The Federal Trade Commission (FTC) announced on January 30 that it reached a settlement with two companies engaged in subprime auto lending. The two car title lenders – First American Title Lending and Finance Select – were alleged to have misled borrowers in their advertisements by failing to disclose the actual terms and costs of loans.
HSBC Struggling to Overhaul its Anti Money-Laundering System
Despite spending hundreds of millions of dollars to overhaul its anti-money-laundering system, the message to HSBC from U.S. officials is clear: it’s still not enough.
Amazon’s Tax Scheme in Luxembourg
Amazon, a Seattle-based company, negotiated and struck a deal with Luxembourg in 2003 that effectively granted the company exemption from all tax payments in the entirety of Europe. The deal, still in force, limits Amazon’s tax liabilities only to Luxembourg.
Obama’s Corporate Tax Reform Proposal
President Obama recently announced his latest budget proposal. He suggested a one-time levy of 14% as a transition tax on the earnings American firms have accumulated abroad, a recurring tax on future foreign earnings of 19%, and finally, to lower the corporate tax rate to 28%.
Yahoo to Distribute Entire Stake in Alibaba to Shareholders Via Spinoff
In response to increasing pressure from activists, Yahoo announced a tax-free plan on January 27 by which it will distribute its entire stake in the Chinese e-commerce giant Alibaba to its shareholders. Comprised of 384 million shares valued at $40 billion (closing price on January 26), Yahoo’s 15.4% ownership share of Alibaba accounts for about 85% of Yahoo’s market value.
Sysco Offers Divesture Package to Appease FTC in US Foods Merger
Sysco, the nation’s largest food distribution company, has offered to divest 11 US Foods distribution centers with $4.6 billion in annual revenue, in order to gain approval from the Federal Trade Commission (FTC) and move forward in its $3.5 billion merger with chief rival US Foods. The sale of the 11 facilities to a far smaller rival, Performance Food Group, is contingent on the consummation of the proposed merger. Despite the divesture, Sysco estimates that it will still be able to achieve net annual synergies of at least $600 million in four years and consequently provide new value to its customers, including lower costs.
AT&T to Acquire Nextel Mexico Through Bankruptcy Proceedings
AT&T’s goal of creating an all-encompassing North American Mobile Service just took another large step forward. The second-largest mobile-phone carrier in the United States recently agreed to buy Nextel Mexico for $1.875bn, less any outstanding debt of the business, in a transaction under Section 363 of the U.S. Bankruptcy Code.
Consolidation in the Reinsurance Industry
Reinsurance is used by insurance companies to transfer some of their risk to other parties. The company willing to accept the risk is known as the reinsurer and the company transferring the risk is known as the “ceding company”. The reinsurer agrees to indemnify the ceding company against some of the primary insurance risks underwritten by the ceding company under one or more insurance contracts. The ceding company pays a premium to the reinsurer and in return it will receive a payment if specified event occurs. Examples include extensive damage from flooding and earthquakes.
Implications of a Stronger US Dollar
The US dollar is experiencing steady growth: not only has the dollar steadily improved over the last four years, but it rose thirteen percent in 2014 and an additional five percent in the first part of 2015. This recent strength can be attributed to the implementation of quantitative easing by the European Central Bank (“ECB”) and aggressive stimuli from central banks around the world including the ECB and the Bank of Japan.
UBS Dark Pool Leads to $14.5 Million in Settlement Paid to SEC
Dark pools are private exchanges or forums for trading securities that primarily facilitate large block trades by institutional investors. Dark pools offer the efficiency (in the form of liquidity) of trading on a public exchange, but allow the transactions to remain secret—neither the price nor the identity of the firm is disclosed—until the trade is filled. The lack of transparency in dark pool trades allows large trades to be made by institutional investors without influencing the market and adversely affecting the price. Private banks and brokerages generally operate dark pools, which are subject to more relaxed public disclosure requirements than public exchanges. But that is not to say that dark pools are not subject to federal securities laws, as evidenced by the SEC investigation of and charges brought against Swiss banking-giant UBS.