Financial Mines

News and notes from the business reporters for the Connecticut Media Group.
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Archive for August, 2012

Risk on, sort of

Friday, August 31, 2012 by:Rob Varnon
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Well, Bernanke has spoken. He stands ready for more easing if necessary. The markets finished Friday on an up note and some experts are saying it’s time to put a little more risk into portfolios. Don’t go nuts people. Wall Street is still as tricky and as difficult as winning the big stuffed dog at a carnival game.

The Dow finished Friday up 90 to 13,091, the Nasdaq up 18 to 3,067 and the S&P 500 gained 7 to finish at 1,407.

Joe Mathews, Morgan Stanley Smith Barney vice president and the firm’s Fairfield office manager, said central bankers are supporting the markets and that should allow for a little more risk taking.

The firm has made a number of changes to its recommendations going forward, he said Friday, including a key change to its cash outlook.
With central banks pledging to keep interest rates low, there’s less reason to have cash. So they went from overweight to underweight.

Other moves:
Equities – overall position to neutral from slightly underweight and a reduction in the size of our underweight position in European equities

  • Investment Grade corporate bonds – Increase our overweight position
  • High yield bonds – Shift in position to neutral from slight underweight
  • Emerging market Bonds – Slightly overweight position from neutral
  • Commodities – position shifts from slightly underweight to neutral
  • Short duration bonds – Neutral from overweight
  • Managed futures – Reduced tactical overweight position.

Paul Schatz, president and chief investment officer of Woodbridge Capital, sees some order returning to the market as well.

“The market seems to be digesting the gains from June and July in a very orderly fashion,” he said. ”

Some of the pullback earlier in the week was expected, he said, as prices approached the April peak.

“Until proven otherwise, weakness can be bought,” he added. “I think the Dow is about take on a leadership role, which hasn’t happened in some time.

Shatz added if stocks make a new over the coming days and weeks,that could be a selling opportunity.

Mark Luschini, chief investment strategist for Janney Montgomery Scott, sees a similar picture of risk.

“We upgraded the probability of our optimistic scenario to about equal to that of our base case,” he said. “That means risks have receded somewhat, but remain elevated.

Dow holds above 13,000 after briefly dropping below the mark

Thursday, August 30, 2012 by:Rob Varnon
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The Dow briefly dropped below 13,000 this morning with Connecticut’s giants UTC and GE both getting pushed lower.

Just before 11 a.m., the Dow dropped to 12,979 before scrambling back above 13,000 where it fought to stay for the rest of the day. It closed at 13,001.

Fairfield-based GE closed down 18 cents to $20.64.

Hartford-based UTC lost as much as $1.70 in the morning, before clawing back some of that to finish down $1.11 at $79.06.

Publishers to pay $69 million for e-book Apple scandal

Wednesday, August 29, 2012 by:Rob Varnon
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Attorney General George Jepsen announced Wednesday three of the five publishers the state is suing for alleged price fixing of e-books with Apple Inc., have settled and agreed to pay $69 million to the states and territories involved in the suite.

Connecticut and Texas led the investigation into alleged price fixing of best sellers that involved Apple Inc., which was trying to wrest a larger portion of the ebook market from Amazon.

The lawsuit is continuing against two other publishers and Apple.

Here’s the official release from Jepsen’s office.

HARTFORD – Connecticut Attorney General George Jepsen along with 54 attorneys general in other states, districts and U.S. territories, announced today that they have reached an antitrust settlement with three of the largest book publishers in the United States.

Hachette Book Group, Inc., HarperCollins Publishers L.L.C. and Simon & Schuster Inc. have agreed to pay a total of more than $69 million to consumers to resolve antitrust claims of an alleged unlawful conspiracy to fix the prices of electronic books (eBooks). They have also agreed to change the way they price eBooks going forward.

The settlement occurs in conjunction with a civil antitrust lawsuit filed today in U.S. District Court for the Southern District of New York against Hachette, HarperCollins, and Simon & Schuster, which alleges that the three settling publishers and others, including non-settling publishers Macmillan and Penguin (collectively, the “Agency Five” publishers), “conspired and agreed to increase retail eBook prices for all consumers” and “agreed to eliminate eBook retail price competition between eBook outlets, such that retail prices to consumers would be the same regardless of the outlet patronized by the consumer.”

“While publishers are entitled to their profits, consumers are equally entitled to a fair and open marketplace,” said Attorney General Jepsen. “This settlement will provide restitution to those customers who were harmed by this price-fixing scheme, but it also will restore competition in the eBook market for consumers’ long-term benefit.”

The lawsuit and today’s settlement stem from a two-year antitrust investigation conducted jointly by the U.S. Department of Justice’s Antitrust Division and the Connecticut and Texas Attorneys General. That investigation developed evidence that the Agency Five conspired to end eBook retailers’ freedom to compete on price by taking control of pricing from eBook retailers and substantially increasing the prices that consumers paid for eBooks. The attorneys general said that the publishers prevented retail price competition resulting in consumers paying tens of millions of dollars more for their eBooks.

“This action sends a strong message that this sort of anticompetitive behavior will not be accepted Through our ongoing litigation, we hope to provide additional restitution to consumers,” Attorney General Jepsen said, “Additionally, I’m especially proud of the exemplary bipartisan cooperation on both the state and federal level on this matter, which involved 54 states and jurisdictions working together on behalf of consumers across the country.”

Under the proposed settlement agreement, which the court must approve, Hachette, HarperCollins and Simon & Schuster will compensate consumers who purchased eBooks from any of the Agency Five during the period of April 1, 2010, through May 21, 2012. Payments will begin 30 days after the court approval of the settlement becomes final.

Consumers in Connecticut are expected to receive up to $1,264,658 in total compensation. The settling defendants will also pay approximately $7.5 million to the states for fees and costs.

In addition to paying the $69 million consumer compensation, Hachette, HarperCollins and Simon & Schuster have agreed to terminate their existing agency agreements with certain retailers, requiring the publishers to grant retailers – such as Amazon and Barnes & Noble – the freedom to reduce the prices of their eBook titles.

Another case against non-settling publishers – Penguin and MacMillan and Apple, Inc. – remains pending in the Southern District of New York.

Assistant Attorneys General Joseph Nielsen, Gary Becker and Kirsten Rigney, Paralegal Holly MacDonald and Assistant Attorney General Michael Cole, chief of the Antitrust Department are assisting the Attorney General in this matter.

Attorney General Jepsen serves as co-chair of the Antitrust Committee for the National Association of Attorneys General.

Greenwich nail salon clipped by feds

Wednesday, August 29, 2012 by:Rob Varnon
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The owner of a Greenwich nail salon has pleaded guilty to structuring payments and violating immigration laws.

Jae Hee Yang, 57 of Englewood, N.J., pleaded guilty this week in Federal Court in Hartford to structuring currency transactions and employing an unauthorized alien.

In 2009. Yang, owner of Tip top Nails, withdrew $100,000 in 15 cash withdrawals, to avoid triggering a Currency Transaction Report. Federal law requires all financial institutions to report withdrawals exceeding $10,000 in cash.

The CRT could also generate questions about the use of the funds, so people try to avoid triggering it by structuring the payments.

Yang also ran afoul of federal law because she employed undocumented workers and paid them in cash under the table.

She will be sentenced on Nov. 20. She faces up to five-and-a-half years in prison, a $250,000 fine and has agreed to give up the $100,000 she structured. The money was earned through the business, the U.S. Attorney for the District of Connecticut said.

Shelton-based market research co. SSI expands in Denmark

Wednesday, August 29, 2012 by:Rob Varnon
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SSI announced Wednesday it has launched a joint venture with Danish company Interresearch, which will add 35,000 respondents to its Nordic market.

As part of the joint venture, SSI will take over some clients and hire some staff from Interresearch.
“The Nordics is a very important market for SSI and through this investment we build a much stronger presence in
Denmark, allowing us to effectively support research projects in the region with high-quality sample” says Ulf
Bjoernemark, Managing Director Nordics at SSI.

Subway and Humane Society target crated pig meat production

Tuesday, August 28, 2012 by:Rob Varnon
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The Humane Society of the United States is lauding Milford-based Subway for demanding its meat providers eliminate the use of gestation crates in pig farming.

In a blog, Wayne Pacelle, president and CEO of the Humane Society, says Subway is joining a growing list of other companies opposed to the practice. Pacelle said McDonald’s, Burger King, Wendy’s, Oscar Mayer, Costco, Safeway, Kroger, and other leading food companies have made the pledge to force a change in this three-decade-old trend in the pork industry.

According to the Humane Society, some pig farmers place sows in crates just large enough for them to lay down in and only remove them when they are giving birth to what will become ham and sausage. Those who object to the practice note the animal’s quality of life is terrible.

On its website, subway says:

“We support the elimination of crate style housing for gestation sows and have had this eliminated from our pork suppliers in the UK. Also, our pork suppliers in the US have begun to transition to a more humane process including the elimination of gestation crates and anticipate having this process completed within the next 10 years. We will continue to work with suppliers who share our commitment to phasing out gestation stalls as quickly as possible, putting traceability systems in place and using the best animal welfare and handling practices.”

And Pacelle said Subway pledges to not use crated pig meat by 2022. Other pork hawkers are planning to eliminate the practice from their supply chain by 2017.

NU taps Kansas utility exec as CL&P president

Monday, August 27, 2012 by:Rob Varnon
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Just in time for hurricane season.

Northeast Utilities has appointed a utility industry veteran from the Midwest as new president of Connecticut Light & Power Co.William P. Herdegen III will be CL&P’s president and chief operating officer. He brings 35 years of industry experience to the role in which he’ll be responsible for the construction, operation and maintenance of CL&P’s infrastructure, as well as the safe and reliable delivery of electricity to its 1.2 million customers.

CL&P’s system was savaged last year by Tropical Storm Irene when high winds and rain brought down trees onto power lines through out the state.

Herdegen certainly knows about wind, having begun his career in the Windy City . He worked for more than 20 years  at Unicom, now Exelon in Chicago.Most recently, he served as Vice President of Transmission and Distribution Operations at Kansas City Power & Light, overseeing everything from maintenance to dispatch operations to engineering for more than 800,000 customers.

Herdegen has an established track record of being a leader within the industry and maintains a strong commitment to teamwork and accountability, the company said in its announcement.

“With a focus on operational excellence, customer service, emergency response and employee safety, Bill helped to drive significant improvements for Kansas City Power & Light’s customers,” said Tom May, President and CEO of Northeast Utilities. “We know Bill will bring that same level of commitment to Connecticut to ensure the continued delivery of reliable, safe electric service to our customers everyday, especially during storms and other emergencies.”

The company said Herdegen is responsible for many successful initiatives at KCP&L including improvements to the company’s storm response plan that led to their ranking as one of the best in the country by CUBIC, a contractor for the Department of Defense and Homeland Security, specializing in emergency response scenario planning and execution. He also helped the company achieve top-quartile reliability for the past nine years along with tier-one customer satisfaction ratings from JD Power & Associates, and contributed to vast improvements in the utility’s safety record.

Herdegen holds an MBA from the University of Chicago and a Bachelors of Science in Electrical Engineering from the University of Illinois. He will join CL&P on September 11 and will report directly to Lee Olivier, NU’s Executive Vice President and Chief Operating Officer.

Staff writer Brian Lockhart contributed to this Mines report.

Chase Bank email scam worries Labor Department

Monday, August 27, 2012 by:Rob Varnon
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The state Department of Labor issued a warning people collecting unemployment insurance that someone posing as Chase Bank is sending out emails seeking access to accounts.

Nancy Steffens, a Labor Department spokeswoman, said the emails are not just limited to UI recipients, but are targeting anything to do with Chase.

She said the cyber missives instruct recipients the bank is seeking to update its system or verify the target’s identity. But after two UI recipients reported receiving the emails, the department thought it best to send out a warning.

The reason it is a concern for Labor is that Chase manages its UI benefits program. That program no longer issues checks, but instead recipients must rely on either a Chase issued debit card or opt for direct deposit.

Chase also manages the state’s tax refund program.

“We don’t have any indication accounts have been compromised,” Steffens said.

Indications are that the people behind the emails are spamming the region and do not have access to email lists from Chase or the department, she said.

“Chase is trying to determine who the specific sender is,” Steffens said.

Here’s the official warning form the Labor Department and what to do if you are concerned.

Unemployment Benefits Program Information

Please be aware: Unemployment Insurance recipients are asked to be aware of alleged email messages claiming to be from Chase Bank and requesting information pertinent to their accounts.  They are in no way associated with Connecticut Department of Labor or Chase — the vendor of Connecticut’s Direct Benefits UI payment program.

“We have had several reports of such alleged emails claiming to have originated from Chase, and want to be perfectly clear about this,” explains Acting State Labor Commissioner Dennis Murphy. “These emails are not from Chase, and are not associated with the Direct Benefits program. Neither Chase Bank nor the Connecticut Department of Labor would ever communicate with customers receiving UI benefits in this manner.

“Claimants who suspect that their accounts have been compromised can telephone Chase at 1-800-432-3117,” Murphy adds. “”When they do, they should have their account information available. They can email Chase at accountatrisk@chase.com”.

For anyone who have received a suspicious email, but not acted on it, Chase asks that they forward it to abuse@chase.com. You will receive an automated email from Chase acknowledging receipt of your original email, Murphy said.


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