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Wednesday, May 23, 2012
Pension corp sues Dewey & LeBoeuf law firm
Global shares fall as Greek turmoil saps risk appetiteReuters
Asian shares fell and the dollar rose broadly on Wednesday after efforts to form a new government in Greece collapsed, …
Tuesday, May 22, 2012
Repsol sues Argentina over giant YPF seizure
By Carlos Ruano and Jonathan Stempel
MADRID/NEW YORK (Reuters) - Repsol YPF SA (REP.MC), the large Spanish oil and gas company, on Tuesday sued Argentina for seizing control of formerly state-owned energy company YPF SA (YPFD.BA), in which Repsol held a majority stake.
The lawsuit, filed in the U.S. District Court in Manhattan, is part of Repsol's effort to recover more than $10 billion from Argentina over the seizure in a case that could drag on in arbitration and the courts for years.
Argentina also faces tens of billions of dollars of other U.S. litigation, largely tied to its sovereign debt default one decade ago.
Representatives for the government were not immediately available late Tuesday for comment.
In the complaint, Repsol and the money manager Texas Yale Capital Corp, which holds YPF American depositary receipts, claimed that Argentina reneged on its promise to tender for Class D shares of YPF if it ever took back control of the company.
Argentine president Cristina Fernandez announced the planned seizure of a 51 percent stake in YPF from Repsol on April 16, contending that the Spanish company did not invest enough and allowed oil production and exploration to decline.
Argentine lawmakers approved the seizure earlier this month.
Repsol's total stake prior to the seizure was 57 percent. YPF shares have fallen 50 percent this year, and 31 percent since the seizure was announced, causing losses for other investors.
"Argentina's failure to launch a tender offer despite having retaken control over YPF constitutes a breach of its contractual obligations to other shareholders," the complaint said.
Repsol and Texas Yale seek compensatory damages, a requirement that Argentina launch a tender offer, and other remedies.
Texas Yale is based in Spicewood, Texas.
Earlier Tuesday, Repsol said it had told Fernandez of a dispute under the Treaty for Investment Promotion and Protection agreed between Spain and Argentina -- a necessary step for arbitration at the World Bank's International Center for Settlement of Investment Disputes.
Six months must pass before ICSID will consider arbitration in any dispute, to allow negotiations between the two parties.
Repsol Chairman Antonio Brufau has said his company's claim would be based on an estimated $18 billion total value for YPF.
Spanish government and European Union officials have said they will act against Argentina over the expropriation.
Analysts, however, have said the options are limited. They have noted that Argentina has ignored past ICSID fines and that the country's capacity to settle is unclear because it remains shut out of world capital markets. Argentina may also argue that the YPF seizure was in the public interest.
Even if Repsol were to prevail at the ICSID, lawyers familiar with similar cases said it was unlikely it could recover a payout. About one-fourth of global cases handled by the ICSID have been against Argentina.
"The ICSID takes years in its rulings, but we are talking about the most important case in its history," said one lawyer, who asked not to be named. "I wouldn't be surprised if there was interest in speeding up the process although it is going to be long and involved."
In March, U.S. President Barack Obama said he would suspend trade benefits for Argentina because it had failed to pay more than $300 million in compensation awards in two disputes.
Repsol shares closed down 1.34 percent at 13.62 euros.
The case is Repsol YPF SA et al v. Argentina, U.S. District Court, Southern District of New York, No. 12-03877.
($1 = 0.785 euro)
(Reporting By Carlos Ruano in Madrid and Jonathan Stempel in New York; Additional reporting by Hilary Burke in Buenos Aires; Writing by Sarah Morris and Jonathan Stempel; Editing by Dan Lalor, Jane Merriman and Jim Marshall)
France's Hollande's plane struck by lightning en route to Germany
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Senate leaders move toward vote on Fed nominees
By Thomas Ferraro and Donna Smith
WASHINGTON (Reuters) - President Barack Obama's two stalled nominees for the Federal Reserve are likely to clear a Senate procedural hurdle on Thursday, paving the way for anticipated confirmation, the chamber's leaders said on Tuesday.
Democratic and Republican aides said they expect Senate approval of the pair as early as Thursday, shortly after the procedural vote, which would take the Fed's Washington-based board up to its full seven-person strength for the first time since April 2006.
"We've been waiting months and months. It's important we have a fully functioning Fed," Senate Democratic leader Harry Reid told reporters.
Since officials on the central bank's board are usually aligned with the chairman on matters of policy, Senate approval of the nominees - Harvard economist Jeremy Stein and investment banker Jerome Powell - could strengthen Ben Bernanke's hand if he decides the economy needs more support.
Last month, Bernanke left the door open to further steps to buttress growth but said Fed policy appeared "more or less in the right place." The Fed has held overnight interest rates near zero since late 2008 and has bought $2.3 trillion in government and mortgage-related bonds to push other borrowing costs down.
Republican Senator David Vitter objected to both nominees, saying he worried they would provide "rubber stamps" for Bernanke's policies, and he called for a full debate.
Vitter's move had raised the specter the Senate might abandon the nominees, leaving a decision on filling out the Fed board to whoever wins the presidential election in November.
But Reid, with Republican support, moved to confirm and seat them. He scheduled a procedural vote for Thursday and expressed hope the nominees that Obama put forward in December would secure the 60 votes needed to move toward final approval.
Democrats hold the Senate, 53-47, meaning they need at least a few Republicans votes to reach the needed 60.
"My impression is that there is bipartisan support," Senate Republican Leader Mitch McConnell told reporters.
A senior Democratic aide described the two as a "balanced pair," saying that while Obama formally nominated both of them, Powell had been "hand-picked by Senator McConnell."
A Democratic aide said a final confirmation vote would likely come on Thursday, with both Democrats and Republicans agreeing to only a brief debate.
However, Republicans could push a vote into Friday or early next week if they want more time to discuss the nominees.
Stein, who holds a doctorate in economics from the Massachusetts Institute of Technology, is a Harvard economist who served briefly as a senior adviser to Treasury Secretary Timothy Geithner and as a staff member for Obama's National Economic Council. He specializes in stock price behavior, corporate investment and financing decisions, risk management and business capital allocation.
Powell is a lawyer who brings Wall Street experience, having worked at Bankers Trust, the Carlyle Group and Dillon Read after serving as a Treasury undersecretary in the administration of former President George H. W. Bush. His knowledge of financial markets could help fill the gap left by Kevin Warsh, a former Morgan Stanley executive who left the Fed a year ago.
By choosing a pair of nominees with Democratic and Republican credentials, Obama had hoped to win quick approval.
Fed board terms run for 14 years but Stein and Powell have been nominated to fill out unexpired terms. Powell's term would end on January 31, 2014, and Stein's would end on January 31, 2018.
(Reporting by Tom Ferraro and Donna Smith; Editing by Anthony Boadle, James Dalgleish and Dan Grebler)
Lawsuit against Le-Nature's law firm reinstated
PITTSBURGH (AP) -- A Pennsylvania appeals court has reinstated a malpractice claim against one of Pittsburgh's leading law firms.
The Superior Court ruling Monday involves law firm K & L Gates and Le-Nature's, a bankrupt soft drink maker that was based in Latrobe.
In the lawsuit a bankruptcy court trustee had accused K & L Gates of professional negligence for its role in an investigation that failed to uncover massive fraud at Le-Nature's.
Last year the founder of Le-Nature's was sentenced to 20 years in federal prison for an accounting fraud scheme that cost investors $684 million. Other company executives and associates also received stiff sentences.
A K & L Gates spokesman didn't immediately respond to messages seeking comment.
Jamie Dimon passes shareholder vote on JP Morgan role
The FBI and the US Department of Justice are examining whether there was any criminal wrongdoing in losses that have damaged the reputation that JP Morgan and Mr Dimon have built for risk management.
America's largest bank by assets has been battling to contain the fallout from the losses, which Mr Dimon described as "self-inflicted".
Yesterday, at the bank's annual shareholder meeting in Tampa, Florida, the banker admitted: "It should never have happened. I can't justify it."
The 56 year-old, one of the most powerful bankers on Wall Street, said he would consider clawing back the bonuses of any executives found to be responsible.
The losses have already cost Ina Drew, the head of the bank's chief investment office, her job and more are expected to leave the bank.
Mr Dimon yesterday refused to say how long its own internal investigation will take, but said the bank would "do the right thing".
In a further blow to Mr Dimon, whom President Barack Obama once described as his "favourite banker", 40pc of JP Morgan's shareholders voted to split his dual role as chairman and chief executive.
The crisis is the biggest that Mr Dimon has faced since shepherding JP Morgan through the financial crisis. Just a month ago, he dismissed reports about large trades the bank was making in an obscure corner of the derivatives market as nothing more than a "tempest in a teapot". Yesterday, he promised shareholders that "we will do the right thing" in investigating the losses.
But there was little sign of the controversy abating yesterday. John Liu, who runs New York City's pension fund, yesterday joined the call for bonuses of those executives responsible for the losses to be taken back.
The disclosure of the losses in the credit derivatives market has reignited the debate in the US over whether more regulation is needed to ensure the safety and soundness of the financial system.
Mr Dimon has been one of the most outspoken critics of the wave of regulation since the financial crisis, but insisted to shareholders that he was in favour of "sound and strong" regulation.
JP Morgan, which employs thousands of people in the City of London, has warned that the $2bn losses could deepen over the course of the year.
While some shareholders at the Florida AGM offered support to Mr Dimon, others were alarmed and baffled at the scale of the losses that the bank said it ran up in six weeks. "I'd like to have a clearer sense of the risk that I'm taking when I invest in JP Morgan," said Eric Vlahov, a shareholder. "Right now you don't."
Although the proposal to appoint an independent chairman failed to win the support of the majority of shareholders, the size of the vote in favour may have surprised the bank's board.
Most votes are likely to have been submitted before the trading losses were disclosed last Thursday. However, 91.5pc of shareholders backed the pay of Mr Dimon, which totalled $23m last year.
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