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George Soros did not bet against sterling just before Brexit vote: spokesman

LONDON George Soros, the billionaire who earned fame by betting against the pound in 1992, did not speculate against sterling just ahead of Britain’s vote to leave the European Union but he did profit from other bearish bets due to the Brexit result, a spokesman said.

“George Soros did not speculate against sterling while he was arguing for Britain to remain in the European Union,” a spokesman for Soros said on Monday. “In fact, he was long the British Pound leading up to the vote.”

“However, because of his generally bearish outlook on world markets, Mr. Soros did profit from other investments,” the spokesman said.

(Reporting by Guy Faulconbridge; editing by Kate Holton)

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Texas ‘Frack Master’ bilked investors out of millions, SEC says

NEW YORK Texas oilman Chris Faulkner built a high-profile public persona, raised millions for his oil and gas ventures and courted politicians. But the SEC has alleged that behind the scenes, he cheated investors out of $80 million to fund a “debauched” jet-setting lifestyle.

The U.S. Securities and Exchange Commission on Friday filed a lawsuit that alleges a stunning failure of corporate governance at Faulkner’s Dallas-based Breitling Energy Corp (BECC.PK) and other companies he helped to create.

Based upon inflated estimates of the oil and gas that his companies controlled, the charges said, Faulkner lured hundreds of U.S. investors to back his firms. Their investments were largely used to pay personal expenses for Faulkner, his associates, family and friends, the SEC alleged.

Faulkner, 39, faced a spate of lawsuits in the early 2000s in connection with his previous web hosting business .

The businessman turned his attention to energy drilling during the U.S. shale boom in the last decade. His companies boasted of holding prime drilling real estate in regions like Texas, Oklahoma and North Dakota.

But after raising funds, Faulkner did little drilling and instead racked up millions in credit card charges, the SEC said.

The lawsuit charged Breitling CEO Faulkner, three related companies and seven other people for activities starting in 2011.

Faulkner, the self-proclaimed “Frack Master,” was frequently featured in the media, including Reuters, offering rosy projections about shale drilling and his own companies’ prospects.

Faulkner used investors’ cash on extravagances including lavish meals, chartered planes, jewelry, strip clubs and female escort services, according to the SEC complaint.

Along the way, Faulkner, his friends and associates violated various securities laws, it said. Breitling and related firms sold investments in more than 20 oil and gas prospects in several states. The SEC said they exaggerated the prospects’ earnings potential and also booked fictional drilling costs.

Solicitations to investors were “replete with material misrepresentations and omissions,” the SEC said.

The SEC’s allegations are “inaccurate and untrue,” said Larry Friedman, a lawyer for Breitling and Faulkner. The companies raised hundreds of millions of dollars for legitimate ventures and they have not been subject to investor complaints, Friedman said.

Faulkner, Breitling and other companies named in the complaint did not respond to separate requests for comment.

Among the red flags that prompted an SEC investigation: Breitling Energy, Faulkner’s publicly traded company, has not filed detailed quarterly or annual financial statements with the agency since 2014, when its former auditor quit.

Breitling has continued to tout drilling plans, but it was not clear how much energy Faulkner’s companies have produced.

The CEO personally misappropriated at least $30 million, according to the SEC suit filed in the Northern District of Texas. He then used business and personal credit cards to spend millions on personal activities, the suit said.

Executives and board members at Faulkner’s companies did not adequately question the expenses, which were not disclosed to investors, the SEC said.

Faulkner dubbed one of his corporate credit cards the “whore card,” the SEC said. During two months in 2014, he used it to charge more than $1 million on travel and entertainment including visits to strip clubs, according to the suit.

Faulkner also spent nearly a million dollars with Status Luxury Group, a New York-based private concierge service, the suit said. Status, which arranges travel, meals and events for clients, last year sued Faulkner and Breitling for around $240,000 in unpaid bills, including a women’s shoe-shopping spree.

Faulkner’s lawyer says the SEC’s personal expense allegations don’t add up.

“Nobody can spend $30 million on steak and travel,” Friedman said. “But this is a competitive business and you spend money to make money. There’s entertainment, there’s international travel.”


Faulkner has long had a knack for fundraising, capturing media attention, and rubbing shoulders with powerful lawmakers.

Despite a lack of drilling experience, he became a highly public evangelist for fracking and employed a coterie of PR people.

He also courted and contributed to several big-name U.S. politicians, including Florida Senator Marco Rubio, who visited Faulkner at Breitling headquarters in September 2014.

Faulkner took Breitling public that year. Its shares traded as high as 95 cents but have since tumbled to 2 cents.

After investors had plowed funds into various other companies Faulkner created, the proceeds were illegally shifted back through Breitling, the SEC said. Some went to a friend and to Faulkner’s ex-wife, the SEC said, while Faulkner also used funds to covertly trade in Breitling’s shares, creating the false appearance of heavy investor interest.

(Additional reporting by Nate Raymond in New York; Editing by Cynthia Osterman)

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Anbang plans to convert most of Waldorf Astoria to apartments: WSJ

NEW YORK China’s Anbang Insurance Group Co [ANBANG.UL] plans to convert as much as three-quarters of the rooms at New York’s landmark Waldorf Astoria hotel into apartments, the Wall Street Journal reported on Sunday, citing people familiar with the matter.

The insurer, which bought the hotel from Hilton Worldwide Holdings Inc (HLT.N) in 2014 for $1.95 billion, plans to close the Waldorf for up to three years starting next spring, the report said.

“We have not finalized any plans in terms of the scope, nature and details of the renovation project or the exact timing and duration of the hotel’s closure. We are currently developing conceptual plans and will share additional details once those plans are finalized,” a U.S.-based spokesman for Anbang said.

It plans to convert as many as 1,100 of the hotel’s 1,413 rooms into condominiums, according to the Journal. When the hotel reopens, it will have 300 to 500 guest rooms.

The plan also calls for the hotel to cut hundreds of jobs, according to the report.

(Reporting by Michael Erman; Editing by Dan Grebler and Gopakumar Warrier)

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Brexit adds headwinds to U.S. companies slowing spending

WASHINGTON/NEW YORK U.S. business investment, already heading for its worst slowdown since the global financial crisis, could decline further as Britain’s vote to leave the European Union creates more risks for companies, economists say.

With growth tepid at home, North American companies as diverse as plane maker Boeing Co (BA.N), Ford Motor Co (F.N), heavy equipment manufacturer Caterpillar Inc (CAT.N) and oil producer Exxon Mobil Corp (XOM.N) now will find themselves trying to plan overseas spending without knowing whether Britain’s departure from the EU will upend tariff rules.

“The ‘leave’ outcome has introduced substantial uncertainty that likely would dampen U.S. growth by delaying and or reducing business investment and consumption expenditures,” said William Lee, head of North America Economics at Citigroup in New York.

Lee said U.S. multinational corporations face difficult strategic challenges – including assessing the U.K.’s future status as a gateway to the E.U. and London’s role as a financial center – that could crimp spending enough to reduce potential growth levels and real incomes.

U.S. business spending on capital equipment dropped over the last two quarters and contracted in the first quarter at its quickest pace in seven years. A further decline in the second quarter would be the first time since the 2007-09 recession that it contracted for three straight quarters.

Jim Farley, top European executive for automaker Ford, had warned a “Brexit” outcome could impact “potential future investment.”

Caterpillar has voiced concern any changes in trade rules for its UK base would impact its European supply chain.

While recognizing that UK exit negotiations will be complex, Caterpillar’s UK chief Mark Dorsett urged leaders in a statement to ensure “single market access issues be prioritized to lessen the negative impact on business.”

And Exxon, the world’s largest-publicly traded oil company, said “the barrier-free movement of goods, people and capital across borders is important for a business like ours with operations across Europe.”

After the Brexit vote, Boeing said in a statement that as a global business “we constantly manage changes in political circumstances and we will continue to do so now with the evolving situation in the UK and Europe.”

Mark Grayson, a spokesman for PhRMA, the trade group representing pharmaceutical companies, said it is not yet clear whether Britain will move to set up its own agency to approve drugs, or opt to simply follow EU rules.


Data from the U.S. Commerce Department on Friday showed non-defense capital goods orders excluding aircraft, a closely watched proxy for business spending plans, fell for a second straight month in May. These so-called core capital goods orders have increased in six of the last 17 months.

“Remember too that Brexit is occurring while the U.S. economy is in the later stages of its current business cycle, meaning the U.S. is more susceptible to economic shocks,” said Steve Blitz, chief economist at M Science in New York.

“There is, happily, a lot less leverage in the system than there was in 2007, meaning no recession of equal magnitude is threatened,” Blitz said.

Economists said heightened uncertainty over Brexit could spill into the labor market and hurt consumer sentiment headed into November’s U.S. presidential election.

“Concern over another euro area crisis could slow U.S. growth in the next couple of quarters through weak financial markets and declining business and consumer confidence,” said Ethan Harris, global economist at Bank of America Merrill Lynch.

He estimates Brexit could lower gross domestic product growth by an average of two-tenths of a percentage point over the next six quarters.

“This could be reinforced by concern about the U.S. presidential election,” Harris added.

(Editing by Terry Wade and Lisa Girion)

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Goldman sees post-Brexit UK recession; cuts EU, U.S. growth views

Britain is likely to enter a recession within the year as a result of last week’s vote to leave the European Union, a decision that will stunt global economic growth as well, Goldman Sachs’ top economists said on Sunday.

“We now expect the (British) economy to enter a mild recession by early 2017,” Goldman economist Jan Hatzius and Sven Jari Stehn wrote in a note for clients.

They expect the victorious “leave” outcome in the June 23 referendum to chop a cumulative 2.75 percent off UK gross domestic product in the next 18 months.

They also expect knock-on effects in the U.S. and European economies.

Goldman now expects eurozone GDP over the next two years to average 1.25 percent versus 1.5 percent before the Brexit vote.

For the U.S. economy, the bank now expects GDP growth in the second half of 2016 to come in at 2 percent versus a forecast of 2.25 percent previously.

Goldman sees three principle risks for as a result of the vote: terms of trade are likely to deteriorate; companies are likely to scale back investment due to the uncertainty created by the outcome; and financial conditions will tighten due to exchange rate fluctuations and weakness in risk assets like stocks and junk bonds.

(Reporting by Dan Burns in New York; Editing by Sandra Maler)

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Wall Street futures lower on Brexit concerns

NEW YORK U.S. stock index futures eased slightly in early trading on Sunday after Britain’s vote to leave the European Union sparked a sharp sell-off in global markets on Friday, wiping out over $2 trillion from world equities.

Investors were blindsided by Thursday’s vote, having bid up equity markets in the days leading up to it. U.S. stock indexes had been in striking distance of all-time highs, with some expecting a sharp rally to new highs in the coming days.

“The market’s expensive so the risk is really high. There’s a better time ahead for equities – it just isn’t yet,” said Steve Blumenthal, chief executive of CMG Capital Management Group Inc. in King of Prussia, Pennsylvania.

SP 500 e-mini futures ESc1 were down 0.5 percent. Dow Jones industrial average e-mini futures 1YMc1 fell 0.6 percent and Nasdaq 100 e-mini futures NQc1 fell 0.7 percent.

With the initial shock of the unexpected result having sunk in somewhat over the weekend, some investors said the impact on the United States would be minimal and that price declines brought about by Friday’s “over reaction” could be a buying opportunity.

“The impact on the United States is not as great as many people fear,” said Michael Yoshikami, chief executive of Destination Wealth Management in Walnut Creek, California. “What you do as an investor is you look at the good-quality names.”

Barron’s cited Goldman Sachs Group (GS.N) as a possible target for bargain-hunters in an edition on Sunday dedicated to “How to play the markets” after the “Brexit” vote.

Goldman Sachs shares could rise as much as 30 percent over the next year if the U.S. bank buys back stock and cuts costs, according to the report. It claimed the company’s shares have fallen too far, especially after losing 7 percent on Friday after the referendum.

The MSCI all-country world index .MIWD00000PUS fell 4.8 percent on Friday, its biggest percentage loss since Aug. 8, 2011, when it fell 5.09 percent on the first trading day after SP stripped the United States of its “AAA” credit rating.

The SP 500 .SPX fell 3.6 percent on the day, its biggest one day drop in 10 months.

The $2.08 trillion dollar loss across global equity markets was the biggest one-day fall ever, according Standard Poor’s Dow Jones Indices, trumping the Lehman Brothers bankruptcy during the 2008 financial crisis and the Black Monday stock market crash of 1987.

(Additonal Reporting by Trevor Hunnicutt and Michael Ermin; Editing by Chris Reese and Dan Grebler)

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Panama opens canal extension amid growth risks, cost battle

PANAMA CITY Panama opened the long-delayed $5.4 billion expansion of its shipping canal amid cheering crowds on Sunday, despite looming economic uncertainty in the shipping industry and a heated battle over billions in cost overruns.

At 7.50 a.m. (1250 GMT), the Chinese container ship “Cosco Shipping Panama” entered the Agua Clara lock on the Atlantic to begin the first crossing of the roughly 50-mile-long (80.45-km-long) waterway and was due to emerge on the Pacific side by 5.00 p.m. (2200 GMT).

The expansion, which triples the size of ships that can travel the canal, allows the country to host 98 percent of the world’s shipping and is aimed at wresting market share from rival Suez and U.S. land routes made cheaper by low oil prices.

By 2021, the Panama Canal Authority (ACP) is hoping the project will bring in $2.1 billion per year in added revenue, representing 2.8 percent of gross domestic product.

“As a Panamanian, I am proud,” said Odalis Castillo, an 18-year-old student who attended the launch. “There will be more money to spend on social projects.”

But the ACP is enmeshed in a $3.587-billion conflict over cost overruns with Spain’s Sacyr and Italy’s Salini Impreglio [IPGIN.UL], which won the project in 2009 and finished it two years late, amid construction setbacks and strikes.

It also faces challenges like the supply of fresh water needed to move the giant locks and safe handling of the huge ships.

So far 170 ships have signed up to use the canal in the next three months. If the industry perks up, the ACP already has a $17 billion plan for a fourth set of locks to lure even bigger ships that can now only travel through the Suez Canal.

Just a dozen of the 70 heads of state invited to see the debut of the third set of locks attended the ceremony but Panama’s Foreign Ministry hailed the event a diplomatic success, with representatives from nearly all the invited countries in attendance.

Analysts said the rank of those leading the delegations was affected by the Panama Papers scandal, in which millions of documents were leaked from law firm Mossack Fonseca, revealing how some of the world’s richest people use offshore companies to avoid tax and launder money.

Jill Biden, the wife of U.S. Vice-President Joe Biden, led the delegation from the United States, which finished building the canal in 1914, controlled it until 1999 and is still its biggest user.

(Writing by Alexandra Alper; Editing by Sandra Maler)

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Goldman shares could rise 30 percent in next year: Barron’s

NEW YORK Goldman Sachs Group (GS.N) shares could rise as much as 30 percent over the next year if the U.S. bank buys back stock and cuts costs, according to a report in Barron’s.

The Barron’s report said the company’s shares have fallen too far, especially after losing 7 percent of their value on Friday after Britain’s referendum vote to leave the European Union.

It said the bank’s book value per share has tripled in the last ten years, while its share price has stayed basically flat.

Shares of Goldman Sachs closed at $141.86 on the New York Stock Exchange on Friday.

(Reporting by Michael Erman; Editing by Chris Reese)

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Intel considers sale of cyber security business: FT

NEW YORK Chipmaker Intel Corp (INTC.O) is considering the sale of its cyber security business, the Financial Times reported on Sunday.

According to the report, the company has been talking to its bankers about options for the Intel Security unit, which was previously known as McAfee.

Intel bought McAfee for $7.7 billion in 2011.

A spokesperson for Intel could not be immediately reached for comment. The company said in April that it planned to cut up to 12,000 jobs globally as it refocuses its business toward making microchips that power data centers and Internet-connected devices and away from the declining personal computer industry it helped found.

(Reporting by Michael Erman; Editing by Lisa Von Ahn)

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