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Monthly Archives: December 2012

Massachusetts Fines Morgan Stanley Over Facebook I.P.O.

“Morgan Stanley is paying for its role in the troubled stock market debut of Facebook.

On Monday, Massachusetts’s top financial authority fined the bank $5 million for violating securities laws, the first major regulatory action tied to Facebook’s initial public stock offering.

William F. Galvin, the secretary of the commonwealth of Massachusetts, accused the bank of improperly influencing the stock offering process. The regulator’s consent order asserts that a senior Morgan Stanley banker coached Facebook on how to share information with stock analysts who cover the social media company, a potential violation of a landmark legal settlement with Wall Street. While the banker never contacted the analysts directly, his actions, Mr. Galvin said, put ordinary investors at a disadvantage because they lacked access to the same research.

“The broader message here is we are going to use any means possible to enforce the strict code in place about giving out information,” Mr. Galvin said in an interview. “We want to get the message across that if Wall Street wants to get confidence back, they can’t disadvantage Main Street.”

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Cerberus, Owner of the Maker of Bushmaster, Seeks the Sale of Freedom Group

“Private-equity firm Cerberus Capital Management LP said it is seeking to sell the company that manufactures a gun used in last week’s shooting at Sandy Hook Elementary School in Newtown, Conn.

“We have determined to immediately engage in a formal process to sell our investment in Freedom Group…We believe that this decision allows us to meet our obligations to the investors whose interests we are entrusted to protect without being drawn into the national debate that is more properly pursued by those with the formal charter and public responsibility to do so,” Cerberus said in a statement Tuesday…”

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Uncle Sam Helps Income Gap to Widen Since the Declaration of the War on Poverty

“In the town that launched the War on Poverty 48 years ago, the poor are getting poorer despite the government’s help. And the rich are getting richer because of it.

The top 5 percent of households in Washington, D.C., made more than $500,000 on average last year, while the bottom 20 percent earned less than $9,500 – a ratio of 54 to 1.

That gap is up from 39 to 1 two decades ago. It’s wider than in any of the 50 states and all but two major cities. This at a time when income inequality in the United States as a whole has risen to levels last seen in the years before the Great Depression….”

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Nielsen to Buy Arbitron for $1.26 Billion


Nielsen Holdings, known for its television viewership ratings, agreed to buy media and marketing research firm Arbitron in a deal worth $1.26 billion.

The $48 per share offer represents a 26 percent premium to Arbitron’s Monday close on the New York Stock Exchange.”

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Swedish Central Bank Cuts Interest Rates as 2013 GDP Outlook Gets Revised Downward by 30%

“Sweden’s central bank cut interest rates by a quarter point on Tuesday to the lowest for more than two years but gave only slim hopes of further reductions to bolster one of Europe’s more robust economies.

The bank said it expected the policy rate to remain around the new level of 1.0 percent for the next 12 months, running contrary to some expectations it would point clearly to another swift cut in rates.

But economists said its forecasts for rates and lower than previously expected growth next year showed a slim chance of another reduction early in 2013.

It kept a forecast for growth this year of 0.9 percent but cut the 2013 outlook to 1.2 percent from 1.8 percent, reflecting the sagging of an economy that is still doing much better than most of its euro zone peers.”

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NYT Report: $WMT Mexico Unit Involved With Bribery

Wal-Mart Stores Inc. (WMT), the world’s biggest retailer, said it’s investigating how it got a license for a store in Mexico as the New York Times reported its local unit bribed an official to change a zoning map.

Wal-Mart de Mexico SAB gave $52,000 to an official to redraw a 2003 zoning map that would have prohibited commercial development on a field less than a mile from the pyramids of Teotihuacan, according to the report. A former lawyer of the company known as Walmex cited the incident as he told Wal-Mart executives of how the unit used bribery, the newspaper reported….”

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$TVIX Will Undergo a 1 for 10 Reverse Split

“Credit Suisse’s (CS) leveraged volatility-trading note — the one at the center of a trading controversy earlier this year – will undertake a procedure this week that should help it stick around U.S. markets.

On Friday, the bank announced a 1-for-10 reverse splitfor the VelocityShares Daily 2x VIX Short Term ETN (TVIX), a move that will increase its price by a factor of ten while reducing share count similarly.”

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$TM Fined Again for Failure to Report Defects in a Timely Manner, Record Fine of $17.35 m


“(Reuters) – Toyota Motor Corp has been ordered to pay a record fine of $17.35 million for failing to report a safety defect to the U.S. government in a timely manner, the U.S. Department of Transportation said.

The fine is the highest civil penalty ever paid by a single automaker to the department’s National Highway Traffic Safety Administration for violations related to a recall, the department said on Tuesday.”

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Icahn’s American Railcar Offers to Buy Greenbrier for $543 Million

“(Reuters) – American Railcar Industries Inc , controlled by activist investor Carl Icahn, offered to buy rival railcar maker Greenbrier Cos Inc for about $543 million, reviving a nearly five-year old plan to combine the companies.

American Railcar’s offer of $20 per share represents a premium of 5.4 percent to Greenbrier’s closing price on Monday.

Greenbrier’s shares have risen 36 percent since Icahn reported a 9.99 percent stake in the company last month that made him its largest shareholder.

Icahn proposed a possible merger of Greenbrier and American Railcar in 2008, but later said a combination was not possible due to “unresolved issues”. (http://r.reuters.com/pud93t)

Greenbrier, which like American Railcar makes, repairs and refurbishes railroad freight cars, could not immediately be reached for comment outside of regular business hours.

Icahn Enterprises LP , which controls Icahn’s stake in American Railcar, said in a regulatory filing on Tuesday that the offer followed talks with Greenbrier. (http://link.reuters.com/ceg74t) “

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Black Gold Rallies on U.S. Budget Progress

“Oil rose for a third day in New York on speculation that an agreement will be reached to avert a U.S. budget impasse that would trigger automatic spending cuts and tax increases next year, sapping demand for fuels.

West Texas Intermediate futures gained as much as 0.8 percent following yesterday’s close at the highest level in almost two weeks. In discussions on the so-called fiscal cliff, PresidentBarack Obama made a new offer after House Speaker John Boehner dropped his opposition to raising tax rates for some top earners. Crude supplies shrank last week while fuel stockpiles rose, according to a Bloomberg News survey before an Energy Department report tomorrow.

“It seems highly like that an acceptable compromise to avert the fiscal cliff will emerge in time,” said Christopher Bellew, a senior broker at Jefferies Bache Ltd. in London.

Crude for January delivery climbed as much as 70 cents to $87.90 a barrel in electronic trading on the New York Mercantile Exchange and was at $87.71 at 11:59 a.m. London time. The contract, which expires tomorrow, rose 47 cents to $87.20 yesterday, the highest close since Dec. 5. The more-actively traded February future rose 52 cents to $88.19 a barrel.

Brent for February settlement on the London-based ICE Futures Europe exchange gained as much as 82 cents, or 0.8 percent, to $108.46 a barrel. The front-month European benchmark contract was at a $20.03 premium to the corresponding WTI future. The spread was $19.97 yesterday, the narrowest since Oct. 19…”

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Brazil Eases Reserve Requirement on Banks to Buoy Currency

Brazil’s central bank reduced reserve requirements on short dollar positions held by local banks as it steps up efforts to buoy the real, the worst performing major currency this year.

Starting Dec. 20, banks will be required to deposit in cash at the central bank 60 percent of their short positions in U.S. dollars above $3 billion, up from a previous limit of no more than $1 billion or any amount in excess of its capital base, the central bank said in a statement.

The real was unchanged at 2.0986 per U.S. dollar at 9:42 a.m. local time.

The government started this month loosening capital controls it imposed in the past two years after the real tumbled to a three-year low on Nov. 30 and the economy grew at half the pace forecast by economists in the third quarter….”

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Draghi Predicts ECB Policy Will Foster Euro-Area Recovery by 2013

“European Central Bank President Mario Draghi said ECB policies and governance reforms in the euro area have revived confidence that will help foster a gradual economic recovery in the second half of next year.

A commitment in July to preserve the euro at any cost and the establishment of a single banking supervisor have improved financial-market sentiment, Draghi said in Brussels yesterday. One priority for 2013 is now to create a single resolution mechanism to complete Europe’s banking union, he said.

“The impression that one has of this year, at least of the second part of this year, is of a gradual improvement in financing conditions which is one of the reasons why we foresee a beginning of a recovery in the second part of next year,” Draghi said in testimony at the European Parliament’s Economic and Monetary Affairs Committee. Still, “the medium-term outlook for economic activity remains challenging.”

The Frankfurt-based ECB cut its economic forecasts earlier this month, predicting the 17-nation region will contract 0.5 percent this year and 0.3 percent in 2013. The Governing Council kept its benchmark interest rate at a record low of 0.75 percent, even though a majority of policy makers were open to easing borrowing costs, according to three officials speaking on condition of anonymity.

ECB Executive Board member Yves Mersch told German newspaper Frankfurter Allgemeine Zeitung in an interview to be published today that he doesn’t “quite understand” the discussion about lower interest rates because non-standard measures have become the primary policy tools….”

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Spanish Banks See a Rise in Bad Loans

Bad loans as a proportion of total lending at Spanish banks climbed to a record 11.23 percent in October as the country’s economic slump led more companies and homeowners to miss credit payments.

The proportion rose from 10.71 percent in September as 7.4 billion euros ($9.8 billion) of loans soured in the month to take the total of doubtful credit in the banking system to 189.6 billion euros, the Bank of Spain said on its website today. The mortgage default rate jumped to 3.49 percent in the third quarter from 3.16 percent in the second quarter, the Bank of Spain said.

Spain’s economic slump, now in its fifth year, continues to drive defaults to record highs as lenders report rising impairments of corporate, home and consumer loans as well as those linked to real estate. Doubts about the ability of Spain’s weaker lenders to withstand mounting impairments of loans linked to real estate helped push the country to seek a European bailout for its banking system in June…”

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Foreign Investment Flows Into China Fall for a 12th Time in 13 Months

Foreign direct investment in China fell for the 12th time in 13 months, suggesting the nation’s economic-growth rebound has yet to attract a fresh influx of capital spending from abroad.

Investment dropped 5.4 percent in November from a year earlier to $8.29 billion, the Ministry of Commerce said in Beijing today. FDI inflows in the first 11 months of the year fell 3.6 percent to $100 billion.

China will step up efforts to stabilize investment inflows next year and expand outflows, state media reported Dec. 16 after an annual economic-planning meeting in Beijing. While factoryoutput and retail sales have accelerated for the last three months, trade and lending trailed forecasts in November, restraining the pace of recovery….”

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The Aussie Dollar Falls on Expected Interest Rates Cuts

“The Australian dollar held losses after the nation’s Reserve Bank cited a softer labor market for cutting interest rates at this month’s meeting.

The Reserve Bank of Australia said growth is stabilizing in China, according to minutes of the Dec. 4 meeting when it cut its overnight cash-rate target to 3 percent. Losses in the so- called Aussie were limited after the Conference Board’s gauge of leading economic indicators inAustralia rose in October. New Zealand’s dollar remained lower after the Treasury Department lowered its budget surplus forecast for 2015.

“The Aussie got sold first on expectations of additional rate cuts from the RBA,” said Takuya Kawabata, a researcher in Tokyo at Gaitame.com Research Institute Ltd. “The Aussie was then bought back as the market digested some the positive comments about Chinese growth. The RBA may wait and see for a little while before resuming rate cuts next year.”

The Australian dollar slid 0.1 percent to $1.0540 as of 4:26 p.m. in Sydney from yesterday, when it fell 0.1 percent to $1.0552. The Aussie bought 88.51 yen from 88.52 yesterday, when it touched 89.13, the highest since May 2011.

New Zealand’s dollar, known as the kiwi, lost 0.1 percent to 84.38 U.S. cents from yesterday, when it declined 0.2 percent. The currency was little changed at 70.86 yen.

The yield on Australia’s 10-year government debt rose three basis points, or 0.03 percentage point, to 3.38 percent from yesterday, when it touched 3.41 percent, the highest since Sept. 17….”

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Gold Manages to Get Out of a Rut to Trade Above $1,700

“Gold rose in New York, gaining with other commodities, on optimism U.S. lawmakers will reach agreement on the budget to avert automatic spending cuts.

President Barack Obama and House Speaker John Boehner are negotiating to avert the so-called fiscal cliff, more than $600 billion in tax increases and spending cuts set to start in January. Obama yesterday made a new offer that would raise taxes by $1.2 trillion and cut $1.22 trillion in spending, according to a person familiar with the talks. The U.S. Dollar Index, a gauge against six counterparts, held near a two-month low and crude rose for a third day.

“Gold broke back above the $1,700 level on optimism that a U.S. budget deal will be reached with a weaker dollar helping the move,” Cailey Barker, an analyst at Numis Securities Ltd. in London, said today by e-mail.

Gold for February delivery gained 0.1 percent to $1,699.40 an ounce by 6:55 a.m. on the Comex in New York after gaining as much as 0.4 percent. Spot gold was little-changed at $1,698.45 an ounce in London…”

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Samsung Says It Will Drop Lawsuits Against Apple in Europe

Samsung Electronics Co. (005930) will withdraw patent lawsuits targeting Apple Inc. (AAPL)’s use of its technology in European countries, the company said today.

“Samsung has decided to withdraw our injunction requests against Apple on the basis of our standard essential patents pending in European courts, in the interest of protecting consumer choice,” the Seoul-based company said in an e-mailed statement today. The decision on European lawsuits comes hours after a U.S. court ruled it wouldn’t ban sales of 26 Samsung products in a patent lawsuit…”

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The Yen Falls Again on Incoming Easing Political Party

“The yen fell for a sixth day against the euro before the Bank of Japan starts a two-day meeting tomorrow with newly elected Prime Minister Shinzo Abe pressing policy makers to increase stimulus.

Japan’s currency was near a 20-month low versus the dollar after Abe said he told BOJ Governor Masaaki Shirakawa today that he wants to increase the inflation target. The euro rose for a seventh day against the dollar, the longest run since April 2011, after Spain and Greece met their targets at bill sales. Sweden’s krona jumped after the central bank signaled it probably won’t cut interest rates next year, even as it lowered its benchmark today.

“Fears that the new Abe government is going to announce something quite drastic are diverting flows into other currencies,” said Peter Frank, global head of currency strategy at Banco Bilbao Vizcaya Argentaria SA (BBVA) in London. “The euro is benefiting. There’s an absence of negative risk for the euro right now.”

The yen dropped 0.1 percent to 110.59 per euro at 7:12 a.m. New York time after sliding to 111.32 yesterday, the weakest level since March 21. Japan’s currency was little changed at 83.87 per dollar after falling to 84.48 yesterday, the lowest since April 12, 2011. The euro gained 0.2 percent to $1.3186.

Abe, whose Liberal Democratic Party swept to victory in elections for the lower house of Japan’s Parliament on Dec. 16, will have the chance to reshape the BOJ next year, when the terms of its governor and two deputies expire.”

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