Financial Insurance US

Fund-of-Funds Firms Investigated by Regulators

2010-09-11T03:55:00.001-07:00

U.S. securities regulators are probing "fund-of-funds" firms that channel investors' money into hedge funds, looking at supervision of client assets and potential conflicts of interest, according to a person familiar with the matter.

The probe is part of a sweep of about a dozen firms by the U.S. Securities and Exchange Commission's Office of Compliance Inspections and Examinations, the source said, declining to be named because they were not authorized to speak to the media.

An SEC spokesman declined to comment.

The move is one of the SEC's broadest examinations yet of the fund-of-funds industry, which manages some $735 billion in assets, according to hedge fund data tracker InvestHedge.

Fund-of-funds firms typically collect fees of 1 to 2 percent and hand over investors' money to multiple hedge fund managers that they claim to carefully select. The industry has come under scrutiny in the past few years after several firms faced huge losses from investing with convicted Ponzi schemer Bernard Madoff.

The SEC inquiry, first reported by The Wall Street Journal Friday, will investigate whether the firms are properly supervising their clients' money and working to avoid potential conflicts of interest.

The newspaper said the SEC's initial inquiry involved mid-sized fund-of-funds firms overseeing $100 million to $15 billion in assets, and that it could be expanded to include alternative investment advisers focused on private equity and other registered advisers catering to pension funds. The Journal cited people familiar with the matter.

Texas Instruments Narrows Quarterly Outlook

2010-09-11T03:44:00.001-07:00

Texas Instruments, whose chips are used in products ranging from cars to cellphones, on Thursday narrowed its third-quarter earnings and revenue outlook but kept the mid-point of its forecast range.

It said it now expects third-quarter earnings of 66 cents to 72 cents per share on revenue of $3.62 billion to $3.78 billion, implying a midpoint of 69 cents and $3.70 billion.

The new outlook appeared to be in line with the average analyst expectation for earnings of 69 cents a share on revenue of $3.689 billion according to Thomson Reuters.

In July, TI had set a quarterly earnings target of 64 cents to 74 cents per share on revenue of $3.55 billion to $3.85 billion, implying a mid-point of 69 cents and $3.70 billion.

Shares of TI were more than 1 percent lower in after-hours trading Thursday. Get after-hour quotes for Texas Instruments here.

The shares closed [TXN 23.70 -0.14 (-0.59%) ] at $23.84 in the regular New York Stock Exchange session.

NYSE stocks posting largest volume decreases

2010-09-11T03:42:00.000-07:00

NEW YORK - A look at the 10 biggest volume decliners on New York Stock Exchange at the close of trading: : :

Advanced Micro Devices Inc. fell 4.6 percent to $6.09 with 81,031,200 shares traded.

Bank of America Corp. rose .4 percent to $13.50 with 475,467,400 shares traded.

Citigroup Inc. was unchanged at $3.91 with 1,172,739,300 shares traded.

Ford Motor Co. rose 2.3 percent to $12.07 with 167,606,300 shares traded.

General Electric Co. rose 3.8 percent to $15.39 with 236,352,800 shares traded.

Hewlett Packard Co. fell 5.1 percent to $40.34 with 93,553,200 shares traded.

Motorola Inc. fell .3 percent to $7.94 with 80,194,700 shares traded.

PG&E Corp. fell 7.3 percent to $47.68 with 37,347,400 shares traded.

Pfizer Inc. rose 3.2 percent to $16.46 with 188,849,800 shares traded.

Synovus Financial Corp. fell 7.2 percent to $2.35 with 66,790,600 shares traded.

Wholesale Inventories Post Largest Jump in 2 Years

2010-09-11T03:39:00.000-07:00

U.S. wholesale inventories surged by the largest amount in two years in July, a government report said on Friday, in a sign firms were anticipating enough demand to boost stock this summer.

Inventories jumped 1.3 percent, the steepest gain since July 2008, and more than three times the 0.4 percent increase analysts had anticipated, a Commerce Department report showed.

A restocking of inventories has helped drive the economy's

recovery, but analysts say slowing demand has likely left businesses with ample stocks and they expect the boost from inventories to fade in the second half of the year.

A quickened pace of inventory accumulation accounted for 0.6 percentage points of the economy's 1.6 percent annual growth rate during the second quarter.

Economic data suggest the recovery may have lost steam over the summer. Friday's report showed wholesale sales rose by a larger-than-expected 0.6 percent in July, suggesting inventories may not have been gathering too much dust on shelves.

But the sales rise followed declines in June and May, and analysts said sales would need to stay strong to support continued inventory building.

"In general there has been an increase in inventories at a time when the economy is slowing down," said Brian Bethune, an economist with IHS Global Insight in Lexington, Massachusetts. "Something's gotta give here. Either the economy picks up or production has to be cut."

Markets paid little attention to the report.

The inventory-to-sales ratio, which measures how long it would take to clear shelves at the current sales pace, edged up to 1.16 months' worth. It was the highest since February, but was down from 1.27 months' worth a year ago.

Shares Edge Up Again As Investors Stay Upbeat

2010-09-11T03:37:00.000-07:00

Stocks edged higher Friday, extending a rally that began nearly two weeks ago, as investors retained their newfound optimism about the economy.

The Dow Jones industrial average rose 47 points in light trading. It was the seventh day of gains in the last eight for the index. Treasury prices eased as traders became more willing to assume risk.

Stocks have escaped their August doldrums and moved steadily higher in September, helped by several encouraging economic signals. The latest came Friday morning with a report that wholesale inventories rose in July, a sign of confidence that retail sales will rise.

“It’s becoming more evident that confidence by consumers and the labor market is improving,” said Timothy Speiss, chairman of EisnerAmper’s personal wealth advisers practice. “It’s tepid. It’s weak. But it’s progress.”

The energy sector got a lift from a jump in oil prices. Oil climbed about 2 percent after a pipeline that delivers oil to Midwest refineries was closed. Oil companies like Chevron and Schlumberger rose on the news.

The market’s September rally has paused only once, when concerns resurfaced about European banks. European markets fluctuated Friday after a report that the German banking giant Deutsche Bank was considering a stock sale to raise cash.

Many of the recent improvements in economic indicators have been incremental, but because of the deep pessimism about the economy that set in last month, even faint glimmers of hope on the job market and other parts of the economy like trade have been enough to please investors.

“There’s been so much negativity that it doesn’t take much in terms of data beating expectations to propel the market,” said Hank Smith, the chief investment officer at Haverford Investments.

The Dow rose 47.53 points, or 0.5 percent, to close at 10,462.77. It was the highest close since Aug. 10. But it is still only up 0.3 percent this year.

Broader indexes also rose. The Standard & Poor’s 500-stock index rose 5.37, or 0.5 percent, to 1,109.55, while the Nasdaq composite index rose 6.28, or 0.3 percent, to 2,242.48.

About two stocks rose for every one that fell on the New York Stock Exchange, where consolidated volume was extremely low at 3.1 billion shares.

Even with their recent gains, most indexes had only modest advances for the week.

The main culprit was a decline Tuesday spurred by worries over European banks. The Dow is up 0.1 percent for the week, the S.& P. is up 0.5 percent, and the Nasdaq is up 0.4 percent.

Bond prices were lower. The Treasury’s benchmark 10-year note fell 9/32, to 98 18/32, and the yield, which moves in the opposite direction of its price, rose to 2.79 percent from 2.76 percent late Thursday.

Oil rose $2.20, or 3 percent, to $76.45 a barrel on the New York Mercantile Exchange. Chevron rose $1.46 to $78.82, while Schlumberger Ltd. rose 78 cents to $59.31.

New Banking Rules Would Ease Shocks to System

2010-09-11T03:35:00.000-07:00

If all goes well, the world will be a slightly safer place after top central bankers and bank regulators emerge Sunday from meetings in Basel, Switzerland. By agreeing on new rules designed to prevent financial crises, they will remove a source of uncertainty that has weighed on markets just as concerns about European sovereign debt rise again.

But the rules will also put further pressure on weaker banks, many of which will have to raise more capital, and mark another step in the triage of the banking world into healthy institutions and sick ones with few options other than to plead for more government aid — or go out of business.

The financial authorities from 27 countries, including Ben S. Bernanke, chairman of the U.S. Federal Reserve, and Jean-Claude Trichet, president of the European Central Bank, have been working for months on what new constraints the banking industry should face.

The fierce debate about the so-called Basel III rules has added an extra dose of tension to markets made nervous in recent weeks by the problems of Anglo Irish Bank in Ireland, and new questions about sovereign debt holdings.

In the long run, if the rules work the way they are supposed to, banks will be much more able to absorb violent market shocks and the world will be less susceptible to the kind off inancial crisis it has experienced the past three years.

“The system does not have the capacity for another round of bailouts, nor does the public have the tolerance for it,” said Nout Wellink, chairman of the Basel Committee on Banking Supervision, which drafted the proposed rules.

But the new regulations probably mean that banking will become a less profitable business. According to some dire predictions, economic growth could even suffer as banks curtail lending to build up bigger financial cushions.

“If the new rules come all banks will go to the capital markets looking for new money, but you would need a crystal ball to know if the markets will provide it,” said Carsten Gross, who follows regulatory issues for the Association of German Public Sector Banks, which has said its members might need to raise €50 billion, or $64 billion, and warned that economic growth could suffer as a result.

Even though the new rules would not go into full force for years, already there are signs that banks are lining up to ask investors for more capital.

Deutsche Bank [DB 60.50 0.51 (+0.85%) ] plans to issue €9 billion in new shares to finance its acquisition of Postbank, a German consumer-oriented institution, Bloomberg News and The Financial Times reported, without citing their sources. Deutsche Bank declined to comment, but it has said previously that it will finance any acquisitions with new shares.

This past week, National Bank of Greece said it would raise €2.8 billion, and there is speculation that other institutions, like Commerzbank in Frankfurt, might also try to raise money soon.

Mr. Wellink’s panel is overseen by the so-called Group of Central Bank Governors and Heads of Supervision, under the chairmanship of Mr. Trichet of the E.C.B. Mr. Trichet’s group is expected to forge a pact on the new rules late Sunday, though talks could continue through Monday. Its recommendations will go to the G-20 nations in November, and only take effect after individual nations write them into law.

For all the loud complaining and doomsday predictions from some corners of the banking industry, many analysts say the new rules could be positive for most banks.

“So far regulators have been quite prudent in trying not to burden the banking sector too much,” said Marie Diron, an economist in London who advises Ernst & Young, the consulting firm. She noted that regulators were expected to phase in the new rules through 2018, giving banks plenty of time to adjust.

Dire forecasts of the economic effect are “the reaction of a group that is trying to defend its position and is under stress,” Ms. Diron said. “Most of them should be able to meet requirements without problems. The ones who will have problems are the ones who would have problems without Basel III.”

Most large European banks that need to raise new capital will be able to do so by holding on to earnings rather than paying dividends to shareholders, said Jon Peace, an analyst at Nomura Equity Research.

True, banks are not likely to rack up the kind of earnings they did before the crisis hit, he said. But they will still make respectable returns and be less risky. “We would see this as a positive catalyst,” Mr. Peace said of the Basel III rules.

Many bankers seem resigned to slightly more modest but steadier profits in the future, and some even sound like they welcome the prospect.

“For sure the returns on equity we were talking about a few years ago are not any more a reality,” Alessandro Profumo, chief executive of UniCredit, the Italian bank, said in Frankfurt this past week. “In my opinion there will be less volatility in the results.”

The central issue before the regulators in Basel is how much low-risk capital banks should be required to keep in reserve, and what qualifies as low-risk capital.

Under current rules, banks might hold so-called core Tier 1 capital, the most bulletproof category of reserves, equal to as little as 2 percent of their assets. Analysts at Morgan Stanley [MS 27.19 0.18 (+0.67%) ] expect the regulators to raise the required amount to about 8 percent.

John Hancock Retirement Plan Services Hosts Webcasts with Fred Reish

2010-09-11T03:32:00.000-07:00

BOSTON, Sept 09, 2010 /PRNewswire via COMTEX/ -- John Hancock Retirement Plan Services (RPS) is working to help its partners -- third party administrators (TPAs), financial representatives and registered investment advisors (RIAs) -- understand their responsibilities in the recently-passed DOL disclosure requirements under section 408(b)(2), which are designed to help plan fiduciaries assess the reasonableness of the service provider's contract with the plan and any potential for conflicts of interest.

The regulation, which becomes effective on July 16, 2011, generally requires enhanced fee, compensation, and service and fiduciary disclosures from service providers. To help its partners understand and address these changes, John Hancock RPS has engaged ERISA attorney and industry expert, Fred Reish, to conduct three CE educational webinars -- one tailored to each partner audience.

"The DOL's intent is to make it easier for plan fiduciaries to compare and review plan fees and services. How this is achieved by providers will differ, given their distinct roles in the 401(k) industry," said Reish. "My goal for each webinar is to give John Hancock's partners what they need to know to ready their respective businesses."

The webcasts are the latest educational tools among John Hancock RPS's resources for intermediaries and plan sponsors. Others include a newsletter, Regulatory Update, that keeps financial representatives and TPAs informed of regulatory change and a dedicated legislative and regulatory information section on John Hancock partner and plan sponsor websites.

To further support its partners, John Hancock also commissioned Fred Reish to draft three sample service agreements and disclosure materials reflecting changes under the regulation -- one for TPAs, Broker/Dealer firms and independent insurance advisors.

"Compliance with DOL disclosure requirements under 408(b)(2) will be dependent on the industry learning about and preparing for the changes," continued Reish. "The 408(b)(2) disclosure documents provide substantial support to John Hancock RPS's partners."

"We've long considered education on matters critical to the industry a part of what we offer as a provider," said Ed Eng, Senior Vice President, Product Development, John Hancock RPS. "The DOL disclosure requirements are important to all parts of our industry and we're pleased that Fred Reish will share his considerable insight and recommendations during our webcasts."

Financial representatives, TPAs or RIAs interested in more information on the webcasts can contact the John Hancock Retirement Plan Services Sales Desk at 1-877-346-8378.

About John Hancock Retirement Plan Services

John Hancock Retirement Plan Services is one of the largest providers of 401(k) plans across all plan sizes among banks, mutual funds and insurers, according to CFO Magazine. (CFO Magazine 2010 401(k) Providers Survey, for year-end 2009. Published in May 2010).

About John Hancock Financial and Manulife Financial

John Hancock Financial is a unit of Manulife Financial Corporation, a leading Canadian-based financial services group serving millions of customers in 22 countries and territories worldwide. Operating as Manulife Financial in Canada and in most of Asia, and primarily as John Hancock in the United States, Manulife Financial Corporation offers clients a diverse range of financial protection products and wealth management services through its extensive network of employees, agents and distribution partners. For more than 120 years, clients have looked to Manulife for strong, reliable, trustworthy and forward-thinking solutions for their most significant financial decisions. Funds under management by Manulife Financial and its subsidiaries were Cdn$454 billion (US$428 billion) as at June 30, 2010.

Manulife Financial Corporation trades as 'MFC' on the TSX, NYSE and PSE, and under '945' on the SEHK. Manulife Financial can be found on the Internet at www.manulife.com.

The John Hancock unit, through its insurance companies, comprises one of the largest life insurers in the United States. John Hancock offers a broad range of financial products and services, including life insurance, fixed and variable annuities, fixed products, mutual funds, 401(k) plans, long-term care insurance, college savings, and other forms of business insurance. Additional information about John Hancock may be found at www.johnhancock.com.

John Hancock Retirement Plan Services and Fred Reish are not affiliated and neither are responsible for the liabilities of the other. Both John Hancock Life Insurance Company (U.S.A.) and John Hancock Life Insurance Company of New York do business under certain instances under the John Hancock Retirement Plan Services name.

Both John Hancock Life Insurance Company (U.S.A.) and John Hancock Life Insurance Company of New York do business under certain instances using the John Hancock Retirement Plan Services name. Group annuity contracts and recordkeeping agreements are issued by: John Hancock Life Insurance Company (U.S.A.), Boston, MA 02210 (not licensed in New York) and John Hancock Life Insurance Company of New York, Valhalla, NY 10595. Product features and availability may differ by state.