Financial News

NY regulator questions investment firms’ ties to insurers: WSJ

admin — Mon, 20 May 2013 05:53:56 +0000

(Reuters) - New York's top financial regulator has sent subpoenas to several firms seeking information on investments that guarantee steady payments to hundreds of thousands of retirees and other consumers, the Wall Street Journal said on Monday, citin...

United to restart 787 flights on Monday

admin — Mon, 20 May 2013 05:41:45 +0000

United Airlines is getting its 787s back in the air. The planes are returning after being grounded for four months by the federal government because of smoldering batteries on 787s owned by other airlines. The incidents included an emergency landing o...

Death sentence in Chinese underground bank case

admin — Mon, 20 May 2013 05:40:11 +0000

BEIJING (AP) — A businesswoman in southern China has been sentenced to death on charges of defrauding investors as the government tightens controls on informal financing that is widely used by entrepreneurs.

Lin Haiyan was convicted of "illegal fundraising" for collecting 640 million yuan ($100 million) from investors by promising high returns and low risk, according to a statement by the Intermediate People's Court in Wenzhou, a center for private sector business. It said the scheme collapsed in October 2011 and 428 million yuan could not be recovered.

The case highlighted potential abuses in largely unregulated informal lending that supports entrepreneurs who generate China's new jobs and wealth but often cannot get loans from the state-owned banking industry. The government is tightening controls after the global financial crisis sparked a wave of defaults and protests by lenders.

Another businesswoman from Wenzhou also was sentenced to death last year on illegal fundraising charges. That penalty was overturned following an outcry on the Internet and she was sentenced to prison.

Communist leaders have promised more bank lending for entrepreneurs and announced a pilot project in 2012 in Wenzhou to allow closely supervised private sector lending. But business leaders in Wenzhou say it is harder for entrepreneurs to get loans because worsening economic conditions have made banks and private sources reluctant to lend.

The underground credit market is estimated by China's central bank and private sector analysts at 2 trillion to 4 trillion yuan ($325 billion to $650 billion), or as much as 7 percent of total lending. In some areas, informal lending exceeds that of official banks.

Many households provide money for private lending in an effort to get a better return than the low deposit rates paid by Chinese banks, which effectively force depositors to subsidize low-interest loans to state industry.

Authorities have sentenced 1,449 people to prison terms of at least five years for involvement in underground lending since 2011, a police official, Du Jinfu, said last month.

Legal experts say loans between individuals are legal and the government has failed to make clear what lenders and borrowers are allowed to do.

"The distinction between illegal fundraising and private lending still remains unclear," said the Dui Hua Foundation, a San Francisco-based group that researches China's justice system, in a report in February.

Lin started raising money from friends, relatives and coworkers in 2007, according to a statement on the court website. It said Lin told investors the money was going into stock offerings and bank deposits but used it to speculate in stocks.

Even as losses mounted, Lin continued to raise money until the scheme collapsed, the court said.

The statement said the penalty still must be confirmed. All death sentences in China are automatically appealed to the country's highest court for review.

The court took the unusual step of issuing a second statement to support sentencing Lin to death after a Chinese blogger questioned the penalty in a comment that included the phrase "killing the witness."

"Lin Haiyan's actions constituted financial fraud that caused huge losses and seriously damaged the people and the state," said the statement, which was several times the length of the original announcement. It criticized the blogger for challenging the court's decision.

Protests erupted in 2011 and early 2012 in cities and towns throughout central China and along the southeast coast, areas with large concentrations of small private businesses, after the downturn in global trade triggered a wave of defaults. Schoolteachers, retirees and others who had lent to entrepreneurs demanded authorities get back their money.

Regulators also worried banks and state companies had gotten involved in underground lending, exposing the official financial system to unreported risks.

In the earlier case in Wenzhou, an entrepreneur, Wu Ying, was sentenced to death for improperly raising 770 million yuan ($120 million) from investors in 2005-07. Wu, who started with a hair salon and built a business empire, had earlier been praised by state media as a role model for female entrepreneurs.

China's supreme court overturned Wu's death sentence following an outcry on the Internet over the severity of the penalty. She was re-sentenced to death with a two-year reprieve, which usually is commuted to a long prison term.

A statement on the website of China's highest court, dated in 2011, says charges of "illegal fundraising" can be applied to an individual who receives more than 200,000 yuan ($32,000) of informal loans or causes losses to lenders of 100,000 yuan ($16,000). Enterprises can face charges if they receive 1 million yuan ($160,000) or causes losses of 2.5 million yuan ($400,000).

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AP researcher Flora Ji contributed.

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Chesapeake Energy hires Anadarko executive as CEO: WSJ

admin — Mon, 20 May 2013 05:27:28 +0000

(Reuters) - Chesapeake Energy Corp has hired Robert Douglas Lawler of rival Anadarko Petroleum Corp as chief executive, filling the post vacated by co-founder Aubrey McClendon, the Wall Street Journal reported, citing people familiar with the matter...

Asian stocks rise on signs of steady US recovery

admin — Mon, 20 May 2013 05:24:14 +0000

BANGKOK (AP) — Evidence of a steady economic recovery in the U.S. helped push Asian stock markets higher Monday.

A gauge of future economic activity issued Friday rose more than expected, a sign that the world's biggest economy is improving. Consumer confidence also rose, offsetting several lackluster reports on slowing manufacturing and an increase in applications for unemployment benefits.

Japan's Nikkei 225 index jumped 1.4 percent to 15,352.84. Hong Kong's Hang Seng surged 1.7 percent to 23,476.65. South Korea's Kospi fell 0.1 percent to 1,984.06. Australia's S&P/ASX 200 advanced 0.7 percent to 5,215.40.

Investors will have a slew of data to sift through this week, including U.S. homes sales and durable goods orders. Analysts are somewhat pessimistic about the strength of China's recovery but are expecting to see solid improvement in the U.S.

In Washington, remarks by Federal Reserve Chairman Ben Bernanke to members of Congress on Wednesday will be closely examined for hints about the future direction of the central bank's monetary policy.

The Fed is currently conducting the third round of massive bond purchases known as quantitative easing to help drive down interest rates and spur lending. But recently improving data on the U.S. economy has led to speculation that the Fed might consider winding the program down earlier than expected.

"What everyone is watching for is any comment from the Fed chief on asset purchases or any clarification on current thinking," said Mitul Kotecha of Credit Agricole CIB in Hong Kong. "The timing of any decision on winding down asset purchases is still very much undecided so it seems unlikely Bernanke will be categorical or provide strong timing about a reduction" in quantitative easing.

HSBC's survey on China's manufacturing growth, to be released Thursday, is also highly anticipated. Analysts at Credit Agricole are expecting a slight deceleration due to seasonal factors, from 50.4 in April to 50.3 in May.

"More signs of weakness will add to global growth worries. I think markets are particularly sensitive to this data release," Kotecha said.

Benchmarks in mainland China and Indonesia rose. Taiwan's fell.

Wall Street stocks again pushed higher Friday after the Conference Board said its index of leading economic indicators rose 0.6 percent last month after a revised decline of 0.2 percent in March. The index is intended to predict how the economy will be doing in three to six months. Separately, the University of Michigan's preliminary survey of consumer confidence climbed to 83.7. Economists had predicted that the gauge would climb to 76.8.

The Dow Jones industrial average rose 0.8 percent to close at 15,354.40. The Standard & Poor's 500 index gained 1 percent, to 1,666.12. The Nasdaq composite index rose 1 percent to 3,498.97.

Benchmark oil for June delivery was down 14 cents at $95.88 a barrel in electronic trading on the New York Mercantile Exchange.

In currencies, the euro rose to $1.2845 from $1.2829 late Friday in New York. The dollar fell to 102.64 yen from 103.18 yen.

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Follow Pamela Sampson on Twitter at http://twitter.com/pamelasampson

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SAC Capital’s Cohen gets subpoena to testify: NY Times

admin — Mon, 20 May 2013 04:40:43 +0000

(Reuters) - Steven A. Cohen has received a subpoena to testify before a grand jury in a U.S. government insider trading investigation into his hedge fund SAC Capital Advisors, the New York Times reported, citing lawyers and executives briefed on the c...

Asia markets up after US delivers positive data

admin — Mon, 20 May 2013 03:51:03 +0000

BANGKOK (AP) — Evidence of a steady economic recovery in the U.S. helped push Asian stock markets higher Monday.

Japan's Nikkei 225 index jumped 1.4 percent to 15,353.28. Hong Kong's Hang Seng surged 1.7 percent to 23,478.62. South Korea's Kospi added 0.2 percent to 1,990.05. Australia's S&P/ASX 200 advanced 1.2 percent to 5,242.20.

Investors will have a slew of data to sift through this week, including a key Chinese manufacturing report and homes sales and durable goods orders from the U.S. Analysts are somewhat pessimistic about the strength of China's recovery but are expecting to see solid improvement in the U.S.

"Although US data was mixed last week the recovery theme will continue this week, with housing data and durable goods orders set to record gains," Mitul Kotecha of Credit Agricole CIB in Hong Kong said in a commentary.

Additionally, remarks by Federal Reserve Chairman Ben Bernanke to members of Congress on Wednesday will be closely examined for hints about the central bank's future direction regarding its monetary policy.

Benchmarks in mainland China, Indonesia and New Zealand also rose, while those in Taiwan and the Philippines fell.

The Dow Jones industrial average rose 0.8 percent to close at 15,354.40. The Standard & Poor's 500 index gained 1 percent, to 1,666.12. The Nasdaq composite index rose 1 percent to 3,498.97.

Benchmark oil for June delivery was down 10 cents at $95.92 a barrel in electronic trading on the New York Mercantile Exchange.

In currencies, the euro rose to $1.2835 from $1.2829 late Friday in New York. The dollar fell to 102.81 yen from 103.18 yen.

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Follow Pamela Sampson on Twitter at http://twitter.com/pamelasampson

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Yen edges up from lows, Asian shares firmer

admin — Mon, 20 May 2013 02:25:51 +0000

By Masayuki Kitano SINGAPORE (Reuters) - The yen pulled up from a 4-1/2 year low against the dollar on Monday after Japan's economics minister said a further steady drop in the yen could have negative effects on households, pushing the d...

Consumer group flags high SPF ratings on sunscreen

admin — Mon, 20 May 2013 00:04:00 +0000

WASHINGTON (AP) — Sunbathers headed to the beach this summer will find new sunscreen labels on store shelves that are designed to make the products more effective and easier to use. But despite those long-awaited changes, many sunscreens continue to carry SPF ratings that some experts consider misleading and potentially dangerous, according to a consumer watchdog group.

A survey of 1,400 sunscreen products by the Environmental Working Group finds that most products meet new federal requirements put in place last December. The rules from the Food and Drug Administration ban terms like "waterproof," which regulators consider misleading, and require that sunscreens filter out both ultraviolet A and B rays. Previously some products only blocked UVB rays, which cause most sunburn, while providing little protection against UVA rays that pose the greatest risk of skin cancer and wrinkles.

Despite that broader protection, one in seven products reviewed by the watchdog group boasted sun protection factor, or SPF, ratings above 50, which have long been viewed with skepticism by experts. In part, that's because SPF numbers like 100 or 150 can give users a false sense of security, leading them to stay in the sun long after the lotion has stopped protecting their skin.

Many consumers assume that SPF 100 is twice as effective as SPF 50, but dermatologists say the difference between the two is actually negligible. Where an SPF 50 product might protect against 97 percent of sunburn-causing rays, an SPF 100 product might block 98.5 percent of those rays.

"The high SPF numbers are just a gimmick," says Marianne Berwick, professor of epidemiology at the University of New Mexico. "Most people really don't need more than an SPF 30 and they should reapply it every couple of hours." Berwick says sunscreen should be used in combination with hats, clothing and shade, which provide better protection against ultraviolet radiation.

Some dermatologists say there may be some rationale for using higher SPF sunscreens, since users often don't apply enough of the lotion to get its full effect.

"The challenge is that beyond 50 the increase in UV protection is relatively small," says Dr. Henry Lim, chair of dermatology at the Henry Ford Hospital in Detroit.

The SPF number indicates the amount of sun exposure needed to cause sunburn on sunscreen-protected skin compared with unprotected skin. For example, a SPF rating of 30 means it would take the person 30 times longer to burn wearing sunscreen than with exposed skin.

There is a popular misconception that the SPF figure relates to a certain number of hours spent in the sun. However this is incorrect, since the level of exposure varies by geography, time of day and skin complexion.

The FDA itself said in 2011 that "labeling a product with a specific SPF value higher than 50 would be misleading to the consumer." At the time the agency proposed capping all SPF values at 50 because "there is not sufficient data to show that products with SPF values higher than 50 provide greater protection for users." But regulators have faced pushback from companies, including Johnson & Johnson, which argue that higher SPF products provide measurable benefits.

As a result, the FDA says it is still reviewing studies and comments submitted by outside parties, and there is no deadline for the agency to finalize an SPF cap.

It took the agency decades to put in place last year's sunscreen changes. FDA first announced its intent to draft sunscreen rules in 1978 and published them in 1999. The agency then delayed finalizing the regulations for years until it could address concerns from both industry and consumers.

The FDA is also reviewing the safety of effectiveness of spray-on products, which use different formulations from other sun-protection solutions. Among other concerns, the agency is looking at whether the sprays can be harmful when inhaled.

The survey by the Environmental Working Group found that one in four sunscreens sold in the U.S. is a spray product.

"People like the sprays because they are quick to put on and cover a lot of area," said Dr. Darrell Rigel, a dermatologist in New York. "The downside is that you usually have to apply two coats."

More than 76,000 men and women in the U.S. will be diagnosed with melanoma this year and 9,480 are expected to die from the aggressive form of skin cancer, according to the National Cancer Institute. The disease, which is often linked to ultraviolet exposure, is usually curable when detected early.

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On the Web: http://www.ewg.org/2013sunscreen/

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Yahoo’s board approves $1.1 billion Tumblr acquisition: WSJ

admin — Sun, 19 May 2013 20:35:22 +0000

SAN FRANCISCO (Reuters) - Yahoo Inc's board has approved a deal to buy blogging and social networking site Tumblr for $1.1 billion in cash, the Wall Street Journal cited people familiar with the matter as saying on Sunday.

Such an acquisition would be Marissa Mayer's largest deal since taking the helm of the once-iconic Internet company in July 2012. Yahoo is keen on fast-growing Tumblr because its younger user base would bolster the older website's "cool factor," the technology blog AllThingsD cited the sources as saying.

Mayer, who spent 13 years at Google Inc, is trying to revitalize a former Internet powerhouse that in recent years has struggled with declining business. On its home page, Tumblr says it hosts 108 million blogs, with 50.7 billion posts between them.

Yahoo declined to comment, while Tumblr did not respond to requests for comment.

The deal comes after a recent failed attempt to buy a controlling stake in French video site Dailymotion, owned by France Télécom SA. Tumblr, one of the more successful Internet start-ups out of New York, has only just begun earning revenue through advertising. On its home page, Tumblr says it hosts 108 million blogs, with 50.7 billion posts between them.

Yahoo has invited press to an event in Manhattan on Monday at which it promised to "share something special," without elaborating.

(Reporting By Jeanine Prezioso; Editing by Marguerita Choy)

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