Friday, July 24, 2009

KBW Backtracks, Says Bank of America to Post Profit

By David Mildenberg

July 21 (Bloomberg) -- Bank of America Corp., the biggest U.S. lender, will post a profit in 2010 and avert a charge tied to credit-card losses, KBW Inc. said in a report, backtracking from yesterday’s prediction of a loss.

The bank will adjust its capital rather than take a $12 billion pretax charge to earnings in the first quarter of 2010 to comply with new rules for recording card losses, KBW said today. That should lead to a net gain of 80 cents in 2010 instead of a 10-cent loss, analyst Jefferson Harralson wrote.

“We understand the reserve-building costs of bringing about $150 billion in assets onto the balance sheet will be an adjustment to capital” rather than the earnings statement, he said in today’s report, which rates the stock “outperform.”

Bank of America, which accepted $45 billion from the U.S. rescue fund, boosted common equity by more than $38 billion to close a capital gap found by U.S. stress tests in May. KBW today said it now expects a $7.9 billion capital adjustment tied to the card losses, equating to 91 cents a share, at the Charlotte, North Carolina-based bank.

The charge relates to $150 billion of card receivables and other assets that will be recorded on the bank’s balance sheet starting in January under a change in U.S. accounting rules. As banks move assets to the balance sheet, they must add capital to cushion potential losses.

The lender declined to comment on KBW’s estimate, spokesman Scott Silvestri said. Harralson said he changed his report after discussions with bank officials. Accounting rules lack clarity and it’s unclear what percentage stake Bank of America holds in entities that aren’t included on its balance sheet, he said.

Shared Ownership

Companies use off-balance-sheet vehicles while sharing ownership with other investors. Under accounting rules, “when the structures come back on is when you need to put your reserves on,” Chief Financial Officer Joe Price told analysts on conference call last week.

Accounting industry rule-makers considered enabling banks to spread the costs over several quarters, he said, “but that’s not the way it ended up.”

“What we know is that $150 billion is coming onto the balance sheet, and that is going to require a capital adjustment to reserve for these new assets,” Harralson, whose company specializes in financial services companies, said in a telephone interview. “This will be a call on Bank of America’s capital position, and they have another call on the repayment of TARP and another one in the form of higher loan loss rates.”

TARP refers to the Treasury Department’s Troubled Asset Relief Program, which supplied lenders with rescue funds.

Card Receivables

Bank of America’s second-quarter profit fell 5.5 percent to $3.22 billion on losses from credit-card, small business and housing loans, the bank said July 17. The card unit posted a $1.62 billion loss, and rules approved by Congress to curb card interest rates and fees may trim revenue as much as $700 million in 2010, Chief Executive Officer Kenneth Lewis said.

Bank assets held off the company’s balance sheet include $85 billion in credit-card receivables, along with securities backed by pools of home-equity loans and other asset-backed products, New York-based KBW said.

To contact the reporter on this story: David Mildenberg in Charlotte at

Last Updated: July 21, 2009 16:22 EDT

Bull Mkt. Trading Co. or "The Bull in Your Pantry" - How to Profit from the Coming World Food Shortage

I came across this ad from "UnCommon Wisdom" in my mailbox today and it did give me pause for concern. Can you imagine promoting growing rich off the suffering of the worlds poor and hungry? I imagine the investors will be fat, sassy and healthy, while the rest of us can duke it out among ourselves for the crumbs they will throw us, as usual. We will be standing in breadlines and they will be standing in bank lines to make their deposits. The rich get rich and the poor get poor. What else in new in the world?

The Bull in Your Pantry
by Sean Brodrick

World cereal prices hit record highs in 2007 and in the first half of 2008. Consequently, food prices spiked, which in turn triggered riots in dozens of countries along with a series of food export bans. Since then, prices have fallen due to a good harvest in 2008.

So does that mean we don't have to worry about the global food supply anymore? Not by a long shot!

In fact, if current trends hold, we could be gearing up for another crisis as soon as 2010. So you might want to start stocking up now ... not on food, but on the stocks of companies that'll help solve future food crises and make a hefty profit at the same time.

I'll get to those in a bit. First, here are some facts ...

According to the UN's Food and Agriculture Organization (FAO), the number of chronically hungry people in the world — that is people suffering from perpetual and severe hunger — has risen to an unbelievable one billion! In addition, as many as two billion more people live in perpetual food insecurity — missing some meals and often not knowing where their next meal will come from. In the U.S., the richest nation on Earth, about 36 million people suffer from food insecurity.
The FAO also reports that at least nine nations — Kenya, Ethiopia, Nigeria, Somalia, Sudan, Afghanistan, India, Republic of Moldova and Argentina — are all facing crop failure.
The U.S. could become the Saudi Arabia of grain. We're already the world's biggest food exporter. But even we aren't immune to bad weather or bad luck. Recent USDA numbers show corn development progress is 23 percent behind normal, and there's an 18 percent lag in soybean blooming.
Drought in Texas has led to an estimated $3.6 billion in crop and livestock losses. And despite recent rains, Texas still has the most land in the worst stage of drought in nearly a decade.
To be sure, agriculture prices aren't on a one-way trip higher. In fact, grain prices plummeted during last year's financial crisis and took a hit again in May and June on forecasts for bumper crops.

During the last few months, the prices of agricultural commodities have tested their lows from last year’s collapse. Now they seem to want to go higher. One exception is wheat, which is getting creamed on news that the Commodity Futures Trading Commission (CFTC) is “looking very closely” at phasing out waivers that allow index traders to exceed position limits. Traders worry this will suck the wind out of the wheat futures market, even though studies show it should have little effect.

I think this is a great chance to buy grains before they make another run at the highs they hit in the 2007-2008 global food crisis. While the USDA and many analysts expect a bumper crop this year, those expectations seem to be based on things going just right — and agriculture is an area where things often go wrong.

Add in the climactic troubles that should affect harvests around the world, and there’s plenty of room for a surprise to the downside in crop yields, and a surprise to the upside in potential profits.

And the long-term trend is bullish as a Kansas stock yard …

The Malthusian Curse

Short-term, the world seems well-supplied with grain. Longer-term, the world will struggle to meet the demand.

According to the FAO, world food consumption of cereals is likely to keep pace with population growth and increase by 1.2 percent, to 1,042 million metric tonnes in 2009/10. The International Grains Council says that grain production is going to increase, too, but says that any increase in production would be absorbed by increased ethanol demand.

In the short-term, the world seems well-supplied with grain. Longer-term, the world is in a precarious balance between supply and demand. If droughts in Argentina, Canada, the U.S. Southwest and Australia worsen, supplies could be hit hard when demand is going up.

And demand will go up as long as there is food available. Thomas Robert Malthus pointed this out in his “Essay on the Principle of Population” in 1798.

“The power of population is indefinitely greater than the power in the earth to produce subsistence for man,” he wrote. “This implies a strong and constantly operating check on population from the difficulty of subsistence.”

Human population, Malthus observed, increases at a geometric rate, doubling about every 25 years if unchecked, while agricultural production increases much more slowly. Therein lay a biological trap that humanity could never escape. It’s called the “Malthusian Curse.”

Looking down the road, world food supplies would have to double in the next 40 years to feed a population of nine billion. At the same time, farmers must cope with climate change, soaring oil prices and new plant and animal diseases.

I don’t think we’re going to add another three billion people to the planet … I do think, however, we’re going to hit a wall and prices are going to go sky-high!

Climate Change:
The Agri-Weapon of
Mass Starvation

Global Warming could spark food wars. America and Europe are having cooler-than-normal summers. We better enjoy it, because the general trend is warming, as climate change pushes temperatures higher and higher.

We can talk ourselves to death debating whether global warming is a natural cycle, man-made, or both. But for whatever reason, the Earth is getting warmer.

Most climate change is subtle … so slow it’s barely noticeable. But in the summer of 2007, a large portion of Arctic sea ice — about 40 percent — simply vanished. That wasn’t supposed to happen. As recently as 2004, scientists had predicted it would take another 50 to 100 years for that much ice to melt. Yet there it went. Now, scientists say that permanent (as opposed to seasonal) ice in the arctic may disappear by 2013.

The problem is that ice isn’t just disappearing in the Arctic. Himalayan glaciers that now provide water for a billion people in China and India, as well as their farms and livestock, are melting quickly and could vanish completely by 2035 … that is, unless, like the Arctic ice, the Himalayan ice disappears even faster than forecast.

Melting glaciers could mean less water for Indian rice farmers.

Realize that ice is very important because it takes approximately 1,000 pounds of water to grow one pound of wheat; the ratio is similar for other grains. No glaciers means no water for much of Asia. No water in those parts of Asia, and about one-fifth of the world’s population suddenly becomes very hungry and thirsty. And the next phase of the world’s resource wars could ignite like a drought-fueled bush fire!

For the record, the first global resource war was over resources including lumber and sugar, what we call “The French and Indian Wars.” The second, ongoing resource war is over oil, with its latest battleground in Iraq. Anyone who thinks the armies of the world won’t march to battle over food and water needs to bone up on history.

El Niño could worsen global droughts. One reason we may be having drier, cooler weather this summer is the reappearance of the “El Niño” weather pattern in the Pacific. El Niño, Spanish for the “Christ Child,” is the term for when the eastern Pacific’s water temperatures rise above average. This rise in temperature changes global wind patterns and ocean water circulations.

El Niño has some good effects — fewer tropical storms in the Caribbean. But it also can have bad effects. And one thing El Niño will probably do is make areas that are already going through dry spells — Australia, South Africa, parts of the U.S., Argentina — even drier. It just fits the historical pattern. And it could be bad news for farmers in the affected areas.

Prolonged and severe “megadroughts” are projected to occur in places as diverse as West Africa, North China, and California. While a ten-year drought is occurring in Australia with drastic effects on its agriculture.

And then there are large portions of the world already suffering severe droughts or worse. According to the University College of London’s Global Drought Monitor, 351 million people have lived in exceptional droughts — the most severe level — during the last nine months as shown below …

Source: University College of London

Is There Hope? Yes!

The Agricultural ‘Moon Shot’. The good news is that the modern farmer grows a much higher yield–per-acre than his forefathers did. The bad news is that the rate of crop-yield increase is slowing while population growth keeps rising!

From 1950 to 1990 the world’s grain farmers raised the productivity of their land by an unprecedented 2.1 percent a year. This was slightly faster than the 1.9 percent annual growth of world population during the same period. But from 1990 to 2000 annual productivity dropped to 1.2 percent. Now, grain yields are rising at about 0.7 percent, scarcely half that of the preceding decade and far behind world population growth.

Now for the really good news: Agriculture scientists are on the brink of their own version of a “moon shot” — one that could increase yields while making plants more drought and pest resistant.

Plant breeders now know the sequence of nearly all of the 50,000 or so genes in corn and soybean plants and are using that knowledge in ways that were unimaginable only four or five years ago. Biotech is already making it possible to breed crops with beneficial traits from other species. This will lead to new varieties with higher yields, reduced fertilizer needs, and increased drought tolerance.

But this breakthrough comes with a hefty price tag … companies like Monsanto focus their research and development on traits that increase farmers’ dependence on proprietary chemicals.

Farm equipment manufacturers should do well as farmers boost crop production to satisfy swelling demand.

Farmers can also boost their crop yields another way — by using more fertilizer. And that’s good news for select fertilizer makers.

Meanwhile, makers of tractors and farm tools are also poised for growth.

So all in all, I’m pretty bullish on the agriculture sector.

How You Can Play This Trend …

The boom in agriculture is part of a rebound in commodities. If you want a fund that gives you a stake in all kinds of commodities — corn, wheat, aluminum, oil, and more — consider the PowerShares DB Commodity Index Tracking Fund (DBC).

And for a fund that focuses specifically on agriculture, consider the PowerShares DB Agriculture Fund (DBA). It tracks a basket of futures contracts on some of the most liquid and widely traded agricultural commodities — corn, wheat, soy beans and sugar. With the price of wheat beaten into the dirt, now might be a good time to take a long-term position in the DBA as long as you have a stomach for risk and an appetite for potentially big gains.

Are there individual stocks I’d recommend? Absolutely! In fact, I’m putting together a list of my five favorite individual stocks and two red-hot ETFs in a special, limited-edition report that’ll come out on August 3 (a little more than one week from today!).

These will be my best picks … the hottest stocks … the power-packed funds. These are the picks that can help you reap bushels and bushels of gains over the next 12 to 18 months.

I’ll be offering my report, “Harvest of Gains” — including three follow-ups — for $198. I think it would be cheap at triple the price. But if you call us at 1-800-814-3047 and pre-order the report, and mention my name, you can reserve your copy for the low pre-publication price of just $99.

You can also order the report online by clicking here.

That way, I can rush you a PDF copy of the report so you can jump on the recommendations just as soon as they come off the press.

Yours for trading profits,


P.S. Call 1-800-291-8545. Just say you want “Harvest of Gains,” plus all my follow-up reports on all my picks.

Click on title above for article with charts;

Tuesday, July 21, 2009

Stearns Stands Alone: Calls Paulson a Crook. Wake Up America!

From MM at GS666.Com;

Below in the video we have Congressman Stearns calling Paulson the crook he is. Unfortunately, Congressman Stearns is a lone voice. Where are you America? Wake up. Do you realize you are being raped, robbed and beat to a pulp by Goldman Sachs and their bankster accomplices? One more fact. Hank Paulson was more responsible for the current global financial crisis than any other ten men combined on the face of the planet. Why?

Hank Paulson was a 32 year career Goldman Sachs soldier. He also ran the company as COO and CEO from 1998 through 2006 . . . the exact years that we saw the creation of toxic assets developed by his boys and girls at Goldman Sachs. He left Goldman Sachs at the peak of the bubble to take over the Treasury Secretary job so he could complete the final phase of his scheme . . . cover up, steal a few trillion more, laugh at you and the American public.

Here's a link to the video of Congressman Stearns grilling Paulson, and Paulson squirming in his seat. Actually, he's laughing inside because he knows there is not a thing we are going to do about his multi-trillion dollar heist.

Click on title to see vid;


Mike Morgan

Friday, July 17, 2009

Supervalu Inc., SVU Securities Stock Fraud

Company: Supervalu Inc.,
Ticker Symbol: SVU
Class Period: Apr-23-09 to Jun-23-09
Date Filed: Jul-13-09
Lead Plaintiff Deadline: Sep-11-09

Court: Southern District of New York
A class action lawsuit has been filed in the United States District Court for the Southern District of New York alleging the violation of the federal securities laws on behalf of purchasers of the common stock of Supervalu Inc. ("Supervalu" or the "Company") during the period from April 23, 2009 through June 23, 2009.

The Complaint alleges that the Company disseminated unreasonable highly positive guidance for the Company's financial performance for fiscal 2010, in order to close a $1 billion note offering in May 2009. Indeed, positive guidance on April 23 generated such interest in the Company it was able to offer $500 million in new notes and almost immediately increased the offering to $1 billion. On May 7, 2009, the Company announced the completion of its $1 billion note offering, which was needed to retire existing outstanding indebtedness of the Company which was shortly coming due.

Then, after the refinancing was complete, on June 24, 2009, the Company revealed that first quarter 2010 earnings would be substantially below expectations, and that the previous fiscal 2010 guidance would be updated in light of an unexpectedly poor first quarter. As a result, Supervalu shares dropped almost 12% on very heavy trading volume.

If you acquired the securities of the defendants during the Class Period you may, no later than the Lead Plaintiff Deadline shown above, request that the Court appoint you as lead plaintiff through counsel of your choice. You may also choose to remain an absent class member. A lead plaintiff must meet certain requirements.

Supervalu Inc., SVU Securities Fraud Legal Help
If you have suffered from financial losses, you may qualify for damages or remedies that may be awarded in a possible Supervalu Inc., securities class action lawsuit. Please click the link below to submit your complaint for a free evaluation.

Click on title above for legal help and a free evaluation of your possible case

Tronox, Inc TRXAQ Securities Stock Fraud

Company: Tronox, Inc
Ticker Symbol: TRXAQ
Class Period: Nov-28-05 to Jan-12-09
Date Filed: Jul-14-09

Lead Plaintiff Deadline: Sep-12-09

Court: Southern District of New York
A class action has been filed against executives of Tronox, Inc. (PINKSHEETS: TRXAQ) (PINKSHEETS: TRXBQ) on behalf of investors who purchased stock that was artificially inflated between November 28, 2005 and January 12, 2009. Tronox is not named in this action as a defendant because it filed for bankruptcy protection in January 2009.

According to the complaint, the Defendants failed to disclose important adverse facts about Tronox's environmental and tort liabilities. When the market learned of the true facts about the Company, the price of Tronox stock plummeted.

If you acquired the securities of the defendants during the Class Period you may, no later than the Lead Plaintiff Deadline shown above, request that the Court appoint you as lead plaintiff through counsel of your choice. You may also choose to remain an absent class member. A lead plaintiff must meet certain requirements.

Tronox, Inc TRXAQ Securities Fraud Legal Help
If you have suffered from financial losses, you may qualify for damages or remedies that may be awarded in a possible Tronox, Inc securities class action lawsuit. Please click the link below to submit your complaint for a free evaluation.

Click on title above for legal help and a free evaluation of your possible case;

Ambassadors Group Inc EPAX Securities Stock Fraud

Company: Ambassadors Group Inc
Ticker Symbol: EPAX
Class Period: Feb-8-07 to Oct-23-07
Date Filed: Jul-15-09
Lead Plaintiff Deadline: Sep-13-09

Court: Eastern District of Washington
An investor of Ambassadors Group, Inc., has filed a proposed securities class action lawsuit in the United States District Court for the Eastern District of Washington on behalf of purchasers of Ambassadors Group Inc., common stock during the period between February 8, 2007 and October 23, 2007 against Ambassadors Group over alleged securities laws violations.

According to the complaint, Ambassadors Group and certain of its officers and directors violated the Securities Exchange Act of 1934 by issuing between February 8, 2007 and October 23, 2007 materially false and misleading statements regarding its business prospects. Then, on October 22, 2007, Ambassadors Group announced its financial results for the third quarter of 2007, the period ending September 30, 2007.

For the quarter, Ambassadors Group reported net income of $22.5 million and $1.12 fully diluted earnings per share. Ambassadors Group also announced that “as of October 16, 2007, its net enrolled participants for 2008 travel programs were 26,200 compared to 37,300 participants as of the same date last year for its 2007 programs” and that the “decrease in net enrollments for its 2008 programs will negatively impact its 2008 earnings.” In response to this announcement, the price of Ambassadors Group common stock fell $17.73 per share, or approximately 44%, to close at $21.04 per share, so the lawsuit.

Ambassadors Group, located in Spokane, WA, is an educational company that organizes and promotes international and domestic travel programs for students, athletes and professionals. Ambassadors Group, Inc. reported in 2007 Total Revenue of $114.53million with a net income of $26.69million and in 2008 Total Revenue of $97.93million with a net income of $18.55million. Shares of Ambassadors Group, closed on Tuesday, July 14, 2009, at $12.19 per share, down from a 52weekHigh of $19.99 per share and $40.55 per share in 2007.

If you acquired the securities of the defendants during the Class Period you may, no later than the Lead Plaintiff Deadline shown above, request that the Court appoint you as lead plaintiff through counsel of your choice. You may also choose to remain an absent class member. A lead plaintiff must meet certain requirements.

Ambassadors Group Inc EPAX Securities Fraud Legal Help
If you have suffered from financial losses, you may qualify for damages or remedies that may be awarded in a possible Ambassadors Group Inc securities class action lawsuit. Please click on the title above to submit your complaint for a free evaluation.

Matrixx Initiatives Inc., MTXX Securities Stock Fraud

Company: Matrixx Initiatives Inc.,
Ticker Symbol: MTXX
Class Period: Dec-22-07 to Jun-15-09
Date Filed: Jul-16-09
Lead Plaintiff Deadline: Sep-14-09
Court: United States District Court for the District of Arizona

An investor with Matrixx Initiatives, Inc., has filed a proposed securities class action lawsuit in the United States District Court for the District of Arizona on behalf of shareholders of Matrixx Initiatives, Inc. who purchased Matrixx stock between December 22, 2007 and June 15, 2009, in relation to Matrixx Initiatives alleged violations of FDA regulations involving the Zicam Cold Remedy products.

According to the complaint the plaintiff alleges that between December 22, 2007 and June 15, 2009, Matrixx Initiatives and other Defendants failed to disclose material adverse facts concerning Matrixx’s operational well-being and future prospects. The plaintiff accuses that the defendants violated Federal Securities Laws.

Matrixx Initiatives has recalled its Zicam nasal products, but Matrixx Initiative has been investigated by the SEC with respect to its marketing practices, and according to the investigation it is believed that information surrounding the Zicam line of products, as well as Matrixx Initiatives liability in connection with these products, was not reaching Matrixx's shareholders.

On June 13, the FDA advised consumers to stop using three Matrixx-manufactured over-the-counter cold remedy products marketed under the Zicam name because they are associated with the loss of smell, which may be long-lasting and permanent.

According to the FDA, as of December 2007, Matrixx Initiatives was required to provide reports of adverse reactions to the agency per the Dietary Supplement and Nonprescription Drug Consumer Protection Act. On June 16, 2009 Matrixx Initiatives announced that it has received a Warning Letter from the Food and Drug Administration (the FDA). The FDA has asserted that Matrixx Initiatives is in violation of its regulations by failing to file a new drug application for its Zicam Cold Remedy Nasal Gel and Zicam Cold Remedy Gel Swabs and that those products are misbranded under their regulations for failing to adequately warn of risks.

The FDA informed Matrixx Initiatives that it had concluded that certain Zicam products may pose serious risks to consumers who use them, and that Matrixx marketing practices violate several laws relating to the products, so the investigation. Matrixx Initiatives stated in its press release that “Since Zicam Cold Remedy intranasal Cold Remedy products were first introduced in the market in 1999, more than 35 million retail units representing over 1 billion doses have been sold “ and it “believes these products are safe and do not cause anosmia”, but then announced in a second press release on the same day that “Matrixx Initiatives Voluntarily Withdraws Zicam Cold Remedy Swabs, Zicam Cold Remedy Nasal Gel” as “Consumer safety is and has always been the company's top priority”.

Then on June 22, 2009 nearly 120 individual claims were filed in Arizona Superior Court against Matrixx Initiatives on behalf of individuals from 32 states, from Hawaii to a U.S. contractor in Afghanistan, as well as for a dozen Arizona residents who reported side effects ranging from a complete loss of smell and taste, to diminished senses of smell.

The FDA stated in its letter from June 16, 2009 that the "agency is aware that Matrixx appears to have more than 800 reports related to loss of sense of smell associated with Zicam Cold Remedy intranasal products" and directed Matrixx ”to arrange submission of all reports related to loss of sense of smell associated with Zicam Cold Remedy intranasal products" and to "indicate which of these reports have been previously submitted to the FDA." Upon release of this letter by the FDA, so the investigation, Matrixx Initiatives stock declined from approximately $19 per share to less than $7 per share. On July 23, 2009, Matrixx Initiatives acknowledged the Securities and Exchange Commission is launching an informal inquiry.

If you acquired the securities of the defendants during the Class Period you may, no later than the Lead Plaintiff Deadline shown above, request that the Court appoint you as lead plaintiff through counsel of your choice. You may also choose to remain an absent class member. A lead plaintiff must meet certain requirements.

Matrixx Initiatives Inc., MTXX Securities Fraud Legal Help
If you have suffered from financial losses, you may qualify for damages or remedies that may be awarded in a possible Matrixx Initiatives Inc., securities class action lawsuit. Please click the link below to submit your complaint for a free evaluation.

Click on title above for a free evaluation of your possible case;

Thursday, July 16, 2009

UnCommon Wisdom? Invest in China, Advisor Says

If it weren't for China ...

by Tony Sagami

Dear Subscriber,

Alcoa is always one of the first companies to report its quarterly earnings, so the Wall Street crowd is typically very eager to hear what the aluminum giant has to say.

Well ... Alcoa reported better-than-expected results, and that made the bulls very happy. As always though, the devil is in the details ...

First, Alcoa lost a bundle of money — $454 million and a painful 44 percent drop in year-over-year earnings — so business still stinks ... just not as bad as Wall Street was expecting.

Second, this is the third quarter in a row that Alcoa has lost money, so being an Alcoa shareholder hasn't been rewarding. Alcoa was over $40 last summer but is now less than $10 a share.

And if it weren't for China, Alcoa's share price would probably be a lot lower.

In fact, China is the only region in which Alcoa expects to see some growth. Alcoa CEO Klaus Kleinfeld, said that while global demand for aluminum is expected to decline by 7 percent in 2009, but that figure would balloon to -10 percent if not for China.

That means that China is one of the few parts of the world where business is improving.

"China is clearly out of the woods. Things are bottoming out, and they are even coming back in some sectors," Kleinfield said.

The underlying reality is simple — countries with growing economies consume lots of natural resources.

Aluminum isn't the only natural resource that China is gobbling up. For example, China's copper consumption grew from about 1.8 million tons in 2000 to nearly 5 million tons in 2008. China consumed 13 percent of the global supply of cooper in 2000, but increased that to 28 percent in 2008.

China is also the world's largest consumer of zinc, lead, nickel, and aluminum in the world.

As I mentioned in my Saturday video update, China just spent $1.5 billion to buy a 17 percent stake in Teck Resources (TCK), a Canadian gold, copper, zinc, and coal mining giant.

What about energy? In 2003, China passed Japan to become the second-largest consumer of energy after the United States. That's why the Chinese government said it will increase its strategic crude oil reserves by 160 percent to 270 million barrels in the next five years and spend $4.4 billion to build those storage facilities.

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Two Reasons Why China Will Continue
To Gobble Up Natural Resources

As an investor, you need to ask yourself whether or not China will continue to gobble up natural resources at that hungry pace?

The answer is 'yes' because of two things: (1) 1.4 billion citizens and (2) $1.9 trillion of cold hard cash that is burning a hole in the Chinese government's pockets.

Whether you're talking about basic materials, energy, or food, there is no question China is going to keep on consuming a bigger piece of the global natural resource pie and push the prices of those commodities higher.

What you need to do is get ahead of that Chinese buying binge and get 'long' whatever the Chinese are buying. In the case of my Asia Stock Alert subscribers, we already own stocks like Yanzhou Coal (YZC) and Sino Gold (SGX).

Don't forget to connect the dots to other businesses that will benefit from China's appetite for natural resources:

Shipping companies that deliver those natural resources to China i.e. Genco Shipping & Trading (GNK)
Construction companies that build the power plants i.e. ABB Ltd. (ABB)
Food companies that feed those 1.4 billion hungry mouths i.e. Zhongpin (HOGS)
Construction equipment makers i.e. Komatsu (KMTUY)
Alternative energy companies i.e. Trina Solar (TSL)
Companies that help provide clean water i.e. Duoyuan Global Water (DGW)
If you're more of a mutual fund kind of investor, take a look at U.S. Global China Opportunity (USCOX), a China-focused mutual fund that has a heavy weighting of natural resources and commodity stocks.

There are lots of ways to profit from the coming natural resource boom. How you do it is up to you, but I strongly suggest that you get 'long' whatever the Chinese are buying. It should be one of the most profitable moves you could make.


UnCommon Wisdom


About Uncommon Wisdom

For more information and archived issues, visit

Uncommon Wisdom (UWD) is published by Weiss Research, Inc. and written by Sean Brodrick, Larry Edelson, and Tony Sagami. To avoid conflicts of interest, Weiss Research and its staff do not hold positions in companies recommended in UWD, nor do we accept any compensation for such recommendations. The comments, graphs, forecasts, and indices published in UWD are based upon data whose accuracy is deemed reliable but not guaranteed. Performance returns cited are derived from our best estimates but must be considered hypothetical in as much as we do not track the actual prices investors pay or receive. Regular contributors and staff include Kristen Adams, Andrea Baumwald, John Burke, Amy Carlino, Selene Ceballo, Amber Dakar, Dinesh Kalera, Red Morgan, Maryellen Murphy, Jennifer Newman-Amos, Adam Shafer, Julie Trudeau, Jill Umiker, Leslie Underwood and Michelle Zausnig.

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This investment news is brought to you by Uncommon Wisdom. Uncommon Wisdom is a free daily investment newsletter from Weiss Research analysts offering the latest investing news and financial insights for the stock market, precious metals, natural resources, Asian and South American markets. From time to time, the authors of Uncommon Wisdom also cover other topics they feel can contribute to making you healthy, wealthy and wise. To view archives or subscribe, visit

Wednesday, July 15, 2009

Goldman Sachs staff set for bumper bonuses as bank earns $38m per day

Guardian - The investment bank Goldman Sachs delivered a clear signal that the good times are returning on Wall Street by milking a recovery in financial markets to generate profits of $3.44bn (£2.12bn), raising the prospect of average pay packages of as much as $900,000 for its employees.
Goldman’s second-quarter earnings, which amounted to $38m per day, were up 65% on 2008 and confirmed the US bank’s status as one of the stand-out winners from the credit crunch which paralysed the financial industry for much of last year.
The firm’s revenue of $13.76bn was the highest in its 140-year history. Its success on the trading floor is likely to translate into record bonuses, to the dismay of critics who view runaway compensation as a key factor contributing to the global economic meltdown.

Click on title above for full article;

"Lifestyle Lift" - A Classic, Fantastc Plastic (Surgery) Fraud

Company Settles Case of Reviews It Faked


Published: July 14, 2009

Lifestyle Lift, a cosmetic surgery company, has reached a settlement with the State of New York over its attempts to fake positive consumer reviews on the Web, the New York attorney general’s office said Tuesday.

The company had ordered employees to pretend they were satisfied customers and write glowing reviews of its face-lift procedure on Web sites, according to the attorney general’s statement. Lifestyle Lift also created its own sites of face-lift reviews to appear as an independent sources.

"I love my new lips so much," one satisfied customer says, "that I am not afraid to outline them in black anymore!"

One e-mail message, discovered by the attorney general’s office, told employees to “devote the day to doing more postings on the Web as a satisfied client.”

The company will pay $300,000 in penalties and costs to the state. It has also agreed to stop publishing anonymous reviews on Web sites in the voices of satisfied customers and to identify any content created by employees, the statement said.

Andrew M. Cuomo, New York’s attorney general, said in a statement that Lifestyle Lift’s “attempt to generate business by duping consumers was cynical, manipulative and illegal.”

False reviews have become more of a problem as more people rely on sites like Yelp, Amazon or Epinions to rate and learn about products and services.

Some review sites have grown so powerful that consumer reviews can make or break a new business. Lifestyle Lift, which is based in Troy, Mich., and operates 32 centers nationwide, believed that negative reviews had significantly hurt its reputation, the attorney general’s office said.

"Lifestyle" has been good to me," another satisfied customer said, and promices me free follow-up visits, if necessary."

Lifestyle Lift said in a statement that it “regrets that earlier third-party Web site content did not always properly reflect and acknowledge patient comments or indicate that the content was provided by Lifestyle Lift.”

The livelihood of review sites depends on readers trusting their content; weeding out biased reviews from the sea of anonymous, user-generated submissions has been challenging.

“It’s an incredible violation of consumer trust and it’s a pernicious element of the Web that some companies have embraced this idea, under the guise of reputation management,” said Thomas Seery, founder of, a site on which he said Lifestyle Lift had posted misleading reviews.

Tuesday, July 14, 2009

DC the "Real Winner" in Recession, Expert Says

Best And Worst Cities For High-Paying Jobs
Joel Kotkin, 07.14.09, 12:01 AM EDT

The D.C. metro area is just one place where high-wage employment is still on the rise. But not all metros are so lucky.

Media coverage of America's best jobs usually focuses on blue-collar sectors, like manufacturing, or elite ones, such as finance or technology. But if you're seeking high-wage employment, your best bet lies in the massive "business and professional services" sector.

This unsung division of the economy is basically a mirror of any and all productive industry. It includes everything from human resources and administration to technical and scientific positions, as well as accounting, legal and architectural firms.

Overall there are roughly 17 million professional and business services jobs, 4 million more than manufacturing. This makes it twice as big as the finance sector and five times the size of the much-ballyhooed tech sector. While its average salary--roughly $55,000 a year--is somewhat lower than in those other elite sectors, its wages are still higher than those in all the other large sectors, like health. The sector's $1 trillion in total pay per year accounts for nearly 20% of all wages paid in the nation; finance and tech together only account for $812 billion.

In Depth: Best Cities For High-Paying Jobs

In Depth: Worst Cities For High-Paying Jobs

More than that, the business and professional services sector has encompassed the fastest-growing part of the high-wage economy. Employment in lower-wage sectors like education has also grown quickly. But employment in other sectors that pay their employees well, such as technology, has remained stagnant; jobs in some, such as manufacturing, have fallen sharply. Critically, the business services sector--particularly at the better-paying end--seems to have weathered the current recession better than these other high-wage sectors.

At the top of our list of best places is greater Washington, D.C., and its surrounding suburbs in Virginia and Maryland. Government jobs may drive that economy, but it is the lawyers, consultants and technical services firms who harvest the richest benefits. As New York University public policy professor Mitchell Moss observes, Washington has emerged as the "real winner" in the recession--not just for public-sector workers but private-sector ones too.

Over the past year, parts of northern Virginia--ground zero for the so-called "beltway bandits" who work in industries the government depends on to do its job--have enjoyed the fastest growth in business and professional services, adding over 5,200 jobs despite the current downturn.

Other areas around the nation's capital have also seen strong growth. The Washington D.C.-Arlington-Alexandria area, for example, came in second on our list, gaining nearly 5,100 positions, while No. 6 the Bethesda-Frederick-Rockville, Md., metro area added 2,600. In addition, yet another Virginia area--No. 5-ranked Virginia Beach-Norfolk-Newport News, a center for military-related industries--gained nearly 2,900 jobs in this sector.

It's far too early to thank the free-spending ways of Barack Obama's administration for all this growth. As anyone can tell you, the Bush White House and its Republican Congress were not exactly models of fiscal restraint. Plus, Washington and Northern Virginia have seen growth in their business services sectors over the last several years, in the period stretching from 2001 to 2009. Together those two metros added over 165,000 new jobs in this critical, high-wage sector.

Of course, you don't have to head to Washington to find a high-paying job--although you might not be able to escape unpleasant summer weather. The other major group of business-services hot spots includes Austin, Texas, at No. 3, and Houston, at No. 4. These Lone Star local economies have continued to thrive not only during the current recession but also over the last decade.

The others winners include farther-afield locales in Kansas, Tennessee, Illinois and New York. These areas could be gaining both from companies seeking to lower costs and from the new capabilities for remote work due to the Internet. Even though they didn't make our list, a host of smaller communities--like Mansfield, Ohio; Provo, Utah; and Charleston, S.C.--also enjoyed significant growth in the business services sector over the past year.

So if these are the places where this segment of the economy is growing and high-paying jobs are easier to come by, where is the opposite true? The worst cities on our list span three archetypes: Rust Belt basket cases, Sunbelt flame-outs and expensive big cities. Perhaps the toughest losses were in Michigan: Detroit and the Warren-Troy metro area suffered big setbacks both in the last year and over the last decade.

Consistent job losses in business services in these areas--some 54,000 in the Troy area since 2001--reveal the clear connection between employment in business services and in the region's fundamental auto industry. It turns out that elite services often prove dependent on basic industry. When industrial plants shut down, it's not just blue-collar workers and company executives that suffer; as a result, these firms will use fewer lawyers, accountants, architects and technical consultants.

A similar picture emerges in cities like Phoenix, which lost about 35,000 business-services jobs in just one year. This loss stems from the collapse of the housing bubble, which powered the rest of the regional economy. The same meltdown caused smaller but still significant reversals in one-time boomtowns like Orlando, Fla., Atlanta and Southern California's Santa Ana region, which encompasses Orange County, where business service employment dropped by double-digit rates over the past year.

Yet these same areas should see some recovery, perhaps more so than the traditional auto manufacturing-focused towns. Phoenix, Orlando and other Sun Belt locations--including a host of other areas in Florida--all saw increasing employment in business services over the past decade. If the economy comes back, along with a stabilization of the residential real estate market, business services job growth will likely begin to take off again. After all, the fundamental reasons for the success of these areas, such as warm weather, lower costs and the need to serve a growing population, have not fundamentally changed.

Perhaps most perplexing is the fate of some of the other places on our worst cities list, particularly the biggest metropolitan areas. The professional and business services sector is widely considered ideal for large, cosmopolitan centers, since lots of industries require support. But Chicago experienced a huge chunk of job losses--almost 25%--in this sector during the last year. Other big cities, including Los Angeles, Minneapolis and New York, also suffered.

This is not a new phenomenon. These and other big cities, like Boston and San Jose, San Francisco and Oakland in California, have been shedding these types of jobs since 2001. These losses, however, have been concentrated at the lower-wage end of the business service pyramid, in areas like human resources and administration. These are the positions that companies can fill more easily and cheaply using the Internet or by hiring in less expensive outposts.

That's why Washington and its environs, which has seen across-the-board business growth, remain the great exception. Many business services jobs outside the beltway appear to be becoming more nomadic, based in places where firms face lower costs and where workers can afford to live well on middle-income salaries. Even the long-term resiliency of higher-wage employment like law and accounting in traditional business hubs like New York could be at risk over time, with some jobs shifting to less expensive locales or even overseas.

The changing nature of business services presents a boon to some communities and a challenge to others as they seek to survive and thrive in spite of the current recession. How some cities manage to grow this segment of their economies may well presage which parts of the country will thrive best during the years of recovery--and beyond.

In Depth: Best Cities For High-Paying Jobs

In Depth: Worst Cities For High-Paying Jobs

Joel Kotkin is a presidential fellow in urban futures at Chapman University. He is executive editor of and writes the weekly New Geographer column for Forbes. He is working on a study on upward mobility in global cities for the London-based Legatum Institute. His next book, The Next Hundred Million: America in 2050, will be published by Penguin early next year.

Monday, July 13, 2009

McNamara and LBJ: Crooks, Liars, Murderers, and Thieves

by Jacob G. Hornberger

I can’t help but be amused by sentiments being expressed by liberals regarding Robert McNamara’s tenure at the World Bank. The notion is that, hey, McNamara wasn’t so bad. Even though he was responsible for the deaths of millions of people during the Vietnam War, he ended up helping the poor, needy, and disadvantaged around the world with World Bank loans.

What a crock.

A good example of this statist nonsense was expressed last week in an op-ed in the New York Times entitled “Calculus and Compassion by Philip Bobbitt, who is the nephew of Lyndon and Lady Bird Johnson, a fact I learned back in 1972 when Bobbitt and I, coincidentally, were in the same first-year law school classes at the University of Texas. By that time, I had already figured out, while an undergraduate at Virginia Military Institute, that the Vietnam War was founded on lies and deceptions at the hands of Bobbitt’s uncle, LBJ, and McNamara, his secretary of defense.

Bobbitt recalled that Johnson had described McNamara as a compassionate man. Telling us that his uncle was a “good reader of men,” Bobbitt alleged that Johnson was right about McNamara, saying that “his tenure at the World Bank shows a man driven by a desire to help the poor.”

Like so many other liberals, Bobbitt equates service in government welfare offices as equivalent to, say, Mother Theresa’s service to the poor. Nothing could be further from the truth. With the help of resources that were being voluntarily donated to her, Mother Theresa was devoting her life to helping others. McNamara, on the other hand, was working for an institution that used money that was being forcibly extracted from others.

Suppose, for example, that I accost you with a gun, order you to go to an ATM machine and extract $10,000 from your bank account, and force you to turn it over to me. I use all of the money to help the poor. Does that make me a good, compassionate person? Of course not, as even Bobbitt would acknowledge. He would say that I was a thief, and he would be right.

But where Bobbitt, LBJ, and other liberals have a blind spot is with respect to government. If I run to government and persuade it take the $10,000 from you in the form of taxes and give it to the poor, I (and the bureaucrat distributing the money) immediately become a compassionate saint.

Of course, Bobbitt failed to mention that his uncle’s ability as a “good reader of men” wasn’t perfect. Throughout his tenure as president, LBJ was convinced that he would be able to buy off North Vietnamese leader Ho Chi Minh with generous offers of U.S. foreign aid (i.e., welfare). Alas, his read of Ho Chi Minh turned out to be a bit faulty.

LBJ’s ability to “read men” might also be called into question given his devotion to such crooks as Bobby Baker and Billy Sol Estes. In fact, what Bobbitt also failed to mention in his op-ed was that Kennedy’s assassination saved LBJ from being dropped as JFK’s running mate in 1964 and from facing a federal grand-jury indictment for his role in the Billy Sol Estes grain scandal, which had resulted in the murder of federal investigator Henry Marshall.

In fact, no doubt Bobbitt’s relationship to his uncle is what prevented him from observing in the op-ed that the only reason that LBJ was president was because his illegal stuffing of Ballot Box 13 in Jim Wells County had enabled him to win his U.S. Senate seat from Texas some years before. Bobbitt might also have mentioned, but didn’t, that his uncle had lied about the bogus North Vietnamese attack at the Gulf of Tonkin, which garnered him the Gulf of Tonkin resolution from Congress, which in turn enabled him to expand an undeclared war that ending up taking the lives of 58,000 Americans and three million Vietnamese.

In an era in which moral principles on a severe decline, the last thing we need is praise of crooks, liars, murderers, and thieves. It would be difficult to find more apt descriptions for both Johnson and McNamara.

Jacob Hornberger is founder and president of The Future of Freedom Foundation, publisher of Your Money or Your Life: Why We Must Abolish the Income Tax by Sheldon Richman.

Medical Research Fraud: U.S. Army Style

Study by Medtronic consultant comes under fire

A highly regarded surgeon and Medtronic consultant is under investigation for an allegedly fraudulent medical study involving an orthopedic product made by the med-tech giant.

By JANET MOORE, Star Tribune

Last update: July 12, 2009 - 10:09 PM

Featured comment:

Corporate Ethics-
I'm waiting for Bill George to share his thoughts about his former company since much of this nonsense happened under his watch while he was lecturing other companies about corporate ethics.


Last August, when a British medical journal published a study by five current and former U.S. Army surgeons, the results seemed enormously promising for soldiers who had been maimed in Iraq and for Medtronic Inc.

Probing cases from Walter Reed Army Medical Center, one of the nation's top military hospitals, the article indicated that a Medtronic product that grows and repairs bone could offer a better chance of recovery for soldiers whose legs had been shattered in combat.

Since then, however, an Army investigation has found reason to think that the study overstated the effectiveness of the Medtronic product, inflated the number of patients who were treated and was published without the knowledge of four "co-authors,'' whose signatures were forged.

The case has turned into an embarrassment for Medtronic, which had paid more than $850,000 in fees and expenses to the lead author, Dr. Timothy Kuklo, between 2001 and 2009.

Medtronic says it had no role in the study or knowledge of its publication. But the case has prompted an inquiry by the U.S. Justice Department and Congress, intensifying the scrutiny that has come to bear in the last few years on medical device companies and their financial relationships with doctors.

The Army's wide-ranging investigation provides a rare window into a purported case of medical research fraud.

The article was published in The Journal of Bone and Joint Surgery and written by Kuklo, a highly regarded West Point graduate who retired from the Army in 2006 and is now on the medical faculty at Washington University in St. Louis.

Problems cropped up almost immediately, when a neighbor and fellow physician congratulated Dr. Romney Andersen, an orthopedic surgeon at Walter Reed who was listed as one of four co-authors. Andersen apparently was unaware of the article until that moment.

Yet Kuklo's name and work were certainly familiar to him. In documents from the Army investigation, Andersen describes Kuklo as a mentor, teacher and friend. When Andersen was contemplating a career as a general surgeon, it was Kuklo who encouraged him to pursue orthopedic surgery instead. While at Walter Reed, Andersen helped Kuklo drywall his basement, and the two (along with their wives) socialized as well.

When interviewed by the Army, the study's "co-authors" described Kuklo as a gifted physician and researcher, even a role model. But another of the four, Dr. Richard Islinger, told investigators that Kuklo's persona changed over the years -- he "became more overconfident and ambitious."

As a resident conducting research with Kuklo, Andersen said he noticed "an aberrancy in typical research" that involved "discarding inconsistent findings which did not fit his hypothesis." Andersen said he had misgivings, but added he was a young doctor inexperienced with the intricacies of research, according to Army documents.

Forgeries, misspelling

Kuklo has been heralded for his prolific research -- roughly 96 papers in nine years, according to Andersen, who fondly remembered calling his mentor the "nutty professor."

Troubled by his neighbor's comment, Andersen doggedly searched the Internet for a copy of the article. At first he came up empty because his name was misspelled on the study's copyright release forms. (His forged signature was also misspelled.)

Andersen subsequently contacted the three other "co-authors" and the editor of the journal, as well as officials at Walter Reed. None of the co-authors was aware of the study, according to Army documents.

"I heard about it when Dr. Andersen called me," Islinger said in an interview. "The bottom line is the signature was forged and the numbers were higher than what I remembered." Islinger, now in private practice in New Jersey, says he treated many of the patients involved while at Walter Reed.

The Army found that the 138 soldiers cited in the study differed from the number of cases contained in its wartime casualty database. The study also suggested the Infuse product had a much higher level of effectiveness than the co-authors' actual experience.

Islinger says the Medtronic product, Infuse, "is a very good product. But the results that were published? I don't see it as being that good."

Dr. J. Edwin Atwood, who led the Army's investigation, concluded in a report that the case "is the ultimate tragedy and catastrophe in academic medicine ... truly an academic institution's greatest nightmare."

Kuklo was not disciplined by the Army when the investigation ended, but a Walter Reed spokesman said last week that "additional matters have surfaced" that "warranted additional inquiry." He declined to comment further.

Kuklo has not commented publicly on the controversy and could not be reached for comment for this article.

The Medtronic connection

Following his discovery, Andersen discussed the article informally with Kuklo, Army records indicate, and asked if Kuklo's consulting for Medtronic posed a conflict of interest. Kuklo reportedly responded that during the course of the study, from March 2003 to March 2005, he was not a consultant for the company, and said he accepted only research and institutional support from the company while at Walter Reed.

Andersen said in a sworn statement that it was well-known at Walter Reed that Kuklo was "closely tied with Medtronic."

Physicians on active duty are permitted to engage in "off-duty employment," but only after approval from their commander. The Walter Reed spokesman said in an e-mail that "a search of our records has not revealed any request by Dr. Kuklo for off-duty employment with Medtronic."

No financial disclosures were provided for the journal article. The Army concluded it was likely written after Kuklo retired from Walter Reed.

Medtronic has not commented in detail on the Kuklo investigation, except to say that it didn't enter a general consulting agreement with him until 2006, after he had left Walter Reed and after the period of the study.

"The study in question was a Walter Reed Medical Center study, so their Institutional Review Board [an internal ethics body] was the approval and oversight authority,'' Medtronic said in an e-mail.

Medtronic did say it paid Kuklo $788,279 between 2001 and 2009 for travel expenses, consulting and honoraria for participation at company-sponsored events. In addition, Kuklo was paid $63,623 in indirect payments to third parties, such as hotels and airlines.

The med-tech industry argues that payments to doctors are legitimate compensation for advice on new products, training for doctors and conducting research on a company's behalf.

But some question whether the thousands of dollars spent on these relationships pose a conflict of interest and sway doctors' choice of products.

"The interest of a drug or device company is earning money for shareholders,'' said Steven Miles, a professor at the University of Minnesota's Center for Bioethics. "The interest of doctors is helping patients. If a doctor is a consultant and he's working for a drug or device company, he's working for the shareholders."

As the controversy unfolded, Kuklo went on voluntary leave from his position at Washington University, which would not confirm last week whether it was conducting its own investigation.

He is currently on "inactive status" as a Medtronic consultant.

Janet Moore • 612-673-7752

Bloggers Note:

This is not the first case of ethics violations for Medtronic.
In September 2003 the U.S. Department of Justice notified Medtronic that its Sofamor Danek spinal surgery unit was the subject of an investigation into allegations of illegal kickbacks to physicians.

For a comprehensive history on the MedTronics Company, click on title above;

For Star Tribune article w/ place to comment, go to:

Sunday, July 12, 2009

Beckman / Oxford Group Exposed: Mother, et. al., Sues

A rusting wrought iron gate frames the Van Dusen Mansion at 1900 LaSalle Ave. Bo Beckman heads up The Oxford Private Client Group, an investment advisory firm that claims incredible performance numbers in its private accounts.

A trail of lawsuits - two by his mother - and inquiries dogged Bo Beckman.

By DAN BROWNING, Star Tribune

Last update: July 12, 2009 - 7:52 AM

Bo Beckman's website claims he is one of the best money managers in the country. His firm reports about $2 billion under management and claims an investment strategy that has outperformed the market every year since 2002.

"Discipline, honor, integrity and accountability -- those are the principals that have helped The Oxford Private Client Group attain outstanding long-term returns" with low risk, Beckman's Minneapolis-based firm says. His profile claimed that Morningstar, the firm best known for its mutual fund ratings, ranked him among the nation's top portfolio managers.

But Morningstar says it has never ranked Beckman, and court filings and regulatory documents raise questions about other Beckman claims.

A lawsuit filed last week by nine people who invested almost $5 million alleges Beckman is involved in a currency investment program that has drawn the attention of federal regulators and the FBI.

In federal court Friday, Oxford Private Capital attorney Edward Magarian tried to persuade a judge to lift an order temporarily freezing up to $5 million in the firm's accounts. He said the firm had nothing to do with the plaintiffs' investments.

Oxford Private Client Group, which provides money management services to individuals and institutions, "operates in an industry that takes years to build up a reputation and can take minutes to destroy it," Magarian said.

Beckman, 39, submitted a statement Friday in court. "I have worked hard to build a reputation and the inclusion in this lawsuit of the Oxford Private Client Group, which has no business or knowledge of Plaintiffs, has harmed my reputation and business," he said.

But the plaintiffs' attorney, John Harper III, argued that Beckman and his firm were deeply intertwined with the other defendants. Chief U.S. District Judge Michael Davis kept the freeze in place and scheduled a hearing on a preliminary injunction for July 24.

Magarian said Saturday that Beckman would not comment while the lawsuit was pending.

Carl Clarke, 62, a Minneapolis resident nearing retirement with $100,000 invested through another defendant in the case, Oxford Global Advisors, said the lawsuit worries him. Like Beckman's firm, Oxford Global has an office in the Van Dusen mansion in Minneapolis, a frequent site of investment seminars jointly hosted by both firms.

"That's all the money that I have," Clarke said. "I don't want to be left holding the bag."

Data appear murky

Beckman graduated from high school in Anoka, attended the U.S. Air Force Academy then, in 1991, transferred to the University of Vermont, where he earned a degree in economics in 2002. Records show he has been working in the investment industry since 1993.

A profile of Beckman in a British publication called FX-MM, said he had a "long and illustrious career," and cited the Morningstar ranking as evidence of his acumen. Beckman links to that article on his website.

Beckman's investing prowess is based on the performance of private or separate accounts he calls the "Oxford Core Portfolio."

Steve Deutsch, Morningstar's director of separate accounts, says the firm has never ranked Beckman or the Oxford Core Portfolio because Beckman has declined to provide proof of his major holdings.

In addition, the numbers Beckman's firm reports to Morningstar seem to conflict with numbers that it has provided to a Minneapolis accounting firm. Beckman's Morningstar data show $179 million in the Oxford Core Portfolio, with a total of $2 billion under management.

Data that Beckman's firm provided to Lurie, Besikof, Lapidus & Co. show that, through 2007, the Oxford Core Porfolio had just 39 clients with $37.9 million invested, and about $83.7 million under management companywide.

Marshall Lehman, a partner at Lurie Besikof who signed the report, said his firm wasn't hired to audit Oxford Private Client Group's books, but to ensure that it complied with a rigorous investment performance reporting standard. "If somebody says we got 6 percent, we do not audit to prove they got 6 percent," Lehman said.

Court and regulatory records are also at odds with Beckman's image of an investor with a long and successful track record.

Beckman's mother, Sandra Peterson, has sued him twice. In 2004, she charged him with fraud, misrepresentation and misappropriation in the handling of her late father's estate. She sued him again last July, charging that he had forged her signature on student loans and refused to pay the balance of $4,740 when debt collectors called her.

Beckman settled both cases. Peterson declined to comment.

Crow Wing County slapped Beckman with an $83,617 judgment in 2004 for failing to pay child and spousal support over several years. Beckman testified in that matter that he'd been living "beyond his means." He drove a rented BMW, patched together jobs after being "let go" from Merrill Lynch and Fisher Investments, and lived for a time off borrowed money.

The Financial Industry Regulatory Authority (FINRA) shows two complaints against Beckman. One was dismissed in 2007 as lacking merit. Merrill Lynch paid $99,556 in 2003 to settle the other complaint from an investor who accused Beckman of misrepresenting the terms of an annuity he had sold years earlier.

H&R Block Financial Advisors fired Beckman in April 2004 for allowing his securities registration to lapse. The firm won an award that required Beckman to repay an $80,000 advance. Beckman disputed the reasons for his firing, arguing that he hadn't met performance goals because H&R Block failed to provide enough support. He lost his appeal.

A 'shell game'?

Beckman joined a new firm, CMI Capital Management, in 2004, with investment advisor Chris Pettengill and Gene Walden, a freelance writer with a regular business column in the Star Tribune. Walden said he left the firm after a month. He began writing his Star Tribune column in 2005.

At CMI, former H&R Block financial adviser Eric Erickson persuaded Lorraine Anderson, a 74-year-old Roseville resident, to invest $225,000 in an annuity.

Anderson, who was recovering from cancer at the time and living on Social Security and a small pension, says she met Erickson at CMI's office in Maple Grove. He introduced her to Beckman, who did all the talking, she said.

In October 2005, Anderson got a letter from CMI's parent company saying it was severing ties with its Minnesota subsidiary. The letter identified Beckman as the "portfolio manager on her account" and said he "is no longer employed" by CMI.

Anderson grew frustrated when she learned that she couldn't get at the money in her annuity. She filed a complaint with FINRA, which in January fined Erickson $5,000 for selling an inappropriate investment and suspended him from working as an adviser for 15 days.

Erickson filed for Chapter 7 bankruptcy in April, listing Anderson as a potential creditor.

Christian Sande, an attorney representing Anderson, said he filed a FINRA compliant Saturday against Erickson, Beckman and Harbour Investments, a Wisconsin firm that processed the annuity sale. Sande said Beckman and others associated with the Oxford companies were operating a "shell game" to get around securities laws and avoid responsibility.

"While the amount of money at issue here is not Madoff-level, the losses to Ms. Anderson are virtually her entire nest egg."

Strategy questionable

After leaving CMI, Beckman and Erickson allied themselves with a group of business entities collectively referred to as The Oxford. Some pitch an investment strategy involving foreign currency exchange.

One strategy, offered by Oxford Global Partners among others, relies on banks that comply with Islamic law, called sharia. Oxford Global Partners' website links interested investors to to learn more about its strategy. The site says the no-risk currency arbitrage program targets annual returns of 10.5 percent. Though the S&P 500 is down 37 percent the past 10 years and 21.3 percent from 2002 through 2008, TheArbitrageRoom claims the hedging strategy has produced 72 months of gains.

Local financial advisers, chartered financial analysts, lawyers and an investment banker who reviewed TheArbitrageRoom program said it made no sense.

Brad Johnston, who runs a securities and advisory firm in Minneapolis, said he couldn't see how it would work even after attending an Oxford seminar and then discussing it at length with Oxford Global's chief investment officer, Trevor Cook.

Brian Dolan, chief currency strategist at, a division of GAIN Capital Group, said he's seen similar programs in recent years. "I don't want to call it a scam, but I don't think it holds water," said Dolan, author of "Currency Trading for Dummies."

The Ohio investors allege in their suit that they had been unable to withdraw their money. Beckman's firm was listed along with Cook, investment adviser Jerry Durand and others in what the suit calls the "confusingly intertwined" defendants.

Durand denied wrongdoing. Neither Beckman nor Cook responded to requests for comment.

Harper, the investors' attorney, displayed a list of seven accounts in court Friday where some of the investors' money was supposed to be held. The accounts contained just $290,651. "We do not know where the remaining funds are," he said, noting they amount to about $4.5 million.

Magarian said Beckman and his Oxford Private Client Group had been caught up in the case by association in an overly broad lawsuit.

But Harper displayed documents showing the intertwining relationships of some defendants, including some that showed Beckman as the registered agent for Oxford Global Advisors and The Oxford Private Client Group. He showed an article Beckman wrote that includes a section titled, "About Oxford," which listed both entities and a common e-mail address.

Peter Silverman, an Ohio attorney working with Harper, says the U.S. Attorney's Office told him it "is aware" of the allegations, and put him in touch with the FBI. Silverman said he's also been contacted by the SEC.

In a brief conversation before the lawsuit was filed, Beckman tried to distance himself from the currency trading program. He said although he did get "rebates" from it, he has no ownership of Oxford Global. He said he specializes in stocks. Beckman said he is moving out of the Van Dusen mansion, partly to "prevent this confusion going forward."

"This is like my third or fourth attempt to partner up with a firm and it never seems to work out," Beckman said.

Dan Browning • 612-673-4493

Saturday, July 11, 2009

Petters investor in Illinois charged in fraud

The Securities and Exchange Commission on Friday accused Illinois financier Greg Bell and his company, Lancelot Investment Management, with fraud.

By JACKIE CROSBY, Star Tribune

Last update: July 10, 2009 - 11:29 PM

In the latest twist in the federal racketeering case against Minnesota businessman Tom Petters, federal authorities say a hedge fund manager who claimed to be the biggest victim of Petters' alleged Ponzi scheme was actually a participant in it.

The Securities and Exchange Commission on Friday accused Illinois financier Greg Bell and his company, Lancelot Investment Management, with fraud. In charges filed in U.S. District Court in Minnesota, the SEC also moved to freeze Bell's assets, which include millions of dollars stashed in Swiss bank accounts in the names of Bell and his wife, Inna Goldman.

Separately, Bell was arrested Friday in Highland Park, Ill., and was taken to the Anoka County jail, according to Ron Peterson, a trustee for Lancelot's investors. A criminal complaint against Bell in U.S. District Court in Minneapolis was sealed, but Peterson said the fund manager could appear in court as early as Monday.

A phone number for Bell's business had been disconnected, and attempts to reach his attorneys were unsuccessful.

"Greg Bell portrayed himself as a helping hand to investors -- avidly protecting their funds and verifying the legitimacy of Petters' business," said Robert Khuzami, director of the SEC's Division of Enforcement in a statement. "But behind their backs, he was handing over billions of dollars of his clients' money to feed a fraud."

Investing in Petters

Lancelot, whose clients included individuals, retirement accounts, trusts and other hedge funds, invested $2.6 billion in the Petters group of companies. The SEC alleges that Bell and his company pocketed tens of millions of dollars in fraudulent fees.

The SEC complaint also charges Petters, whose business interests included Sun Country Airlines and Polaroid, with operating a Ponzi scheme. Petters is in jail fighting charges of mail and wire fraud, money laundering and obstruction of justice for masterminding what federal authorities say is a $3.55 billion scheme.

The SEC allegations get to questions about the case that many have asked since Petters was arrested in October 2008. Questions about how much investors knew about Petters' reported activities.

"People have long observed that, at a minimum, there had to be a colossal failure of due diligence on part of these hedge funds," said Doug Kelley, trustee for much of Petters' corporate estate. "And there are certain indicators of fraud that caused everyone to scrutinize them."

Bell had portrayed his Highland Park, Ill.-based company as one of Petters' victims. When Petters' companies collapsed, so did Lancelot Management. Bell sent an e-mail to investors on Oct. 21 after five funds and their subsidiaries filed for bankruptcy, writing: "We are disappointed that the massive fraud perpetrated by Petters Co. has now claimed our funds, and each of our investors, as its victims."

But the SEC alleges that Bell had clear indications that Petters was in trouble but helped prolong the scheme and made sure he got his money out ahead of the eventual collapse.

They say Petters' scheme began unraveling in February 2008, when he was months behind in repaying more than $130 million in notes. The SEC charges Bell with helping Petters concoct a series of bogus transactions designed to hide the fact that he was delinquent.

Bell and Lancelot Management sent money directly to Petters' company under the pretense that the money for investments in a new note, according to the SEC. Petters' employees often returned the money to Bell and Lancelot Management on the same day.

At the same time, Bell is accused of funneling more than $40 million from the Lancelot Funds in the months before Petters' scheme collapsed. Bell put about $30 million of that into accounts and revocable trusts, the SEC said.

Peterson, a Chicago-based attorney appointed as trustee for those Lancelot Management investors, said he had been conducting his own investigation of Bell, suspecting that "he wasn't totally without knowledge." He said the SEC charges were both good news and bad news.

"It adds a defense to the people who we're suing that didn't exist before," said Peterson. "On the other hand, as a result of this, if the government can plea-bargain with Bell in which he fully cooperates, that'll be a great boon."

Jackie Crosby • 612-673-7335


Thu Jul 9, 2009 11:12 pm (PDT)

From: Mark R. Elsis |

Just 96 Months To Save World, Says Charles
The Price Of Capitalism And Consumerism
Is Just Too High, He Tells Industrialists
by Robert Verkaik

Click on title above for full article;

Manulife Financial MFC Securities Stock Fraud

Company: Manulife Financial
Ticker Symbol: MFC
Class Period: Mar-28-08 to Jun-22-09
Date Filed: Jul-10-09
Lead Plaintiff Deadline: Sep-8-09
Court: Southern District of New York

A class action lawsuit has been filed in the United States District Court for the Southern District of New York on behalf of a class consisting of all persons or entities who purchased the securities of Manulife Financial Corporation ("Manulife" or the "Company") between March 28, 2008 and June 22, 2009 (the "Class Period"). Manulife trades as "MFC" on the TSX, NYSE and PSE, and under "945" on the SEHK.

The Complaint charges Manulife and certain of the Company's executive officers with violations of federal securities laws.

On June 19, 2009, after the market closed, Manulife announced that it received an enforcement notice from the Ontario Securities Commission ("OSC") relating to Manulife's disclosure of risks concerning its variable annuity guarantee and segregated funds business. The OSC notice stated that Manulife failed to meet its continuous disclosure obligations related to its exposure to market price risk in its variable annuity guarantee and Segregated Fund Contracts business. Segregated Fund Contracts are insurance contracts also known as individual variable annuities that offer death benefits and maturity guarantees.

The complaint alleges that Manulife made false and misleading statements regarding its ability to manage and control risk. In fact, contrary to the Company's own risk management strategy, Manulife applied no material hedging strategy to manage risk particularly during an economic downturn. The complaint further alleges that notwithstanding its risk management strategy Manulife built up a massive stock portfolio, which it chose to leave unhedged. This resulted in a huge decline in the funds available to guaranty the Separate Fund Contract obligations, forcing the Company to raise billions in capital to make up for a widening shortfall in the amount it had promised to pay customers decades from now.

Investors responded to the OSC's announcement when trading markets reopened on June 22, 2009. The Company's shares dropped 12% to close at $17.67 on an unusually high trading volume of almost 8 million shares.

If you acquired the securities of the defendants during the Class Period you may, no later than the Lead Plaintiff Deadline shown above, request that the Court appoint you as lead plaintiff through counsel of your choice. You may also choose to remain an absent class member. A lead plaintiff must meet certain requirements.

Manulife Financial MFC Securities Fraud
Click on title above for Free Case evaluation;

Friday, July 10, 2009

BP shuts alternative energy HQ

• 'Beyond Petroleum' boast in doubt as clean energy boss quits
• Renewables budget will be reduced by up to £550m this year

BP has shut down its alternative energy headquarters in London, accepted the resignation of its clean energy boss and imposed budget cuts in moves likely to be seen by environmental critics as further signs of the oil group moving "back to petroleum".

But Tony Hayward, the group's chief executive, said BP remained as committed as ever to exploring new energy sources and the non-oil division would benefit from the extra focus of being brought back in house.

BP Alternative Energy was given its own headquarters in County Hall opposite the Houses of Parliament two years ago and its managing director, Vivienne Cox, oversaw a small division of 80 staff concentrating on wind and solar power.

But the 49-year-old Cox – BP's most senior female executive, who previously ran renewables as part of a larger gas and power division now dismantled by Hayward – is standing down tomorrow.

This comes alongside huge cuts in the alternative energy budget – from $1.4bn (£850m) last year to between $500m and $1bn this year, although spending is still roughly in line with original plans to invest $8bn by 2015.

The move back to BP's corporate headquarters at St James's Square in London's West End made sense, particularly when the group was sitting on spare office space due to earlier cutbacks, said Hayward.

"We are going through a major restructuring and bringing the alternative energy business headquarters into the head office seems a good idea to me.

"It saves money and brings it closer to home ... you could almost see it as a reinforcement [of our commitment to the business]," he said.

Cox was stepping down to spend more time with her children, Hayward added. "I know you would love to make a story out of all this," he said, "but it's quite hard work."

The reason for the departure of Cox is variously said by industry insiders to be caused by frustration over the business being downgraded in importance or because she really does intend to stay at home more with her young children. Cox had already reduced her working week down to three days and had publicly admitted the difficulty of combining different roles.

She will be replaced by another woman, her former deputy Katrina Landis, but the moves will worry those campaigning for more women in business, especially as Linda Cook, Shell's most senior female executive, has recently left her job too.

BP has gradually given up on plans to enter the UK wind industry and concentrated all its turbine activities on the US, where it can win tax breaks and get cheaper and easier access to land.

In April the company closed a range of solar power manufacturing plants in Spain and the US with the loss of 620 jobs and Hayward has publicly questioned whether solar would ever become competitive with fossil fuels, something that goes against the current thinking inside the renewables sector.

Hayward has also moved BP into more controversial oil areas, such as Canada's tar sands, creating an impression that he has given up on the objectives of his predecessor, Lord Browne, to take the company "Beyond Petroleum".

Goldman Sachs and the Cap-and-Trade Jackpot

Posted: 10 Jul 2009 07:12 AM PDT
By the Jr. Deputy Accountant;

We have discussed this previously but now that cap and trade is on tap to become the most ridiculous tax in American history (not to mention costly and unfounded), it is all that much more important to take a look at who stands to gain in this game of carbon tax lies and global warming scares.

Via Green Hell:

Senators Dianne Feinstein (D-CA) and Olympia Snow (R-ME) have introduced a bill to make the Commodity Futures Trading Commission the sole regulator of the carbon market created by cap-and-trade legislation.

So does this mean that freebooting Goldman Sachs could be the de facto regulator of the carbon market?

Consider that:

The current chairman of the CFTC is Gary Gensler, formerly of Goldman Sachs.
Goldman Sachs is a part owner of the exchanges where carbon allowances would be traded.

Goldman Sachs has spent millions of dollars lobbying for cap-and-trade legislation in anticipation of making billions of dollars at the expense taxpayers and consumers.
Goldman has a special exemption from the CFTC to exceed the trading limits normally placed on commodity speculators. Not only was this exemption secret for 17 years, the CFTC recently had to ask Goldman for permission to release the letter to Congress!

Goldman Sachs employees are heavy contributors to the Democratic Party giving it over $4.4. million in the last election. Barack Obama received more than $997,000, Feinstein received $24,250, and Snowe received $17,000 from Goldman. All-in-all, this could result in a pretty decent return-on-investment for Goldman.

As the global warming bubble inflates and then bursts, will Goldman Sachs self-regulate all the way to the bank… making record profits at the expense and misery of taxpayers and consumers?

Now the original piece (I'm assuming here that it is a conservative blog because, well, let's face it, the conservatives are pissed over this made up energy mess as we well should be) identifies Goldman Sachs as significant contributors to the Democratic Party but we must remember here that - in Goldman's own words - GS believes in a "perfect hedge" and has of course demonstrated up to this point that it is willing to do just about anything to achieve that. Let's short some Treasurys and the dollar while we are at it why don't we?

Therefore Goldman's political contributions are essentially a moot point unless one looks at said "perfect hedge" and understands that GS doesn't care either way who is in power as long as the Goldman alum keep getting hand-picked for government posts. I do believe, however, that Goldman favored Obama only slightly over McCain for the simple fact that no Republican in his right mind would buy this cap-and-trade bull like our friend Barry O and his wild band of merry financial crack addicts have.

Hook, line, and sinker. And now Goldman is about to not only capitalize on our misfortune but essentially oversee the inflation of yet another bubble, this time one entirely disconnected from reality.

Carbon trading? Oh come on. And you thought CDSs were bad.

Ameriprise paying $17.3 million to settle SEC charges of not disclosing certain payments

By MARCY GORDON , Associated Press

Last update: July 10, 2009 - 11:17 AM

WASHINGTON - Ameriprise Financial Services Inc. on Friday agreed to pay more than $17 million to settle federal regulators' charges that it failed to disclose nearly $31 million received for selling certain investments to its brokerage customers.

Ameriprise did not admit or deny wrongdoing in its settlement with the Securities and Exchange Commission. The Minneapolis-based company — which provides financial planning, asset management and insurance with a major focus on baby boomers who have $100,000 to $1 million in assets — did agree to refrain from future violations of the securities laws and to pay $17.3 million in civil fines and restitution.

According to the SEC, Ameriprise did not disclose compensation for selling certain real estate investment trusts to customers between 2000 and May 2004. REITs own and often operate income-producing real estate or related assets such as office buildings, retail stores and hotels.

The SEC alleged in an administrative proceeding that Ameriprise failed to disclose to investors the roughly $30.8 million it received in connection with sales of the REIT shares and the potential conflicts of interest the payments created.

"Few things are more important to investors than getting unbiased advice from their financial advisers," SEC Enforcement Director Robert Khuzami said in a statement. "Ameriprise customers were not informed about the incentives its brokers had to sell these investments."

The SEC also said that Ameriprise sold more than $100 million of shares of one REIT that weren't registered with the agency, a violation of securities laws.

"This is a very old case that hinged on issues of revenue-sharing disclosure that ended in early 2004," Ameriprise spokesman Paul Johnson said. "We long ago expanded our disclosures to ensure that our clients receive the information from us directly as well as through the prospectus of the product issuer."

Ameriprise was spun off from American Express Co. in 2005.

Thursday, July 9, 2009

Attorney Wants Phantom Fees Returned to Madoff "Survivors"

July 3, 2009. By Brenda Craig

Miami, FL: Lawyers at Dimond, Kaplan & Rothstein have seen a lot of hurt investors over the years—many of them victims of ponzi schemes less elaborate than the one Bernie Madoff ran, but ponzi schemes all the same. “The moral compass of people who commit those kinds of crimes is something that my partners and I will never understand,” says Jeffrey Kaplan. “You either have a moral compass, or you don’t. We’ll never be able to understand what goes through the head of someone who can commit such a heinous fraud.”

As Madoff begins his 150-year prison sentence, “Madoff survivors” as Kaplan prefers to describe his clients who had their life savings stolen, are looking to recover some of those lost assets.

Kaplan and his firm believe they have found a way to get at least some of the lost assets returned. He has recently filed a class action suit against Standard Chartered Bank International (Americas) Limited and Standard Chartered Private Bank on behalf of a couple who live in Mexico and other customers of the bank who invested in the Fairfield Sentry Hedge Fund.

Standard Chartered charged customers a quarterly fee to invest in the Fairfield Fund, which it is now known, turned out to be little more than a feeder fund for Madoff’s crazy pyramid scheme.

Although it is regular practice to charge clients a fee based on the amount in their portfolio, Kaplan argues these funds were essentially worthless. That means the fees being charged, based on the value of their investments, were at the very least too high.

The suit, which has yet to be certified, asks that plaintiffs be refunded millions in fees charged by Standard Chartered alleging that the bank was unjustly enriched by what he calls “phantom fees”.

“It is unjust to have been enriched by these fees when the fees were charged – at rates much higher than should have been charged,” Kaplan says. “You (the bank) pocketed the money.”

In addition, Kaplan argues, the bank was in breach of contract. “You take a fee based on a million dollars when in fact it was only worth $10,000 dollars, is that fair? Ha! No!” says Kaplan. “It is pretty clear that the value of the Madoff funds were unfunded for years.”

The firm where Kaplan is a name partner specializes in recovering losses for investors who have been victimized by the negligence or misconduct of a stockbroker or a brokerage firm.

Jeffrey Kaplan is a graduate of the Miami School of Law (1994) and holds a Bachelor of Science in Business Administration from Northeastern University in Boston (1990). Kaplan is an AV-rated lawyer and was named as a “Top Lawyer” by the South Florida Legal Guide.

Goldman Sachs Computers Sacked by Ex-Sachs Employee

Ex-Goldman Sachs exec arrested for stealing code

July 9, 2009

By Judi Hasson for Fierce CIO: The Executive IT Management Briefing Newsletter;

A former Goldman Sachs executive dipped into the company's data base and allegedly stole quite a few secrets. He allegedly took propriety computer programs that the financial giant uses to make rapid trades in the financial markets. It's just another example of how data is not really safe, regardless of how many firewalls and trip wires you've put up to protect your systems.

Sergey Aleynikov was arrested last Friday as he got off a plane at Newark International Airport. He pleaded not guilty to charges of theft of trade secrets and transporting them abroad. Aleynikov joined Goldman in May 2007 and was a vice president for equity strategy, but announced his resignation after little more than two years.

Before he left, court documents alleged, he used his desktop computer at Goldman's New York offices to upload a stream of code to a website hosted by a server based in Germany. For anyone attempting to pull this kind of stunt, be forewarned. The bank noticed a surge of data leaving its servers and his activities were recorded by the computer system. This was a smart move for Goldman Sachs, and a necessity for any company housing large amounts of sensitive data.

For more on this modern-day theft, click on title above to read full article in the New York Times;

Wednesday, July 8, 2009

Swiss Tell U.S. "F"-Off

Pic and story thanks to Freedoms Phoenix;

Swiss ready to seize UBS data to stifle Washington

By BALZ BRUPPACHER, Associated Press Writer

Wednesday, July 8, 2009

(07-08) 15:28 PDT BERN, Switzerland (AP) --

Switzerland's government said Wednesday it would forbid the Swiss bank UBS AG from complying with any court-ordered transfer of data on tens of thousands of American clients to the U.S. government, and would consider seizing documents to prevent that.

The statement was the strongest yet by Swiss authorities locked in a battle with the U.S. Justice Department over the identities of more than 50,000 American clients at UBS.

The case in the federal district court in Miami has become a focal point of Washington's efforts to crack down on tax evasion and the foreign banks that help wealthy Americans send money overseas. But UBS and the Swiss government say handing over the names would violate Swiss law and subject bank employees to criminal prosecution in Switzerland.

"Swiss law prohibits UBS from complying with a possible order by the court in Miami to hand over the client information," the Swiss Justice Ministry said in a statement, describing its latest filing with the Miami court.

It said the bank would not be in a position to comply, anyhow, since "all the necessary measures should be taken to prevent UBS from handing over the information on the 52,000 account holders demanded in the U.S. civil proceeding."

Ministry spokesman Folco Galli told The Associated Press the government decided last month that it would even seize the documents from UBS to prevent the transfer.

The Swiss filing prompted U.S. District Judge Alan S. Gold to order a response by Sunday from the administration of President Barack Obama focusing on what the U.S. government would do if the Swiss refused to comply with a potential order that the names be turned over.

"The United States shall address ... how far it intends to proceed by way of request for enforcement, up through and including receivership and/or seizure of UBS' assets within the United States," Gold wrote in the order Wednesday.

There was no immediate comment from the U.S. Justice Department.

Last month, the Justice Department said UBS "systematically and deliberately" violated U.S. law by dispatching private bankers to recruit wealthy Americans interested in evading taxes. It urged Gold to hold UBS accountable for conducting years of illegal business on U.S. soil — business it claimed had earned the bank more than $100 million in fees but cost the U.S. hundreds of millions of dollars in unpaid taxes.

Gold has set a July 13 hearing on whether to enforce what are known as "John Doe summonses" used by the Internal Revenue Service to seek information about U.S. taxpayers.

Swiss President Hans-Rudolf Merz has referred to the possibility of an out-of-court settlement, but U.S. authorities have pressed on with the case, threatening to further strain U.S.-Swiss relations.

UBS previously reached a deferred prosecution agreement with the Justice Department in which it agreed to disclose the identities of up to 300 U.S. clients and to pay $780 million to the U.S. government. In that deal, UBS admitted regularly violating U.S. law through its client recruitment methods, use of sham offshore entities and filing of false paperwork. Subsequently, the U.S. decided to pursue a much broader group.

Nicolas Michellod, a senior analyst with Celent, a Boston-based financial research and consulting firm, said the U.S. and Switzerland were using legal agreements to try and gain the upper hand when they negotiate a settlement. The case, however, is only about money, he said.

"As UBS has already admitted its fault, there can be only one solution," Michellod said. "The Swiss bank will have to pay a fine or compensation of an amount corresponding to taxes that are still due to the U.S. government."

The Swiss government's extraordinary step is not without precedent. In the 1980s, it confiscated business files linked to commodities trader Marc Rich to ensure that they weren't passed on to the United States.

Rich fled from the United States to Switzerland in 1983 after he was indicted by a U.S. federal grand jury on more than 50 counts of fraud, racketeering, trading with Iran during the U.S. Embassy hostage crisis and evading more than $48 million in income taxes — crimes that could have imprisoned him for more than 300 years.

He was controversially pardoned in 2001 by Bill Clinton just hours before he left office as U.S. president.


Associated Press writers Bradley S. Klapper in Geneva and Curt Anderson in Miami contributed to this report.