Northern, WI 1/12/2013 (usmarketbuzz) – A precedent setting penalty of $1.5 billion was imposed on the UBS AG (USA) (NYSE:UBS) last month over charges of exploiting the Libor calculations. This was the last nail in the coffin of the largest Swiss bank after a $2.3 billion trading loss and accusations of tax avoidance by the US regulators.
British, American and Swiss regulators are investigating over a dozen banks for rigging, which remained unveiled even through five consecutive internal audits despite the fact the conspiracy was openly discussed on electronic communication channels by the bank managers and brokers. Further settlements could emerge by the end of this year. Barclays PLC (LON:BARC) has already paid $453 million in this behalf.
Three former Chiefs besides Marcel Rohner, the bank’s 48 year old Swiss CEO during 2007-2009, were accused of gross negligence and professional incompetence for the failure of the internal control system.
During the Thursday hearing before the Parliamentary Commission on Banking Standards (PCBS), Rohner, claimed he was unaware of the rigging as he focused “fighting ….for survival”, amid the liquidity crunch following a $50 billion mortgage related write off.The irregularity rooted from “a lack of culture” within the growing business hiring extensively from outside, he said. Another Ex-chief Jerker Johansson accepted that the exploitation was willful negligence, which amounted to stealing.
John McFallfrom the panel remarked the executives”knew that gambling was going on” but choose to complete their tenure and vacate their office in silence.
LIBOR a global benchmark measure of the returns on loans and investments around the globe. Thomson Reuters calculates and publishes it on behalf of the British Bankers’ Association. The British regulator stated the rigging was pervasive to the level that calls for a civil proceeding. The probe will cover all submissions between 2005 to 2010.
Rohner says profit-linked compensation should be introduced and the “dysfunctional” two-tier governance regime which imparts hold the supervising board solely responsible without imparting any operational authority should be abandoned.
Tyrie believes the PCBS’ recommendations due to be released by March end will touch upon “the governance, incentive structure and the overall supervisory approach” could trigger long-term change.
The company announced Wednesday, it will slash head count by 10,000 and divest from the fixed-income segment.
The UBS AG (USA) (NYSE:UBS) shares were up 0.82% to $17.29.
The Barclays PLC (LON:BARC) shares were up 1.18% to £298.08.
Biotech movers: Pfizer Inc. (PFE), Celgene Corporation (CELG)
Pfizer Inc. (PFE) said on Thursday it received a request for documents as part of a U.S. investigation related to quality issues involving the manufacture of auto-injectors at its Meridian Medical Technologies site.
Pfizer, in a regulatory filing, said it would be producing records in response to the civil investigative demand from the U.S. Attorney’s office for the Southern District of New York.
Meridian, a unit of Pfizer that manufactures EpiPen injectors used to deliver an emergency allergy antidote, has been hit by a series of manufacturing problems in recent years. Mylan NV, which markets EpiPens, has recalled tens of thousands of the devices after complaints that some had failed to activate.
Bristol-Myers Squibb has been meeting with shareholders in Boston and New York over the last two weeks to try to salvage its $74 billion purchase of cancer drugmaker Celgene Corporation (CELG), the biggest acquisition announced so far this year.
The deal, announced in January, was hard sell to Bristol shareholders from the start. The acquisition adds about $32 billion in fresh debt to Bristol’s balance sheet while assuming $20 billion in Celgene’s debt, the companies said at the time. After factoring in debt, the acquisition was the largest health-care deal on record, according to data compiled by Refinitiv.
Now, hedge funds Wellington Management and Starboard Value say the deal doesn’t sit well with them. Bristol has sent executives to New York to meet with institutional investors several times over the last two weeks and met with investors in Boston on Wednesday and Thursday, according to a person who briefed on the meetings.
Bristol-Myers declined to comment.
Big Losers: Corbus Pharmaceuticals Holdings, Inc. (CRBP), Petróleo Brasileiro S.A. – Petrobras (PBR)
Corbus Pharmaceuticals Holdings, Inc. (CRBP)’s shares slumped as much as 16% to $6.94 on huge volume. The stock has been showing intense sell off suddenly after a bearish article on seekingalph.com by Alpha Exposure.
The article stated that Corbus has ties to investors convicted of or alleged to have committed securities fraud. We believe lenabasum has failed its major trials in SSc and CF. Lenabasum was also denied Breakthrough Therapy Designation in SSc. We believe lenabasum will fail in its pivotal SSc and Phase 2b CF trials. We are short Corbus with a price target of $0.50.
Petróleo Brasileiro S.A. – Petrobras (PBR) is expanding its ambitious divestment program and has “bold” plans for sales, the Brazilian state-run oil company’s chief executive said after the firm posted its first annual profit in five years.
On a conference call with analysts to discuss fourth-quarter results, CEO Roberto Castello Branco said selling non-core assets will be key to deleveraging.
Petrobras, as the company is known, can reduce its ratio of net debt to earnings before interest, taxes, depreciation and amortization, or EBITDA, to 1.5 or even to 1, he added.
The University of Chicago-educated CEO, who took the reins in early January, has long been vocal about the need to slim down the sprawling firm and focus on core activities such as exploration and production. Thursday’s comments were some of his most assertive on the matter.
Chesapeake Energy Corporation (CHK), Best Buy Co., Inc. (BBY) Are Top Early-Market Movers
Shares of Chesapeake Energy Corporation (CHK) shot up 8% in first hour Wednesday, after the oil and gas production company reported fourth-quarter earnings and revenue that beat expectations, and provided an upbeat outlook. Net income rose to $486 million, or 49 cents a share, from $309 million, or 33 cents a share, in the same period a year ago. Excluding non-recurring items, adjusted EPS fell to 21 cents from 30 cents but beat the FactSet consensus of 18 cents.
Total revenue rose 22% to $3.07 billion, as oil, natural gas and natural-gas equivalent revenue jumped 38% to $1.73 billion. The FactSet consensus for total sales was $2.28 billion for oil and gas sales was $1.10 billion. Average daily production fell 7% to 464,000 barrels of oil equivalent (BOE) while production expenses increased 15% to $2.87 BOE. The company projects 2019 average daily oil production to increase about 32%, capital expenditures are expected to be flat and cash flow is expected to be “meaningfully stronger.” The stock has lost 12% over the past three months through Tuesday, while the SPDR Energy Select Sector ETF has gained 1.5% and the S&P 500 has advanced 4.2%.
Best Buy Co., Inc. (BBY)jumped after the gadget retailer lent a spark to what had been a gloomy earnings season by delivering holiday sales that outpaced projections and a full-year profit outlook that topped analysts’ estimates.
Comparable-store sales in the U.S. — the retailer’s most-watched metric — rose 3 percent in the fourth quarter, beating projections. The midpoint of its profit forecast for the current fiscal year also topped estimates, sending the shares up as much as 16 percent.
The shares climbed as high as $69.85 in New York Wednesday, the biggest intraday gain since May 2017. The shares had already been up 14 percent this year through Tuesday’s close, outpacing the S&P 500 Index.