News Archive


LinkedIn must face customer lawsuit over email addresses


(Reuters) – A federal judge said LinkedIn Corp (LNKD.N) must face a lawsuit by customers who claimed it violated their privacy by accessing their external email accounts, downloading their contacts’ email addresses and soliciting business from those contacts.

U.S. District Judge Lucy Koh in San Jose, California, found that while customers consented to LinkedIn’s sending an initial “endorsement email” to recruit contacts, they did not agree to let the professional networking website operator send two reminder emails when the initial email is ignored.

This practice “could injure users’ reputations by allowing contacts to think that the users are the types of people who spam their contacts or are unable to take the hint that their contacts do not want to join their LinkedIn network,” Koh wrote in a 39-page decision released on Thursday.

“In fact,” she added, “by stating a mere three screens before the disclosure regarding the first invitation that ‘We will not … email anyone without your permission,’ LinkedIn may have actively led users astray.”

Koh said customers may pursue claims that LinkedIn violated their right of publicity, which protects them from unauthorized use of their names and likenesses for commercial purposes, and violated a California unfair competition law.

She dismissed other claims, including a claim that LinkedIn violated a federal wiretap law, and said customers may file an amended lawsuit.

Crystal Braswell, a LinkedIn spokeswoman, said the company is pleased that some claims were dismissed, and “will continue to contest the remaining claims, as we believe they have no merit.”

LinkedIn is based in Mountain View, California, and had about 300 million users at the end of March.

Larry Russ, a lawyer for the plaintiffs, did not immediately respond to requests for comment.

The lawsuit seeks class action status, a halt to the alleged improper email harvesting and marketing, and money damages.

It is among a series of cases challenging the extent to which Internet companies can mine user data to boost profits.

Last September, in a separate decision critical of some of Google Inc’s (GOOGL.O) practices, Koh let Internet users, some with Gmail accounts and some without, pursue a lawsuit challenging the search engine company’s practice of scanning emails to provide targeted advertisements.

The recent case is Perkins et al v. LinkedIn Corp, U.S. District Court, Northern District of California, No. 13-04303.

(Reporting by Jonathan Stempel in New York; Editing by Dan Grebler)

Article source: http://feeds.reuters.com/~r/reuters/businessNews/~3/OGU0nbgflpo/story01.htm

U.S. to sue Citigroup over faulty mortgage bonds: sources


WASHINGTON/NEW YORK (Reuters) – The U.S. Department of Justice is preparing to sue Citigroup Inc (C.N) on charges that the bank defrauded investors on billions of dollars worth of mortgage securities in the run-up to the financial crisis, after talks to resolve the probe broke down, people familiar with the matter said on Friday.

A lawsuit could be filed in U.S. District Court in Brooklyn as early as next week, the people said, as the bank and civil prosecutors stood far apart in reaching an agreement on the size of any deal.

The settlement negotiations had involved penalty numbers of $10 billion or more, another person familiar with the talks said.

Bloomberg News reported earlier on Friday that the Justice Department had asked the bank to pay more than $10 billion, and that the bank had offered less than $4 billion.

Citigroup shares were down 1.7 percent in New York trading following the report.

A Citigroup spokesman declined to comment. Robert Nardoza, a spokesman for the U.S. attorney for the Eastern District of New York, declined comment.

The developments come as the Justice Department is preparing a similar lawsuit against Bank of America’s (BAC.N) Merrill Lynch unit, after discussions over a $12 billion to $17 billion settlement did not produce an agreement.

The $10 billion figure for Citigroup was greeted with disbelief by some on Wall Street because the bank had marketed fewer mortgage securities than did some other banks.

Fred Cannon, an analyst at Keefe, Bruyette Woods, said in a research note that he estimates Citigroup may have to pay $6 billion to reach a deal with the Justice Department, which could exceed the bank’s legal reserves and require it to record additional expenses this year. Citigroup’s share price likely already reflects a $3 billion addition to reserves, he said.

While Wall Street analysts base settlement estimates on the dollar amount of the securities banks sold, it is much harder for them to know if prosecutors have evidence that a bank was especially egregious in packaging poor quality loans and marketing the instruments as safe, and arguably should have to pay more than other banks. Prosecutors also consider the level of banks’ cooperation in investigations and other factors.

Reuters reported in December that the Justice Department was preparing a civil fraud lawsuit against the bank that alleged investors lost tens of billions of dollars on the securities at issue.

U.S. attorney’s offices in Brooklyn and Colorado have been investigating the bank as part of a larger task force probing faulty mortgage securities that helped fuel the housing bubble in the mid-2000s and contributed to its collapse.

(Reporting by Aruna Viswanatha in Washington, D.C. and Karen Freifeld and David Henry in New York; Editing by Leslie Adler)

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U.S. regulator begins review of web traffic exchange agreements


WASHINGTON (Reuters) – The Federal Communications Commission is studying details of Internet traffic exchange agreements between Netflix, Verizon, Comcast and others to begin to review such arrangements, FCC Chairman Tom Wheeler said on Friday.

The U.S. regulator has collected terms of so-called “peering agreements” between Netflix Inc and the two large Internet service providers, but is asking other broadband providers and content companies to share theirs as well.

Such agreements have long been kept secret by the companies, and it is unclear whether or not the FCC would disclose them.

“Consumers must get what they pay for. As a consumers’ representative, we need to know what’s going on,” Wheeler said after a monthly FCC meeting.

“To be clear, what we are doing right now is collecting information, not regulating. We are looking under the hood. Consumers want transparency. They want answers. And so do I.”

Netflix has been urging the FCC to do away with fees that content providers pay for delivery of their services to consumers as they have been blaming Internet providers for throttling their popular traffic.

“We welcome the FCC’s efforts to bring more transparency in this area,” Netflix spokesman Joris Evers said in a statement on Friday. “Americans deserve to get the speed and quality of Internet access they pay for.”

Netflix earlier this year signed deals to pay fees to Verizon Communications Inc and Comcast Corp to bypass the middlemen they had paid before and deliver content directly to the company’s subscribers, ensuring faster speeds.

“Internet traffic exchange has always been handled through commercial agreements. This has worked well for the Internet ecosystem and consumers,” Verizon spokesman Bob Elek said in a statement. “We are hopeful that policy makers will recognize this fact and that the Internet will continue to be the engine of growth of the global economy.”

Comcast spokeswoman Sena Fitzmaurice said in a statement that the company welcomed the review. “We also agree with the Chairman that the broadband consumer should be the focus of this inquiry and not any particular business model.”

(Reporting By Marina Lopes and Alina Selykh in Washington and Lisa Richwine in Los Angeles)

Article source: http://feeds.reuters.com/~r/reuters/businessNews/~3/bT495A3NzS4/story01.htm

GM’s safety crisis deepens with Camaro switch recall


DETROIT (Reuters) – General Motors Co recalled 511,528 Chevrolet Camaros on Friday for an ignition switch problem similar to the defect linked to at least 13 deaths in Chevrolet Cobalts and other models. GM said it was aware of minor accidents and no fatalities from the Camaro. It said the switch defect in the new recall was not related to the problem in the Cobalts.

A driver’s knee could bump the current-model Camaro’s key fob and move the ignition switch out of the “run” position, causing the engine to shut off, the company said.

The earlier recall was triggered by an ignition switch failure in the Chevy Cobalt and other small GM cars, in which a bump of the key fob could turn off the engine, disabling power steering and airbags.

That defect, first observed by GM engineers in 2002, was not reported to consumers for years, and prompted Chief Executive Mary Barra in recent months to overhaul the way GM handles safety recalls.

The recall of Camaros bloats the number of GM vehicles summoned back for switch-related problems to more than 3.1 million. It also intensifies scrutiny on the automaker as Barra prepares to return to Congress next week to provide additional testimony on the earlier recall of Chevrolet Cobalt and other GM small cars.

Barra will be joined by Anton Valukas, chairman of GM’s outside law firm Jenner Block, who conducted a months-long investigation that detailed deep flaws in GM’s internal decision-making process.

The so-called Valukas report, made public last week, triggered the departures of 15 GM employees, including several high-ranking executives in the legal, engineering and public policy groups.

GM’s 3.1 million switch-related recalls are a fraction of the record 16.5 million cars the automaker has recalled this year in 38 separate actions. That’s about the same number of cars the entire auto industry expects to sell this year in the United States.

The new recall, affecting Camaros of model years 2010 to 2014, is not like the one involving older-model Chevrolet Cobalt and Saturn Ion cars, the company said.

“It’s not at all related to the Cobalt,” GM safety spokesman Alan Adler said in an interview. “The condition here is a switchblade key” in which a key pops out of the key fob when a small button is depressed.

The problem with the Camaro switch “is an external bumping issue,” Adler said. The problem, he said, involves “an atypical seating situation. If you sit somewhat normally and don’t pull your seat way up, you are not going to have this problem.”

But Cobalt and Ion had a similar issue involving the location of the switch on the steering column and the tendency of some drivers to bump that switch out of “run” position.

While the switches in the Camaro are different in design from those in the Cobalt and Ion, some of the key issues are similar: When the key fob is bumped and the switch is moved out of the run position, the engine can turn off, causing loss of power steering and failure of airbags to deploy in a crash.

GM said it was aware of three crashes causing four minor injuries linked to the issue in Camaro, a sporty two-door car.

Adler said the air bags did not deploy in those crashes and that he didn’t know the details about the crashes or when they occurred.

Adler said GM was advising Camaro owners to “drive the car and be aware of this” problem.

“GM said it’s not the same problem, but it’s a first cousin,” said Clarence Ditlow, director of the Center for Auto Safety, a Washington-based watchdog group founded in 1970 by Ralph Nader and Consumers Union. GM “should have recalled” the Camaro earlier to correct the issue, Ditlow said.

The U.S. National Highway Traffic Safety Administration, which is responsible for overseeing safety defects and recalls, had not posted an official Camaro recall notice as of mid-morning Friday, but the agency has received and posted several complaints from consumers.

A complaint dated May 6 on the 2014 Camaro noted “knee bumped key, engine turned off at 60 mph.” There were no injuries or deaths reported in that incident.

The NHTSA has been criticized by lawmakers for not acting more swiftly to recall GM small cars with defective switches.

The agency has awarded five-star safety ratings – the highest level – to the 2012-2014 Camaro in front, side and rollover crashes.

“The Camaro ignition system meets all GM engineering specifications and is unrelated to the ignition system used in Chevrolet Cobalts and other small cars included in the ignition switch recall,” GM said in a statement.

Adler said GM discovered the issue in the Camaro as it was testing a wide range of its 2014-2016 models after the widely publicized small-car ignition switch recall.

He said it would send letters to Camaro owners soon, advising them to visit dealers to get a new key made.

Jeff Boyer, appointed to the new position of vice president for GM global safety earlier this year in response to the small-car ignition switch recall, said the Camaro recall was a quick action that is “the new norm for product safety at GM,” according to the press statement.

GM shares rose slightly at midday to $35.58.

(Additional reporting by Thyagaraju Adinarayan in Bangalore; Editing by Meredith Mazzilli and Bernadette Baum)

Article source: http://feeds.reuters.com/~r/reuters/businessNews/~3/bSshD-ZbPmg/story01.htm

U.S. FCC chair recuses himself from AT&T IP transition trial review


WASHINGTON (Reuters) – U.S. Federal Communications Commission Chairman Tom Wheeler on Friday recused himself from the FCC’s review of ATT Inc’s tests of a transition of networks to digital because of his past affiliation with participant EarthLink Holdings Corp.

EarthLink, a managed network and cloud services provider, has applied to participate in ATT’s proposed trials, in which it would test switching telephone services from existing circuit-switch technology to an alternative Internet protocol-based one to see how the change may affect consumers.

Wheeler, a former venture capitalist, stepped down from EarthLink’s board of directors in November as he took reigns at the FCC. On Friday, he said that after consulting with FCC lawyers, he decided to recuse himself from the review of the ATT’s trials because of EarthLink’s application.

ATT is conducting so-called IP transition trials as it seeks to replace their old copper wires with newer technology like fiber or wireless. The tests would seek to establish, among other things, how consumers welcome the change and how new technology performs in emergency situations, including in remote locations.

(Reporting by Alina Selyukh and Marina Lopes; Editing by Steve Orlofsky)

Article source: http://feeds.reuters.com/~r/reuters/businessNews/~3/BTjc0tWvqMg/story01.htm

U.S. producer prices fall, but inflation still seen firming


WASHINGTON (Reuters) – U.S. producer prices fell in May after two month of solid gains, but the decline was not enough to change perceptions that inflation pressures are steadily creeping up.

The Labor Department said on Friday its producer price index for final demand slipped 0.2 percent after advancing in April by 0.6 percent, which was the largest gain in 1-1/2 years.

Economists, who had expected producer prices to edge up, saw the decline as a correction after gains in March and April, and said it did not change their view that prices were firming.

“The net result is a pick-up. The net strengthening makes the modest acceleration in the more important consumer inflation measures more credible,” said Jim O’Sullivan, chief U.S. economist at High Frequency Economics in Valhalla, New York.

The government revamped the PPI series at the start of the year to include services and construction. Big swings in prices received for trade services have injected volatility into the series, making it hard to get a good read on inflation.

The overall inflation backdrop remains generally tame, with the main gauge watched by the Federal Reserve continuing to run below the U.S. central bank’s 2 percent target.

Still, key consumer inflation measures pushed up in April and are expected to continue edging higher as the labor market tightens and the economy regains momentum. That should position the Fed to raise interest rates in the second half of 2015.

MOVING TOWARDS TARGET

The U.S. central bank, which is already scaling back the amount of money it is injecting into the economy through monthly bond purchases, has kept overnight lending rates near zero since December 2008. Fed officials meet on Tuesday and Wednesday to assess the economy’s health and their monetary policy stance.

“They will probably say inflation is trending toward its 2 percent goal,” said Scott Brown, chief economist at Raymond James in St. Petersburg, Florida.

A separate report showed consumer sentiment slipped slightly in early June. The Thomson Reuters/University of Michigan’s consumer sentiment index was at 81.2 from 81.9 in May.

The report offered a mixed reading on the outlook for prices. Households’ prediction of inflation a year out fell to a six month low of 3.0 percent from 3.3 percent in June, but the five-year projection ticked up to 2.9 percent from 2.8 percent.

Producer inflation in May was depressed by broad price declines at the factory gate, while wholesale food prices snapped four consecutive months of increases.

There were also declines in the prices of trade services, a gauge of retailers’ and wholesalers’ margins.

And while wholesale gasoline prices fell last month, economists cautioned increases were in the cards because of the unrest in Iraq.

A recent spike in the price of oil “should filter through to the economy over the next several months, especially if the sectarian violence (in Iraq) continues,” said Jay Morelock, an economist at FTN Financial in New York.

In the 12 months through May, prices received by the nation’s farms, factories and refineries rose 2.0 percent, moderating from April’s 2.1 percent gain.

Producer prices excluding food, energy and trade services were flat after advancing 0.3 percent the prior month.

(Reporting By Lucia Mutikani; Additional reporting by Richard Leong in New York; Editing by Andrea Ricci and Meredith Mazzilli)

Article source: http://feeds.reuters.com/~r/reuters/businessNews/~3/Q2TDTgXvWOg/story01.htm

Priceline to buy OpenTable for $2.6 bln


(Reuters) – Travel website owner Priceline Group Inc (PCLN.O) will buy restaurant reservation website operator OpenTable Inc (OPEN.O) for $2.6 billion, aiming to broaden its services outside the increasingly competitive online travel industry.

Priceline’s offer of $103 per share for the owner of OpenTable.com represents a premium of 46 percent to OpenTable’s Thursday close.

OpenTable’s shares inched past the offer price to trade as high as $104.19 on the Nasdaq, suggesting that some investors expect a higher bid.

Priceline’s shares were down 1.6 percent at $1,205.50.

Priceline, whose competitors include Expedia Inc (EXPE.O) and Orbitz Worldwide Inc (OWW.N), has a record of buying smaller companies and transforming them into large, successful businesses.

With little room to expand, online travel companies are looking outside the industry to boost revenue and drive more customers to their websites by offering more of a one-stop shop for travelers by offering services at their destination.

TripAdvisor Inc (TRIP.O), for example, bought French online restaurant booking platform Lafourchette last month to enter the restaurant-booking industry.

Friday’s deal gives the travel site operator access to OpenTable’s agreements with over 23,000 U.S. restaurants.

OpenTable has been trying to expand its international business as it faces increased competition from Yelp Inc YELP.O and a slew of startups focused on local services.

“Priceline could further strengthen OpenTable’s business, especially in Europe, where Priceline is the market leader, as a result of its significant online user traffic and its organizational infrastructure,” Citi Investment Research analyst Mark May wrote in a research note.

Priceline bought Kayak.com last year and has built it into one of the biggest travel websites outside the United States. It has also ramped up U.S. advertising for Booking.com, which it bought in 2005, giving stiff competition to Expedia.

As of Thursday, OpenTable’s shares were trading at about 33.5 times 12-month estimated forward earnings, far below the 498.7 times of Yelp, its closest competitor, according to Thomson Reuters StarMine.

“I think (the takeover) creates urgency for larger players to acquire the leading local platforms,” Telsey Advisory Group analyst James Cakmak told Reuters, mentioning Yahoo Inc (YHOO.O), Google Inc (GOOGL.O) and Microsoft Corp (MSFT.O) as potential buyers in the sector.

OpenTable posted its first quarterly loss in five years for the period ended March 31 as it spent more on marketing to stem the slowdown in the number of restaurants signing up for its services.

The number of North American restaurants using OpenTable’s platform rose 19 percent, but growth was slower than in the previous two quarters.

OpenTable, which gets $1.00 from a restaurant if a diner reserves a table through its website or app, will continue to operate as an independent business led by its current management, Priceline said.

Yelp’s shares were up 13 percent at $74.65 in midday trading, having fallen 5 percent this year to Thursday’s close.

Priceline reported a 36 percent rise in second-quarter profit as hotel and car booking rose.

The deal is expected to close in the third quarter.

(Additional reporting by Lehar Mann; Editing by Maju Samuel and Ted Kerr)

Article source: http://feeds.reuters.com/~r/reuters/businessNews/~3/CXiZveI40AU/story01.htm

Recapitalizing Fannie, Freddie not viable: Treasury official


WASHINGTON (Reuters) – A senior U.S. Treasury official on Friday rejected calls to recapitalize Fannie Mae and Freddie Mac, saying it would take at least 20 years to make sure they were adequately funded and that in the meantime taxpayers would be on the hook.

In remarks to a housing conference, Treasury Undersecretary Mary Miller repeated the Obama administration’s call that the two so-called government-sponsored enterprises be wound down.

“Critics of reform would suggest that we can simply recapitalize the GSEs and avoid difficult decisions around creating a new system,” she said. “Even if truly rehabilitating the GSEs were possible, recapitalizing them adequately would take at least 20 years.”

“During these 20 years, the taxpayer would remain at risk of having to bail out the GSEs during another downturn,” Miller added

Fannie Mae and Freddie Mac, which buy mortgages from lenders and repackage them into securities they sell to investors with a guarantee, were seized by the government in 2008 as loan losses threatened their solvency.

They were propped up with $187.5 billion in taxpayer aid, but they have since returned to profitability and have paid more in dividends to the government than they received in support.

Efforts to wind down the two entities, the largest sources of mortgage finance, have foundered on Capitol Hill, spurring the hopes of investors who would like to see them reprivatized.

Miller noted that their recent profits have been driven largely by one-time, tax-related adjustments and legal settlements. She also noted they are required to shrink their loan portfolios, which are also helping drive income, by 15 percent a year.

“The GSEs will not be able to replicate the levels of revenue they achieved over the past two years,” she said.

In her remarks, Miller also called for a greater effort to ensure financing was available for affordable rental housing, noting that the financial crisis and recession had led many Americans to choose renting over buying.

She repeated the administration’s call on Congress to allow Ginnie Mae, another GSE, to securitize loans made under a program in which the Federal Housing Administration, a government mortgage insurer, shares risks with state and local housing finance agencies or other qualified lenders.

But Miller said the administration was not waiting for congressional action. Instead, it was exploring whether funding might be available from other governmental sources for loans already guaranteed through FHA’s risk-sharing program, she said.

“This could present a viable interim solution and we hope to say more in the near future,” Miller said.

(Reporting by Timothy Ahmann; Editing by Chizu Nomiyama, Steve Orlofsky and Jonathan Oatis)

Article source: http://feeds.reuters.com/~r/reuters/businessNews/~3/FzhL-nd4blo/story01.htm

Fiat Chrysler CEO confirms targets despite difficult Brazil


VENICE Italy (Reuters) – Fiat Chrysler Automobiles will meet its 2014 targets even though the Brazilian car market is set to remain difficult and Europe is showing no sign of improvement, Chief Executive Sergio Marchionne said on Friday.

“At the group level, we’ll achieve them. This is not a problem,” Marchionne told reporters on the sidelines of an event in Venice.

Asked about a possible stabilisation of the situation in Brazil, he said: “Fiat will maintain its market share in the ups and downs. We expected it to be a difficult year. We see a difficult year until the elections.”

“The World Cup is distracting everyone but elections are the real problem,” he added.

A sluggish economy, expiring tax breaks and weak exports have put the brakes on Brazil’s car industry, stoking fears of lay-offs in an election year.

Marchionne said he saw no sign of changes in the European car market, which this year would remain “more or less in line” with 2013. “Its not a healthy growth,” he said.

Asked whether Fiat would be able to reduce losses in Europe in spite of higher investments, he said it would depend on the performance of its luxury brand Maserati given that costs in its mass-market segment had been cut to the bone.

On press reports of talks with Mitsubishi for a venture in pick-ups, Marchionne said: “We continue to talk with everyone including Mitsubishi.”

(Reporting by Danilo Masoni; editing by Lisa Jucca and Tom Pfeiffer)

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