Tag Archives: Serious Fraud Office

News, Politics, Government

Britain charges two brokers over Libor rate scandal

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Britain’s Serious Fraud Office said Monday that two former brokers have been charged with conspiring to manipulate the Libor interbank lending rate.

“Terry Farr and James Gilmour, former brokers at RP Martin Holdings Limited, have today been charged with offences of conspiracy to defraud in connection with the investigation by the Serious Fraud Office into the manipulation of Libor,” the SFO said in a statement.

The men will appear in court at a later date, it said, adding that its probe into Libor manipulation would continue.

Gilmour, 48, was charged with one count of conspiracy to defraud. Farr, 41, was charged with two counts of the same offence.

The development comes after the SFO filed similar charges against former UBS and Citigroup trader Tom Hayes last month.

All three men were arrested in Britain last December as part of the investigation.

Libor is calculated daily, using estimates from banks of their own interbank rates. However, the system has been found to be open to abuse, with some traders lying about borrowing costs to boost trading positions or make their bank seem more secure.

The Libor scandal erupted last year when British bank Barclays was fined ??290 million ($470 million, 363 million euros) by British and US regulators for attempted manipulation of Libor and Euribor interbank rates between 2005 and 2009.

Royal Bank of Scotland and Swiss lender UBS have also received heavy fines over alleged rigging of Libor. Euribor is the eurozone equivalent.

Libor or the London Interbank Offered Rate is the umbrella term for benchmark rates that underpin the terms of 500 trillion US dollars (??320 trillion) of contracts from mortgages to the cost of corporate lending.

Last week meanwhile, Britain announced that NYSE Euronext, the owner of the New York Stock Exchange, would take over management of Libor early next year.

That followed a review which recommended that industry body the British Bankers’ Association (BBA) should be stripped of its responsibility for setting Libor after widespread rate-rigging was found to have taken place.

…read more

Source: FULL ARTICLE at Fox World News

Business, Finance, Occupation & Industry

Should I Buy Eurasian Natural Resources Corporation?

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By Harvey Jones, The Motley Fool

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LONDON — I’m shopping for shares again, and I’m looking for something cheap to pop into my basket. Should I dig into Eurasian Natural Resources Corporation?

Heavy metals
I’ve been so used to FTSE 100 companies posting solid five-year growth figures that it’s a shock to check the numbers on Eurasian Natural Resources Corporation . Frankly, they’re woeful. All the miners have struggled lately, but few have been as hopeless as this Kazakhstan-based miner and metals company. That said, this could make it an interesting contrarian play. So should I buy ENRC?

If you had invested in ENRC five years ago, you would have lost 78% of your money. You would also have lost heavily over four years, three years, two years, one year and the last month. Financial performance in 2012 was poor, with ENRC posting a net loss of $804 million, against a $1.97 billion profit in 2011. Revenue fell 18% to $6.32 billion. It also suffered a slew of costly writedowns totaling $1.5 billion, including a $608 million impairment charge on its Kazakhstan aluminum business. Investors didn’t even get a final dividend. All the major miners have been hit by falling commodity prices, but this is of a different order.

Soviet rocks
ENRC is a troubled company. Since listing on the FTSE 100 in 2007, it has faced a Serious Fraud Office investigation into corruption allegations and a Financial Services Authority probe into its corporate governance. The so-called “Trio” of founding Kazakh shareholders were memorably accused by ousted board member Ken Olisa as being “more Soviet than City”. You need to carry out a careful investigations of your own before trusting your money to this stock.

Yet ENRC‘s share price is up sharply in recent days, helped by broker UBS upgrading its rating from neutral to buy with a target price of 320 pence. That’s 31% above current share price of £2.44. Continuing in a positive vein, ENRC generates solid cash flow from its Kazakhstan assets, with production volumes records in coal, copper, ferroalloys and electricity. Earnings per share (EPS) are set to grow 26% this year and 44% in 2014. Its geographical position, close to giant Chinese and Russian markets, helps cut its transportation costs, giving it an advantage over its rivals.

Dirty diggers
All miners are a little risky, but ENRC is clearly more risky than most. Even its diversification plans seem to add more danger, as it targets two strife-torn lands, the Democratic Republic of the Congo and Zimbabwe. Any investment should be seen as speculative, which is fine, provided you understand the risks you are taking, and limit the potential fall-out. ENRC trades at 8.7 times earnings, which is only marginally cheaper than BHP Billiton and Rio Tinto, both trading at around nine times earnings, with none of the aggro. Better still, they yield 3.9% and 3.6% respectively. With these FTSE 100 stalwarts going cheap, Eurasian Natural Resources Corporation looks too risky for me. More daring investors might decide it’s …read more

Source: FULL ARTICLE at DailyFinance

Business, Finance, Occupation & Industry

Should I Buy Rolls-Royce Holdings?

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By Harvey Jones, The Motley Fool

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LONDON — It’s time to go shopping for shares again, but where to start? There are loads of great stocks to choose from, and I’ve got my wallet out. Does Rolls-Royce Holdings  offer investors a smooth ride?

High roller
There’s change at the top of Rolls-Royce Holdings, with Ian Davis, who previously served at BP, Johnson & Johnson and McKinsey & Company, replacing outgoing chairman Simon Robertson after eight years. Davis has shown his commitment by shelling out £55,500 on the company’s shares. Sadly, I don’t have that kind of money to hand, but should I also buy Rolls-Royce?

March of the maker
Airplane engine maker Rolls-Royce Holdings is one of those great British engineering companies that we pretend we no longer have. But investors know a top quality operation when they see one, and its stock is up 34% over the past 12 months. So what has driven this splendid performance?

Only a handful of global companies do what Rolls-Royce does, and the barriers to new entrants are high, putting it in a strong market position. Full-year 2012 results were robust, with Rolls-Royce increasing its underlying profits for the 10th consecutive year, up 24% to £1.4 billion. It produced a record number of power systems, which have the added bonus of producing many years of aftermarket service revenues. Group profit margins hit 12.2%, up from 10.7% in 2011. Management is looking forward to “modest growth in underlying revenue and good growth in underlying profit” in 2013. Assuming it takes you five seconds to read this sentence, two Rolls-Royce-engined aircraft will have either taken off or landed by the time you finish it. When Chancellor George Osborne was recently talking about the “march of the makers”, he was talking about companies like Rolls-Royce.

Defense investment
It isn’t all clear skies. Rolls-Royce has also been tainted with scandal, with the Serious Fraud Office investigating allegations of malpractice in China and Indonesia. Fines, prosecutions and reputational damage could follow. The group has large pension liabilities, recently rising to £148 million. Despite its recent power play, it isn’t immune to global economic headwinds. Cuts in defense spending, both in the U.S. and U.K., are a big worry, although the recent decision to allow the Ministry of Defense to roll over £1.6 billion of unspent money eased investor worries. There’s strength in diversity, and Rolls-Royce has a thriving civil aerospace operation. Its share price also benefited from the government‘s plan to invest £1 billion in the aerospace industry.

Operating margins look healthy at a current 9.9%, but chief executive John Rishton is looking enviously at big U.S. competitors such as General Electric and Pratt & Whitney, whose lower costs allows them to offer lower prices, and invest more in infrastructure and training. Dividend investors will be disappointed by its 1.8% yield, although covered three times, there is scope for growth. Management recently hiked the full-year payment 11%, although the forecast yield for 2014 is just 2.2%.

Roll on
Rolls-Royce is up 172% over five …read more
Source: FULL ARTICLE at DailyFinance

Business, Finance, Occupation & Industry

The Dogs of the Dow Are Outperforming Their Index

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By Dan Dzombak, The Motley Fool

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“Dogs of the Dow” is one of the simplest dividend strategies to beat the market. Over the coming year, I’ll track the Dogs’ performance and keep you abreast of news affecting these companies.

The strategy
The Dogs is an investing strategy that buys and holds equal dollar amounts of the 10 best-yielding dividend stocks of the Dow Jones Industrial Average . The strategy banks on the idea that blue-chip stocks with high yields are near the bottom of their business cycle and should do much better going forward. Investors in the strategy then would get not only large dividends but also gains in the stocks underlying those dividends.

High-yield dividends
High-yield portfolios are often dismissed as inferior to their growth counterparts for various reasons:

  • Many people fear that increasing dividend yields mean lower portfolio returns.
  • Others believe that dividend payments mean that management believes the business is done growing.

Evidence from Tweedy, Browne refutes these falsehoods. Research shows that portfolios of high-yield dividend stocks outperform lower-yielding portfolios and the market in general. In fact, a study by noted finance professor Jeremy Siegel found that over 45 years, the highest-yielding 20% of S&P 500 stocks outperformed the S&P 500 by three times! The highest-yielding stocks turned a $1,000 investment in 1957 into $462,750 by 2002, compared with $130,768 if the same money was invested in the index.

Performance
After beating the Dow by 6.8% in 2011, the Dogs of the Dow underperformed the Dow by 0.2% in 2012. Check out the Dogs’ performance in 2013 so far:

Company

Initial Yield

Initial Price

YTD Performance

AT&T

5.34%

$33.71

 9.46%

Verizon 

4.76%

$43.27

 12.3%

Intel 

4.36%

$20.62

 4.78%

Merck

4.20%

$40.94

 8.73%

Pfizer 

3.83%

$25.08

 12.7%

DuPont 

3.82%

$44.98

 11.9%

Hewlett-Packard

3.72%

$14.25

 56.6%

General Electric

3.62%

$20.99

 12.6%

McDonald’s 

3.49%

$88.21

 13.9%

Johnson & Johnson 

3.48%

$70.10

 13.9%

Dow Jones Industrial Average

  

13,104

10.7%

Dogs of the Dow

    

15.7%

Dogs Return vs. Dow (Percentage Points)

    

+5%

Source: S&P Capital IQ as of March 16.

This week, the Dow Jones Industrial Average rose 0.8%. The Dogs of the Dow rose more than the Dow, moving up 1.02%. That brings the Dogs of the Dow’s outperformance up to 5 percentage points better than the Dow!

Movers and shakers
The biggest mover this past week among the Dogs of the Dow was Hewlett-Packard, which rose 6.28%. On Tuesday it was announced that the U.K. Serious Fraud Office had opened an investigation into HP‘s accusations of fraud against the former management of Autonomy, which HP acquired in 2011 for $10.3 billion. Last year, HP wrote down the …read more
Source: FULL ARTICLE at DailyFinance

Business, Finance, Occupation & Industry

Dow Approaches 10-Day Record With A Little Help

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By Jessica Alling, The Motley Fool

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The Dow Jones Industrial Average hit a major milestone yesterday when it finished the day five points up to mark the ninth straight session of gains. Though the index has barely skated by the breakeven mark for the past two days of trading, many believe the Dow is about to extend the streak to 10 days. As of noon, the Dow is up 59 points, or 0.41%. With the momentum behind it, the index may also be instilling greater confidence in the market as a whole, helping the S&P 500 come within 10 points of its 2007 high.

A little help
Good economic news today may be one of the the Dow’s streak is set to continue. Jobless claims fell for the latest reported week, and as we see more and more decreases, it points to a firmer underlying labor market. The rolling four-week average of jobless claims fell to 346,750 — the lowest level in five years.

The producer price index was bolstered once again by gas prices, as the February numbers showed a 0.7% increase compared with a 0.2% improvement in January. The gas price spike during the month created the largest jump in the PPI the economy has seen in five months, but the results stayed in line with analyst expectations.

Chevron may be getting a boost from this morning’s PPI data: The gas company is up 1.5% so far today. The company is also benefiting from rival Exxon‘s prediction that American oil-production will increase 45% by 2040. Chevron has stated that it’s on track to increase its production volume by 25% by 2017. Most American gas and oil companies continue to see improvements thanks to increased shale opportunities.

The twin frontrunners on the Dow today are Hewlett-Packard and IBM , both up more than 1.5%. HP‘s continued struggle with its botched Autonomy deal has opened a new chapter, as the U.K.’s Serious Fraud Office has opened an investigation into the allegations that the British-based company willfully inflated its sales figures to boost its acquisition price. Despite the Autonomy mess, investors are still looking for HP to rally, with 5,000 calls bought late in yesterday’s session signaling an expectation for the stock‘s price to rise to $23 by mid-April.

Big Blue has been all over the news lately, giving investors plenty of reasons to get excited. That excitement pushed IBM to its all-time high yesterday. The tech giant has been working with the city of Boston to improve systemwide initiatives like traffic, water management, and airport logistics. So far, the Massachusetts Water Resources Authority has been able to use IBM‘s predictive software successfully and has cut down on its work orders by 38% by reducing unnecessary maintenance. IBM is also looking to expand its use of Watson, the supercomputer that won on Jeopardy! and has since helped doctors improve the speed and quality of care for cancer patients. Students were asked for ideas that Watson …read more
Source: FULL ARTICLE at DailyFinance