'Happily ever after' a long way off for Bank of Cyprus CEO

By Laura Noonan

NICOSIA, March 30 Sun Mar 30, 2014 5:00am EDT

NICOSIA, March 30 (Reuters) - If John Hourican manages to drag Bank of Cyprus back from the brink of collapse, it would resurrect a financial institution, a national economy and his own career.

Deposed less than a year ago as Royal Bank of Scotland's head of investment banking, 43-year-old Hourican faces what is likely to be his defining legacy in trying to resuscitate the stricken Cypriot lender.

For now, the outcome is far from clear.

Hourican takes issue with the romanticised version of his decision to up sticks to Cyprus last November, six months after becoming the most high-profile victim at RBS of a rate-rigging scandal which the bank said the Irishman had no knowledge of.

"I think they (observers) read too much into motivation and into the planning of people's careers," said Hourican, who was paid 7.5 million pounds ($12 million) by RBS for 2011 and earned 141,000 euros for his first two months as Bank of Cyprus CEO. "I took the job because it was in front of me. I have never had a masterplan."

The fates of Bank of Cyprus and the Cypriot economy are intertwined. The island suffered the worst economic growth in the euro zone in 2013 and is expected to repeat that in 2014. The bank accounts for about 30 percent of the country's lending.

Europe is watching to see how Cypriot banks can recover after seizing funds of depositors to shore up capital, a precedent that informed a new EU-wide banking deal.

Russians, who were among the biggest losers in the deposit grab, remain wary of putting cash into the banks and are watching to see if their one-time haven can be restored.

But on the anniversary of its rescue, Bank of Cyprus is in a perilous state, with mounting loan losses, falling deposits and a still-fragile economy threatening its revival.

UPPING THEIR GAME

Over half of Bank of Cyprus's loan book is classed as non-performing, and while Hourican says there has been some recent stabilisation, the chief financial officer at rival Hellenic Bank, Antonis Rouvas, told Reuters he could not predict at what level the banking system's bad debts would stabilise.

They already make up than 40 percent of total lending across the sector, a tally unmatched in the euro zone and well above the 30 percent of neighbouring crisis-hit Greece.

Moves by local lawmakers could make things even worse. Marios Clerides, the chief executive of the Co-operative Central Bank (CCB), told Reuters his bank could need another bailout on top of the 1.5 billion euros it got in February if proposed new laws to protect private homes from repossession are enacted.

"You have to see the political environment we're working in," he said of banks' scant progress with non-performing loans. "The politicians want us to handle things with a velvety touch. The troika wants us to handle them aggressively. We are trying to handle them as best we can."

RBS's former deputy head of non-core operations, Euan Hamilton, is leading Bank of Cyprus's efforts to stem the tide of loan losses. Customers falling behind on their loans are now contacted by the bank as soon as they stop paying and independent experts review business plans of ailing customers before loans are restructured.

Bankers want the state to strengthen their hand by introducing new laws to help them foreclose on the assets pledged as security to back loans, a measure championed by the EC/IMF/ECB teams overseeing Cyprus's bailout.

"The objective is not to penalize householders, but banks need to have the tools to collect their money," Rouvas said.

Hourican and Rouvas are optimistic that lawmakers will come good, but others are not so sure. "People of influence have loans with the banks," said one experienced senior Cypriot banker, pointing to the unpredictability of parliament.

RESTORING TRUST

The most famously invoked parliamentary veto came last March, when politicians refused to sanction initial plans to seize deposits agreed between the government and EU leaders.

A year on, scars from the eventual deposit seizure are still raw, even for depositors at unaffected banks like CCB.

"We say 'we're well capitalised', but there is no trust," said Clerides. "We say that you are insured (for deposits under 100,000 euros). Their reaction is 'what guarantee can you give that they won't change the law?'."

Andreas Neocloueus, a Limassol lawyer who advises Russian clients, says he doesn't expect them to bring any more money into the island even if the political situation at home worsens. "They fear that the banking system is still sick," he said.

Capital controls, introduced to avoid mass withdrawals after the deposit grab, helped contain the fall in Bank of Cyprus's deposits in the last six months of 2013 to 2 billion euros.

"We've analysed the hell out of that," Hourican said on the subject of what would happen to his bank's 15 billion euros deposit book when the controls are fully lifted.

He expects restrictions within Cyprus to be eased over the coming months, but thinks restrictions on bringing money out of the country are likely to last another year. Between now and then, he must make Bank of Cyprus strong enough to withstand the hit.

BUILDING

The bank hired HSBC to review its business plan, including examining the feasibility of splitting itself into a good bank with healthy loans backed by deposits, and a bad bank with troubled loans backed by fresh funding. (ID:nL5N0MM34X]

"Although Cypriot banks have never been heavily reliant on the bond market, looking at what Greece's Piraeus has been able to achieve in recent weeks, I don't think it would be a surprise to see a Cypriot bank in the market," said Dierk Brandenburg, a senior bank credit analyst at Fidelity, referring to Piraeus's raising of 500 million euros on March 18.

Relisting shares, which were suspended in March 2013, is on the to-do list but Bank of Cyprus is likely to ask for an extension of the suspension when it runs out in July, Hourican said.

"A relisting of the stock for some of them (shareholders)would be an indication of progress. To me, there are other indications of progress we need to have in place first," he said, pointing to the bank's need to reduce its 10 billion euro reliance on last-resort central bank funding, tackle non-performing loans and sell non-core assets.

The bank is reforming how it lends, moving away from collateral-based lending to look at cash flow.

Hourican spent 16 years at RBS, where he overhauled the investment bank, cutting 10,000 staff and closing operations in 14 countries. A former colleague said he lost his job after RBS's investment banking arm fell out of political favour.

Hourican said he wants to "leave something lasting", but said he is not after a headstone that credits him with saving Bank of Cyprus.

"I am absolutely not that narcissistic," he said. ($1 = 0.6011 British pounds) (Additional reporting by Aimee Donnellan in London; editing by Tom Pfeiffer)

• Link this
• Share this
• Digg this
• Email
• Print
• Reprints

16.47 | 0 komentar | Read More

RPT-'Happily ever after' a long way off for Bank of Cyprus CEO

Mon Mar 31, 2014 3:00am EDT

(Repeats item from Sunday with no change to text)

By Laura Noonan

NICOSIA, March 30 (Reuters) - If John Hourican manages to drag Bank of Cyprus back from the brink of collapse, it would resurrect a financial institution, a national economy and his own career.

Deposed less than a year ago as Royal Bank of Scotland's head of investment banking, 43-year-old Hourican faces what is likely to be his defining legacy in trying to resuscitate the stricken Cypriot lender.

For now, the outcome is far from clear.

Hourican takes issue with the romanticised version of his decision to up sticks to Cyprus last November, six months after becoming the most high-profile victim at RBS of a rate-rigging scandal which the bank said the Irishman had no knowledge of.

"I think they (observers) read too much into motivation and into the planning of people's careers," said Hourican, who was paid 7.5 million pounds ($12 million) by RBS for 2011 and earned 141,000 euros for his first two months as Bank of Cyprus CEO. "I took the job because it was in front of me. I have never had a masterplan."

The fates of Bank of Cyprus and the Cypriot economy are intertwined. The island suffered the worst economic growth in the euro zone in 2013 and is expected to repeat that in 2014. The bank accounts for about 30 percent of the country's lending.

Europe is watching to see how Cypriot banks can recover after seizing funds of depositors to shore up capital, a precedent that informed a new EU-wide banking deal.

Russians, who were among the biggest losers in the deposit grab, remain wary of putting cash into the banks and are watching to see if their one-time haven can be restored.

But on the anniversary of its rescue, Bank of Cyprus is in a perilous state, with mounting loan losses, falling deposits and a still-fragile economy threatening its revival.

UPPING THEIR GAME

Over half of Bank of Cyprus's loan book is classed as non-performing, and while Hourican says there has been some recent stabilisation, the chief financial officer at rival Hellenic Bank, Antonis Rouvas, told Reuters he could not predict at what level the banking system's bad debts would stabilise.

They already make up than 40 percent of total lending across the sector, a tally unmatched in the euro zone and well above the 30 percent of neighbouring crisis-hit Greece.

Moves by local lawmakers could make things even worse. Marios Clerides, the chief executive of the Co-operative Central Bank (CCB), told Reuters his bank could need another bailout on top of the 1.5 billion euros it got in February if proposed new laws to protect private homes from repossession are enacted.

"You have to see the political environment we're working in," he said of banks' scant progress with non-performing loans. "The politicians want us to handle things with a velvety touch. The troika wants us to handle them aggressively. We are trying to handle them as best we can."

RBS's former deputy head of non-core operations, Euan Hamilton, is leading Bank of Cyprus's efforts to stem the tide of loan losses. Customers falling behind on their loans are now contacted by the bank as soon as they stop paying and independent experts review business plans of ailing customers before loans are restructured.

Bankers want the state to strengthen their hand by introducing new laws to help them foreclose on the assets pledged as security to back loans, a measure championed by the EC/IMF/ECB teams overseeing Cyprus's bailout.

"The objective is not to penalize householders, but banks need to have the tools to collect their money," Rouvas said.

Hourican and Rouvas are optimistic that lawmakers will come good, but others are not so sure. "People of influence have loans with the banks," said one experienced senior Cypriot banker, pointing to the unpredictability of parliament.

RESTORING TRUST

The most famously invoked parliamentary veto came last March, when politicians refused to sanction initial plans to seize deposits agreed between the government and EU leaders.

A year on, scars from the eventual deposit seizure are still raw, even for depositors at unaffected banks like CCB.

"We say 'we're well capitalised', but there is no trust," said Clerides. "We say that you are insured (for deposits under 100,000 euros). Their reaction is 'what guarantee can you give that they won't change the law?'."

Andreas Neocloueus, a Limassol lawyer who advises Russian clients, says he doesn't expect them to bring any more money into the island even if the political situation at home worsens. "They fear that the banking system is still sick," he said.

Capital controls, introduced to avoid mass withdrawals after the deposit grab, helped contain the fall in Bank of Cyprus's deposits in the last six months of 2013 to 2 billion euros.

"We've analysed the hell out of that," Hourican said on the subject of what would happen to his bank's 15 billion euros deposit book when the controls are fully lifted.

He expects restrictions within Cyprus to be eased over the coming months, but thinks restrictions on bringing money out of the country are likely to last another year. Between now and then, he must make Bank of Cyprus strong enough to withstand the hit.

BUILDING

The bank hired HSBC to review its business plan, including examining the feasibility of splitting itself into a good bank with healthy loans backed by deposits, and a bad bank with troubled loans backed by fresh funding. (ID:nL5N0MM34X]

"Although Cypriot banks have never been heavily reliant on the bond market, looking at what Greece's Piraeus has been able to achieve in recent weeks, I don't think it would be a surprise to see a Cypriot bank in the market," said Dierk Brandenburg, a senior bank credit analyst at Fidelity, referring to Piraeus's raising of 500 million euros on March 18.

Relisting shares, which were suspended in March 2013, is on the to-do list but Bank of Cyprus is likely to ask for an extension of the suspension when it runs out in July, Hourican said.

"A relisting of the stock for some of them (shareholders)would be an indication of progress. To me, there are other indications of progress we need to have in place first," he said, pointing to the bank's need to reduce its 10 billion euro reliance on last-resort central bank funding, tackle non-performing loans and sell non-core assets.

The bank is reforming how it lends, moving away from collateral-based lending to look at cash flow.

Hourican spent 16 years at RBS, where he overhauled the investment bank, cutting 10,000 staff and closing operations in 14 countries. A former colleague said he lost his job after RBS's investment banking arm fell out of political favour.

Hourican said he wants to "leave something lasting", but said he is not after a headstone that credits him with saving Bank of Cyprus.

"I am absolutely not that narcissistic," he said. ($1 = 0.6011 British pounds) (Additional reporting by Aimee Donnellan in London; editing by Tom Pfeiffer)

• Link this
• Share this
• Digg this
• Email
• Print
• Reprints

16.47 | 0 komentar | Read More

Blucora plans all-cash offer for Brookstone - WSJ

March 31 Mon Mar 31, 2014 4:12am EDT

March 31 (Reuters) - Web search provider Blucora Inc is set to challenge Spencer Spirit Holdings Inc's bid for consumer electronics retailer Brookstone Inc , the Wall Street Journal reported, citing people familiar with the matter.

Blucora plans to merge Brookstone with Monoprice, the online seller of electronics accessories it bought last year, the newspaper said. (link.reuters.com/gut97v)

Brookstone, which has battled disappointing sales and weak liquidity, has $140 million in debt, the Journal said.

The company, which had been looking for a potential buyer, said last week it was working with the owner of Spencer's retail chain for a sale of the company and was planning to file for bankruptcy to facilitate the process.

Blucora is likely to offer a material premium to Spencer's bid at the bankruptcy auction for Brookstone, which sells products ranging from massage chairs to bathroom slippers, the Journal said.

Blucora owns metasearch engines, including WebCrawler, and TaxACT, and online tax solutions provider.

Spencer, whose offer includes $120 million in cash and assumption of Brookstone's debt, was completing paperwork to be a "stalking horse bidder" at Brookstone's bankruptcy auction, the business daily reported, citing a Brookstone spokeswoman.

"Stalking horse bids" set baseline offers for the assets and are still subject to auctions.

Blucora spokeswoman Stacy Ybarra told Reuters, "We don't comment on speculations or rumors."

Brookstone and Spencer could not immediately be reached outside regular U.S. business hours.

Brookstone was taken private in 2005 by a group led by Osim - Asia's biggest maker of massage chairs - in a $445 million deal. The group included Temasek Holdings and private equity firm JW Childs Associates LP. (Reporting by Arnab Sen in Bangalore)

• Link this
• Share this
• Digg this
• Email
• Print
• Reprints

16.47 | 0 komentar | Read More

UPDATE 1-New York judge unseals guilty pleas in Dewey law firm fraud

Fri Mar 28, 2014 6:28pm EDT

(Adds statement regarding Sanders)

By Karen Freifeld

NEW YORK, March 28 (Reuters) - A New York judge on Friday unsealed the records of six former Dewey & LeBoeuf employees who pleaded guilty in connection with accounting fraud at the law firm.

The records offer a fresh peek into the government's case against top executives at the defunct elite international law firm and how key witnesses might testify against them.

The employees, who range from Dewey's controller to its billing director, agreed to cooperate with prosecutors who have targeted the firm's top management.

Dewey's former chairman, Steven Davis, 60, Executive Director Stephen DiCarmine, 57, and Chief Financial Officer Joel Sanders, 55, were charged March 6 with taking part in a scheme to cheat banks and investors as they struggled unsuccessfully to keep the law firm alive.

Dewey & LeBoeuf collapsed in 2012, the largest U.S. law firm to file for bankruptcy. If convicted of the top counts against them, the executives each face up to 25 years behind bars.

Prosecutors have accused the executives of using accounting fraud so that Dewey & LeBoeuf could get and keep more than $200 million in financing.

The firm's lenders included JPMorgan Chase & Co, Citigroup Inc's private banking unit, Bank of America Corp and HSBC Holdings Plc. Dewey & LeBoeuf also had a $150 million bond offering in 2010.

The court records offer detailed admissions of wrongdoing but hazy accounts of the direct evidence prosecutors have against the three executives and Zachary Warren, 29, a lower-level employee also charged in the case.

Thomas Mullikin, 53, the controller, said he had only infrequent contact with Sanders, "even less" frequent with DiCarmine, and no contact with Davis.

"I never met the firm's chairman," Mullikin said in his formal admission to wrongdoing.

The controller pleaded guilty to a felony charge known as scheme to defraud. If he cooperates, prosecutors said they would recommend a jail sentence of five months.

The other staffers who pleaded guilty include Budget Director Ilya Alter, 38, Revenue Support Director Dianne Cascino 55, Accounting Manager Jyhjing "Victoria" Harrington, 42, Partner Relations Specialist David Rodriguez, 39, and Billing Director Lourdes Rodriguez, 43.

Their crimes range from falsifying business records to misdemeanor and felony counts of scheme to defraud.

Prosecutors said in the agreements they would recommend no jail time for the five, if they meet certain conditions.

Dewey's ex-Finance Director Francis Canella also pleaded guilty in the case. His record was unsealed on Thursday. Prosecutors will recommend a sentence of two to six years in prison, if he cooperates, according to his agreement.

Lawyers for the top executives, who have pleaded not guilty, said the witnesses had not provided direct evidence against their clients.

Still, the admissions contained comments that prosecutors may use in an effort to implicate Sanders.

"I was instructed by Joel Sanders to create invoices, knowing that they would not be sent to clients," Lourdes Rodriguez said in her statement.

The former billing manager said she understood the invoices were "to hit certain numbers" that were required by the firm's loan agreements with banks.

A lawyer for Warren could not immediately be reached.

The case is New York v Davis et al, New York State Supreme Court, New York County. (Reporting by Karen Freifeld; Editing by Andrew Hay and Dan Grebler)

• Link this
• Share this
• Digg this
• Email
• Print
• Reprints

16.47 | 0 komentar | Read More

UPDATE 3-PwC is sued for $1 billion over MF Global collapse

Fri Mar 28, 2014 6:23pm EDT

(Adds PwC statement)

By Jonathan Stempel

NEW YORK, March 28 (Reuters) - The administrator of MF Global Holdings Ltd's bankruptcy plan on Friday sued the auditor PricewaterhouseCoopers for at least $1 billion over its advice on a $6.3 billion European sovereign debt investment that helped fuel the brokerage's rapid demise.

According to a complaint filed in U.S. District Court in Manhattan, PwC committed professional malpractice by offering "flatly erroneous" advice concerning, and approval of, the off-balance-sheet accounting treatment for the debt by MF Global and its then-chief executive, Jon Corzine.

The complaint said PwC knew that the investment would add significant risk to MF Global's already weak finances. It said MF Global would not have taken on the exposure, which allowed it to book immediate revenue, had it received sound advice.

"PwC's professional malpractice and negligence were a direct and proximate cause of massive damages the company suffered," the complaint said.

Caroline Nolan, a PwC spokeswoman, said that the accounting treatment that is the subject of the complaint has been examined by trustees, regulators and a congressional committee.

"None of them has found that the accounting for those transactions was incorrect. PwC is disappointed that this meritless claim has been brought."

Corzine invested $6.3 billion in debt of countries such as Belgium, Ireland, Italy, Portugal and Spain to advance his strategy of transforming his futures and commodities brokerage into a global investment bank.

But as Europe's economy weakened, MF Global struggled with worries about the debt, margin calls, credit rating downgrades, and news that money from customer accounts was used to cover liquidity shortfalls, ending in its Oct. 31, 2011 bankruptcy.

The complaint said it is the first seeking to hold PwC liable for malpractice over its accounting advice for the sovereign debt. It does not address how customer money was used. Creditors would share in recoveries if the lawsuit succeeds.

Corzine is a former governor and U.S. senator from New Jersey, and former co-chairman of Goldman Sachs. He is not a defendant in the PwC case but faces other lawsuits over MF Global from investors, customers and U.S. regulators.

DIRECTOR "DID NOT LIKE" ACCOUNTING TREATMENT

MF Global's plan administrator is a three-member board to which Louis Freeh, the former Federal Bureau of Investigation director and original court-appointed MF Global trustee, assigned his rights to pursue claims on creditors' behalf.

Corzine had made the sovereign debt investments through so-called repurchase-to-maturity trades, in which he agreed to sell securities and repurchase them later at higher prices, enabling MF Global to obtain short-term funding while boosting leverage.

According to Freeh's April 2013 report on MF Global's collapse, the company's board became increasingly concerned in 2011 over the portfolio's growing size.

He said at least one director, David Schamis, "did not like" the "accounting-driven structure," which let MF Global recognize upfront profit while satisfying rating agencies, and was concerned about MF Global's ability to unwind the trades.

Schamis, a former executive at private equity firm JC Flowers & Co, is a founding partner of Atlas Merchant Capital in New York. He could not immediately be reached for comment.

Former MF Global customers had also sued PwC over the company's collapse, but a federal judge last month dismissed those claims.

The case is MF Global Holdings Ltd as Plan Administrator v. PricewaterhouseCoopers LLP, U.S. District Court, Southern District of New York, No. 14-02197. (Reporting by Jonathan Stempel and Nate Raymond in New York; Editing by Ken Wills, Jonathan Oatis and Bernard Orr)

• Link this
• Share this
• Digg this
• Email
• Print
• Reprints

16.47 | 0 komentar | Read More

'Happily ever after' a long way off for Bank of Cyprus CEO

By Laura Noonan

NICOSIA, March 30 Sun Mar 30, 2014 5:00am EDT

NICOSIA, March 30 (Reuters) - If John Hourican manages to drag Bank of Cyprus back from the brink of collapse, it would resurrect a financial institution, a national economy and his own career.

Deposed less than a year ago as Royal Bank of Scotland's head of investment banking, 43-year-old Hourican faces what is likely to be his defining legacy in trying to resuscitate the stricken Cypriot lender.

For now, the outcome is far from clear.

Hourican takes issue with the romanticised version of his decision to up sticks to Cyprus last November, six months after becoming the most high-profile victim at RBS of a rate-rigging scandal which the bank said the Irishman had no knowledge of.

"I think they (observers) read too much into motivation and into the planning of people's careers," said Hourican, who was paid 7.5 million pounds ($12 million) by RBS for 2011 and earned 141,000 euros for his first two months as Bank of Cyprus CEO. "I took the job because it was in front of me. I have never had a masterplan."

The fates of Bank of Cyprus and the Cypriot economy are intertwined. The island suffered the worst economic growth in the euro zone in 2013 and is expected to repeat that in 2014. The bank accounts for about 30 percent of the country's lending.

Europe is watching to see how Cypriot banks can recover after seizing funds of depositors to shore up capital, a precedent that informed a new EU-wide banking deal.

Russians, who were among the biggest losers in the deposit grab, remain wary of putting cash into the banks and are watching to see if their one-time haven can be restored.

But on the anniversary of its rescue, Bank of Cyprus is in a perilous state, with mounting loan losses, falling deposits and a still-fragile economy threatening its revival.

UPPING THEIR GAME

Over half of Bank of Cyprus's loan book is classed as non-performing, and while Hourican says there has been some recent stabilisation, the chief financial officer at rival Hellenic Bank, Antonis Rouvas, told Reuters he could not predict at what level the banking system's bad debts would stabilise.

They already make up than 40 percent of total lending across the sector, a tally unmatched in the euro zone and well above the 30 percent of neighbouring crisis-hit Greece.

Moves by local lawmakers could make things even worse. Marios Clerides, the chief executive of the Co-operative Central Bank (CCB), told Reuters his bank could need another bailout on top of the 1.5 billion euros it got in February if proposed new laws to protect private homes from repossession are enacted.

"You have to see the political environment we're working in," he said of banks' scant progress with non-performing loans. "The politicians want us to handle things with a velvety touch. The troika wants us to handle them aggressively. We are trying to handle them as best we can."

RBS's former deputy head of non-core operations, Euan Hamilton, is leading Bank of Cyprus's efforts to stem the tide of loan losses. Customers falling behind on their loans are now contacted by the bank as soon as they stop paying and independent experts review business plans of ailing customers before loans are restructured.

Bankers want the state to strengthen their hand by introducing new laws to help them foreclose on the assets pledged as security to back loans, a measure championed by the EC/IMF/ECB teams overseeing Cyprus's bailout.

"The objective is not to penalize householders, but banks need to have the tools to collect their money," Rouvas said.

Hourican and Rouvas are optimistic that lawmakers will come good, but others are not so sure. "People of influence have loans with the banks," said one experienced senior Cypriot banker, pointing to the unpredictability of parliament.

RESTORING TRUST

The most famously invoked parliamentary veto came last March, when politicians refused to sanction initial plans to seize deposits agreed between the government and EU leaders.

A year on, scars from the eventual deposit seizure are still raw, even for depositors at unaffected banks like CCB.

"We say 'we're well capitalised', but there is no trust," said Clerides. "We say that you are insured (for deposits under 100,000 euros). Their reaction is 'what guarantee can you give that they won't change the law?'."

Andreas Neocloueus, a Limassol lawyer who advises Russian clients, says he doesn't expect them to bring any more money into the island even if the political situation at home worsens. "They fear that the banking system is still sick," he said.

Capital controls, introduced to avoid mass withdrawals after the deposit grab, helped contain the fall in Bank of Cyprus's deposits in the last six months of 2013 to 2 billion euros.

"We've analysed the hell out of that," Hourican said on the subject of what would happen to his bank's 15 billion euros deposit book when the controls are fully lifted.

He expects restrictions within Cyprus to be eased over the coming months, but thinks restrictions on bringing money out of the country are likely to last another year. Between now and then, he must make Bank of Cyprus strong enough to withstand the hit.

BUILDING

The bank hired HSBC to review its business plan, including examining the feasibility of splitting itself into a good bank with healthy loans backed by deposits, and a bad bank with troubled loans backed by fresh funding. (ID:nL5N0MM34X]

"Although Cypriot banks have never been heavily reliant on the bond market, looking at what Greece's Piraeus has been able to achieve in recent weeks, I don't think it would be a surprise to see a Cypriot bank in the market," said Dierk Brandenburg, a senior bank credit analyst at Fidelity, referring to Piraeus's raising of 500 million euros on March 18.

Relisting shares, which were suspended in March 2013, is on the to-do list but Bank of Cyprus is likely to ask for an extension of the suspension when it runs out in July, Hourican said.

"A relisting of the stock for some of them (shareholders)would be an indication of progress. To me, there are other indications of progress we need to have in place first," he said, pointing to the bank's need to reduce its 10 billion euro reliance on last-resort central bank funding, tackle non-performing loans and sell non-core assets.

The bank is reforming how it lends, moving away from collateral-based lending to look at cash flow.

Hourican spent 16 years at RBS, where he overhauled the investment bank, cutting 10,000 staff and closing operations in 14 countries. A former colleague said he lost his job after RBS's investment banking arm fell out of political favour.

Hourican said he wants to "leave something lasting", but said he is not after a headstone that credits him with saving Bank of Cyprus.

"I am absolutely not that narcissistic," he said. ($1 = 0.6011 British pounds) (Additional reporting by Aimee Donnellan in London; editing by Tom Pfeiffer)

• Link this
• Share this
• Digg this
• Email
• Print
• Reprints

16.47 | 0 komentar | Read More

New York Judge unseals guilty pleas in Dewey law firm fraud

By Karen Freifeld

NEW YORK, March 28 Fri Mar 28, 2014 5:16pm EDT

NEW YORK, March 28 (Reuters) - A New York judge on Friday unsealed the records of six former Dewey & LeBoeuf employees who pleaded guilty in connection with accounting fraud at the law firm.

The records offer a new peek into the government's case against top executives at the defunct elite international law firm and how key witnesses might testify against them.

The employees, who range from Dewey's controller to its billing director, agreed to cooperate with prosecutors who have targeted the firm's top management.

Dewey's former chairman Steven Davis, 60, executive director Stephen DiCarmine, 57, and chief financial officer Joel Sanders, 55, were charged March 6 with taking part in a scheme to cheat banks and investors as they struggled unsuccessfully to keep the law firm alive.

Dewey & LeBoeuf collapsed in 2012, becoming the largest U.S. law firm to file for bankruptcy. If convicted of the top counts against them, the executives each face up to 25 years behind bars.

Prosecutors have accused the executives of using accounting fraud so that Dewey & LeBoeuf could get and keep more than $200 million in financing.

The firm's lenders included JPMorgan Chase & Co, Citigroup Inc's private banking unit, Bank of America Corp and HSBC Holdings Plc. Dewey & LeBoeuf also had a $150 million bond offering in 2010.

The court records offer detailed admissions of wrongdoing but hazy accounts of the direct evidence prosecutors have against the executive trio and Zachary Warren, 29, a lower level employee also charged in the case.

Thomas Mullikin, 53, the controller, said he had only infrequent contact with Sanders, "even less" frequent with DiCarmine, and no contact with Davis.

"I never met the firm's chairman," Mullikin said in his formal admission to wrongdoing.

The controller pleaded guilty to a felony charge known as scheme to defraud. If he cooperates, prosecutors said they would recommend a jail sentence of five months.

The other staffers who pleaded guilty include budget director Ilya Alter, 38, revenue support director Dianne Cascino 55, accounting manager Jyhjing "Victoria" Harrington, 42, partner relations specialist David Rodriguez, 39, and billing director Lourdes Rodriguez, 43.

Their crimes range from falsifying business records to misdemeanor and felony counts of scheme to defraud.

Prosecutors said in the agreements they would recommend no jail time for the five, if they meet certain conditions.

Dewey's ex-finance director Francis Canella also pleaded guilty in the case. His record was unsealed on Thursday. Prosecutors will recommend a sentence of two to six years in prison for him, if he cooperates, according to his agreement.

Lawyers for the top executives, who have pleaded not guilty, said the witnesses had not provided direct evidence against their clients. A lawyer for Warren could not immediately be reached.

The case is New York v Davis et al, New York State Supreme Court, New York County. (Reporting By Karen Freifeld; editing by Andrew Hay)

• Link this
• Share this
• Digg this
• Email
• Print
• Reprints

16.47 | 0 komentar | Read More

UPDATE 3-PwC is sued for $1 billion over MF Global collapse

Fri Mar 28, 2014 6:23pm EDT

(Adds PwC statement)

By Jonathan Stempel

NEW YORK, March 28 (Reuters) - The administrator of MF Global Holdings Ltd's bankruptcy plan on Friday sued the auditor PricewaterhouseCoopers for at least $1 billion over its advice on a $6.3 billion European sovereign debt investment that helped fuel the brokerage's rapid demise.

According to a complaint filed in U.S. District Court in Manhattan, PwC committed professional malpractice by offering "flatly erroneous" advice concerning, and approval of, the off-balance-sheet accounting treatment for the debt by MF Global and its then-chief executive, Jon Corzine.

The complaint said PwC knew that the investment would add significant risk to MF Global's already weak finances. It said MF Global would not have taken on the exposure, which allowed it to book immediate revenue, had it received sound advice.

"PwC's professional malpractice and negligence were a direct and proximate cause of massive damages the company suffered," the complaint said.

Caroline Nolan, a PwC spokeswoman, said that the accounting treatment that is the subject of the complaint has been examined by trustees, regulators and a congressional committee.

"None of them has found that the accounting for those transactions was incorrect. PwC is disappointed that this meritless claim has been brought."

Corzine invested $6.3 billion in debt of countries such as Belgium, Ireland, Italy, Portugal and Spain to advance his strategy of transforming his futures and commodities brokerage into a global investment bank.

But as Europe's economy weakened, MF Global struggled with worries about the debt, margin calls, credit rating downgrades, and news that money from customer accounts was used to cover liquidity shortfalls, ending in its Oct. 31, 2011 bankruptcy.

The complaint said it is the first seeking to hold PwC liable for malpractice over its accounting advice for the sovereign debt. It does not address how customer money was used. Creditors would share in recoveries if the lawsuit succeeds.

Corzine is a former governor and U.S. senator from New Jersey, and former co-chairman of Goldman Sachs. He is not a defendant in the PwC case but faces other lawsuits over MF Global from investors, customers and U.S. regulators.

DIRECTOR "DID NOT LIKE" ACCOUNTING TREATMENT

MF Global's plan administrator is a three-member board to which Louis Freeh, the former Federal Bureau of Investigation director and original court-appointed MF Global trustee, assigned his rights to pursue claims on creditors' behalf.

Corzine had made the sovereign debt investments through so-called repurchase-to-maturity trades, in which he agreed to sell securities and repurchase them later at higher prices, enabling MF Global to obtain short-term funding while boosting leverage.

According to Freeh's April 2013 report on MF Global's collapse, the company's board became increasingly concerned in 2011 over the portfolio's growing size.

He said at least one director, David Schamis, "did not like" the "accounting-driven structure," which let MF Global recognize upfront profit while satisfying rating agencies, and was concerned about MF Global's ability to unwind the trades.

Schamis, a former executive at private equity firm JC Flowers & Co, is a founding partner of Atlas Merchant Capital in New York. He could not immediately be reached for comment.

Former MF Global customers had also sued PwC over the company's collapse, but a federal judge last month dismissed those claims.

The case is MF Global Holdings Ltd as Plan Administrator v. PricewaterhouseCoopers LLP, U.S. District Court, Southern District of New York, No. 14-02197. (Reporting by Jonathan Stempel and Nate Raymond in New York; Editing by Ken Wills, Jonathan Oatis and Bernard Orr)

• Link this
• Share this
• Digg this
• Email
• Print
• Reprints

16.47 | 0 komentar | Read More

UPDATE 1-New York judge unseals guilty pleas in Dewey law firm fraud

Fri Mar 28, 2014 6:28pm EDT

(Adds statement regarding Sanders)

By Karen Freifeld

NEW YORK, March 28 (Reuters) - A New York judge on Friday unsealed the records of six former Dewey & LeBoeuf employees who pleaded guilty in connection with accounting fraud at the law firm.

The records offer a fresh peek into the government's case against top executives at the defunct elite international law firm and how key witnesses might testify against them.

The employees, who range from Dewey's controller to its billing director, agreed to cooperate with prosecutors who have targeted the firm's top management.

Dewey's former chairman, Steven Davis, 60, Executive Director Stephen DiCarmine, 57, and Chief Financial Officer Joel Sanders, 55, were charged March 6 with taking part in a scheme to cheat banks and investors as they struggled unsuccessfully to keep the law firm alive.

Dewey & LeBoeuf collapsed in 2012, the largest U.S. law firm to file for bankruptcy. If convicted of the top counts against them, the executives each face up to 25 years behind bars.

Prosecutors have accused the executives of using accounting fraud so that Dewey & LeBoeuf could get and keep more than $200 million in financing.

The firm's lenders included JPMorgan Chase & Co, Citigroup Inc's private banking unit, Bank of America Corp and HSBC Holdings Plc. Dewey & LeBoeuf also had a $150 million bond offering in 2010.

The court records offer detailed admissions of wrongdoing but hazy accounts of the direct evidence prosecutors have against the three executives and Zachary Warren, 29, a lower-level employee also charged in the case.

Thomas Mullikin, 53, the controller, said he had only infrequent contact with Sanders, "even less" frequent with DiCarmine, and no contact with Davis.

"I never met the firm's chairman," Mullikin said in his formal admission to wrongdoing.

The controller pleaded guilty to a felony charge known as scheme to defraud. If he cooperates, prosecutors said they would recommend a jail sentence of five months.

The other staffers who pleaded guilty include Budget Director Ilya Alter, 38, Revenue Support Director Dianne Cascino 55, Accounting Manager Jyhjing "Victoria" Harrington, 42, Partner Relations Specialist David Rodriguez, 39, and Billing Director Lourdes Rodriguez, 43.

Their crimes range from falsifying business records to misdemeanor and felony counts of scheme to defraud.

Prosecutors said in the agreements they would recommend no jail time for the five, if they meet certain conditions.

Dewey's ex-Finance Director Francis Canella also pleaded guilty in the case. His record was unsealed on Thursday. Prosecutors will recommend a sentence of two to six years in prison, if he cooperates, according to his agreement.

Lawyers for the top executives, who have pleaded not guilty, said the witnesses had not provided direct evidence against their clients.

Still, the admissions contained comments that prosecutors may use in an effort to implicate Sanders.

"I was instructed by Joel Sanders to create invoices, knowing that they would not be sent to clients," Lourdes Rodriguez said in her statement.

The former billing manager said she understood the invoices were "to hit certain numbers" that were required by the firm's loan agreements with banks.

A lawyer for Warren could not immediately be reached.

The case is New York v Davis et al, New York State Supreme Court, New York County. (Reporting by Karen Freifeld; Editing by Andrew Hay and Dan Grebler)

• Link this
• Share this
• Digg this
• Email
• Print
• Reprints

16.47 | 0 komentar | Read More

Ex-Dewey finance director admits accounting was false

By Karen Freifeld

NEW YORK, March 27 Thu Mar 27, 2014 4:02pm EDT

NEW YORK, March 27 (Reuters) - Dewey & LeBoeuf's ex-finance director pleaded guilty to grand larceny last month and admitted he knew false financial statements were being provided to the firm's lenders, according to court documents unsealed on Thursday.

Francis Canellas, 34, faces anywhere between no jail time and five to 15 years, the documents showed, for his role in the accounting fraud at Dewey & LeBoeuf, which became the largest U.S. law firm collapse when it went bankrupt in May 2012.

He is one of seven firm employees who have pleaded guilty to the fraud, according to prosecutors, and has agreed to cooperate in the case against the firm's management.

Dewey & LeBoeuf's former chairman Steven Davis, 60, executive director Stephen DiCarmine, 57, chief financial officer Joel Sanders, 55, and client relations manager Zachary Warren, 29, were all criminally charged March 6 for the alleged use of accounting gimmicks and fraud to cheat banks and investors in a failed attempt to keep the law firm alive.

"We all knew that adjustments were being made to deceive our lenders and others," Canellas said in a five-page statement unsealed on Thursday by Manhattan State Supreme Court Justice Michael Obus.

Dewey's lenders included JPMorgan Chase & Co, Citigroup Inc's private banking unit, Bank of America Corp and HSBC Holdings Plc.

Canellas said the "inappropriate" adjustments began in late 2008 after Sanders told him that DiCarmine and Davis said they needed to meet cash flow covenants in the firm's credit agreements. Over the years, he said, he instructed others to make the adjustments.

Canellas also said he, Sanders and others provided information "that we knew to be false" to investors in a $150 million bond offering in 2010, and that he participated in efforts to keep the firm's auditors, Ernst & Young, in the dark.

"We're not surprised that a cooperating witness who has admitted to a crime is trying to implicate others and blame them, especially when he got such a sweet deal," said New York attorney Edward Little, who represents Sanders.

Attorney Austin Campriello, who represents DiCarmine, called the statement a "very thin reed on which to build a case against Steve DiCarmine." He said the case against his client "will crumble."

Lawyers for Davis and Warren did not immediately return calls for comment.

Agreements for the six other employees who have pleaded guilty are expected to be unsealed on Friday.

A separate civil case was filed by the U.S. Securities and Exchange Commission over the bond offering.

The case is New York v Davis et al, New York State Supreme Court, New York County.

(Reporting By Karen Freifeld; Editing by Diane Craft)

• Link this
• Share this
• Digg this
• Email
• Print
• Reprints

16.48 | 0 komentar | Read More

Detroit loosens latest swaps proposal, to submit debt plan Monday

March 27 Thu Mar 27, 2014 5:23pm EDT

March 27 (Reuters) - Detroit dropped a key requirement in its latest version of an agreement on costly interest rate swaps with two investment banks, which was filed in court late Wednesday.

Under the agreement, UBS AG and Merrill Lynch Capital Services, a unit of Bank of America Corp. would no longer have to support the financially hobbled city's plan to restructure its debts.

Other creditors had said they could be subject to a "cram down" if the banks officially approved the plan. Under Chapter 9 of the federal bankruptcy code, once a city wins agreement from a single class of creditors whose interests are impaired by bankruptcy it can then impose settlement terms on other classes of creditors.

In the agreement, though, the banks state they will not object to a debt-adjustment plan.

On Monday, Detroit will submit to the bankruptcy court an amended adjustment plan, along with a revised disclosure statement that responds to various "informal requests for the inclusion of additional information," the city said in a filing on Thursday.

Bankruptcy Court Judge Steven Rhodes has scheduled a hearing for April 4 on the plan and its treatment of retirees.

The city's emergency manager, Kevyn Orr, is seeking to wind down the expensive interest rate swaps used to hedge pension debt. Under the agreement, the city would pay the banks $42.5 million each to settle swaps estimated at around $285 million.

Rhodes has rejected previous proposals from the city and banks to end the swaps as too expensive for the city.

Detroit filed for bankruptcy protection last July, the largest municipal filing in U.S. history. (Reporting by Lisa Lambert; Additional reporting by Karen Pierog in Chicago; Editing by Leslie Adler)

• Link this
• Share this
• Digg this
• Email
• Print
• Reprints

16.48 | 0 komentar | Read More

UPDATE 1-Ex-Dewey finance director admits accounting was false

Thu Mar 27, 2014 6:12pm EDT

(Adds comment from former chairman's lawyer)

By Karen Freifeld

NEW YORK, March 27 (Reuters) - Dewey & LeBoeuf's ex-finance director pleaded guilty to grand larceny last month and admitted he knew false financial statements were being provided to the firm's lenders, according to court documents unsealed on Thursday.

Francis Canellas, 34, faces anywhere between no jail time and five to 15 years, the documents showed, for his role in the accounting fraud at Dewey & LeBoeuf, which became the largest U.S. law firm collapse when it went bankrupt in May 2012.

He is one of seven firm employees who have pleaded guilty to the fraud, according to prosecutors, and has agreed to cooperate in the case against the firm's management.

Dewey & LeBoeuf's former chairman Steven Davis, 60, executive director Stephen DiCarmine, 57, chief financial officer Joel Sanders, 55, and client relations manager Zachary Warren, 29, were all criminally charged March 6 for the alleged use of accounting gimmicks and fraud to cheat banks and investors in a failed attempt to keep the law firm alive.

"We all knew that adjustments were being made to deceive our lenders and others," Canellas said in a five-page statement unsealed on Thursday by Manhattan State Supreme Court Justice Michael Obus.

Dewey's lenders included JPMorgan Chase & Co, Citigroup Inc's private banking unit, Bank of America Corp and HSBC Holdings Plc.

Canellas said the "inappropriate" adjustments began in late 2008 after Sanders told him that DiCarmine and Davis said they needed to meet cash flow covenants in the firm's credit agreements. Over the years, he said, he instructed others to make the adjustments.

Canellas also said he, Sanders and others provided information "that we knew to be false" to investors in a $150 million bond offering in 2010, and that he participated in efforts to keep the firm's auditors, Ernst & Young, in the dark.

Lawyers for the executives charged in the case played down the potential impact of Canellas's statement. All of the executives have pleaded not guilty.

Attorney Elkan Abramowitz, who represents Davis, said the statement does not contain "any direct evidence of wrongdoing against Davis because there isn't any."

Austin Campriello, the attorney who represents DiCarmine, called Canellas's statement a "very thin reed on which to build a case against Steve DiCarmine." He said the case against his client "will crumble."

New York attorney Edward Little, who represents Sanders, said he was not surprised "that a cooperating witness who has admitted to a crime is trying to implicate others and blame them, especially when he got such a sweet deal."

Canellas said in the statement that he interacted with Sanders on a daily basis and discussed their activities.

Lawyers for Warren and Canellas could not be immediately reached for comment.

Agreements for the six other employees who have pleaded guilty are expected to be unsealed on Friday.

A separate civil case was filed by the U.S. Securities and Exchange Commission over the bond offering.

The case is New York v Davis et al, New York State Supreme Court, New York County.

(Reporting By Karen Freifeld; Editing by Diane Craft)

• Link this
• Share this
• Digg this
• Email
• Print
• Reprints

16.48 | 0 komentar | Read More

PRESS DIGEST - Wall Street Journal - March 27

March 27 Thu Mar 27, 2014 1:31am EDT

March 27 (Reuters) - The following are the top stories in the Wall Street Journal. Reuters has not verified these stories and does not vouch for their accuracy.

* Citigroup Inc failed to get Federal Reserve approval to reward investors with higher dividends and stock buybacks, a surprising blow to Chief Executive Michael Corbat's effort to bolster the bank's reputation following a 2008 government rescue. The Fed rejected capital plans from five large banks and approved 25 as part of its annual "stress tests" measuring a firm's ability to continue lending during a severe economic downturn. (link.reuters.com/xeb97v)

* Bank of America Corp and former Chief Executive Kenneth Lewis took big steps to put the financial crisis behind them by paying state and federal agencies to settle lawsuits over the acquisitions of Countrywide Financial Corp and Merrill Lynch & Co. The Charlotte, North Carolina-based lender said it would pay $9.5 billion to settle mortgage claims with Fannie Mae, Freddie Mac and their federal regulator. (link.reuters.com/bub97v)

* Brookstone Inc, which sells consumer gadgets ranging from travel electronics to massage chairs, is preparing to file for bankruptcy protection as early as Sunday, with a plan in place to be bought by another specialty retailer Spencer Spirit Holdings Inc, people familiar with the matter said. (link.reuters.com/jeb97v)

* Microsoft Corp's new boss on Thursday will have his first shot at outlining a new, less Windows-dependent path for the company. Chief Executive Satya Nadella, at an event in San Francisco, is expected to disclose a new version of Microsoft's popular Office software for the iPad, people familiar with the matter said. (link.reuters.com/hub97v)

* An internal investigation into the George Washington Bridge lane closures conducted by lawyers hired by the Christie administration is expected to absolve additional members of Governor Chris Christie's senior staff from being involved in the matter. (link.reuters.com/kub97v) (Compiled by Arnab Sen in Bangalore)

• Link this
• Share this
• Digg this
• Email
• Print
• Reprints

16.47 | 0 komentar | Read More

UniCredit tests interest for Italy's first Additional Tier 1 bond

By Aimee Donnellan

Thu Mar 27, 2014 4:46am EDT

LONDON, March 27 (IFR) - UniCredit is testing investor interest for Italy's first Additional Tier 1 bond at 8.25% area, having already marketed the deal in the low 8% range in Asia, according to a lead manager.

The Italian lender is planning to price the benchmark-sized perpetual non-call 10-year US dollar issue later today via lead managers Citigroup, HSBC, Societe Generale, UBS and UniCredit's own investment banking unit acting.

The transaction is expected to be rated BB- by Fitch and will write down temporarily if UniCredit's Common Equity Tier 1 ratio falls below 5.125%. (Reporting by Aimee Donnellan, Editing by Helene Durand, Julian Baker)

16.47 | 0 komentar | Read More

UPDATE 1-UniCredit tests interest for Italy's first Additional Tier 1 bond

Thu Mar 27, 2014 5:17am EDT

(Adds background information)

By Aimee Donnellan

LONDON, March 27 (IFR) - UniCredit will become the latest bank to issue a deeply subordinated issue later on Thursday as it seeks to bolster its balance sheet and meet new regulatory requirements.

The Italian lender joins the likes of Banco Santander, Nationwide Building Society and Danske Bank, which have all issued Additional Tier 1 debt in recent weeks, making the most of investors' strong appetite for these securities that expose bondholders to the potential for big losses.

The borrower is testing investor interest for Italy's first Additional Tier 1 bond at 8.25% area, having already marketed the deal in the low 8% range in Asia, according to a lead manager.

The Italian lender is planning to price the benchmark-sized perpetual non-call 10-year US dollar issue later today via Citigroup, HSBC, Societe Generale, UBS and UniCredit's own investment banking unit acting.

The transaction is expected to be rated BB- by Fitch and will write down temporarily if UniCredit's Common Equity Tier 1 ratio falls below 5.125%.

UniCredit has got in ahead of Societe Generale, which had to put a euro Additional Tier 1 issue on hold on Wednesday ahead of a rating announcement. Fitch subsequently put the French bank's single A rating on negative outlook.

UniCredit delayed its high profile capital transaction by two weeks, according to sources, having posted a loss of EUR14bn due to huge writedowns on bad loans and past acquisitions as it moved to clean up its balance sheet ahead of an industry-wide health check by the European Central Bank.

Unlike issuance from the Spanish banks, which converts into equity if the bank breaches a 5.125% Common Equity Tier 1 ratio, UniCredit will have a temporary write-down mechanism, meaning that investors could see their holdings recover if the bank gets back on its feet.

UniCredit's fully-loaded Basel III Common Equity Tier 1 capital adequacy ratio, a closely-watched measure of a bank's financial strength, stood at 9.4% of risk-weighted assets at the end of 2013.

French banks have favoured the structure, with both Societe Generale and Credit Agricole issuing these deeply subordinated bonds, although the latter chose a higher trigger. (Reporting by Aimee Donnellan, Editing by Helene Durand, Julian Baker)

• Link this
• Share this
• Digg this
• Email
• Print
• Reprints

16.47 | 0 komentar | Read More

UPDATE 1-Ex-Sentinel CEO found guilty over $500 million fraud

Tue Mar 25, 2014 6:23pm EDT

(Adds allegations, case citation, byline)

By Jonathan Stempel

March 25 (Reuters) - The former chief executive officer of Sentinel Management Group Inc was found guilty on Tuesday of defrauding customers out of more than $500 million before the suburban Chicago firm collapsed in August 2007, federal prosecutors said.

Jurors deliberated less than two hours in Chicago federal court before finding Eric Bloom, 49, of Northbrook, Illinois, guilty on 18 counts of wire fraud and one count of investment adviser fraud, following a four-week trial, the office of U.S. Attorney Zachary Fardon said.

Terence Campbell and Theodore Poulos, who represented Bloom, did not immediately respond to requests for comment.

Each wire fraud count carries a maximum 20-year prison term plus a fine. The government is also seeking a forfeiture of more than $500 million. Bloom is free on bond pending sentencing.

The case had originally been brought by then-U.S. Attorney Patrick Fitzgerald, who called it one of the largest fraud cases ever brought in Chicago federal court.

Sentinel had managed short-term cash belonging to futures commission merchants, commodity pools, hedge funds and others, and according to prosecutors once oversaw more than $1 billion.

Bloom had been accused of defrauding more than 70 customers in a scheme that ran from January 2003 to Aug. 17, 2007, when his Northbrook-based firm filed for bankruptcy.

Prosecutors said Bloom falsely represented to customers the risks of investing with Sentinel, including by concealing its use of leverage and exposure to many illiquid securities.

Bloom and co-defendant Charles Mosley, Sentinel's head trader, were also accused of pledging customer money as collateral for a Bank of New York Mellon Corp credit line, which grew to more than $415 million, that funded a "house" trading portfolio to benefit them and Bloom's family.

Prosecutors said Bloom took in more than $100 million in the scheme's final weeks despite knowing a default on the credit line was possible, and on Aug. 13, 2007 misled customers by blaming Sentinel's inability to honor redemptions on a "liquidity crisis" and "investor fear and panic."

Assistant U.S. Attorney Clifford Histed told jurors during closing arguments not that Sentinel was a victim of the credit crisis, but rather that the crisis "exposed" its long-running fraud, Fardon's office said,

Bank of New York Mellon was not charged with wrongdoing.

Mosley, 50, who lives in Vernon Hills, Illinois, pleaded guilty in October to two counts of investment adviser fraud and is awaiting sentencing, court records show.

The case is U.S. v. Bloom, U.S. District Court, Northern District of Illinois, No. 12-cr-00409. (Reporting by Jonathan Stempel in New York; Editing by Lisa Shumaker, Bernard Orr)

• Link this
• Share this
• Digg this
• Email
• Print
• Reprints

16.48 | 0 komentar | Read More

UPDATE 2-Ex-Sentinel CEO found guilty over $500 million fraud

Wed Mar 26, 2014 1:01am EDT

(Adds comment from Bloom's lawyer)

By Jonathan Stempel

March 26 (Reuters) - The former chief executive officer of Sentinel Management Group Inc was found guilty on Tuesday of defrauding customers out of more than $500 million before the suburban Chicago firm collapsed in August 2007, federal prosecutors said.

Jurors deliberated less than two hours in Chicago federal court before finding Eric Bloom, 49, of Northbrook, Illinois, guilty on 18 counts of wire fraud and one count of investment adviser fraud, following a four-week trial, the office of U.S. Attorney Zachary Fardon said.

Each wire fraud count carries a maximum 20-year prison term plus a fine. The government is also seeking a forfeiture of more than $500 million. Bloom is free on bond pending sentencing.

"I believe wholeheartedly that the evidence clearly demonstrated that Eric Bloom acted in good faith -- he did not intend to defraud anyone. We intend to ask the trial judge to overturn the jury's decision because it does not comport with the evidence, and if necessary we will pursue an appeal," said Terence Campbell, who represented Bloom.

The case had originally been brought by then-U.S. Attorney Patrick Fitzgerald, who called it one of the largest fraud cases ever brought in Chicago federal court.

Sentinel had managed short-term cash belonging to futures commission merchants, commodity pools, hedge funds and others, and according to prosecutors once oversaw more than $1 billion.

Bloom had been accused of defrauding more than 70 customers in a scheme that ran from January 2003 to Aug. 17, 2007, when his Northbrook-based firm filed for bankruptcy.

Prosecutors said Bloom falsely represented to customers the risks of investing with Sentinel, including by concealing its use of leverage and exposure to many illiquid securities.

Bloom and co-defendant Charles Mosley, Sentinel's head trader, were also accused of pledging customer money as collateral for a Bank of New York Mellon Corp credit line, which grew to more than $415 million, that funded a "house" trading portfolio to benefit them and Bloom's family.

Prosecutors said Bloom took in more than $100 million in the scheme's final weeks despite knowing a default on the credit line was possible, and on Aug. 13, 2007 misled customers by blaming Sentinel's inability to honor redemptions on a "liquidity crisis" and "investor fear and panic."

Assistant U.S. Attorney Clifford Histed told jurors during closing arguments not that Sentinel was a victim of the credit crisis, but rather that the crisis "exposed" its long-running fraud, Fardon's office said.

Bank of New York Mellon was not charged with wrongdoing. Mosley, 50, who lives in Vernon Hills, Illinois, pleaded guilty in October to two counts of investment adviser fraud and is awaiting sentencing, court records show.

The case is U.S. v. Bloom, U.S. District Court, Northern District of Illinois, No. 12-cr-00409. (Reporting by Jonathan Stempel in New York; Editing by Lisa Shumaker, Bernard Orr)

• Link this
• Share this
• Digg this
• Email
• Print
• Reprints

16.48 | 0 komentar | Read More

Societe Generale postpones euro Additional Tier 1 bond

By Aimee Donnellan and Helene Durand

Wed Mar 26, 2014 5:02am EDT

LONDON, March 26 (IFR) - Societe Generale has postponed a euro Additional Tier 1 bond, having been notified of an imminent publication of a rating agency report, according to a statement sent to investors seen by IFR.

"Although there is expected to be no potential impact on their fundamental assessment, in recognising the need for transparency with the market, Société Générale has decided to delay the execution of its Euro denominated Additional Tier 1 transaction," the statement read.

Societe Generale is expecting to relaunch the perpetual non-call seven-year transaction in the near future. The French bank is rated A2/A/A at the senior level, with S&P's A rating on negative outlook and the Moody's and Fitch outlooks both stable. (Reporting by Helene Durand, editing by Julian Baker)

16.48 | 0 komentar | Read More

LightSquared asks court not to re-open trial with Ergen

By Dena Aubin

NEW YORK, March 24 Mon Mar 24, 2014 8:26pm EDT

NEW YORK, March 24 (Reuters) - Broadband company LightSquared has urged a judge not to re-open a trial that ended last week over Dish Network Corp Chairman Charles Ergen's purchase of LightSquared debt, saying it would delay resolution of LightSquared's bankruptcy proceedings.

In a court filing on Friday, lawyers for LightSquared said the company should not have to bear the "tremendous cost" in money, time and distraction and have its efforts to emerge from bankruptcy imperiled.

LightSquared, which filed for bankruptcy in 2012, presented closing arguments last week in a trial over whether Ergen improperly acquired $1 billion of the company's debt to take control of its wireless rights.

U.S. Bankruptcy Judge Shelley Chapman has not yet issued a ruling in the trial, which ended on Monday.

At a hearing on Wednesday, Chapman said she had received a letter the night before that led her to question the integrity of the trial record and that a discussion was needed about reopening it.

The trial revolved around whether Ergen held up the closing of some of his debt purchases to conceal his identity in order to acquire a controlling stake of LightSquared's debt.

During closing arguments, Ergen's lawyer, Rachel Strickland, said it was Jefferies LLC, the broker on the transactions, that held up the trades by imposing a moratorium until documentation issues were sorted out.

In Friday's filing, lawyers for LightSquared said that Ergen's lawyers had forwarded to the court on March 18 email communications concerning the purported Jefferies moratorium.

Withholding the documents until then was "highly prejudicial" and seriously impaired LightSquared's presentation of its case, the company's lawyers said in Friday's filing.

Re-opening the record to allow for additional discovery would only "serve to reward defendants for their misconduct" in not revealing the information before, LightSquared's lawyers said.

Lawyers for Ergen could not immediately be reached for comment.

The allegations of delayed trades were crucial for LightSquared, which must convince a bankruptcy judge that Ergen acted surreptitiously and that his actions hurt the company.

LightSquared filed for bankruptcy after the Federal Communications Commission revoked its license to build a planned wireless network.

The case is In re: LightSquared Inc et al, U.S. Bankruptcy Court, Southern District of New York, No 12-12080.

(Reporting By Dena Aubin; Editing by Kenneth Maxwell)

• Link this
• Share this
• Digg this
• Email
• Print
• Reprints

16.48 | 0 komentar | Read More

PRESS DIGEST- British Business - March 25

March 25 Mon Mar 24, 2014 10:05pm EDT

March 25 (Reuters) - The following are the top stories on the business pages of British newspapers. Reuters has not verified these stories and does not vouch for their accuracy.

The Telegraph

RBS 'IN TALKS' TO SELL CITIZENS TO JAPANESE BANK

One of Japan's largest banks has approached Royal Bank of Scotland to buy its U.S. retail business ahead of its stock market flotation this year. (link.reuters.com/kyj87v)

ENERGY COMPETITION PROBE 'WILL INCREASE RISK OF BLACKOUTS'

The risk of blackouts will be increased by a two-year probe into the energy market that will deter companies from building new power plants, a leading analyst has warned. (link.reuters.com/gyj87v)

MONITISE TO RAISE 110 MLN STG IN SHARE PLACING

Monitise, the online payments provider, announced plans to raise more than 110 million pounds ($181.4 million) on London's junior AIM market to fund a shift to subscription-based services that is expected to slow its growth. (link.reuters.com/myj87v)

GATWICK MISSES OUT ON DIRECT ROUTE TO JAKARTA

An Indonesian airline which was due to launch a direct service from Gatwick to Jakarta in May will now operate the service via Amsterdam to pick up passengers, it has emerged. (link.reuters.com/hyj87v)

The Guardian

LLOYDS' TOP MANAGEMENT BONUSES POTENTIALLY WORTH MORE THAN 27 MLN STG

Bailed out Lloyds Banking Group has handed its top management team - including Chief Executive Antonio Horta-Osorio - bonuses potentially worth more than 27 million pounds. (link.reuters.com/naj87v)

ASDA TO AXE AROUND 200 JOBS

Asda is to cut around 200 jobs as it forges a new five-year plan to tackle increasing competition from rival supermarkets and discounters. (link.reuters.com/baj87v)

The Times

CO-OP'S STAKE IN BANK SLIPS AFTER 400 MILLION POUND CALL

The Co-operative Group's grip on its troubled banking division appeared to weaken further last night after a stack of mis-selling costs forced the lender into a surprise 400 million pound emergency cash call. (link.reuters.com/dyj87v)

SCOTLAND 'WOULD FACE HIGHER TAXES OR IMMIGRATION TO FUND PENSIONS'

An independent Scotland would have to raise taxes or attract hundreds of thousands of immigrants to pay the state pension currently offered within the UK, a new study has found. (link.reuters.com/wuj87v)

PHONES4U TRIES TO GATECRASH CARPHONE MERGER WITH DIXONS

Merger talks between Dixons Retail and Carphone Warehouse have hit a potential hurdle after the owners of Phones4u approached the retailer about an alternative deal. (link.reuters.com/cyj87v)

LLOYDS ACCUSED OF USING LOOPHOLE TO CUT PPI BILL

A fresh payment protection insurance scandal is set to engulf Lloyds Banking Group amid accusations that it used a loophole to cut compensation awards to customers. (link.reuters.com/xuj87v)

ALL THAT GLISTERS COULD NOW TURN TO DUST FOR ALBEMARLE

Troubled pawnbroker Albemarle & Bond, which has been seeking a buyer for the business for months while its lenders kept the company afloat, is set to collapse after its banks called time on the turnaround of the business. (link.reuters.com/byj87v)

The Independent

FURY AS FCA IS ACCUSED OF WIMPING OUT OF TOUGH NEW REGULATIONS ON PAYDAY LOANS

Members of Parliament and consumer groups have criticised the London's financial watchdog, the Financial Conduct Authority, for lacking teeth ahead of its taking over responsibility for payday lenders next month. (link.reuters.com/nyj87v)

($1 = 0.6065 British Pounds) (Compiled by Richa Naidu in Bangalore)

• Link this
• Share this
• Digg this
• Email
• Print
• Reprints

16.47 | 0 komentar | Read More

UPDATE 1-Hundreds rush to rural Chinese bank after solvency rumours-media

Tue Mar 25, 2014 4:55am EDT

(Adds comment from local officials, background)

SHANGHAI, March 25 (Reuters) - Hundreds of people rushed to withdraw money from a branch of a small Chinese bank after rumours spread about its solvency, reflecting growing anxiety among investors as regulators signal greater tolerance for credit defaults.

The case highlights the urgency of plans to implement a deposit insurance system to protect investors' deposits in case of bank insolvency, given that Chinese are growing increasingly nervous about the impact that slowing economic growth will have on the viability of financial institutions.

Regulators have said they will roll out deposit insurance as soon as possible, without giving a firm deadline.

Domestic media reported, and a local official confirmed, that ordinary depositors swarmed a branch of Jiangsu Sheyang Rural Commercial Bank in Yancheng in economically troubled Jiangsu province on Monday.

Bank Chairman Zang Zhengzhi was quoted as saying the bank would ensure payments to all the depositors. The report did not say how the rumour originated.

Why Yancheng investors suddenly lost confidence in the security of their bank deposits is not clear, given that the Sheyang bank is subject to formal reserve requirements, loan-to-deposit ratios and other rules to ensure they keep sufficient cash on hand to meet demand.

Bank failures in China are virtually unknown, as Chinese banks are considered to operate under an implicit guarantee from the government.

Finally, the central bank has eased up on money rates since February, and traders say liquidity in the interbank market -- where banks like Sheyang bank can tap short-term funds to meet depositor demand -- remains relatively relaxed.

"It's true that these rumours exist, but actually (the bank going bankrupt) is impossible. It's a completely different situation from the problem with the cooperatives," said Zhang Chaoyang, an official at the propaganda department of the Communist Party committee in Tinghu district, where the bank branch is located.

Zhang was referring to an incident that rattled depositors in Yancheng in January, when some local rural cooperatives -- which are not subject to the supervision of the bank regulator -- ran out of cash and locked their doors.

Local officials say several co-op bosses fled after committing fraud.

China's central bank governor said earlier this month that deposit rates are likely to liberalised in one to two years - the most explicit timeframe to date for what would be the final step in freeing up banks to set their own interest rates.

It is widely expected to introduce a deposit insurance scheme before liberalising deposit rates to protect savers in case a freed-up market leads to major strains on smaller banks and alarms the public. Analysts also expect the controls on deposit rates to be lifted gradually.

DEFAULT FEARS

Local and global investors in China have taken note of Beijing's recent decision to allow China's first domestic bond default by Shanghai Chaori Solar Energy Science and Technology Co Ltd in March. Officials have indicated publicly that they are not worried that more defaults will damage economic stability.

In the past, domestic bond issuers were routinely bailed out by local governments and banks, and the willingness of regulators to let Chaori miss interest payments negatively impacted rates in Chinese offshore credit markets.

More recently, media also reported a heavily indebted real estate developer in Zhejiang province was at risk of defaulting on 3.5 billion yuan ($565 million) worth of loans -- a situation that has yet to be resolved.

When contacted by Reuters by phone on Tuesday, an official at the Jiangsu Sheyang Rural Commercial Bank branch hung up, saying she was busy.

An official at the administrative office at Jiangsu Sheyang Rural Commercial Bank said the bank would publish a statement shortly. On its website, the bank says it is capitalised at 525 million yuan ($85 million) and had total deposits of 12 billion yuan as of end-February,

Officials at the Jiangsu branch offices of the China Banking Regulatory Commission (CBRC) declined to comment. The Yancheng branch of CBRC and the propaganda offices in Yancheng city and Sheyang county did not answer calls seeking comment.

($1 = 6.1888 Chinese Yuan) (Reporting by Gabriel Wildau, Xu Yong, Pete Sweeney, Samuel Shen, John Ruwitch and Shanghai newsroom; Writing by Kazunori Takada; Editing by Kim Coghill)

• Link this
• Share this
• Digg this
• Email
• Print
• Reprints

16.47 | 0 komentar | Read More

Sears Canada to refund, finish work after collapse of installation firm

TORONTO, March 21 Fri Mar 21, 2014 11:18am EDT

TORONTO, March 21 (Reuters) - Sears Canada Inc said on Friday it will refund payments or offer alternative services to customers affected by the collapse of SHS Services Management Inc, which provided home-improvement services on behalf of Sears Canada.

SHS, which did installations such as roofing and window replacement, ceased operations and went into receivership late last year.

It began operating Sears' home improvement business in March 2013. It is liquidating assets to repay creditors owed more than C$8.9 million ($7.91 million), according to the receiver, PricewaterhouseCoopers Inc.

Sears Canada, majority-owned by Sears Holdings Corp , apologized to customers and said it has been finding alternative contractors to finish work already paid for by customers. It said it will refund money paid for services that were not rendered.

Customers who have made deposits but did not get any work done from SHS are owed just over C$1.8 million, according to the receiver's report, Sears said.

Sears also said it would work with customers to remove liens placed on their properties by SHS creditors.

($1=$1.12 Canadian) (Reporting by Solarina Ho; Editing by Peter Galloway)

• Link this
• Share this
• Digg this
• Email
• Print
• Reprints

16.48 | 0 komentar | Read More

UPDATE 1-Mt. Gox says it found 200,000 bitcoins in 'forgotten' wallet

Fri Mar 21, 2014 4:30pm EDT

(Adds class action lawyer disputing claim coins were 'forgotten')

By Sophie Knight

TOKYO (Reuters) - Mt. Gox said on Friday it found 200,000 "forgotten" bitcoins on March 7, a week after the Tokyo-based digital currency exchange filed for bankruptcy protection, saying it lost nearly all the 850,000 bitcoins it held, worth some $500 million at today's prices.

Mt. Gox made the announcement on its website. Online sleuths had noticed around 200,000 bitcoins moving through the crypto-currency exchange after the bankruptcy filing.

The exchange, headed by 28-year-old Frenchman Mark Karpeles, said the bitcoins were found in an old-format online wallet which it had thought no longer held any bitcoins, but which it checked again after its bankruptcy filing.

"On March 7, 2014, MtGox Co., Ltd. confirmed that an old format wallet which was used prior to June 2011 held a balance of approximately 200,000 BTC," the statement said.

It added that "for security reasons" it moved the 200,000 bitcoins from online to offline wallets on March 14-15.

"These bitcoin movements, including the change in the manner in which these coins were stored, had been reported to the court and the supervisor by counsels," Mt. Gox said.

A lawyer representing the plaintiffs in a class action suit against the shuttered exchange disputed the claim that the bitcoins had been "forgotten" in a dormant wallet.

Many of Mt. Gox's 127,000 creditors, who feared they had lost their investments when the exchange filed for bankruptcy, are skeptical about what the exchange has said happened to the bitcoins it had. In its bankruptcy filing, Mt. Gox also said $28 million was "missing" from its Japanese bank accounts.

BITCOIN TRACKING

On Thursday, a U.S. judge in Chicago overseeing a class action against Mt. Gox revised a previous order, allowing some of the exchange's bitcoin movements to be tracked.

"Today in court we got relief ... specifically to track the 180,000 bitcoins, which we've been monitoring. Hours later, Mt. Gox claimed it 'found' these bitcoins ... it appears Mt. Gox realized we were close and decided to acknowledge that it owned these 180,000-200,000 bitcoins," Steven L. Woodrow, a partner at law firm Edelson, told Reuters in emailed comments.

Edelson is representing Illinois resident Gregory Greene, who proposed the class action over what he claims is a massive fraud. Mt. Gox blamed the loss of 750,000 bitcoins belonging to its customers and 100,000 of its own on hackers who attacked its software.

Bitcoin is bought and sold on a peer-to-peer network independent of central control. Its value soared last year, and the total worth of bitcoins is now about $7 billion.

BLOCKCHAIN EVIDENCE

In an interview on Friday, Woodrow said the claim that the newly discovered bitcoins had been in a long-dormant wallet was false, citing publicly visible information about the contents of Mt. Gox's bitcoin wallets, which can be viewed on the internet.

"The idea that there were 200,000 or 180,000 bitcoins in a single wallet that they just discovered which had been dormant for years that contained 180,000 bitcoins is undercut by plain evidence on the blockchain," Woodrow said.

The blockchain is a public ledger recording every movement of each bitcoin in existence. Entries to the blockchain are made automatically, as part of Bitcoin's software.

"On March 7th there's a transaction where transferred batches of bitcoins containing 40,000 and 50,000 each into a single address holding the 180,000."

Karpeles' lawyers did not immediately respond to a request for comment.

Woodrow said the blockchain showed the 180,000 bitcoins were distributed in batches of 50 bitcoins each to separate wallets over a period of four days starting March 7.

"At no point was the bankruptcy Court in Dallas notified of this at all, despite Mr. Karpeles supposedly informing his lawyers about it on March 8th and Mt. Gox seeking Chapter 15 protection on the 10th," Woodrow said. (Additional reporting by Tom Hals in Delaware and Emily Flitter in New York; Editing by Tom Brown)

• Link this
• Share this
• Digg this
• Email
• Print
• Reprints

16.48 | 0 komentar | Read More