New York City lost its bid to impose a ban on oversize sodas in a ruling by the state’s highest court, ending for now an effort to revive a rule struck down after lawsuits by trade groups whose members include Coca-Cola Co. (KO)
New York’s Court of Appeals said in a 4-2 decision yesterday that the city’s health board lacked authority to impose the ban, proposed by Michael Bloomberg when he was mayor, saying such policymaking is reserved for legislative bodies --in this case, the city council.
The big-drink ban was an attempt “to promote a healthy diet without significantly affecting the beverage industry,” the court wrote. “The value judgments entailed difficult and complex choices between broad policy goals -- choices reserved to the legislative branch.”
Current Mayor Bill De Blasio said the city is “extremely disappointed” by the ruling.
Bloomberg is the majority owner of Bloomberg LP, the parent of Bloomberg News.
The case is New York Statewide Coalition of Hispanic Chambers of Commerce v. New York City Department of Health and Mental Hygiene, 653584/2012, New York State Supreme Court, New York County (Manhattan).
Illinois Town Bond Sales Halted Over Fraud Charge on Hotel Deals
A city outside Chicago was blocked from selling bonds after the U.S. Securities and Exchange Commission accused it of defrauding investors and steering secret fees to a municipal official.
The case against Harvey, Illinois, a 25,000-person city in Cook County, concerns about $14 million in bonds sold from 2008 to 2010 that were to finance the construction of a Holiday Inn. Another such sale was considered as soon as this week.
The SEC on June 24 said that the city hoodwinked investors by using $1.7 million to pay payroll and other operating expenses, while the hotel stands in disrepair with holes in its facade, exposed studs and a gutted interior. The SEC said Comptroller Joseph Letke, 55, profited by receiving $269,000 in undisclosed payments from the deals.
“Harvey’s bond investors were misled into believing their money would go toward construction of a Holiday Inn when instead the bulk of it was diverted into Harvey’s general coffers and Letke’s pocket,” David Glockner, the director of the SEC’s Chicago office, said in a statement.
The agency has been moving more aggressively to crack down on public officials who mislead investors in the $3.7 trillion municipal bond market. It previously brought fraud cases against Illinois and New Jersey, and this month it settled with a Chicago charter-school operator for failing to disclose insider business dealings that led the state to withhold grants.
Letke didn’t immediately respond to messages left at his offices seeking comment about the sanction. A spokesman for the city said Mayor Eric Kellogg has no comment on the agency’s allegations.
U.K. Starts Energy Market Probe That May Split ‘Big Six’
U.K. competition authorities will conduct a full investigation of the energy market to determine whether the six biggest utilities are unfairly profiting from their market power.
The industry regulator Ofgem asked for the probe, whose final recommendations are due at the end of next year. The report may recommend splitting power-generation businesses from units that supply consumers and businesses.
The decision reflects concern that natural gas and power customers are being shortchanged by the companies, whose profits have more than quadrupled since 2009. With the next election less than a year away, energy has become a touchstone part of Britain’s political agenda, with all parties criticizing suppliers for being quick to raise prices when wholesale costs rise and slow to cut them.
“This will help rebuild consumer trust and confidence in the energy market as well as provide the certainty investors have called for,” Ofgem Chief Executive Officer Dermot Nolan said in an e-mailed statement.
The regulator asked the Competition and Markets Authority for an investigation. It said there’s increasing consumer distrust of suppliers and uncertainty about the relationship between the generation arms and supply businesses of the Big Six, which consist of Centrica Plc (CNA), SSE Plc (SSE), Electricite de France SA, RWE AG, Iberdrola SA (IBE) and EON SE. (EOAN)
All of the Big Six welcomed the inquiry. Keith Anderson, chief corporate officer of Iberdrola’s ScottishPower unit, said it “provides a real opportunity to clear the air.”
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Bitcoin to Get Scrutiny From Consumer Bureau After Prodding
Bitcoin and other digital currencies will get more attention from the U.S. Consumer Financial Protection Bureau after prodding from a congressional watchdog.
The Government Accountability Office, the investigative arm of Congress, wrote in a confidential report last month that the bureau, created by the 2010 Dodd-Frank financial regulatory overhaul, needed to become more active in developing U.S. digital-currency policies. In a written response, the agency agreed.
“We’re looking forward to increasing our involvement in formal working groups as they engage on specific issues relating to consumer protection,” William Wade-Gery, CFPB’s acting assistant director for card and payment markets, wrote in a May 6 letter to the GAO.
While the GAO report didn’t specify the issues that should be addressed by the CFPB, fraud and security have been serious problems for some bitcoin users. For example, an exchange based in Tokyo went bankrupt in February after losing most of its users’ accounts to hackers.
Bitcoins emerged in 2009 out of a paper authored under the pseudonym Satoshi Nakamoto. Since then, retailers selling items from Gummi Bears to luxury homes have started accepting bitcoins, and new companies have begun offering ways to ease its use as a payment system.
In the Courts
Argentina Bond Fight Judge Rejects Stay of Debt Payment Ruling
A federal judge sided with Argentina holdout bondholders who urged him not to delay enforcing his order that the country pay them at the same time it makes payments on restructured debt.
U.S. District Judge Thomas Griesa in Manhattan yesterday denied the stay sought by the South American nation. The creditors, led by NML Capital, said they’re willing to enter into talks with Argentina and would consider working out “a consensual accommodation” to allow Argentina to make its bond payment by July 30, the end of its 30-day grace period, if talks “have made good progress,” according to a letter filed with the court.
Martin Marietta Purchase of Texas Industries Cleared by U.S.
Martin Marietta Materials Inc.’s $2.7 billion purchase of Texas Industries Inc. was approved by the U.S. Justice Department under a settlement that requires asset sales.
Martin Marietta will sell rail yards in Texas and an Oklahoma quarry to maintain competition in the market for gravel, sand and crushed stone, the Justice Department’s antitrust division said in court filings yesterday in Washington.
“Without the divestiture obtained by the antitrust division, customers would have likely faced higher prices as a result of this acquisition,” Bill Baer, the division’s head, said in a statement.
Martin Marietta, based in Raleigh, North Carolina, gains entry into the cement market with the Texas Industries purchase as construction bounces back. U.S. housing starts topped 1 million on an annual basis in April and May after plummeting as low as 478,000 in April 2009. Martin Marietta’s products, known as aggregates, are mixed with cement to produce concrete.
Texas Industries, based in Dallas, is the largest cement producer in Texas, with two cement plants there, and the third-biggest in California. Texas consumes the most cement and aggregates in the U.S., and California is second.
To contact the reporter on this story: Ellen Rosen in New York at email@example.com