All posts in "Business"

UPDATE 4-Volkswagen agrees deal with unions to cut 30,000 jobs

Photo
oldtimer-1096770_1280
By bernswaelz from Pixabay

UPDATE 4-Volkswagen agrees deal with unions to cut 30,000 jobs

By Andreas Cremer and Jan Schwartz
| WOLFSBURG, Germany

Volkswagen (VOWG_p.DE) and its labor unions agreed to cut 30,000 jobs at the core VW brand in exchange for a commitment to avoid forced redundancies in Germany until 2025, a compromise which leaves the carmaker’s profitability still lagging rivals.

The turnaround plan announced on Friday will lead to 3.7 billion euros ($3.9 billion) in annual savings by 2020 and lift the Volkswagen (VW) brand’s operating margin to 4 percent that year, from an expected 2 percent in 2016.

That target still remains below rival European carmakers such as Renault (RENA.PA) and Peugeot Citroen (PEUP.PA), which is targeting an operating margin of 6 percent in 2021.

VW, Europe’s largest carmaker, is seeking to move beyond an emissions-cheating scandal that has tarnished its image and left it facing billions of euros in fines and settlements.

The cuts came with a management pledge to create 9,000 new jobs in the area of battery production and mobility services at factories in Germany as part of efforts to shift toward electric and self-driving cars.

“We have to invest billions of euros in new cars and services while new rivals will attack us – the transformation will surely be more radical than everything we have experienced to date,” VW brand CEO Herbert Diess said at a press conference.

DEEP ENOUGH?

Some experts argued the cost cuts were not deep enough.

Spending on R&D and staff across VW’s automotive operations has been growing for years with the need to overhaul the cost base dating back to before the diesel emissions scandal broke 14 months ago.

“The deal may be the best the company could negotiate with labor but it’s not a victory for either side,” said Erik Gordon, a University of Michigan business professor.

“The cuts are too small to make VW cost competitive with Toyota (7203.T) and other global rivals.”

With 610,000 workers globally, VW last year built slightly fewer vehicles than Toyota which has 350,000 staff. The German company has also been slow to cease production of unprofitable vehicles in its 340-model range.

VW’s labor leaders said management had agreed to avoid forced redundancies in Germany until 2025, a step which clears the way to cutting 23,000 jobs via the more palatable methods of buyouts, early retirements and reducing part-time staff.

Jobs will also be cut in North America, Brazil and Argentina, VW said, without being more specific. Around 120,000 employees work for VW brand in Germany including 6,000 temporary staff.

 

UNIONS PLEASED

Many analysts and investors nonetheless welcomed the deal, sending the shares more than 2 percent higher to the top of the blue-chip DAX .GDAXI index in early Frankfurt trading. At 1324 GMT (8:24 a.m. ET), the stock was still trading up 0.8 percent at 118.5 euros.

Activist hedge fund TCI, which has been critical of Volkswagen management, said it looked like a good deal all round provided it could be made to stick.

“As long as they are net savings – the savings are not given back by increased costs elsewhere in the organization,” said TCI partner Ben Walker.

“They’ve just to deliver now. It’s easy to talk. They now have to deliver and execute,” he added.

Labor leaders were pleased with the outcome.

“The most important message is the jobs of the core workforce is secure,” VW’s works council chief Bernd Osterloh said at the news conference in Wolfsburg, where the company has its headquarters.

Management and labor agreed to outsource production of plastic parts from the German Braunschweig plant but will compensate workers by assigning more orders for chassis and steering assembly needed with rising investment in self-drive cars.

In a further sign of its shifting focus, VW said it will build electric cars at its German factories in Zwickau and Wolfsburg.

Electric motors will be built in Kassel, and VW will start battery cell production and development in Salzgitter.

Volkswagen will also build battery packs for electric and hybrid cars in Braunschweig, it said.

(Additional reporting by Maiya Keidan in London; Writing by Edward Taylor; Editing by Alexander Smith/Keith Weir)

Stock market, trading journal, daily journal, investing journal

My Trading Journal: 30 Day Trading Journal

Published at Fri, 18 Nov 2016 15:10:36 +0000

Continue reading >
0 Shares

Q&A: John Paul DeJoria learned how to bottle success

Photo

Entrepreneur John Paul Dejoria from ”Follow the Leader”, participates in a CNBC Primetime panel during the Television Critics Association (TCA) Cable Winter Press Tour in Pasadena, California, January 14, 2016.REUTERS/Danny Moloshok

Q&A: John Paul DeJoria learned how to bottle success

By Chris Taylor | NEW YORK

Most entrepreneurs dream of catching lightning in a bottle once in their lives. Billionaire John Paul DeJoria has managed to make a habit of it.

The Los Angeles-bred entrepreneur, a son of Greek and Italian immigrants, hit the jackpot with ventures like the Paul Mitchell line of hair products and Patron tequila.

For the latest in Reuters’ Life Lessons series, DeJoria, 72, talked about the sales drive that took him from selling Christmas cards door-to-door as a kid, to becoming one of the most successful entrepreneurs on the planet.

Q: What life lessons about money were instilled in you growing up?

A: My mother always told my brother and I that we can do anything as long as we kept applying ourselves. She also told us to remember to give to those who have less than you. These two things have always inspired my personal philosophy, and everything I do.

Q: What did you learn from your early gigs, selling everything from Christmas cards to encyclopedias?

A: A very important lesson: Persistence and overcoming rejection. Going door-to-door selling is exhausting and often times discouraging. But you have to be just as enthusiastic on door number 50 as you were on door number 1 to make a sale. Successful people do what unsuccessful people don’t want to do.

Q: What were your shoestring early days with the Paul Mitchell line like – even living out of your car at the beginning?

A: I started John Paul Mitchell Systems in 1980, in one of the worst economic environments when inflation was at its highest and people were waiting in lines around the block to get gas. I was, in fact, homeless and living out of my car when our first backer pulled out. But Paul Mitchell and I started JPMS with a borrowed $700 and an answering machine. We even decided on the iconic black-and-white logo and packaging because we couldn’t afford to print in color.

Q: How did you realize there was big potential with ultra-premium tequila when you launched Patron?

A: I received a sample of tequila that was smoother than anything I had ever tasted, and was told that there was a tequila “chef” out there that could make it even smoother. You could actually sip it, instead holding your breath. So right then I knew there was a potential market there. Why? Because people want to treat themselves.

Q: As an investor are you more of a risk-taker, or more conservative in where you put your money?

A: I look at my investments in three ways: Part of my money goes into helping others and making the world a better place to live. The next portion involves risk by building businesses and hiring good people. Finally, there is a portion that goes to more conservative investments, such as stocks and real estate.

Q: When it comes to philanthropy, how do you sort through all the requests and decide where you can make a meaningful impact?

A: I established JP’s Peace, Love & Happiness Foundation as a hub for all charitable investments to help with that. The organizations span the core values of my companies: Sustainability, social responsibility and animal-friendliness.

Q: Even though you have been so successful, do you still try to live below your means like in the early days?

A: Yes. I can have a big yacht now if I wanted one, but it makes no sense to me. It is better to rent it, rather than flaunt it. Plus it is a waste to have something like that to just sit there. I would rather put that money into something that can help others and the planet.

Q: You have a number of children, so what lessons about money and life do you try to pass down to them?

A: I had a tradition where they all received a weekly allowance starting at the age of 10. It was important that they learned the value of money. Of course, this all had to change when my youngest son turned 14 and that $10 disappeared in one trip to the movies. It couldn’t even get him popcorn and a soda. That is when I realized I had to increase it to $20 a week.

(Editing by Beth Pinsker and Marguerita Choy)

Stock market, trading journal, daily journal, investing journal

My Trading Journal: 30 Day Trading Journal

Published at Thu, 17 Nov 2016 14:16:50 +0000

Continue reading >
0 Shares

A post-Trump SEC could shake up current policy

Photo

A general exterior view of the U.S. Securities and Exchange Commission (SEC) headquarters in Washington, June 24, 2011.REUTERS/Jonathan Ernst

A post-Trump SEC could shake up current policy

By Sarah N. Lynch | WASHINGTON

It will be a new day at the U.S. Securities and Exchange Commission after President-elect Donald Trump installs his choice to run the agency.

With Trump’s transition team already in regulatory-relief mode and promising to revamp the Dodd-Frank financial reform legislation, some rules already are marked for death or dialback.

Expected on the chopping block soon after Trump takes the oath of office is a proposal that would require companies to disclose pay ratios between their CEOs and employees. Another would require companies to disclose whether their products contain conflict minerals — minerals that were mined in a war-torn region of Africa.

Dead for now is any prospect of the SEC approving a tough fiduciary rule for financial advisers, say policy experts.

Trump’s decision to tap former Republican SEC Commissioner Paul Atkins to help manage the Trump team’s transition efforts at the SEC and other financial agencies offers a window into some other changes that could be in store. Atkins, the founder of the regulatory consulting firm Patomak Global Partners, is viewed by some to be a top contender for the position of SEC chairman itself, though as the transition head he could also recommend someone else for that job.

Atkins’ well-known conservative views on everything from enforcement penalties to corporate governance are likely to be reflected in the SEC’s agenda.

Here are five policy areas likely to change.

CORPORATE AUDITING RULES COULD GET LOOSER

Paul Atkins was a staunch critic of the Public Company Accounting Oversight Board (PCAOB), a body created after the Enron accounting scandal to police and write new rules for corporate auditors.

Atkins raised concerns about the board’s budget and high salaries, and advocated against prescriptive accounting rules that he felt constrained auditors from making professional judgments.

Recently, Republicans have criticized the PCAOB for taking on more progressive causes, such as proposing companies rotate auditors to reduce conflicts or requiring accounting firms to disclose the name of individual partners working on company audits.

The PCAOB’s chairman Jim Doty, who advocated for the controversial reform measures, will almost certainly not be re-appointed by the incoming SEC chair.

“I expect that a new Chair will refocus the Board’s standard-setting agenda on the core audit function,” said Hunton & Williams Partner Scott Kimpel. “I would expect a return to the basics.”

PENALTIES COULD SHRINK; PEOPLE COULD PAY

The topic of whether to impose corporate penalties against a company would come under scrutiny.

During his time at the SEC, Atkins advocated for an enforcement approach that he said did not unduly punish corporate shareholders that had already suffered from the misconduct. He called for the SEC to carefully weigh who had profited from the bad behavior, and urged the SEC to hold individuals accountable for their actions.

STOCK MARKET TRADING WOULD GET SECOND LOOK

Atkins has long opined that the SEC’s rules requiring “best price” execution of stock trades actually skews the market by causing fragmentation and harming price discovery by directing orders away from traditional stock exchanges into “dark pool” trading platforms.

As a commissioner, Paul Atkins was critical of the rule called Regulation National Market System (NMS), saying it could impede true price discovery and encourage gaming of the system.

In January 2016 he wrote an opinion piece in the Wall Street Journal calling for the SEC to do major surgery on the rule, allowing considerations beyond ‘best price’ and speed to determine order flow.

WHISTLEBLOWERS COULD FACE MORE HURDLES

The Dodd-Frank law gave the SEC newfound powers to reward whistleblowers who come forward with tips of corporate malfeasance.

From August 2011 through fiscal year 2015, the SEC has received more than 14,000 tips, and by August of 2016, the program had given out more than $100 million in rewards.

But corporate America has long disliked the part of the rule that protects whistleblowers from having to report wrongdoing to their own companies before they tip off the government.

In 2011, Atkins urged the SEC to require whistleblowers to report internally first, saying a failure to do so could undermine compliance programs.

Whether this will change remains to be seen, especially in the wake of the Wells Fargo & Co scandal, where employees who reported internally about the opening of unauthorized accounts were fired.

Atkins “cares deeply about the commission and its enforcement program,” said Jordan Thomas, a whistleblower attorney at Labaton Sucharow who previously worked in the SEC’s enforcement division during Atkins’ tenure.

“I find it very hard to believe that he would support undermining such a successful program.”

CAPITAL FORMATION COULD GET A BOOST

Atkins was a strong proponent of the 2012 Jump Start Our Business Startups Act, which scaled back some SEC rules to help smaller companies raise capital.

In testimony on Capitol Hill, Atkins advocated for additional steps to be taken to help smaller companies, including rules to help create venture exchanges for mid-cap stocks and broadening efforts to exempt private capital-raising rules from regulation by states.

(Reporting by Sarah N. Lynch; editing by Linda Stern and Diane Craft)

Stock market, trading journal, daily journal, investing journal

My Trading Journal: 30 Day Trading Journal

Published at Wed, 16 Nov 2016 09:35:06 +0000

Continue reading >
0 Shares

Zuckerberg again rejects claims of Facebook impact on U.S. election

Photo

Facebook CEO Mark Zuckerberg is seen on stage during a town hall at Facebook's headquarters in Menlo Park, California September 27, 2015. REUTERS/Stephen Lam/File Photo

Facebook CEO Mark Zuckerberg is seen on stage during a town hall at Facebook’s headquarters in Menlo Park, California September 27, 2015.REUTERS/Stephen Lam/File Photo

Zuckerberg again rejects claims of Facebook impact on U.S. election

By Chris Prentice | NEW YORK

Facebook Inc chief executive Mark Zuckerberg again rejected the idea that the social network affected the U.S. presidential election, saying late Saturday it is “extremely unlikely” news hoaxes changed the outcome.

Ensnared in a string of content controversies in recent months, Facebook has insisted that it is a technology company, not a media firm. But scrutiny of the site has heightened since the surprise election of Republican Donald Trump on Tuesday, with critics alleging the site helped spread lies via fake news stories and hoaxes.

Zuckerberg has vehemently defended the network against such criticism, calling the idea that Facebook affected the election “crazy” at a conference on Thursday. He echoed that stance in his late Saturday post, though he said the company would do more to prevent fake news.

Such hoaxes represent a sliver of content shared on Facebook and because they are not limited to partisan views or politics, it is unlikely they could have changed the election’s outcome, Zuckerberg said.

“Of all the content on Facebook, more than 99 percent of what people see is authentic,” he said, noting the network’s goal is to “give every person a voice.”

Still, Facebook has launched work to enable people to flag hoaxes and fake news, the statement said.

Facebook has faced a number of content controversies this year, including international outcry after it removed an iconic Vietnam War photo due to nudity, a decision that was later reversed. The thorniest content issues are decided by a group of top executives at Facebook.

Questions over content policing have returned to the fore in the tense days since the election, which has led to protests against Trump and his proposed policies in major U.S. cities.

Ahead of the Nov. 8 election, Facebook users saw fake news reports erroneously alleging that Pope Francis endorsed Donald Trump and that a federal agent who had been investigating Democratic candidate Hillary Clinton was found dead.

Senior management have launched a conversation to examine Facebook’s involvement in affecting opinions and votes, The New York Times reported on Saturday, saying a group of vice presidents and executives began discussing late Tuesday the company’s role in the election’s outcome.

Facebook’s policy team was called together and the firm plans to address staff concerns at a broader meeting, the paper reported, citing anonymous sources.

Facebook representatives were not immediately available to comment on the report.

“After the election, many people are asking whether fake news contributed to the result, and what our responsibility is to prevent fake news from spreading,” Zuckerberg said on Saturday.

“These are very important questions and I care deeply about getting them right.”

(Reporting by Chris Prentice; Editing by Mary Milliken)

Stock market, trading journal, daily journal, investing journal

My Trading Journal: 30 Day Trading Journal

Published at Sun, 13 Nov 2016 20:40:47 +0000

Continue reading >
0 Shares

Toyota to settle U.S. truck rust lawsuit for up to $3.4 billion

Photo

Toyota Motor Corp’s logo is pictured on a car in Tokyo, Japan, November 8, 2016.REUTERS/Kim Kyung-Hoon

Toyota to settle U.S. truck rust lawsuit for up to $3.4 billion

Toyota Motor Corp (7203.T) has agreed to a settlement of up to $3.4 billion for a federal class action brought by U.S. owners of pickup trucks and SUVs whose frames could rust through, plaintiffs lawyers have said in court papers.

The proposed settlement covers about 1.5 million Tacoma compact pickups, Tundra full-size pickups and Sequoia SUVs alleged to have received inadequate rust protection that could lead to corrosion serious enough to jeopardize their structural integrity, according to court papers.

Attorneys for the plaintiffs in court papers supporting the settlement estimated the value of frame replacements at about $3.375 billion based on a cost of about $15,000 per vehicle and the inspections at about $90 million at $60 per vehicle.

Toyota admitted no liability or wrongdoing in the proposed settlement filed on Wednesday before U.S. District Judge Fernando Olguin in Los Angeles.

“We want our customers to have a great ownership experience, so we are pleased to resolve this litigation in a way that benefits them and demonstrates that we stand behind the quality and reliability of our vehicles,” Toyota said in a statement.

Under the settlement terms, Toyota will inspect the vehicles for 12 years from the day they were first sold or leased to determine whether frames need to be replaced at company expense and reimburse owners who previously paid for frame replacement.

The settlement reached on Oct. 31 covers Tacoma trucks from the model years 2005 through 2010, Sequoias from 2005 through 2008 and Tundras from the 2007 and 2008 model years.

Toyota also agreed to pay $9.75 million in attorneys’ fees, $150,000 in costs and expenses, and $2,500 each to the named eight class representatives as well as the cost of advertising the settlement.

(Reporting by David Bailey in Minneapolis; Editing by Bernard Orr)

Stock market, trading journal, daily journal, investing journal

My Trading Journal: 30 Day Trading Journal

Published at Sat, 12 Nov 2016 23:16:30 +0000

Continue reading >
0 Shares

SEC fraud trial of ‘Diva of Distressed’ Tilton wraps up

Photo
law-1063249_1280
ByActivedia from Pixabay

SEC fraud trial of ‘Diva of Distressed’ Tilton wraps up

By Nate Raymond
| NEW YORK

A lawyer for financier Lynn Tilton on Thursday accused the U.S. Securities and Exchange Commission of pursuing a fraud case against the private equity chief straight out of a “fantasy world,” as an administrative trial drew to a close.

During his closing argument in a Manhattan courtroom, Tilton’s lawyer Randy Mastro expressed anger that the SEC had accused the founder of Patriarch Partners of fraud, given what he called the lack of evidence presented at trial.

He said that after a seven-year investigation, the SEC presented testimony from only a handful out of the dozens of investors at issue in the case, and was relying on Tilton’s own testimony to support its allegations she misled them.

Mastro called the SEC enforcement division’s decision to sue “offensive,” and said that the evidence showed Tilton, 57, had not defrauded investors in three debt funds that loaned money to distressed companies.

“The division is living in a fantasy world,” he said.

But Nicholas Heinke, an SEC lawyer, said the evidence showed Tilton and Patriarch, which is based in Manhattan, had misled investors by hiding the performance of the loans made by the three so-called Zohar collateralized loan obligation funds.

“Ms. Tilton was determined to keep what was actually happening to the loans from investors to remain in control of the funds,” he said.

Known for her flashy outfits and called the “Diva of Distressed” for taking over troubled companies, Tilton has portrayed herself as a hard-charging female executive in a male-dominated field.

In 2000, she founded Patriarch, which counts among its portfolio companies MD Helicopters.

But in 2015, the SEC accused Tilton of defrauding investors in the three Zohar funds by miscategorizing companies that missed interest payments as current rather than in default, to avoid losing $200 million in management fees.

The SEC has asked Administrative Law Judge Carol Fox Foelak to force Tilton and Patriarch Partners to pay at least $200 million and to bar her from the securities industry.

Tilton denies wrongdoing. She testified that investors knew she had authority to defer or forgive interest payments that the distressed companies owed, in order to give them time to be brought back from the dead.

The three-week trial came after Tilton unsuccessfully sued to block what she called an unconstitutional proceeding before an SEC in-house judge.

Foelak is expected to rule next year, after receiving post-trial briefs due by Jan. 13.

(Reporting by Nate Raymond in New York; Editing by Bernard Orr)

Stock market, trading journal, daily journal, investing journal

My Trading Journal: 30 Day Trading Journal

Published at Thu, 10 Nov 2016 17:56:13 +0000

Continue reading >
0 Shares

Volkswagen emissions scandal deepens as prosecutors probe chairman

oldtimer-1096770_1280
oldtimer-1096770_1280By bernswaelz from Pixabay

Volkswagen emissions scandal deepens as prosecutors probe chairman

German prosecutors have widened an inquiry into suspected market manipulation by managers at Volkswagen (VOWG_p.DE) to include the carmaker’s supervisory board Chairman Hans Dieter Poetsch, VW said on Sunday.

The investigation, which relates to Poetsch’s time as finance chief, is the latest fallout from VW’s admission last year that it cheated on diesel emissions tests.

VW has acknowledged it installed software that deactivated pollution controls on more than 11 million diesel vehicles sold worldwide, damaging its global business and prompting the departure of Chief Executive Martin Winterkorn.

Adding to its troubles, a German newspaper reported on Sunday that a U.S. regulator found another cheat software device in vehicles made by its luxury division Audi which is unrelated to the device that triggered last year’s scandal at VW. Audi has declined to comment on the report.

The prosecutor’s office in Braunschweig first announced the market manipulation probe in June, targeting former CEO Winterkorn and VW brand chief Herbert Diess for suspected market manipulation related to the emissions scandal.

The prosecutor’s office said at the time that its inquiry centered on evidence that VW’s duty to disclose possible financial damage from the emissions test cheating may have arisen before Sept. 22, 2015, when it publicly admitted wrongdoing.

Winterkorn had already left VW at the time, while Diess is still head of its core brand.

“Based on a thorough examination by internal and external legal experts, the company reaffirms its belief that VW’s management fulfilled its duties to inform the capital market,” VW said on Sunday.

VW said the company and Poetsch, who was finance chief of Volkswagen from 2003 until he became chairman in October 2015, would fully support the prosecutor’s office in its investigation. The prosecutor’s office in Braunschweig was not immediately available for comment.

The Porsche and Piech families that control Volkswagen through their holding company Porsche SE (PSHG_p.DE), of which Poetsch is CEO, said on Sunday they backed the manager and shared VW’s view that he had complied with capital market rules.

The German state of Lower Saxony, VW’s second biggest shareholder with 20 percent of voting rights, said it was up to the prosecution and the courts to assess what had happened, adding Poetsch should be assumed to be innocent pending the completion of the investigation.

CHEATING SOFTWARE

Sunday’s Bild am Sonntag report said the California Air Resources Board (CARB) had made a new discovery of cheating software in an automatic transmission Audi in summer 2016. CARB has declined to comment on the report.

Audi, the main contributor to earnings at parent VW, had already admitted last year to using illicit emissions-control devices in about 85,000 3.0 liter six-cylinder diesel engines and has so far this year set aside 752 million euros ($838 million) to cover related costs.

Bild am Sonntag, which cited no sources, said the software in CARB’s new discovery lowered carbon dioxide emissions by detecting whether a car’s steering wheel was turned as it would be if it was driving on a road.

If the steering wheel was not turned, as if it was being tested in a laboratory, the software turned on a gear-shifting program which produced less carbon dioxide, allowing the car to meet the emissions criteria.

If the wheel turned by more than 15 degrees, as if it was being driven, it turned the software off. The newspaper did not say if other performance criteria improved when this was switched off.

Audi stopped using the software in May 2016, just before CARB discovered the manipulation in an older model, the paper said. It said the affected transmissions were used in several hundred thousand vehicles, including Audi’s A6, A8 and Q5 models, adding that the carmaker had suspended several engineers in connection with the matter.

Any revelation of further cheating software would be a major setback after VW just reached a near $15 billion settlement with U.S. regulators and car owners, crossing one of the biggest hurdles in the clean-up of the scandal.

(Reporting by Maria Sheahan; Additional reporting by Andreas Cremer, Jan Schwartz and Joe White; editing by Anna Willard/Ruth Pitchford)

Stock market, trading journal, daily journal, investing journal

My Trading Journal: 30 Day Trading Journal

 

Published at Sun, 06 Nov 2016 15:01:01 +0000

Continue reading >
0 Shares

U.S. regulator found another cheat device in Audi car: report

 

U.S. regulator found another cheat device in Audi car: report

A U.S. regulator found software in some Audi vehicles that lowered their carbon dioxide emissions if it detected they were being used under test conditions, Bild am Sonntag reported.

The California Air Resources Board (CARB) discovered the software in an automatic transmission Audi last summer, the German weekly newspaper said, without citing any sources.

CARB had no immediate comment and Audi was not immediately available for comment on Sunday’s Bild am Sonntag report.

The paper said the device, which was not the same as the one which triggered last year’s diesel emissions scandal at Audi parent Volkswagen (VOWG_p.DE), was also used in diesel and gasoline-powered cars in Europe.

VW’s admission that it had installed software that deactivated pollution controls on more than 11 million diesel vehicles sold worldwide, triggered the deepest business crisis in the German carmaker’s history.

Audi (NSUG.DE), the main contributor to VW group profit, has also admitted its 3.0 liter V6 diesel engine was fitted with emissions-control software.

Bild am Sonntag said the software discovered by CARB, which was installed in vehicles with certain automatic transmissions, detected whether a car’s steering wheel was turned.

If it was not, indicating laboratory testing conditions, the software turned on a gear-shifting program which produced less carbon dioxide than in normal road driving. If the wheel was turned in any direction by more than 15 degrees, the program was switched off, the paper said.

Audi stopped using the software in May 2016, just before CARB discovered the manipulation in an older model, the paper said, adding that the carmaker had suspended several engineers in connection with the matter.

Bild am Sonntag said a spokesman for Audi had declined to comment, citing ongoing talks with U.S. and California regulators on a proposed fix for cars with 3.0 liter engines.

(Reporting by Maria Sheahan; Additional reporting by Andreas Cremer and Joe White; Editing by Alexander Smith)

Stock market, trading journal, daily journal, investing journal

My Trading Journal: 30 Day Trading Journal

Published at Sat, 05 Nov 2016 23:15:11 +0000

Continue reading >
0 Shares

Wall Street scion Caspersen gets 4 years in prison for $38.5 million fraud

 

Andrew Caspersen and his wife Christina Caspersen depart following his sentencing at the U.S. Federal Court in New York City, U.S., November 4, 2016.REUTERS/Brendan McDermid

Wall Street scion Caspersen gets 4 years in prison for $38.5 million fraud

By Nate Raymond | NEW YORK

Former Wall Street executive Andrew Caspersen was sentenced on Friday to four years in prison for engaging in what prosecutors say was a Ponzi-like scheme to defraud investors including family members and friends out of $38.5 million.

Caspersen, who worked at a unit of investment banker Paul Taubman’s PJT Partners Inc before his arrest in March, was sentenced by U.S. District Judge Jed Rakoff in Manhattan after pleading guilty to charges including securities fraud.

Prosecutors sought up to 15-2/3 years in prison for the Princeton University and Harvard Law School graduate, who they said for 18 months shamelessly exploited his victims’ trust.

But Paul Shechtman, his lawyer, urged Rakoff to consider as a mitigating factor Caspersen’s “pathological” gambling addiction that led him to obtain millions of dollars to engage in risky options trading.

“I was willing to do anything to continue, and eventually I did,” Caspersen, 40, said in court.

After hearing from testimony from an expert in gambling addition, Rakoff agreed Caspersen’s condition impacted his decision making. He called the lengthy prison term prosecutors pushed “absurd.”

“No purpose will be served by letting him rot in prison for years on end,” said Rakoff, who is expected to order restitution at a later date.

Caspersen, the son of late Wall Street financier Finn M.W. Caspersen, had worked at Park Hill Group since 2013. The advisory firm was spun off from private equity group Blackstone Group LP last year and is now part of PJT Partners.

Prosecutors said beginning in 2014, Caspersen sought to defraud over a dozen investors including his mother, a brother and friends by claiming he would use their funds to make loans to private equity firms, generating annual returns of 15 to 20 percent.

Instead, prosecutors said he used the $38.5 million he raised to make options trades, to pay earlier investors and to replace over $8 million he misappropriated from Park Hill, which Caspersen said during his July guilty plea he used for gambling.

In total, he tried to raise over $150 million, prosecutors said.

 

He was arrested in March at a New York airport after returning from a trip to Florida. Just before that, he had drafted a suicide note to his wife and letter to his creditors saying he was “deeply ashamed,” court papers said.

The case is U.S. v. Caspersen, U.S. District Court, Southern District of New York, No. 16-cr-00414.

(Editing by Matthew Lewis, Bernard Orr)

Stock market, trading journal, daily journal, investing journal

My Trading Journal: 30 Day Trading Journal

Published at Fri, 04 Nov 2016 21:58:56 +0000

Continue reading >
0 Shares

Corolla, Toyota’s car for the masses, turns 50

macro-1721265_1280By Rusfromspb from Pixabay

Corolla, Toyota’s car for the masses, turns 50

This weekend marks the 50th anniversary of the Toyota Corolla, one of the world’s best-selling cars.

Since the first model went on sale in Japan on Nov. 5, 1966, some 44.3 million Corollas have been sold globally through the end of September, including the Corolla Fielder station wagon and other variants, the Japanese automaker says.

Here are some milestones along the way and where it stands today.

CAR FOR THE MASSES

In the late 1950s, as Japan’s economy recovered from World War Two, automakers aimed to produce an affordable car for the average family, most of whom didn’t have a vehicle.

Toyota Motor Corp (7203.T) first came out with the Publica, which wasn’t very well received. In 1966, it introduced the sportier two-door Corolla with a jaw-dropping plan: to build 30,000 of them a month at a time when Toyota’s total monthly production was 50,000 vehicles.

The car sold well as Japanese consumers aspired to get the “3 C’s” – color TVs, cars and coolers (air conditioners). Three years after the launch, the Corolla became the country’s top-selling car and helped usher in an age of motorization in Japan.

“BETTER THAN AVERAGE”

The man in charge of developing the original Corolla, Tatsuo Hasegawa, had designed aircraft during the war, and incorporated some aircraft aerodynamics into the new car.

His concept for the Corolla was “80-plus-points” – in short, a car with a more-than-passing grade on several counts that gave customers the feel of a better-than-average product.

For the first-generation Corolla, the going-the-extra-mile “add-on” was its sportiness, despite being a family car. Hasegawa gave the car a 4-speed manual transmission operated by a gearshift on the floor, instead of the more typical 3-speed, column shifter at the time.

The Corolla also had a 1,100cc engine, a bit larger than that of its rival, the Nissan Sunny.

Toyota has stuck to its tradition of introducing new technologies to the masses with each remodeling of the Corolla. Now in its 11th generation in Japan, the car is made in 13 countries around the world and sold in more than 150 countries.

NO LONGER KING

After 33 straight years as Japan’s top-selling model, the Corolla lost the crown in Japan to rival Honda Motor’s Fit hatchback in 2002.

It is now also outsold by the Toyota Aqua and Prius hybrid-only models as domestic customers opt for more fuel-efficient cars.

The outlook at home is bleak, with the overall car market due to shrink further along with the population. Domestic sales of the Corolla are now about a quarter of their peak of around 400,000 in 1973. But the Corolla is still a cash cow in the United States, where it is the No.2 best-selling passenger car model so far this year, behind only the Toyota Camry.

(Reporting and writing by Malcolm Foster and Chang-Ran Kim; Editing by Simon Cameron-Moore)

 

Stock market, trading journal, daily journal, investing journal

My Trading Journal: 30 Day Trading Journal

Published at Sat, 05 Nov 2016 03:02:11 +0000

Continue reading >
0 Shares

Ameriprise Financial joins race to buy UniCredit’s Pioneer: sources

Photo
building-839787_1280By unsplash from Pixabay

Ameriprise Financial joins race to buy UniCredit’s Pioneer: sources

By Gianluca Semeraro and Maria Pia Quaglia
| MILAN

U.S. financial services company Ameriprise Financial has joined the race to buy asset manager Pioneer Investments, which has been put on the block by Italy’s biggest bank UniCredit, two sources close to the matter said on Thursday.

The Minneapolis-based company, which controls Threadneedle Asset Management, joins four other bidders that are expected to present binding offers for Pioneer by Nov. 10, the sources said.

Ameriprise and UniCredit declined to comment on the issue.

Europe’s biggest asset manager Amundi and an Italian consortium led by Poste Italiane are seen as frontrunners in the race.

Australia’s Macquarie and British group Aberdeen Asset Management are also interested in the unit.

The sale of the asset gatherer is part of a broader effort by UniCredit to boost its capital. Led by its new CEO Jean-Pierre Mustier, the bank is due to unveil a new strategic plan on Dec. 13.

The offers will likely value Pioneer between 3.2 billion and 3.4 billion euros ($3.8 billion), another source said.

Poste Italiane has had contacts with both Aberdeen and Macquarie over joining forces to buy Pioneer but the talks have so far led nowhere, a fourth source said.

One of the sources said a further extension of the deadline for presenting binding offers could not be ruled out.

 

($1 = 0.9013 euros)

(Additional reporting by Francesca Landini)

Stock market, trading journal, daily journal, investing journal

My Trading Journal: 30 Day Trading Journal

Published at Thu, 03 Nov 2016 16:53:04 +0000

Continue reading >
0 Shares

Wells Fargo CEO sees ‘relatively quick’ review of sales practices

 

 

 

A Wells Fargo Bank is shown in Charlotte, North Carolina, U.S., September 26, 2016. REUTERS/Mike Blake
By Dan Freed

Wells Fargo CEO sees ‘relatively quick’ review of sales practices

Wells Fargo & Co’s (WFC.N) CEO Tim Sloan said on Thursday a comprehensive review of the bank’s sales practices would be done ‘relatively quickly’ and unveiled a series of immediate changes at the bank’s retail unit under new division boss Mary Mack.

Management is reaching out to employees who were wrongly fired, while continuing to review sales practices across the bank, and changing compensation plans to avoid incentivizing bad behavior. It is also ramping up marketing efforts after having slowed them in the wake of the problems, Mack told an industry conference in Boston, her first with analysts since taking over the retail business.

The bank, which earlier said in a regulatory filing that legal costs could exceed reserves by $1.7 billion, has also hired an outside consultant to guide changes to the retail business.

The retail unit’s new risk chief now reports into the broader company’s risk chief, rather than to Mack. The bank also said it created a new ‘Change Leader’ position in the unit to focus on ‘what great customer experience looks like,’ according to Mack and Sloan’s presentation.

“We’re going to leave no stone unturned,” said Sloan.

“I don’t want there to be a question about how we interact with customers at Wells Fargo,” he added. “We’re going to put that to rest. That’s going to be done in a very comprehensive way and it’s going to be done relatively quickly, but it’s going to be done right.”

An independent consultant is now reviewing sales practices across the whole bank, Sloan said, without identifying the company. Because most of Wells Fargo’s senior leadership has been at the bank for a long time, they may have inadvertently contributed to some of its problems, he said.

Wells Fargo’s period of atonement follows a $185 million settlement on Sept. 8 with federal regulators and a Los Angeles prosecutor regarding its opening as many as 2 million accounts in retail customers’ names without their permission.

At the time, the bank said it fired 5,300 employees for improper sales practices over a period of five years, but since then reports have surfaced of employees also being fired for raising red flags or not meeting aggressive sales quotas imposed by their managers.

Wells Fargo welcomes back employees fired ‘inappropriately’ if they would like to return, Sloan said. He took the reins on Oct. 12 from former CEO John Stumpf, who abruptly left the bank under harsh scrutiny for its practices.

Mack became head of the retail unit in July, before the scandal came to light. She replaced Carrie Tolstedt, who forfeited $19 million in stock in September following a public uproar over the sales issues. Stumpf gave up $41 million.

Even with the settlement, the management shakeup and the steps is taking to improve, Wells Fargo’s problems are not over.

The bank faces probes from several other regulators and authorities, including the U.S. Department of Justice and congressional committees. The Securities and Exchange Commission is also examining the bank, Wells said in its filing on Thursday.

Wells’ $1.7 billion estimate of its potential legal expense shortfall is up from a $1 billion estimate in August.

(Reporting by Dan Freed in New York; Additional reporting by Sruthi Shankar in Bengaluru and David Henry in New York; Writing by Lauren Tara LaCapra; Editing by Nick Zieminski)

Stock market, trading journal, daily journal, investing journal

My Trading Journal: 30 Day Trading Journal

Published at Thu, 03 Nov 2016 15:40:46 +0000

Continue reading >
0 Shares

Love or Money? The economics of online dating

 

A couple tries to hold on to an umbrella flipped inside out at a sea front off the coast of the Arabian Sea, in Mumbai June 14, 2013.REUTERS/Danish Siddiqui

Love or Money? The economics of online dating

By Chris Taylor | NEW YORK

When it comes to love, money has nothing to do with it. Right?

Not so fast.

After all, they don’t call it a “meet market” for nothing. The dating world is, in fact, its own market, with complex economic judgments taking place all the time.

That is according to Dr. Marina Adshade, an economics professor at the University of British Columbia and author of the book “Dollars & Sex,” which examines the relationship between money and love.

“Dating markets don’t have currency, so they depend on other mechanisms to operate, much like a barter system,” Adshade said. “It all depends on what you are bringing to the table. Some of those qualities might be age or attractiveness – and some are financial.”

Indeed, just go on popular dating sites such as Match.com, and one of the criteria for winnowing down potential matches is annual income. You can look for someone who makes $50,000 a year, or $75,000, or $100,000.

So, does that matter? Well, in one study published in the Journal of Economic Behavior & Organization, which crunched data from a popular Chinese online-dating website, male profiles with the highest income levels got 10 times more visits than the lowest.

Another study, co-authored by famed behavioral economist Dan Ariely, uncovered similar online-dating preferences.

“Men and women prefer a high-income partners over low-income partners,” the authors wrote in the journal Quantitative Marketing and Economics. “This income preference is more pronounced for women.”

The takeaway: As much as we like to think we are beyond the days of Jane Austen, when suitors were evaluated largely based on how much money they brought in – the famous Mr. Darcy in “Pride & Prejudice” was worth “Five thousand a year!” – money can be critical in our romantic lives.

“Someone’s income will almost always factor into the equation,” says Douglas Kobak, a financial planner in Conshohocken, Pennsylvania.

“When you are becoming serious, you need to consider what your partner is bringing to the table besides love and a good time. The question becomes one about the potential to earn the income needed to build wealth and live a lifestyle you want.”

ECONOMIC JUDGMENTS

Just think about the numerous economic judgments we are making while dating online. First off, we are essentially estimating our own value (which may or may not be accurate), Adshade notes. At the same time we are estimating others’ value, and whether they are likely to respond – or whether they are “out of our league.”

Then we are weighing interested suitors against the “opportunity costs” that there may be other, ‘better’ options still out there. And we make these judgments against the backdrop that we are all, sadly, depreciating assets. Wait too long for an ideal person, and you could miss out on quality matches, who will eventually be snapped up themselves.

There are also competing economic theories at work. Are you looking for someone relatively similar in qualities like income and education (“market theory”)? Or are you looking for someone sufficiently different from yourself, that you both gain from the union (“economic trade theory”)?

One note to remember: Annual income is just one financial data point, and probably not even the most important one. In terms of long-term economic security, it is better to partner with someone who makes $50,000 annually but lives below their means, than someone who makes $100,000 a year but spends wildly and racks up debt.

“Money itself is not nearly as important as are money habits,” says Robert Braglia, a financial planner in New York.

Adshade’s key advice for would-be romantics: Broaden the criteria you are looking for in a mate. If you are solely looking for a man who is over 6’2″ and makes six figures annually, you have instantly gone from a “thick” market – one with literally millions of people – to a “thin” one, with few remaining options. Indeed, the tall, rich guy with a full head of hair is probably off the market already, she says.

Instead, devote yourself to a more “exhaustive” search that includes a wider variety of income levels, she advises. It will take more time to sift through that broader pool, but that is better than “artificially reducing the size of your search sample,” she says. “That is the biggest mistake.”

The writer is a Reuters contributor. The opinions expressed are his own.

(Editing by Lauren Young and Alan Crosby)

Stock market, trading journal, daily journal, investing journal

My Trading Journal: 30 Day Trading Journal

Published at Wed, 02 Nov 2016 13:06:36 +0000

Continue reading >
3 Shares

Facebook reports better-than-expected rise in revenue

 

3D-printed models of people are seen in front of a Facebook logo in this photo illustration taken June 9, 2016.REUTERS/Dado Ruvic/Illustration
By Rishika Sadam and Dustin Volz

Facebook Inc (FB.O) on Thursday posted earnings growth that beat Wall Street’s high expectations as the world’s biggest online social network said daily mobile users exceeded the one billion mark for the first time.

Its shares were down 1.7 percent, in after-hours trading, at $124.97.

Mobile ads accounted for 84 percent of Facebook’s total advertising revenue of $6.82 billion in the third quarter that ended Sept. 30, compared with 78 percent a year earlier.

The company is also reaping the benefits of a big push into video, both on Facebook itself and on the Instagram photo app.

“We’re making progress putting video first across our apps and executing our 10 year technology roadmap,” Chief Executive Officer Mark Zuckerberg said in a statement.

Facebook reported a 55.8 percent rise in quarterly revenue, to $7.01 billion, beating analysts’ average estimate of $6.92 billion, according to Thomson Reuters I/B/E/S.

Facebook said about 1.79 billion people were using its site monthly as of Sept. 30, up 16 percent from a year earlier.

The strong numbers come as Facebook has struggled in recent months to combat allegations that it unfairly removes certain content on its service, and news in September that the company had for years overestimated how it calculates the average time users spend watching video.

But investors appear optimistic Facebook will continue to grow revenue through its aggressive expansion of mobile and video advertising.

More than 90 percent of Facebook’s users access the social network through mobile devices, and the company now boasts daily average mobile users of 1.09 billion, up 22 percent from last year.

With the company’s photo-sharing app Instagram and messaging apps WhatsApp and Facebook Messenger facing increasing competition from Snapchat, Facebook has been adding features to keep users hooked and attract advertisers.

The company said in September that Instagram’s advertising base had more than doubled to more than 500,000 in six months. Instagram had about 500 million users as of June. (bit.ly/2f1SJfP)

Facebook took its attempts to boost user engagement to the workplace last month, launching a subscription-based enterprise version of its mobile app.

The company also launched Marketplace, a feature that allows people to buy and sell items locally, and has been focusing more on video to better compete with Google’s (GOOGL.O) YouTube.

Facebook is expected to generate about $22 billion in mobile ad revenue in 2016, according to research firm eMarketer, up about 67 percent from 2015. Total ad revenue is forecast to rise to about $26 billion, an increase of about 52 percent.

However, there are questions about how long Facebook can continue to boost mobile ad revenue, given limits to the number of ads that Facebook can show each user.

Net income attributable to Facebook shareholders jumped to $2.37 billion, or 82 cents per share, in the quarter from $891 million, or 31 cents per share, in the third quarter of 2015.

Excluding items, the company earned $1.09 per share. On that basis, analysts had expected 97 cents per share.

Up to Wednesday’s close of $127.17, Facebook’s shares had risen 21.5 percent since the start of the year.

(Reporting by Rishika Sadam and Supantha Mukherjee in Bengaluru; Editing by Saumyadeb Chakrabarty and Bill Rigby)

Stock market, trading journal, daily journal, investing journal

My Trading Journal: 30 Day Trading Journal

Published at Wed, 02 Nov 2016 20:25:45 +0000

Continue reading >
0 Shares

Big Fidelity investor in Wells Fargo trimmed position in September

 

Big Fidelity investor in Wells Fargo trimmed position in September

 

Fidelity Contrafund, one of the largest investors in Wells Fargo & Co (WFC.N), reduced its stake in the scandal-hit bank by 5 percent in September, according to the fund’s latest holdings report.

Run by star portfolio manager Will Danoff, Contrafund had a $2.2 billion stake in Wells Fargo, or about 50.1 million shares, at the end of September, according to a report released on Sunday. The fund owned about 52.65 million shares at the end of August.

Wells Fargo is the only bank in a Contrafund top 10 holdings list dominated by tech companies. The bank’s shares dragged on Contrafund’s third-quarter performance, falling nearly 6 percent amid disclosure Wells Fargo branch staff opened as many as 2 million accounts without customers’ knowledge.

Contrafund is the third-largest mutual fund investor in Wells Fargo, behind two Vanguard Group index funds, according to Thomson Reuters data.

 

(Reporting By Tim McLaughlin; Editing by Meredith Mazzilli)

Get The #1 Daily Trading Journal: TTW 30 Day: My Trading Journal

Published at Mon, 31 Oct 2016 14:26:03 +0000

Continue reading >
0 Shares

Got bank? Election could create flood of marijuana cash with no place to go

Photo
marijuana-269851_1280By noexcusesradio from Pixabay

Got bank? Election could create flood of marijuana cash with no place to go

By Lisa Lambert
| October 31

Although the sale of marijuana is a federal crime, the number of U.S. banks working with pot businesses, now sanctioned in many states, is growing, up 45 percent in the last year alone.

Still, marijuana merchants say there are not nearly enough banks willing to take their cash. So many dispensaries resort to stashing cash in storage units, back offices and armored vans.

Proponents believe the Nov. 8 election could tip the balance in favor of liberalizing federal marijuana laws, a move seen as key to getting risk-averse banks off the sidelines.

Measures on ballots in California, Florida and seven other states would bring to 34 the number of states sanctioning pot for medical or recreational use, or both. That could push annual sales, by one estimate, to $23 billion.

The prospect for a market of such scale is adding urgency to calls for a national approach to marijuana that expands banking options. Law enforcement and Federal Reserve officials have expressed concern about the fraud and crime associated with un-bankable cash.

Nearly 600 dispensary robberies have been reported in Denver since recreational pot was legalized in Colorado three years ago.

“There’s not a single human being who thinks there is any benefit at all in forcing marijuana business to be conducted on an all-cash basis,” said Rep. Earl Blumenauer, a Democrat from Oregon who has called for the decriminalization of marijuana since coming to Congress in 1996.

MONEY LAUNDERING

The U.S. Justice Department said in 2014 it would not prosecute banks for serving state-sanctioned marijuana businesses. At the same time, the Treasury Department requires banks to report suspected drug crimes.

At last count, 301 banks were serving marijuana businesses, according to the Treasury Department. Many more have avoided the sector out of fear that making the wrong call could put them at risk, said Robert Rowe, a vice president at the American Bankers Association.

The National Cannabis Association is pressing Congress for a law that would hold banks harmless for handling pot cash, said Michael Correia, a lobbyist for the trade group. If California legalizes recreational use next week, the nation’s biggest Congressional delegation will have a big stake in the issue.

In lieu of federal action, some states have tried their own fixes. Colorado created a credit union system for state-sanctioned marijuana businesses. But it fell apart when the Kansas City Federal Reserve denied a Colorado pot credit union access to the national payments system, which distributes currency and clears checks and electronic payments.

California has no such plans, said Tom Dresslar, spokesman for the state’s Department of Business Oversight.

“This was a problem created by federal law,” Dresslar said, “and it needs a federal solution.”

In northern California, where growers serve state-sanctioned medical dispensaries as well as the black market, the Community Credit Union of Southern Humboldt stopped opening pot business accounts because of the red tape and uncertainty, said senior vice president Janet Sanchez.

“We’re not being asked to go over to the gun dealer and ask them if they’re making appropriate background checks,” she said.

Dispensary operators unable to find willing banks tell tales of subterfuge, recordkeeping nightmares and armies of security guards. Many open bank accounts and submit credit card charges in ways that obscure their true enterprise, such as “spa services.”

Susana de la Rionda has run a Los Angeles medical marijuana dispensary for 12 years and has had to find a new bank about once a year and submit to tax audits twice as often.

“I feel like a gangster,” she said.

Denver Relief dispensary founder Ean Seeb said operators always are trying workarounds to get cash into banks, including washing bills in fabric softener to hide the odor of pot. For a time, he said, one automated teller machine near a Denver mall drew lines every night of marijuana merchants, each depositing the maximum $500 in cash.

 

WEEDING OUT RISK

Partner Colorado Credit Union began working with state-sanctioned dispensaries two years ago and has developed elaborate protocols to minimize risk, including an initial vetting that can take three weeks. It uses armored trucks to take cash deposits directly from dispensaries to the Denver branch of the Federal Reserve Bank.

When the credit union spots a red flag, Chief Executive Sundie Seefried dispatches employees to pay the dispensary a visit, and she has closed two accounts for compliance problems. Seefried encourages operators to visit by keeping fine cigars in her office, and she stays in touch with regulators.

“Our program is designed with eyes on the business, eyes on the owner, eyes on the money,” she said.

With 95 dispensary members, Seefried said the credit union is at capacity, and she hopes more bankers will get involved. She fields calls for advice, speaks to industry groups and, earlier this year, shared what she’s learned in a book.

Despite the safeguards, Seefried said she takes nothing for granted. Every few months, she said she drills her staff to make sure they know what to do in the event of her arrest.

“What calls are you going to make?” she said she asks them.

“If you don’t have a little fear going into this because of the illegality at the federal level, you’re probably not the person to do this job,” she said.

(Reporting by Lisa Lambert; editing by Linda Stern and Lisa Girion)

Get The #1 Daily Trading Journal: TTW 30 Day: My Trading Journal
Published at Mon, 31 Oct 2016 09:49:03 +0000

Continue reading >
0 Shares

UBS beefs up funds for U.S. mortgage mis-selling case to $1.4 billion

 

The logo of Swiss bank UBS is seen at the company’s headquarters in Zurich, Switzerland February 10, 2015.REUTERS/Arnd Wiegmann/File Photo
By Joshua Franklin and Angelika Gruber | ZURICH

UBS revealed it had set aside an extra $417 million to cover potential penalties tied to mis-selling mortgage-backed securities ahead of the financial crisis as it delivered an 11 percent rise in third-quarter profit.

Results from UBS on Friday showed the Swiss bank had upped provisions to cover a range of ongoing residential mortgage-backed securities (RMBS) legal to $1.405 billion, from $988 million previously.

This follows news last month that the U.S. Department of Justice had demanded a $14 billion fine from Deutsche Bank in an RMBS investigation.

The DOJ demand was far more than analysts had expected and prompted fears UBS, the world’s biggest wealth manager, could also face a stiffer penalty. But Chief Executive Sergio Ermotti said on a call following that each case was different.

“Every bank has its own legal position,” he said, declining to make any comment on the timing of any resolution.

UBS also told investors Hong Kong’s regulator was investigating its role as sponsor of some initial public offerings. If found guilty, it could face financial penalties and a temporary ban from providing corporate finance advisory services in Hong Kong.

Pre-tax profit for the three months to end-September rose to 877 million Swiss francs ($883 million), beating expectations thanks to strong business in the Swiss market and cost cuts.

“Overall, it was certainly positive,” Kepler Cheuvreux analyst Peter Casanova, who has a “hold” rating on the stock with a target price of 14.60 francs, said. “Basically it shows progress on the cost side.”

UBS shares gained 2 percent to 14.21 francs by 0814 ET, outpacing the European banking sector index.

CLIENT CAUTION

Nevertheless, UBS maintained its gloomy outlook amid negative interest rates in Switzerland and economic uncertainty which has kept many investors on the sidelines.

“Our clients really are just not making any moves,” Chief Financial Officer Kirt Gardner said.

UBS did not benefit from the same surge in investment banking revenues experienced by U.S. banks since its business is more geared towards equities in Europe and Asia, and Wall Street earnings were boosted by U.S. bond trading.

It is the downside to UBS’s widely lauded post-financial crisis strategy to focus on capital-light wealth management while scaling back in investment banking and fixed income, where earnings are more volatile and which consume more capital.

In the tough environment, UBS’s wealth management division saw a sixth straight quarter of falling or stagnating gross margins. However, the unit’s net margin – which factors in cost savings – rose slightly to 27 basis points.

Transaction-based income in wealth management fell to 334 million francs, the lowest since 2008.

“I don’t expect, until we see a change in the environment, that we’re going to see a material increase at all in our transaction revenue,” Gardner said.

Net new money inflows – a volatile but important indicator of future earnings in private banking – totaled 9.4 billion francs at its wealth management unit and $800 million at its wealth management business in the Americas.

COST PRESSURE

UBS netted 100 million francs in third-quarter savings, bringing total net cost cuts since 2013 to 1.5 billion francs.

However, the bank said increased expenditure from new regulation meant it needed to find additional savings to achieve targeted net cuts of 2.1 billion francs by end-2017.

Ermotti told analysts cost pressures would likely spur industry consolidation and left the door open for acquisitions.

“We are not immune from having to consider (non-organic growth). It would be irresponsible for us not to look at all options.”

Group net profit fell to 827 million francs from 2.1 billion francs in the year-ago quarter, which benefited from a net tax benefit of 1.3 billion francs.

UBS saw a positive impact from deferred tax assets (DTAs) of 424 million francs, the bulk of the roughly 500 million the bank had forecast in 2016. DTAs are tax breaks from losses suffered in the financial crisis.

UBS delivered an annualized adjusted return on tangible equity (RoTE) – a key measure of profitability – of 10.1 percent, short of the bank’s target for more than 15 percent, although it does not give a time frame for this.

The bank’s common equity tier 1 capital ratio, an important measure of balance sheet strength which UBS uses as a benchmark for its dividend, fell to 14.0 percent from 14.2 percent due to a slight rise in risk-weighted assets.

Ermotti played down prospects of raising the ordinary dividend from 0.60 francs per share in 2015, saying the priority this year was to protect the baseline.

($1 = 0.9932 Swiss francs)

(Editing by Michael Shields and Alexander Smith)

Get The #1 Daily Trading Journal: TTW 30 Day: My Trading Journal

Published at Fri, 28 Oct 2016 12:22:15 +0000

Continue reading >
0 Shares

October 2016: Unofficial Problem Bank list declines to 177 Institutions

Photo
tags
By fancycrave1 from Pixabay

October 2016: Unofficial Problem Bank list declines to 177 Institutions

This is an unofficial list of Problem Banks compiled only from public sources.

Here is the unofficial problem bank list for October 2016.

Changes and comments from surferdude808:

Update on the Unofficial Problem Bank List for October 2016.  During the month, the list fell from 177 institutions to 173 after five removals and one addition.  Assets dropped by $562 million to an aggregate $54.9 billion.  A year ago, the list held 264 institutions with assets of $79.2 billion.

Actions have been terminated against Horry County State Bank, Loris, SC ($383 million  Ticker: HCFB) and Heritage Community Bank, Greeneville, TN ($89 million).  Finding merger partners were Landmark Community Bank, National Association, Isanti, MN ($80 million); Citizens State Bank, Kingsland, GA ($56 million); and Home Savings Bank, Jefferson City, MO ($24 million).  Added this month was The First National Bank of Lacon, Lacon, IL ($70 million).

In a change, the OCC released an update on its enforcement action activity today, the last Friday of the month.  Historically, the OCC has issued its update on the first Friday following the 15th of the month.  While the FDIC provides a release on the last Friday of the month as well; however, it only includes action changes for the preceding month, so their information has a longer lag time.  Conversely, the Federal Reserve releases individual action changes as they occur instead of waiting to accumulate them in a monthly release.

Read more at http://www.calculatedriskblog.com/2016/10/october-2016-unofficial-problem-bank.html#MdAq8E6FbruHRaup.99

by Bill McBride on 10/29/2016 02:45:00 PM

Get The #1 Daily Trading Journal: TTW 30 Day: My Trading Journal
Published at Sat, 29 Oct 2016 18:45:00 +0000

Continue reading >
0 Shares

Madoff trustee reaches $277 million accord with money manager’s family

 

Bernard Madoff exits the Manhattan federal court house in New York in this January 14, 2009 file photo.REUTERS/Brendan McDermid/File Photo
By Jonathan Stempel

The court-appointed trustee liquidating Bernard Madoff’s firm said on Friday he has reached a settlement with the family of late Beverly Hills money manager Stanley Chais that will provide more than $277 million to victims of Madoff’s Ponzi scheme.

Irving Picard, the trustee, said victims will receive at least $232 million of cash, and the rights to $30.7 million of assets that are expected to be sold.

A separate $15 million fund will pay claims by California investors, resolving litigation by that state’s Attorney General Kamala Harris, and which had been brought in 2009 by her predecessor, California Governor Jerry Brown.

Friday’s settlement requires approval by U.S. Bankruptcy Judge Stuart Bernstein in Manhattan, who oversees the liquidation of Bernard L. Madoff Investment Securities LLC. A hearing is scheduled for Nov. 22.

The cash payout would boost to $11.46 billion the sum that Picard has recovered for former Madoff customers, or 65 percent of their estimated $17.5 billion loss. Picard has said half of the 2,597 accounts with valid claims have been fully paid off.

Madoff, 78, is serving a 150-year prison term after pleading guilty to running a decades-long fraud uncovered in December 2008.

Chais, who died in September 2010 at the age of 84, once handled investments for elite Hollywood clients like Oscar-winning director Steven Spielberg, and had been a close friend of Madoff since the 1960s.

Picard had sought to recoup $1.32 billion of “fictitious profits” that he claimed the Chais defendants, including Chais’ widow Pamela, withdrew from Madoff’s firm.

The U.S. Securities and Exchange Commission in June 2009 filed a related civil lawsuit against Chais, claiming he ignored red flags that Madoff’s seemingly steady returns were bogus.

In a court filing, Picard’s lawyers said the settlement covered all of Stanley Chais’ estate and substantially all of his widow’s assets, and represented “a good faith, complete and total compromise.”

Chais had maintained that he was also a Madoff victim and had lost nearly all of his own money.

Lawyers for the Chais defendants did not immediately respond to requests for comment.

Through Sept. 30, more than $1.42 billion has been spent on recovery efforts, including $824.6 million for legal fees for Picard’s law firm Baker & Hostetler and $370.2 million for consultant fees, a Thursday court filing shows.

A $4 billion fund overseen by former SEC Chairman Richard Breeden will also compensate Madoff victims.

The cases are Picard v Chais et al, U.S. Bankruptcy Court, Southern District of New York, No. 09-ap-01172; and In re: Bernard L. Madoff Investment Securities LLC in the same court, No. 08-01789.

(Reporting by Jonathan Stempel in New York; Editing by Steve Orlofsky and Cynthia Osterman)

Get The #1 Daily Trading Journal: TTW 30 Day: My Trading Journal

Published at Fri, 28 Oct 2016 17:04:46 +0000

Continue reading >
0 Shares

UPDATE 1-AutoNation net income drops on recall costs; to add used-car stores

Photo
https://pixabay.com/en/users/Hans-2/By hans from Pixabay

UPDATE 1-AutoNation net income drops on recall costs; to add used-car stores

By Joseph White

AutoNation Inc (AN.N) reported a 9 percent decline in third quarter net income on Friday, weighed by $6 million in aftertax costs relating to used vehicles affected by Takata airbag inflator recalls.

AutoNation said it could not sell 14 percent of its used-vehicle inventory because the cars have recalled Takata airbag inflators that have not been replaced.

The U.S. auto retail chain also said on Friday it will invest at least $500 million over the next several years to expand beyond new-vehicle sales, including opening standalone used-vehicle stores that would compete with used-car specialist Carmax Inc.(KMX.N)

The company said it had identified 25 markets where it could open standalone used-vehicle stores under the AutoNation USA brand, and expects to open five stores next year.

These stores will offer services to customers whose vehicles are no longer covered by manufacturer warranties, and sell a new line of AutoNation branded replacement parts, the Ft. Lauderdale, Florida company said in a statement.

AutoNation, the largest U.S. new car dealership chain, faces slowing growth in the U.S. car and light truck market, and increasing pressure on profit margins for new vehicle sales.

The company will expand its collision-repair operations, and plans to build or buy at least 18 new collision-repair operations over the next two years. AutoNation currently operates 70 body repair stores in the United States.

Profit margins on vehicle repair services, replacement parts, collision repairs and used vehicle sales are usually higher than those for new car sales.

In a related move to capture more revenue from a car’s life cycle, AutoNation said it will open four more AutoNation vehicle auction operations over the next two years, adding to a wholesale used vehicle auction it operates in Southern California.

Revenue grew 4 percent to $5.6 billion in the quarter. AutoNation said net income per share remained flat at $1.05 a share, reflecting share repurchases. That was below the $1.15 consensus forecast according to ThomsonReuters I/B/E/S. The company said its board has approved another $250 million in common stock buybacks.

(Editing by Bernadette Baum)

Get The #1 Daily Trading Journal: TTW 30 Day: My Trading Journal

 
Published at Fri, 28 Oct 2016 12:34:50 +0000

Continue reading >
0 Shares
Page 13 of 15