Financial Mines

News and notes from the business reporters for the Connecticut Media Group.

Archive for November, 2011

Now soup is in the BPA soup

Wednesday, November 23, 2011 by:Rob Varnon

A new study in JAMA, Journal of the American Medical Association, found the urine of people who just consumed canned soup, had higher levels of BPA.

While the study doesn’t make a connection to any health risks, it’s another shot in the war against chemicals that have seeped into the blood streams of humans and it might require some changes of soup makers, as they either stop lining their cans with the stuff, or launch ad campaigns to make sure people know they are BPA free.

This is a good write up of the study:

http://www.businessweek.com/news/2011-11-22/canned-soup-increases-bisphenol-a-exposure-harvard-study-says.html

Campbell’s and General Mills were both off 1 percent in trading Wednesday morning. Chemical companies were also lower. Dow Chemical was off nearly 2 percent just after noon, as were other makers of the material around the globe, like Bayer AG.

It’s a continuing issue chemical companies face in a world where consumers continue to push back against chemical intrusions into the food chain and into their blood streams.

If the soup makers need some guidance on this issue, they only have to turn to Playtex and other manufacturers of baby gear, who waged a losing PR campaign about the use of the material in plastics used in baby bottles etc. Now just about everything is “BPA Free.”

Insiders exercising options ahead of holidays

Tuesday, November 22, 2011 by:Rob Varnon

Missouri-based officers of Leggett & Platt Inc., the home goods maker, snapped up shares in their company at as much as a $2.50 discount from Tuesday’s trading levels.

The question is as volatility continues to swing prices up and down, what will insiders do with options carrying higher values?

In the case of the 11 officers at Leggett, they were buying at $17.49 to $18.59 a share just days after some analysts issued sell and underperform ratings on the company heading into the holidays.

But the company’s shares were trading around $20 on the New York Stock Exchange in the morning session.

SEC files on Madoff’s Kugel and moves on a D.C. Ponzi

Tuesday, November 22, 2011 by:Rob Varnon

The Securities and Exchange Commission is continuing to clean up the Beranard Madoff mess bringing charges against long-term Madoff employee, David Kugel.

Kugel pleaded guilty to six felony charges on Monday as well.

According to the SEC, Kugel was asked by Madoff to provide the firm’s investment advisory operations with backdated arbitrage trade information to be formulated into fictitious trading on investors’ account statements. Kugel’s own account at BMIS was among those in which backdated trades were entered, and he withdrew nearly $10 million in “profits” from the fictitious trading over several years.

Madoff, once considered a Wall Street genius, was revealed to be a Ponzi scheme con artist and is serving a 150-year sentence. The size of the fraud was estimated to top $50 billion, but that figure has become a moving target as a trustee sorts out the losses and gains investors made in the Madoff fund. The total losses, however, are measured in the billions.

In the criminal case, the scheme is said to have attracted $120 billion in investment with losses of about $20 billion.

“Kugel helped Madoff maintain the elaborate and enduring facade that his clients were engaged in actual trading when in fact no such trading occurred,” said George S. Canellos, Director of the SEC’s New York Regional Office in a press release. “Kugel withdrew millions of dollars of phony profits that he knew weren’t from actual trading activity.”

In other Ponzi related news, the SEC uncovered a $27 million Ponzi scheme in Washington, D.C. that involved investments in promissory notes. The alleged perpetrator, Garfield Taylor, targeted middle class residents of his community who apparently had little experience with investing, the SEC said.

Like Madoff and other scams, the leader of the scheme appears to have gone after investors within his own social circle as a way to insulating himself from scrutiny.

Lesson remains: beware friends and friends of friends with can’t miss opportunities.

State unemployment rate drops to 8.7 percent

Monday, November 21, 2011 by:Rob Varnon

Connecticut’s unemployment rate dropped to 8.7 percent in October, from 8.9 percent in September, marking the second straight month of job growth for the Nutmeg State, according to Labor Department statistics.

The Labor Department said October’s job gains came primarily from professional and business services sector, where 3,000 jobs were added. Construction, thanks to tropical storm Irene, added 1,500 jobs.

“A second month of positive movement in Connecticut’s jobs and unemployment numbers is always good news,
however the employment sectors that appear most responsible for October’s job growth seem to be related to
demand for repairs driven by Hurricane Irene,” noted Andy Condon, Labor’s Director of the Office of Research. “The
strongest increases came from construction, temporary employment services, and services to buildings and
dwellings. We would expect this type of job growth to be temporary.”

Jobs in finance dropped by 300 month to month and are down 2,300 from a year ago.

The labor force grew in October by more 6,000 as more people hunted and found jobs than in September. However, the labor force is actually down by 15,000 people from a year ago, reflecting a large pool of people abandoning the search for jobs in Connecticut.

The national unemployment rate in October was 9 percent.

Ineffectual, a new hit song from D.C.

Monday, November 21, 2011 by:Rob Varnon

Good morning on this shortened work week. We’ve decided to start Monday off with a song in honor of the Super Terrific Deficit Cutting Committee and Congress proving once again, how ineffectual they’ve all become down there at a time when leadership is needed.

With Apologies to Nat King Cole

Ineffectual
That’s what you are,
Ineffectual
Democrat and Republican.

Like a song of failure that clings to you,
How the thought of you does things to me.
Never before
Has someone been more…

Ineffectual
In every way,
And forever more
That’s how you’ll stay.

That’s why, Congress, it’s incredible
That someone so ineffectual

Thinks they’re entitled

To be re-elected, too.

In case you’re wondering the issue remains U.S. debt and the ability to match revenue with spending at a time when European nations are stumbling against the same issue. Apparently, the job is just too difficult for elected officials to do. Maybe it’s time to privatize government?

A pre-IPO Facebook investment scam took in $12.6 million

Thursday, November 17, 2011 by:Rob Varnon

The SEC has charged a group of people and their associated companies of running a scam that claimed investors could obtain pre-IPO shares of hot companies, including Facebook.

The used a series of companies, including Florida-based Praetorian Global Fund and Spartan Capital to take in money. The idea was simple, the SEC said. They said they had access to private shares of Facebook and other hot companies set aside in a series of other funds people could invest in. The companies are expected to issue IPOs in the near future and their private shares are considered valuable because they could be convertible and are hard to come by.

Generally, only founders, venture capitalists and early insiders get a shot at these shares. The SEC says the group of men, based in Florida, New Jersey and New York, never had access to the shared and were just pocketing it.

Three of those involved in the alleged conspiracy faced allegations of misconduct in the past.

John A. Mattera, 50 of Florida, was convicted eight years ago of running a smaller version of this scheme in which he sold securities he didn’t own. He pleaded guilty to seven counts of grand theft in a separate Florida criminal case, the SEC said.

In 2009, John Arnold, age 61, also of Florida was found liable for securities fraud and ordered to pay a $65,000 fine.

And David Howard II, 32 of New York City was charged earlier this year with fraud in connection with he operation of a boiler room trading scam.

Here’s a link to the SEC release on the scam:

http://www.sec.gov/news/press/2011/2011-245.htm

Stanley Black & Decker looks to cut short-term borrowing

Thursday, November 17, 2011 by:Rob Varnon

New Britain-based Stanley Black and Decker filed a prospectus and amendment on Nov. 17 announcing plans to issue senior unsecured debt.

The tool maker said it’s looking to pay down short term borrowing. According to the latest prospectus, filed with the SEC, Stanley has $560.7 million of short term debt and $2.73 billion in long-term debt. The company has cash and cash equivalents of more than $851 million.

Expectations among some economists are that the Federal Reserve is going to continue to try to hold long-term rates low, so the trend of companies refinancing short-term debt with longer term notes will most likely continue.

Stanley is heading into the holiday shopping season that is projected to see a surge in consumer spending by 2.8 percent over last year, according to the National Retail Federation’s annual forecast.

Shares of Stanley were up 39 cents to $65.75 in morning trading in New York.

Senators offering bans on Congressional insider trading

Wednesday, November 16, 2011 by:Rob Varnon

The market profiteering uncovered by 60 minutes last weekend looked so bad, two members of Congress are moving to if not ban insider trading completely, to at least make disclosure a part of the process.

The TV news show dug into the investment activities of Congress and found members from both sides of the aisle seemed particularly good at profiting on stocks in companies that are impacted by the committees upon which these lawmakers sit. Yet, it’s legal.

But U.S. Sen. Kirsten Gillibrand, D-N.Y., and U.S. Sen. Scott Brown, R-Mass., are pushing for legislation to strip immunity from Congress and their staff in regards to insider transactions, maybe.

Gillibrand said on Nov. 16 she intends to file something while Brown has already done so.

We have not seen a House version, yet.

What must Rajratnam think of all this?

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