BofA’s $315M Settlement Approved

by Source of Article on May 11, 2020

On Tuesday,Jed Rakoff, the U.S. District Judge in Manhattan,
Bank of America Corporation

‘s (

) $315 million settlement with investors related to the Public
Employees’ Retirement System of Mississippi pension fund. The
settlement was made to compensate investors for misleading them
regarding the risks associated with mortgage-backed securities
issued by the Merrill Lynch unit of BofA.

Rakoff concluded that the facts and figures submitted by BofA
were satisfactory. Moreover, he commented that, “the settlement is,
in all respects, fair, reasonable, and adequate, and in the best
interests of the settlement class members.” Rakoff had a trial in
March 2012 over the settlement.

Though BofA did not admitted any wrongdoing, Merrill Lynch,
purchased by the investment bank in 2009, averred that losses faced
by investors were attributable to downturn in economy and housing


In December 2011, BofA agreed to settle the charges against the
suit, which investors filed in the U.S. District Court in New York,
accusing it of misleading investors by misrepresenting facts in its
mortgage-backed securities of over $16.5 billion. Securities were
sold in 18 offerings between 2006 and 2007.

The complaint lodged in December 2008 claimed that BofA
deceptively sold the sub-prime mortgage-linked securities, which
eventually failed. Additionally, it misrepresented the value of
instrument by providing materially misleading statements.

These investments were backed by inferior quality mortgages
provided by subprime lenders Countrywide Financial Corp., First
Franklin Financial, and IndyMac Bancorp, which got bankrupt in


Most recently, in February 2012, a $9.8 million settlement by
Goldman Sachs Group Inc.


) related to a Ponzi scheme was approved by a federal judge. The
settlement, in particular, was reached by Goldman’s clearing and
execution division and the Ponzi scheme refers to that of Arthur
Nadel’s, which was unraveled following the financial crisis.

Goldman also agreed to pay $550 million towards legal charges in
2010, followed by
JPMorgan Chase Co.


), who faced regulatory charges in June 2011 and paid $153.6
million. All these cases had intricate investments called
collateralized debt obligations, backed largely by mortgages

However, in November 2011, Jed Rakoff rejected
Citigroup Inc.

‘s (

) $285 million settlement with the U.S. Securities and Exchange
Commission (SEC). The settlement was to compensate investors for
misleading them regarding a housing market related collateralized
debt obligation (CDO).

According to the judge, absence of proper documents prevented
him from giving a green signal to the settlement. Moreover, he
condemned regulators for depriving the general public of their
right of knowing the details of Citi’s wrongdoing in the deal.

Rakoff has scheduled a trial on July 16, 2020, though Citi and
the SEC might come up with a new settlement for the judge’s
approval in advance.

Previously, in September 2009, Rakoff had dismissed a $33
million settlement between the SEC and BofA. The deal was related
to civil charges imposed on BofA. The bank was accused of
misleading shareholders when it acquired Merrill Lynch at a time
when the financial crisis was at its peak in 2008. BofA failed to
disclose the payment of $5.8 billion in bonuses to employees even
though it recorded $27.6 billion yearly loss.

Our Viewpoint

With the settlement of the lawsuits, BofA plans to move forward
with its business strategies after attempting to end issues related
to the financial crisis. Moreover, pending lawsuits further trigger
financial hassles while blemishing the company’s image.

Therefore, it is in the interest of the company to resolve such
matters at the earliest. Moreover, the investors, who are deprived
of their hard-earned money, are at peace after the settlement is

BofA currently retains a Zacks #3 Rank, which translates into a
short-term Hold rating. Considering the fundamentals, we also
maintain a long-term Neutral rating on the stock.


BANK OF AMER CP (BAC): Free Stock Analysis


CITIGROUP INC (C): Free Stock Analysis Report


GOLDMAN SACHS (GS): Free Stock Analysis Report


JPMORGAN CHASE (JPM): Free Stock Analysis


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UK teen arrested in hack probe

by Source of Article on May 10, 2020

The teenager was believed to have been part of a group that published confidential calls

Police have arrested a 17-year-old boy alleged to be the spokesman for a notorious hacking group.

The boy is said to be a member of Team Poison, a group which claimed responsibility for more than 1,400 illegal activities.

He was arrested in connection with alleged offences under the Computer Misuse Act 1990.

“Computer equipment has been seized and is undergoing a detailed forensic examination,” the police said.

The operation, carried out by Northumbria Police, was supported by the UK’s Police Central eCrime Unit (PCeU).

Confidential investigations

Team Poison - which identifies itself as “TeaMp0isoN” online - has taken responsibility for several high-profile attacks.

It is believed to have been behind the publishing of recordings of Scotland Yard officers discussing confidential hacking investigations with American law enforcement.

Two teenagers were subsequently arrested in connection with the unauthorised intrusion.

Other hacks credited to Team Poison include accessing former Prime Minister Tony Blair’s address book, and posting status updates on the profile of Facebook founder Mark Zuckerberg.

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Chemical Industry Stock Outlook - May 2012

by Source of Article on May 10, 2020

Although March quarter results show continued signs of
improvement in the U.S., a soft operating environment in Europe
continues to weigh on the companies in the chemicals space. High
input costs, weaknesses across some key end-markets (such as
construction and electronics) and the European sovereign debt
crisis remain the major impediments to growth.

While the U.S. economy has still not reached a robust growth phase
and Western Europe remains crippled with debt issues, the chemical
industry is well placed to reap the benefits of the emerging market
tailwind in 2012, with Asia holding the magic wand for growth.

Industry Dynamics

Chemicals are generally used to make a number of consumer goods and
are also used in the agriculture, manufacturing, construction and
service industries. In fact, the chemical industry itself consumes
26% of its own output. Major industrial consumers include rubber
and plastic, textiles, apparel, petroleum refining, pulp and paper
and primary metals.

The chemical industry, a nearly $3 trillion global business, has
grown at a brisk pace for more than five decades. The fastest
growing areas have involved the manufacture of synthetic organic
polymers used as plastics, fibers and elastomers. The chemical
industry is mainly concentrated in three areas of the world:
Western Europe, North America and Japan. Europe is the largest
producer, followed by the U.S. and Japan.

The U.S. chemical industry represents roughly 19% of the global
chemicals output and employs more than 800,000 people. It is
responsible for 10% of the nation’s merchandise exports,
aggregating $145 billion annually. Roughly 5.5 million additional
jobs are backed by the purchasing activity of the chemical
industry. The chemical industry, by nature, is cyclical and heavily
linked to the overall condition of the U.S. economy.

According to chemical giant



), global chemical production (excluding pharmaceuticals) rose 4.8%
in 2011, backed by healthy demand from major industries. In the EU,
chemical production edged up 1.6% while declining 3.1% in Japan,
hurt by the March 2011 quake.

The sluggish economy took a toll on growth in the U.S. as the
nation’s chemical production grew a nominal 2.1% in 2011. South
America and Asia (excluding Japan) witnessed growth of 4.7% and
11.1%, respectively. Growth in Asia was led by strong contributions
from China.

End-Market Scenario

There are 170 major chemical companies in the U.S. operating
internationally with more than 2,800 facilities abroad. The
chemical industry is among the biggest industries in the U.S., a
roughly $720 billion enterprise, accounting for 26% of the nation’s

According to the American Chemistry Council (“ACC”), the Chemical
Production Regional Index (CPRI), crept up 0.1% in March 2012,
following a revised 1% gain in February. Results were mixed in
different regions, with gains clocked across the Gulf Coast,
Midwest, Ohio Valley and Southeast regions while production dipped
in Mid-Atlantic and West Coast and was flat in the Northeast.

Output from the U.S. manufacturing sector, the largest consumer of
chemical products, nudged up 0.6% in March 2012, following a 1.1%
gain a month ago. Output in several key chemistry end-use markets
rose, including structural panels, plastic products, computers,
motor vehicles, aerospace, machinery and construction supplies.

Compared to March 2011, total chemical production across the board
rose 1.3% and was ahead in all regions. The year-over-year
comparisons improved in several regions, including the Gulf Coast,
Ohio Valley and the Southeast.

Raw Material Market Trends

The chemical industry uses oil, naphtha and natural gas as energy
and feedstock inputs. Oil prices remain high despite the sub-par
growth outlook for the global economy, largely owing to
geostrategic reasons. BASF report states that the price of Brent
crude oil rose sharply in 2011 (averaging at $110 a barrel),
stirred by the combined impact of strong demand and political
unrest in the Middle East and North Africa.

Price of the other key raw material, naphtha, averaged at $930 per
metric ton in 2011, a more than 30% year-over-year surge. Naphtha
prices are also expected to remain elevated relative to last year’s
levels. The only bright spot for the industry on the feedstock
front is natural gas. In fact, the price of natural gas has dropped
to its lowest level in over a decade.

Over the past five years, the U.S. natural gas markets have seen a
dynamic shift due to the emergence of a new source of energy, shale
gas, which exists in large quantities with sources close to many
big energy-intensive cities. Shale gas is not only desirable for
environmental reasons, given its low carbon footprint relative to
oil or coal, but is at the same time cost effective.

2012: Emerging Markets Hold the Key

For 2012, the outlook for the global chemical industry is balanced,
as the U.S. and European Union continue to contend with soft local
economies and debt constraints, while the emerging markets are
expected to show more rapid growth in output.

The ACC foresees moderate production growth this year followed by a
stronger recovery in 2013. National chemical output is expected to
slow to 1.6% in 2012 from 3.8% a year ago, and then rise to 2.1% in
2013. A rebound across most of the key end-use markets is helping
to maintain the industry’s contribution to the nation’s economic

The chemicals outlook indicates moderate growth over the next few
years, depending on certain factors including strengthening
domestic demand and an improvement in overseas exports. Exports
climbed nearly 11% to $189 billion last year and are projected to
surpass $230 billion in 2014.

While the U.S. economy is not headed towards another recession, the
sovereign debt plight in Europe coupled with other economic factors
poses downside risks to the U.S. economic outlook.

The ACC projects weaker growth in the European chemicals output
than its earlier forecast in 2012, in part, due to increased
uncertainty. Most of last year’s output growth took place in the
first quarter after a strong demand recovery with double-digit
growth witnessed in 2010.

The European Chemical Industry Council (“ECIC”), however, sees
growth resuming in 2012, strengthening steadily through the year.
The group forecasts 1.5% chemical industry growth this year.

While developed economies, restrained by debt and stricter fiscal
policies, are likely to increase chemical production at a modest
pace, a more rapid growth in output from the emerging markets is
expected in 2012.

Asia and other emerging markets are expected to continue to lead in
volume increases with the most significant gains coming from China
and India. The ACC also envision China to overtake the U.S. as the
largest market for chemicals. Chemical makers in the emerging
markets are expected to deliver a 6.2% production increase in 2012
followed by 7.5% in 2013.


The ACC notes that emerging market growth, abundant shale gas and a
still supportive dollar exchange rate should help drive U.S.
chemical exports.

A string of factors are driving growth in the export markets
including favorable energy costs stemming from the abundance of
shale gas and strong demand from the emerging markets. Affordable
natural gas and ethane (derived from shale gas) offer U.S.
producers a compelling cost advantage over their global
counterparts who use a more expensive, oil-based feedstock.

Further, cost-cutting measures implemented by chemical companies,
such as plant closures, aggressive cost containment and production
improvement initiatives, should yield industry-wide margin
improvements. Cash flows derived through these actions can be used
for growth.

Mergers and acquisitions offer chemical companies another means to
shore up growth in this difficult scenario. These companies remain
focused on exploring growth opportunities in the fast-growing
emerging markets, particularly the lucrative regions of
Asia-Pacific and Latin America such as China and Brazil.

A major deal in this space was last year’s acquisition of Danisco
EI DuPont de Nemours Co


) for $6.3 billion. The acquisition strengthened the company’s
presence in the food ingredient and enzyme markets, and expanded
its presence in industrial biotechnology and biofuels.

The deal synced well with DuPont’s strategy to expand beyond its
chemical and manufacturing focus into the “megatrend” sectors of
agribusiness and alternative energy. Both industries are expected
to grow rapidly in the coming years as food demand and prices
increase and clean energy policies gain more ground.

Some of the key end-markets for chemical products are on an
uptrend. This has been manifested by the recent earnings reports of
leading chemical players. DuPont, for example, logged a
double-digit surge in sales riding on higher sales volume in the
Agriculture segment. Danisco contributed to higher profit in the

Despite softness in the consumer electronics segment, the company
is poised for growth on the heels of strong momentum in agriculture
and food businesses. On the cost-saving front, DuPont remains on
track to achieve its fixed cost productivity targets of $1 billion
by 2012.

The other chemical titan,
The Dow Chemical Company


), is delivering cost synergies from the Rohm Haas
acquisition and is targeting synergy capture of $2 billion by the
end of 2012. Dow is also benefiting from strong fundamentals in
agriculture and food markets. It believes economic recovery will
gain momentum in the second quarter and through the remainder of

Moreover, Dow sees an improving U.S. economy citing tailwind from
the nation’s rich access to low-cost natural gas. Despite
challenges in Europe faced by both DuPont and Dow, we are
optimistic about the long-term prospects of these two industry

Eastman Chemical Company


) is expected to benefit from the acquisition of Solutia (expected
to close in mid-2012). Higher selling prices contributed to revenue
growth in the March quarter. The company’s diversified chemical
portfolio, along with its integrated and diverse downstream
businesses, is driving earnings. The company benefits from business
restructuring and cost-cutting measures as well as increased
capacity additions.

We also hold a favorable view on
Celanese Corp.


) despite the challenges it faces in Europe. The company’s profit
shot up 29% in the March quarter on higher volumes and pricing in
its acetyl intermediates and industrial specialties businesses. We
like the company’s initiatives to improve margins and profits by
running its plants better and controlling expenses, which should
yield results through the rest of


The global nature of the industry puts competitive issues into
sharp focus. The U.S. producers have responded to competitive
pressures by streamlining operations, relocating manufacturing
facilities to low-cost regions closer to end-markets, and being
overall more nimble and flexible in responding to market
opportunities. And it is not always easy to pull this off.

Commodity price hikes, though subsiding lately, is adding to
feedstock costs for many of these producers. Their ability to pass
these costs on to end consumers is not always easy, given the
competitive pressures at play. As a result, margins for a number of
producers will continue to be under pressure.

Given the industry’s sensitivity to the global economy, any
negative current in the macro economy would be reflected in the
prospects of the chemical companies. The turmoil in Europe and its
impact on global growth remain sources of near-term uncertainty.
Western Europe continues to pose challenges on chemical stocks due
to weak demand (particularly in the construction industry) and the
lingering impact of debt crisis.

Moreover, the U.S. housing sector remains a weak end-market. The
domestic housing sector, a key consumer of chemicals, is likely to
remain soft through 2012. Weakness in the electronics and
construction end-markets may weigh on the June quarter results.

Chemical makers are also exposed to several regulatory hurdles and
compliance issues. The U.S. Environmental Protection Agency (EPA),
for example, has proposed a new mandate which could enforce more
stringent hazardous air pollutant emissions limitation on boiler
operators. Based on EPA’s estimate, compliance with these rules
would cost these operators billions of dollars annually, even
leading to mill closures.

The largest manufacturers operating on a global scale with plants
in numerous countries include the likes of BASF,
Braskem S.A.


), Celanese, Degussa, Dow Chemical, DuPont, Eastman Chemical,


Mitsubishi UFJ Financial Group, Inc.


) and
PPG Industries Inc.




BRASKEM SA (BAK): Free Stock Analysis Report


BASF SE (BASFY): Free Stock Analysis Report


CELANESE CP-A (CE): Free Stock Analysis Report


DU PONT (EI) DE (DD): Free Stock Analysis


DOW CHEMICAL (DOW): Free Stock Analysis Report


EASTMAN CHEM CO (EMN): Free Stock Analysis


MITSUBISHI-UFJ (MTU): Free Stock Analysis


PPG INDS INC (PPG): Free Stock Analysis Report


EXXON MOBIL CRP (XOM): Free Stock Analysis


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April Comps Slacken at McDonald’s

by Source of Article on May 10, 2020

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Facebook launches its app store

by Source of Article on May 10, 2020

Facebook has admitted that growing mobile phone use could hurt future revenue

Facebook has launched its own app store to promote mobile programs that operate using the social network.

The company said the App Center will become the “new, central place to find great apps like Draw Something” and other titles.

Developers will have the ability to charge a fee for apps sold in the store in the near future, Facebook said.

The announcement came as Facebook admitted growth in mobile use could hurt future advertising revenue.

Ahead of its initial public offering, Facebook told potential investors in a statement: “If users increasingly access Facebook mobile products as a substitute for access through personal computers, and if we are unable to successfully implement monetisation strategies for our mobile users, or if we incur excessive expenses in this effort, our financial performance and ability to grow revenue would be negatively affected.”

‘Start preparing’

The App Center is expected to be rolled out globally in “the coming weeks”, said Facebook’s Aaron Brady in a post on the network’s developer blog.

“All developers should start preparing today to make sure their app is included for the launch,” he wrote.

However, Mr Brady said the store was not designed to compete head-on with the likes of Apple’s App Store and Google Play.

“The App Center is designed to grow mobile apps that use Facebook - whether they’re on iOS, Android or the mobile web,” he wrote.

“From the mobile App Center, users can browse apps that are compatible with their device, and if a mobile app requires installation, they will be sent to download the app from the App Store or Google Play.”

The store will follow the well-oiled app browsing format - and will be available on mobile

Only apps which make use of Facebook’s log-in system Connect are eligible to be included in the store.

‘Attract more ideas’

Saverio Romeo, an industry analyst from Frost Sullivan, said the store announcement suggested an aggressive push by Facebook to become a bigger player in mobile.

He said Facebook needed to become “more significant, to attract more ideas and get more experience in the mobile space”.

“I think the store is an important element - a community of developers is a fundamental element in the growth we have seen with Apple and Android,” he told the BBC.

He also said he believed Facebook could position itself as the first major app store to be platform-agnostic - that is, not tied to a single platform such as iOS or Android.

“The type of applications that the Facebook community can develop can have an incredible open horizon.

“Facebook is ubiquitous - it does not have any preferential routes. The question is the monetisation of all this.”

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