NEWARK, N.J. (AP) — Four major professional sports leagues and the NCAA are poised to move forward with their legal fight over New Jersey's plans to allow sports gambling.
That comes after a judge on Friday rejected arguments that the leagues couldn't prove they would be harmed if the state proceeds with the plans.
In denying the state's request to dismiss the lawsuit by the NBA, NHL, NFL, Major League Baseball and the NCAA, U.S. District Judge Michael Shipp agreed that they have standing to file the suit because expanding legal sports betting to New Jersey would negatively affect perception of their games.
In his ruling, Shipp cited studies offered by the leagues that showed fans' negative attitudes toward game-fixing and sports gambling.
NFL spokesman Brian McCarthy declined to comment on the ruling, telling The Associated Press on Saturday that "the decision speaks for itself."
Stacey Osburn, director of public and media relations for the NCAA, said the association was "pleased with the court's ruling. The NCAA has long maintained that sports wagering threatens the well-being of student-athletes and the integrity of college sports."
Phone messages left Saturday for officials with the NBA and NHL were not immediately returned. A voicemail for a MLB spokesman was full and would not accept messages.
New Jersey also has argued in court papers that a 1990s law prohibiting sports gambling in all but four states is unconstitutional, and Shipp ordered that a date for oral argument on that issue will be set after Jan. 20.
The federal law prohibited sports gambling in all states but Nevada, where bettors can gamble on single games, and three other states that were allowed to offer multi-game parlay betting. New Jersey has argued the law usurps the authority of state legislatures and discriminates by "grandfathering" in some states.
U.S. Rep. Frank Pallone Jr., D-N.J., who has worked in the House to change the federal law, decried Shipp's decision.
"It is absurd for the professional sports leagues and the NCAA to claim that they will suffer injuries as a result of the legalization of sports betting in New Jersey," Pallone said Saturday.
"That these organizations claim that the sports they represent will somehow have their reputation impacted is naïve at best and assumes that illegal gambling is not currently occurring in lieu of legal sports betting," he added. "The fact is that the presence of illegal betting and the crime that goes with it has a far greater impact on the legitimacy of sports organization."
The leagues filed suit in August after Gov. Chris Christie vowed to defy a federal ban on sports wagering. The Republican governor signed a sports betting law in January, limiting bets to the Atlantic City casinos and the state's horse racing tracks.
New Jersey has said it plans to license sports betting as soon as January, and in October it published regulations governing licenses. But the state agreed to give the leagues 30 days' notice before it grants any licenses and hasn't done so yet, the state attorney general's office said last week.
The state, represented by former U.S. Solicitor General Theodore Olson, had argued before Shipp last Tuesday that the leagues are as popular as they've ever been despite the existence of legal gambling in Nevada and more widespread illegal gambling.
The NCAA has said it will relocate several championship events scheduled to be held in New Jersey next year because of the state's sports gambling push.
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MF Global trustee announces settlement deals key to cash payouts
Labels: Business(Reuters) - The trustee for the failed MF Global Inc on Saturday announced two key agreements that are expected to accelerate cash payouts to clients and creditors of the failed futures brokerage.
James Giddens, trustee for the MF Global estate, said in a statement he has negotiated deals to resolve disputes with the company's former British affiliate and the parent company, MF Global Holdings Ltd.
As a result of the UK agreement, Giddens estimated between$500 million and $600 million could be returned to the MF Global estate if the deal is finalized.
Giddens, whose job is to recover as much money as possible for customers, has returned about 80 percent of the money in customer trading accounts.
Giddens said claims by MF Global's securities customers could be fully restored. Commodities customers could get "significant additional distributions," he said.
The estate has a hearing scheduled for January 31, 2013 before the United States Bankruptcy Court for the Southern District of New York, the first step toward getting the UK agreement approved.
"The trustee's goal is still to return 100 percent to the commodities customers, and we will be going before the court in an attempt to achieve that," Kent Jarrell, a spokesman for Giddens, said on Saturday.
MF Global improperly used customer money to plug liquidity gaps as the brokerage was in freefall last year, creating a roughly $1.6 billion gap in customer accounts, according to a June report by Giddens. The company filed for bankruptcy in October 2011.
As a result of money changing hands during MF Global's chaotic collapse, various company affiliates have been fighting over who owes money to whom.
Earlier this month, Giddens released a report saying more than 28,000 claims have been filed by the brokerage's commodities and securities customers, all but 200 have been fully resolved.
So far, Giddens has returned approximately $4.7 billion to commodities customers hit by the brokerage's collapse.
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Modest discounts, fiscal cliff deter last-minute shoppers
Labels: BusinessNEW YORK/WESTBURY, New York (Reuters) - Retailers may not see a sales surge this weekend as ho-hum discounts and fears about imminent tax hikes and cuts in government spending give Americans fewer reasons to open their wallets in the last few days before Christmas.
The acrimonious debate in Washington over how to avoid the so-called "fiscal cliff" is one of a number of concerns weighing on shoppers, experts said, as consumers head to malls on the last Saturday ahead of the holiday - typically one of the busiest shopping days of the year.
"I don't think we're going to get a great pickup in the last few days here," said Ron Friedman, retail practice leader at consulting firm Marcum LLP, explaining how the uncertainty related to the "cliff" was weighing on American minds.
Some shoppers agreed.
"That whole fiscal cliff thing is a bit nerve-wracking, and we're trying to save a bit of money for some (home construction) projects next year," Emma Carrington, 43, said while shopping at the Westfield Old Orchard Mall in Skokie, Illinois.
The mother of three, who was at a Barnes & Noble store on Saturday to buy her husband a Nook e-reader, said she was spending less than last year.
Many others are also being cautious.
"We just try to stay on a budget. We're not going crazy," said Tom Chowinski, a market researcher at Nielsen, who was shopping with his wife for their four adult children on Saturday morning at a Wal-Mart store in Westbury, New York.
U.S. consumer sentiment plummeted in December as Americans were unnerved by ongoing negotiations. The Thomson Reuters/University of Michigan's final reading on the overall index on consumer sentiment tumbled to 72.9 from 82.7 in November, worse than forecasts for 74.7. It was the lowest level since July.
"Whenever you introduce anxiety, it will have an impact on shoppers' spending," especially those who shop on credit, said Kevin Regan, senior manager director at FTI Consulting.
Some, like New Yorker Linda Hampton, shopping at a Best Buy store, hope lawmakers will somehow avert the "cliff."
"It would be a disaster. Our taxes will go up. But I think our president will step in," Hampton said.
Talks to avoid the fiscal cliff stalled on Thursday when Republican lawmakers rejected House Speaker John Boehner's proposal aimed at winning concessions from President Barack Obama.
HO-HUM CHRISTMAS?
"What could have been a merry Christmas is going to turn to a ho-hum Christmas, and we can thank our, you know, politicians for getting in the middle of it all," NPD analyst Marshal Cohen said. "This great unknown puts a big damper on the consumer feeling confident to go out and spend more."
Malls from New York to Illinois to California had modest crowds on Saturday, but experts said shoppers could simply be procrastinating. Unlike the past couple of years, when Christmas fell on a weekend, the holiday falls on a Tuesday this year, giving last-minute shoppers more breathing room.
Also, many retailers were still offering free shipping and promising to deliver items by Christmas Eve.
"The traffic you see out and about may not necessarily give you the full picture," said Ramesh Swamy, an analyst at Deloitte.
Shoshana Pucci, senior marketing manager at Glendale Galleria in Southern California, said she expected these shoppers to even make multiple visits rather than do all their last-minute shopping in one go on Saturday.
The holiday quarter can account for about 30 percent of annual sales and half of profit for many chains.
More than 60 percent of U.S. consumers have already finished more than three-quarters of their holiday shopping, according to a Reuters/Ipsos poll released on Thursday. This means retailers will have to bait shoppers with big discounts to get them to open their wallets in the last lap of the holiday race.
While Cohen and Friedman expected retailers to pull out all the stops this weekend to woo last-minute shoppers, some others expected discounts to be less aggressive since retailers did a better job of managing inventory this year.
"Customers will not be finding deals as good as last year," said Scott Tuhy, a vice president at Moody's. "I haven't seen 60-70 percent off sales as much."
While Barnes & Noble offered 25 percent off on any one item except Nook products, Ann Inc's Loft chain offered 50 percent off on everything except new arrivals. Gap offered 40 percent off on all denims, while Victoria's Secret advertised $5 lacie panties and $10 off some yoga wear.
Stores of Macy's and Nordstrom were some of the busiest at Roosevelt Field mall in Garden City, on New York's Long Island, but crowds were moderate at the J.C. Penney store.
This week, research firm ShopperTrak lowered its sales forecast for November and December and now expects sales to be up 2.5 percent, rather than up 3.3 percent.
Many retailers reported record traffic on Thanksgiving Day and the subsequent weekend, but several, including Macy's Inc and Saks Inc, lost a lot of business in early November because of Superstorm Sandy.
Sales for the November-December holiday season look set to rise 4.1 percent to $586.1 billion this year after a 5.6 percent increase in 2011, according to the National Retail Federation.
"Retailers are going to be pretty challenged this year in trying to get beyond all this," Cohen said, referring to a string of events this holiday season that have weighed on U.S. shoppers including the hurricane, gridlock in Washington and the December 14 shooting at an elementary school in Connecticut.
NRF sees 2013 retail sales rising about 2 to 2.5 percent if the fiscal cliff is averted. If not, sales would be essentially flat for the year, the trade group estimated in a study with Macroeconomic Advisers.
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Pacts in MF Global liquidation could free up cash
Labels: BusinessSettlements between parties with completing claims in the liquidation of MF Global could speed up payment to customers of the collapsed brokerage, with one agreement potentially freeing up as much as $600 million for U.S. customers.
Two separate agreements were announced on Saturday. One is between James Giddens, the bankruptcy trustee overseeing the liquidation of MF Global's main brokerage unit, and Richard Heis, who is overseeing the liquidation of the company's United Kingdom operations. Giddens and Heis agreed to resolve all claims between the two corporate entities.
Giddens also reached an agreement resolving claims between the estate representing creditors of the brokerage unit and the one representing those of parent company MF Global Holdings Ltd.
Giddens said in a prepared statement that the agreements "are in the best interests of former customers and other creditors," and allow trustees to request court approval for additional cash distributions.
The agreement between the brokerage unit trustee and the UK-based unit could result in $500 million to $600 million being returned to the estate for U.S. brokerage customers, the parties said.
Giddens said he has applied with a U.S. bankruptcy court to make additional distributions as a result of the agreement.
Heis said the agreement will "clear important obstacles and allow us to significantly reduce reserves that have blocked us from additional distributions to the former customers and creditors of MF Global UK."
Due to litigation, just 10 percent has been distributed so far out of the $2.5 billion that's been collected for those customers, Heis said.
With the agreements in hand, "we will move quickly to get money in agreed claimaints' pockets at the earliest opportunity," Heis said.
Giddens has been combing through the accounts of MF Global since it filed for bankruptcy protection in October 2011. MF Global, which was headed by former New Jersey Gov. Jon Corzine, collapsed after making a disastrous bet on European debt.
Regulators have been investigating whether MF Global tapped money from clients' accounts as its financial condition worsened. That would violate securities laws. Brokerages are required to keep customer money separate from the firm's money.
Much of the money that went missing belonged to farmers, ranchers and other business owners who used MF Global to reduce their risks from the fluctuating prices of commodities such as corn and wheat.
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Japan's Abe heaps pressure on BOJ to set 2 percent inflation target
Labels: BusinessTOKYO (Reuters) - Japan's next premier, Shinzo Abe, renewed pressure on the central bank to adopt a 2 percent inflation target, saying that he will try to revise a law guaranteeing its independence if his demand is not met.
He also said he will pick someone who agrees with his views on the need for bolder monetary easing to succeed BOJ Governor Masaaki Shirakawa when his term expires in April next year.
"At this month's policy meeting, the BOJ said it would examine (setting an inflation target) at its next meeting" in January, Abe said on television on Sunday.
"If it doesn't, we'll revise the BOJ Law and set up a policy accord with the central bank to agree on an inflation target. We may also seek to have the BOJ held accountable for job growth."
The comments are the strongest warning to date on the possibility of revising the law guaranteeing the BOJ's independence from political interference. It is rare for a prime minister or a would-be premier to make explicit demands on what the BOJ should do at its policy-setting meetings.
Abe, who is set to become prime minister on Wednesday after his opposition Liberal Democratic Party (LDP) won this month's lower house election, has put the BOJ at the center of political debate, urging bolder monetary stimulus to beat deflation.
He wants the BOJ to share with the government a binding 2 percent inflation target, double the central bank's current goal, and ease policy "unlimitedly" to achieve it. There is no specific time frame.
Under pressure, the central bank loosened policy on Thursday for the third time in four months by boosting asset purchases. It also said it would consider setting a higher inflation target at its next policy-setting meeting on January 21-22.
Some central bank policymakers, notably the conservative Shirakawa, have been reluctant to set a 2 percent inflation target in a country which has been mired in grinding deflation for more than a decade.
But they may have little choice but to meet Abe's demand given explicit threats to the BOJ's independence.
Abe's LDP and coalition partner hold a two-thirds majority in the powerful lower house that allows them to overrule bills turned down in the upper house - including one to revise the BOJ Law.
"Countries around the world are printing more money to boost their export competitiveness. Japan must do so too" to keep the yen from rising, Abe said. "It makes a big difference whether the yen is at 80 to the dollar, or at 90 to the dollar."
Abe's new government will have the power to nominate a new BOJ governor when Shirakawa's term ends in April next year. The nomination, unlike other legislation, needs approval by both houses of parliament.
That means Abe needs support from other parties to pass through the nomination in the upper house, where his coalition doesn't hold a majority.
"I'd like to have someone who agrees with our view (on monetary policy)," Abe said on Shirakawa's successor. "There are parties that share my view" which should be willing to cooperate with the LDP in passing the nomination through the upper house, he said.
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TEXT-S&P Afms Rating On Emerald Assets Ltd. - Portfolio 1 Notes
Labels: Business(The following was released by the rating agency)
OVERVIEW
-- Emerald Assets Ltd. - Portfolio 1 is a commercial
mortgage backed securitization that is secured by a
cross-collateralized portfolio of 36 industrial properties in
Singapore.
-- One property is being removed from the collateral
portfolio and three will be added to the collateral pool, taking
the number of properties in the portfolio to 38.
-- We have affirmed our rating on the class P1-AAA-002 notes
outstanding after reviewing the changes to the collateral pool.
SYDNEY (Standard & Poor's) Dec. 18, 2012--Standard & Poor's
Ratings Services today affirmed its rating on one class of
commercial-mortgage-backed securities (CMBS) issued by Emerald
Assets Ltd. - Portfolio 1. Emerald Assets Ltd. - Portfolio 1 is
a commercial mortgage backed securitization that is secured by a
cross-collateralized portfolio of 36 industrial properties
located in Singapore.
One property is being removed from the collateral portfolio
and three will be added to the collateral pool, taking the
number of properties in the portfolio to 38. We have affirmed
our rating on the class P1-AAA-002 notes outstanding after
reviewing the changes to the collateral pool.
The rating affirmation reflects our view that the rated
notes are able to withstand stresses that are commensurate with
the current rating levels. The transaction is a single-borrower
secured loan CMBS secured by a portfolio of industrial
properties owned by Ascendas Real Estate Investment Trust
A-REIT. The notes were initially issued in 2007.
The rating affirmation reflects:
-- The strength of the secured loan between Emerald Assets
and A-REIT;
-- The credit quality of the underlying collateral
properties;
-- The cash flow coverage levels and overcollateralization
provided;
-- The liquidity support provided; and
-- The quality of asset management.
STANDARD & POOR'S 17G-7 DISCLOSURE REPORT
SEC Rule 17g-7 requires an NRSRO, for any report
accompanying a credit rating relating to an asset-backed
security as defined in the Rule, to include a description of the
representations, warranties and enforcement mechanisms available
to investors and a description of how they differ from the
representations, warranties and enforcement mechanisms in
issuances of similar securities. The Rule applies to in-scope
securities initially rated (including preliminary ratings) on or
after Sept. 26, 2011. If applicable, the Standard & Poor's 17g-7
Disclosure Report included in this credit rating report is
available at "http://standardandpoorsdisclosure-17g7.com".
REGULATORY DISCLOSURES
Please refer to the initial rating report for any additional
regulatory disclosures that may apply to a transaction.
RATING AFFIRMED
Class Rating P1-AAA-002 AA- (sf)
RELATED CRITERIA AND RESEARCH
-- Counterparty Risk Framework Methodology And Assumptions,
Nov. 29, 2012 -- Asia Pacific Feels The Pressure Of Ongoing
Global Economic Uncertainty, Sept. 23, 2012 -- CMBS Global
Property Evaluation Methodology, Sept. 5, 2012 -- Global
Structured Finance Scenario And Sensitivity Analysis: The
Effects Of The Top Five Macroeconomic Factors, Nov. 4, 2011 --
Principles of Credit Ratings, Feb. 16, 2011
Read More..
OVERVIEW
-- Emerald Assets Ltd. - Portfolio 1 is a commercial
mortgage backed securitization that is secured by a
cross-collateralized portfolio of 36 industrial properties in
Singapore.
-- One property is being removed from the collateral
portfolio and three will be added to the collateral pool, taking
the number of properties in the portfolio to 38.
-- We have affirmed our rating on the class P1-AAA-002 notes
outstanding after reviewing the changes to the collateral pool.
SYDNEY (Standard & Poor's) Dec. 18, 2012--Standard & Poor's
Ratings Services today affirmed its rating on one class of
commercial-mortgage-backed securities (CMBS) issued by Emerald
Assets Ltd. - Portfolio 1. Emerald Assets Ltd. - Portfolio 1 is
a commercial mortgage backed securitization that is secured by a
cross-collateralized portfolio of 36 industrial properties
located in Singapore.
One property is being removed from the collateral portfolio
and three will be added to the collateral pool, taking the
number of properties in the portfolio to 38. We have affirmed
our rating on the class P1-AAA-002 notes outstanding after
reviewing the changes to the collateral pool.
The rating affirmation reflects our view that the rated
notes are able to withstand stresses that are commensurate with
the current rating levels. The transaction is a single-borrower
secured loan CMBS secured by a portfolio of industrial
properties owned by Ascendas Real Estate Investment Trust
A-REIT. The notes were initially issued in 2007.
The rating affirmation reflects:
-- The strength of the secured loan between Emerald Assets
and A-REIT;
-- The credit quality of the underlying collateral
properties;
-- The cash flow coverage levels and overcollateralization
provided;
-- The liquidity support provided; and
-- The quality of asset management.
STANDARD & POOR'S 17G-7 DISCLOSURE REPORT
SEC Rule 17g-7 requires an NRSRO, for any report
accompanying a credit rating relating to an asset-backed
security as defined in the Rule, to include a description of the
representations, warranties and enforcement mechanisms available
to investors and a description of how they differ from the
representations, warranties and enforcement mechanisms in
issuances of similar securities. The Rule applies to in-scope
securities initially rated (including preliminary ratings) on or
after Sept. 26, 2011. If applicable, the Standard & Poor's 17g-7
Disclosure Report included in this credit rating report is
available at "http://standardandpoorsdisclosure-17g7.com".
REGULATORY DISCLOSURES
Please refer to the initial rating report for any additional
regulatory disclosures that may apply to a transaction.
RATING AFFIRMED
Class Rating P1-AAA-002 AA- (sf)
RELATED CRITERIA AND RESEARCH
-- Counterparty Risk Framework Methodology And Assumptions,
Nov. 29, 2012 -- Asia Pacific Feels The Pressure Of Ongoing
Global Economic Uncertainty, Sept. 23, 2012 -- CMBS Global
Property Evaluation Methodology, Sept. 5, 2012 -- Global
Structured Finance Scenario And Sensitivity Analysis: The
Effects Of The Top Five Macroeconomic Factors, Nov. 4, 2011 --
Principles of Credit Ratings, Feb. 16, 2011
Two former fund managers guilty of insider trading
Labels: Business NEW YORK (Reuters) - Two former hedge fund managers were convicted on Monday of illegal trading in Dell Inc stock based on secret information supplied by research analysts, the latest in a string of Wall Street insider-trading convictions.
A federal jury in Manhattan found Todd Newman, a former portfolio manager at Diamondback Capital Management, and Anthony Chiasson, co-founder of Level Global Investors, guilty on all counts of conspiracy to commit securities fraud and securities fraud.
"Like scores of privileged professionals before them, Newman and Chiasson are finding out the hard way that the opportunity cost of gaining an illegal edge in the market is the loss of one's liberty," U.S. Attorney Preet Bharara said after the verdict.
The two men were charged in January as part of a sweep called "Operation Perfect Hedge" by the Federal Bureau of Investigation. A third defendant in the case, Jon Horvath, a former analyst at a division of hedge fund titan SAC Capital, pleaded guilty to charges related to insider trading before the trial.
"We're going to certainly appeal," Reid Weingarten, a lawyer for Chiasson, said after Monday's verdict, said in the court hall after two full days of deliberations by a jury.
The case helped highlight how a group of fund managers and analysts with ties to billionaire Steven Cohen's SAC Capital have been pursued over insider trading. A top deputy of Cohen's, Michael Steinberg, is an unindicted co-conspirator in the case.
Last month, in a different case, federal prosecutors charged Mathew Martoma, a former employee at a SAC Capital division, with helping Cohen's firm avoid losses and reap profits of $276 million.
Prosecutors have not accused Cohen of wrongdoing, and after Martoma's arrest SAC said it was confident that both Cohen and the firm "have acted appropriately." The U.S. Securities and Exchange Commission has notified the hedge fund that the agency was considering filing civil charges against it, according to a disclosure SAC made recently to investors.
The two managers were accused of using confidential information in trades of Dell stock ahead of the computer maker's earnings reports for the first and second quarters of 2008. Prosecutors alleged that Chiasson earned $57 million on those trades while Newman netted $3.8 million.
Both were also accused of illegally trading in chipmaker Nvidia Corp . Chiasson was accused of earning $10 million in illegal profits on trades ahead of Nvidia's May 2009 results. Prosecutors offered evidence at trial that Newman had $78,000 in gains on Nvidia.
Prosecutors said the bets were made based on secret information obtained by a group of analysts who formed a "corrupt network" that swapped non-public information obtained from themselves and others.
But defense lawyers contended that neither Newman nor Chiasson knew the information was secret because the analysts made it appear their stock recommendations were legitimate.
Several analysts, including former Diamondback analyst Jesse Tortora and former Level Global analyst Spyridon Adondakis, pleaded guilty. Both Tortora and Adondakis, who pleaded guilty in January, testified on behalf of the government.
The government's wide-ranging investigation devastated Newman's and Chiasson's hedge funds. Level Global was closed in 2011 following an FBI raid. Diamondback told its clients on December 6 it planned to close.
Since August 2009, federal prosecutors in New York have charged 75 people with insider trading and secured convictions against 71 of them.
Read More..
A federal jury in Manhattan found Todd Newman, a former portfolio manager at Diamondback Capital Management, and Anthony Chiasson, co-founder of Level Global Investors, guilty on all counts of conspiracy to commit securities fraud and securities fraud.
"Like scores of privileged professionals before them, Newman and Chiasson are finding out the hard way that the opportunity cost of gaining an illegal edge in the market is the loss of one's liberty," U.S. Attorney Preet Bharara said after the verdict.
The two men were charged in January as part of a sweep called "Operation Perfect Hedge" by the Federal Bureau of Investigation. A third defendant in the case, Jon Horvath, a former analyst at a division of hedge fund titan SAC Capital, pleaded guilty to charges related to insider trading before the trial.
"We're going to certainly appeal," Reid Weingarten, a lawyer for Chiasson, said after Monday's verdict, said in the court hall after two full days of deliberations by a jury.
The case helped highlight how a group of fund managers and analysts with ties to billionaire Steven Cohen's SAC Capital have been pursued over insider trading. A top deputy of Cohen's, Michael Steinberg, is an unindicted co-conspirator in the case.
Last month, in a different case, federal prosecutors charged Mathew Martoma, a former employee at a SAC Capital division, with helping Cohen's firm avoid losses and reap profits of $276 million.
Prosecutors have not accused Cohen of wrongdoing, and after Martoma's arrest SAC said it was confident that both Cohen and the firm "have acted appropriately." The U.S. Securities and Exchange Commission has notified the hedge fund that the agency was considering filing civil charges against it, according to a disclosure SAC made recently to investors.
The two managers were accused of using confidential information in trades of Dell stock ahead of the computer maker's earnings reports for the first and second quarters of 2008. Prosecutors alleged that Chiasson earned $57 million on those trades while Newman netted $3.8 million.
Both were also accused of illegally trading in chipmaker Nvidia Corp . Chiasson was accused of earning $10 million in illegal profits on trades ahead of Nvidia's May 2009 results. Prosecutors offered evidence at trial that Newman had $78,000 in gains on Nvidia.
Prosecutors said the bets were made based on secret information obtained by a group of analysts who formed a "corrupt network" that swapped non-public information obtained from themselves and others.
But defense lawyers contended that neither Newman nor Chiasson knew the information was secret because the analysts made it appear their stock recommendations were legitimate.
Several analysts, including former Diamondback analyst Jesse Tortora and former Level Global analyst Spyridon Adondakis, pleaded guilty. Both Tortora and Adondakis, who pleaded guilty in January, testified on behalf of the government.
The government's wide-ranging investigation devastated Newman's and Chiasson's hedge funds. Level Global was closed in 2011 following an FBI raid. Diamondback told its clients on December 6 it planned to close.
Since August 2009, federal prosecutors in New York have charged 75 people with insider trading and secured convictions against 71 of them.
Massachusetts fines Morgan Stanley over Facebook IPO
Labels: Business BOSTON (Reuters) - Morgan Stanley , the lead underwriter for Facebook Inc's initial public offering, will pay a $5 million fine to Massachusetts for violating securities laws governing how investment research can be distributed.
Massachusetts' top securities regulator, William Galvin, on Monday charged that a top Morgan Stanley banker had improperly coached Facebook on how to disclose sensitive financial information selectively, perpetuating what he calls "an unlevel playing field" between Wall Street and Main Street.
Morgan Stanley has faced criticism since Facebook went public in May for revealing revised earnings and revenue forecasts to select clients before the media company's $16 billion initial public offering.
This is the first time a case stemming from Morgan Stanley's handling of the Facebook offering has been decided.
Facebook had privately told Wall Street research analysts about softer forecasts because of less robust mobile revenues. A top Morgan Stanley banker coached Facebook executives on how to get the message out, Galvin said.
A Morgan Stanley spokeswoman said on Monday the company is "pleased to have reached a settlement" and that it is "committed to robust compliance with both the letter and the spirit of all applicable regulations and laws." The company neither admitted nor denied any wrongdoing.
Galvin, who has been aggressive in policing how research is distributed on Wall Street ever since investment banks reached a global settlement in 2003, said the bank violated that settlement. He fined Citigroup $2 million over similar charges in late October.
"The conduct at Morgan Stanley was more egregious," he said in an interview explaining the amount of the fine. "With it we will get their attention and begin to take steps in restoring some confidence for retail investors to invest."
Galvin also said that his months-long investigation into the Facebook IPO is far from over and that he continues to review the other banks involved. Goldman Sachs and JP Morgan also acted as underwriters. The underwriting fee for all underwriters was reported to be $176 million at the time, or 1.1 percent of the proceeds.
Massachusetts did not name the Morgan Stanley banker in its documents but personal information detailed in the matter suggest it is Michael Grimes, a top technology banker.
The state said the banker helped a Facebook executive release new information and then guided the executive on how to speak with Wall Street analysts about it. The banker, Galvin said, rehearsed with Facebook's Treasurer and wrote the bulk of the script Facebook's Treasurer used when calling the research analysts.
A number of Wall Street analysts cut their growth estimates for Facebook in the days before the IPO after the company filed an amended prospectus.
Facebook's treasurer then quickly called a number for Wall Street analysts providing even more information.
The banker "was not allowed to call research analysts himself, so he did everything he could to ensure research analysts received new revenue numbers which they then provided to institutional investors," Galvin said.
Galvin's consent order also says that the banker spoke with company lawyers and then to Facebook's chief financial officer about how to prove an update "without creating the appearance of not providing the underlying trend information to all investors."
The banker and all others involved with the matter at Morgan Stanley are still employed by the company, a person familiar with the matter said.
Retail investors were not given any similar information, Galvin said, saying this case illustrates how institutional investors often have an edge over retail investors.
Read More..
Massachusetts' top securities regulator, William Galvin, on Monday charged that a top Morgan Stanley banker had improperly coached Facebook on how to disclose sensitive financial information selectively, perpetuating what he calls "an unlevel playing field" between Wall Street and Main Street.
Morgan Stanley has faced criticism since Facebook went public in May for revealing revised earnings and revenue forecasts to select clients before the media company's $16 billion initial public offering.
This is the first time a case stemming from Morgan Stanley's handling of the Facebook offering has been decided.
Facebook had privately told Wall Street research analysts about softer forecasts because of less robust mobile revenues. A top Morgan Stanley banker coached Facebook executives on how to get the message out, Galvin said.
A Morgan Stanley spokeswoman said on Monday the company is "pleased to have reached a settlement" and that it is "committed to robust compliance with both the letter and the spirit of all applicable regulations and laws." The company neither admitted nor denied any wrongdoing.
Galvin, who has been aggressive in policing how research is distributed on Wall Street ever since investment banks reached a global settlement in 2003, said the bank violated that settlement. He fined Citigroup $2 million over similar charges in late October.
"The conduct at Morgan Stanley was more egregious," he said in an interview explaining the amount of the fine. "With it we will get their attention and begin to take steps in restoring some confidence for retail investors to invest."
Galvin also said that his months-long investigation into the Facebook IPO is far from over and that he continues to review the other banks involved. Goldman Sachs and JP Morgan also acted as underwriters. The underwriting fee for all underwriters was reported to be $176 million at the time, or 1.1 percent of the proceeds.
Massachusetts did not name the Morgan Stanley banker in its documents but personal information detailed in the matter suggest it is Michael Grimes, a top technology banker.
The state said the banker helped a Facebook executive release new information and then guided the executive on how to speak with Wall Street analysts about it. The banker, Galvin said, rehearsed with Facebook's Treasurer and wrote the bulk of the script Facebook's Treasurer used when calling the research analysts.
A number of Wall Street analysts cut their growth estimates for Facebook in the days before the IPO after the company filed an amended prospectus.
Facebook's treasurer then quickly called a number for Wall Street analysts providing even more information.
The banker "was not allowed to call research analysts himself, so he did everything he could to ensure research analysts received new revenue numbers which they then provided to institutional investors," Galvin said.
Galvin's consent order also says that the banker spoke with company lawyers and then to Facebook's chief financial officer about how to prove an update "without creating the appearance of not providing the underlying trend information to all investors."
The banker and all others involved with the matter at Morgan Stanley are still employed by the company, a person familiar with the matter said.
Retail investors were not given any similar information, Galvin said, saying this case illustrates how institutional investors often have an edge over retail investors.
Stocks move higher as budget talks progress
Labels: BusinessNEW YORK (AP) — Stocks rose on Wall Street as investors were encouraged by signs of progress in budget talks in Washington. Just two weeks remain before tax increases and government spending cuts take effect if no deal is reached.
On the floor of the New York Stock Exchange, stock traders paused for a minute of silence at 9:15 a.m. EST to remember the 20 children and seven adults killed Friday in a gunman's rampage through a Connecticut elementary school.
The Dow Jones industrial average rose 100.38 points to 13,235.39, its biggest gain this month. The Standard & Poor's 500 index climbed 16.78 points to 1,430.36 and the Nasdaq composite index rose 39.27 points to 3,010.60.
Marc Chaikin, CEO of the Philadelphia-based market research firm Chaikin Analytics, said investors became more hopeful for a resolution in the budget talks after House Speaker John Boehner made an offer to increase tax rates on high-income Americans.
"The fiscal cliff is obviously foremost on everyone's mind," Chaikin said.
Banks were among the best-performing stocks. Citigroup gained $1.55, 4.1 percent, to $39.15 after Raymond James raised its target price on the stock to $52 from $44. In a note to clients, the brokerage reaffirmed its "Strong Buy" rating, citing the "improving fundamental outlook." Bank of America also gained 42 cents, or 4 percent, to $11.
Investors are currently favoring financial stocks over technology stocks, said Ben Schwarz, chief market strategist at Lightspeed Financial.
"The banks are ripping today," Schwarz said. "People are looking for stability and the tech sector hasn't given them any."
Financial companies make up the best performing industry group in the S&P 500 this year, according to FactSet data. The group, which includes banks such as Wells Fargo & Co. and insurers such as Travelers, has gained 25 percent this year.
Apple rose $9.04, or 1.8 percent, to $518.83 after the company said it sold more than 2 million iPhone 5s in China in their first three days of availability, setting a record for that market. The technology giant's stock has fallen 26 percent since it closed at a record $702.10 in September and is trading close to its lowest since February.
In Washington, there appeared to be movement in long-stalled budget talks aimed at avoiding tax increases and government spending cuts set to take effect Jan. 1, which are known as the "fiscal cliff." The combination could lead to a recession.
Indexes opened higher following the news that Boehner, a Republican, offered $1 trillion in higher tax revenue over 10 years and an increase on the top tax rate for people making $1 million per year, to 39.6 percent from 35 percent. The market moved higher still after news crossed shortly before noon that Boehner went to the White House to meet with President Barack Obama.
Wall Street has been relatively calm in recent weeks, but David Kelly, chief global strategist for J.P. Morgan Funds, said that by Friday the market will be "squarely focused on what is or is not happening in Washington."
He suggested in a note to clients that the markets will not have "priced in" any outcome, "setting the stage for a market rally with an agreement and a slump with stalemate."
Clearwire slid 46 cents, to $2.91, after Sprint announced terms of its buyout deal for the wireless Internet access company. Sprint's price of $2.97 per share was below Clearwire's closing stock price Friday.
Japanese stocks rose after the country's Liberal Democratic Party regained power following a landslide election victory.
Brian Singer, partner at William Blair, a Chicago-based asset management firm, said investors were encouraged by the outcome, which gave the conservative party overwhelming control of Parliament. The Liberal Democrats have promised greater economic stimulus spending and more action to end a destructive cycle of price declines, or deflation.
The note on the 10-year Treasury bond rose 7 basis points to 1.78 percent.
Other stocks making big moves:
—American International Group rose $1.01, or 3 percent, to $34.95 after the insurer said it was selling its remaining stake in the life insurer AIA Group. The Wall Street Journal said AIG may raise as much as $6.5 billion from the sale. AIG avoided collapse in 2008 with $182 billion in support from the U.S. government — the biggest of the Wall Street bailout packages — after suffering massive losses from investments in derivatives.
—Tenet Healthcare Co. gained 55 cents, or 1.8 percent, to $31.38 after Deutsche Bank raised its recommendation on the stock to "buy" from "hold." The bank cited Tenet's "compelling" business and financial outlook over the next 12 to 24 months.
Read More..
On the floor of the New York Stock Exchange, stock traders paused for a minute of silence at 9:15 a.m. EST to remember the 20 children and seven adults killed Friday in a gunman's rampage through a Connecticut elementary school.
The Dow Jones industrial average rose 100.38 points to 13,235.39, its biggest gain this month. The Standard & Poor's 500 index climbed 16.78 points to 1,430.36 and the Nasdaq composite index rose 39.27 points to 3,010.60.
Marc Chaikin, CEO of the Philadelphia-based market research firm Chaikin Analytics, said investors became more hopeful for a resolution in the budget talks after House Speaker John Boehner made an offer to increase tax rates on high-income Americans.
"The fiscal cliff is obviously foremost on everyone's mind," Chaikin said.
Banks were among the best-performing stocks. Citigroup gained $1.55, 4.1 percent, to $39.15 after Raymond James raised its target price on the stock to $52 from $44. In a note to clients, the brokerage reaffirmed its "Strong Buy" rating, citing the "improving fundamental outlook." Bank of America also gained 42 cents, or 4 percent, to $11.
Investors are currently favoring financial stocks over technology stocks, said Ben Schwarz, chief market strategist at Lightspeed Financial.
"The banks are ripping today," Schwarz said. "People are looking for stability and the tech sector hasn't given them any."
Financial companies make up the best performing industry group in the S&P 500 this year, according to FactSet data. The group, which includes banks such as Wells Fargo & Co. and insurers such as Travelers, has gained 25 percent this year.
Apple rose $9.04, or 1.8 percent, to $518.83 after the company said it sold more than 2 million iPhone 5s in China in their first three days of availability, setting a record for that market. The technology giant's stock has fallen 26 percent since it closed at a record $702.10 in September and is trading close to its lowest since February.
In Washington, there appeared to be movement in long-stalled budget talks aimed at avoiding tax increases and government spending cuts set to take effect Jan. 1, which are known as the "fiscal cliff." The combination could lead to a recession.
Indexes opened higher following the news that Boehner, a Republican, offered $1 trillion in higher tax revenue over 10 years and an increase on the top tax rate for people making $1 million per year, to 39.6 percent from 35 percent. The market moved higher still after news crossed shortly before noon that Boehner went to the White House to meet with President Barack Obama.
Wall Street has been relatively calm in recent weeks, but David Kelly, chief global strategist for J.P. Morgan Funds, said that by Friday the market will be "squarely focused on what is or is not happening in Washington."
He suggested in a note to clients that the markets will not have "priced in" any outcome, "setting the stage for a market rally with an agreement and a slump with stalemate."
Clearwire slid 46 cents, to $2.91, after Sprint announced terms of its buyout deal for the wireless Internet access company. Sprint's price of $2.97 per share was below Clearwire's closing stock price Friday.
Japanese stocks rose after the country's Liberal Democratic Party regained power following a landslide election victory.
Brian Singer, partner at William Blair, a Chicago-based asset management firm, said investors were encouraged by the outcome, which gave the conservative party overwhelming control of Parliament. The Liberal Democrats have promised greater economic stimulus spending and more action to end a destructive cycle of price declines, or deflation.
The note on the 10-year Treasury bond rose 7 basis points to 1.78 percent.
Other stocks making big moves:
—American International Group rose $1.01, or 3 percent, to $34.95 after the insurer said it was selling its remaining stake in the life insurer AIA Group. The Wall Street Journal said AIG may raise as much as $6.5 billion from the sale. AIG avoided collapse in 2008 with $182 billion in support from the U.S. government — the biggest of the Wall Street bailout packages — after suffering massive losses from investments in derivatives.
—Tenet Healthcare Co. gained 55 cents, or 1.8 percent, to $31.38 after Deutsche Bank raised its recommendation on the stock to "buy" from "hold." The bank cited Tenet's "compelling" business and financial outlook over the next 12 to 24 months.
Ethical investing offers opportunities for Canadian advisers
Labels: BusinessTORONTO (Reuters) - While Canadian financial advisers are struggling to lure investors, in part because of lackluster returns, those promoting "socially responsible investing" say they've got an edge on the competition as shareholder activism heats up.
The din of the Occupy Wall Street movement has faded, but the controversy over pipelines, oil sands and climate change remain hot topics in Canada, where C$530 billion ($536 billion) - or nearly a fifth - of investable assets have a "socially responsible" earmark.
"It is definitely a good time to be in socially responsible investing," said Sterling Rempel, a financial planner at Future Values in Calgary, a city where the energy industry and environmentalists go head to head on a daily basis.
While ethical investment once meant cutting tobacco companies and arms producers from portfolios, investors are now turning to self-described socially responsible investing (SRI) funds to influence companies on anything from executive pay to climate change and labor issues.
Such funds often buy shares in industries as diverse as banking and oil and then lobby to force change from within as activist shareholders. The SRI industry takes credit for forcing so-called "say on pay" votes on executive compensation at 100 companies in Canada, power that was unheard of five years ago.
"A key part of our strategy ... is owning imperfect companies and then sitting down with the management of those companies, and engaging and encouraging them to be leaders within their industry," said Gary Hawton, president of the Social Investment Organization in Canada, a membership-based group that includes banks, fund companies, financial advisors and others interested in socially responsible investment.
For committed SRI advisers and investors, true SRI funds must screen out the worst industries and companies who refuse to engage - and engage fully with those who will. Simply buying shares in green companies and waiting for returns is not enough.
That standard means SRI products remain limited, and even then, skepticism persists.
"Ethical funds are more a feel-good approach than (something that is) really affecting a significant change," said University of British Columbia business professor Werner Antweiler, adding that funds have to hold a very big stake in a company to really get a voice in the boardroom.
"It always comes down to avoidance of the worst offenders in an industry," said Antweiler.
Decades after the earliest SRI funds were launched, a count of SRI equity funds shows just 32 in the pool of several thousand Canadian funds overall, Hawton said.
Growth in product will come when the leaders in Canada's small industry - including NEI Investments, IGM Financial Group through its Investors Group unit, Industrial Alliance unit IA Clarington and Desardins Investments - see more demand.
LOYAL THROUGH HARD TIMES
An adviser who knows the industry will benefit not just from a flow of social activist investors, advisers and investors say, but also from the additional loyalty and long-term perspective such clients bring with them - attractive qualities in a tough financial market.
"My SRI clients are pretty loyal," said Michele Jolley, an adviser at Portfolio Strategies in Calgary. "They are less willing to give up on the investment, and more willing to ride through the difficult market cycles."
Not that SRI clients aren't in it for the profit. Studies show little difference in returns between SRI and conventional mutual funds, with both hit by the 2008 financial crisis and gradually regaining ground.
Sustainalytics, a global analysis firm that looks at SRI research, says the Jantzi Social Index notched an annualized return of 5.36 percent since its 2000 inception - in line with the 5.44 percent return of the S&P/TSX Composite Index.
"I want to make money too. But I try to hold out for the long-range view," said Heather Waldie, a 56-year-old retired teacher and a client of Jolley's.
"2008 was a very scary time. I watched, as everyone else did, my investments diminish. But I go back to my belief that if you are investing in good companies with good values, in the end I think they are going to succeed."
Loyalty and principles aside, reaching out to the activist investor typically nets advisers a client who is not being well-served, in an environment filled with disgruntled investors and advisers looking for new strategies.
"If you are trying to build your practice, why not do it in an area that surveys show investors are interested in and very few advisers are doing?" said SIO's Hawton.
For Ryan Colwell, a financial planner at IPC Investment in Georgetown, Ontario, west of Toronto, winning SRI clients does not mean marketing himself as a specialist - a tactic he believes only appeals to the minority of investors.
Instead, he's aiming for the fat middle of the curve, investors who might accept an SRI investment if it offers solid returns in addition to something the client believes in.
"If you lead with it, you sound like you're way different, and nobody likes way different," said Colwell.
Simply asking clients if they are interested in investing in a socially responsible way may be the biggest driver of growth, said Hawton, who in addition to heading the SIO is also president of Qtrade Financial Group's OceanRock Investments, Canada's fourth-largest SRI fund provider by assets.
In the last year, OceanRock has shown advisers in its distribution network how to ask clients about SRI, and then reap the benefit of their business. Assets in OceanRock funds have risen 31 percent in the year to September 2012 to C$297 million, far outstripping overall SRI fund growth of 5 percent and Canadian long-term mutual fund growth of 13 percent, according to figures from Investor Economics research firm.
"The vast majority of clients in Canada aren't even aware of the option, but if asked, will say: 'Yes I would like that,'" said Hawton, whose funds are available through the big Canadian banks as well as independent advisers.
"And then they say, 'I can't believe my other adviser has never mentioned it.'"
($1 = 0.99 Canadian dollars)
Read More..
The din of the Occupy Wall Street movement has faded, but the controversy over pipelines, oil sands and climate change remain hot topics in Canada, where C$530 billion ($536 billion) - or nearly a fifth - of investable assets have a "socially responsible" earmark.
"It is definitely a good time to be in socially responsible investing," said Sterling Rempel, a financial planner at Future Values in Calgary, a city where the energy industry and environmentalists go head to head on a daily basis.
While ethical investment once meant cutting tobacco companies and arms producers from portfolios, investors are now turning to self-described socially responsible investing (SRI) funds to influence companies on anything from executive pay to climate change and labor issues.
Such funds often buy shares in industries as diverse as banking and oil and then lobby to force change from within as activist shareholders. The SRI industry takes credit for forcing so-called "say on pay" votes on executive compensation at 100 companies in Canada, power that was unheard of five years ago.
"A key part of our strategy ... is owning imperfect companies and then sitting down with the management of those companies, and engaging and encouraging them to be leaders within their industry," said Gary Hawton, president of the Social Investment Organization in Canada, a membership-based group that includes banks, fund companies, financial advisors and others interested in socially responsible investment.
For committed SRI advisers and investors, true SRI funds must screen out the worst industries and companies who refuse to engage - and engage fully with those who will. Simply buying shares in green companies and waiting for returns is not enough.
That standard means SRI products remain limited, and even then, skepticism persists.
"Ethical funds are more a feel-good approach than (something that is) really affecting a significant change," said University of British Columbia business professor Werner Antweiler, adding that funds have to hold a very big stake in a company to really get a voice in the boardroom.
"It always comes down to avoidance of the worst offenders in an industry," said Antweiler.
Decades after the earliest SRI funds were launched, a count of SRI equity funds shows just 32 in the pool of several thousand Canadian funds overall, Hawton said.
Growth in product will come when the leaders in Canada's small industry - including NEI Investments, IGM Financial Group through its Investors Group unit, Industrial Alliance unit IA Clarington and Desardins Investments - see more demand.
LOYAL THROUGH HARD TIMES
An adviser who knows the industry will benefit not just from a flow of social activist investors, advisers and investors say, but also from the additional loyalty and long-term perspective such clients bring with them - attractive qualities in a tough financial market.
"My SRI clients are pretty loyal," said Michele Jolley, an adviser at Portfolio Strategies in Calgary. "They are less willing to give up on the investment, and more willing to ride through the difficult market cycles."
Not that SRI clients aren't in it for the profit. Studies show little difference in returns between SRI and conventional mutual funds, with both hit by the 2008 financial crisis and gradually regaining ground.
Sustainalytics, a global analysis firm that looks at SRI research, says the Jantzi Social Index notched an annualized return of 5.36 percent since its 2000 inception - in line with the 5.44 percent return of the S&P/TSX Composite Index.
"I want to make money too. But I try to hold out for the long-range view," said Heather Waldie, a 56-year-old retired teacher and a client of Jolley's.
"2008 was a very scary time. I watched, as everyone else did, my investments diminish. But I go back to my belief that if you are investing in good companies with good values, in the end I think they are going to succeed."
Loyalty and principles aside, reaching out to the activist investor typically nets advisers a client who is not being well-served, in an environment filled with disgruntled investors and advisers looking for new strategies.
"If you are trying to build your practice, why not do it in an area that surveys show investors are interested in and very few advisers are doing?" said SIO's Hawton.
For Ryan Colwell, a financial planner at IPC Investment in Georgetown, Ontario, west of Toronto, winning SRI clients does not mean marketing himself as a specialist - a tactic he believes only appeals to the minority of investors.
Instead, he's aiming for the fat middle of the curve, investors who might accept an SRI investment if it offers solid returns in addition to something the client believes in.
"If you lead with it, you sound like you're way different, and nobody likes way different," said Colwell.
Simply asking clients if they are interested in investing in a socially responsible way may be the biggest driver of growth, said Hawton, who in addition to heading the SIO is also president of Qtrade Financial Group's OceanRock Investments, Canada's fourth-largest SRI fund provider by assets.
In the last year, OceanRock has shown advisers in its distribution network how to ask clients about SRI, and then reap the benefit of their business. Assets in OceanRock funds have risen 31 percent in the year to September 2012 to C$297 million, far outstripping overall SRI fund growth of 5 percent and Canadian long-term mutual fund growth of 13 percent, according to figures from Investor Economics research firm.
"The vast majority of clients in Canada aren't even aware of the option, but if asked, will say: 'Yes I would like that,'" said Hawton, whose funds are available through the big Canadian banks as well as independent advisers.
"And then they say, 'I can't believe my other adviser has never mentioned it.'"
($1 = 0.99 Canadian dollars)
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