Stock futures point to higher start

(REUTERS, PERCENT, CENTS, ECONOMISTS, SURVEY, SALES)

(Reuters) - Stock futures pointed to a higher start on Wall Street on Wednesday, with futures for the S&P 500 up 0.7 percent, for Dow Jones up 0.5 percent and the Nasdaq 100 futures gaining 0.6 percent.
In Europe, stocks were higher, led by oils and banks, with the FTSEurofirst 300 index up 1.1 percent at 859.84 points at 0900 GMT.
Constellation Brands is reporting first quarter numbers, with analysts expecting the company to report earnings per share of 0.32 cents compared to 0.34 cents a year ago.
General Mills is reporting fourth quarter results with analysts expecting earnings per share of 0.80 cents compared to 0.73 cents a year ago.
Automatic Data Processing (ADP) releases its June employment report at 8:15 a.m. EDT. Economists in a Reuters survey expect 393,000 jobs were lost in June, down from a May job loss figure of 532,000.
At 10 a.m. EDT, the Institute for Supply Management releases its June manufacturing index. Economists in a Reuters survey expect a reading of 44.5 compared with 42.8 in May.
National Association of Realtors issues Pending Home Sales for May at 10 a.m. EDT. Economists in a Reuters survey expect a reading of 6.7 percent, unchanged from the prior month.
Commerce Department releases May construction spending at 10 a.m. EDT. Economists in a Reuters survey forecast a decline of 0.5 percent compared with a 0.8 percent rise the prior month.
U.S. automakers release June auto sales. Economists in a Reuters survey expect annualized sales of 3.33 million cars and 4.00 million trucks. In May, car sales stood at 3.35 million, and truck sales were 4.03 million.
Shares of Pfizer Inc (PFE.N) dropped 1.5 percent to $14.77 after the bell on Tuesday after the company said it was scrapping a late stage trial of its drug Sutent for treatment of a form of colorectal cancer.
Shares of AMAG Pharmaceuticals (AMAG.O) jumped 5 percent to $57.11 after the bell on Tuesday following news that the company`s iron deficiency drug was approved by the U.S. Food & Drug Administration.
U.S. stocks fell on Tuesday as an unexpected drop in consumer confidence cooled recent optimism about an economic recovery, but Wall Street still closed out its best quarter in a decade.
The Dow Jones industrial average .DJI slipped 0.97 percent, the Standard & Poor`s 500 Index .SPX dropped 0.85 percent and the Nasdaq Composite Index .IXIC shed 0.49 percent.
(Reporting by Joanne FrearsonEditing by Hans Peters)
Original article

Microsoft`s Bing search wins share from Google

(MICROSOFT, MARKET, SHARE, FIRST, PERCENT, STATCOUNTER)

LONDON/SEATTLE (Reuters) - Microsoft Corp`s new Bing search engine gained U.S. market share in its first month in operation but still trails dominant rival Google Inc, according to data released on Wednesday.
Bing, launched on June 3 but available to some users a few days earlier, took 8.23 percent of U.S. Web searches in June, up from 7.81 percent for Microsoft search just prior to its rollout and 7.21 percent in April, said Internet data firm StatCounter.
Google lost share slightly, dipping to 78.48 percent from 78.72 percent before Bing. Yahoo Inc, the perennial No. 2 in the market, rose to 11.04 percent from 10.99 percent.
Bing`s share peaked in the first week of June at 9.21 percent, falling away in the middle two weeks before coming back at 8.45 percent in the last week of June.
The results may give heart to Microsoft, which is investing heavily in its loss-making online services business and is refusing to cede the market to Google.
"At first sight, a 1 percent increase in market share does not appear to be a huge return on the investment Microsoft has made in Bing but the underlying trend appears positive," StatCounter Chief Executive Adohan Cullen said in a statement.
The world`s largest software company may yet strike an online search partnership with Yahoo to make itself a credible competitor, but talk of such a deal has quietened down.
StatCounter, based in Dublin, says its data are based on 4 billion pageloads per month monitored through a network of websites. Other data research firms such as comScore are not expected to release figures on Bing`s share until mid-July.
(Reporting by Bill Rigby and Georgina Prodhan; editing by Simon Jessop)
Original article

Auto sales seen showing signs of stability

(SALES, INDUSTRY, PERCENT, DECLINE, MOTOR, MILLION)

By David Bailey
DETROIT (Reuters) - Major automakers are expected to report the highest sales rate of 2009 when they post results for June, as deep discounts limit industry-wide results to a 30-percent decline.
In the context of the U.S. auto industry, where sales have been slumping for four years, that would constitute good news and support the view sales are near bottom after a punishing decline to nearly 30-year lows, analysts and executives said.
All of the largest automakers are expected to post deep U.S. light vehicle sales declines for June to round out what has been the weakest market since the early 1980s.
"We continue to believe that U.S. auto sales have bottomed this cycle and are heartened by seemingly strengthening retail sales even ahead of any impact from `cash for clunkers` ... " J.P. Morgan analyst Himanshu Patel said in a note to clients.
Ford Motor Co expects to report sales declines in the 10 percent to 20 percent range in June, which would be the best result of the top six selling automakers in the United States, following on a recent trend of outperforming sales for Ford.
Analysts and Ford see the industry as likely posting a sales decline in the 25 percent to 30 percent range for June from a year earlier. On an annualized basis, the rate could top 10 million units, the strongest total since December.
Edmunds expects Chrysler sales to drop 29.1 percent, General Motors Corp 28.9 percent, Honda Motor Co Ltd 31.4 percent, Toyota Motor Corp 28.7 percent and Nissan Motor Co Ltd 24.2 percent.
GM`s bankruptcy filing on June 1, inventory sell-offs from Chrysler dealerships that were losing franchises early in June, and the completion of the sale of Chrysler assets to a group led by Italy`s Fiat SpA all may have distorted the results for the month to some extent, analysts said.
"June industry sales of light vehicles appear to have improved somewhat further versus last month`s levels, benefiting from some recovery in consumer confidence but also from the large discounts offered by Chrysler and terminated GM brands in order to liquidate inventories," Barclays Capital analyst Brian Johnson said in a note to clients on Monday.
10 MILLION MARK?
U.S. auto sales may have pierced the 10 million vehicle mark in June on the annualized basis economists follow as an early snapshot of the appetite for big ticket items.
A result at or above 10 million units would be the strongest since the 10.3 million unit rate in December, but still one of the weakest since the early 1980s.
"We`re still a long way from 16 million unit sales, but things are moving in the right direction," Jesse Toprak, executive director of industry analysis for Edmunds.com, said of sales rates seen in 2007.
A Reuters poll of analysts found a median expectation for U.S. auto sales of 9.81 million vehicles on an annualized basis, which would be down slightly from the 9.9 million unit rate in May and far below the 13.7 million rate in June 2008.
However, on Monday, Ford U.S. sales analyst George Pipas said a 10 million unit rate was possible. Barclays and J.P. Morgan both have forecast a 10.1 million unit rate.  Continued...
Original article

Fiat CEO says Chrysler cash burn slows: report

(CHRYSLER, COMPANY, EXECUTIVE, MARCHIONNE, ROMEO, DODGE)

MILAN (Reuters) - U.S. automaker Chrysler Group LLC has stemmed the pace at which it uses cash after emerging from bankruptcy last month as a slimmer company, Chief Executive Sergio Marchionne said in an interview with Bloomberg published on Wednesday.
Chrysler went through $9.6 billion in cash in 2008. The Detroit car maker reorganized around what it considered its best assets and $6 billion in fresh financing from the U.S. and Canadian governments.
"We are still burning cash, but it`s slowed down by far," the agency quoted Marchionne, also the chief executive of Italy`s Fiat SpA, as saying.
"The question is how quickly we can stop the bleeding. That is priority No. 1."
He declined to say how quickly the company is using cash.
Marchionne is cutting inventory and adding new platforms and engine technology to redefine the product portfolio.
Fiat acquired 20 percent of the new Chrysler formed from the bankruptcy. The combined company is the world`s sixth-largest carmaker, with annual sales of 4.5 million vehicles.
Marchionne said he wanted to disclose Chrysler`s financial information even though the automaker was not publicly listed, Bloomberg said.
He said he was working with the U.S. Treasury to decide what information Chrysler might report and when.
ALFA ROMEO AND DODGE
By the end of the month, Marchionne wants to decide how the new company will manage its Dodge and Alfa Romeo brands, which he sees as American and European counterparts.
One solution might be to sell Alfa Romeo models under the Dodge brand in the United States and Dodge cars as Alfa Romeos in Europe, Marchionne said.
Chrysler should be able to take control of its European dealer network by September, Marchionne added.
Marchionne said he was not searching for another partner in Europe or Asia, even though his offer for General Motors Corp`s came up short.
He said on Friday he would not sweeten his bid to top frontrunner Magna International Inc`s offer to buy the company, even though he is still interested in the German brand.
The executive said a plan to spin off or list the Italian company`s car-making operations has been put on hold since its bid for Opel is not moving forward.  Continued...
Original article

Oil rises above $70 on bullish API report

(BARREL, REPORT, CRUDE, RECOVERY, MILLION, ECONOMIC)

By Fayen Wong
PERTH (Reuters) - Oil climbed back above $70 a barrel on Wednesday as an industry inventory report showing a larger-than-expected fall in U.S. crude stocks buoyed hopes of a demand recovery and encouraged buying.
The American Petroleum Institute said that domestic crude stocks fell 6.8 million barrels to 349.7 million barrels last week, against analysts forecast for a much smaller drawdown of just 2 million barrels.
This helped turn crude around from a 2 percent overnight loss, after a drop in U.S. consumer confidence added to concerns about a potential economic rebound.
U.S. crude for August delivery rose 59 cents to $70.48 a barrel by 0636 GMT (2:36 a.m. EDT). The contract settled down $1.60 at $69.89 a barrel on Tuesday, after earlier rising to an eight-month high of $73.38.
London Brent crude rose 62 cents to $69.92 a barrel.
"The U.S. consumer confidence report was a negative for the oil price but in late news, reports by the American Petroleum Institute that crude stocks fell by 6.8 million barrels helped to lift sentiment," said David Moore, a commodities analyst at the Commonwealth Bank of Australia.
The API report is regarded as a precursor to more authoritative numbers issued by the U.S. Energy Information Administration at 10:30 a.m. EDT on Wednesday.
Data from South Korea and from China, the world`s No.2 energy consumer, also offered some encouragement.
China`s official purchasing managers` index (PMI) for June rose to 53.2 from 53.1 in May, showing that the country`s economic recovery is on more solid ground, while South Korea`s export numbers were much better than forecast.
Oil prices, which have tumbled from a record high of over $147 struck in July last year, have rallied in recent months on a weak dollar and hopes of a global economic recovery to chalk up a 42 percent gain in the last quarter -- the highest quarterly gain since 1990.
But some analysts have questioned the sustainability of the current prices as near term demand remains weak and the global economic outlook was still murky, a view backed up by Japanese business sentiment that improved less than expected in June.
U.S. unemployment and housing data, due later on Wednesday, will give the next clues on how the world`s economies are faring.
(Reporting by Fayen Wong; Editing by Michael Urquhart)
Original article

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Asia shares struggle as data shows going tough

(STOCK, AFTER, EXPECTED, INDEX, QUARTER, PERCENT)

By Charlotte Cooper
TOKYO (Reuters) - Asian stock markets struggled to gain ground on Wednesday as economic data showed the process of turnaround to recovery was likely to be a slow grind, and the dollar capitalized on that more cautious sentiment.
Oil held above $70 a barrel after industry inventory data showed a bigger-than-expected fall in crude stocks, which helped pare some of the previous day`s losses after data unsettled investors about a potential U.S. economic rebound.
In Japan, business confidence pulled back from a record low hit three months ago, but the improvement was smaller than market players had expected and still a negative reading.
That followed an unexpectedly steep slide in U.S. consumer confidence in June, which dented optimism on Wall Street about prospects for recovery and weighed on shares in Asia.
Australia`s benchmark index .AXJO got the new quarter off to a weak start, falling 2 percent as growth-sensitive stocks such as shopping mall owner Westfield Group (WDC.AX) lost ground.
The broader MSCI index of Asia-Pacific shares excluding Japan .MIAPJ0000PUS eased 0.4 percent, holding below June`s 2009 peak, while Tokyo`s Nikkei share average .N225 was flat, with Orix Corp (8591.T) and All Nippon Airways (9202.T) sliding on news of possible public share offerings. .T
Japanese construction machinery makers such as Komatsu (6301.T) edged higher on news that China`s official purchasing manager index (PMI) gained.
But analysts noted big Japanese firms in the Bank of Japan`s tankan survey planned to cut capital spending, a key driver of the economy, by 9.4 percent in the year to next March, more than the market expected.
"Basically, the tankan showed that things aren`t all that good in the near term but seemed encouraging for the longer term, making its overall impact neutral," said Kenichi Hirano, operating officer at Tachibana Securities.
"I`d have liked to see slightly better capital spending, but given the current situation it`s only natural that it should fall -- after all, with production down, the last thing manufacturers can do right now is spend."
In Seoul, shares rose 0.8 percent helped by a slower than expected fall in South Korean exports, while component-maker LG Innotek (011070.KS) rallied on the first day of trading after it completed a merger with LG Micron Ltd.
The U.S. Conference Board`s index of consumer attitudes fell in June to 49.3 from a downwardly revised 54.8 in May, deflating stocks on the last day of the quarter.
The Dow Jones industrial average .DJI slipped 0.97 percent, the Standard & Poor`s 500 Index .SPX dropped 0.85 percent and the Nasdaq .IXIC eased 0.49 percent.
Nevertheless, Wall Street still closed out its best quarter in a decade, with the S&P 500 jumping 15.2 percent in the three months to end-June, the blue-chip Dow advancing 11 percent and the Nasdaq climbing by more than a fifth. .N
JOBS DATA IN FOCUS  Continued...
Original article

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BofA`s asset management unit gets lukewarm bids: report

(AMERICA, MANAGEMENT, CITING, PEOPLE, BILLION, GROUP)

(Reuters) - Bank of America Corp`s (BAC.N) primary investment management unit is drawing lower than expected bids after its likeliest suitor, BlackRock Inc (BLK.N), inked a blockbuster deal to buy Barclays Global Investor (BARC.L), the Financial Times reported, citing people close to the matter.
Bank of America has been trying to sell its Boston-based Columbia Management unit since earlier this year, but the bank has so far not announced a deal for the unit.
The company is hoping to get at least $3 billion from a sale of Columbia Management, but bids so far have come in closer to $2 billion, the paper said, citing the people.
BlackRock was a leading candidate to buy the business, but its hands have become full since agreeing to buy BGI for $13.5 billion last month.
But buy-out firms remain interested in First Republic, a private bank that Bank of America has been trying to sell.
A group led by former bank executive Gerry Ford -- which includes private equity firms Carlyle Group CYL.UL, Blackstone Group LP (BX.N), Oak Hill Capital Partners and TPG -- appears to have the highest degree of interest in the business, FT said, citing people close to the matter.
If sold, First Republic could be priced at about its tangible book value -- ranging from $600 million to $800 million depending on how its assets were marked and the degree to which Bank of America agreed to share losses, the paper said.
(Reporting by Tenzin Pema in Bangalore; Editing by Lincoln Feast)
Original article

Fed`s Yellen: slow recovery to start in late 2009

(YELLEN, INFLATION, SEVERAL, YEARS, ECONOMY, MARKET)

By Ros Krasny
SAN FRANCISCO (Reuters) - The recession is likely to end later in 2009, ushering in a "frustratingly slow" recovery marked by continued high unemployment, a top Federal Reserve official said on Tuesday.
Janet Yellen, president of the San Francisco Fed, looked for inflation to stay low for several years, and hinted that the central bank should be in no hurry to raise interest rates even once growth turns positive.
"I am not optimistic that the economy will spring back to normal anytime soon," Yellen told the Commonwealth Club of California in San Francisco.
The U.S. jobless rate is likely to rise from its current level, and it could take several years to return to full employment, Yellen said -- a period that could intensify downward pressure on wages and prices.
In her first extended remarks on the economy since early May, Yellen said that undesirably low inflation was the biggest issue on the medium-term horizon.
"I`ll put my cards on the table right away. I think the predominant risk is that inflation will be too low, not too high, over the next several years," she said.
"I expect core inflation will dip to about 1 percent over the next year and remain below 2 percent for several years."
Further, "if the economy fails to recover soon, it is conceivable that this very low inflation could turn into outright deflation." Still, Yellen said the risk of a "devastating spiral" of deflation was unlikely.
Yellen is a voting member of the Federal Open Market Committee in 2009.
The FOMC lowered its benchmark lending rate to a range of zero to 0.25 percent in December in an attempt to shore up the economy.
Financial markets assess a reasonable chance the Fed will start to raise rates by late 2009 or early 2010, but seem to be at odds with Yellen`s focus on deflation.
The Fed "certainly has the means to unwind the stimulus when the time is right," she said, adding that many of the bank`s special credit programs are tapering off as market conditions improve.
Even so, "I`m more concerned that we will be tempted to tighten policy too soon, thereby aborting recovery," Yellen said, citing the notorious blunders of the Fed committed in the 1930s.
"I do not believe that there is a real threat of high inflation in the current situation."
She said financial markets continued to show more confidence after a time when the Fed`s programs succeeded "in averting a full-blown meltdown."  Continued...
Original article

Putnam Chairman Charles "Ed" Haldeman stepping down

(PUTNAM, HALDEMAN, COMPANY, PRESIDENT, BILLION, REYNOLDS)

NEW YORK (Reuters) - Putnam Investments said Charles "Ed" Haldeman Jr. will step down on Tuesday as chairman of the Boston investment company, ending a turbulent seven-year run at the firm.
Haldeman, 60, who joined Putnam in 2002 and ran it as president and chief executive from 2003 until last year, is the prime candidate for the chief executive post at government-backed mortgage company Freddie Mac (FRE.N), the Wall Street Journal reported, citing people familiar with the situation.
Officials at Freddie Mac could not be reached for comment.
Haldeman was credited with restoring the firm`s standing with regulators after a series of trading scandals that forced out his predecessor, Lawrence Lasser.
But Haldeman wasn`t able to restore the performance of Putnam`s mutual funds, which also suffered from outflows. That contributed to the decision of past owner Marsh & McLennan Cos (MMC.N) to sell the business to Canada`s Power Financial for $3.9 billion in 2007.
Power Financial named Robert Reynolds, now 57, to lead the business last year, and he has turned its performance around with a series of management changes.
A spokesman said neither Haldeman nor Reynolds were available for interviews on Tuesday.
In a statement, Haldeman said "Bob Reynolds is doing a great job as CEO. This is a good time for me to advance to the next stage of my career. I`ll always be grateful for the opportunity to have worked with so many dedicated and talented professionals."
Haldeman is also stepping down as president of the Putnam Funds and as a trustee. Reynolds will replace Haldeman as president of the funds board, but Haldeman won`t be replaced as chairman of the fund company.
At the end of May, Putnam had $102 billion in assets under management, versus an all-time high of more than $400 billion earlier this decade, the company said.
(Reporting by Ross Kerber; Additional reporting by Martinne Geller; Editing by Phil Berlowitz, Gary Hill)
Original article

GM CEO makes case for bankruptcy asset sale

(BANKRUPTCY, COURT, ASSETS, AUTOMAKER, HENDERSON, BILLION)

By Emily Chasan and Caroline Humer
NEW YORK (Reuters) - General Motors Corp`s chief executive told a U.S. bankruptcy court on Tuesday that the sale of GM`s main assets to government-backed "New GM" must win court approval in order for the automaker to survive.
Fritz Henderson told the court that if the sale is not approved by July 10 and GM loses access to government funding, the company would be forced to liquidate. He testified on the first day of a hearing at which the automaker is seeking court approval for the sale just 30 days after filing for Chapter 11.
"Business is doing better" at GM, Henderson said, as customers, suppliers, workers and others anticipate the completion of a successful deal. He added that the automaker had originally hoped to repay its loans to the government and restructure outside of bankruptcy.
Henderson said during questioning that while sales in June were not as bad as expected, they were still down. "We do not expect to make money in June of 2009," he said.
Part of the reason business is better is the success of Chrysler`s asset sale out of bankruptcy, Henderson said.
"The 363 transaction with Chrysler did go relatively quickly. It provided some buyers assurance that this can go relatively quickly," he said.
GM competitor Chrysler filed for bankruptcy on April 30 and completed a sale of its main assets a few weeks ago.
Henderson also discussed the departure of former GM CEO Rick Wagoner, saying that Wagoner told him that he had been asked to step down by Steve Rattner, head of the Obama administration`s autos task force.
The GM sale hearing, before Judge Robert Gerber, is expected to continue for at least two days, as the company faces objections and questions from its creditors committee, a group of dissenting bondholders, those with liability and asbestos claims against the company, as well as unions and dealerships.
If the deal is approved, GM will be able to sell its best assets, including Chevrolet and Cadillac, under Section 363 of the bankruptcy code to a "New GM" while the U.S. Treasury would provide billions of dollars in financing.
Evercore managing director J. Stephen Worth said during testimony that his firm valued "New GM" at $38 billion to $48 billion in an analysis the financial firm prepared for the GM board of directors. That is substantially larger than the market capitalization of Ford which is near $18.3 billion. Ford is the only U.S. automaker to have avoided bankruptcy,
GM`s old assets would remain behind in bankruptcy court to be liquidated. Testimony also addressed whether "Old GM" will have enough cash to cover the liabilities it will retain, such as the $530 million in environmental claims.
During the hearing, Albert Koch, an AlixPartners executive who will be CEO of "Old GM", said he estimates the company needs $1.25 billion to wind down. He does not expect to present a liquidation plan until early 2010.
LIKELY WIN FOR U.S. AUTOS TASK FORCE
A successful sale would mark the second big victory for the Obama administration`s autos task force, which earlier this month also helped broker the sale of Chrysler LLC to a group led by Italy`s Fiat SpA. The U.S. Supreme Court cleared the way for that deal to go through on June 9.  Continued...
Original article

Fed`s Bullard says must shield Fed independence

(BULLARD, COULD, INDEPENDENCE, THINK, YIELDS, GOING)

By Alister Bull
PHILADELPHIA (Reuters) - St. Louis Federal Reserve Bank President James Bullard said on Tuesday that public anger over the U.S. financial crisis and subsequent bailouts could cause big problems if this escalated into a political challenge to the independence of the U.S. central bank.
"If that leads to some sort of erosion, or even the appearance of an erosion, of the independence of the Fed, I think that could be very counterproductive in this environment," he said after giving a talk about monetary policy to a Global Interdependence Center event.
The atmosphere between the Fed and the U.S. Congress has become very tense in the wake of last year`s crisis. Lawmakers are angry over the taxpayer-backed rescues of investment bank Bear Stearns and insurer American International Group, which led to a public outcry that could hurt them in the polls.
Fed Chairman Ben Bernanke also endured a hostile congressional grilling last week over the Fed`s role in Bank of America`s purchase of Merrill Lynch, and lawmakers have demanded Fed emails and questioned its accountability.
All of this is taking place against the background of a record U.S. budget deficit, and an unprecedentedly aggressive Fed purchase program of U.S. government debt.
"We`ve got very large fiscal deficits. We`ve got the appearance...that the Fed is monetizing the deficit, pushing up yields. Anything that is going to erode the independence of the Fed is going to feed that expectation and drive yields higher.
"So I think we are really in a delicate situation here as regards the independence of the Fed, and that is an important consideration going forward," he said in response to a question from the audience.
Bullard said that he did not believe the Congress really wanted to clip the Fed`s wings, but warned it would be easy for foreign investors to get the wrong message, and conclude that the Fed was going to finance the deficit by printing money.
"The Congress has thought over the last 100 years about how much independence to give the central bank. And when they really think about it, at the end of the day, they want the level of independence that we have. And so I think that will be the end outcome of this," he told reporters.
"I don`t think anyone involved intends to monetize the debt, but that is what it looks like to outsiders," he said.
EXIT STRATEGY
In earlier remarks, Bullard said that the Fed`s very accommodative monetary policy will remain in place for an extended period and a premature exit from this strategy could thwart U.S. economic recovery.
But Bullard said having a plan to shrink the monetary base after the Fed massively expanded it was important to control inflation expectations. And he said selling Fed-held assets was probably the most likely way it would choose to go.
"Without an exit strategy, expectations of high inflation may develop," Bullard said at the event, which was held at the Federal Reserve Bank of Philadelphia.
"If expectations of inflation feed into today`s long-term yields, those yields will rise today and hamper recovery prospects," he said in prepared remarks.  Continued...
Original article

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Ten or more face possible Madoff charges: source

(MADOFF, SOURCE, FRAUD, INVESTMENT, OTHER, THEIR)

By Grant McCool
NEW YORK (Reuters) - U.S. investigators say 10 or more people associated with imprisoned swindler Bernard Madoff could face criminal charges in the coming months, a law enforcement source said on Tuesday.
The source, who asked not be identified because of the continuing investigation into the multibillion-dollar Madoff fraud, said the FBI was "closer to the beginning than the end" of the probe.
Disgraced financier Madoff, 71, was handed a 150-year prison sentence Monday. He was arrested in December and pleaded guilty in March to orchestrating Wall Street`s biggest investment fraud of as much as $65 billion.
He has not named accomplices in his classic "cash in, cash out" Ponzi scheme. The only other person charged criminally so far is his outside accountant, David Friehling.
"There will probably be more people charged," the law enforcement source said. "It is likely to be 10 or more, but it is going to be a lengthy process that could take months or more."
Madoff was prosecuted by the Office of the U.S. Attorney in Manhattan, which declined comment on its continuing investigation.
In pre-sentencing court papers, prosecutors said Madoff organized and led the fraud and had numerous clerical employees working in the business.
"It would not have been possible to execute his scheme without their assistance," prosecutors said.
Federal investigators have declined to identify who is the focus of their inquiries, but they are skeptical of claims by some people who worked at the Madoff firm that they had no knowledge of a fraud spanning decades, the law enforcement source said.
JUGGERNAUT
White-collar crime experts have said from the start that Madoff`s scheme appeared to be too complex to carry out alone.
"What will happen from now is the juggernaut of the federal government and many other agencies are going to roll forward and scoop up as many people as they can and prosecute them," said Anthony Sabino, professor of law and business at St. John`s University in New York.
Bernard L. Madoff Investment Securities LLC had about 200 employees in a brokerage unit and an investment advisory business. The court-appointed trustee winding down the firm said the criminal activity took place in the investment arm.
Madoff`s wife of 45 years, Ruth, their sons Mark and Andrew and his brother Peter and niece, Shana, all face civil lawsuits. Peter, Mark and Andrew Madoff were executives in the brokerage, but their lawyers have said they were not aware of the fraud.
Other long-time employees identified in lawsuits or other court documents include former financial manager Frank DiPascali, a 33-year veteran, JoAnn Crupi and Annette Bongiorno, who worked there for 25 years and 40 years, respectively.  Continued...
Original article

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AIG gets new directors at subdued annual meeting

(GOVERNMENT, DIRECTORS, MEETING, BOARD, INVESTORS, LIDDY)

By Lilla Zuill and Paritosh Bansal
NEW YORK (Reuters) - American International Group Inc (AIG.N) got a new slate of government-backed directors at a subdued annual meeting on Tuesday, effectively revamping its board after the insurer`s $180 billion taxpayer bailout.
The meeting attracted far fewer investors than in years past and wrapped up in less than an hour, with the outcome of company proposals all but assured by the fact that trustees appointed to oversee the government`s nearly 80 percent stake in AIG can swing any vote.
Only a handful of investors used the meeting as a forum to air grievances, even though it was the first public opportunity to address AIG management and directors since the company`s implosion last September.
Less than 200 investors attended the meeting, held in AIG`s soon to be sold 72 Wall Street building, which was circled by security personnel. This was in sharp contrast to overflow crowds in years past.
Shareholders have seen the value of their stock all but wiped out. The shares, which traded as high as $100 at the beginning of the decade, have languished below $2 nearly all year. In morning trading they were down 18 cents at $1.15.
"I am sorry for what`s happened to you," Chief Executive Edward Liddy told a shareholder who said she and her husband had bought AIG shares in their retirement plan and had lost a lot of money. "The story that you recount has happened to so many folks," Liddy said.
AIG delayed its annual meeting, usually held in May, to give it more time to shuffle its board, which has been almost entirely reconstituted over the last year.
"They were like rats leaving a sinking ship -- goodbye and good riddance," shareholder Kenneth Steiner of Great Neck, New York, said at the meeting, referring to departed directors.
At least seven of the new directors were recommended by either the U.S. Treasury Department or the trustees overseeing the government`s stake in AIG.
Steiner also took aim at PricewaterhouseCoopers, AIG`s outside auditor. He called PwC "incompetent at best" for not alerting shareholders sooner to a lack of internal controls. AIG disclosed that it paid the accounting firm $131 million in 2008.
Liddy defended PwC, which was reappointed as auditor for the coming year. He said PwC cited AIG for a material weakness in controls in early 2008, effectively forcing AIG to disclose that large losses could be lurking in a derivatives portfolio.
AIG usually hands out thick, glossy, photo-filled annual reports at the meeting, but not this year. Instead, it distributed bare-bones copies of its 10-K filing with the U.S. Securities and Exchange Committee, printed on cheap newsprint. A spokesman cited financial constraints.
NEW LEADERSHIP
Liddy said he was confident the board would soon name a new chairman and CEO. He plans to relinquish his spot on the board once candidates for CEO and chairman are lined up to succeed him.
Liddy, responding to investors who asked if they should hold onto their shares, said he could give no assurance that the government would ever relinquish its stake in the insurer.  Continued...
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SEC may tighten executive pay rules: sources

(COMPANIES, STOCK, OPTIONS, EXECUTIVES, VALUE, COMPENSATION)

By Rachelle Younglai and Jonathan Stempel
WASHINGTON/NEW YORK (Reuters) - U.S. securities regulators are considering changing how companies are required to disclose stock options awarded to executives, people familiar with the Securities and Exchange Commission`s thinking told Reuters on Tuesday.
At an SEC meeting on Wednesday, the commissioners also will propose giving investors a greater voice in setting executive pay at companies that were given taxpayer funds under the U.S. government`s Troubled Asset Relief Program.
Among the possible changes is a revision to how companies value equity awards in the "summary compensation table" for top executives that they file with the commission each year.
The SEC is considering requiring companies to include the estimated value for stock options granted during the year, the people said. The sources requested anonymity because the proposal is still being crafted and may change.
The table now includes the value of option grants that vested, or became eligible to be exercised, during the year. Many compensation experts consider this an imperfect way to value options, and believe options should be valued as of the date they are granted.
A change in how companies report the value of stock options could profoundly affect the reporting of executive pay.
Citigroup Inc (C.N), for example, reported $10.8 million of compensation for Chief Executive Vikram Pandit in 2008, according to a proxy filing. Had the bank valued Pandit`s stock and option grants as of the date they were granted, his reported compensation would have been $38.2 million.
Pandit was awarded much of his 2008 compensation on January 22 of that year, when Citigroup shares closed at $24.42. The stock closed Tuesday at $2.97, and Pandit`s awards are now either under water or show paper losses.
OBAMA PUSHES CHANGE
The Obama administration has sought to rein in excessive executive pay amid outrage from lawmakers and the public that some executives, including some at insurer American International Group Inc (AIG.N), were copping big pay packages even as the government propped up their companies.
The administration has urged Congress to give the SEC authority to require publicly traded companies to give shareholders a nonbinding vote on pay for top executives.
It also wants the SEC to have power to insure that corporate pay committees are sufficiently independent from management.
The SEC may propose requiring companies to disclose more information about compensation consultants who also perform other work for the company, the sources said.
For example, if a consultant provided compensation advice and other services, the company would be required to disclose their fees and the other work being performed.
Governance activists charge that consulting firms face conflicts of interest because of their dual role in advising companies on human resources as well as executive pay.  Continued...
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Wal-Mart supports employer mandated health coverage

(PRESIDENT, OBAMA, HEALTH, MANDATE, COVERAGE, EMPLOYEES)

SAN FRANCISCO (Reuters) - Wal-Mart Stores Inc (WMT.N), the world`s largest retailer, said on Tuesday that it supports President Barack Obama`s push to require large employers to offer health insurance to workers.
"We are for an employer mandate which is fair and broad in its coverage," stated a letter addressed to Obama and signed by Mike Duke, the chief executive of Wal-Mart; Andy Stern, the president of Service Employees International Union and John Podesta, the CEO of the Center for American Progress.
Wal-Mart, the nation`s largest private employer, also said separately that the mandate should cover as many businesses as possible, and cover part-time and full-time employees.
"Any alternative to an employer mandate should not create barriers or disincentives to hiring workers with disabilities, entry level employees, or people from low income families." said Leslie Dach, Wal-Mart`s executive vice president of corporate affairs and government relations, in a statement.
Wal-Mart has drawn criticism from labor groups, who have accused it of mistreating employees and not offering adequate health care coverage. Former CEO Lee Scott worked to counter those critics before he retired from his role as CEO earlier this year.
Meanwhile, Obama has stepped up his push for health care reform. The president has left much of the details of health reform to Congress, but he has told U.S. lawmakers he is open to requiring larger companies to provide coverage for employees while exempting smaller businesses.
(Reporting by Nicole Maestri; Editing by Tim Dobbyn)
Original article

Geely, others still eye Volvo cars takeover: source

(HOLDING, GEELY, VOLVO, PERSON, VISIT, PROCESS)

By Quentin Webb
LONDON (Reuters) - China`s Beijing Automotive Industry Holding Corp (BAIC), rival Geely, and at least one "Western industrial group" remain interested in Ford Motor Co`s Volvo car unit, a person close to the situation said on Tuesday.
Geely, which has already visited Volvo in Sweden, plans to make a fresh visit soon, the person added. A second person close to the situation said Geely representatives were likely to visit this week.
Ford (F.N) is also hopeful that a consortium of Scandinavian investors may come together to lodge a proposal, the first person said.
John Gardiner, a spokesman for Ford Europe, declined to comment in detail on the sale process. But he said: "We`re still in discussion with a number of parties concerning the future of Volvo. No final decision has been made at this stage and the process will take some time to unfold."
Ford put the money-losing Volvo cars unit up for sale in December, as it looked to cut costs and raise cash amid industrywide record-low vehicle sales. Bankers say the complexity of disentangling Volvo cars from its parent means the process is likely to take a long time.
On May 7, the Hong Kong-listed Geely Automobile Holdings (0175.HK) said it had not submitted, and had no plans to submit, any bid concerning a takeover of Volvo.
However, it is not clear whether that denial would rule out a bid from mainland-based parent company Zhejiang Geely Holding Group, whose owner, Li Shu Fu, is chairman of both firms.
Earlier this month a BAIC spokesman said he was not briefed on the company`s interest in any foreign auto brands, after the Wall Street Journal said it was interested in Volvo and BAIC executives were set to visit Volvo headquarters in Gothenburg.
BAIC and Geely could not immediately be reached by Reuters for comment.
(Reporting by Quentin Webb; Additional reporting by Sven Nordenstam in Stockholm; Editing by Douwe Miedema and Richard Chang)
Original article

U.S. demands UBS "comply in full" in tax evasion case

(DEPARTMENT, SWISS, COURT, UNITED, INTEREST, GOVERNMENT)

By Tom Brown
MIAMI (Reuters) - The U.S. Justice Department said on Tuesday it was pressing ahead with its five-month-old lawsuit against UBS AG to force the Swiss bank to identify thousands of U.S. clients with secret UBS accounts.
Despite recent media speculation about a possible settlement of the case, the department said in a brief filed with a Florida court that it was seeking to enforce tax compliance with the full weight of U.S. law.
"The United States has a strong national interest in making sure that all U.S. taxpayers comply with the tax laws, including disclosing their offshore accounts, and paying all the taxes they owe," the department said in the brief.
The U.S. government sued UBS in February in the U.S. Southern District Court of Florida, seeking the names of 52,000 Americans suspected of using the bank to hide nearly $15 billion in assets and evade U.S. taxes.
"The United States has proven its case for enforcement. The Court should order UBS to comply in full," the department said in its filing.
In response, a spokesman for UBS said enforcement of the U.S. summons would require the bank to violate Swiss law and was inconsistent with U.S.-Swiss treaty frameworks.
A court hearing on the U.S. government case against UBS has been scheduled for July 13.
Attorneys and analysts have been skeptical about media reports that the United States would drop the case against UBS without major Swiss concessions, given the international momentum against tax havens and the coming deadlines for errant U.S. taxpayers to come forward voluntarily.
"Based on our representation of many UBS cases, it is clear in our minds that the government is going to pursue vigorously its objectives of transparency and limiting tax haven abuse," attorney William Sharp, who represents U.S. clients of UBS, told Reuters by phone.
BANK "HELPED AMERICANS BREAK U.S. LAWS"
UBS and the Swiss government have argued that any exchange of confidential banking information should be handled through existing legal treaties rather than in the courts.
But in its court filing on Tuesday, the U.S. Justice Department appeared unrelenting in its bid to use legal tools to pry open Switzerland`s jealousy guarded tradition of bank secrecy.
"Although Swiss interests in bank secrecy may also be important, the Court must consider those interests in the context of UBS`s conduct, where for at least seven years the bank actively helped tens of thousands of Americans break U.S. laws, and evade hundreds of millions of dollars in U.S. taxes," the department said.
"The vital national interest of the United States in fighting attempts by U.S. taxpayers to avoid and evade their tax obligations outweighs the general Swiss interest in maintaining the secrecy of its banking relationships -- especially for those foreign lawbreakers," it added.
A source familiar with the matter told Reuters on Tuesday that American clients of UBS will not be able to access secret accounts starting on Wednesday unless they transfer the money onshore or close the account.  Continued...
Original article