PricewaterhouseCoopers agreed to pay shareholders $225 million to settle securities and accounting fraud claims relating to the Tyco International securities class-action suit, according to Allan Ripp, a spokesman for Grant & Eisenhofer, one of the law firms representing institutional investors.
A group of union and public pension funds that was part of a class-action lawsuit against Tyco reached a $3 billion settlement with the company in May. The suit was filed in 2002 after former Tyco CEO Dennis Kozlowski and other company officers were accused of overstating roughly $6 billion in income between 1999 and 2002. Plaintiffs including the $14.7 billion Louisiana Teachers Retirement System and the $9 billion Louisiana State Employees Retirement System, both in Baton Rouge claimed PricewaterhouseCoopers did not uncover the alleged fraud.
The settlement, the largest ever for the accounting firm and among the largest in a securities class-action suit, still has to be approved by the U.S. District Court in New Hampshire, Mr. Ripp said.
Letters threaten Goldman Sachs
NEW YORK The FBI is investigating a series of death threats made against Goldman Sachs in letters sent to several newspapers. In a memo to Goldman Sachs employees on July 6, company security officials acknowledged the anonymous threats and said they have been in contact with federal authorities, who believe the threat to be of low credibility. Authorities have mounted an active investigation to determine the source of the threats, according to the memo from Goldman Sachs office of global security.
The letters were received by nine newspapers nationwide, including the Newark Star-Ledger, which reported that the letter read: Goldman Sachs. Hundreds will die. We are inside. You cannot stop us. That letter was signed A.Q.U.S.A. and was mailed from Queens County, New York.
CalPERS seeks class action status in lawsuit
SACRAMENTO, Calif. CalPERS said today it has filed to obtain class-action status in a federal lawsuit against seven New York Stock Exchange specialist firms. The CalPERS complaint is against Van der Moolen Specialists USA, Spear Leeds Kellogg Specialists, LaBranche & Co., Fleet Specialists, Bear Wagner Specialists, Performance Specialist Group and SIG Specialists as well as their parent companies. The complaint alleges that the specialist firms violated federal securities laws by trading for their own proprietary accounts instead of matching public orders.
In 2004, the seven specialist firms settled with the SEC for a combined $247 million over the same charges.
The deadline for the $247.1 billion California Public Employees Retirement System to seek class certification status in its lawsuit against the NYSE specialists in U.S. District Court in New York was June 29. Clark McKinley, CalPERS spokesman, said the system filed for the class-action status that day.
Market manipulation claim
Interactive Brokers Group, a global options market-making firm and broker, asked German market regulators to investigate a $37 million loss it suffered in May as a result of alleged market manipulation. Interactives market-making subsidiary, Timber Hill Europe AG, suffered an unusual, non-recurring loss that occurred on a German exchange in May 2007, according to a quarterly earnings report submitted to the SEC on July 5. Thomas Peterffy, Interactive founder and chairman, compensated Timber for the loss, the filing said, noting the capital injection did not affect the groups quarterly earnings.
Interactive alleged that a market manipulation resulted from massive trading 44% of the float in one stock on Deutsche Boerses Xetra platform on an ex-dividend day.
Interactive said it has reported this manipulation to, and met with, the German Federal Financial Supervisory Authority, the Bafin, and the Bafin has undertaken an official investigation of the matter. The progress of the investigation is subject to the German secrecy laws. The firm has also filed a petition with the Eurex to change its rules so that a manipulation of this sort will not happen again.
Institutional investors at concert
EAST RUTHERFORD, N.J. Representatives of a dozen U.S. institutional investors and money managers attended the Live Earth concert July 7 at Giants Stadium to show solidarity with efforts to stop global warming. Concerts are being held on five other continents to raise awareness of the threat of global climate change.
Representatives at the U.S. concert included TIAA-CREF, State Street, AIG Global Investment, Generation Investment Management, the $85 billion New Jersey State Investment Council, the $154 billion New York State Common Retirement Fund and the $100 billion New York City Retirement Systems. The investment organizations are members of Ceres, a national corporate governance network working to address sustainability issues at public companies.
Golden parachute is sole majority vote-getter
BETHESDA, Md. Of executive pay-related shareholder proposals, only proposals to limit or seek shareholder approval of golden parachute severance agreements received an average majority vote this season 59.1% according to Institutional Shareholder Services. Proposals to reform the options-granting process averaged 47.7%, the next highest level of average support, according a review of results form the 2007 proxy season through June 15. Say-on-pay proposals averaged 42.6% of the vote and received a majority of vote at four of 28 companies that disclosed the voting results. Among other pay-related proposals, requesting a report on compensation consultant independence averaged 40.2% of the vote, and clawback proposals to recoup unearned incentive executive compensation averaged 35.5%.
Among other proposals, repealing classified boards to provide for an annual election of directors averaged 69% of the vote; requiring a majority vote to elect directors received 49.3%; and separation of the roles of chairman and CEO received 26.8%.
IXIS changes name, buys equity firm
BOSTON Natixis Global Asset Management the new name for IXIS Asset Management US Group will acquire equity manager Gateway Investment Advisors, confirmed Natixis spokesman Raymond ORourke. Terms were not disclosed. Gateway ran $7.5 billion in total assets as of March 31, according to an announcement on the acquisition. IXIS manages $808 billion overall worldwide.
Cincinnati-based Gateway will be part of Natixis multiboutique structure, said Mr. ORourke, and both its investment management team and name will be retained. Investment bankers from Merrill Lynch advised IXIS on the transaction, while Mitchell Advisers represented Gateway.
Hedge fund wont be prosecuted for alleged bribe
Omega Advisors, a $6 billion hedge fund, will not be charged by the U.S. Attorneys Office in New York for allegedly participating in a scheme to bribe senior Azerbaijan government officials to ensure privatization of that countrys state-owned oil company, according to a statement issued today by the U.S. Attorney for New York. Under a settlement agreement announced today, Omega will cooperate with U.S. authorities investigating the alleged bribe and forfeit $500,000. Omega can still be prosecuted for criminal tax violations, according to the statement.
Omega was implicated in the alleged bribery, as well as David Pinkerton, Frederic Bourke Jr. and Viktor Kozeny; the three men were indicted on several charges in connection with the situation in 2005. Mr. Pinkerton was managing director and head of developed markets for AIG Global Investment Group, the private equity and hedge fund arm of AIG. He was placed on administrative leave following the indictment. Mr. Bourke was a major shareholder of Blueport International, an investment firm. On June 21, most charges against Messrs. Pinkerton and Bourke were dismissed because the statute of limitations had expired, according to court documents. Mr. Kozeny was a Czech national who allegedly brought the deal to investors. He is currently in the Bahamas and is being extradited to the U.S.
In 1998, Omega had invested $100 million in the privatization plan, which never went through, and the firm lost its investment.
Rydex now part of Security Benefit
TOPEKA, Kan. Security Benefit Group, a financial services and retirement planning services firm, agreed to acquire Rydex Investments for an undisclosed amount, executives for both companies said in a conference call. Security Benefit will add Rydexs $15 billion of assets, spread across mutual funds, ETFs and institutional strategies; roughly $2.3 billion, or 15% of Rydexs assets, come from institutional investors. When the deal closes, the combined firm will manage close to $35 billion. Rydex will retain its management team and existing operations, and will function as a separate line of business within Security Benefit.
Calamos launches total return bond fund
NAPERVILLE, Ill. Calamos Investments introduced the Calamos Total Return Bond Fund. The mutual fund will be invested in diversified investment-grade U.S. fixed-income securities and may also invest opportunistically in high-yield and international bonds, as well as currencies. The funds guidelines allow the investment team to use derivatives to control the portfolios credit and interest-rate exposure. The company seeded the fund with $30 million. The investment team is led by co-CIOs John P. Calamos Sr. and Nick P. Calamos, with support from Matthew Toms, director of fixed income, according to a news release. John Calamos is also the firms chairman and CEO, and Nick Calamos, executive vice president.
Phocas, Northern Lights form partnership
SAN FRANCISCO Phocas Financial entered into a strategic partnership with private equity firm Northern Lights Venture, confirmed Tim Carver, Northern Lights managing director. He declined to provide details on the deal, which closed last month. Northern Lights will help Phocas with global distribution and will advise on improving operations as the company grows, said Kevin Granger, portfolio manager at Phocas.
Though Northern Lights did not take an equity stake in the company, its fair to say they will participate economically as our firm grows, said Mr. Granger.
Phocas has $200 million in assets under management in small-cap value and growth equities, REITs and equity income portfolios for institutional and high-net-worth investors.
UBP to debut 2 funds
UBP Asset Management, is launching an event-driven fund and a non-directional fund this month, said Matthew Stadmauer, managing partner.
Also at UBPAM, John Stimpson was named a director in the firms institutional sales group. The position is new, said Mr. Stadmauer. Mr. Stimpson was vice president in the absolute return strategies group at Deutsche Bank, where he marketed hedge funds to institutional clients and consultants. Mayura Hooper, a Deutsche Bank spokeswoman, said she did not have information about Mr. Stimpsons replacement.
Northern Trust to add independent valuation
CHICAGO Northern Trust will include independent valuation of derivatives in the portfolios of its custody and fund administration clients, the firm announced. Valuations on over-the-counter derivatives from Markit Partners, Bear Stearns Pricing Direct and SuperDerivatives will now be used.
Obtaining valuations on the same derivative from multiple valuation providers offers our clients a more accurate version of the value of their derivatives, said Judson Baker, product manager for derivatives processing-related servicesat Northern Trust. Mr. Baker said the explosion of new types of derivatives on the market has made it more difficult to get accurate valuations.
UBS to offer target-date funds from new group
CHICAGO UBS Global Asset Management formed a defined contribution and retirement solutions group to offer target-date funds and total retirement outsourcing for DC and DB plans, said John Inglis, spokesman. The new group will offer next-generation custom target-date funds that take advantage of changing market conditions by leveraging UBS Global Asset Managements 25-year heritage in active global asset allocation, security selection and risk management, Drew Carrington, executive director, said in a news release. UBS officials decided to introduce target-date funds because they were proposed as a qualified default option by the Pension Protection Act of 2006.
Vanguard creates liability-matching fund
MALVERN, Pa. Vanguard Group introduced an extended-duration Treasury index fund aimed at institutional investors looking to better match their assets and liabilities, said spokeswoman Rebecca Cohen. The fund which seeks to match the performance of the Lehman Brothers Treasury STRIPS 20-25 Year Equal Par Bond index will offer an institutional share class with a $5 million minimum initial investment at an estimated expense ratio of 11 basis points; an institutional-plus share class with a $100 million initial minimum and an eight-basis-point expense ratio; and an ETF share class with a 14-basis-point expense ratio.
SSgA hits $100 billion in currency assets
LONDON State Street Global Advisors currency-related strategies reached $100 billion in notional assets under management, more than doubling in the past three years said Collin Crownover, the firms London-based global head of currency management. Mr. Crownover said demand for currency strategies has continued to grow steadily, as pension funds around the globe increasingly invest outside of their home markets.