Monday, 31 October 2011

An Insight on Insider Stock Trades

When Raj Rajaratnam left his homeland in the Indian Ocean Island of Sri Lanka many years ago, he couldn't have dreamed of being the owner of his own hedge fund many years later. But that is just what he became-the founder of one of Wall Street's biggest funds, The Galleon Group.
Neither could have Mr.Rajaratnam dreamed of being accused thereafter of some of the biggest exchange market crimes-insider trading. While his trial for the same has been a sensation, the lack of clear comprehension on how insider stock trades work has not. Furthermore, there's a thin line between what is legal insider trading and what is not.
Individuals with company information that is not public may be in possession of a most valuable weapon in the finance markets, even unwittingly.
These individuals include chief executives, officers, key employees, directors, large stockholders and their immediate families are the most likely to bandy important company details while unknowingly committing punishable financial crimes.
Insider information is information that is not within public domain and could materially affect the market price of a particular stock.
Following from this definition, insider stock trades are buys and sells that are made based on this kind of information. The key individuals mentioned above would be in breach of their fiduciary duty to the company if they engaged in this kind of trade.
An example of an illegal insider trade would be one where the wife of a Chief Financial Officer, with prior knowledge of the company's impending filing for bankruptcy, sells the couple's joint portfolio of the same company.
On the other hand, if you are on the train home and overhear a company CEO discussing with a fellow passenger about the certain takeover of his company you would not be liable for the financial crime since the information did not come directly from the CEO.
Nejun Seyhan is an insider trading expert from the University of Michigan and has done a number of studies concerning the issue. During one of the studies, he found that when key personnel engaged in insider stock trades, their company's stock price outperformed the rest of the industry by 8.3% in the following 12 months. If they sold the shares, the stock underperformed the market by 5.4%. Insiders typically trade on their company's stock when events such as takeovers, mergers, acquisitions are imminent. They also engage in insider stock trades when they think that they stock is undervalued.
To avoid charges of illegal insider stock trading, an insider has to report their trades within 2 business days to the SEC ( Securities and Exchange Commission) .This also applies to all shareholders who have more than 10% of the stock of the company as they are also considered as insiders.
Back to Rajaratnam-his defence team is now alleging that he only made $7 million from his trades, down from the $70 m that the prosecutors claim. And for this they want him jailed for between 19.5 and 24.5 years. Tough luck.

November 15 Launch for Amazon Kindle Fire 7

Amazon's Kindle Fire tablet launch in late September marks the beginning of a new battle for dominance in the tablet market. It's no secret that Apple is the runaway leader in this market with the iPad having a headstart in what has proved to be a lucrative market for popular gadgets. Young and hippy professionals are the target for this market and they have proven to be the driving force for tablets.
However, with Apple enjoying the lion's share of the market and the rest of the competition seemingly resigned to playing second fiddle, there has been a lack of new entrants with the result of shortage in innovativeness and creativity. Amazon's entrance into the fray is meant to fix just that.
With a cost plan that is more than half the price of Apple's iPad, Amazon's strategy is bound to slice of the tablet market for the Seattle, Washington-based firm. The 7 inch tablet brings Amazon's digital content into a simple gadget format-a strategy that the iPad's competitors cannot match. Nokia, Samsung and Motorola are all in the tablet market but Apple is currently leading the way with 80% of the market.
Amazon is a market leader in e-commerce and CEO, Jeff Bezos hopes to harness this competitive advantage for the Kindle Fire.
At $199, Fire is bound to burn off some part of the competition and especially the iPad which has been retailing at $499 in the US. Pre-orders for the November 15 US shipments are currently ongoing. There's still no word on the worldwide release.
On the technical side, the Kindle Fire runs on a modified version of Google Inc.'s Android operating system-developed without Google's blessing but a good improvement nonetheless. This enables a friendly and easy-to-use interface that ties the device to its large content of videos, books, magazines and the most recent introduction-music.
Amazon's digital content currently boasts of 18 million movies, books, shows and magazines. The view is enhanced by the 16 million colors interface in high resolution that brings out the verve in the glossy magazines and books.
Over 100,000 movies and shows are available for downloading and streaming. In addition, Amazon Prime members are allowed a free 1-month trial to stream 10000 movies and TV shows.
Kindle Fire is run by a state-of-the-art dual core processor that enables enhanced performance allowing the user to stream, download and browse while at the same time enjoying a story on an e-book.
Amazon Silk, the web browser, uses cloud computing to enable enhanced computing power to deliver movies and other content to the device with super speeds utilizing Amazon's worldwide system of high-speed servers.
The only key missing features in the gadget are the camera, microphone and 3G capability but the gadget has been rated to be a prelude to a more sophisticated tablet to be released by Amazon in 2012 to counter the iPad on more fronts.
Sarah Rotman Epps, a financial analyst from Massachusetts-based firm, Forrester Research says Amazon is way ahead of competitors in terms of cloud services and that's what customers want more that the hardware.

Wednesday, 19 October 2011

Gold erases intraday losses

Wed, Oct 19 2011, 13:46 GMT | (Córdoba) - The yellow metal cut intraday losses and continued to move away its weekly lows after data showed US consumer prices came in line with expectations in September, while housing starts jumped above forecast last month.

Gold climbed near $14 to $1,660 an ounce during the American trade. The precious metal is currently trading at $1,655 virtually unchanged since opening and up 1.8% from its weekly low hit on Tuesday. The price action follows a loss of 1.4% for gold the previous day.

According to Anton Kolganov, analyst at ForexMillion, the metal is trading along a sideways trading pattern. "A downtrend will start as soon as the pair drops below support level 1651, which will be followed by moving down to support level 1637. An uptrend will start from support level 1637 and as soon, as the pair rises above resistance level 1662, which will be followed by moving up to resistance level 1676".

Anadarko to Pay BP $4 Billion to Settle Gulf Spill Claims

By Joseph Woelfel
LONDON (TheStreet) -- Anadarko Petroleum agreed to pay BP $4 billion to settle all claims from the Gulf of Mexico oil spill in April 2010.

Under the agreement, Anadarko, which held a 25% stake in the damaged Macondo well, will transfer the stake to BP.

BP, in a statement Monday, said it would apply the payment to its $20 billion fund that was established to meet individual, business and government claims.

Under the settlement, Anadarko has the opportunity to recover 12.5%, or up to $1 billion, from future recoveries from third parties or insurance proceeds exceeding $1.5 billion, BP said.
"This settlement represents a positive resolution of a significant uncertainty and it resolves the issues among all the leaseholders of the Macondo well," said Bob Dudley, BP CEO, in a statement. "There is clear progress with parties stepping forward to meet their obligations and help fund the economic and environmental restoration of the Gulf. It's time for the contractors, including Transocean and Halliburton, to do the same."

BP is still involved in suits with Transocean and Halliburton over the Gulf of Mexico disaster. Last month, BP announced a settlement with MOEX Offshore 2007 LLC, which owned 10% of the well.

Groupon planning IPO launch for next week: sources

By Alistair Barr and Clare Baldwin

SAN FRANCISCO/NEW YORK | Wed Oct 19, 2011 9:35am EDT

(Reuters) - Groupon Inc is pushing ahead with plans to go public in the face of a volatile equity market, a recent executive departure and questions about its accounting and financial disclosures, sources said on Tuesday.

Groupon, the largest daily deal company, is planning to launch a roadshow for its initial public offering next week, on Monday or Tuesday, three sources familiar with the situation said.

The IPO is expected to value the Chicago-based company at over $10 billion, likely in the range of $11 billion to $12 billion, two of the sources said.

The sources declined to be named because they were not authorized to speak publicly on the matter.

Michael Buckley, a spokesman for Groupon, declined to comment.

In June, Groupon filed for an IPO of up to $750 million. It is one of the most hotly anticipated deals in the United States IPO pipeline.

The offering was initially expected to value Groupon at more than $20 billion, but the stock market slumped at the end of the summer, disrupting most IPO plans and cutting the value of the few that did get done. Groupon has never disclosed in its IPO filings how the company would be valued in the IPO.

Groupon has faced criticism for some of its accounting metrics. The company took a more conservative accounting approach twice, under pressure from regulators and investors, but it is still losing money, partly because of its marketing spending, and faces questions about the sustainability of its business model.

An internal memo from Chief Executive Andrew Mason disclosing financial information about the company that was not in its IPO filings was leaked to the press in August. This put Groupon under greater regulatory scrutiny.

In late September, Groupon's chief operating officer left to join Google Inc.

"The Groupon story is no longer so compelling," said Scott Sweet of IPO Boutique, a research firm focused on initial public offerings. He added that a valuation above $10 billion was "enormous."

"They have always thought that the company is the only one out there doing what it does and that this warrants a high valuation," Sweet said. "But they are in denial."

Underwriters on the IPO are being led by Morgan Stanley, Goldman Sachs & Co and Credit Suisse.

News that Groupon was considering launching its IPO roadshow next week was reported earlier on Tuesday by the AllThingsD blog.

(Reporting by Clare Baldwin in New York and Alistair Barr in San Francisco; editing by Andre Grenon)

Wednesday, 12 October 2011

Forex: AUD/USD gains 2 percent on the day (Córdoba) - The Australian Dollar gathered renewed momentum after a consolidation phase just below 1.0140 and stretched to fresh highs versus the Greenback during the American session, helped by higher stocks and commodity prices.

AUD/USD broke above previous daily highs and extended gains toward a fresh peak of 1.0176 before easing slightly. At time of writing, the Aussie is quoting around 1.0150/60, printing a 2.1% gain on Wednesday.

"While above 1.0100 we see good chances of a further rise to 1.0220-50 in the coming sessions. The pair is looking strong now and a pull back below 1.0100 could find Support near 1.0000", said the Kshitij Consultancy Services Team. "A strong break below 1.0000 will have to be seen now to bring back the downside pressure on the pair once again".

Thursday, 6 October 2011

Steve Jobs "may never be equaled"

By Poornima Gupta and Peter Henderson

SAN FRANCISCO | Thu Oct 6, 2011 8:58am EDT

SAN FRANCISCO (Reuters) - Passionate, prickly, and deemed irreplaceable by many Apple fans and investors, Steve Jobs made a life defying conventions and expectations.

And despite years of poor health, his death on Wednesday at the age of 56 prompted a global gasp as many people remembered how much he had done to transform the worlds of computing, music and mobile phones, changing the way people communicate and access information and entertainment.

"The world rarely sees someone who has had the profound impact Steve has had, the effects of which will be felt for many generations to come," said Microsoft co-founder and long-time rival Bill Gates.

"For those of us lucky enough to get to work with him, it's been an insanely great honor."

The founder of Apple Inc died on Wednesday in Palo Alto, surrounded by his family. The circumstances of his passing were unclear, but Jobs has had a long battle with cancer and other health issues.

Jobs' family thanked many for their prayers during the last year of Steves illness.

A college dropout, Jobs floated through India in search of spiritual guidance prior to founding Apple - a name he suggested to his friend and co-founder Steve Wozniak after a visit to a commune in Oregon he referred to as an "apple orchard."

With his passion for minimalist design and marketing genius, Jobs changed the course of personal computing during two stints at Apple and then brought a revolution to the mobile market.

The iconic iPod, the iPhone - dubbed the "Jesus phone" for its quasi-religious following - and the iPad are the creation of a man who was known for his near-obsessive control of the product development process.

"Most mere mortals cannot understand a person like Steve Jobs," said bestselling author and venture capitalist Guy Kawasaki, a former Apple employee, in a recent interview. He considers Jobs "the greatest CEO in the history of man", adding that he just had "a different operating system."

Charismatic, visionary, ruthless, perfectionist, dictator - these are some of the words that people have used to describe Jobs, who may have been the biggest dreamer the technology world has ever known, but also was a hard-edged businessman and negotiator through and through.

"Steve was the best of the best. Like Mozart and Picasso, he may never be equaled," said Marc Andreessen, venture capitalist and co-founder of Netscape Communications.

Microsoft's Gates had called Jobs the most inspiring person in the tech industry and President Barack Obama held him up as the embodiment of the American Dream.

It's hard to imagine a bigger success story than Steve Jobs, but rejection, failure and bad fate were part and parcel of who he was. Jobs was given away at birth, driven out of Apple in the mid-80s and struck with cancer when he finally had regained the top of the mountain.

He resigned as CEO of Apple Inc on August 24 - saying he could no longer fulfill the duties - and briefly served as chairman before his death.

Jobs grew up with an adopted family in Silicon Valley, which was turning from orchards to homes for workers at Lockheed and other defense and technology companies.

Electronics friend Bill Fernandez introduced him to boy engineer Wozniak, and the two Steves began a friendship that eventually bred Apple Computer.

"Woz is a brilliant engineer, but he is not really an entrepreneur, and that's where Jobs came in," recently remembered Fernandez, who was the first employee at Apple.

Wozniak earlier this year said that his goal was only to design hardware and he had no interest in running Apple.

"Steve Jobs' role was defined -- you've got to learn to be an executive in every division of the company so you can be the world's most important person some day. That was his goal," joked Wozniak, who is still listed as an employee, even though he has not worked at Apple for years.


Jobs created Apple twice - once when he founded it and the second time after a return credited with saving the company, which now vies with Exxon Mobil as the most valuable publicly traded corporation in the United States.

Every day to him was "a new adventure in the company," Jay Elliot, a former senior vice president at Apple who worked very closely with Jobs in the eighties, said earlier this year, adding that he was "almost like a child" when it came to his inquisitiveness.

He was highly intolerant of company politics and bureaucracy, Elliot noted.

But the inspiring Jobs came with a lot of hard edges, oftentimes alienating colleagues and early investors with his my-way-or-the-highway dictums and plans that were generally ahead of their time.

Elliot was a witness to the acrimony between Jobs and former Apple Chief Executive John Sculley who often clashed on ideas, products and the direction of the company.

The dispute came to a head at Apple's first major sales meeting in Hawaii in 1985 where the two "just blew up against each other," Elliot said.

Jobs left soon after, saying he was fired.

"It was awful-tasting medicine, but I guess the patient needed it. Sometimes life's gonna hit you in the head with a brick. Don't lose faith," Jobs told a Stanford graduating class in 2005.

He returned to Apple about a decade after he left, working as a consultant. Soon he was running it, in what has been called Jobs' second act.

Jobs reinvented the technology world four or five times, first with the Apple II, a beautiful personal computer in the 1970s; then in the 1980s with the Macintosh, driven by a mouse and presenting a clean screen that made computing inviting; the ubiquitous iPod debuted in 2001, the iPhone in 2007 and in 2010 the iPad, which a year after it was introduced outsold the Mac.


How did he do it? Design fans, Apple employees and Jobs acquaintances credit a natural design-sense drive to simplify. Jobs' return to Apple was a study in reduction.

Ed Niehaus, who was wooed and hired by Jobs to do public relations for resurgent Apple, remembers an elevator ride that everyone in Silicon Valley has heard of, but seemed more myth than reality. It was soon after Jobs' triumphant return and he was axing product plans -- and people.

Niehaus recalled: "I once rode down an elevator, not that many floors. We got in the elevator and the next floor a young woman got in, and I could see her go, 'oops, wrong elevator.' And Steve said, 'Hi, who are you?' and introduces himself to her - 'I'm Steve Jobs' and turned on the charm and said, 'What do you do?' and all this sort of thing. And the door of the elevator opens at the bottom, and he says, 'We are not going to need you.' And we walk away."

Apple was bloated, Niehaus added, and Jobs was bringing back simplicity and focus.

"He always believed the most important decisions you make are not the things you do - but the things that you decide not to do. He's a minimalist," former CEO Sculley - who was recruited by Jobs, watched him build the Mac, and then helped throw out the Apple founder in a boardroom battle - told the CultofMac news website in 2010.

A few steps in the Apple design process have leaked out over the years, despite the obsessive secrecy that is part of the company culture. An Apple engineer outlined a long development process at a conference blogged by Businessweek in 2008.

A new product or feature begins with 10 ideas -- good ideas, no also-rans, which are presented as "pixel-perfect" mockups. Apple culls the 10 to three, which are tried out for months more, before a final star is chosen.

Meanwhile, the design team meets for two types of weekly meetings -- one to brainstorm with no limits, and one to focus on getting the product out the door, BusinessWeek described.

When Steve Jobs weighed in, it was with a simple set of verdicts: "insanely great," "really, really really great," and "shit,", Niehaus recalled.

"Basically Steve tells you exactly what he wants and you just go build it," said one former iPhone engineer, who declined to give his name.

He remembers working on one project for two months. "Steve said 'What is this shit? Why are you wasting my time?'" he recalled.

Being chewed up and spat out by Jobs is an experience most Apple employees who have come in contact with Jobs can relate to. And Jobs was known to like people who stood up to him.

"I never asked you to start, so why should I ask you to stop?" Jobs told another former Apple employee, who wanted to know whether he should continue to work on a project that was being questioned by the forceful CEO.

Jobs liked to push. From the very start, people told tales of him putting his - often dirty - feet on the table in meetings. Others tell of Jobs putting down their company, making them defend themselves in interviews.

"He was clearly looking for someone who could stand up to him," said another former member of the top team. He remembers Jobs and Tim Cook, who is taking over as CEO, as the "metronome" of the company, with vastly different personal styles and exactly the same "insane" attention to detail.

Jobs, in fact, reveled in details, many a time irking everyone around him with his obsessiveness.

Apple's first CEO Michael Scott has said that Jobs spent weeks contemplating how rounded the edges of the Apple II case should be.

"He put white earbuds in the ears of everyone on the planet, and shut us all in to our own little pods of experience," said Niehaus, who is in awe of Jobs' taste and talent.

Jobs, given a Gulfstream jet by his appreciative board, probably didn't fly commercial in years, and anyone who sits down with an iPod next to someone they don't want to acknowledge gets a little bit of that experience.

He understood envy "as well as anybody on the planet" and carried it around with him, triple parking his car because he could, said Niehaus, adding that part of what he sold was envy.


Even Jobs' appearance simplified over the years. When he returned to Apple after his decade away, he wore fancy white shirts and vests and even a pin stripe suit to introduce new products.

The black mock turtleneck and jeans that became the defining Jobs outfit showed up at more comfortable settings, when Jobs wooed developers, in the late 1990s. But he pulled the iPod out of a jeans pocket to introduce the music player in 2001. From then on, he barely seemed to take off the outfit.

The jeans and running shoes flashed under his academic gown when he gave the Stanford commencement speech in 2005, and he wore a black mock turtleneck sitting next to President Obama at a 2011 dinner with Silicon Valley titans. On Obama's other side was Facebook founder Mark Zuckerberg, who wore a jacket to the event.

Jobs himself described his world as very simple.

"For the past 33 years I have looked in the mirror every morning and asked myself, 'if today were the last day of my life, would I want to do what I am about to do today?' And whenever the answer has been 'no' for too many days in a row, I know I need to change something," he told Stanford University students in the soul-baring commencement address.

"Remembering that you are going to die is the best way I know to avoid the trap of thinking you have something to lose. You are already naked. There is no reason not to follow your heart," he said.

That kind of earnest, almost naive hope, combined with ruthless dismissal of whatever missed his lofty standards, were a potent mix for those around him.

His approval was "an addictive drug," said Niehaus. "I think that most people would knock themselves out to have that experience again, once they've had it. It's that defining. It is a really tremendous experience."


Jobs had been on leave three times since 2004, and he clearly thought about an Apple without him. Jobs had a liver transplant and a rare form of pancreatic cancer.

His own mortality was a major driver in his life and work.

"Remembering that I'll be dead soon is the most important tool I've ever encountered to help me make the big choices in life," Jobs said in the commencement speech. "Because almost everything -- all external expectations, all pride, all fear of embarrassment or failure -- these things just fall away in the face of death, leaving only what is truly important."

Jobs and the Apple board had a succession plan -- put Cook in charge -- and he has left a well-respected team. Jobs put extraordinary effort into finding people who he said are 10, 20, 50 times better than average, he told Time magazine, adding that there were no prima donnas when great people got together.

"Having a close circle of people was really important to him," Elliot said.

Many Apple watchers and investors say that the company has a deep bench, led by Cook. But for others, that just doesn't ring true.

The former engineer whose months of works was dismissed by Jobs with a single curse doesn't see much strength in the ranks, saying that it was always a case of "Steve is the visionary," and if something happened it was always a case of "Let's ask Steve".

Apple itself marked the death of Jobs by placing a simple black-and-white picture of the founder on the front page of its Web site, with his name and the dates 1955-2011.

(Editing by Tiffany Wu, Ted Kerr and Martin Howell