Tag: Business and Finance

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AP ANALYSIS: MORE ‘PHONY NUMBERS’ IN REPORTS AS STOCKS RISE

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BY BERNARD CONDON
AP BUSINESS WRITER

NEW YORK (AP) — Those record profits that companies are reporting may not be all they’re cracked up to be.

As the stock market climbs ever higher, professional investors are warning that companies are presenting misleading versions of their results that ignore a wide variety of normal costs of running a business to make it seem like they’re doing better than they really are.

What’s worse, the financial analysts who are supposed to fight corporate spin are often playing along. Instead of challenging the companies, they’re largely passing along the rosy numbers in reports recommending stocks to investors.

“Companies are tilting the results,” says fund manager Tom Brown of Second Curve Capital, “and the analysts are buying it.”

An analysis of results from 500 major companies by The Associated Press, based on data provided by S&P Capital IQ, a research firm, found that the gap between the “adjusted” profits that analysts cite and bottom-line earnings figures that companies are legally obliged to report, or net income, has widened dramatically over the past five years.

https://hosted.ap.org/dynamic/stories/U/US_FUZZY_MATH?SITE=AP&SECTION=HOME&TEMPLATE=DEFAULT&CTIME=2015-06-08-03-06-52

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BANK OF AMERICA FINED $30M FOR VIOLATIONS INVOLVING U.S. SERVICEMEMBERS

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NEW YORK, May 30 (UPI) — Bank of America has been hit with a $30 million fine for violating the rights of accounts owned by U.S. military servicemembers, officials said.

The violations reportedly involve 73,000 different bank accounts belonging to the military members, the {link:New York Times reported: “https://www.nytimes.com/2015/05/30/business/dealbook/bank-of-america-fined-for-violations-of-military-relief-law.html?_r=0″,nw}.

The Office of the Comptroller of the Currency (O.C.C.) said {link:the bank violated the rights: “https://www.nasdaq.com/article/bank-of-america-to-pay-30-million-fix-violations-on-servicemembers-accounts-20150529-00938″,nw} of servicemembers and failed to ensure it was complying with a federal law designed to ease financial stresses on those in the military.

The law, known as the Servicemembers Civil Relief Act, seeks to ease financial strain on servicemembers as a mode to help them cope with other stresses brought on by military service.

The law limits how much interest banks can charge on servicemembers’ accounts while they are deployed, and prevents banks from repossessing vehicles and foreclosing homes on soldiers without a court order.

https://www.breitbart.com/news/bank-of-america-fined-30m-for-violations-involving-u-s-servicemembers/

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Reps. Garrett, Maloney Introduce the Restoring Main Street Investor Protection and Confidence Act of 2015

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Congratulations to Nicole Eskow, a student at Bergen County Academies, on being named an Intel Science Talent Search finalist. During a recent visit to my office, Nicole explained her cancer research that earned her this prestigious recognition. Keep up the great work!
May 4, 2015

WASHINGTON, D.C. – U.S. Representatives Scott Garrett (R-N.J.), Chairman of the House Financial Services Capital Markets and Government Sponsored Enterprises Subcommittee, and Carolyn Maloney (D-N.Y.), Ranking Member of the Subcommittee on Capital Markets and Government Sponsored Enterprises, today introduced H.R. 1982, the Restoring Main Street Investor Protection and Confidence Act of 2015.

H.R. 1982 would reaffirm and clarify key protections for ordinary investors that were put in place when Congress passed and amended the Securities Investor Protection Act (SIPA).  In particular, the bill aims to properly shield innocent individual investors who have already been defrauded and financially devastated by Ponzi schemes perpetrated by Bernie Madoff,  Allen Stanford, and others from further “clawbacks” by the Securities Investor Protection Corporation (SIPC) Trustee.

“This bill is about creating confidence in our markets and protecting innocent investors—investors with their life savings on the line—from abuse, and malfeasance,” said Garrett.  “If Americans lose faith in our securities markets, and the government agencies that give them their seal of approval, it could have a devastating impact on our capital markets and our economy.  If enacted, this legislation will bring confidence back to Main Street investors by ensuring fairness for victims, enhancing efficient functioning of U.S. securities markets, and strengthening the oversight and accountability of the Securities Investor Protection Corporation (SIPC).”

“The last thing a defrauded investor needs is an additional shakedown from the Securities Investor Protection Corporation,” said Maloney. “This important legislation would shield mom and pop investors from these so-called clawbacks, and ensure we go after the criminals, not the victims. It’s a pleasure to work with Representative Garrett on this important legislation.”

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Jon Corzine Considers Launching Hedge Fund

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Plan would mark return to finance for embattled former MF Global CEO

By JULIE STEINBERG and ROB COPELAND
April 19, 2015 7:05 p.m. ET
182 COMMENTS

Jon S. Corzine, the embattled former MF Global Holdings Ltd. chief executive and ex-chairman of Goldman Sachs Group Inc., has discussed plans to start his own hedge fund in recent months, according to people familiar with the matter.

The fund would start with cash from Mr. Corzine’s personal wealth and a handful of outside investors. Mr. Corzine said he had been speaking with about a half-dozen potential investors, and projected around $150 million in assets under management, one of the people said.

The plans are tentative and could evolve or fall apart in coming months. But a launch would mark an unlikely return to high finance for Mr. Corzine, the 68-year-old former Democratic U.S. senator and New Jersey governor who has stayed out of the limelight since commodities brokerage MF Global declared bankruptcy in 2011.

https://www.wsj.com/articles/jon-corzine-considers-launching-hedge-fund-1429484718

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Top 20% of Earners Pay 84% of Income Tax

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And the bottom 20%? They get paid by Uncle Sam. We compare tax burdens as Tax Day approaches.

By
LAURA SAUNDERS
April 10, 2015 9:59 a.m. ET

Who pays what in income taxes? With April 15 just around the corner, filers may be curious about where they fit into the system as a whole.

The individual income tax remains the most important levy in the U.S., providing nearly half of federal revenue. This is unusual: On average, developed nations get only one-third of their revenue from income taxes. Typically they also impose national consumption taxes, such as a value-added tax, that raise as much revenue as their income tax.

The pressure on the U.S. income tax has prompted lawmakers on both sides of the aisle to seriously consider a national consumption tax. But liberals worry that such a levy could unduly burden the poor, while conservatives fear it would be too easy to dial up the rate and collect more revenue.

As a result, experts say, there is little chance of tax overhaul this year.

Meanwhile, these two tables offer a snapshot of who is paying what for the 2014 tax year.

https://www.wsj.com/articles/top-20-of-earners-pay-84-of-income-tax-1428674384

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How states got into such a pension fix

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JOEL L. NAROFF

POSTED: Sunday, April 5, 2015, 1:09 AM

Pension reform is like the weather: Everybody talks about it, but nobody does anything about it.

Despite years of dire warnings that pension shortfalls could become the monster that ate state budgets, little progress has been made to reduce the gap. Since changes must occur, it’s time to understand the causes of the crisis so past mistakes will not be repeated.

Pensions in Pennsylvania and New Jersey are staggeringly underfunded. This misery, though, has lots of company. Recently, the Dallas Morning News wrote an editorial about the looming crisis in Texas, which it called “an embarrassment.”

Not being alone is no excuse. Public-sector pensions are promissory notes between the public, through their elected representatives and government workers, for future payments. Unfortunately, politicians have been very willing to fail their fiduciary responsibilities.

Pension plans are underfunded because governing bodies have underfunded them. Contractually agreed-to plan payments have been diverted to other uses, and the trend continues. In New Jersey, a state court recently ruled the Christie administration violated a 2011 pension-reform law by not making this year’s required pension payment.

Let’s be clear: The failure to make necessary pension payments was not because of an inability to pay. The funds that should have gone to the pension plan went, instead, to fund other programs and to keep taxes from rising. The fiscal capacity to fund the pensions was there. The political will was not.

Who got the billions of dollars that didn’t go into the pension plans? The beneficiaries were individuals and businesses who paid lower taxes, and programs that received extra funding. In other words, everyone, which is why this is a politically feasible transfer of income.

Read more at https://www.philly.com/philly/business/20150405_How_states_got_into_such_a_pension_fix.html#M5Kojp7yDCs2SuO3.99

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Sentencing postponed for Paramus man who worked for Madoff

Bernie-Madoff

APRIL 2, 2015    LAST UPDATED: FRIDAY, APRIL 3, 2015, 10:26 AM
BY HUGH R. MORLEY
STAFF WRITER |
THE RECORD

Irwin Lipkin, the 76-year-old Paramus man who was the first non-family employee to get hired by swindler Bernard Madoff’s firm, has had his sentencing for his role in Madoff’s Ponzi scheme delayed again, for health reasons.

A judge moved the sentencing from April 10 to May 13 at the request of Lipkin’s attorney, who said doctors have “uncovered potential issues of dementia” and “cardiac related issues,” court records show.

Attorney Richard Galler, of Hackensack, who said his client also has a kidney condition, sought a 30-day delay in sentencing while doctors prepare reports on his ailments.

“It was adjourned a month because part of the plea bargain says that he is allowed to have a reduction because of his health condition,” said Galler, adding that the deal allows Lipkin to face a maximum of 10 years in prison. His sentencing has been delayed a number of times.

Lipkin, who joined Madoff and his wife at the firm, Bernard L. Madoff Investment Securities, in 1964, retired as controller in 1998. He pleaded guilty in November 2012 to conspiracy to commit securities fraud, falsifying records and making false filings with the Securities and Exchange Commission. Despite his plea, he contended that he was unaware of the Ponzi scheme when he worked at the company.

Lipkin, who has a residence in Delray Beach, Fla., as well as his Paramus home, pleaded guilty from a wheelchair. “He is not well,” said Galler. “He spends most of his time in his house.”

https://www.northjersey.com/news/business/sentencing-postponed-for-paramus-man-who-worked-for-madoff-1.1301826

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Hard Times for Obama Voters

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Hard Times for Obama Voters

Recent college grads, and especially African-Americans, struggle to find work in a slow recovery.
ByJAMES FREEMAN
May 21, 2014 7:58 a.m. ET

The great irony of the Obama era is that the President’s base voters have disproportionately suffered from a sputtering economy, while the wealthy that Mr. Obama likes to criticize have enjoyed a booming stock market. A new study shows just how difficult this era has been for some of the President’s most loyal supporters.

Researchers at the Center for Economic and Policy Research, a left-leaning think tank, find that “The Great Recession has been hard on all recent college graduates, but it has been even harder on black recent graduates.”

In 2013, the unemployment rate for black college graduates ages 22-27 was a full 12.4%, more than double the 5.6% rate for all college grads in the same age range.

And for those African-American recent grads who did have jobs in 2013, study authors Janelle Jones and John Schmitt find that a staggering 56% were underemployed, meaning they were doing jobs that typically don’t require a four-year college degree. This compares to 45% underemployment among all recent graduates. For youngsters of all colors, these statistics describe a tragic era of lost opportunity and unrealized potential.

Even a career-friendly course of study isn’t protecting young graduates from the ravages of this historically slow recovery. The authors report that “for the years 2010 to 2012, among black recent graduates with degrees in engineering, the average unemployment rate was 10 percent and the underemployment rate was 32 percent.” Among all recent grads with engineering degrees, the average unemployment rate in those years was 6%, while 22% were underemployed.

https://www.wsj.com/articles/SB10001424052702303480304579575560207738956

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U.S. Capital Gains Tax Rate, 6th Highest in OECD

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Obama-Golf

U.S. Capital Gains Tax Rate, 6th Highest in OECD
March 25,2015

President’s budget proposal would bump rate to 5th highest

Washington, DC ,The United States currently has the 6th highest top marginal tax rate on capital gains in the OECD at 28.6 percent. President Obama’s recent budget proposal seeks to increase the top marginal tax rate on capital gains to 32.8 percent, which would give the U.S. the fifth highest rate in the industrialized world. However, this expansion of the capital gains tax could lead to slower economic growth, according to a recent report from the nonpartisan Tax Foundation.

“Increasing taxes on capital income discourages savings, which leads to lower levels of investment and slower economic growth,” explains Tax foundation Economist Kyle Pomerleau. “The expansion of this tax as suggested in the recent budget proposal would only further this bias against saving.”

The report argues that as more people prefer consumption today due to this bias, there will be less capital available in the future. For investors, this represents less available capital for factories, machines, and other investment opportunities.

“Additionally, capital gains taxes create a lock-in effect that reduces the mobility of capital,” adds Pomerleau. “People are less willing to realize capital gains from one investment in order to move to another when they face a tax on their returns. Funds will be slower to move to better investments, further reducing economic growth.”

By raising the federal top marginal capital gains tax rate, President Obama’s FY 2016 budget would compound these negative effects and make the U.S. tax code less competitive globally. On the other hand, the report finds that lowering taxes on capital gains would have the reverse effect, increasing investment and leading to greater economic growth.

The report’s key findings include:

The average combined federal, state, and local top marginal tax rate on long-term capital gains in the United States is 28.6 percent – 6th highest in the OECD.
This is more than 10 percentage points higher than the simple average across industrialized nations of 18.4 percent, and 5 percentage points higher than the weighted average.
Nine industrialized countries exempt long-term capital gains from taxation.
California has the 3rd highest top marginal capital gains tax rate in the industrialized world at 33 percent.
The taxation of capital gains places a double-tax on corporate income, increases the cost of capital, and reduces investment in the economy.
The President’s FY 2016 budget would increase capital gains tax rates in the United States from 28.6 percent to 32.8, the 5th highest rate in the OECD.