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Showing posts from July, 2013

U.S. prosecutors charged six foreign nationals with hacking crimes

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U.S. prosecutors charged six foreign nationals with hacking crimes, including credit and debit card thefts that authorities say cost U.S. and European companies more than $300 million in losses, and charged one of them with breaching Nasdaq computers.
Prosecutors said the indictments unsealed on Thursday for the payment card hacking were the biggest cyber fraud case filed in U.S. history.
The long list of victims include financial firms Citigroup Inc, Nasdaq OMX Group Inc, PNC Financial Services Group Inc and a Visa Inc licensee, Visa Jordan. Others include retailers Carrefour SA and J.C. Penney Co along with JetBlue Airways Corp, prosecutors said as they announced indictments.
Prosecutors said they conservatively estimate that a group of five men stole at least 160 million credit card numbers, resulting in losses in excess of $300 million.
Authorities in New Jersey charged that each of the defendants had specialized tasks: Russians Vladimir Drinkman, 32, and Alexandr Kalinin, 26, hac…

Federal Reserve reviewing the trading by banks in the commodities market

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The Federal Reserve is "reviewing" a landmark 2003 decision that first allowed regulated banks to trade in physical commoditymarkets, it said on Friday, a move that may send new shockwaves through Wall Street.
The one-sentence statement suggests the Fed is taking a much deeper, wide-ranging look at how banks operate in commoditymarkets than previously believed, amid intensifying scrutiny of everything from electricity trading to metals warehouses.

While the Fed has been debating for years whether to allow banks including Morgan Stanley (MS.N) and JPMorgan (JPM.N) to continue owning assets like oil storage tanks or power plants, Friday's surprise statement suggests it is also reconsidering whether all bank holding firms should be able to trade raw materials such as gasoline tankers and coffee beans.

By referencing its initial decision a decade ago permitting Citigroup's Phibro unit to trade oil cargoes - setting a precedent for a dozen more banks that followed suit - …

Wall Street's billion dollar commodity trading

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Image via CrunchBase Wall Street's multibillion-dollar commodity trading operations came under the political spotlight on Tuesday as a powerful Senate committee questioned whether commercial banks should control oil pipelines, power plants and metals warehouses.
The Senate Banking Committee hearing comes as Goldman Sachs, Morgan Stanley and JPMorgan Chase - which generated an estimated $4 billion in commodity revenues last year - face growing pressure from a number of investigations into their operations, and as the Federal Reserve reviews Wall Street's right to operate in raw material markets.
Big aluminum buyers like MillerCoors, the second largest brewer in the U.S., told the packed hearing that the banks' control of metal warehouses that are part of the London Metal Exchange network has driven up their costs by as much as $3 billion last year by distorting supplies.
"U.S. bank holding companies have effective control of the LME and they have created a bottleneck wh…

Virtual terminals for high risk credit card processing

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JPMorgan Chase & Co is exiting physical commodities trading

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Commodities trading (Photo credit: London Commodity Markets)JPMorgan Chase & Co is exiting physical commodities trading, the bank said in a surprise statement on Friday, as Wall Street's role in the trading of raw materials comes under unprecedented political and regulatory pressure.
After spending billions of dollars and five years building the banking world's biggest commodity desk, JPMorgan said it would pursue "strategic alternatives" for its trading assets that stretch from Baltimore to Johor, and a global team dealing in everything from African crude oil to Chilean copper.
The firm will explore "a sale, spinoff or strategic partnership" of the physical business championed by commodities chief Blythe Masters, the architect of JPMorgan's expansion in the sector and one of the most famous women on Wall Street. The bank said it will continue to trade in financial commodities such as derivatives and precious metals.
Pressured by tougher regulation …

New global rules to help clamp down on corporate tax evasion and avoidance

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English: The logo of the Organisation for Economic Co-operation and Development (OECD). (Photo credit: Wikipedia) New global rules to help clamp down on corporate tax evasion and avoidance could be in place as early as next year, says the Organization for Economic Co-operation and Development.
The Paris-based organization handed the G20 finance ministers — including Canada'sJim Flaherty — a three-step game plan during their meetings Friday, which if implemented, will establish the infrastructure for global co-operation on the controversial issue.
The plan calls for a universal and automatic exchange of financial information, development of an operation platform for common reporting and due diligence of rules, and the creation of a multilateral platform to protect confidentiality.
Dennis Howlett, the executive director of Canadians for Tax Fairness, says he's encouraged by the progress and expects the G20 ministers to endorse the plan.
Howlett, however, also cautioned that the …

Indonesia's Palm Oil Industry Rife With Human-Rights Abuses

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“What kind of oil should we buy?” Luo Xiaohua shouts to her cousin from the cooking oil aisle in Yonghui Supermarket in the heart of Chongqing, a rising Chinese megacity. Luo, 50, is the quintessential Chinese shopper. She earns $3,250 a year and has an elementary education. She’s fiercely opinionated about her purchases.
Luo stands before amber-hued bottles loaded with a commodity that fuels China’s and India’s growing consumer classes. “From what I understand, all of these brands contain palm oil,” she says. “But they just don’t say it on the label.” She says she’d prefer to use olive oil but can’t afford it. “Corporations have the power in this country, and consumers have to make decisions based on limited options.”
Palm oil and its derivatives are found in thousands of products worldwide, from doughnuts to soap, lipstick to biodiesel. Globally, palm oil consumption has quintupled since 1990. Demand in Asia, where palm oil is widely used in cooking oil and noodles, has driven the g…

JPMorgan Chase & Co (JPM.N), the largest U.S. bank, posted a 31 percent increase

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JPMorgan Chase & Co (JPM.N), the largest U.S. bank, posted a 31 percent increase in second-quarter earnings on Friday after underwriting income jumped and bond trading revenue rose.
JPMorgan, the first of the major U.S. banks to report results for the quarter, managed to book more profit from trading corporate bonds even as debt prices broadly fell. The bank's comments made some investors hopeful that rivals with big trading arms will also post strong second-quarter results.
Shares of Goldman Sachs Group Inc (GS.N), Morgan Stanley (MS.N) and Bank of America Corp (BAC.N) were up more than 1 percent as of late Friday afternoon.
But JPMorgan also acknowledged that market conditions have grown difficult, and that it might need to accelerate cost-cutting. Since mid-May, U.S. bond markets have suffered their worst two-month selloff in a decade, as the Federal Reserve has said it is planning to taper its massive bond purchases, known as quantitative easing.
The bond market weakness p…

Citigroup Inc posted a 42 percent jump in quarterly profit

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Citigroup (Photo credit: Wikipedia) Citigroup Inc posted a 42 percent jump in quarterly profit as bond trading revenue gained and stronger home prices helped the bad mortgages on its books, underscoring the bank's recovery since the financial crisis.
The third-largest U.S. bank is getting its house in order after years of management problems forced it to seek three U.S. bailouts in 2008 and 2009. Current Chief ExecutiveMichael Corbat and predecessor Vikram Pandit cut risk-taking in its trading businesses, hired selectively in safer areas like investment banking, and scaled back in markets where the bank had few growth opportunities.

Citigroup is fixing itself amid a treacherous environment for global banks. Rising bond yields in the United States are expected to cut into debt underwriting volume and may cut into bond trading profit.

Citigroup, often seen as the most international of the major U.S. banks, faces additional pressure from slowing growth in emerging markets. About one-h…

Two former brokers charged in Libor interest rate rigging

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Britain's fraud prosecutor on Monday charged two former brokers at interdealer broker RP Martin with conspiracy to defraud, stepping up its investigation into the rigging of Libor benchmark interest rates.
The Serious Fraud Office (SFO) said it had charged Terry Farr and James Gilmour, seven months after arresting them. They are the first brokers to be charged in the Libor scandal.

The two were arrested a fortnight before Christmas along with former UBS (UBSN.VX) and Citigroup (C.N) trader Tom Hayes, who was last month charged with eight counts of conspiracy to defraud as the SFO laid the groundwork for what could be the first Libor trial.

A central cog in the world financial system, the London interbank offered rate (Libor) is used as a reference for some $550 trillion in contracts ranging from complex derivatives to everyday credit card bills.

Trust in the benchmark was shaken by revelations last year that traders had routinely manipulated it, prompting a series of investigation…

Ruling could OK user fee for premium credit cards

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Accountants Deloitte will next week return before a tribunal

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Deloitte (Photo credit: mada299) Accountants Deloitte will next week return before a tribunal which is assessing whether it failed to manage conflicts of interest in its advice to MG Rover Group and the "Phoenix Four" directors who bought the UKcarmaker before it collapsed.
MG Rover was put into administration in 2005 with debts of 1.4 billion pounds ($2.1 billion) and the loss of 6,000 jobs. Four of its directors had set up Phoenix to buy the loss-making carmaker for a token 10 pounds five years earlier.
There was public anger when it emerged the four had paid themselves 40 million pounds in salaries and pensions before MG Rover collapsed. The four faced no criminal charges but were disqualified from being directors of any company for up to six years.
The Financial Reporting Council, which regulates accountants, said last year that Deloitte and an employee, Maghsoud Einollahi, had failed to properly manage conflicts of interest.
Deloitte and Einollahi had acted as corporate…

UPS and FedEx might be worried about international shipments to slowing economies

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Image via CrunchBase UPS and FedEx might be worried about international shipments to slowing economies like China, but perhaps they should be more concerned about what's going on in their own back yards.
Major U.S. retailers are experimenting with new e-commerce strategies that could dent demand for package delivery services, particularly demand for shipments over long distances, according to analysts and industry executives.
Amazon.com Inc is building its distribution warehouses closer to customers to save millions of dollars in shipping costs. The world's largest online retailer is also increasingly using its own delivery trucks, cutting UPS and FedEx out of some parts of its fulfillment network.
Meanwhile, major brick-and-mortar retailers such as Wal-Mart Stores Inc, Best Buy Co Inc and Gap Inc are shipping more online orders from stores close to shoppers, rather than from warehouses hundreds of miles away.
"UPS and FedEx are not only watching this, they are likely con…

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Canada has lagged the United States in using its rail system to haul crude oil

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CN 8880 rolls past Wood Street Crossing in Harvey (Photo credit: Wikipedia) For the last three years, Canada has lagged the United States in using its rail system to haul crude oil, hindered by a lack of loading terminals and a shortage of specially built rail cars that reheat viscous oil sands crude.
Now it's on the brink of catching up. Over the next 12 months, producers like Cenovus Energy Inc (CVE.TO) and logistics firms like Gibson Energy Inc (GEI.TO) will load up mile-long dedicated trains with ultra-heavy bitumen oil and move them thousands of miles in heated and coiled rail cars that eliminate the need to dilute the crude for pipeline shipments.
Yet they are opening up a new phase in the oil-by-rail boom at a moment of deepening uncertainty. An oil-train derailment that killed 50 people in Quebec has cast a shadow over the controversial practice and could raise new hurdles.
For the moment, the handful of new projects to potentially quadruple the amount of oil sands crude s…

Economy stuck

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Every calendar quarter, the Bureau of Economic Analysis (BEA) makes three estimates of U.S. Gross Domestic Product (GDP) for the prior quarter: an advance estimate, a second estimate and a third estimate.
The advance estimate of real GDP for the first quarter was 2.5 percent. That's not a robust rate of growth, but as an improvement over the 0.4 percent rate for the last quarter of 2012, it was a strong move in the right direction.
The second estimate contained only a slight revision, down to 2.4 percent. However, when the third estimate came out last month, real GDP growth for the first quarter was revised all the way down to 1.8 percent. This is still an improvement over the prior quarter, but indicates progress at a much more sluggish rate. Especially given the start-and-stop nature of the recovery since the Great Recession, this tepid growth rate suggests the economy may be stuck in the same rut.
The threat of inflation
Inflation has been nicely under control in recent months. A…

12-year prison sentence for insider trading upheld

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A record 12-year prison sentence for insider trading given to a former lawyer in connection with a tipping scheme that stretched over 17 years was upheld on Tuesday by a federal appeals court.
Matthew Kluger, 52, had been sentenced in June 2012 for passing tips about corporate mergers that he learned about while working at four major U.S. law firms from 1994 to 2011, starting when he was a student at New York University's law school.
Prosecutors said the scheme generated more than $37 million of illegal profit, most of which went to Garrett Bauer, a New York trader. Bauer was sentenced to 9 years in prison, while a middleman, Kenneth Robinson, got 2-1/4 years in prison.
Kluger pleaded guilty in December 2011 to securities fraud, conspiracy and obstruction charges, but he said his sentence was too long, in part because his profit was only about $500,000.
The 3rd U.S. Circuit Court of Appeals in Philadelphia nonetheless found "good reason" for Kluger's sentence, even t…