Radisson hit by credit card hack

Hotel Chain Radisson has been the subject of a computer attack that saw credit and debit card details stolen from its computer systems.

In an open letter on its website, the company said that the incident occurred between November 2008 and May 2009 at its branches in the US and Canada.

It is not known how many hotels were targeted during the security breach, but the firm stated that the number that may have been affected is "limited".

Data such as names, card numbers and expiration dates was taken during the hack attacks and Radisson has urged guests who stayed at its hotels during the time period to check their bank statements for any suspicious transactions.

"To the extent there is any suspected unauthorized card activity, it should be reported to the bank that issued your credit card, as well as proper law enforcement authorities," the company advised.

Last month, Network Solutions revealed that details relating to 573,000 debit and credit card accounts were stolen earlier this year during a hack on its web servers.

Financial crisis of past year offers many lessons

About a year has passed since the financial crisis hit with full force, and investors could learn a few things from the experience. First and foremost, diversification is still a useful concept, but markets are so interconnected that there are limits to the level of security one can achieve from it. Now and then, trends are so powerful that diversification will not work.

http://online.wsj.com/article/SB125158349559369687.html

New credit card rules - how to reject an interest rate increase

Below is a letter you can use to opt-out of interest rate increases. Edit the bold words to fit your credit card information.

Date

Your Name
Your Address
Your City, State Zip

Credit Card Issuer
Address

City, State Zip

Re: Account Number XXXX-XXXX-XXXX-XXXX

To Whom It May Concern:

On January 15, 2009, I received a notice from you indicating an interest rate increase on the previously referenced account. Let this letter serve as my notification that I do not wish to pay the higher interest rate. I will continue paying my credit card balance at the current interest rate of 8.9%.

Please confirm in writing to the address listed above that I have been opted-out of the higher interest rate.

Thank you for your anticipated cooperation in this matter.

Sincerely,



Your Name

Tips for Sending Your Opt-Out Letter

• To be effective, your opt-out letter must be sent within 15 days of receiving notification of the rate increase or by the date listed on your rate increase notification.
• Even if you opt-out by phone, it's a good idea to follow up with a letter so that you have proof of opting-out if the credit card issuer misplaces your phone opt-out.
• Send your letter via certified mail with return receipt requested. Ideally, you should obtain a certified mailing label from the post office prior to printing your letter. That way you can include the 20-digit trakcing number on the certified mailing receipt number in your letter for extra proof.
• You can track the letter at USPS.com using the 20-digit tracking number on the certified mailing receipt. The return receipt will arrive in the mail a few days after the mail has actually been received.
• Follow up with the credit card issuer to be sure your opt-out was processed and to find out if and when your account will be closed.

New credit card rules

Starting Thursday 8/20/09, when the first phase of the new Credit Card Accountability, Responsibility and Disclosure (CARD) Act goes into effect, credit card users will be armed with a new right to say no to -- that is, opt out of -- interest-rate increases and other changes in their credit card agreements.

Under the first phase of the new law, consumers must be given:

• At least 45 days' warning of changes to their credit card accounts. Currently, only 15 days' notice is required unless customers default on their accounts, in which case interest-rate increases can go into effect immediately.

• At least 21 days to pay their monthly credit card statements without threat of late fees.

• The right to opt out of interest-rate and fee increases and the right to cancel their accounts while paying off the balances under the old, lower interest rates. Currently, issuers offer opt-out options at their discretion, and it is not a consumer right.

• Highest interest balances paid first:

  When consumers have accounts that carry different interest rates for different types of purchases (i.e., cash advances, regular purchases, balance transfers or ATM withdrawals), payments in excess of the minimum amount due must go to balances with higher interest rates first.

  Current industry practice is to apply all amounts over the minimum monthly payments to the lowest-interest balances first -- thus extending the time it takes to pay off higher-interest rate balances.

Other aspects of the new credit card law -- such as restrictions on interest-rate increases, bans on issuing and marketing credit cards to young adults, and regulations on gift cards -- take effect in February 2010 and later. In addition, starting July 1, 2010, a host of requirements for disclosing fees, rates and terms on monthly statements, credit card applications and mailers will become law as a result of new rules drafted and approved by the Federal Reserve Board and other banking regulators.

More details on the new opt-out rules

Other provisions that got into effect Thursday include:

• Credit card issuers must inform card users of the right to cancel when they mail a 45-day notice of a change in terms. The notice must explain the steps cardholders can take to exercise their right to cancel, including a toll-free number to call and a deadline for opting out.

• Opting out means a consumer can no longer make purchases with the card. Instead, the old, lower interest rate or fee will be applied while the consumer repays the balance.

• There are exceptions to the opt-out rule. Consumers cannot opt out of increases in minimum-payment amounts.

• Another major exception is variable-rate credit cards, whose rates are tied to an index -- almost always the prime rate. When the Federal Reserve raises interest rates, it raises the prime rate. Those increases are passed on to variable-rate cardholders; no opt-out is allowed. In recent months, card issuers have reacted by switching consumers from fixed-rate cards to variable-rate cards.

• Consumers who are more than 60 days late making payments do not have the right to reject rate increases.

• Reductions in credit limits cannot be rejected by any cardholders.

• Issuers cannot demand payment in full of outstanding balances or charge monthly maintenance fees on closed accounts if consumers reject changes in terms.

Robert Prechter's market assessment

"The stock market has now fulfilled our forecast made in February for a rise to 9,000-10,000," says Robert Prechter. In The Elliott Wave Theorist, he now sees increasing risk.

"The rally in the S&P since March has been one of the faster ever, rising 50% in five months, and rapidly carrying the S&P to the lower end of our general target zone of 1000-1100.

"At the same time, optimism has finally reached 'Primary degree' levels. The daily sentiment index recently reported 88% bulls among S&P traders, a reading equal to that on October 9, 2007, the top day of the 'Cycle B wave' when the Dow made its all-time closing high of 14,164.

"Higher readings are possible, but we are no longer compelled to wait. In falling from 14,198 to 6470, the Primary wave covered a large amount of territory: 7728 points. The Fibonacci 3/8 retracement level is 9368, while a 5/8 retracement would carry to 11,300.

"The Dow has essentially achieved the first of these retracements levels. Indeed, at this point, the Dow has also achieved a Fibonacci 3/8 retracement, creating a Fibonacci 50% gain in a Fibonacci 5 months. It would be a nice place for the rally to stop.

"Given that stocks remain in the largest-degree bear market in nearly 300 years, it is not a good idea to bet inordinately on the upside. We should not ask more of the 'stock market gods' than they have already granted us.

"The prudent thing to do is return to a bearish stance now that prices have reached the first Fibonacci retracement level. Investors should continue to keep the bulk of their wealth in case and the safest possible cash equivalents, in the safest institutions.

"If you actively invest in the stock market with money you can afford to lose, it's time to return to the short side. It may be early in terms of both bime and price, but that's the cost of insuring that don't miss profiting in the next wave down."

Blankfein questions resentment directed at Goldman

During the past six months, Goldman Sachs has taken risks and been handsomely rewarded for it. The firm repaid billions of dollars the government forced it to take in the fall, raised billions more from Warren Buffett and other investors, and encouraged its executives to tone down activities that could be construed as conspicuous consumption. Despite all of these efforts, Goldman has been the target of much resentment from its rivals, the media, Congress and the public, raising questions from CEO Lloyd Blankfein.

more at

http://www.time.com/time/magazine/article/0,9171,1917727,00.html

416 US banks on FDIC's problem bank list

A total of 416 US banks were on the Federal Deposit Insurance Corporation's (FDIC's) problem list during the second quarter of 2009, the regulatory body has revealed.

The figure, which is a 15-year high, is a sharp rise on the 111 that were included during the first three months of the year.

Shelia Bair, chairman of the FDIC, said that there has been a steady increase in the proportion of financial institutions that are troubled, but added that levels are "still well below" those seen during the previous financial crisis.

"As banks and thrifts continue cleaning up their balance sheets, more are coming on to our problem list," she explained, noting that there have been 81 failures so far this year.

The FDIC stated its deposit insurance fund was down to $10.4 billion during the three-month period - a fall of 20 per cent - but that it will not be asking for further funding from the Treasury.

Colonial BancGroup is one bank to have failed so far this year, with the financial institution filing for bankruptcy recently after its retail banking operations collapsed.

more at http://online.wsj.com/article/SB125137695691263385.html

California borrows $1.5 billion from JPMorgan to repay IOUs

JPMorgan Chase loaned California $1.5 billion with a yearly interest rate of 3%. The loan will be used to pay IOUs the state issued during a cash crunch. The interest rate is considered high for such a loan and possibly reflects ongoing concerns about the state's solvency.

more at http://www.bloomberg.com/apps/news?pid=newsarchive&sid=aBy4dKDDGdBE

Little-known Getco is key player in high-frequency trading

Getco LLC might not be a household name, but the private Chicago-based company with fewer than 250 employees is one of the largest players in high-frequency trading, often accounting for as much as 20% of daily trading volume of many stocks. Getco, which stands for Global Electronic Trading Co., has become one of the five largest traders when measured by volume in stocks and other electronically traded instruments. "They are probably the biggest market maker in the U.S. stock market," said Justin Schack, a vice president at Rosenblatt Securities.

All this has been profitable for Getco, which earned about $400 million in 2008, trading mostly with its own money, people familiar with its finances say.

more at

http://online.wsj.com/article/SB125133123046162191.html

and http://www.getcollc.com/index.php

Treasury collects $7.3B from banks that tapped TARP

The many banks that received state aid through the Troubled Asset Relief Program have paid a total of $7.3 billion in dividend payments to the Treasury. Citigroup contributed $648 million as part of a deal that resulted in the government taking a 34% stake in the bank.

more at

http://online.wsj.com/article/SB125131342944261351.html

JPMorgan, Citi, AmEx tap TALF, while BofA shuns market

JPMorgan Chase, Citigroup, American Express and other issuers have sold billions of dollars in debt backed by credit cards this year through the Federal Reserve's Term Asset-Backed Securities Loan Facility. 

Bank of America, which tapped the asset-backed securities market for $13.7 billion last year, has shunned it this year. "I don't doubt that Bank of America would like to re-engage that market," said Michael Nix of Greenwood Capital Associates. "The credit card securitization market is starting to thaw, but there still isn't a lot of demand, so the cost of issuance may be higher than the bank thinks is worthwhile."

more at http://www.bloomberg.com/apps/news?pid=20601208&sid=a1YZAQx7tBEk

SEC, FINRA, CFTC join debate about controversial ETFs

Industry insiders are concerned that debate about nontraditional exchange-traded funds could harm the broader ETF sector. The Securities and Exchange Commission teamed up with the Financial Industry Regulatory Authority to alert investors about risks associated with leveraged ETFs.

more at http://www.investmentnews.com/apps/pbcs.dll/article?AID=/20090823/REG/308239978

Key Changes of the New Credit Card Rules

On May 22, 2009, President Barack Obama approved a series of rules that make major changes to practices within the credit card industry. Here is a list of the 10 key changes of the new credit card rules. Note: the rules listed won't take effect until February 22, 2010.

1. No interest rate increases for the first 12 months of your credit card.

You can enjoy your interest rate for at least the first year after opening your new account with two exceptions. First, your rate could increase in the first year if the creditor disclosed a rate increase when you opened the account. Second, if you don't make the minimum payment within 30 days of the due date you'll be subject to a penalty rate increase.

2. No interest rate increases on pre-existing balances.

If and when your interest rate does increase, the credit card issuer can't retroactively apply the increased rate to existing balances. Only purchases made after the increase goes into effect will be subject to the new interest rate.

3. Rate increases require 45-day advanced notice, even penalty rate increases.

Banks currently get 15 days to notify you of an interest rate increase and they don't have to notify you at all for penalty rate increases. The increased time for an advanced notice will give you more time to respond to an interest rate increase. Rules regarding interest rate increases take effect August 20, 2009.

4. No more double billing cycle finance charges.

The double billing cycle method of calculating finance charges allows credit card issuers to charge interest on balances you've already paid. The Federal Reserve has outlawed this expensive practice.

5. Limited fees for subprime credit cards.

Subprime credit cards can no longer charge up the cardholder's credit limit with fees. Now, fees are limited to 50% of the credit limit, but only 25% of those can be charged when the account is opened. The remaining fees must be spread over at least five billing cycles.

6. Billing statements must be sent 21 days before payment due date.

The current rule requires billing statements to be sent within a reasonable time for the consumer to make payment. The new rule puts a time period on that "reasonable time."

7. Payments received by 5:00 pm on the due date are on time.

The Federal Reserve recognizes that banks must have a cut-off time for accepting payments and sets that time to 5:00 pm. The didn't specify a time zone, so, sending your payment early is still a good practice.

8. Payments received the next business day after a weekend or holiday are on time.

If your due date falls on a weekend or holiday and your credit card issuer doesn't process payments on that day, your payment is still considered on time if it's received by the next business day. For example, that means the Monday after a weekend or December 26 during the holidays.

9. Payments above the minimum are applied to highest interest rate balances.

The minimum payment would go toward your low-rate balance, while the remainder of your payment must be applied to the balance with the highest interest rate. This reduces your interest cost over the life of the credit card versus the alternative of applying the complete payment to the low rate balance.

10. Billing statements must include year-to-date total of interest and fees.

Now, you'll be able to see just how much interest charges and fees you pay on your credit card. When the rules take effect, your billing statement will have to list the current month's interest charges and fees along with the total amount you paid during the year.

Sears, Lampert targeted in appeal of Kmart case

(Reuters) — Sears Holdings Corp. and its chairman, Edward Lampert, face an appeal of a federal lawsuit by former Kmart Holding Corp. shareholders accusing them of making false statements to drive down Kmart's share price.

According to a notice made public on Friday, the plaintiffs in the class-action lawsuit plan to appeal to the U.S. Second Circuit Court of Appeals a July 21 lower court ruling that they failed to show wrongdoing by Sears, Lampert and Julian Day, a former Kmart chief executive officer.

Lampert, a billionaire investor, got a controlling stake in Kmart and became its chairman when the retailer emerged from bankruptcy in 2003.

The plaintiffs allege that he and Day publicly undervalued Kmart's real estate assets to conceal that Lampert had gotten control of the company at a price far below fair market value, and to allow both men to buy more shares at bargain prices.

They said that when Kmart sold some of those assets to Home Depot Inc. and the former Sears Roebuck & Co, its shares rose more than 60 percent in fewer than four months, giving Kmart and Lampert the ammunition to merge with Sears.

The plaintiffs contend that they sold their Kmart shares at artificially low prices because of the misrepresentations, but U.S. District Judge Lewis Kaplan rejected the claims.

In his ruling, he said the plaintiffs failed to show that defendants represented that Kmart real estate was worth just $10 million when it was actually worth about 1,000 times that, or $9 billion to $18 billion. He said that this "rather dramatic" theory "piles one unsubstantiated assumption on another."

The judge also said the plaintiffs failed to demonstrate any intent to deceive. He added that because Lampert and Day were obligated to buy Kmart shares and exercise Kmart stock options at fixed prices under contracts made during the retailer's bankruptcy, "it defies logic and common sense" for them to want to drive the share price down.

The lead plaintiffs in the case are the Plumbers and Pipefitters National Pension Fund, the Mississippi Public Employees' Retirement System, and Fred Campo.

Sears posted a surprise quarterly loss on Thursday as falling sales overshadowed efforts to cut costs. The stock fell 11.9 percent on Thursday and is down by roughly two-thirds from its April 2007 peak.

FSA, CFTC to step up cross-border surveillance of oil markets

The U.K. Financial Services Authority and the Commodity Futures Trading Commission said they plan to work more closely in their supervision of energy-futures markets to curb manipulation and speculation. "We must effectively utilize all existing powers to ensure that futures markets remain free of manipulation, fraud or other market abuses," said Gary Gensler, chairman of the CFTC. "Achieving this goal requires a coordinated international response."

more at http://www.bloomberg.com/apps/news?pid=newsarchive&sid=aQInFGCfud3k

Credit card relief: Phase one

The first part of Obama's crackdown on the credit card industry will give consumers more notice when contracts are changed and the option to reject interest rate increases.

NEW YORK (CNNMoney.com) -- Consumers struggling with credit card debt will start to see some relief Thursday as the first steps of the Obama administration's industry overhaul go into effect.

Beginning Aug. 20, credit card issuers will be required to give customers 45 days advance notice before making any significant changes to a contract and will be required to mail bills 21 days before the due date.

Under current laws, issuers are required to give 30 days notice before changing a contract and mail bills at least 14 days in advance.

Consumers will also have the right to reject changes to their contracts, including interest rate increases, and they will have the option of paying off their balances at their existing rates within five years.

The changes are the first to come under the Obama administration's credit card reform act, which was singed into law in May.

"The new rules of the road established by the Credit CARD Act will shield credit cardholders from widespread abusive practices," Senate Banking Committee Chairman Chris Dodd, D-Conn., the bill's author, said in a Wednesday statement.

But the more substantial changes are expected in February, when the second half of the Act is implemented.

Thursday's reforms are "a good thing" for consumers, said Linda Sherry, director of national priorities at Consumer Action, a non-profit consumer advocacy group. "But they are just the icing on cake. The cake is coming in February."

In February, credit card companies will be prohibited from raising interest rates on existing balances unless the borrower is more than 60 days delinquent or the increase is stated in the contract.

"That's a very big deal for household budgets," said Gail Hillebrand, senior attorney at Consumers Union. "It means the rate can't go up on money they've already borrowed."

Among other measures to come in February: Consumers under the age of 21 will be required to have a cosigner and will have restricted credit limits; credit card issuers will not be able to raise interest rates in the first year unless specified in the contract; and issuers will be required to give more advance notice before raising rates on future purchases.

Thursday's changes. Requiring companies to mail bills seven more days in advance is expected to make it easier for consumers to pay their monthly installments on time and avoid penalties for being late.

But rejecting changes to the terms of a contract could come at a price.

While consumers will now have the right to reject an interest rate increase and cancel their cards, the new rules stipulate that the cardholder will have five years to repay their balance at the current interest rate.

That could result in a much higher minimum payment, since the time-frame to repay the debt will be condensed. Under the new rules, the minimum balance cannot go up by more than double.

In cases where the balance is too large to be repaid within five years without more than doubling the minimum payment, it's up to the credit card company to extend the time frame or determine a new rate.

US government begins UBS account crackdown

Over 150 customers at UBS are to be investigated by the US authorities on suspicion of tax avoidance.

According to court documents, the account holders are accused of concealing their income or assets in order to pay less tax in the US.

These are the first cases to be brought against clients of the Swiss bank since it and the US government reached a deal to disclose the names of some customers who were suspected of acting illegally.

Details of the agreement are due to be announced this week and it has been suggested that the move marks the end of the confidential Swiss bank account, with Reuters reporting that the number of cases will "mushroom" in the near future.

Speaking to the Associated Press after the deal was agreed last week, Florida-based tax lawyer William Sharp said that it is unlikely the move would have gone ahead without UBS agreeing to hand over a "substantial" amount of information.

He predicted that "at least several hundred" names will have been given to the US authorities.

Ex-Credit Suisse Group broker gets fraud conviction

A former Credit Suisse Group broker has been found guilty of fraud by a jury in New York.

Eric Butler was convicted of encouraging corporate clients to invest in risky securities, resulting in losses of almost $1 billion.

He now faces up to 45 years in prison, while Julian Tzolov, his co-conspirator who pleaded guilty last month to fraud, has yet to be sentenced.

Tzolov may receive a lesser prison term due to the fact that he agreed to testify against Butler after pleading guilty.

US attorney for the eastern district of New York Benton Campbell said in a statement that "the defendants' fraudulent misrepresentations saddled investors with unknown risks they did not bargain for".

The actions of the pair were discovered in August 2007 when auctions for debts backed by sub-prime mortgages - which the pair had convinced clients to invest in - began to fail.

Selling these high-risk securities meant that the pair received greater commissions for their work than they would have done if they had urged investors to make safer purchases.

Assistant US attorney John Nowak described the crime as "a bait-and-switch scheme", adding: "They deceived clients who had trusted them."

Companies affected by the actions of Butler and Tzolov included drug manufacturer Roche, fertilizer producer Potash and STMicroelectronics, a semiconductor firm.

The jury needed less than a day of deliberation to find Butler guilty after a three-week trial, Reuters reports.

According to the news source, this case is one of the first prosecutions to be made as a result of the causes of the credit crunch two years ago.

Earlier this month, Bernard Madoff's former chief investment officer Frank DiPascali admitted securities fraud, conspiracy and money laundering charges at Manhattan Federal Court, confirming the belief that Madoff did not operate alone when carrying out his $65 billion Ponzi scheme.

SEC issues warning on leveraged ETFs

The Securities and Exchange Commission's warning to investors regarding potential losses from leveraged exchange-traded funds echoes those from the financial industry and others. The SEC cautioned investors to look closely at the ETFs' details. "It is possible you could suffer significant losses even if the long-term performance of the [underlying] index showed a gain," the SEC said.

more at http://www.reuters.com/article/ousiv/idUSTRE57H5WQ20090818

This Day in Wall Street History 1841: First bankruptcy laws established

The first set of standard bankruptcy laws hit the books throughout the nation on this day in 1841. And, while the laws were repealed a few years later, they proved popular during their brief tenure, with 33,737 people utilizing the newfound right to voluntarily declare for bankruptcy.

Source: History.com

Global Stocks, Oil Climb After German Confidence Report Signals Recovery

(Bloomberg) — U.S. and European stocks advanced and oil and industrial metals climbed following better-than- estimated earnings at Home Depot Inc. and Target Corp. and an increase in German investor confidence. The MSCI World Index added 0.7 percent at 11:08 a.m. in New York, rebounding from its biggest slide since April.

Aluminum rose 2 percent and crude oil and nickel rebounded after a two-day drop. The yen weakened against each of the most-traded currencies, while the dollar decreased versus every one except the yen. “This is a bull market and it will continue to do OK,” said Craig Hodges , a fund manager at Dallas-based Hodges Capital Management Inc., which oversees about $750 million. “There are necessary corrections you need in order for it to stay healthy. It’s a tug of war.” The advance in equities today restored only about a quarter of yesterday’s 2.8 percent slump in the MSCI World Index. The gauge of 23 developed markets has rallied 51 percent from a 13- year low in March on speculation the worst of the global recession is over. The Dow Jones Industrial Average gained 49.35 points to 9,184.69. Europe’s Dow Jones Stoxx 600 Index added 0.9 percent. Treasuries were little changed. Home Depot, the largest home-improvement retailer, added 3.3 percent to $26.97 to help lead the gain in the Dow industrials.

SEC delays decision on short-selling limits

Four months after releasing its proposal for restricting short-selling stocks, the Securities and Exchange Commission has yet to settle on an approach. The SEC has run into obstacles related to the effectiveness of the proposal as well as its cost. The agency is suggesting a different approach to the issue and has given the public 30 days to comment.

more at

http://www.investmentnews.com/apps/pbcs.dll/article?AID=/20090817/REG/908179984

Three Madoff Homes to Be Auctioned Off

Three opulent homes owned by U.S. Ponzi scheme perpetrator Bernard Madoff will be auctioned off to help his victims, authorities say.

U.S. Marshal Service spokesman Roland Ubaldo said Friday that Madoff's cliffside summer home on New York's Long Island, a penthouse on Manhattan's Upper East Side and a palatial mansion in Palm Beach, Fla., would be sold to pay restitution to those who lost billions in the former financier's Ponzi scheme, The New York Daily News reported.

Together, the marshal service says, the homes are worth about $20 million.
"Our goal since day one is to maximize returns for the victims," Ubaldo said. "Obviously, our top priority is restitution for the victims."

Madoff this year pleaded guilty to a massive investment scam that affected pension plans, hedge funds, charities, celebrities and ordinary retirees $65 billion, the Daily News said.

Pimco snags Harvard portfolio manager

Marc P. Seidner jumps from coast to coast to join Bill Gross as a top fixed-income manager at the Newport Beach bond shop

Pacific Investment Management Co. LLC has hired Marc P. Seidner as an executive vice president and portfolio manager.

He will run several fixed-income portfolios and help formulate investment strategies, the company said in a statement today

Mr. Seidner's first day at Pimco is Aug. 17.

“Marc is a seasoned and extremely talented investment professional,” Bill Gross, co-chief investment officer at Pimco of Newport Beach, Calif., said in a statement. “We are delighted to have him on Pimco's portfolio management team. His addition will help to further strengthen our ability to deliver value to our clients.”

Mr. Seidner joins Pimco from Harvard Management Co. of Boston, where he was a managing director and a domestic-fixed-income portfolio manager.

Meredith Whitney buys Seegal Benson Leucadia Securities

Meredith Whitney Advisory Group LLC has announced that it has wrapped up its purchase of Seegal Benson Leucadia Securities LLC, a New York-based broker dealer.

The unit, which has been renamed Meredith Whitney Securities LLC, will provide financial advisory and research services initially. But Ms. Whitney, chief executive, also plans to apply to the Financial Industry Regulatory Authority Inc. of Washington and New York to expand its services, the New York firm said in a statement.

The additional services will include sales and trading, syndicate participation and other broker-dealer activities.

“This acquisition will broaden the scope of our services and capabilities to our clients greatly, and we look forward to this new addition to the platform,” Ms. Whitney said in the statement.

Founded in February 2009, the former Meredith Whitney Advisory Group is an investment research firm covering a range of financial companies.

Bank of America drops credit card arbitration process

Bank of America announced a policy under which an unhappy consumer can sue the bank over disputes regarding credit card and other loans. The move makes Bank of America the first major lender in the country to forgo the arbitration process for many consumer accounts. "It is certainly significant," said Alan Kaplinsky, a partner at Ballard Spahr Andrews & Ingersoll. "Whether others follow is an open question. Other banks and companies have used arbitration for years and are happy with it."

more at

http://www.reuters.com/article/ousiv/idUSTRE57D03E20090814

U.S. consumers' mood darkens in August: survey

(Reuters) - U.S. consumer confidence fell in early August as a growing number of Americans fretted about their finances even though they expected the broader economy to improve, a survey showed on Friday.

The Reuters/University of Michigan Surveys of Consumers said its preliminary reading of the index of confidence for August fell to 63.2 from 66.0 in July. This was below economists' median expectation of a reading of 68.5, according to a Reuters poll.

The index of consumer expectations fell to 62.1 in early August, its lowest reading since March and down from 63.2 in July.

"Consumers reported much less favorable assessments of their personal finances even as they were more likely to expect improved conditions in the national economy," the Reuters/University of Michigan Surveys of Consumers said in a statement.

The fewest consumers in the survey's sixty-year history reported improved finances, with many citing job losses, shorter working hours and smaller wage gains, said the survey.

UBS and US government reach tax dispute deal

UBS has reached an agreement with the US government that will result in the Swiss bank settling a dispute over tax evasion out of court.

Stuart Gibson, US justice department lawyer, said that both parties have settled on the details of a contract.

However, Mr Gibson added that it will "take a little time for the agreements to be signed in final form".

Details of the arrangement, such as how many names of the US customers that hold offshore accounts at UBS will be revealed to the government, were not divulged.

Florida-based tax lawyer William Sharp told the Associated Press that it is unlikely that such a move would have been made without a "substantial handover" of details.

He predicted that "at least several hundred, if not thousands" of names have been supplied to the authorities.

Shares in UBS fell earlier this week due to the ongoing negotiations, but have now rebounded on the news.

Number of short positions on Nasdaq, NYSE drops

During the second half of July, the New York Stock Exchange saw a 10.27% decline in the number of short-selling positions that were not closed out. Meanwhile, the Nasdaq Stock Market saw short interest fall more than 5%. "It's surprising to see such a big drop in short interest when the market is rising," said Eric Newman, a portfolio manager at TFS Capital.

more at

http://online.wsj.com/article/SB125004186718724677.html

FDIC requires Citi to get independent review of management

In a move supported by other regulators, the Federal Deposit Insurance Corp. forced Citigroup to retain external consultants to review the bank's management. Citi hired Egon Zehnder for the examination, sources said.

more at

http://www.ft.com/cms/s/0/a8e71670-8777-11de-9280-00144feabdc0.html?nclick_check=1

FSA releases guidance on bankers' bonuses

The U.K. Financial Services Authority published updated rules regarding bankers' bonuses. The rules, which include a ban on guaranteed bonuses of more than a year, apply to a couple of dozen of the largest banks. The City watchdog said penalties for violations include higher capital charges and possible enforcement action.

more at

http://www.nytimes.com/reuters/2009/08/12/business/business-uk-britain-banks-fsa.html

NYSE gains momentum in IPO battle with Nasdaq

This year, the New York Stock Exchange has snagged 11 of the 15 initial public offering listings, while Nasdaq has stumbled, according to data from Thomson Reuters. Nasdaq had more than 90% of IPO listings in 1999 and 2000 and a 67% market share as recently as 2007. Analysts suggest the shift in market share may be a result of efforts on the part of NYSE Euronext to establish new benchmarks for listings.

more at

http://online.wsj.com/article/SB125012719965827923.html

Citadel slashing stake in E-Trade

(Reuters) — Citadel Investment Group LLC, the hedge fund giant that injected capital into struggling brokerage E-Trade Financial Corp., said on Thursday it will slash its investment by more than two thirds over the next few months.

The Chicago-based firm plans to sell 120 million of its 166 million E-Trade shares through an insider stock-trading plan registered with the Securities and Exchange Commission. The sales will leave Citadel with just 46 million shares, or a 4.1 percent stake, when the plan concludes at the end of October.

Citadel spokeswoman Devon Spurgeon declined to comment.

The hedge fund manager intends to sell some E-Trade stock daily, under the terms of the plan, though never below the price of $1.20 a share.

Citadel founder and Chief Executive Kenneth Griffin, who was added to the E-Trade board on June 8, intends to remain. Citadel noted it will maintain significant holdings in the broker's debt and will likely emerge as E-Trade's largest stockholder even after the stock sales.

Citadel reported a 14.9 percent stake in E-Trade as of Monday.

In a filing Thursday, Citadel said it sold nearly 14 million E-Trade shares on Monday and Tuesday for $19.4 million, leaving it with 120.4 million shares.

Prechter : Gold & Silver Due for a Major Fall

Gold has fallen sharply in recent days, but its supporters are undaunted: The yellow metal remains within earshot of its all-time high and is destined to soar as the dollar implodes, gold's bulls say.

As is often the case, Bob Precther, president of Elliott Wave International, takes the contrarian view, arguing there's "too much optimism" about precious metals and negativity around the dollar.

In fact, Prechter believes the dollar put in a major bottom last week and, as a result, foresees major weakness ahead for commodities generally, and gold and silver specifically. The precious metals are "heavily overbought" and the "path of least resistance" will be to the downside for many months, he says. "[Gold's] going to go much further [down] than people think."

Prechter predicts gold will follow silver's path, which has put in a series of lower highs in recent months.

"Even though people are one-sidedly bullish on precious metals, they're not making any progress at all," says the legendary market watcher. "I would not be loading up on gold at this point, you'll get a better opportunity later.

33% of household assets held in retirement accounts, ICI reports

The accounts held $13.4 trillion, with $2.3 trillion in 401(k) plans

Americans held $13.4 trillion in retirement assets at the end of the first quarter, accounting for 33% of all household assets in the United States, the Investment Company Institute reported today.

Individual retirement accounts held $3.4 trillion, ICI said in its report, “The U.S. Retirement Market, First Quarter 2009,” < http://www.ici.org/pdf/09_q1_retmrkt_update.pdf>. Employer-sponsored defined contribution plans also held $3.4 trillion, of which $2.3 trillion were in 401(k) plans.

Forty-four percent of IRA assets and 45% of defined contribution plan assets were invested in mutual funds.

Between Dec. 31, 2008, and March 31, retirement assets fell 4.4%, from $14.1 trillion to $13.4 trillion. During the first quarter, the Standard & Poor’s 500 stock index declined by 11% and the Citigroup Broad Investment Grade Bond Index gained 0.2%.

Target date mutual funds managed $159 billion at the end of the quarter, compared with $164 billion at the end of the fourth quarter. Almost 90% of the assets in those funds were in retirement accounts, the Washington-based ICI said.

more at

http://www.investmentnews.com/apps/pbcs.dll/article?AID=/20090811/REG/908119992

Vanguard registers for seven bond ETFs

Some see filing as a challenge to iShares, as four of the funds would be cheaper

Vanguard today filed a registration statement with the Securities and Exchange Commission to offer seven new bond index exchange traded funds in what some industry experts believe to be a direct challenge to iShares, the dominant fixed-income ETF provider.

Three of the ETFs are expected to invest in U.S. Treasuries, three in corporate bonds and one in mortgage-backed securities, according to the filling from The Vanguard Group Inc. of Malvern, Pa.

The ETFs — planned as shares of proposed bond index funds — all come with expected expense ratios of 0.15%.

That is the same expense ratio iShares, a unit of Barclays Global Investors of San Francisco, charges for its comparable U.S. Treasury ETFs, but lower than the 0.20% it charges for comparable ETFs that invest in corporate bonds and the 0.25% it charges for its comparable mortgaged-backed ETF.

It appears as if Vanguard’s goal is to wrest “control of the exchange-traded bond fund market from Barclays’ iShares group,” Daniel Wiener, the Brooklyn, N.Y.-based chairman and chief executive of Adviser Investment Management Inc. of Newton, Mass., which manages more than $1 billion in assets, wrote in an e-mail.

Vanguard, however, has a long way to go before it can best iShares.

Vanguard offers five fixed-income ETFs with more than $8 billion in assets, while iShares offers 27 bond ETFs with total assets of more than $63 billion, according to Morningstar Inc. of Chicago.

more at

http://www.investmentnews.com/apps/pbcs.dll/article?AID=/20090811/REG/908119983/-1/RSS02&rssfeed=RSS02

This Day in Wall Street History 1919: Andrew Carnegie dies

Burn a dollar bill in mourning, because Aug. 11, 1919, marks the passing of Andrew Carnegie, the man alternately known as the king of steel, architect of the second Industrial Revolution, friend of capitalism, and scourge of workers.

Carnegie's life story is a classic bit of American mythology. Born in Scotland, he immigrated to America at age 13 and started his career as a bobbin boy in a cotton factory. Thanks to a ferocious competitive streak, and a bit of luck -- one of his farms was perched atop an oilfield -- Carnegie soon left the factory floor for the boardroom.

An early proponent of consolidation and vertical integration, Carnegie racked up his fortune -- and effectively monopolized the steel industry -- by controlling everything from raw materials to the means of production.

Though he was raking in millions of dollars, Carnegie eventually heeded the urge to return to Scotland, where he embarked upon a plan to die penniless. Before contracting a fatal bout of bronchial pneumonia, Carnegie had successfully burned through a good bit of his riches, some of which he used to finance various schools and institutes.

Source: History.com

GM’s Volt boasts 230 miles per gallon

General Motors said on Tuesday that its Chevrolet Volt plug-in hybrid car will boast fuel consumption of 230 miles per gallon in city driving, making it the first mass-produced vehicle with triple-digit fuel economy.

GM provided the estimate as part of a drive to burnish its image and win back customers after emerging from a court-supervised restructuring early last month. It also announced that it will expand its luxury Cadillac brand with the addition of a small, rear-wheel drive sedan.

The Volt, due to go into production in late 2010, will be powered mainly by a battery pack with a 40-mile range. A small internal combustion engine will extend the range by recharging the battery while the car is in motion.

The 230 mpg fuel-consumption figure is based on draft guidelines being developed by the US Environmental Protection Agency. Fritz Henderson, GM’s chief executive, expressed confidence that the Volt would achieve at least 100 miles per gallon in combined city and highway driving.

Toyota’s Prius hatchback, currently the top-selling hybrid, has a fuel-economy rating of 48 mpg.

N.Y. Fed aggressively hires traders as holdings surge

The Federal Reserve Bank of New York plans to bolster its market-group staff, which was at 240 at the end of 2007, to 400 by the end of this year. The bank's soaring securities holdings prompted the hiring spree as the Fed aims to keep credit flowing through the economy. "Once we started to have to implement programs that were clearly outside the traditional credit-easing tools that the Fed has used before, it became illogical to manage some of the new programs inside the current structure," said Patricia Mosser, a senior adviser.

more at

http://www.ft.com/cms/s/0/8a5f8bf8-860d-11de-98de-00144feabdc0.html?nclick_check=1

While A-list Wall Street firms retrench, B-list firms thrive

The financial crisis forced many Wall Street firms to shed staff and retrench, but some B-list companies, such as Schonfeld Group Holdings, prospered during the turmoil. The situation allowed smaller firms to recruit traders from the largest companies. The employment shift is emblematic of a larger change in the trading business.

more at

http://online.wsj.com/article/SB124992646701020111.html

Best Countries for Entrepreneurs

The World Bank Group has published their annual "Doing Business" report that ranks 181 countries on how friendly their regulatory climate is to entrepreneurs.
The report provides a quantitative measure of regulations for starting a business as they apply to domestic small and medium-size enterprises.
Economies are ranked on their ease of doing business. The ease of doing business index means the regulatory environment is conducive to the operation of business.

Ease of Doing Business

1. Singapore
2. New Zealand
3. United States
4. Hong Kong
5. Denmark
6. United Kingdom
7. Ireland
8. Canada
9. Australia
10. Norway

The Ease of Doing Business Index is an index created by the World Bank. Higher rankings indicate better, usually simpler, regulations for businesses and stronger protections of property rights. Empirical research funded by the World Bank to justify their work claims to show that the effect of improving these regulations on economic growth is strong.

"Empirical research is needed to establish the optimal level of business regulation—for example, what the duration of court procedures should be and what the optimal degree of social protection is. The indicators compiled in the Doing Business project allow such research to take place. Since the start of the project in November 2001, more than 800 academic papers have used one or more indicators constructed in Doing Business and the related background papers by its authors"

Other Criteria:

• Ease of Doing Business
• Starting a Business - Procedures, time, cost and paid-in minimum capital to open a new business
• Dealing with Construction Permits - Procedures, time and cost to obtain construction permits, inspections and utility connections
• Employing Workers - Difficulty of hiring index, rigidity of hours index, difficulty of firing index, firing cost
• Registering Property - Procedures, time and cost to transfer commercial real estate
• Getting Credit - Strength of legal rights index, depth of credit information index
• Protecting Investors - Strength of investor protection index: extent of disclosure index, extent of director liability index and ease of shareholder suits index
• Paying Taxes - Number of tax payments, time to prepare and file tax returns and to pay taxes, total taxes as a share of profit before all taxes borne
• Trading Across Borders - Documents, time and cost to export and import
• Enforcing Contracts - Procedures, time and cost to resolve a commercial dispute
• Closing a Business - Recovery rate in bankruptcy

Source: World Bank - Doing Business

Paul Krugman Calls the Bottom

Nobel Prize winning economist Paul Krugman thinks August is the trough month for the U.S. economy. And yes, he is reading a lot into the improved unemployment numbers from July.

Of course, it took trillions in direct spending, guarantees and loans to do it, but he believes we've got actual growth coming. It's worth noting, too, that Krugman estimates the stimulus plans have saved 1 million jobs. So, without the stimulus, unemployment would be around 12%.

more at

http://www.nytimes.com/2009/08/10/opinion/10krugman.html?scp=2&sq=krugman&st=cse

Government reports this week

Aug 11	8:30 AM	Productivity-Prel	Q2	-	5.2%	5.4%	1.6%
Aug 11	8:30 AM	Unit Labor Costs	Q2	-	-2.2%	-2.4%	3.0%
Aug 11	10:00 AM	Wholesale Inventories	Jun	-	-0.9%	-0.9%	-0.8%
Aug 12	8:30 AM	Trade Balance	Jun	-	-$31.0B	-$28.5B	-$26.0B
Aug 12	10:30 AM	Crude Inventories	08/07	-	NA	NA	+1.67M
Aug 12	10:35 AM	Crude Inventories	08/07	-	NA	NA	NA
Aug 12	2:00 PM	Treasury Budget	Jul	-	NA	-$180.0B	NA
Aug 12	2:15 PM	FOMC Rate Decision	-	-	-	-	0.00%-0.25%
Aug 13	8:30 AM	Export Prices ex-ag.	Jul	-	NA	NA	0.8%
Aug 13	8:30 AM	Import Prices ex-oil	Jul	-	NA	NA	0.2%
Aug 13	8:30 AM	Initial Claims	08/08	-	540K	545K	550K
Aug 13	8:30 AM	Retail Sales	Jul	-	0.9%	0.7%	0.6%
Aug 13	8:30 AM	Retail Sales ex-auto	Jul	-	0.3%	0.1%	0.3%
Aug 13	10:00 AM	Business Inventories	Jun	-	-0.9%	-0.9%	-1.0%
Aug 14	8:30 AM	Core CPI	Jul	-	0.1%	0.1%	0.2%
Aug 14	8:30 AM	CPI	Jul	-	0.0%	0.0%	0.7%
Aug 14	9:15 AM	Capacity Utilization	Jul	-	68.5%	68.4%	68.0%
Aug 14	9:15 AM	Industrial Production	Jul	-	0.5%	0.4%	-0.4%
Aug 14	9:55 AM	Mich Sentiment-Prel	Aug	-	70.0	69.0	66.0