Good morning New York,
FT ALPHAVILLE
The short arm of the SEC: So, there was evidence this week that the US authorities might finally be getting to grips with the Chinese reverse merger scandal, whereby a string of Chinese companies exploited lax listing rules to shake down naive American investors.Executives at RINO International, a steel industry supplier, have been charged by the SEC with inflating revenues and other such fiddlings. Their punishment, however, is not exactly medieval. Paul’s post has more.
Breaking up is hard to do – Rio Tinto edition: In the M&A hall of shame, Rio Tinto’s top-of-the-market [≈ Average US restaurant meal cost]bn acquisition of Alcan (in CASH) is right up there. In this century, at least. It was a truly disastrous deal that nearly killed the Anglo-Australian mining company and its after-effects are being felt to this day. Just ask Tom Albanese. So what should Rio do with its problem child? Neil has a few suggestions.
NEWS
Japan’s economy grew at the fastest pace in a year last quarter, with solid growth in consumer spending and exports suggesting Abenomics may already be having tangible effects. Real GDP grew at an annualised rate ofthe to March, the second consecutive quarter of growth after the last quarter ofto 1%. Analysts surveyed by Bloomberg expected a 2.7% increase on average. Exports rose 3.8%, imports rose 1% and consumer spending was 0.9% higher. (Financial Times)(Reuters)(FT Alphaville)
Lawyers for JPMorgan Chase have demanded that Bloomberg hand over data logs of staff who searched for activities of the bank’s employees using Bloomberg terminals since 2008, as it decides whether to take legal action over the matter. The bank’s lawyers also sought the role of each Bloomberg employee who had searched for information, and demanded verification that Bloomberg had revoked reporters’ access to information about terminal users, as Bloomberg has said it did after a formal complaint from Goldman Sachs last month. (Financial Times)(Wall Street Journal)
Richemont chairman to take a break: “Compagnie Financière Richemont said Thursday that Chairman Johann Rupert will take a 12-month sabbatical from the luxury company as it posted better-than-expected full-year earnings and a good start to the year. The 62-year-old South African, who is also the controlling shareholder of the Richemont, said he would stand down as chairman after its annual general meeting in September and return to the company and his current role next year. Mr. Rupert stood down as chief executive at the end of March.” (Wall Street Journal)
IRS chief quits over Tea Party scandal: President Barack Obama said the head of the Internal Revenue Service had resigned, as the White House sought to quell a series of controversies that has engulfed the administration.The IRS has been under fire since it admitted on Friday that it had improperly targeted the Tea Party groups, as early as 2010, a time when the conservative movement was gaining traction throughout the country. (Financial Times)
UK High Court rules Goldman Sachs tax deal lawful: A “sweetheart” tax deal between HM Revenue & Customs and Goldman Sachs which let the investment bank off paying interest was lawful, the High Court has ruled. Mr Justice Nicol dismissed a legal challenge brought by UK Uncut , the tax campaign group, over HMRC and Goldman’s settlement of a lengthy tax dispute. (Financial Times)
Chinese FDI misses forecasts: Foreign direct investment in China in April was 0.4% higher than a year earlier, short of March’s 5.7% gain and Bloomberg consensus estimates of 6.2% growth. (Bloomberg)
“RP Martin has removed its chief executive and an executive director from their posts amid a probe into the firm’s role in the manipulation of Libor that saw two former employees arrested in December.” (Financial Times)
David Cameron is “open to all ideas” for returning RBS to private ownership but its finances must improve first, he told reporters on the last day of a three-day visit to the United States. (Reuters)
Platts fought an attempt to impose new regulations on world oil benchmarks last year. International regulators’ group IOSCO considered new controls after the bank Libor scandal, but Platts resisted the move, arguing it would affects its role, independence and impartiality. (Wall Street Journal)
Spanish banks are bracing themselves for a fresh financial hit, amid rising pressure from the Bank of Spain on lenders to write down the value of their €200bn portfolio of restructured loans to the country’s troubled companies and struggling households. The move could see NPL ratios rise further. (Financial Times)
Banks sue Lisbon over ‘toxic’ asset allegations: JPMorgan Chase and Banco Santander have filed lawsuits in London Portuguese state-owned companies as a bitter legal tussle intensifies over derivative contracts the Lisbon government has described as “toxic”. Portugal’s treasury secretary, said in April that Lisbon would take legal action against the two banks after two months of attempts at renegotiating the contracts failed to produce an agreement. (Financial Times)
Brazil raised a record R$2.8bn in its first auction of licences for oil exploration blocks in five years, with oil majors including ExxonMobil, Chevron and BP winning blocks, as well as BG Group of the UK. (Financial Times)
Warning over SWF opacity: Sovereign wealth funds from resource-rich countries controlling more than $500bn of assets operate with no disclosure, limiting their accountability and increasing the risk of corruption, says the Revenue Watch Institute, a New York-based group backed by charitable foundations and rich-country governments. The group’s report showed that eight large funds, including the investment authorities of Qatar, Kuwait and Libya, disclosed no details at all about their assets, transactions or investments. Only 11 of 58 resource-rich countries rated as ‘satisfactory’ overall. (Financial Times)
Markets are mixed but global stocks sit just shy of cyclical highs as investors ponder the interaction between central bank policy and the patchy nature of worldwide economic growth.Profit takers have emerged in Japanese equities after Tokyo’s reflationary strategy is seen to have had some of the desired effect, while the euro is hovering just above six-week lows following news the currency bloc is enduring its longest recession since its inception. US index futures suggest Wall Street’s S&P, dipping from its record close of 1,659, which came despite disappointing industrial production data counteracting recently better retail sales and jobs reports writes the FT’s Global Markets Ron Swanson equivalent.
