News Archive

U.S. judge sets hearing in Argentina bond case over Citi subpoena

NEW YORK (Reuters) – A U.S. judge overseeing litigation by Argentina and creditors who did not participate in the country’s past debt restructurings on Friday scheduled a hearing to assess whether Citigroup Inc (C.N) should be forced to comply with a subpoena.

U.S. District Judge Thomas Griesa in New York scheduled a hearing for Sept. 10 at 2:30 p.m. EDT following a request by a lawyer for Elliott Management’s NML Capital Ltd, a creditor suing over Argentine bonds that have been in default since 2002.

(Reporting by Nate Raymond in New York; Editing by Meredith Mazzilli)

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Exclusive: Intel hires senior Qualcomm exec to boost mobile business

SAN FRANCISCO (Reuters) – Chipmaker Intel Corp (INTC.O) has hired Amir Faintuch, a senior executive at rival Qualcomm Inc (QCOM.O), to step up efforts in mobile and Internet-connected gadgets.

Hiring a senior executive from a major competitor is rare for Intel, which is known in Silicon Valley for its insular culture, and it reflects the eagerness of the Santa Clara, California, chipmaker to improve its struggling mobile business.

Faintuch, who previously oversaw Qualcomm’s networking and connectivity businesses as president of Qualcomm Atheros, is joining Intel as a senior vice president and co-general manager of the Platform Engineering Group, Intel spokesman Chuck Mulloy said on Friday.

He will be among Intel’s dozen or so most senior executives and will co-manage the Platform Engineering Group with Josh Walden, a manufacturing technology expert who previously led the group.

Mulloy told Reuters that in addition to strong network skills, Faintuch brings experience designing “system on chips,” or SoCs, which combine features like modems, Wi-Fi and memory.

While Intel excels at developing processors for laptops and desktop computers, it has less experience designing SoCs, which are widely used in smartphones and tablets.

“We want to accelerate our success rate with SoCs and get the designs aligned and the roadmaps aligned to do that,” Mulloy said. “We’ve made good progress but there’s more to be done. Amir has extensive management experience and a strong resume.”

A Qualcomm spokesman had no comment beyond confirming Faintuch’s departure.

Bringing in Faintuch, which was announced in an email to Intel employees on Friday, is the latest move by the company to accelerate progress in mobile gadgets, where it trails Qualcomm.

Since taking over in 2013, CEO Brian Krzanich has made a number of sweeping changes designed to counteract a slump in PC sales, including opening Intel’s cutting-edge factories to other chipmakers willing to pay for access to them.

In May, Intel reached an agreement with Chinese SoC specialist Rockchip to make chips for inexpensive tablets running Google Inc’s (GOOGL.O) Android platform.

As Intel struggles with declining PC sales and slow progress in mobile, Qualcomm, whose smartphone chips lead the industry, has been viewed by many engineers in recent years as a potentially more attractive place to work.

In 2012, senior executive Anand Chandrasekher, a 25-year Intel veteran, jumped over to Qualcomm to become the San Diego company’s chief marketing officer.

(Editing by Chris Reese and Matthew Lewis)

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IMF board stands behind Lagarde over French probe

WASHINGTON (Reuters) – The International Monetary Fund’s board on Friday stood behind the global lender’s leader Christine Lagarde, who is facing a criminal investigation in France tied to a political corruption probe dating from 2008.

French magistrates earlier this week put Lagarde under formal investigation for “negligence” after questioning her in Paris for a fourth time. The long-running saga concerns allegations that tycoon Bernard Tapie won a large arbitration payout due to political connections when Lagarde was French finance minister.

“The Executive Board has been briefed on recent developments related to this matter, and continues to express its confidence in the Managing Director’s ability to effectively carry out her duties,” the board said in a statement.

The 24-member board, which has the power to hire and fire the IMF’s managing director, discussed the French corruption probe after the first three times Lagarde was questioned under her previous status as a witness, and also considered the case’s implications when it decided to hire her in 2011.

Three sources told Reuters on Thursday the board would likely stand behind Lagarde this time, as well.

Lagarde’s lawyer said he would appeal the decision to move to an investigation, and the legal appeals process would likely last beyond the end of Lagarde’s first five-year IMF term, which ends in July 2016.

In the case, Lagarde is accused of “negligence” for not blocking the arbitration that won Tapie a huge pay-out. She has said the case is “without merit.”

Under French law, magistrates place a person under formal investigation when they believe there are indications of wrongdoing, but that does not always lead to a trial.

(Reporting by Anna Yukhananov; Editing by Chizu Nomiyama)

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S&P 500 edges up to set new record; best month since Feb

NEW YORK (Reuters) – U.S. stocks closed out a strong month on a quiet note on Friday, with the SP 500 posting a modest gain to close at a new record as the latest positive data helped extend a rally that had been briefly threatened by overseas concerns.

Since falling to a near three-month low on Aug. 7, the SP 500 has risen in 12 of the past 16 sessions. It is also closed out its fourth straight weekly advance and sixth positive month of the past seven. Friday’s gains pushed the index to its latest record close of 2,003.37, its third finish above 2,000 this week.

Wall Street initially lost ground after Britain introduced a note of caution into the market, raising its international terrorism threat level to the second highest in response to possible attacks being planned in Syria and Iraq.

In the latest economic data, business activity in the U.S. Midwest rebounded more than expected in August, signaling a pickup in that region’s economy. Separately, U.S. consumer sentiment rose more than expected, according to the final August reading from the Thomson Reuters/University of Michigan Surveys of Consumers.

“We reached and closed above the 2,000 milestone this week and that gets the mental obstacle out of the way,” said Andre Bakhos, managing director at Janlyn Capital LLC in Bernardsville, New Jersey.

“Economic numbers have been positive for the most part, people are drawing comfort from these numbers, using them as a justification for optimism.”

Economic numbers have helped to offset geopolitical concerns, with flare ups in the conflict between Ukraine and Russia helping to curb gains. Ukraine called for full membership in NATO on Friday, its strongest plea yet for Western military help, after accusing Russia of sending in armored columns that have driven back its forces on behalf of pro-Moscow rebels.

The Dow Jones Industrial average .DJI rose 18.88 points, or 0.11 percent, to 17,098.45, the SP 500 .SPX gained 6.63 points, or 0.33 percent, to 2,003.37 and the Nasdaq Composite .IXIC added 22.58 points, or 0.5 percent, to 4,580.27.

For the week, the Dow rose 0.6 percent, the SP advanced 0.7 percent and the Nasdaq was up 0.9 percent, the fourth consecutive week of gains for all three. For the month of August, the Dow added 3.2 percent, the SP gained 3.8 percent and the Nasdaq finished 4.8 percent higher. The SP’s gain marked its best monthly performance since February.

The week’s trading volume has been among the lightest of the year, with action muted going into the Labor Day holiday in the United States. Markets will be closed on Monday.

The U.S. shares of AstraZeneca (AZN.L) (AZN.N) rose 1.8 percent to close at $76.01 on news the company had moved its immuno-oncology medicine MEDI-4736 into a mid-stage study in colorectal cancer.

Splunk Inc (SPLK.O) jumped 19.1 percent to $53.93 a day after posting strong revenue growth and raising its full-year sales outlook.

Volume was thin, with about 3.8 billion shares traded on U.S. exchanges, well below the 5.29 billion average so far this month, according to data from BATS Global Markets.

Advancing stocks outnumbered declining ones on the NYSE by 2,117 to 890, while on the Nasdaq, advances beat declines 1,882 to 790.

(Editing by Chizu Nomiyama, Meredith Mazzilli and Andre Grenon)

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U.S auto sales seen ending summer without a sizzle

DETROIT (Reuters) – U.S. auto industry sales in August will be about even with a year ago, not quite ending the summer in a sizzling fashion but still warm enough to continue the recovery from a recession now five years in the rear-view mirror.

Analysts polled by Thomson Reuters expect monthly sales of about 1.5 million new vehicles when automakers report them on Wednesday, with a seasonally adjusted annualized sales rate of 16.6 million. It should be the sixth straight month showing an annualized rate above 16 million, a level reached only twice in 2013.

Auto sales are a closely watched indicator of consumer demand, particularly for big-ticket items, and the industry accounts for roughly one-fifth of all U.S. retail spending.

While sales would be flat with last August, the annualized rate for the month would be up from 16.1 million a year ago because there was one less selling day this year.

Profit-eroding incentives remained high in August, as dealers trimmed prices to help clear lots and make way for 2015 models. Industry research firm Kelley Blue Book said incentives, including rebates and cash-back offers, were on track to end the month between $2,700 to $3,000 per vehicle.

The biggest discounts were on mid-size sedans, which are staying on dealer lots more than 80 days before being sold, compared to 47 days for small crossover sport utility vehicles, Kelley Blue Book said.

While auto sales have strengthened to nearly pre-recession levels, there is concern among some analysts that longer-term loans and increased lending to subprime buyers may be inflating sales. Some new vehicles are being sold with 7-year loans, which could cause owners to hold onto their cars longer, because equity is not established until late in the pay-off cycle.

Chrysler Group LLC, a unit of Fiat SpA (FIA.MI), and Nissan Motor Co (7201.T) once again gained market share in August to the detriment of sales leaders General Motors Co (GM.N), Ford Motor Co (F.N) and Toyota Motor Corp (7203.T), according to analysts.

Eight analysts polled by Reuters expect Chrysler to show a monthly sales gain of 13.5 percent, while Nissan is seen ending August up 2.4 percent. Among major automakers, the two are expected to be the only winners.

Michelle Krebs, an analyst with Kelley Blue Book, expects Chrysler will only enjoy a few more months of double-digit gains. This year’s gains by Chrysler have been helped by the fact that sales of Jeep Cherokee SUVs were compared to low sales of a model it replaced in late 2013, the Jeep Liberty.

The Reuters poll showed monthly sales declines for GM, down 1.2 percent, Ford, down 1.4 percent, Toyota, down 2.3 percent and Honda Motor Co (7267.T) off 7.9 percent. Hyundai Motor Co (005380.KS) and its affiliate Kia Motors Corp (000270.KS) are seen down a combined 0.8 percent.

(Additional reporting by Ben Klayman in Detroit; Editing by Tom Brown)

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Exclusive: U.S. options exchanges craft rules to fend off turmoil

NEW YORK (Reuters) – A year after Goldman Sachs (GS.N) bungled a software upgrade and lost tens of millions of dollars from unintended trades, the 12 U.S. stock options exchanges have crafted new rules for dealing with erroneous transactions, according to draft documents seen by Reuters.

Under the proposed rules, unintended trades placed by professional traders will usually have their prices adjusted to levels as close to their fair market value as possible, while wrong trades by retail customers will be mainly be undone, five sources with knowledge of the matter told Reuters.

The rules are meant to protect investors from algorithms gone wild and other sources of market turmoil. Regulators and exchange operators across equities, commodities and other markets have been taking steps to prevent mistaken trades from spiraling into collapses, a rising concern as trading grows increasingly automated.

When market prices are oscillating wildly, technical glitches can create turmoil, said Andy Nybo, head of derivatives research at advisory firm TABB Group.

“A cohesive solution for the industry is critical to get in place before we have another technology blowup,” he said.

In other markets, technical glitches have created big trouble for traders. Knight Capital Group, a stock trading firm now known as KCG Holdings Inc, lost $461.1 million in August 2012 from new software that was improperly installed. The loss forced the company to seek $400 million of rescue capital and eventually led to its sale to a rival firm.

But critics say the new stock-option trading rules are hardly perfect. Participants often don’t know whether they are trading with a professional or a retail investor. If markets start surging or plunging unexpectedly, traders have no way of knowing if their positions will disappear, or be adjusted.

That uncertainty could result in many traders exiting a choppy market just when they are most needed, said Thomas Peterffy, founder and head of Interactive Brokers (IBKR.O), a brokerage and options market maker.

“All of the liquidity goes out of the marketplace and then it will never recover,” he said. Although listed stock options markets are a fraction of the size of U.S. equities market, derivatives exchanges are seen as a crucial tool for dealers and other market participants to offload risk from the stock market.

The proposed rules come at the behest of U.S. Securities and Exchange Commission Chairwoman Mary Jo White, who last September ordered the heads of the exchanges to take specific steps to make the cash equities and options markets more sound, including a unified rule for obvious errors for options trades.

Exchanges have been fine-tuning the plan with the help of the SEC since June, and expect to file it with the regulator in four to six weeks, according to one of the people. All of the sources asked to remain anonymous because the details are not yet public.

Once the plan is filed with the SEC, it will be made available for public comment, which will later be reviewed by the regulator before deciding on whether to approve the rule.

Options exchange operators NYSE, which is owned by Intercontinental Exchange Inc (ICE.N), Nasdaq OMX Group (NDAQ.O), BATS Global Markets, CBOE Holdings (CBOE.O), International Securities Exchange, owned by Deutsche Boerse (DB1Gn.DE), and BOX Options Exchange, owned by TMX Group (X.TO), declined to comment for this story, as did the SEC. Miami International Holdings Inc did not respond to a request for comment.



Options trade across a dozen different exchanges, and each exchange has its own rules for how to deal with mistaken trades.

Those differing rules can create trouble. In August 2013, Goldman’s software snafu resulted in its flooding stock options markets with bad trades, pushing the prices of some options down sharply.

When Goldman Sachs said the transactions were erroneous, some exchanges canceled the positions, and some did not. Traders that had bought an option from Goldman on one exchange and sold the same position on another could have found themselves holding an option they thought they had sold. Goldman’s losses would have been far greater had most of the trades not been canceled.

In crafting rules for dealing with mistaken trades, exchanges had originally planned to adjust most obviously erroneous trades, said three people familiar with the matter. But retail brokers objected, and said that their customers tend to make mistakes that professionals don’t, such as buying or selling a completely different option from what they had intended to trade.

Allowing different treatment for professional traders versus retail investors seemed like a middle ground, the sources said. Retail trading accounted for 24.3 percent of options market volume in the first half, according to TABB Group.

Under the rules, a trade is deemed obviously erroneous if its price differs dramatically from the market level for that option soon before and after the transaction was executed. But the rules also allow market participants to change trades that were harmed by unexpected market movements that had nothing to do with technical glitches: a trade can be deemed obviously mistaken even if the price movement that triggered the trade was just a market gyration after a surprising event.

After the proposed rules are in place, the exchanges will then consider a second phase of coordination, including appointing a single, uniform source for determining the theoretical prices of options, something that each of the exchanges now does on its own, three of the sources said. The exchanges will also look at implementing a system similar to one in the stock markets where options would be prevented from trading outside a range based on recent prices, the people said.

The exchanges have given themselves leeway in the rules that would allow them to cancel all erroneous trades for all participants if they think that doing so would lead to getting the market back to a normal state as quickly as possible.

(Reporting by John McCrank; Editing by Dan Wilchins and John Pickering)

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AT&T sues Cox Communications for patent infringement

(Reuters) – ATT (T.N) is suing Cox Communications for infringing eight patents dealing with network quality after the regional cable provider ignored its complaints about the issue and made “billions” off of the technology, according to a new lawsuit.

In the suit filed Friday in Delaware federal court against Cox and more than 30 of its regional units, ATT said that Cox had been warned about the claims of patent infringement as far back as 2009. It said Cox delayed negotiations and refused to take a license for the technologies.

ATT claims the patents were infringed in Cox’s use and sale of digital video recorders, set top boxes, Internet and telephone systems, according to the lawsuit.

The patents relate to methods for improving the quality and reducing the costs of telecommunications services, the suit said.

ATT said in the suit that Cox was also inducing its employees and subscribers to infringe.

“(Cox) generates billions of dollars in revenue every year through its use of ATT’s technologies,” the telecommunications giant said, adding that the lawsuit is necessary to prove ATT is owed royalty payments for the alleged unauthorized use of its inventions.

A representative from Cox said the company just learned of the case and had no comment. Attorneys for ATT also could not immediately be reached.

ATT is asking the court to declare Cox’s infringement “wilful and deliberate” and seeks unspecified damages. It also wants the court to order Cox to pay a “compulsory, ongoing” royalty to ATT.

The case is ATT Intellectual Property I, LP, and ATT Intellectual Property II, LP, v. Cox Communications et al, No. 14-cv-01106.

(Reporting By Andrew Chung; Editing by Ted Botha and Alden Bentley)

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Kraft issues voluntary recall of some American Singles cheese product

NEW YORK (Reuters) – Kraft Foods Group Inc (KRFT.O) said on Friday it is voluntarily recalling 7,691 cases of some varieties of its Kraft American Singles as a precautionary measure after a supplier failed to store an ingredient correctly.

The Northfield, Illinois-based company said the recall affects four varieties of Kraft American Singles Pasteurized Prepared Cheese Product. The recall is for products with “Best When Used By” dates of Feb. 20, 2015, and Feb. 21, 2015.

A supplier did not store an ingredient in accordance with Kraft’s temperature standards. While unlikely, this could create conditions that could lead to premature spoilage and food-borne illness, the company said.

Kraft said that any of the product in question should not be consumed and should be returned to the store where purchased for an exchange or full refund.

Kraft said it has had no consumer illness complaints for the product associated with the recall.

The cheese was produced at Kraft’s Springfield, Missouri, facility.

(Reporting by Anjali Athavaley; Editing by Leslie Adler)

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Part of Espirito Santo empire may try to block sale of insurer

LISBON (Reuters) – Part of the troubled business empire of Portugal’s Espirito Santo family said on Friday it may try to block the planned sale of an insurance company it once controlled, adding to opposition already expressed by a group of investors.

The challenges highlight the difficulties that bailed-out Banco Espirito Santo (BES) and its successor Novo Banco face as they try to recover some of the family’s massive debts.

Luxembourg-registered Espirito Santo Financial Group (ESFG), a holding company that used to own insurer Tranquilidade and is now under creditor protection after defaulting on its debt, said in a statement the transfer of shares in Tranquilidade to Novo Banco – which is trying to sell the insurer – may be illegal.

It said it had not been notified of the execution of the transfer after the termination of a financing agreement, “and therefore concludes that it is still the owner of the shares”. It added it was carrying out a full due diligence on the terms and conditions of a pledge it made to transfer the shares.

“ESFG thinks that the pledge may be illegal,” it said.

Should the final conclusion of the due diligence confirm its preliminary view, “ESFG will legally react against the pledge of the shares, its execution and any sale of the same” that could be carried out by Novo Banco in the meantime, it said.

Once Portugal’s largest listed lender, BES lost billions of euros from dealings with its Espirito Santo founding family. Regulators decided on Aug. 3 to put its healthy assets into a new entity, Novo Banco, and leave family borrowings, shareholders and junior creditors behind in BES.

Novo Banco’s share of the spoils included Tranquilidade, a large Portuguese non-life insurer, and sources told Reuters last week that the new bank was close to sealing a 200 million euro ($264 million) deal to sell Tranquilidade to U.S. fund Apollo Global Management.

A Novo Banco spokesman said “the process of Tranquilidade’s sale remains on course”. The sale process started in early 2014 before the family financial problems became public knowledge.

Earlier, lawyers representing about 10 individual bondholders of Espirito Santo Financial (Portugal) (ESFP), who hold 12 percent of a 70 million euro bond issued in May 2013, said they were challenging Novo Banco’s claim on Tranquilidade because it disadvantaged creditors of ESFP, which is the indirect owner of 45 percent of the insurer.

The shares in Tranquilidade were pledged to BES as a guarantee ESFG would make sure that BES retail clients who were sold about 2 billion euros of Espirito Santo debt would be repaid. ESFG is the 100 percent owner of ESFP, so it beneficially owned all of Tranquilidade.

BES could face similar challenges as it tries to secure repayment of 1.6 billion euros of borrowings by an array of companies related to Espirito Santo.

The complex structure of the Espirito Santo empire, which spanned from Panama and Luxembourg to Dubai, means there are dozens of borrower companies across different jurisdictions.

(Reporting by Andrei Khalip and Laura Noonan; Editing by Mark Potter)

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