Here’s what you may have missed in the business news last week:
- SAC gets accused of a decade of insider trading. After seven years of investigation, the SEC is charging Wall Street Hedge Fund SAC Capital with four counts of securities fraud (AKA insider trading) and one count of wire fraud (misrepresentation via email?). These activities allegedly began in 1999, were ongoing as late as 2010, and made “hundreds of millions of dollars in illegal profits”. According the Businessweek, SAC Capital counts for as much as 3% of the NYSE’s daily trading, and is rumoured to own just under 20% of Google. Which pretty much makes this the largest insider-trading accusation in history. Despite founder Steven A. Cohen telling his investors that SAC will remain open for business, they’re pulling out in droves for fear that the SEC might do some account-freezing. Employees too have started to abandon ship, sending out resumés in anticipation of their imminent entry into the job market. But can we just pause a moment to reflect on the fact that the SEC has been investigating this for SEVEN years?
- Mr Batista is no longer a billionaire. Just a year ago, Eike Batista was the 8th richest man in the world, and vowing in interviews to become the richest: because, as he put it, he “embodies the Brazilian dream of entrepreneurial success”, which (I guess?) makes it the patriotic thing to do. Unfortunately, those pesky companies of his went and listed with some guarantees (both personal and otherwise). And then Brazil took a dive after the market went risk off, so now those guarantees are back to haunt. A few debt and equity restructurings, and boom – off the Bloomberg Billionaire Index. Pride, eh? Bet you he was upset when Marky Z’s facebook fortune swelled by $3.8 billion IN A DAY last Thursday, after Facebook actually managed to pull off some mobile advertising.
- Anglo American does not do well. Only one in ten Anglo mines has consistently delivered on target over the last 2 years. That is: nine out of ten are under-performing. Oh, and obviously, falling commodity prices. So it makes total sense that their profit numbers are down by 68% – in fact, it’s almost surprising that they’re not down by a little more than that. The two glaring problems: the Minas Rio mining project in Brazil (one of the world’s largest), whose consistent headline involves the phrase “overrun costs soar to XX billion”; and labour unrest in South Africa (the home of the greatest concentration of Anglo mines). Fortunately, they don’t mine for gold – so they’re being spared from the current round of South Africa’s wage negotiations.
- Apple’s Share Buyback is happening three times faster than expected. Apple released its earning results for the last quarter, and they were better than expected. The most interesting part: the number of Apple shares that Apple has been repurchasing. In April, they announced their share buyback plan (wrote about it here: Why Debt Can Be A Fabulous Thing), and a quarter later, they’ve bought back 36 million shares for about $16 billion (leaving the rest of us holding 908 million shares). To be clear, based on the amount they’ve spent, they could have bought Nokia. Or for a third of that, they could have bought Blackberry. Only – they didn’t. Instead, they bought Apple.
- Welcome the Biggest Advertising Company in the World. Two companies I’ve never really heard of – french Publicis Groupe SA and american Omnicon Group Inc. – are banding together in a tax-less merger to form “the world’s largest advertising company” (which will be dutch and based in the Netherlands). But even though I haven’t heard of them, I do know their agencies (Publicis owns BBDO Worldwide, and Omnicon owns Leo Burnett and Saatchi & Saatchi). The deal is being justified by cost-cutting – which is usually a euphemism for “fewer account managers required”. Can you imagine: creative types from Paris and creative types from New York all trying to get along?