he said.
"A European economy that lags is not necessarily enough to put the world economy back into recession," Nicholas Colas, ConvergEx Group chief market strategist, said. "But a European economy that cannot stabilize its currency and capital markets certainly will push the global economy back into the red.
"A double dip is a possibility."
It is a daunting prospect, because having already deployed their best countermeasures — stimulus spending and central bank interest rate cuts — governments everywhere may be out of ammunition.
Stephen Lewis, a London-based economist with Monument Securities, spoke for many of the pessimists Friday after a week of market turmoil in Europe when he saw "no guarantee that the upswing in the global economy from 2009’s low point will be sustained."
At the heart of the crisis are fears that indebted eurozone governments will be unable to pay what they owe. Those fears have sent the prices of government bonds — many of them held by big banks in Germany and France — plummeting. Europe also faces low growth prospects because governments must cut back on spending to pay down heavy debt loads payday loan lenders in states.
If banks in Europe and beyond suffer losses on marked-down government bonds, this would then make them afraid to lend the money that businesses need to operate and expand, choking off growth — a replay, in a sense, of the freezing of credit markets after the Sept. 2008 collapse of the U.S. investment bank Lehman Brothers, which led to a worldwide recession. The global economy shrank by 0.6 percent in 2009, its first dip since World War II.
"If sovereign debt concerns are accompanied by worries over bank liquidity any more significant than those currently influencing the credit market, another dip in world economic activity would seem a sure thing," Lewis said.
As fear spreads, stocks and the price of oil, both signs of expectations for future economic growth, have been drawn into the downdraft. And gold, traditionally a safe haven, has hit ominous all-time highs.
Most of the world’s leading stock markets are below where they started the year as investors revise down their growth expectations for the global economy.
Reflecting the optimism that held sway until recently, the IMF slightly raised in April its 2010 global growth forecast to 4.2 percent, although eurozone growth was forecast at only 1 percent. Now even that looks optimistic.
World markets have always affected each other, but instant and constant connectivity and real-time trading and instant information have taken things to a new level; bad news in Milan can trigger instant selloffs in Tokyo or Chicago.
A sell-off in the stock market this week signaled, among other things, a belief that the economy is headed for a slowdown later this year, after having expanded by nearly 12 percent in the first quarter from the same quarter the year before.
Daniel Tarullo, a governor with the U.S. Federal reserve, said the direct effect on U.S. banks of losses on exposure to overextended governments in Greece, Portugal, Spain, Ireland and Italy "would be small." But if problems were to spread more broadly through Europe, U.S. banks would face larger losses as the value of traded assets dropped and loan delinquencies mounted.
Neil Mackinnon, global macro strategist at VTB Capital in London, said it would be a mistake to think the problems on Europe’s periphery represented only a local crisis.
"The problems in the eurozone debt markets, which many people thought was a regional problem, has morphed into a major global problem," Mackinnon said.
Dr. David Poplack has been awarded a $953,000 grant from the Cancer Prevention and Research Initiative of Texas to expand the Passport for Care program for pediatric cancer survivors.
Poplack, professor of pediatric oncology at Baylor College of Medicine and director of the Texas Children’s Cancer Center, helped develop the web-based program designed to guide health care for pediatric cancer survivors.
He will use the grant to expand the program to 12 treatment centers in Texas, including in Austin, San Antonio, El Paso, the Rio Grande Valley and north Texas.
Launched in October 2008, more than 1,000 patients have been enrolled in the program, which is currently used at Texas Children’s Hospital’s Cancer Center.
The CPRIT grant also includes a research component. A series of studies will be conducted to examine the current standard of care and follow-up information survivors are getting, and how the implementation of Passport for Care will improve that low fee pay day loans.
More than 75 percent of pediatric cancer patients are cured; however many have late effects of their treatment than can be serious or even life-threatening.
“Passport for Care provides the physician with a detailed summary of the survivor's treatment and individualized guidelines for their follow-up screening. It essentially makes every physician a survivor expert,” Poplack said in a statement.
Passport for Care was also developed by Dr. Marc Horowitz, professor of pediatrics hematology-oncology at Baylor College of Medicine, and Dr. Michael Fordis, director of BCM's Center for Collaborative and Interactive Technologies.
The percentage of workers with virtually no savings is growing, and the outlook for a financially stable retirement is dismal, according to a report released last week.
In 2010, 27 percent of workers have less than $1,000 stashed away, compared with 20 percent in 2009, according to the annual Retirement Confidence Survey from the Employee Benefit Research Institute.
Of the workers with some form of savings, 54 percent said they had less than $25,000. The same percentage said they needed at least $500,000 for retirement. But just 46 percent have calculated how much they need in retirement.
The nonprofit institute, along with market research firm Mathew Greenwald and Associates, surveyed 1,153 U.S. workers and retirees ages 25 and up in January.
Fewer workers have saved at all — 69 percent, compared with 75 percent in 2009 — and even fewer said they were currently doing so. Just 16 percent of workers said they were very confident in their ability to save enough — the second-lowest level in the survey’s 20-year history.
But 32 percent of workers said they were very confident in their ability to invest their savings, up from 24 percent in 2009. More than half said they were somewhat confident. And with the struggling economy, unstable job market and roller-coaster stock market, 24 percent of workers said they had postponed their retirement age, up from the 14 percent in 2009. A third of workers now anticipate retiring after they turn 65.
Controversy has accompanied Verizon Wireless' latest Droid phone ad that mocks Apple Inc.'s iPhone, but never actually mentions its rival.
The ad starts with a group of mesmerized people looking at a phone that is behind a glass case and asks, "Should a phone be pretty? Should it be a tiara-wearing, digitally clueless beauty pageant queen?”
Then it says the Motorola Droid, which uses Google Inc.'s (NASDAQ:GOOG) Android operating system, is "racehorse-duct-taped-to-a-Scud-missile fast."
It also shows what some critics are portraying as an anti-gay image of a group of fashionably dressed (and partially undressed) male statues getting hit with tomatoes.
The ad can be viewed on YouTube by clicking here.
A post by Kara Swisher on the Wall Street Journal's All Things Digital blog slams the ad and is headlined, "Is the new droid ad anti-women and anti-gay or just plain idiotic? Actually all three!
VentureBeat rated the ad "just plain clueless," especially for "likening the Droid phone’s speed to that of the Scud missile, a not-very-fast Russian rocket used by Saddam Hussein’s regime no faxing 1 hour payday loans. A Scud killed 28 Americans at an airbase in Saudi Arabia in 1991. Other Scuds have killed lots more civilians in the Middle East."
Not all of the reviews have been negative, with many focusing on the cool look and humor of the spot.
But while saying he liked the ad, Stuart Turton of PC Pro wrote, that "when stripped to its barebones (the ad) actually says that the Droid is uglier than an iPhone, and… erm… well, that’s it. Funnily enough, it appears that by criticising the iPhone for placing style before substance, Verizon’s done exactly that."
Verizon's other Droid ads resulted in legal challenges by the iPhone's exclusive U.S. service provider, AT&T Inc., which were recently dropped. In those, Verizon took aim at AT&T's service and likened the iPhone to a misfit toy in a holiday-themed video.
Shares in banks, builders and companies part-owned in the Middle East fell around the world on Thursday and investors sought safety in government bonds on worries about Dubai’s ability to pay its debts.
Sterling fell as exposure focused on UK banks, and euro zone government bond futures hit their highest level since late April, breaking out of the trading range that has been in place since June as risk aversion prompted by the crisis kicked in.
“The Dubai story is weighing heavily on stock markets and people are looking to safe-havens so there’s some flight to quality again,” said Charles Berry, a trader at LBBW.
The euro broke above 91 pence for the first time in a month to hit a high of 91.29 pence.
“There are concerns regarding the extent of the exposure of the UK banks to Dubai, hence sterling is coming under pressure,” said Ian Stannard, currency strategist at BNP Paribas.
European bank shares fell over 3 percent on concern about potential exposure. Dubai said on Wednesday that two of its key firms, Nakheel and Dubai World, plan to delay repayment on billions of dollars of debt.
Companies where Middle Eastern investors own big stakes, such as the London Stock Exchange were also hit by concern the holdings could be cut to meet obligations at home.
By 1020 GMT the DJ Stoxx European bank index .SX7P was down 3.5 percent at 221.7 points.
The fall was led by HSBC, Standard Chartered, Barclays, Deutsche Bank and Royal Bank of Scotland, whose shares all fell over 4 percent.
In Seoul, shares in construction issues fell, with Samsung C&T leading losses as investor concerns focused on Dubai’s once booming construction sector.
A Samsung C&T spokesman said that the company was currently working on a $350 million project awarded by Nakheel in 2007.
“So far, we have not had any problems with the project,” he said.
Shares in Hyundai Engineering & Construction were down 4.41 percent and Samsung Engineering fell 2.16 percent as of 0458 GMT.
Nakheel’s NAKHD.UL Islamic bond prices extended losses, falling 12 points to 72, their lowest since February, according to Reuters data.
DEBT DELAY
Efforts by US regulators to move privately traded derivatives to central clearing houses are unlikely to be a cure-all for the industry, and may increase systemic risk if exposures are dispersed among too many counterparties.
Regulators around the world are pushing for the majority of contracts in the $450 trillion over-the-counter derivatives markets to be cleared through central counterparties, as futures and options contracts have been for years, in order to reduce the systemic risk posed by the web of connections between large financial institutions.
If there are too many clearing houses though, regulators run the risk of increasing the systemic risk posed by OTC derivatives trading, said Darrell Duffie, professor of finance at Stanford University.
“A clearing house through its opportunity to net across many asset classes and dealers can lead to a very substantial reduction in risk and also a very big increase in efficiency,” Duffie said.
“However, that only works if you have very few clearing houses,” he said. “Many clearing houses could be very bad. You would have increased counterparty exposure and excessive use of collateral, with multiple points of failure. This could add systemic risk.”
Clearing the majority of derivatives through one counterparty is advantageous as market participants can offset all contracts in which they owe or are owed money against each other, a process known as netting.
The amount of collateral needed to back their exposures would also be radically reduced in this scenario.
Creating too many clearing houses, however, increases the amount of exposure a participant could have to a failed dealer, as it would be spread across several entities payday cash loans.
There are currently at least five clearing houses in the U.S. and Europe that clear or plan to clear credit default swaps, contracts that are used to insure against a borrower defaulting on their debt.
Other clearing houses clear, or plan to clear, other derivatives, including contracts in the $414 trillion OTC interest rate derivatives market.
REDUCING RISKS
Debate has increased recently over whether central clearing will successfully reduce risk posed by OTC derivatives, as some participants fret that difficulties in determining appropriate capital requirements for certain contracts could make concentrating exposures in clearing houses risky.
To some, CDS contracts are too risky in or outside of central counterparties.
David Einhorn, president of Greenlight Capital, said at a recent investment conference that CDSs cannot be made safer and should be banned, citing the “anti-social” incentives to let companies fail that may motivate protection holders who also own corporate debt.
“The reform proposal to create a CDS clearing house does nothing more than maintain private profits and socialized risks by moving the counterparty risk from the private sector to a newly created too-big-to-fail entity,” he said.
Dow Chemical Co and Shenhua Group, China’s largest coal miner, will reportedly move ahead with their planned $10 billion coal-to-chemical project in Shaanxi province after a delay of at least one year.
Top executives from the companies, senior officials in Shaanxi province and representatives from the U.S. Embassy in China attended a cornerstone laying ceremony on November 3, the China Chemical Industry News reported on Thursday.
The Yulin project in northern Shaanxi aimed to install 23 units that include a 3.32 million tonne-per-year methanol facility for ethylene and propylene, which are used for making various plastics and chemical products.
“The feasibility study of the project has entered the stage of applying for an approval from the central government,” the newspaper said, citing an unnamed local government official advanced payday loan.
The feasibility study was previously planned to be completed in 2008.
An assistant president with Shenhua who is based in Beijing declined any knowledge of the project, and officials at Dow Chemical in China could not immediately be reached.
Dow sold off $3.4 billion in assets this year to boost its bottom line and reduce debt. The chemical firm also cut costs by laying off thousands of workers and shutting several plants.
Shenhua is the parent of Hong Kong-listed China Shenhua Energy.
(Reporting by Jim Bai and Chen Aizhu; Editing by Ken Wills)
Powered by WordPress -- XHTML 1.0