The following are the day's top business stories:
1. Picower Estate to Forfeit $7.2 Billion in Biggest Madoff Fraud Settlement 2. Treasuries, Stocks Advance as Yields, Profit Forecasts Attract Investors 3. Greenspan Says U.S. Economy Picking Up, May Grow as Much as 3.5% Next Year 4. Finra Retooling Market Surveillance to Catch Abuses Like Insider Trading 5. Billionaire Icahn Seeks Talks With Chesapeake Energy After Boosting Stake 6. IMF Approves $3.3 Billion for Greece Amid `Impressive' Fiscal Adjustment 7. Flextronics' Shimoon Loses Bail Request in Hedge Fund Insider-Trading Case 8. AT&T to Buy Back Up to $8.77 Billion of Stock as Wireless Unit Boosts Cash 9. Siemens May Help Fund Cape Cod Wind-Power Project, U.S. CEO Spiegel Says 10.Build America Boom Is Set to Bust After Busiest Issuance Week: Muni Credit 11.Stocks Rising 17% Since Bernanke Disclosed QE2 Disarms Fed's Worst Critics 12.Insider-Trading Probe in U.S. May Speed Attrition Among Expert Networks
1. Picower Estate to Forfeit $7.2 Billion in Biggest Madoff Fraud Settlement
The estate of billionaire Jeffry Picower, an investor in Bernard L. Madoff´s Ponzi scheme, agreed to forfeit $7.2 billion to victims of the fraud, bringing the amount collected by authorities to $9.8 billion. Irving Picard, the trustee liquidating Bernard L. Madoff Investment Securities LLC, sued Picower in May 2009, claiming he withdrew $7.2 billion more than he invested. Picower died in October 2009 at age 67. Picard and U.S. Attorney Preet Bharara, who is probing the Madoff fraud, today announced the settlement with Picower´s widow, Barbara. "I commend Barbara Picower for agreeing to turn over this truly staggering sum, which really was always other people´s money," Bharara said today at a news conference in New York. "This settlement provides a significant measure of hope to the many victims of Bernard Madoff´s horrific crimes." Picard said that investors in Madoff´s Ponzi scheme, the largest in U.S. history, lost $20 billion in principal. Account statements at the time of Madoff´s arrest in December 2008 showed total balances of $65 billion. Picard, who filed hundreds of lawsuits seeking $50 billion, has now recovered $9.8 billion.
2. Treasuries, Stocks Advance as Yields, Profit Forecasts Attract Investors
Treasuries rose as yields near seven-month highs attracted buyers, while gains in most U.S. stocks sent the Standard & Poor´s 500 Index to the highest since 2008 following a bank takeover and stronger-than-estimated forecasts from Oracle Corp. and Research In Motion Ltd. The 10-year note´s yield fell for a second day, dropping nine basis points to 3.32 percent at 4 p.m. after touching the highest level since May yesterday. The S&P 500 climbed 0.1 percent to 1,243.91. Coffee surged to a 13-year high, cotton rose the exchange limit and corn and sugar advanced as adverse weather threatened crops. The dollar rallied 0.5 percent to $1.3182 per euro amid concern European leaders didn´t do enough to halt the debt crisis. Treasury yields trimmed a weekly gain triggered by speculation an extension of U.S. tax cuts will stimulate the economy while forcing the government to borrow more to cover a wider budget deficit. Oracle rallied 3.9 percent to pace gains among U.S. technology stocks, while regional banks advanced after Marshall & Ilsley Corp. agreed to be bought. "There´s more confidence on the economy," said Russ Koesterich, the San Francisco-based head of investment strategy for scientific active equities at BlackRock Inc., which oversees $3.45 trillion as the world´s largest asset manager. "Companies are sitting on a ton of cash and as confidence rises, they´ll be more likely to engage in M&A and buybacks. The tax-cut extension is a positive and should be stimulative in 2011."
3. Greenspan Says U.S. Economy Picking Up, May Grow as Much as 3.5% Next Year
The U.S. economy is picking up speed and may grow by 3 percent to 3.5 percent next year, former Federal Reserve Chairman Alan Greenspan said. "The U.S. economy unquestionably has some momentum," he said in an interview late yesterday in Washington. "The fourth quarter looks good. The growth rate could be 3.5 percent or more" for the final quarter of this year. The economy grew at annualized pace of 2.5 percent in the third quarter. A spate of recent statistics -- from rising retail sales to falling unemployment claims -- suggest it is gaining ground. Mohamed El-Erian, chief executive officer of Pacific Investment Management Co., said last week that the Newport Beach, California-based firm sees the economy expanding 3 percent to 3.5 percent in the fourth quarter of 2011 from the same period of this year. Greenspan called that forecast "reasonable."
4. Finra Retooling Market Surveillance to Catch Abuses Like Insider Trading
The Financial Industry Regulatory Authority is revamping how it scans for abuses such as insider trading, responding to increased fragmentation of markets, Chief Executive Officer Richard Ketchum said today. Finra conducts market surveillance for most stock exchanges, reflecting 80 percent of U.S. trading, after adding NYSE Euronext´s markets to its oversight responsibilities in June. While the regulator currently operates separate databases for trading-related information for securities listed on the New York Stock Exchange and Nasdaq Stock Market, the goal is to "pull that together" in 2011 to spot manipulative and illegal activity across venues, Ketchum told reporters in New York. With stock activity dispersed across as many as 50 venues including exchanges, electronic communication networks, dark pools and the trading desks of broker-dealers, manipulative practices have spread out in an attempt to elude regulators, he said. Dark pools are private venues that match orders without displaying quotes. Surveillance must aggregate data across markets to identify patterns and related trading, Ketchum said. "Putting all that information together so people can see relationships" across markets is critical, he said. "That will come as our major task in 2011."
5. Billionaire Icahn Seeks Talks With Chesapeake Energy After Boosting Stake
Billionaire investor Carl Icahn has increased his stake in Chesapeake Energy Corp., the second- biggest U.S. natural-gas producer, and wants to make the company more profitable, according to a regulatory filing. Icahn increased his ownership to about 5 percent from 2.5 percent, according to the filing with the U.S. Securities and Exchange Commission. He has already had discussions with company officials about Chesapeake´s operations and "the maximization of shareholder value," according to the filing, which was released after the close of trading today. On Dec. 15, Icahn agreed to buy Dynegy Inc., the third- biggest U.S. independent power producer, for $665 million, outbidding Blackstone Group LP. Oklahoma City-based Chesapeake´s stock has fallen 10 percent this year as gas prices have declined. The company announced plans this year to shift its production away from gas and into crude oil.
6. IMF Approves $3.3 Billion for Greece Amid `Impressive' Fiscal Adjustment
The International Monetary Fund said Greece´s rescue program has "continued to perform well" and it approved payment of another 2.5 billion euros ($3.3 billion), according to a statement released in Washington today. The fund said the Greek authorities are "to be commended" for their efforts to implement budget cuts, new economic policies and other reforms. Inflation is falling and the Greek economy is becoming more competitive, the IMF said. "The overall fiscal adjustment to date has been impressive," the IMF said. "It is important that fiscal structural reforms be forcefully advanced to ensure a lasting consolidation." More reforms are needed to boost potential growth, the IMF said. Greece needs to make additional changes to create new jobs, improve access to professions, and deregulate tourism and retail trade, according to the IMF.
7. Flextronics' Shimoon Loses Bail Request in Hedge Fund Insider-Trading Case
A U.S. judge refused to grant immediate bail to Walter Shimoon, who was arrested yesterday in an insider-trading probe for allegedly passing information about Flextronics International Ltd., the company where he worked. Shimoon, whose former employer supplies cameras and battery chargers for Apple Inc. devices, made his first court appearance today in the San Diego federal courthouse and his lawyer sought to post a bond allowing his release. A prosecutor objected, saying there´s a risk Shimoon would flee if freed. "This was a massive fraud involving more than $10 million" that "caused incredible damage to Apple," Assistant U.S. Attorney Marietta Geckos told U.S. Magistrate Judge Bernard G. Skomal, who scheduled a bail hearing for Dec. 20. Shimoon, 39, was one of three technology firm employees arrested yesterday on charges of wire fraud and conspiracy for allegedly providing inside information about their companies to clients of Primary Global Research LLC, a consulting company that provides experts to investors. A fourth person arrested, James Fleishman, was an account representative at Mountain View, California-based Primary Global.
8. AT&T to Buy Back Up to $8.77 Billion of Stock as Wireless Unit Boosts Cash
AT&T Inc., the largest U.S. phone company, boosted its dividend for the 27th consecutive year and said it will buy back as many as 300 million shares as wireless- customer gains help its cash flow. AT&T raised its quarterly dividend 2.4 percent to 43 cents from 42 cents, representing a 6.5 percent yield on the carrier´s average share price this year. Analysts including Piper Jaffray & Co.´s Chris Larsen and Credit Suisse Group AG´s Jonathan Chaplin, both based in New York, expected 43 cents. The carrier said in a statement its board authorized a plan to repurchase as many as 300 million shares, marking the first buyback announcement in three years. At yesterday´s closing price, the buyback would cost about $8.77 billion. The company´s market capitalization is about $172 billion. AT&T, based in Dallas, boosted revenue by $847 million last quarter from a year earlier to $31.6 billion. Chief Executive Officer Randall Stephenson has attracted 6.1 million wireless customers this year with devices such as Apple Inc.´s iPhone.
9. Siemens May Help Fund Cape Cod Wind-Power Project, U.S. CEO Spiegel Says
Siemens AG is in talks to help finance the construction of Cape Wind. Backing the controversial wind farm off the coast of Massachusetts would ensure that the developers purchase Siemens turbines and may spur demand for offshore wind power in the U.S., according to Eric Spiegel, chief executive officer of Siemens Corp., the Munich-based company´s U.S. unit. "We have been in discussions to help finance debt and equity," Spiegel said in an interview today. "We´d be willing to be a part if it´s required." The developer, Cape Wind Associates LLC, wants to install 130 Siemens turbines about 5 miles (8 kilometers) off Cape Cod. Environmental groups have opposed the project, which received an important boost when Massachusetts regulators on Nov. 22 agreed to let National Grid Plc buy half of Cape Wind´s output for 18.7 cents per kilowatt-hour. That price will increase 3.5 percent each year for the 15 years of the contract.
10.Build America Boom Is Set to Bust After Busiest Issuance Week: Muni Credit
Sales of Build America Bonds, which have enabled states and cities to borrow about $185 billion from investors around the world since last year, are drying up a week before the federally subsidized program is set to end. Next week´s scheduled issuance will plummet to $35 million, the second-lowest total since April 2009, after reaching a record in the past five days, according to data compiled by Bloomberg. A record 141 individual offerings of the debt, which is set to expire Dec. 31, have been sold in the last two weeks, Bloomberg data show. The glut of Build Americas has driven yields up 44 basis points this month to 6.51 percent on Dec. 15, the highest this year, according to a Wells Fargo index. The prospect of higher premiums to sell municipal debt next week may have discouraged issuers from coming to market, said Evan Rourke, a portfolio member with Boston-based Eaton Vance Corp., which has almost $10 billion under management. "The rush to issue BABs took us to this point," Rourke said in a telephone interview. "Now the market shuts down."
11.Stocks Rising 17% Since Bernanke Disclosed QE2 Disarms Fed's Worst Critics
Republican leaders in Congress say they have "deep concerns" about Ben S. Bernanke´s second round of quantitative easing. The U.S. stock and credit markets don´t share those reservations. The Standard & Poor´s 500 Index has climbed 17 percent since the Federal Reserve chairman first indicated on Aug. 27 that the central bank might buy more securities to boost the economy. Junk bonds rallied, with the extra yield that investors demand to own the securities instead of government debt shrinking to 5.45 percentage points yesterday from 6.81 points, according to Bank of America Merrill Lynch index data. "It has been successful," Peter Hooper, chief economist at Deutsche Bank Securities Inc. in New York, said of Bernanke´s policy of pumping money into the financial system, dubbed QE2. "It´s contributed to the rally in the stock market" and has "been important in reducing substantially the downside risk of deflation." Economic reports signal the recovery is gaining strength. A bigger-than-projected increase in retail sales in November prompted Michael Feroli, chief U.S. economist at JPMorgan Chase & Co. in New York, to raise his outlook for fourth-quarter consumer spending. Industrial production in November also exceeded forecasts, and a gauge of consumer confidence rose to a six-month high in December.
12.Insider-Trading Probe in U.S. May Speed Attrition Among Expert Networks
A consolidation among "expert-network" companies probably will accelerate after the arrest of two Primary Global Research LLC employees and three of the firm´s outside consultants in the past three weeks. The U.S. insider-trading investigation that led to the arrests will prompt clients to withdraw and heighten pressure on companies to prevent their experts from leaking nonpublic information to clients, according to Michael Mayhew, founder of Integrity Research Associates LLC in New York, which tracks the industry. Those that can´t afford or don´t want to make costly technology and personnel investments to upgrade compliance will be winnowed out, he said in a telephone interview. "This next few months could put some firms out of business," said Mayhew, who has talked with clients in recent days who are concerned that the investigation will open them up to scrutiny. "Business will become more difficult, and there will be consolidation." Last year, Guidepoint Global LLC in New York acquired Vista Research Inc. from Standard & Poor´s Corp. Fees were being squeezed even before the government probe, said Mayhew, whose firm is 20 percent owned by Zurich-based UBS AG, the largest Swiss bank.
-0- Dec/18/2010 00:35 GMT