News Archive

U.S. banks to help regulators in tax evasion probe: WSJ

(Reuters) – The Swiss units of Goldman Sachs Group Inc (GS.N) and Morgan Stanley (MS.N) have agreed to hand over details to U.S. authorities about how they may have helped Americans to evade taxes, the Wall Street Journal reported.

Though the two banks will not face prosecution in the United States in return, they could be penalized by up to 50 percent of the value of the undeclared U.S. accounts they have handled, the Journal said, citing people familiar with the matter. (

The move comes as the U.S. Justice Department ramps up its investigations of Swiss banks that helped Americans dodge taxes leading to billions of dollars of missed revenues.

As part of the program with the authorities, named category 2, banks compile information about how they set up Swiss accounts for U.S. clients and also how much was contained in the accounts, the Journal said, adding that the information must be reviewed by an independent examiner.

The Justice Department is currently probing 14 Swiss banks over taxes after UBS AG (UBSN.VX) became the first major bank to settle over the charges. Two smaller Swiss banks have had to close shop as a result of the U.S. investigation.

Last month, a former Credit Suisse Group AG (CSGN.VX) banker pleaded guilty to conspiring to help U.S. customers evade taxes by using Swiss accounts, and said he did so with the encouragement of his superiors.

(Reporting by Avik Das in Bangalore; Editing by Saumyadeb Chakrabarty)

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Tesco credit rating under threat: S&P

LONDON (Reuters) – Tesco (TSCO.L), Britain’s biggest retailer, was dealt a fresh blow on Tuesday after another ratings agency warned of a possible cut to its credit rating in the wake of its recent poor performance.

Earlier this month Tesco Chief Executive Philip Clarke vowed to win back shoppers with millions of pounds of price cuts after the grocer posted a second straight year of falling profits.

Standard Poors said it had revised its outlook for Tesco’s debt to negative from stable.

“The outlook revision reflects a greater decline in Tesco’s like-for-like sales in the UK than we anticipated, and lower profitability across its retail operations,” it said.

Though SP affirmed it “BBB+/A-2” long and short-term corporate credit ratings on Tesco, it believes the firm will find it hard to reverse the negative market and operating trends that are adversely affecting its sales and profitability.

It said a continued decline in Tesco’s market share, sales and profit could result in a one-notch downgrade.

The stance by SP follows one by rival Moody’s on Friday to place its BAA1 rating for Tesco on review for downgrade.

In common with Britain’s three other leading grocers – Wal-Mart’s (WMT.N) Asda, Sainsbury’s (SBRY.L) and Morrisons (MRW.L) – Tesco has been hit on two fronts, by the discount chains Aldi ALDIEI.UL and Lidl LIDUK.UL and by Waitrose JLP.UL and Marks Spencer (MKS.L) at the premium end of the market.

Monthly industry data, published April 8, showed Tesco’s UK market share had shrunk to 28.6 percent, its lowest level in nearly a decade.

(Reporting by James Davey; editing by Kate Holton)

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Last Nokia phones sell sluggishly as loss widens

HELSINKI (Reuters) – Nokia said on Tuesday its phone sales fell 30 percent in the last quarter they belonged to the previous world-market leader and the unit’s loss widened.

Nokia’s discontinued operations – the phone unit – posted a drop in first-quarter sales to 1.9 billion euros ($2.6 billion)from 2.8 billion in the same quarter a year earlier. The operating loss widened to 306 million from 73 million.

The Finnish company said the sales decline resulted primarily from decreasing demand for its cheaper phones, but smartphone sales also fell.

Microsoft bought Nokia’s phone unit for 5.6 billion euros in a deal that closed on Friday. ($1 = 0.7223 euros)

(Reporting by Sakari Suoninen; Editing by Dale Hudson)

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European Union moves to end smartphone patent wars

BRUSSELS (Reuters) – The European Union’s antitrust enforcer has told two top smartphone makers to stop filing aggressive patent lawsuits against rivals such as Apple, aiming to end a patent war and open the market to freer competition.

The European Commission reprimanded Motorola Mobility on Tuesday for taking such action against Apple, hoping the ruling will halt a rising tide of legal disputes among rivals vying for profit in the global smartphone market.

The EU’s anti-trust enforcer also said that Samsung Electronics must keep a promise not to seek injunctions against rivals if they sign a licensing agreement.

“The so-called smartphone patent wars should not occur at the expense of consumers,” said Joaquin Almunia, the European commissioner in charge of anti-trust enforcement.

The landmark ruling will help draw a line under a long-running feud between smartphone makers and a slew of legal action against rivals by manufacturers who claimed their designs had been copied.

Although no fine will be imposed on Google Inc’s Motorola, the Commission ruled that the company had been wrong to seek an injunction against Apple in Germany for copying a ‘standard-essential’ patent, for which Apple had bought a license.

Such patents, which cover basic mobile technology such as the mechanism to make and end a phone call, have become the scene of bitter legal confrontation.

Phone companies often argue that their technology, such as Apple’s slide-to-unlock keypad, should be covered by such legal protection to prevent rivals stealing a lead.


Ever since Apple entered the market with its iPhone, smartphone makers have been seeking to mimic its success.

This has led to a series of claims and counter-claims by inventors that their technology had been stolen, including some of the basic building blocks of a mobile phone.

“The EU is being the voice of reason,” said Ben Wood of advisory firm CCS Insight. “Smaller phone makers can no longer afford to get into protracted legal battles over patents. Essential patents, such as making a mobile phone connect to a mobile network, must be available.

“We forecast that over 1.2 billion smart phones will be sold worldwide this year and this means the stakes are high.”

The Commission ordered Motorola to resolve its dispute with Apple in Europe at the negotiating table, not in the courtroom.

“While patent holders should be fairly remunerated for the use of their intellectual property, implementers of such standards should also get access to standardized technology,” said Almunia.

The patent wars between tech companies, which also include Microsoft, Nokia and smaller rivals, underscore the fierce battle for market share in the lucrative mobile phone industry.

The world’s top smartphone makers, Samsung and Apple, are suing each other in more than 10 countries.

(Additional reporting by Jan Strupczewski; Editing by Larry King and Susan Fenton)

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ECB fails to fully offset bond buys again as money markets tighten

FRANKFURT (Reuters) – The European Central Bank failed to fully offset its past purchases of government bonds on Tuesday, missing its target for the third week running as spare cash in the banking system falls to critical levels.

The ECB has been taking an amount equal to its holdings of euro zone government bonds as weekly deposits from banks to neutralize any threat that the buying will fuel inflation.

But many banks are repaying early loans they took from the ECB at the height of the euro zone crisis, and have set aside tens of billions of euros before an ECB health check of the sector, leaving them less cash to deposit at the central bank.

The ECB drew back 103.946 billion euros ($143.9 billion) on Tuesday in seven-day deposits, well below a target of 172.5 billion, equivalent to the size of its first and now terminated sovereign bond-buy plan, which remained unchanged last week.

The drop in the amount of surplus cash in the system puts upward pressure on market interest rates. The ECB earlier this year debated ending its sterilization operations to loosen lending conditions but opted to keep them going for now.

Further highlighting the tightening on money markets, banks took 172.621 billion euros in weekly loans from the ECB on Tuesday, the most since the last week of June 2012 and beating expectations in a Reuters poll of traders for 130 billion euros.

The EONIA overnight rate hit 0.398 percent on Monday – its highest since 2011 with the exception of two liquidity-tight days at the end of last year and at the end of the first quarter of 2014.

The ECB, whose main refinancing rate stands at 0.25 percent, is watching EONIA moves carefully, having identified an “unwarranted” tightening of short-term money market rates as one of the scenarios that could prompt fresh policy action.

Banks are taking more money from the ECB to balance out a drop in excess liquidity, the money banks hold in excess of their daily operational needs.

Excess liquidity fell to around 86 billion euros on Tuesday, according to Reuters calculations, a level last seen just before the ECB offered three-year crisis loans to banks in December 2011.

In the Reuters poll, 16 of 19 traders said pressure on money market rates would eventually ease as banks take more money in the weekly ECB operations. The other three said falling excess liquidity would push the EONIA rates higher. ($1 = 0.7223 Euros)

(Reporting by Eva Taylor, Sakari Suoninen and Paul Carrel; Editing by Gareth Jones/Ruth Pitchford)

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Bitcoin traders settle class actions over failed Mt Gox exchange

(Reuters) – U.S. and Canadian customers of failed Tokyo-based bitcoin exchange Mt. Gox have agreed to settle their proposed class action lawsuits that alleged the company defrauded them of hundreds of millions of dollars.

The class action plaintiffs agreed to support a plan by Sunlot Holdings to buy the shuttered exchange and accept their share of bitcoins still held by Mt. Gox, according to a statement and court filings.

Mt. Gox filed for bankruptcy in Japan and the United States earlier this year after saying it lost some 850,000 bitcoins – worth more than $400 million – in a hacking attack. It subsequently said it found 200,000 bitcoins.


Once the world’s biggest bitcoin exchange, Mt. Gox is slated to be liquidated after the Tokyo District Court granted the company’s request to abandon plans to revive its business.

In return for settling separate class actions, the U.S. and Canadian customers will share in a 16.5 percent stake after Mt. Gox is sold to Sunlot, a firm backed by child actor-turned entrepreneur Brock Pierce and venture capitalist William Quigley.

In addition, the customers will split the 200,000 bitcoins that Mt. Gox said it found after seeking bankruptcy protection, and will also split up to $20 million in fiat currency held by the administrator for Mt. Gox.

“This is the customers’ best option and the only chance they have for full restitution,” said a statement from Jay Edelson of the Edelson law firm, the lead attorney in the U.S. case.

Sunlot has proposed buying Mt. Gox for one bitcoin, or less than $500, according to the Wall Street Journal. A sale to Sunlot must be approved by the Tokyo court.

The court-appointed administrator for Mt. Gox, attorney Nobuaki Kobayashi, did not respond to a request for comment on Tuesday, a national holiday in Japan.

The settlement releases Mt. Gox’s founder, Jed McCaleb, and Gonzague Gay-Bouchery, once the exchange’s chief marketing officer. The pair committed to help pursue the class action against the remaining defendants: Mt. Gox CEO Mark Karpeles, parent company Tibanne, the company’s banking partner Mizuho Bank Ltd and others.

The settlement needs to be approved by the Canadian and U.S. courts overseeing the class actions cases.

The U.S. class action is Gregory Greene et al v Mt. Gox Inc et al; United States District Court, Northern District of Illinois, No. 14-01437

The Canadian class action is David Joyce et al v Mt. Gox Inc et al, Ontario Superior Court of Justice, CV-14-500253-00CP

(Reporting by Tom Hals in Wilmington, Delaware and Nathan Layne in Tokyo; Editing by Ian Geoghegan)

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Asia shares, major currencies hesitant before key events

SYDNEY (Reuters) – Asian share markets put in an indecisive performance on Tuesday as caution ahead of some major events this week overshadowed a late rally on Wall Street.

Major currencies held to tight ranges as Tokyo took a holiday, though the euro hung onto gains on the yen and Australian dollar.

The lack of momentum showed in MSCI’s broadest index of Asia-Pacific shares outside Japan .MIAPJ0000PUS which drifted off by 0.2 percent. Shanghai added 0.2 percent .SSEC while South Korea fell by a matching amount .KS11.

Samsung Electronics (005930.KS) stock slipped 1.8 percent after reporting its second straight fall in quarterly profit as weakness in flat-screen panels and the maturing high-end smartphone business weighed on earnings.

Yet the company held out the hope that the football World Cup in Brazil would help boost sales of screens and smartphones as fans invest in fancy gadgets to watch the action.

Events in Ukraine provided an excuse for caution. The United States slapped sanctions on seven Russian government officials and 17 companies linked to Russian President Vladimir Putin in a fresh attempt to force Moscow to back down from its intervention in Ukraine. TOP/NEWS

Wall Street put in another erratic performance but mostly ended in the black. The Dow .DJI closed 0.53 percent firmer, while the SP 500 .SPX added 0.32 percent. The Nasdaq .IXIC finished flat amid falls in Amazon (AMZN.O) and Facebook (FB.O).

What gains there were owed much to the MA fever in pharmaceuticals. Pfizer Inc (PFE.N) said it approached Britain’s AstraZeneca Plc (AZN.L) (AZN.N) to reignite a potential $100 billion takeover but was rebuffed, stoking speculation of a bidding war.

AstraZeneca shares rallied over 14 percent, while Pfizer rose 4.2 percent to be the biggest gainer in the Dow.


The potential, albeit distant, that Pfizer might need pounds to pay for the bid gave speculators a reason to go long on sterling. The currency climbed to a four-and-a-half year peak on the dollar at $1.6856 before fading to $1.6813.

The euro followed the pound higher to as far as $1.3879, aided in part by a Reuters report playing down the chance of any near-term easing in euro zone monetary policy.

European Central Bank President Mario Draghi told lawmakers from Germany’s ruling coalition on Monday that low inflation would persist but quantitative easing remains some way off, according to a source who took part in the meeting.

On Tuesday, the euro was holding at $1.3862 and still well within the $1.3783/$1.3905 band that has held for the last couple of weeks.

The dollar has been equally range-bound on the yen, bouncing back and forth between 101.95 and 102.72 for the past seven sessions. It was hovering at 102.48 on Tuesday as investors waited to see if this week’s Federal Reserve policy meeting or U.S. jobs data provided the impetus to break the range.

The Bank of Japan holds its policy meeting on Wednesday, while a raft of economic data are due over the next few days including euro zone inflation and GDP from the UK and U.S.

In commodity markets, Brent crude oil added 14 cents to $108.26 a barrel, but that followed a drop over a dollar on Monday when Libya paved the way to restart exports at a second port after a deal with rebels to unblock major terminals.

U.S. crude gained 2 cents to $100.89 a barrel.

Spot gold faded to $1,294.49 an ounce after failing to break resistance around $1,306.00.

(Editing by Shri Navaratnam)

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Samsung Electronics sells 89 million smartphones in first-quarter, market share falls: research firm

SEOUL (Reuters) – Samsung Electronics Co Ltd’s smartphone shipments rose 28 percent to 89 million units in the first quarter, but the world’s top handset maker lost market share to Chinese and other rivals, research firm Strategy Analytics said on Tuesday.

Samsung’s smartphone market share fell to 31.2 percent from 32.4 percent a year ago, followed by Apple Inc which dropped to 15.3 percent from 17.5 percent, Strategy Analytics said.

China’s Huawei Technologies had 4.7 percent market share, unchanged from the previous year, while Lenovo Group Ltd boosted its share to 4.7 percent from 3.9 percent.

(Reporting by Miyoung Kim; Editing by Stephen Coates)

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Alibaba’s founders set up charitable trust seen valued at $3 billion

BEIJING (Reuters) – The founders of Chinese Internet company Alibaba Group Holding Ltd have set up a charitable trust focusing on the environment and health that could be worth as much as $3 billion, making it one of the biggest in Asia.

Jack Ma, Alibaba’s founder and executive chair, and Joe Tsai, a co-founder of Alibaba, created the trust that will be funded by share options they own that represent about 2 percent of Alibaba’s equity, the company said in a statement on its microblog on Thursday.

Alibaba did not give a value for the investment. The trust is being set up as Alibaba prepares for a highly anticipated initial public offering that could value the company at $151 billion, according to analysts. That would give the trust a value of $3.02 billion.

“It is impossible for me to be a doctor. But I can have my own way to save lives,” Ma was quoted by the state news agency Xinhua as saying. Ma’s personal fortune is worth around $8.9 billion, according to Forbes.

Alibaba, founded 15 years ago by Ma, has cornered the Chinese Internet consumer market and expanded into everything from online auctions to messaging and payments.

Philanthropy in China has yet to take off, as some wealthy Chinese fear generous donations could invite unwanted attention on their fortunes. China ranks towards the bottom of the list of countries where people give money to charity, volunteer or help a stranger, according to The World Giving Index, compiled by the Charities Aid Foundation.

(Corrects 2nd paragraph to show fund represents 2 pct of Alibaba’s equity, not 2 pct of Ma’s and Tsai’s combined equity in Alibaba)

(Reporting by Sui-Lee Wee; Editing by Miral Fahmy)

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