Dec. 18 (Bloomberg) -- The following are the day's top business stories:
1. Treasury Yield Curve Is Steepest Since February on Tax-Reduction Extension 2. Picower Estate Agrees to Forfeit $7.2 Billion to Benefit Madoff's Victims 3. Insider-Trading Probe in U.S. May Speed Attrition Among Expert Networks 4. Dollar Gains Amid Sovereign Debt Concern, Attractive Treasury Note Yields 5. Former Jefferies Fund Manager Gets Six Years in $7 Million Trading Scheme 6. Arcelormittal Raises Baffinland Offer to $1.23 a Share, Lowers Acceptance 7. U.S. Bank Collapses Reach 157 This Year as Six More Lenders Are Shuttered 8. Canadian Dollar Falls for Second Week as Investors Lose Appetite for Risk 9. Australia Acting `Too Late' Over Online Threat to Retailers, Harvey Says 10.Asian Currencies Decline as Yields Surge in U.S. on Improved Economic Data 11.Bank of America Sued by Arizona, Nevada Over Mortgage Modification Program 12.Most Read on Bloomberg: Goldman Executive Payouts, Insider-Trading Probe
1. Treasury Yield Curve Is Steepest Since February on Tax-Reduction Extension
The extra yield Treasury investors demand to hold 10-year notes over 2-year securities touched the widest since February on speculation an extension of tax cuts will spur growth and increase deficits. The benchmark 10-year yield rose this week to the highest level in seven months as retail sales advanced in November more than economists forecast and the Federal Reserve said the recovery is continuing. The U.S. economy grew at a faster pace in the third quarter, a report is forecast to show next week. "The market will be subject to selling," said Brian Edmonds, head of interest rates in New York at Cantor Fitzgerald LP, one of the 18 primary dealers that trade directly with the Fed. "It´s hard to think of anything good for bonds coming out of the tax-cut extension. Something has got to give." The difference in yield between 10- and 2-year notes increased for a third week, rising to 272 basis points yesterday, or 2.72 percentage points, from 268 basis points on Dec. 10, according to Bloomberg data. The spread touched 289 basis points on Dec. 15, the widest since Feb. 23.
2. Picower Estate Agrees to Forfeit $7.2 Billion to Benefit Madoff's Victims
The estate of Jeffry Picower agreed to forfeit $7.2 billion that the investor got from Bernard L. Madoff´s Ponzi scheme, bringing the amount collected by authorities for victims of the fraud 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, yesterday 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 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.
3. 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.
4. Dollar Gains Amid Sovereign Debt Concern, Attractive Treasury Note Yields
The dollar rose for a second week against the euro as Treasury yields reached a seven-month high on stronger-than-forecast economic data and concern Europe´s debt crisis will spread boosted demand for the U.S. currency. The greenback touched an almost three-month high against the yen this week as Treasury yields lured buyers and President Barack Obama signed into law an $858 billion tax cut bill. The euro dropped to a two-week low against the dollar on concern an agreement reached at the European Union summit this week won´t contain the region´s debt problems. Two reports next week are forecast to show U.S. sales of existing and new homes picked up in November. "The positive U.S. cycle is beginning to accelerate and it´s good for the U.S. dollar," said Andrew Busch, a global currency strategist at Bank of Montreal in Chicago. "On top of that, we get bad news for Ireland and Greece. The positive things for the dollar are there." The dollar rose 0.3 percent to $1.3188 per euro, from $1.3226 Dec. 10, and touched $1.3133, the strongest since Dec. 2 The greenback gained to 83.98 yen from 83.95 last week and reached 84.51 yen, the highest since Sept. 24. The euro added 0.3 percent percent to 110.77 yen, from 111.04 yen.
5. Former Jefferies Fund Manager Gets Six Years in $7 Million Trading Scheme
Joseph Contorinis, the former Jefferies Paragon Fund money manager convicted in an insider- trading scheme that prosecutors said netted more than $7 million in illegal profits, was sentenced to six years in prison. "This is a crime that does damage to the national economy," U.S. District Judge Richard Sullivan in New York said yesterday as he sentenced Contorinis. "It´s very important to send a message through the sentence imposed on you." "You will become a poster child for what happens," Sullivan added. He also ordered Contorinis to forfeit as much as $13 million. Contorinis was convicted by a federal jury in Manhattan in October of securities fraud and conspiracy. Jurors found that he illegally traded on inside merger tips supplied by Nicos Stephanou, an investment banker who was the government´s chief witness in the trial.
6. Arcelormittal Raises Baffinland Offer to $1.23 a Share, Lowers Acceptance
ArcelorMittal, the largest producer of steel, raised its cash offer for Baffinland Iron Mines Corp. to C$1.25 ($1.23) a share and said Baffinland´s board supports the increased price. The offer, a 14 percent premium to the original bid, has been extended until 11:59 p.m. Toronto time on Dec. 29, the company said in a statement. Warrant holders will get C$0.10 per warrant, Baffinland said. Daniella Dimitrov, Baffinland vice chairman, didn´t immediately return a call placed after business hours. The minimum acceptance condition for the purchase has been lowered to 50 percent plus one common share, Arcelor said today. About 25 percent of Baffinland´s stock has been tendered. ArcelorMittal aims to boost self-sufficiency in raw materials as prices for iron ore and coking coal surge on demand from China. The Luxembourg-based company said in September it planned to spend $4 billion to increase iron-ore production to 100 million metric tons a year by 2015, from 60 million.
7. U.S. Bank Collapses Reach 157 This Year as Six More Lenders Are Shuttered
Regulators shuttered six banks holding a total of $1.23 billion in assets, including three in Georgia and one each in Arkansas, Minnesota and Florida, as real-estate losses drive this year´s bank failures to 157. Florida has lost 29 lenders this year while 21 banks in Georgia were seized, the Federal Deposit Insurance Corp. said today in statements on its website. Regulators have closed 322 banks since the start of 2008. Today´s six closures cost the FDIC´s deposit-insurance fund a total of $267.6 million. "We´re over the hump in terms of number of failures and the average size, and potentially in the cost of them," Bert Ely, a banking consultant in Alexandria, Virginia, said in an interview. The crisis is "far from over but we´re making headway." This week´s failures may be the final closures for 2010 because regulators seldom shut down banks on holiday weekends, Ely said. The next two Fridays are Christmas Eve, a market holiday in the U.S., and New Year´s Eve.
8. Canadian Dollar Falls for Second Week as Investors Lose Appetite for Risk
Canada´s dollar dropped for a second week against the greenback as investors turned to the perceived safety of U.S. government debt on concern Europe´s sovereign- debt crisis will deepen. The currency, nicknamed the loonie for the image of the bird on the C$1 coin, retreated from a one-month high as investors´ risk appetite ebbed and stocks and crude oil pared advances. The allure of U.S. assets was also burnished as Treasury yields rose to seven-month highs. Data next week may show gains slowed in Canadian consumer prices and retail sales. "The positive equity and commodity story was winning out at the beginning of the week, but in the second half the issues in Europe and the risk aversion overwhelmed it," said George Davis, chief technical analyst for fixed income and currency strategy at Royal Bank of Canada´s RBC Dominion Securities in Toronto. "Europe has created a bid tone for the U.S. dollar and so dollar-Canada." The Canadian currency weakened 0.5 percent to C$1.0140 per U.S. dollar yesterday in New York, from C$1.0091 on Dec. 10. It touched C$1.0001 on Dec. 15, the strongest level since it last traded on a one-for one basis with the greenback on Nov. 11. One Canadian dollar buys 98.62 U.S. cents.
9. Australia Acting `Too Late' Over Online Threat to Retailers, Harvey Says
Australia´s inquiry into the retail industry is "too late" to stop some retailers going out of business due to competition from offshore websites, said Gerry Harvey, executive chairman of Harvey Norman Holdings Ltd. The government doesn´t appreciate the urgency of the threat facing domestic retailers from overseas-based rivals making use of the Internet, Harvey said in a telephone interview today. Harvey Norman is Australia´s largest furniture and electrical retailer. "You´ve got every second person in the country importing things from overseas, evading duty, not paying sales tax," Harvey said. "It´s gaining momentum at a rapid rate. Rather than clip it in the bud, they´ll end up doing something about it, but it will be too late. You´ve got an awful lot of retailers that are going to be going broke after Christmas." Prime Minister Julia Gillard´s government today announced an inquiry into the impact of globalization on the retail industry, which includes looking at growth in online purchases from abroad by consumers.
10.Asian Currencies Decline as Yields Surge in U.S. on Improved Economic Data
Asian currencies had a second weekly loss as the highest U.S. Treasury yields in seven months and improving economic data out of the world´s largest economy damped sentiment toward emerging-market assets. The difference in yields between 10-year bonds in the Philippines and the U.S. shrank this week to the least in almost three years, according to data compiled by Bloomberg. The corresponding gap for South Korean debt was at the lowest level since April. The number of U.S. workers filing first-time claims for jobless benefits decreased to a three-week low, while housing starts rose 3.9 percent in November from a month earlier, separate government reports showed on Dec. 16. "The rising U.S. yields means Asia´s higher-yielding assets become less attractive, weighing on regional currencies," said Tsutomu Soma, a bond and currency dealer at Okasan Securities Co. in Tokyo. "We have seen some good U.S. economic data boosting demand for the dollar as well." The Bloomberg-JPMorgan Asia Dollar Index, which tracks the region´s 10 most-active currencies, dropped 0.5 percent this week to 114.68. The Philippine peso weakened 1.2 percent to 44.23 per dollar, South Korea´s won slid 0.8 percent to 1,152.58 and the Singapore dollar lost 0.4 percent to S$1.3125, according to data compiled by Bloomberg.
11.Bank of America Sued by Arizona, Nevada Over Mortgage Modification Program
Bank of America Corp. was sued by Arizona and Nevada over home-loan modification programs intended to keep homeowners who borrowed from its Countrywide mortgage unit out of foreclosure. Instead of working to modify loans on a timely basis, Bank of America proceeded with foreclosures while borrowers´ requests for modifications were pending, a violation of a 2009 agreement with Arizona to help borrowers facing the loss of their homes, Terry Goddard, the state´s attorney general, said yesterday in a statement. "We are disappointed that the suit was filed at this time," Dan Frahm, a Bank of America spokesman, said in an e-mail, referring to the Arizona suit. "We and other major servicers are currently engaged in multistate discussions led by Attorney General Miller in Iowa to try to address foreclosure related issues more comprehensively." All 50 U.S. states are investigating whether banks and loan servicers used false documents and signatures to justify hundreds of thousands of foreclosures. The probe, announced Oct. 13, came after JPMorgan Chase & Co. and Ally Financial Inc.´s GMAC mortgage unit said they would stop repossessions in 23 states where courts supervise home seizures, and Bank of America, the largest U.S. lender, froze foreclosures nationwide.
For the complete stories summarized here, and for more of the day's top news, see TOP <Go>.