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American International Group Inc. (NYSE: AIG) has released more information on many of the troubled Maiden Lane III derivatives transactions. These are those contracts that helped to knock the company down from a financial giant to a controversial company that could not service without the Uncle Sam Bail Out. This shows the counterparties in the filing as well, with some of those being Bank of America Corp. (NYSE: BAC), Goldman Sachs Group Inc. (NYSE: GS), UBS AG (NYSE: UBS), Barclays plc (NYSE: BCS) and others… Wachovia, George Quay, SOCGEN, Goldman Sachs (listed as GSI and GSCM), CALYON, BGI, Bank of America, Merrill Lynch, RBS, HSBC BANK USA, Rabobank, CORAL Purchasing (Ireland) Limited, Deutsche Bank, REMO FINANCE INC-Dresdner, UBS, Barclays, and BMO.
Before you see the figures, keep in mind that this disclosure is over the 2008 derivatives along with counterparties… some of which no longer exist. Read More
Posts related to ‘SEC’
AIG Discloses 2008 Troubled Derivatives Hand (AIG, BAC, GS, UBS, BCS)
BATS Plans The Other-Other IPO Market
BATS Exchange has been an almost stealth success in the world of trading stocks. In about four years it now claims to have about 10% of the US equity trading market share and about 8% of the FTSE 100 market share in trading volume. The company also recently filed rules with the SEC to launch US equity options trading and a second U.S. equities exchange both slated for launch in early 2010. Now it plans to launch a new ‘primary listings market’ by summer of 2010, which 24/7 Wall St. would dub the (or an) “other-other IPO market” for companies. BATS said that it wants to provide “a competitive alternative to incumbent exchanges by expanding into the US listings market.” The details were very limited in the release, so we will wait for more data and information before signing this up for the party or for the funeral.
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Yahoo! and Microsoft Extend Negotiation Period (YHOO, MSFT)
Yahoo! Inc. (NASDAQ: YHOO) issued an SEC filing noting that it and Microsoft Corp. (NASDAQ: MSFT) have extended the negotiating time on the previously announced search pact. Without getting to participate in the drawing room for the negotiations it is impossible to know if there were real snags other than the usual gossip that comes and goes or if it is simply nothing more than just needing more time to complete the documents. Here is a broken down excerpt from the Yahoo! SEC Filing:
Apollo’s Woes (APOL)
Apollo Group Inc. (NASDAQ: APOL) is the clear leader of the private-sector public education companies. Yet, that leadership position is coming with some severe pain after its earnings. Apollo reported that its profit fell by some 60% on one-time litigation and write-off charges. Earnings were $91.5 million, or $0.59 EPS, but outside of items its non-GAAP earnings was listed as being $1.06 EPS. Revenue rose by almost 30% to $1.08 billion. The consensus estimates from Thomson Reuters were $1.04 EPS (non-GAAP) and $1.03 billion in revenues. The bomb is here: the Securities and Exchange Commission has launched an informal inquiry over the company’s revenue recognition policy.
Is Sequenom Dead? (SQNM)
Sequenom Inc. (NASDAQ: SQNM) is becoming a case study on how to run a medical testing products company into the ground. The diagnostic test maker has more problems other than just the announcement that it fired CEO Harry Stylli and several others after an investigation into the results for its Down syndrome blood test. This was supposed to be the Holy Grail for Down testing, and we still lack a full understanding of what happened.
Board member Harry Hixson will fill in as Sequenom’s interim CEO, and board member Ronald Lindsay will take over as interim CFO and controller. Elizabeth Dragon was senior vice president for research and development, but she is out as well and you have to ask yourself how great a company without a head of R&D can be. Three other employees were fired, and Paul Hawran “resigned” on Friday with another executive. Sure he resigned.
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B of A Hot Seat Continues (BAC)
Bank of America Corporation (NYSE: BAC) has a couple of issues on the legal and regulatory front for this week. Last night, it announced that it has reached an agreement with the U.S. government over asset guarantees. The company also has to now go to court over the thrown out SEC settlement.
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More Official Warnings on Leveraged ETFs (FAS, FAZ, UYG, SKF, SDS, SSO)
The Financial Industry Regulatory Authority and the Securities and Exchange Commission decided to issue an Investor Alert yesterday called “Leveraged and Inverse ETFs: Specialized Products with Extra Risks for Buy-and-Hold Investors”…. This warning was meant to warn retail investors of the added risks in leveraged ETF investments that exist above and beyond the traditional world of investment products. This follows a recent FINRA regulatory notice reminding securities firms and brokers of their sales practice obligations relating to leveraged and inverse exchange-traded funds.
While this is not against any single leveraged ETF (or inverse ETF), it may have at least some influence on leveraged ETF and reverse-leveraged ETFs. The two key ETFs for leverage and high volume and high volatility are the Direxion Daily Financial Bull 3X Shares (NYSE: FAS) and the Direxion Daily Financial Bear 3X Shares (NYSE: FAZ) as they are the triple-leverage financial sector ETFs.
A handful of the other active leveraged and inverse-leverage ETFSs are as follows: Ultra Financials ProShares (NYSE: UYG) seeks twice the daily performance of the Dow Jones U.S. Financials index. UltraShort Financials ProShares (NYSE: SKF) seeks twice the inverse of the daily performance of the Dow Jones U.S. Financials index. UltraShort S&P500 ProShares (NYSE: SDS) seeks twice the inverse of the daily performance of the S&P 500 Index. Ultra S&P500 ProShares (NYSE: SSO) twice the daily performance of the S&P 500 Index.
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How Deep Are Buffett’s SEC & Derivative Issues? (BRK-A) (BRK-B)
Berkshire Hathaway Inc.(NYE: BRK-A) (BRK-B) had its earnings and quarterly report last Friday, but the aftermath this week has shown more derivative criticism. But more importantly, issues over SEC correspondence have been gathering some heightened interest.
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GE Gets SEC Issues Behind It (GE)
General Electric Company (NYSE: GE) has reached a settlement with the SEC regarding four accounting matters in 2002 and 2003. Yep, 2002 and 2003. This has enough of a look-back that it is probably as relevant to shareholders today as gold to a dead man. This concludes the SEC investigation of these accounting issue, and GE was able to settle these allegations without admitting or denying allegations of any wrongdoing. GE consented to the entry of a judgment that requires the company to pay a civil penalty of $50 million and to comply with the federal securities laws.
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Huron… When The Consultants Need Consultants (HURN)
Huron Consulting Group Inc. (NASDAQ: HURN) was a stock we screened early this morning in pre-market hours for its active trading at VSInvestor.com. We noted that this one was getting destroyed, but the company may have just become one of the worst stocks on NASDAQ.
Huron disclosed that it is restating financial statements for the fiscal years 2006, 2007 and 2008 and Q1 2009. The restatements pertain to non-cash charges relating to how payments received by the sellers of certain acquired businesses were subsequently redistributed among themselves and to other select Huron employees. The total estimated impact on net income and EBITDA might not sound that bad on the surface for all restated periods at $57 million, particularly when there is said to be no impact on cash, cash flows from operations or adjusted EBITDA. Things go from bad to worse after that.
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New Measures Against Short Sale Abuse
We are starting to get more information out of the Securities and Exchange Commission on how it plans to go after some of the abuses which have been prevalent in short selling. Keep in mind that this is pursuing the abuse of short selling, not the use of short selling. The SEC issued a release today outlining several actions meant to protect against abusive short sales and to make more short sale information available to the public.
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Angelo Mozilo Charged With Insider Trading (BAC)
CNBC’s David Faber just reported that the SEC will be charging former Countrywide CEO Angelo Mozilo with insider trading and disclosure violations for stock sales from 2006 and beyond. Interestingly enough, Faber noted that criminal charges will NOT accompany the charges. Former executives Sambol and Sieracki are also to be charged with failure to disclose material information. We’ll follow up after more information is made available. So far, there has been no impact at all in Bank of America Corporation (NYSE: BAC) as shares are still up 4.5% at $11.72 on the day.
As far as the fate of any personal tanning machines, no word was given.
Jon C. Ogg
June 4, 2009
Does Reg. FD Exist Anymore? (BAC)
There is an interesting question that we would like to pose after hearing about an 800 million share or 825 million share secondary coming from Bank of America Corporation (NYSE: BAC). If you were watching any after-hours trading levels after 4:00 PM EST today, you would have had the same thought… “Why the hell is Bank of America stock down another 5% or 6% after the close when it was down 4% today?” What we would like clarification on is whether B of A should be required to disclose this information under Reg FD (Regulation Fair Disclosure). Furthermore, should banks and other institutions have to go back to a measure of fair disclosure of information?
UPDATED as of 7:28 PM EST: B of A did finally issue a release as you will see below…. but not the one that was affecting shares in the after-hours session. Read More
CFO Death Only Clouds Freddie Mac & Fannie Mae Further (FRE, FNM)
If you thought that things could not get much stranger at Freddie Mac (NYSE: FRE) or at Fannie Mae (NYSE: FNM), they may have taken an even stranger turn than most could imagine. David Kellerman, the acting Chief Financial Officer and Senior VP at Freddie Mac, was found dead early this morning from an apparent suicide at his home in Virginia.
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Obama needs a new car czar
Why did the Obama administration name investment banker Steven Rattner as the head of auto task force knowing that New York prosecutors were investigating whether he had a role in a kickback scheme at New York state’s pension fund?
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FASB Bring Sense, and Cents, To Banks & Mark-to-Market (C, WFC, BAC, JPM)
The Financial Accounting Standards Board, or FASB, has voted to loosen its rules for the (now dreaded) balance sheet act of mark-to-market valuation for accounting. Many will argue that this is unfairly giving clemency to the troubled banks and financial institutions. Some will argue that it violates free market principles. And some will argue that it will save the system and limit the amount of extra capital needed in the system. The term “toxic assets” will now be called something to the tune of “underperforming assets” or “exceptional assets.”
Citigroup, Inc. (NYSE: C) and Wells Fargo & Co. (NYSE: WFC) have been on record noting that the mark-to-market standard does not work in the current periods of inactivity or illiquidity. This morning Ken Lewis of Bank of America Corp. (NYSE: BAC) told CNBC’s Becky Quick that it is a mark-to- maturity company as the bank holds the loans. Jamie Dimon of JPMorgan Chase & Co. (NYSE: JPM) has defended mark-to-market, but with some exceptions and without the ultimate endorsement. Even if you do interpret Dimon’s statements as supporting mark-to-market in all cases no matter what, you can always expect the guy with the strongest books that can hold up to any storm to say everyone else should be that way.
More ‘Going Concern’ Notes Hitting Companies (AWBC, AHR, BWTR, CHCI, DCGN, GST, MLP, OXGN, TMI, XCR)
This might be a record year for auditor “going concern” notes being included in annual report filings with the SEC. If it isn’t a record, it sure feels like it. This note in an annual report is either from the company or its auditor(s) that there is a risk that the company will not be able to operate without bringing in new capital or be operated in the same manner financially.
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The Death of Formal Earnings Guidance
There is a new trend that has emerged in this earnings season that will have an impact in 2009 and maybe beyond: a lack of earnings and/or revenue guidance. This unravels roughly 9 years worth of transparency for annual targets set by major companies. Many companies have never offered guidance and there are some benefits in not providing targets. Like it or not, though, investors are probably just going to have to get used to hearing about fewer earnings targets.
Madoff: The $50 Billion Ponzi Man (NDAQ)
Bernie Madoff, the former non-executive Chairman of the NASDAQ (NASDAQ: NDAQ), has been arrested on an investor fraud case that has massive implications over trust and legitimacy on Wall Street. The good news is that this fraud does not appear to be a systematic risk event. The bad news is that the losses may be well into the "billions" of dollars. The second bit of bad news is that this is just another mark against an already tarnished image on Wall Street.
SEC Finally Curbs Naked Short Selling
The Securities and Exchange Commission has announced new measures this morning to curb naked short sales. The rules impose a firm close-out requirement on short sellers and their brokers. Parties must now deliver securities borrowed for short sales on the trade settlement date, which is three days after the transaction date. Supposedly, penalties will be imposed if the parties do not comply. The interim final rule will take effect as of 12:01 a.m. EDT on Thursday.
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