Ex-SAC manager granted $5 million bail in insider-trading case

NEW YORK, Mon Nov 26, 2012 – A former SAC Capital portfolio manager was released on $5 million bail on Monday after making his first appearance in a New York court on charges of making illegal trades that hedge fund titan Steven A. Cohen personally signed off on.

Mathew Martoma, 38, of Boca Raton, Fla., was charged last week in what U.S. prosecutors called “the most lucrative” insider-trading scheme ever.

Martoma was accused of helping Cohen’s firm avoid losses and reap profits totaling $276 million in the summer of 2008 by using insider tips he obtained from a doctor about Elan Corp and Wyeth LLC. Martoma worked for CR Intrinsic, a unit of Cohen’s SAC Capital.

Cohen was not charged with wrongdoing, but prosecutors have said in court papers that the “owner” of the hedge fund signed off on Martoma’s recommendation to sell the shares of Elan and Wyeth. A spokesman for SAC Capital said last week that “Mr. Cohen and SAC are confident that they have acted appropriately and will continue to cooperate with the government’s inquiry.”

At Monday’s 13-minute hearing in U.S. district court in Manhattan, Martoma spoke only once, answering “yes, your honor” to a judge’s question. He did not enter a plea.

Martoma’s lawyer, Charles Stillman, last week said that his client was an “exceptional portfolio manager” and he is confident Martoma will be exonerated.

Magistrate Judge James Cott on Monday agreed to a proposed $5 million bail package for Martoma, who has been free on similar bail conditions since making an initial court appearance in a Florida court after his arrest on Nov. 20.

SEC Chairman Mary Schapiro to step down

WASHINGTON, Mon Nov 26, 2012 – The head of the U.S. Securities and Exchange Commission, Mary Schapiro, announced on Monday that she would step down from the agency on Dec. 14.

SEC Commissioner Elisse Walter will be designated to succeed Schapiro upon her departure, the White House said in a statement.

“The SEC is stronger, and our financial system is safer and better able to serve the American people – thanks in large part to Mary’s hard work,” President Barack Obama said.

Speculation had swirled for months that Schapiro would leave soon after the November presidential election. The announcement marks one of the first departures of Obama’s financial regulation team in the aftermath of the election.

Schapiro led the SEC through a major overhaul in the wake of the financial crisis, as it bore the brunt of criticism for its oversight leading up to the crisis and for failing to catch now-convicted Ponzi schemers Bernard Madoff and Allen Stanford.

In the past two years, the agency has logged record enforcement actions, including 735 in the 2011 fiscal year and 734 in 2012, it said in a statement announcing Schapiro’s departure.

The SEC has also been bogged down with major rules that the 2010 Dodd-Frank financial regulation law required it to write, many of which are still in process.

“I’ve been so amazed by how hard the men and women of the agency work each and every day and by the sacrifices they make to get the job done,” Schapiro said in the statement.

Apollo to buy McGraw-Hill education unit for $2.5 billion

NEW YORK, Mon Nov 26, 2012 — McGraw-Hill Companies Inc said it will sell its educational publishing unit to Apollo Global Management LLC for $2.5 billion.

McGraw-Hill expects to record a non-cash impairment charge of about $450 to $550 million in the fourth quarter.

McGraw-Hill said it will realize $1.9 billion of proceeds from the deal, after taxes and certain adjustments, and will use the money to buy back its shares, make “selective tuck-in acquisitions” for its portfolio of financial services businesses and repay short-term borrowings.

McGraw-Hill owns Standard & Poor’s credit rating service, Capital IQ tools for financial analysis and commodity market information services company Platts.

The company announced in September 2011 that it would separate the education and financial services businesses as part of a stepped-up push to increase returns to shareholders. The restructuring plan was announced after institutional investors argued publicly that the company would be worth more if split up.

Like other publishers, the education business has been under pressure to adapt its content to digital delivery. While such transformations hold the potential to ultimately reduce costs, they are also requiring massive changes in what employees do and how products are sold.

Abercrombie seen as early winner in Thanksgiving clothing sales

NEW YORK, Mon Nov 26, 2012 – Abercrombie & Fitch Co. seemed to come out ahead of other clothing retailers during the annual Black Friday kickoff to the holiday shopping season, analysts said on Monday.

Abercrombie and Wal-Mart Stores Inc. were among the perceived winners in a four-day weekend when some stores opened on Thanksgiving night and people shopped online in greater numbers than ever before.

The National Retail Federation trade group reported on Sunday that total sales for the four days from Thanksgiving through Sunday had risen 12.8 percent to $59.1 billion. That is down from a 16.4 percent increase last year.

Abercrombie, which operates the Hollister chain in addition to its namesake stores, “was the clear winner,” with the longest lines and units per transaction during the weekend, according to Oppenheimer analyst Pamela Quintiliano.

UnitedHealth forecasts 2013 profit below Wall Street view

MINNETONKA, Minn., Mon Nov 26, 2012 – UnitedHealth Group Inc., the largest U.S. private health insurer, said on Monday it expected 2013 earnings of $5.25 to $5.50 per share, below analysts’ expectations.

Revenue should be $123 billion to $124 billion, the company said, higher than the Wall Street target. UnitedHealth gave the forecast in a statement ahead of a Tuesday meeting with analysts and investors.

Analysts had expected 2013 earnings of $5.58 per share on revenue of $119.12 billion, according to Thomson Reuters I/B/E/S.

UnitedHealth said during a quarterly conference call in October that analysts’ estimates for 2013 were too high, citing the weak economy and government efforts to rein in the deficit. At that time, the consensus was for earnings of $5.60 per share.

UnitedHealth has a history of exceeding its forecast, Oppenheimer analyst Michael Wiederhorn said in a research note. “Overall, we believe UNH’s outlook will prove conservative,” he wrote.

Wiederhorn said it was not immediately clear if the Wall Street consensus outlook for 2013 revenue was comparable and included sales from Brazil’s Amil Participacoes SA, which it acquired for $4.9 billion.

UnitedHealth also reaffirmed its 2012 outlook for earnings of $5.20 to $5.25 per share.

Onex to buy insurance brokerage from Goldman fund for $2.3 billion

NEW YORK, Mon Nov 26, 2012 – Canadian private equity firm Onex Corp. will buy USI, one of the largest providers of insurance brokerage services in the United States, from Goldman Sachs Group Inc.’s GS Capital Partners private equity fund for $2.3 billion.

USI, founded in 1994 and taken private in 2007, says it is the ninth largest insurance broker in the United States. It offers property, casualty, employee benefit and retirement consulting services.

Onex Partners III, Onex’s $4.7 billion private equity fund, will make an equity investment of about $700 million. Onex is a 25 percent limited partner in Onex Partners III.

Onex, with about $14 billion of assets under management, is a co-investor in the transaction.

USI said its employees, who invested alongside GS Capital Partners to take it private, will remain investors in the company.

The deal is expected to close by the end of the year.

Consumers boost growth despite business caution

WASHINGTON, Fri Oct 26, 2012 – Economic growth picked up in the third quarter as a late burst in consumer spending offset the first cutbacks in investment in more than a year by cautious businesses.

Gross domestic product expanded at a 2 percent annual rate, the Commerce Department said on Friday, accelerating from the second quarter’s 1.3 percent pace.

Still, the stronger pace of expansion fell short of what is needed to make much of a dent in unemployment, and details of the report did not bode well for an acceleration in output in the fourth quarter, as a spurt in government spending was see as temporary.

A growth pace in excess of 2.5 percent is needed over several quarters to make substantial headway cutting the jobless rate. Economists polled by Reuters had expected a 1.9 percent growth pace in the third quarter.

The report offers little cheer for the White House ahead of the closely contested Nov. 6 presidential election, in which President Barack Obama is trying to fend off Republican challenger Mitt Romney.

U.S. stock index futures pared losses after the data, while Treasuries briefly cut early price gains. The dollar trimmed losses against the yen, and cut gains against the euro.

Since climbing out of the 2007-09 recession, the economy has faced a series of headwinds from high gasoline prices to the debt turmoil in Europe and, lately, fears of U.S. government austerity.

Tax gains lift Merck, but sales slightly below expectations isappoint

WHITEHOUSE STATION, N.J., Fri Oct 26, 2012 – Merck & Co. Inc. reported a higher-than-expected third-quarter profit, as a favorable tax rate and lower merger costs helped offset plunging sales of its former flagship product, Singulair, an asthma drug that began facing cheaper generics in August.

But overall company sales came in slightly below Wall Street expectations, as Singulair’s decline outpaced already grim predictions for it.

Merck, the No. 2 U.S. drugmaker, said on Friday it earned $1.73 billion, or 56 cents per share, compared with $1.69 billion, or 55 cents per share, a year earlier.

Excluding special items, Merck earned 95 cents per share. Analysts, on average, expected 92 cents.

The better-than-expected profit was largely due to the favorable impact of an overseas tax settlement as well as realization of foreign tax benefits, Merck said.

Jefferies & Co analyst Jeffrey Holford had predicted a tax rate of 26 percent, but it came in at 20.3 percent. He called the profit beat “low quality” because it was mostly due to the one-time tax gains.

“Gross margins were also weaker than expected,” Holford said, and noted that Singulair sales were about $75 million below what he had expected.

Merck spokesman Ron Rogers said the tax gains are not expected to carry over into the fourth quarter and that the drugmaker continues to expect a full-year tax rate of about 25 percent.

Global company revenue fell 4 percent to $11.49 billion in the quarter, below Wall Street expectations of $11.57 billion.

Wal-Mart to open 100 more stores in China by 2015

BENTONVILLE, Ark., Fri Oct 26, 2012 – Wal-Mart Stores Inc (WMT.N) plans to open 100 more stores in China and create 18,000 jobs there over the next three years, it said on Friday, in a bid to boost its presence in China’s booming but highly competitive hypermarket sector.

Wal-Mart, which has 370 stores and more than 100,000 employees in China, was a pioneer in the market, but now faces much greater competition from Britain’s Tesco Plc, Germany’s Metro AG, France’s Carrefour and domestic firms, as well as a slowing economy.

China’s hypermarket sector, in which retail sales reached 506.9 billion yuan ($81 billion) last year according to Euromonitor, includes the world’s three largest retailers in Wal-Mart, Carrefour and Tesco, and domestic brands led by Sun Art Retail Group.

U.S. Bancorp, PNC latest bank websites to face access issues

WASHINGTON, Wed Sep 26, 2012 – Some U.S. Bancorp and PNC Financial Services customers were having trouble accessing the banks’ websites on Wednesday, as U.S. financial institutions appear to be threatened by another round of cyber attacks.

Wells Fargo & Co. also faced lingering problems with its website after customers had intermittent access issues on Tuesday, a spokeswoman for the bank said.

U.S. Bancorp is experiencing “unusual and high-traffic volume” on its site that is designed to slow down the system, bank spokesman Tom Joyce said. The problem is similar to what other banks have faced in the past week, he said.

“We are working closely with federal law enforcement officials to address this issue,” he said. Customers data and funds are not at risk, he added.

A PNC spokesman said some if its customers may be experiencing difficulty logging into the bank’s website on the first attempt. “We are aware of the situation and are working to restore full access,” spokesman Fred Solomon said.

The attacks came after a posting on the Internet on Tuesday by an unknown person, calling for cyber-attacks this week against Wells Fargo, U.S. Bancorp and PNC. A similar posting last week warned of attacks against Bank of America Corp and the New York Stock Exchange.

The person who posted the message on a site called pastebin.com said the attacks will continue until the film that had stirred anti-U.S. protests across the Middle East was removed from the Internet.