Dell’s Internal Accounting Probe Uncovers Evidence of Misconduct Amaranth Sued by San Diego County Retirement Fund Blackstone to book profits earlier Blackstone Says IPO Tax Stance May Prompt IRS Action Bill Miller, Mired in Worst Slump of Career, Embraces AES, Tyco Citigroup plans to recruit 10,000 staff in Asia push Bear Stearns, IndyMac Say Subprime Woes Won’t Spread More headlines below
Credit Suisse sues subprime lenders Lehman poaches investment banker from UBS UBS Cuts 23 of 30 New York Stock Exchange Floor Jobs Take-Two Holders Succeed in Board Coup Big proxy adviser opposes Clear Channel deal Eurotunnel faces action from investors Tribune Gets New Offer From Burkle, Broad to Compete With Zell
Dell’s Internal Accounting Probe Uncovers Evidence of Misconduct – Wall Street Journal
Dell Inc., after a lengthy internal probe of its accounting practices, said it had found evidence of misconduct but didn’t specify what it was.
The computer maker said the investigation also found a number of accounting errors and deficiencies in the financial-control "environment." Dell stressed that its investigation isn’t complete, however, and said it will delay filing its annual 10-K report with the Securities and Exchange Commission, originally due April 3, past an extension date of April 18.
Dell, which faces federal investigations into its finances and has been struggling to rebound from reversals in the personal-computer business, said restatements of prior financial results may be necessary once the probe is complete….
Amaranth Sued by San Diego County Retirement Fund – Bloomberg
Amaranth Advisors LLC was sued by the San Diego County retirement fund for securities fraud, the first investor lawsuit against the hedge-fund firm since it collapsed under a record $6.6 billion in losses in September.
Amaranth lied about its trading strategies and made “excessively risky and volatile investments,” according to a complaint filed today by the San Diego County Employees Retirement Association. The pension fund expects to lose $100 million of the $175 million it invested with Amaranth, Chief Executive Officer Brian White said in an interview.
“We’ve had many discussions with Amaranth and its principals over the past several months trying to reach some voluntary settlement,” White said. “That has been unsuccessful.”…
Blackstone to book profits earlier – Financial Times
Blackstone Group plans to book profits from private equity at the time an asset is bought, as the buy-out firm exploits a new accounting standard to smooth out its lumpy income stream.
Blackstone, preparing for a potential $40bn float, wants to treat private equity performance fees as derivatives it can value in advance, a move that would have boosted last year’s net income by $595m (€446m), or 22 per cent, it said in its preliminary prospectus.
The move is likely to prompt questions from potential investors, who are already being asked to buy into a listed partnership structure that gives them little say in how the business is run….
Blackstone Says IPO Tax Stance May Prompt IRS Action – Bloomberg
Blackstone Group LP, the private- equity firm seeking to raise $4 billion in an initial public offering, plans to use a tactic to reduce taxes that may be challenged by the Internal Revenue Service.
In a March 22 filing with the U.S. Securities and Exchange Commission, New York-based Blackstone said it will organize as a limited partnership, avoiding the 35 percent corporate tax on most of its income and giving it a competitive advantage over rivals such as Goldman Sachs Group Inc. and Morgan Stanley.
“We believe we will be treated as a partnership and not as a corporation for U.S. federal income tax purposes,” Blackstone said in announcing the largest initial public offering by a U.S. buyout firm. “The IRS may challenge this conclusion and a court may sustain such a challenge.”….
Bill Miller, Mired in Worst Slump of Career, Embraces AES, Tyco – Bloomberg
The bad news streamed down via satellite to a private yacht cruising somewhere off the Leeward Islands.
On board, Legg Mason Inc. money manager Bill Miller was bracing for the blow: The market, he knew, had beaten him at last. His streak — 15 years of besting the Standard & Poor’s 500 Index — had come to an end. The final numbers showed he’d returned 5.9 percent in 2006, trailing a 15.8 percent gain by the S&P 500.
There was little cheer at Baltimore-based Legg Mason when Miller returned from his late-December sail. Miller says there was no buck-up message waiting for him from his boss, Raymond “Chip” Mason. Nor were there condolences from his friend Warren Buffett.
Miller, the mastermind behind the $21 billion Legg Mason Value Trust mutual fund, says people often ask if he’s somehow relieved that his run, one of the greatest in the history of investing, is finally over…..
Citigroup plans to recruit 10,000 staff in Asia push – The Times of London
Citigroup, the world’s largest bank, is planning to add as many as 10,000 staff across its Asia divisions as part of a plan to double its presence in China and boost investment banking in the rest of the region.
The massive hiring plan comes less than 24 hours after reports on Wall Street suggested that the banking group was seeking to axe about 5 per cent of its workforce, or 15,000 jobs, as part of a wider cost cutting plan.
The Asian job plans were revealed by Charles Prince, the Citigroup chief executive, during a trip to Beijing…..
Bear Stearns, IndyMac Say Subprime Woes Won’t Spread – Bloomberg
Bear Stearns Cos., the biggest U.S. underwriter of mortgage-backed bonds, said the surge of defaults in subprime home loans won’t spread to other parts of the mortgage market, and IndyMac Bancorp Inc. said losses from more creditworthy customers are far below industry averages.
Lending 100 percent of the home value, not verifying borrowers’ income and lower credit scores caused U.S. subprime defaults to rise, said Tom Marano, head of Bear Stearns’ mortgage business, in a New York meeting with investors today. Only 7 percent of Alt-A mortgages, another low-documentation loan that’s drawn scrutiny, combine all three risk factors, he said.
Shares of companies that offer less-risky mortgages including IndyMac Bancorp have fallen this year partly because investors were concerned Alt-A loans may go sour. Regulators including Federal Reserve Chairman Ben Bernanke said they don’t see any “spillover” of defaults into safer mortgages, and IndyMac said today the industry’s loss rate on Alt-A is one- seventeenth the level of subprime loans….
Credit Suisse sues subprime lenders – Financial Times
Credit Suisse has filed lawsuits against at least three US subprime mortgage lenders, marking an escalation of efforts by Wall Street banks to use legal action to purge themselves of bad housing loans.
DLJ Mortgage Capital, a unit of Credit Suisse, is separately suing the three mortgage companies for more than $30m, claiming the lenders failed to honour obligations relating to loans that it purchased from them. EMC Mortgage Corp, a unit of Bear Stearns, has filed at least one $70m lawsuit against a lender. Other suits are expected.
The legal action comes as Wall Street seeks to limit damage from the subprime collapse. Banks including Credit Suisse, Bear Stearns and Lehman Brothers helped fuel the boom in subprime lending, providing billions of dollars to lenders as they bought mortgage loans to sell to yield-hungry investors….
Lehman poaches investment banker from UBS – Reuters
Lehman Brothers has poached Aidan Clegg from UBS to be a managing director for UK investment banking, a Lehman spokeswoman said on Friday.
Clegg, who held the same title at UBS, will report to Michael Tory, Lehman’s head of UK investment banking.
Clegg helped advise housebuilder Taylor Woodrow on its acquisition of rival George Wimpey and retailer HMV Group on its takeover of bookseller Ottakar’s while at UBS….
UBS Cuts 23 of 30 New York Stock Exchange Floor Jobs – Bloomberg
UBS AG, Europe’s biggest bank by assets, is cutting 23 jobs from its 30-member staff at the New York Stock Exchange, joining a growing list of firms that are relying more on computers instead of floor traders.
UBS, based in Zurich, is trying to find positions within the bank for the 23 people, most of whom hold administrative jobs, said Kris Kagel, a spokesman in New York. Nine of the bank’s 16 floor brokers were affected, he said in an interview today.
NYSE Group Inc., which owns the exchange, has introduced automated trading to help it compete with Nasdaq Stock Market Inc. in meeting investor demand for faster electronic transactions. UBS follows Lehman Brothers Holdings Inc., Bank of America Corp., Credit Suisse Group and Van der Moolen Holding NV in cutting the number of jobs on the stock exchange floor….
Take-Two Holders Succeed in Board Coup – Wall Street Journal
A group of Take-Two Interactive Software Inc. shareholders owning 46.1% of the videogame maker’s stock succeeded in removing the board and replacing it with six new directors.
The newly elected board already nominated as chairman Strauss Zelnick, founder of media management and investment firm ZelnickMedia. The board also named Benjamin Feder as acting chief executive, succeeding former CEO Paul Eibeler, and increased the number of board seats to seven from six in order to reappoint the just-ousted Grover Brown as the seventh director.
The board coup is the handiwork of four institutional shareholders, a class of investors not known for activist investing, or agitating for change at companies to boost the stock price. The group consists of mutual-fund firm OppenheimerFunds Inc., D.E. Shaw Valence Portfolios LLC, Tudor Investment Corp. and hedge fund S.A.C. Capital…
Big proxy adviser opposes Clear Channel deal – Reuters
The leading investor proxy advisory service urged shareholders in Clear Channel Communications Inc. on Thursday to vote against a $19 billion management-backed buyout bid, in a major setback for the deal.
Opposition has been mounting to the offer to take the largest U.S. radio station chain private, and Clear Channel has already pushed back the vote date. Some analysts have argued that investors deserve more than the current offer of $37.60 a share.
RBC Capital Markets analyst David Bank said the opinion by Institutional Shareholder Services, an influential adviser to big funds, cut the chance that the deal will go through to less than 50 percent. A smaller proxy adviser, Glass Lewis, also opposes the deal….
Eurotunnel faces action from investors – Daily Telegraph
Eurotunnel faces a class-action lawsuit from some of its longest suffering shareholders after the Channel Tunnel operator axed their travel perks as part of its financial restructuring.
Some 4,065 "foundation shareholders", who each invested at least £5,250 at 1987’s float, are forming an action group to challenge what they claim is a breach of contract.
As an incentive to invest, Eurotunnel offered founding investors unlimited travel for £1 per trip for the duration of the company’s concession to 2082…
Tribune Gets New Offer From Burkle, Broad to Compete With Zell – Bloomberg
Tribune Co. suitors Ron Burkle and Eli Broad increased their offer to $8.2 billion, topping a bid by Sam Zell, a person familiar with the situation said.
Burke and Broad, both billionaires from California, raised their offer to $34 a share, including $500 million in cash, said the person, who declined to be named because the discussions are confidential. The offer from Zell, a Chicago-based real-estate billionaire, is valued at $33 a share.
The proposal complicates deliberations for directors of Chicago-based Tribune, who were close to accepting Zell’s offer before a self-imposed deadline of March 31. Tribune, the owner of the Los Angeles Times and Chicago Cubs that put itself up for sale six months ago, had extended the deadline for offers to try to drum up demand. Zell had been the only bidder in contention….
