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U.S. judge rules banks must face lawsuit over alleged rate rigging


NEW YORK (Reuters) – A federal judge in Manhattan has ruled that a group of international banks must face complaints that they violated the U.S. Commodity Exchange Act by manipulating yen-denominated interest rate benchmarks between 2006 and 2010.

In a ruling on Friday, U.S. District Judge George Daniels also granted the banks’ motion to dismiss related claims against them for antitrust violations and unjust enrichment.

The banks, which included Mizuho Bank Ltd, JP Morgan Chase Co, Barclays Bank AG, UBS AG and Citigroup Inc, were sued in 2012 for allegedly manipulating rates that reflect interest on short-term loans denominated in Japanese yen.

The interest rate benchmarks, used for pricing a wide array of financial products, are set each day based on rates submitted by banks as the prevailing market rates or the rates at which they could borrow funds.

Lawyers for the banks could not immediately be reached for comment.

The class action was filed on behalf of Jeffrey Laydon, a Sanford, Florida man who said he suffered losses on futures contracts that were manipulated by the banks.

According to the lawsuit, the banks deliberately and systematically submitted false rates to the Japanese Bankers Association and British Bankers Association, which set the benchmark rates.

The rates involved were the Euroyen Tokyo Interbank Offered Rate (TIBOR), the London Interbank Offered Rate for Japanese Yen (Yen-LIBOR), and Euroyen TIBOR futures contracts.

More than a dozen banks and brokerage firms have been investigated worldwide over alleged manipulation of Libor and related benchmarks.

A Japanese investment banking unit of UBS in September was ordered to pay a $100 million criminal fine after pleading guilty to wire fraud for scheming to manipulate yen LIBOR to benefit a senior trader’s positions.

Barclays and Royal Bank of Scotland Group Plc have also reached settlements with authorities.

In his ruling, Daniels rejected the banks’ argument that Laydon did not have standing to sue under the Commodity Exchange Act. That act gives plaintiffs standing to sue for manipulation of a futures contract or the price of the commodity underlying the contract, Daniels said.

The Commodity Futures Trading Commission has repeatedly found that the Yen-LIBOR and Euroyen TIBOR are each a “commodity” within the meaning of the Commodity Exchange Act, Daniels said.

However, Daniels agreed with the banks’ argument that Laydon did not have standing to sue for antitrust violations. Although Laydon alleged that he suffered net losses because of the banks’ rate rigging, the lawsuit “does not allege facts that competition was harmed in any way,” Daniels said.

Daniels also said the unjust enrichment claims fail because Laydon failed to show any relationship between himself and the banks or how the banks benefited at Laydon’s expense.

The case is: Jeffrey Laydon et al v Mizuho Bank Ltd et al, U.S. District Court, Southern District of New York, No 12-cv-3419

(Reporting By Dena Aubin; editing by Andrew Hay)

Article source: http://feeds.reuters.com/~r/reuters/businessNews/~3/TO9jLtU_mM8/story01.htm

Apple, Google lose bid to avoid trial on tech worker lawsuit


SAN FRANCISCO (Reuters) – A U.S. judge on Friday rejected a request from Apple, Google and two other tech companies to avoid a trial in a class action lawsuit alleging a scheme to drive down wages.

Tech workers sued the companies alleging they conspired to avoid competing for each other’s employees in order to avert a salary war. Trial is scheduled to begin in May.

Apple, Google, Intel and Adobe asked for a judgment in their favor without a trial, arguing that any no-hire agreements between the companies were reached independently, and were not part of an overarching conspiracy. U.S. District Judge Lucy Koh in San Jose, Calif., however, rejected that argument.

“That the agreements were entered into and enforced by a small group of intertwining high level executives bolsters the inference that the agreements were not independent,” wrote Koh.

A representative for Adobe could not immediately be reached for comment. An Intel spokesman said the company is studying the ruling, and representatives for Google and Apple declined to comment.

The case began in 2011 when five software engineers sued Apple, Google, Adobe Systems Inc, Intel Corp and others, alleging a conspiracy to suppress pay by agreeing not to recruit or hire each other’s employees.

These defendants were accused of violating the Sherman Act and Clayton Act antitrust laws by conspiring to eliminate competition for labor, depriving workers of job mobility and hundreds of millions of dollars in compensation.

The case has been closely watched in Silicon Valley, with much of it built on emails among top executives, including the late Apple Chief Executive Officer Steve Jobs and former Google Chief Executive Officer Eric Schmidt.

In the order on Friday, Koh wrote that the companies shared confidential compensation information with each other, despite the fact they considered each other competitors. For instance, Intel chief executive Paul Otellini circulated information about competitors’ bonus plans that he “lifted from Google.”

“A reasonable jury could infer that this confidential information could be shared safely by competitors only because the anti-solicitation agreements squelched true competition,” Koh wrote.

Other companies refused to enter into non-solicitation agreements at all. Bill Campbell, who served on Apple’s board and also advised Google, discussed attempting to broker a “cease fire” between Google and Facebook, Koh wrote.

Facebook chief operating officer Sheryl Sandberg ultimately refused Google’s entreaties to join a no-hire agreement, according to court documents.

“These expansions and attempted expansions of the anti- solicitation agreements suggest that the agreements were not isolated, independent bilateral agreements, but rather were part of a broader conspiracy,” Koh wrote.

Walt Disney Co’s Pixar and Lucasfilm units and Intuit Inc have already agreed to a settlement, with Disney paying about $9 million and Intuit paying $11 million.

At a hearing this week, attorneys for Google and the plaintiffs said they were “making progress” in settlement talks.

The case in U.S. District Court, Northern District of California is In re: High-Tech Employee Antitrust Litigation, U.S. District Court, Northern District of California, No. 11-02509.

(Reporting by Dan Levine; Editing by David Gregorio and Andrew Hay)

Article source: http://feeds.reuters.com/~r/reuters/businessNews/~3/vnfx6hu1kuw/story01.htm

Healthy job growth could calm stocks’ nerves


NEW YORK (Reuters) – If hiring picked up in March at a healthy pace, that could convince U.S. stock investors next week that the economy’s recent setbacks caused by the weather were only temporary.

Friday’s monthly jobs report, the most widely watched U.S. economic indicator, is expected to show that nonfarm payrolls added 200,000 jobs in March, according to a Reuters poll of economists.

The rebound in hiring started last month despite the icy weather. Employers added 175,000 jobs to nonfarm payrolls in February after creating 129,000 new positions in January.

Wall Street will get more data on the broader economy next week as well.

The Institute for Supply Management will release its national surveys for March on the manufacturing and services sectors, which are expected to show improvement from the previous month as well.

Rosier data could confirm for investors that recent weakness in economic data was caused by the winter’s harsh weather, suggesting the U.S. economy’s uptrend is intact.

Improvement in the labor market, along with a pickup in the manufacturing and services sectors, could also bolster the case for the Federal Reserve’s scaling back of economic stimulus and put more focus on the timing of when the central bank will begin raising interest rates.

Job growth would be a plus for the market, which has suffered a bout of volatility as some of the most high-flying shares, including biotechs, have tumbled in the past week.

“We potentially could have a big positive surprise. The polar vortex is over, and I believe we could get a snapback in payroll numbers that is significantly better than expected,” said Doug Cote, chief market strategist at ING U.S. Investment Management in New York.

Car sales for March will be released next week, along with ADP’s private-sector payrolls report for March and data on the U.S. international trade deficit for February.

Investors are anxious to get a look at more trade data after China’s weak export numbers earlier this month underscored worries that the world’s second-largest economy is slowing.

TECHS MAY EXTEND SLIDE

The recent selloff in biotech and other recent big gainers could persist, strategists said, although so far it has not eroded the market’s bull run. Investors have been putting money into utilities and other sectors.

The Nasdaq biotechnology index .NBI fell 7 percent for the week. With just one trading day left in March, the Nasdaq biotech index was down about 13 percent for the month at Friday’s close.

“There’s definitely been rotation out of tech in terms of asset flows, and energy and utilities have been growing,” said John Kosar, director of research with Asbury Research in Chicago.

For the week, the SP utilities sector index .SPLRCU rose 1.2 percent and the SP energy index .SPNY climbed 2.5 percent.

In another potential headwind for the stock market, Moody’s put Russia’s government bond rating on review for a downgrade late Friday.

FIRST-QUARTER WARNINGS DOMINATE

More U.S. companies could issue outlooks for the upcoming reporting period. So far, negative outlooks have surpassed positive ones from SP 500 companies by a ratio of 6.9 to 1 for the first quarter, Thomson Reuters data showed.

That’s still lower than the ratio for the fourth quarter, but the high number of negative outlooks has driven profit estimates down for the first quarter.

SP 500 first-quarter earnings growth is now expected to increase just 2.1 percent, down sharply from a January 1 growth estimate of 7.6 percent, the Thomson Reuters data showed.

Among companies that have already reported earnings, FedEx (FDX.N) said severe winter conditions hurt results. FedEx cut its fiscal-year profit forecast.

Monsanto (MON.N) is due to report earnings next week, along with Micron Technology (MU.O). But the earnings season won’t get under way until April 8, when Alcoa (AA.N) is scheduled to report results.

“You’ll start to have companies giving you an indication of how the quarter looked,” said Dan Veru, chief investment officer of Palisade Capital Management LLC in Fort Lee, New Jersey, which oversees $4 billion.

(Wall St Week Ahead runs every Friday. Questions or comments on this column can be emailed to: caroline.valetkevitch@thomsonreuters.com)

(Reporting by Caroline Valetkevitch; Editing by Jan Paschal; For the U.S. stock report, click on .N)

Article source: http://feeds.reuters.com/~r/reuters/businessNews/~3/0cC8MmZQjTQ/story01.htm

GM expands ignition switch recall to 2.6 million cars


DETROIT (Reuters) – General Motors Co expanded its global recall of cars with defective ignition switches to 2.6 million on Friday, adding 971,000 later-model vehicles due to concerns over faulty replacement parts.

The recall now includes all model years of the Chevrolet Cobalt, Chevrolet HHR, Saturn Ion, Saturn Sky, Pontiac G5 and Pontiac Solstice made from 2003-2011.

At least 12 deaths have been linked to the defect in the ignition, which when jostled or bumped can switch itself into “accessory” mode, even at highway speeds, shutting down the engine and disabling power steering, power brakes and airbags.

The expanded recall follows a Reuters report on Wednesday that it was still possible to purchase GM-brand ignition switches manufactured by Delphi Automotive carrying the same part number as the product at the center of the February recall.

GM redesigned the faulty part for model years after 2007, but it did not change the part number, and it fears that some newer-model cars could have been repaired with defective older-model switches.

Switches still available in parts stores may not be defective, but it is nearly impossible to tell new ones from older-design ones unless they are taken apart or the manufacturing history is checked, Reuters reported.

Even before the expansion, the recall had sparked investigations by Congress, federal regulators, the Department of Justice and GM itself. All are asking why it took GM so long to address an issue first noted by the company in 2001.

GM Chief Executive Mary Barra said on Friday that “we are taking no chances with safety” in replacing the ignition switches on all 2.6 million cars. Barra is due to testify next week before Congress, where she is likely to be grilled on why it took GM more than 10 years to implement the recall.

971,000 GLOBALLY

The expanded recall adds 971,000 cars globally, including 824,000 in the United States, GM said.

GM also is recalling all the replacement ignition switches that have been sent to U.S. aftermarket distributors, the spare parts market. About 95,000 faulty switches were sold to dealers and parts wholesalers, of which about 5,000 remain on shelves.

GM said Friday that no deaths or injuries have been linked to faulty ignition switches in the newer models that have been added to the recall. Older versions of those cars, dating from 2003-2007, were recalled in two tranches in February.

GM had said on Thursday that the replacement ignition switch it has ordered from Delphi to use in the earlier recall will bear a new part number that “eliminates any potential confusion about which part to use in the repair,” according to a company spokesman.

GM said owners will be notified by mail the week of April 21 and can have ignition switches replaced for free at dealers “as parts become available” — a process that is likely to take months because of the sheer number of vehicles involved.

GM also launched a website, www.gmignitionupdate.com, to provide consumers with information on the recall.

GM replaced the Cobalt in 2010 with a newer compact, the Cruze. On Friday, the automaker told U.S. dealers to stop selling certain 2013 and 2014 Cruze sedans equipped with 1.4-liter engines without saying why.

(Reporting by Paul Lienert in Detroit, editing by Peter Henderson)

Article source: http://feeds.reuters.com/~r/reuters/businessNews/~3/9qMs0Zpl1Fg/story01.htm

Candy Crush brings IPO market back to earth


NEW YORK (Reuters) – In the weeks leading up to the IPO of King Digital Entertainment, the company’s bankers scrambled to persuade investors that the maker of popular online game “Candy Crush Saga” was more than a one-trick pony, according to a source familiar with the situation.

As the debut approached this week, the bankers’ job only got harder. On Tuesday, Facebook Inc said it would pay $2 billion for Oculus VR, a two-year-old virtual reality startup that has yet to put a product on the market. Facebook CEO Mark Zuckerberg described the deal as the social media giant’s desire to bet on “the platforms of tomorrow.”

But for some investors, the deal brought back memories of the Internet boom and bust in 1998-2001, where profitability and other financial fundamentals of companies took the back seat to a raging fad about anything with a dotcom identity, according to the source.

Bankers underwriting King Digital’s offering had to call in favors with investors who had received large allocations in previous successful IPOs, the source said. As a result, King Digital priced the offering at the mid-point of its range of $21 to $24. But its shares tanked in Wednesday’s debut, falling 16 percent and fell further on Thursday and Friday. King Digital could not be reached immediately for comment.

Wall Street bankers are now looking at the disappointing opening as a sign that investors are getting more cautious about the IPO market, especially when it comes to technology and biotechnology stocks. Although bankers said companies waiting in the wings so far seemed to want to forge ahead with their IPO plans, the realization is likely to moderate expectations on the size of offerings and valuations.

“You realize that people are going to be a little bit more cautious. You realize that the valuation needs to be reflective of that cautiousness,” said Sam Kendall, global head of equity capital markets at UBS AG.

That would mark a sharp turning point for the IPO market, in which investors have been fed a steady diet of new public offerings this year from companies yet to turn a profit. More than 50 IPOs have priced in 2014, and two-thirds of those are unprofitable, according to Renaissance Capital, an IPO investment advisor.

Still, companies that have gone public this year have seen their shares rise 33 percent on average from their offer prices, according to Dealogic.

NEXT TEST

“The market has gotten ahead of itself, and you’re seeing a pause in speculation, especially for biotech and some of these new tech names,” said Eric Green, senior portfolio manager and director of research at Penn Capital Management in Philadelphia, which oversees $7.5 billion.

“Other issues, like Ukraine or whatever, end up being an excuse to take money off the table, but the fundamentals behind these companies haven’t changed, just the valuations over them. Those are coming back to earth,” he added.

The next test for the market could come as early as next week, when a series of technology companies are due to list, including online food delivery service Grubhub.com, healthcare IT company IMS health, and software maker Five9.

Bankers said the investor caution is more of a correction rather than a sign that the market was shutting down for new offerings.

While investor worries about frothy valuations is giving pause to some companies in the technology and biotech sectors, companies in other industries are still forging ahead, betting that there will be enough demand for their stock.

In financial services, for example, the U.S. Treasury announced plans to sell nearly 23 percent of Ally Financial Inc through an initial public offering to raise as much as $2.66 billion.

One source familiar with the situation said by buying Ally investors would pay for “a value story,” unlike “the growth story” sold in technology and biotech IPOs.

Still, both the Treasury and Ally would have liked to be able to sell the entire government stake in the bank in one go, sources have previously said. The Treasury will still be left with a stake in the bailed-out bank after the IPO.

A spokesman for the U.S. Treasury and a spokeswoman for Ally declined to comment.

Separately, sources familiar with the matter said on Thursday that aircraft lessor Avolon was preparing for an IPO this year as it looked to take advantage of a recent boom in aircraft finance, driven by an expectation that air travel will continue to grow.

Even in the technology sector, bankers said companies such as Alibaba Group Holding Ltd, the Chinese e-commerce company, are likely to find sufficient demand when they come to market.

Alibaba is expected to file for a listing in the United States as early as April with IPO proceeds that could exceed $15 billion.

“All kinds of industries have been represented in IPOs, but it’s the splashy Internet ones that have been in the news,” said John Carey, portfolio manager at Pioneer Investment Management in Boston, which has about $220 billion in assets under management.

“People are exercising caution, and I’d be more concerned if they were willing to pay anything at all,” Carey added. “If demand was robust for anything that came down the pike, that would trouble me.”

(Additional reporting by Peter Rudegeair and Ryan Vlastelica; Editing by Paritosh Bansal, Martin Howell)

Article source: http://feeds.reuters.com/~r/reuters/businessNews/~3/JuddU0AsV9Q/story01.htm

Wall Street ends higher but biotech selloff weighs


NEW YORK (Reuters) – U.S. stocks ended up on Friday but off their session highs as a late afternoon selloff in the biotechnology sector weighed on the overall market.

The Nasdaq Composite Index fell nearly 3 percent for the week, marking its worst week since October 2012.

The three major U.S. stock indexes had been significantly higher in most of the morning and early afternoon trade following comments from China’s Premier Li Keqiang indicating that the country’s government was ready to take steps to support its slowing economy.

But a 2.8 percent drop in the Nasdaq biotechnology index .NBI led the major indexes to session lows. The biotech sector index fell 7 percent for the week. With just one trading day left in March, the index was down about 13 percent for the month at Friday’s close.

Gilead Sciences Inc (GILD.O) shares fell 4.1 percent to end at $68.55 and Biogen Idec (BIIB.O) shares lost 5 percent to close at $294.12. The two stocks were among the SP 500’s biggest decliners.

“The decline in biotech is part of the reallocation of capital as we near the end of the quarter. It seems like they are a bit out of favor right now, along with momentum stocks,” said JJ Kinahan, chief strategist of TD Ameritrade in Chicago.

The Dow Jones industrial average .DJI rose 58.83 points or 0.36 percent, to end at 16,323.06. The SP 500 .SPX gained 8.58 points or 0.46 percent, to finish at 1,857.62. The Nasdaq Composite .IXIC added 4.526 points or 0.11 percent, to close at 4,155.759.

For the week, the Dow rose 0.1 percent, while the SP 500 was off 0.5 percent and the Nasdaq was down 2.8 percent.

The week’s losses were concentrated in the Nasdaq as investors took profit in some of the market’s biggest outperformers, mostly in the Internet and biotech space. Some analysts say the selloff in “momentum” stocks has yet to run its course, though this could benefit more value-oriented names. A move to such companies helped limit the Dow’s weekly decline.

Netflix Inc (NFLX.O), one of the more prominent momentum names, continued its downward trend, slipping 1.5 percent to $358.87. The stock has dropped for 16 of the last 18 sessions, losing about a fifth of its value over that period.

Red Hat Inc (RHT.N) reported fourth-quarter earnings that beat expectations late Thursday, though the open-source software provider gave a full-year profit view that was below forecasts. Red Hat’s stock fell 6.9 percent to $52.23.

In the latest snapshot of the U.S. economy, personal income and consumption both rose 0.3 percent in February, an indication that weak data earlier this year was due to bad weather rather than worsening fundamentals.

U.S. consumer sentiment fell in March as consumers were less hopeful about the prospects for the overall economy, according to the Thomson Reuters/University of Michigan’s final March reading on the overall index on consumer sentiment. While the report was up by 0.1 from the preliminary March read, it was also slightly under expectations.

Volume of about 5.7 billion shares traded on U.S. exchanges, below the 6.9 billion average so far this month, according to data from BATS Global Markets.

Advancers outnumbered decliners on the New York Stock Exchange by a ratio of 2.5 to 1. On the Nasdaq, there were 1,320 stocks that rose and 1,282 that fell.

(Editing by Jan Paschal)

Article source: http://feeds.reuters.com/~r/reuters/businessNews/~3/YyULIY9QFUs/story01.htm

New York judge unseals guilty pleas in Dewey law firm fraud


NEW YORK (Reuters) – A New York judge on Friday unsealed the records of six former Dewey LeBoeuf employees who pleaded guilty in connection with accounting fraud at the law firm.

The records offer a fresh peek into the government’s case against top executives at the defunct elite international law firm and how key witnesses might testify against them.

The employees, who range from Dewey’s controller to its billing director, agreed to cooperate with prosecutors who have targeted the firm’s top management.

Dewey’s former chairman, Steven Davis, 60, Executive Director Stephen DiCarmine, 57, and Chief Financial Officer Joel Sanders, 55, were charged March 6 with taking part in a scheme to cheat banks and investors as they struggled unsuccessfully to keep the law firm alive.

Dewey LeBoeuf collapsed in 2012, the largest U.S. law firm to file for bankruptcy. If convicted of the top counts against them, the executives each face up to 25 years behind bars.

Prosecutors have accused the executives of using accounting fraud so that Dewey LeBoeuf could get and keep more than $200 million in financing.

The firm’s lenders included JPMorgan Chase Co, Citigroup Inc’s private banking unit, Bank of America Corp and HSBC Holdings Plc. Dewey LeBoeuf also had a $150 million bond offering in 2010.

The court records offer detailed admissions of wrongdoing but hazy accounts of the direct evidence prosecutors have against the three executives and Zachary Warren, 29, a lower-level employee also charged in the case.

Thomas Mullikin, 53, the controller, said he had only infrequent contact with Sanders, “even less” frequent with DiCarmine, and no contact with Davis.

“I never met the firm’s chairman,” Mullikin said in his formal admission to wrongdoing.

The controller pleaded guilty to a felony charge known as scheme to defraud. If he cooperates, prosecutors said they would recommend a jail sentence of five months.

The other staffers who pleaded guilty include Budget Director Ilya Alter, 38, Revenue Support Director Dianne Cascino 55, Accounting Manager Jyhjing “Victoria” Harrington, 42, Partner Relations Specialist David Rodriguez, 39, and Billing Director Lourdes Rodriguez, 43.

Their crimes range from falsifying business records to misdemeanor and felony counts of scheme to defraud.

Prosecutors said in the agreements they would recommend no jail time for the five, if they meet certain conditions.

Dewey’s ex-Finance Director Francis Canella also pleaded guilty in the case. His record was unsealed on Thursday. Prosecutors will recommend a sentence of two to six years in prison, if he cooperates, according to his agreement.

Lawyers for the top executives, who have pleaded not guilty, said the witnesses had not provided direct evidence against their clients.

Still, the admissions contained comments that prosecutors may use in an effort to implicate Sanders.

“I was instructed by Joel Sanders to create invoices, knowing that they would not be sent to clients,” Lourdes Rodriguez said in her statement.

The former billing manager said she understood the invoices were “to hit certain numbers” that were required by the firm’s loan agreements with banks.

A lawyer for Warren could not immediately be reached.

The case is New York v Davis et al, New York State Supreme Court, New York County.

(Reporting by Karen Freifeld; Editing by Andrew Hay and Dan Grebler)

Article source: http://feeds.reuters.com/~r/reuters/businessNews/~3/49GH6fSemVw/story01.htm

PwC is sued for $1 billion over MF Global collapse


NEW YORK (Reuters) – The administrator of MF Global Holdings Ltd’s bankruptcy plan on Friday sued the auditor PricewaterhouseCoopers for at least $1 billion over its advice on a $6.3 billion European sovereign debt investment that helped fuel the brokerage’s rapid demise.

According to a complaint filed in U.S. District Court in Manhattan, PwC committed professional malpractice by offering “flatly erroneous” advice concerning, and approval of, the off-balance-sheet accounting treatment for the debt by MF Global and its then-chief executive, Jon Corzine.

The complaint said PwC knew that the investment would add significant risk to MF Global’s already weak finances. It said MF Global would not have taken on the exposure, which allowed it to book immediate revenue, had it received sound advice.

“PwC’s professional malpractice and negligence were a direct and proximate cause of massive damages the company suffered,” the complaint said.

Caroline Nolan, a PwC spokeswoman, said that the accounting treatment that is the subject of the complaint has been examined by trustees, regulators and a congressional committee.

“None of them has found that the accounting for those transactions was incorrect. PwC is disappointed that this meritless claim has been brought.”

Corzine invested $6.3 billion in debt of countries such as Belgium, Ireland, Italy, Portugal and Spain to advance his strategy of transforming his futures and commodities brokerage into a global investment bank.

But as Europe’s economy weakened, MF Global struggled with worries about the debt, margin calls, credit rating downgrades, and news that money from customer accounts was used to cover liquidity shortfalls, ending in its October 31, 2011 bankruptcy.

The complaint said it is the first seeking to hold PwC liable for malpractice over its accounting advice for the sovereign debt. It does not address how customer money was used. Creditors would share in recoveries if the lawsuit succeeds.

Corzine is a former governor and U.S. senator from New Jersey, and former co-chairman of Goldman Sachs. He is not a defendant in the PwC case but faces other lawsuits over MF Global from investors, customers and U.S. regulators.

DIRECTOR “DID NOT LIKE” ACCOUNTING TREATMENT

MF Global’s plan administrator is a three-member board to which Louis Freeh, the former Federal Bureau of Investigation director and original court-appointed MF Global trustee, assigned his rights to pursue claims on creditors’ behalf.

Corzine had made the sovereign debt investments through so-called repurchase-to-maturity trades, in which he agreed to sell securities and repurchase them later at higher prices, enabling MF Global to obtain short-term funding while boosting leverage.

According to Freeh’s April 2013 report on MF Global’s collapse, the company’s board became increasingly concerned in 2011 over the portfolio’s growing size.

He said at least one director, David Schamis, “did not like” the “accounting-driven structure,” which let MF Global recognize upfront profit while satisfying rating agencies, and was concerned about MF Global’s ability to unwind the trades.

Schamis, a former executive at private equity firm JC Flowers Co, is a founding partner of Atlas Merchant Capital in New York. He could not immediately be reached for comment.

Former MF Global customers had also sued PwC over the company’s collapse, but a federal judge last month dismissed those claims.

The case is MF Global Holdings Ltd as Plan Administrator v. PricewaterhouseCoopers LLP, U.S. District Court, Southern District of New York, No. 14-02197.

(Reporting by Jonathan Stempel and Nate Raymond in New York; Editing by Ken Wills, Jonathan Oatis and Bernard Orr)

Article source: http://feeds.reuters.com/~r/reuters/businessNews/~3/OpBBftGB5oM/story01.htm

Time Warner Cable rejects Charter’s call to drop Comcast merger


(Reuters) – Time Warner Cable Inc said on Friday it was committed to a deal reached with larger cable operator Comcast Corp in response to calls by Charter Communications that shareholders reject the $45 billion merger.

Charter, which was rebuffed in its bid for Time Warner Cable, said in a statement filed with the U.S. Securities and Exchange Commission that the planned merger of Time Warner Cable and Comcast posed a high degree of regulatory risk and warned that approval could drag on until the first quarter of 2015.

TWC and Comcast announced their all-stock agreement on February 13, which at the time gave the deal a value of $158.82 per share. Charter argued in the filing that, due to Comcast’s declining share price, the value was now worth $141.16 a share.

It called the merger process flawed as “the TWC board specifically demanded of Charter $160 per share, and publicly stated that they would not take a penny less than $160 and that the collar was a critical element.”

In a response to the filing, TWC said: “We are fully committed to our merger with Comcast, which we believe is in the best interests of shareholders.”

(Reporting By Nicola Leske; Editing by Jonathan Oatis)

Article source: http://feeds.reuters.com/~r/reuters/businessNews/~3/CSmdDVHBxug/story01.htm