Financial Mines

“Ye be warned.”

According to an SEC complaint and lawsuit after lawsuit filed in federal courts in California and New York, China-based Puda Coal, sold shares to a shell company to American investors and raised millions.

The SEC allegations are mirrored in several investor lawsuits against Puda and they say the chairman of the company, Ming Zhao and his CEO Liping Zhu pitched the company to investors as a consolidator in the business. That means the government allegedly tapped Puda to take over coal plants in China. However, what the company allegedly failed to mention to investors when it was raising money through two offerings, was that its chairman had transferred the only coal plant the company had a stake in to himself. Zhao is named by the SEC in its lawsuit and so is Zhu, who is charged with helping Zhao move the plant.

The transfer of the key asset was first exposed on AlfredLittle.com, which is now posting that its supporters are being threatened by Chinese companies.

George S. Canellos, Director of the SEC’s New York Regional Office, said in a prepared statement, “The massive fraud perpetrated by Zhao and Zhu wiped out hundreds of millions of dollars in shareholder value and was compounded by their brazen obstruction of the SEC’s investigation.”

Tampa-based Marine Odyssey Exploration lost its bid to hang onto $500 million in Spanish gold coins it recovered from an 1804 shipwreck, but has won the backing of some big investors, including Blackrock.

Marine Odyssey was told by a U.S. Judge to turn the coins over to Spain this week, but the publicly traded treasure hunter said it’s not sunk. The international lawsuit was touched off after Odyssey found and recovered the wreck in the Atlantic. Spain’s demand for the return of the silver and gold might create concern for salvage operations that scour the see for artifacts.

Here’s a full story on it from the Daily Mail:

http://bit.ly/zxdnzw

In SEC filings this month, Odyssey revealed it has agreements in place that could help it salvage the HMS Victory, a ship sunk in 1744. It’s also working on the salvage of the SS Gairsoppa, a British merchant ship sunk during World War II.

And Marine Odyssey also filed paperwork showing Blackrock holds a more than 5 percent stake in the salvage company.

Shares of Odyssey were down slightly Tuesday to $3.25 in trading on the Nasdaq Stock Market

On the same day the Dow finally recrossed 13,000, investors showed an appetite for rising share prices for Connecticut companies, Sturm Ruger, Terex and FuelCell Energy.

Southport-based Ruger hit a 52 week high Tuesday trading at $45.62 and and was still up more than 3 percent at $45.28 heading toward afternoon. Ruger reports fourth quarter and year-end earnings on Wednesday.

Westport-based Terex, the maker of construction equipment, was also up more than 3 percent to $26.45. The company is seen by some analysts as an affordable alternative  to Caterpillar, which is trading at $115 a share. One issue for Terex is its exposure to Europe.

Danbury-based FuelCell Energy, the maker of industrial fuel cells, was up more than 6 percent to $1.42. The company has carved out a position in the Asian market for its products at a time when expansion of the economy hinges on energy prices and pollution.

Arguably, Wall Street already pays in Connecticut, at least according to some gold coasters with big tax bills. But this is a different message coming from the campaign trail.

Former Connecticut Secretary of State Susan  Bysiewicz is running again, this time  for the Senate seat Joe Lieberman is going to vacate. And she has a Google ad called “May Wall Street Pay,”  which popped up on an LA Times page Monday.

Campaign against the Street

The former SOTS offers up a plan to try to recoup money from Wall Street banks by levying a transaction tax and then using that money to pay down mortgages in homes that are underwater. If you follow the link you’ll see some 60 Minutes reports on the meltdown along with Bysiewicz’ pitch.

The ad caught The Mine’s eye (get it?) because it is being run as a way to try and capture a senate seat from Connecticut, home to hedge funds and who knows how many Goldman Sachs VPs. By the way, does everyone at GS become a VP?

It appears to be a way to tap into the Occupy Wall Street movement, but it’ll be interesting to see if that message has legs, here, especially as so many campaigns here rely on that flow of money from Greenwich.

U.S. Markets aren’t trading today, on President’s Day, so Hearst Connecticut won’t be publishing a business section on Tuesday. The hard copy edition of the news will return Wednesday.

Yes, we know there’s still business happening today, and you can read about here on The Mines and in our digital section.

And now for some quick President/Business trivia:

Which president decided to not be a king, but did become a liquor baron?

Shares in Westport-based Terex Corp. and Tangoe Inc. of Orange surged in Thursday trading after executives held conference calls with analysts and discussed fourth quarter earnings and forecasts for 2012.

Both companies reported earnings Wednesday evening and then answered analysts’ questions. For Tangoe, the call was held Wednesday night, for Terex, Thursday morning. The companies’ stock has the advantage of trading after the analysts had time to digest and make adjustments to their recommendations.

Tangoe shares gained $1.29, rising 7.67 percent to $18.10 cents on the Nasdaq. Stifel Nicolaus’ analysts raised the target for Tangoe to $20 a share.

Terex stock gained 6.71 percent, or $1.58, to close at $25.11 in trading after a morning call with analysts. The market generally trended up Thursday with the S&P gaining 1.1 percent to $1,358.

Danbury’s FuelCell Energy market another good day as well, rising 4.65 percent to $1.35 as the maker of industrial fuel cells continues to make progress in staying out of the penny stock range.

It’s going to be a little more difficult to charge for performance at advisories.

The SEC said Wednesday the income threshold for charging performance fees will not longer include the value of homes. The move is not a surprise, the SEC made a similar decisions over accredited investor in December, which affects who can participate in hedge funds.

It could have a dramatic affect on the Connecticut investment community down the road. Before the rule change, people could include the value of their home in their net worth. In some Connecticut communities, a three-bedroom cottage with a postage stamp front lawn was worth $700,000, which meant you were halfway there for being a qualified client and more than halfway for being an accredited investor.

Here’s the SEC’s explaination of the new IA fee change:

Under the SEC’s rule, registered investment advisers may charge clients performance fees if the client’s net worth or assets under management by the adviser meet certain dollar thresholds. Investors who meet the net worth or asset threshold are deemed to be “qualified clients,” able to bear the risks associated with performance fee arrangements.

The revised rule will require “qualified clients” to have at least $1 million of assets under management with the adviser, up from $750,000, or a net worth of at least $2 million, up from $1.5 million. These rule changes conform the rule’s dollar thresholds to the levels set by a Commission order in July 2011. The Commission-ordered increase in the thresholds was required by the 2010 Dodd-Frank Wall Street Reform and Consumer Protection Act. In addition, the revised rule will exclude the value of a client’s primary residence and certain property-related debts from the net worth calculation; the change was not required by the Dodd-Frank Act, but is consistent with changes the Commission approved in December to net worth calculations for determining who is an “accredited investor” eligible to invest in certain unregistered securities offerings.

A new grandfather provision to the performance fee rule will permit registered investment advisers to continue to charge clients performance fees if the clients were considered “qualified clients” before the rule changes. In addition, the grandfather provision will permit newly registering investment advisers to continue charging performance fees to those clients they were already charging performance fees.

Finally, the revised rule provides that every five years, the Commission will issue an order making inflation adjustments to the dollar thresholds used to determine whether an individual or company is a qualified client, as required by the Dodd-Frank Act.

The actual rule can be read here:

http://www.sec.gov/rules/final/2012/ia-3372.pdf

Westport-based Terex reported a loss of $4 million for the fourth quarter of 2011 but pledged to be profitable this year. The company said it used 2011 to boost sales and expects to obtain profitability as a result of larger market share. It nearly hit $2 billion in sales in the quarter.

Shares of Terex lost 1 cent to close at $23.53.

Over in Orange, Tangoe Inc. reported net income of $3 million, or 8 cents a share, which was about what analysts were expecting. The company, which went public last summer, is expecting continued growth for the year.

Shares of Tangoe lost 88 cents to close at $16.81.

Tangoe executives tangled with analysts after the close of trading Wednesday and Terex’s Ron DeFeo will be fielding questions from the experts Thursday morning.