The stories you want. The opinions that matter.
No, thanks
Tag: barclays
Jeb Bush Quits Firm That Profited From Obamacare

Jeb Bush Quits Firm That Profited From Obamacare

By Joseph Tanfani, Tribune Washington Bureau (TNS)

WASHINGTON — When Jeb Bush completed two terms as governor of Florida in 2007, he reported his net worth was $1.3 million, about $700,000 less than when he took office.

Today, nearly eight years later, he is a wealthy man. He has plunged into business and entrepreneurial ventures involving consulting, the paid lecture circuit and energy development. He has developed real estate, advised international investment banks and joined high-paying corporate boards.

But as he considers running for president in 2016, Bush has begun to unwind some of his financial affairs, apparently to avoid the kind of criticism that hobbled fellow Republican Mitt Romney’s unsuccessful candidacy for the White House in 2012.

Bush is quitting Tenet Healthcare Corp., a company that has profited from Obamacare, and is ending a consulting contract with Barclays Bank to focus on his political future. Aides say he also has stopped giving highly-paid speeches to focus on traveling the nation, meeting with potential donors and testing what a friend calls a “visionary” brand of campaigning.

But Bush’s business record, enmeshed in international finance and some troubled former ventures in South Florida, could end up complicating his return to politics and his hopes to follow his father, George H.W. Bush, and his older brother, George W. Bush, into the Oval Office.

Last year, he took a step into the rarefied world of private equity and offshore investments, joining with former banking executives and a Chinese airline company to make bets on natural gas exploration and shipping. One of the funds was set up in the United Kingdom, a structure that allows the company to shield overseas investors from U.S. taxes.

During the 2012 race, Romney was attacked by Democrats for his lucrative work at Bain Capital, a pioneering venture capital company that bought scores of troubled companies, took over their management and sometimes laid off employees while collecting huge fees and payouts.

But Bush and his aides argue that his investments and entrepreneurial ventures are different because he didn’t taking control of companies and restructure them.

“These are all growth investments that the governor has worked on,” said Bush’s spokeswoman, Kristy Campbell.

Bush’s latest undertaking is as a partner in three privately-held funds that have raised a total of $127 million for investments in domestic and foreign companies. Bill Parish, an investment adviser in Portland, Ore., said the funds are fairly small in the private equity world.

But in the heat of a political campaign, Parish said, opaque investment vehicles, especially involving overseas accounts, inevitably will raise questions about the identities of his investors and the nature of their business.

“If he’s smart, he’s going to take care of it and shut them down,” Parish said.

Campbell said the 61-year-old former governor is “reviewing all his engagements and his business commitments” now that he’s begun to focus on a potential race. “That’s a natural next step,” she said.

Born and raised in Texas, Bush moved in 1981 to Miami, where his wife’s family lived, and went to work for a wealthy Cuban-born businessman, Armando Codina. Both had worked on George H.W. Bush’s failed 1980 re-election campaign, and Codina ultimately made the younger Bush a partner in a South Florida real estate development firm.

In 1986, Bush got into politics when he was named Florida’s commerce secretary. He quit in 1988 to help his father, then the vice president, win the White House. In 1994, the younger Bush lost his first race for the governor’s mansion but won four years later and ultimately became Florida’s first two-term Republican governor.

After leaving the governor’s office in 2007, he set up Jeb Bush and Associates, a management consulting firm. His son, Jeb Bush Jr., is managing partner. Bush has said the firm’s clients range from Fortune 500 companies to small tech startups, but Campbell declined to discuss the company’s business, or identify its clients.

That same year, Bush also was hired as an adviser to Lehman Brothers, the New York investment bank and financial services firm. When Lehman collapsed in bankruptcy in 2008 amid the global financial crisis, Bush shifted to Barclays, the London-based multinational banking and financial services giant that bought Lehman Brothers’ North American divisions.

He got involved in a venture that provides disaster response services. He and two partners also set up another company, Maghicle Driverless, that is trying to develop self-driving vehicles for passengers and cargo.

“He was grabbing at a lot of things to make money quickly,” said Susan MacManus, a political science professor at the University of South Florida.

Now Bush has begun to pull back.

Campbell, the Bush spokeswoman, said he will leave Barclays by Dec. 31, to focus on a possible presidential run. She said his work for Lehman Brothers and Barclays was mostly offering clients “his perspective on the impact of economic trends, regulations and policies.”

On Wednesday, Bush also resigned from the board of directors of Tenet Healthcare Corp., effective Dec. 31, according to a corporate filing. The Dallas-based company actively supported the 2010 Affordable Care Act, and its revenue has risen because of it — an issue that could hurt Bush in Republican primaries.

Bush earned cash and stock awards worth nearly $300,000 from Tenet in 2013, according to corporate filings. He also sold Tenet stock worth $1.1 million that year, the records show.

“Mr. Bush is not resigning on account of any disagreement with Tenet,” the company said.

A seat on the board of directors of a Florida-based timberland company, Rayonier, paid him about $200,000 last year, according to the company’s proxy statement.

Some of Bush’s business ventures have gone badly.

In 2007, Bush joined InnoVida, a Miami manufacturer of composite building materials, winning a seat on the board and a $15,000-a-month consulting contract. At the time, company president Claudio Osorio was a big player in Miami’s glitzy social and political world, hosting fundraisers at his Star Island mansion for Democratic politicians like Hillary Clinton and in 2008, for then-Sen. Barack Obama.

In March 2010, InnoVida obtained a $10-million federal loan to build homes and a factory in earthquake-wrecked Haiti. But Osorio scammed millions from that loan and from investors, according to a federal indictment filed in Miami.

A Securities and Exchange Commission complaint in 2012 said Osorio had recruited Bush and other high-profile figures to lend “an air of legitimacy” to InnoVida and help him raise money. In 2013, Osorio pleaded guilty to fraud charges and was sentenced to 12 years in prison.

Bush was paid a total of $468,901 before leaving InnoVida in September 2010. A court-approved settlement agreement in the company’s bankruptcy case says he provided “substantial assistance” to investigations into the company’s finances, and he agreed to pay back $270,000 to the bankruptcy court.

His foray into private equity began last year with three banking industry veterans: Amar Bajpai, formerly of Lehman Brothers; Ross Rodrigues, a former Credit Suisse analyst and hedge fund principal, and David Savett, a former energy trader at Credit Suisse. Details were first reported by Bloomberg News.

Their firm, Britton Hill Holdings, named after the highest point in Florida, raised $40.4 million from investors and put it in Inflection Energy, a Denver-based company that has been investing in hydraulic fracking natural gas wells in the Marcellus shale region in Pennsylvania and New York.

Bush and his partners also set up two other funds.

BH Logistics raised $26 million and invested it in Dorian LPG Ltd., a shipping company incorporated last year in the Marshall Islands to transport propane gas. BH Global Aviation, based in the United Kingdom., raised $60.8 million. That money was invested in Hawker Pacific, an aviation sales and services firm based in Hong Kong that mainly does business in Asia and Australia.

Hawker Pacific has no operations in the United States, and the investment fund was set up overseas to protect the company from having to comply with U.S. business regulations, Campbell said.

Nearly all of the money for Dorian LPG Ltd. and BH Global Aviation came from investors outside the United States, Security and Exchange Commission filings show.

The biggest investor was a Chinese firm called HNA Group, a conglomerate that includes an airline and other businesses. In a press release, HNA said its investment in Dorian was part of a plan to build a distribution network in China to “take advantage of the significant opportunities for growth” in propane.

Al Cardenas, former Republican Party chairman in Florida and a longtime friend of Bush, said he doesn’t think the former governor’s involvement with international finance will hurt his appeal should he run for president.

“I think he’s always been an honest man in business and in politics,” Cardenas said. “He’s comfortable with his actions and what he’s done. All the public wants to know is that you behaved honorably and that you care for them.”

MacManus, the political science professor, isn’t so sure. Some of Bush’s business dealings might draw heat during a campaign, particularly from unbridled outside political groups.

“The thing with investments, there’s always something to criticize,” she said.

Photo: Gage Skidmore via Flickr

Six Major Banks Fined $4.3 Billion For Attempted Currency Manipulation

Six Major Banks Fined $4.3 Billion For Attempted Currency Manipulation

By Jim Puzzanghera and Dean Starkman, Los Angeles Times (MCT)

This story has been updated.

WASHINGTON — In another black eye for the financial industry, U.S., British and Swiss regulators on Wednesday fined JPMorgan Chase & Co., Citigroup, Bank of America Corp. and three other global banks a total of about $4.3 billion to settle investigations into attempted manipulation of foreign exchange rates.

The fines, including the largest ever issued by Britain’s Financial Conduct Authority, are the latest multibillion-dollar hit to the industry in the wake of alleged misconduct in the 2008 financial crisis and attempts to rig major international markets.

“The setting of a benchmark rate is not simply another opportunity for banks to earn a profit,” said Aitan Goelman, director of enforcement at the U.S. Commodity Futures Trading Commission.

“Countless individuals and companies around the world rely on these rates to settle financial contracts, and this reliance is premised on faith in the fundamental integrity of these benchmarks,” he said.

“The market only works if people have confidence that the process of setting these benchmarks is fair, not corrupted by manipulation by some of the biggest banks in the world,” Goelman said.

The CFTC settlement included a total of $1.48 billion in fines: $310 million each for JPMorgan Chase Bank and Citibank; $290 million each for the Royal Bank of Scotland and UBS; and $275 million for HSBC Bank.

British regulators hit the five firms with a combined $1.7 billion in fines, and the Swiss Financial Market Supervisory Authority levied a $138 million fine against UBS.

Several hours after those fines were announced, the U.S. Office of the Comptroller of the Currency said it fined JPMorgan and Citibank $350 million each and also fined Bank of America $250 million for “unsafe or unsound practices” related to their foreign exchange businesses.

The settlements end investigation into attempted manipulation of benchmark foreign exchange rates to benefit the positions of traders at the banks, regulators said.

Citigroup said Wednesday it had “acted quickly upon becoming aware of issues in our foreign exchange business” and has changed its systems and monitoring “to better guard against improper behavior.”

Barclays, another global bank under investigation in the foreign exchange probe, declined to take part in the settlement. Britain’s Financial Conduct Authority said it was continuing to investigate the bank.

About $5.3 trillion changes hands each day in the foreign exchange market, one of the world’s largest, with about 40 percent of the trades taking place in London, the agency said.

From Jan. 1, 2008, until Oct. 15, 2013, “ineffective controls at the banks” allowed their traders to put the firms’ financial interests ahead of clients’ in the market, the Financial Conduct Authority said.

The traders shared confidential information about clients’ activities and colluded with traders at other banks to manipulate foreign exchange rates.

“Traders at different banks formed tightknit groups in which information was shared about client activity, including using code names to identify clients without naming them,” the FCA said. These groups were described as, for example, “‘the players,” “the 3 musketeers,” “1 team, 1 dream,” “a co-operative” and “the A-team,” the agency said.

Some of the manipulation occurred at the same time regulators were investigating possible manipulation of another benchmark, the London interbank offered rate, also known as Libor, which helps set interest rates around the world.

“Firms could have been in no doubt, especially after Libor, that failing to take steps to tackle the consequences of a free-for-all culture on their trading floors was unacceptable,” said Tracey McDermott, the Financial Conduct Authority’s director of enforcement and financial crime.

“If they fail to do so, they will continue to face significant regulatory and reputational costs,” she said.

With the latest action, the CFTC said it has fined banks more than $3.34 billion since 2012 for attempted manipulation of global financial benchmarks.

London-based Barclays said Wednesday it had “engaged constructively” with regulators, including the FCA and the CFTC, and had “considered a settlement on closely similar terms to those announced the morning.”

“However, after discussions with other regulators and authorities, we have concluded that it is in the interests of the company to seek a more general coordinated settlement,” the bank said.

A person familiar with the matter said Barclays was holding out because it could not reach agreement with New York’s Department of Financial Services, headed by Benjamin Lawsky, who had set tougher conditions for a settlement, including a demand to install monitors within the bank.

The New York regulator, which has jurisdiction over foreign banks charted in New York State, is probing a dozen banks in its foreign exchange probe, including Deutsche Bank.

U.S. Suit Alleges 12 Banks Colluded In Huge Forex Market

U.S. Suit Alleges 12 Banks Colluded In Huge Forex Market

New York (AFP) — A dozen banking giants have been sued in New York for allegedly fixing global foreign exchange rates in the latest ripple to accompany government probes of the huge market.

The defendants in the class-action lawsuit, which include BNP Paribas and JPMorgan Chase, shared confidential information during private online chat sessions to collude and fix trades on the key WM/Reuters foreign exchange rate, which is set each afternoon in London, according to a complaint filed Monday.

The conspiracy “impacted the pricing of trillions of dollars’ worth of FX Instruments, inflicting severe financial harm on Plaintiffs and members of the Class,” the complaint said.

The complaint did not quantify the losses, calling the impact of the rate-fixing “presently undetermined.”

The other defendants in the case are: Bank of America, Barclays, Citigroup, Credit Suisse, Deutsche Bank, Goldman Sachs, HSBC, Morgan Stanley, RBS, and UBS.

A dozen plaintiffs are in the class-action suit, which amends and expands a November 2013 suit against seven banks filed by Haverhill Retirement System of Haverhill, Massachusetts.

The 11 plaintiffs that joined the original lawsuit Monday include Aureus Currency Fund, a California investment fund, the City of Philadelphia and the Oklahoma Firefights Pension and Retirement System.

Defendants in the case are “dominant” dealers in foreign exchange, with about 84 percent of market share with transactions worth some $5.3 trillion per day.

The complaint called foreign exchange “one of the world’s least regulated financial markets” and rated it an “opaque” system because most trading takes place away from exchanges.

The suit comes as regulators in the United States, the European Union, Britain, and other venues launch probes of foreign exchange market manipulation.

Banks have suspended or fired more than 30 employees in the wake of these probes, according to the complaint.

Photo by bruceg1001/Flickr

Scandal-Hit Barclays Bank Axes Jobs, Raises Bonuses

Scandal-Hit Barclays Bank Axes Jobs, Raises Bonuses

London (AFP) – Barclays will axe thousands of jobs and raise bonuses for its investment bankers this year, the under-fire British lender announced on Tuesday after posting a return to annual profits.

Chief executive Antony Jenkins, who has himself declined a huge bonus as Barclays is probed along with other banks over possible manipulation of foreign exchange trading, said that between 10,000 and 12,000 jobs would go worldwide this year.

Jenkins told a conference call with media that about 7,000 jobs would go in Britain, out of a global workforce of about 139,000.

Barclays, which is seeking to repair a reputation badly damaged by its role in the Libor interest rate-rigging scandal of 2012, increased the money available for staff bonuses by almost 10 percent to £2.378 billion ($3.907 billion, 2.858 billion euros).

While net profits rose, the investment bank unit reported a loss in the fourth quarter, while pre-tax earnings slumped as Barclays factored in restructuring costs and litigation charges.

Along with other British lenders, Barclays has been hit by massive compensation payouts to customers who were mis-sold insurance policies.

“Despite challenging conditions, our underlying performance has been resilient and momentum is building, as evidenced by the results,” Jenkins said in comments accompanying the results.

Defending its bonus payouts, the bank said it was being competitive in “ensuring that Barclays has the right people in the right roles”.

Barclays, which is Britain’s second biggest bank after HSBC, announced on Tuesday that a strong performance by its retail arm helped lift group profit after tax to £540 million last year, compared with a net loss of £624 million in 2012.

Barclays shares slumped 1.91 percent to 269.75 pence on London’s benchmark FTSE 100 index, which was showing a gain of 0.79 percent at 6,643.34 points in morning deals.

“Underneath the Barclays bonnet, performances are mixed,” said Richard Hunter, head of equities at Hargreaves Lansdown Stockbrokers.

“More positively, the capital cushion is now looking robust, the credit impairment position has improved further, the bank continues to pay a dividend unlike some of its rivals… and certain pockets of the business such as UK Retail made a robust contribution.”

Retail banking veteran Jenkins replaced Bob Diamond, who stepped down as chief executive of Barclays in July 2012 after the bank was fined £290 million by British and U.S. regulators over the attempted manipulation of the key interbank Libor interest rate.

U.S. national Diamond was renowned for overseeing a culture of high bonuses at Barclays’ investment banking division, which he headed before taking over as chief executive.

Barclays took the unusual step of posting its headline and adjusted pre-tax profits on Monday, a day earlier than scheduled, after figures were leaked to media.

While statutory pre-tax profits surged last year, adjusted earnings dropped and missed the bank’s own forecast amid the group’s cost-cutting.

Reported profit before tax hit £2.9 billion in 2013, while adjusted pre-tax profit, which the bank said took into account exceptional charges, slumped to £5.2 billion.

Barclays has set aside an additional £331 million in provisions to cover litigation and regulatory charges.

And last year it was forced into a huge £5.8-billion shares sale, or rights issue, to meet regulatory demands to strengthen its capital buffers.

“Barclays tried to stagger the bad news by unexpectedly revealing the headline (pre-tax profit) figure yesterday, but announcing jobs cuts and increasing the bonus pool has backfired on the bank’s share price,” said David Madden, market analyst at traders IG.

In a fresh blow, Britain’s data watchdog on Sunday launched a probe after confidential files relating to Barclays customers were allegedly stolen then sold on to rogue brokers.

AFP Photo/Carl Court