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Small-Business Guide: Seeking Capital, Some Companies Turn to ‘Do-It-Yourself I.P.O.’s’

July 31, 2013 by

Mr. Ahmadi , the founder of People’s Grocery, a nonprofit focused on food justice issues, hoped to open a commercial grocery store that would offer fresh produce in West Oakland, Calif., a so-called food desert, meaning its 25,000 residents have few healthy food options. A public-private loan fund, California FreshWorks Fund, had issued a letter of intent to lend Mr. Ahmadi two-thirds of the $3.6 million he needed to open the People’s Community Market. There was just one condition — he would first have to raise the remaining $1.2 million from investors. Mr. Ahmadi spent a year pitching to angels, social investors and private equity firms, but most were looking for double-digit returns and a clear exit strategy.

Mr. Ahmadi’s lawyer, however, suggested an alternative, something known as a direct public offering, or D.P.O., which is a way to raise money from the public without the inconvenience and expense of going public on a stock exchange. The term direct public offering does not have a precise legal definition, but it is used to describe a public securities offering similar to an initial public offering, or I.P.O., but with one big difference: There is no need to hire an investment bank. In fact, D.P.O.’s are known as “do-it-yourself I.P.O.’s.”

Although obscure, they have been around for decades. Most famously, in 1984, two young entrepreneurs raised a first round of capital for their fledgling ice cream company in an intrastate offering. With the slogan “Get a scoop of the action,” Ben Jerry’s raised $750,000 from 1,800 ice-cream-loving Vermonters, allowing them to build a new plant and expand, and setting the stage for a $5.8 million initial offering the following year. Annie’s Homegrown, the maker of packaged macaroni and cheese, raised $3 million in 1996 through a direct offering, advertising the offering in coupons tucked into each box. And more recently, tight credit markets and the rise of social media have fueled interest in the alternative financing system, especially among companies that have enthusiastic customers who can be converted into shareholders.

In a typical initial public offering, a Wall Street underwriter markets shares to wealthy clients and institutional investors, taking a cut of the proceeds. In a direct offering, shares are marketed directly by the issuing company, typically to customers, supporters and, these days, social media followers. The companies may advertise the offering freely and accept funds from an unlimited number of unaccredited, or nonwealthy, investors. And the companies are not subject to the quarterly reporting requirements and comprehensive registration process that come with an initial offering.

On the downside, business owners must be prepared to invest a substantial amount of time and effort in the process and to deal with hundreds or even thousands of small investors. And most direct offerings require assistance from a knowledgeable lawyer. Not surprisingly, however, cutting out the middleman and streamlining the process lowers the cost considerably. A direct offering might cost around $25,000 in legal fees, while a formal initial public offering can cost $1 million or more. That makes direct offerings an increasingly attractive option for companies that need a substantial amount of capital — typically between $500,000 and $5 million — but not enough to justify the cost of an initial public offering.

With traditional sources of capital still out of reach for many small businesses, and with the future of investment-style crowdfunding uncertain, direct offerings can offer a compelling alternative. In recent months, companies including pickle makers, department stores, food cooperatives and service firms have found a ready market. “There’s a huge trend of people wanting to invest locally, and people are looking for ways to make that happen,” said Jenny Kassan, president of Cutting Edge Capital, an Oakland, Calif., consulting firm that has helped seven companies raise money this way since 2010, including People’s Community Market. California has some 150 to 200 direct offerings annually, Ms. Kassan said.

Direct offerings were a hot topic at a Business Alliance for Local Living Economies conference held in Buffalo in June. “I’m seeing a huge disconnect between the investment products available and the desires and values of investors,” said Michelle Long, executive director for the organization, a network of 30,000 entrepreneurs and community leaders. “D.P.O.’s represent an opportunity to put your money into something real and tangible.”

Companies typically qualify for a direct offering under one of three federal securities exemptions, each with its own parameters and considerations. The exemptions include Regulation D Rule 504, for offerings up to $1 million; Regulation A, for offerings up to $5 million (scheduled to be raised to $50 million under the JOBS Act); and the intrastate exemption, for companies that do business primarily in a single state and limit the sale of securities to investors in that state. The offerings are filed with state securities regulators and are subject only to state regulations, which can vary greatly. (In addition to these three main exemptions, there are also exemptions for nonprofits and farmer cooperatives.)

After about eight months of preparatory work, People’s Community Market introduced its direct offering campaign last November, offering shares of nonvoting preferred stock with a minimum investment of $1,000. In return, investors were promised an annual 3 percent dividend plus an annual store credit equal to 1 percent of their investment. Because the grocery business is cash-intensive and Mr. Ahmadi wanted to ensure enough operating capital, the deal was structured so that accumulated dividends would be paid to investors in a lump sum after the seven-year term of the loan. Investors have the option to sell their shares back to the company with 60 days’ notice.

The offering has yet to close, but People’s Market has raised more than $630,000 from more than 150 mostly unaccredited investors — and potential customers. “We have a critical following,” said Mr. Ahmadi, who plans to use the money to build the store, purchase inventory and open by fall 2014 (details are in the prospectus). “Ultimately,” he said, “it’s about leveraging social capital and turning it into financial capital.”

Direct offerings seem to be popular among food companies. In addition to People’s Market, others that have conducted such offerings recently include Farm Fresh to You, a farm in California’s Capay Valley, and Arroyo Food Coop in Pasadena, Calif. Real Pickles, in Greenfield, Mass., recently raised $500,000 in just two months to finance a transition to a worker-owned cooperative. Why food? One reason, Ms. Kassan said, is that “people are passionate about food, so it’s a pretty easy sell.” But, she added, “I believe this can work across many industries.” Her firm, for example, Cutting Edge Capital, recently raised $150,000 through its own direct offering.

Or take GruntWorks, a business based in Portland, Ore., that acts as a concierge for homeowners in need of anything from housekeeping to plumbing to roofing services. GruntWorks solicits bids from its network of 120 or so vetted service providers and guarantees every job.

Since opening last year, GruntWorks has grown quickly. It generated $500,000 in sales its first year and expects to double that this year. To finance its expansion, Scott Fouser, the founder, has applied to Oregon’s state authorities for a direct offering. By engaging his customers and turning them into shareholders, Mr. Fouser said he would be free from having to rely on search engines and other marketing.

“I think it’s a terrific vehicle to engage the community and bring some profitability back to your supporters,” he said. “That’s the real juice here.”

Article source: http://www.nytimes.com/2013/08/01/business/smallbusiness/seeking-capital-some-companies-turn-to-do-it-yourself-ipos.html?partner=rss&emc=rss

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Milestone Claimed in Creating Fuel From Waste

July 31, 2013 by

WASHINGTON — After months of frustrating delays, a chemical company announced Wednesday that it had produced commercial quantities of ethanol from wood waste and other nonfood vegetative matter, a long-sought goal that, if it can be expanded economically, has major implications for providing vehicle fuel and limiting greenhouse gas emissions.

The company, INEOS Bio, a subsidiary of the European oil and chemical company INEOS, said it had produced the fuel at its $130 million Indian River BioEnergy Center in Vero Beach, Fla., which it had hoped to open by the end of last year. The company said it was the first commercial-scale production of ethanol from cellulosic feedstock, but it did not say how much it had produced. Shipments will begin in August, the company said.

The process begins with wastes — wood and vegetative matter for now, municipal garbage later — and cooks it into a gas of carbon monoxide and hydrogen. Bacteria eat the gas and excrete alcohol, which is then distilled. Successful production would eliminate some of the “food versus fuel” debate in the manufacturing of ethanol, which comes from corn.

“Biomass gasification has not been done like this before, nor has the fermentation,” said Peter Williams, chief executive of INEOS Bio.

The plant, which uses methane gas from a nearby landfill, has faced a variety of problems. One was getting the methane, which is a greenhouse gas if released unburned, to the plant’s boilers. (The plan is to eventually run the plant on garbage that now goes to landfills.) Another problem was its reliance on the electrical grid.

The plant usually generates more power than it needs — selling the surplus to the local utility — and is supposed to be able to operate independently. But when thunderstorms knocked out the power grid, the plant unexpectedly shut down and it took weeks to get it running again, said Mark Niederschulte, the chief operating officer of INEOS Bio.

“We’ve had some painful do/undo loops,” he said.

The plant has produced “truckloads” of ethanol, said Mr. Williams, but still has work to do to improve its yield. Mr. Niederschulte said, “Now we want to produce more ethanol from a ton of wood, rather than just making ethanol from a ton of wood.”

The Department of Energy hailed the development as the first of a kind, and said it was made possible by research work the department had sponsored in recent years. The energy secretary, Ernest Moniz, said in a statement, “Unlocking the potential for the responsible development of all of America’s rich energy resources is a critical part of our all-of-the-above energy strategy.”

The Environmental Protection Agency, which grants valuable credits to companies that produce fuel from wastes, confirmed that only a very small volume has been produced so far. Another company, KiOR, has produced some diesel fuel from wood waste at a plant in Columbus, Miss.

Congress laid out a quota for production of biofuels from nonfood sources, but the agency has had to cut it back every year because of lack of production.

INEOS has a goal of eight million gallons a year.

If ethanol can be produced at reasonable cost from abundant nonfood sources, like yard trimmings or household trash, it could displace fuel made from oil, and that oil, and its carbon, could stay in the ground, reducing the amount greenhouse gases in the atmosphere, experts say. Carbon from wood scraps or garbage would enter the atmosphere via cellulosic ethanol, but cutting down a tree or trimming a garden creates space for new growth, which absorbs carbon dioxide from the air.

Article source: http://www.nytimes.com/2013/08/01/business/energy-environment/company-says-its-the-first-to-make-ethanol-from-waste.html?partner=rss&emc=rss

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Banks’ Focus on Recovery Is Miring Europe’s Economic Growth

July 30, 2013 by

Quarterly reports by three of the biggest banks in Europe on Tuesday showed how, five years after the beginning of the financial crisis, they continue to pay for the sins and excesses of the boom years.

While the six largest United States banks earned a combined $23 billion in the three months through June, Deutsche Bank, Barclays and UBS could not manage profit of $1 billion among them. The fallout is measured not only in diminished earnings but also in the banks’ continued need to raise money to make themselves less vulnerable to risk and to set aside reserves to pay for any future legal scandals.

As the banks work their way through the rubble of the financial crisis and their own missteps, their focus on rehabilitation — rather than a full resumption of lending to businesses and consumers — continues to delay Europe’s economic rebound.

That stands in contrast to the big American banks, which despite their own legal and financial troubles were forced by the government to quickly resolve their problems. That has helped pace the United States recovery that is creating a widening growth gap between the two sides of the Atlantic.

American banks “pushed through the pain earlier than the European banks,” said James H. Gellert, the chief executive of Rapid Ratings, an independent analysis firm in New York. Now the European banks are trying to raise capital and revamp their businesses in the midst of a downturn.

The multiple challenges “not only have financial impact,” Mr. Gellert said, “they are seriously distracting to management.”

Banks around the world face growing momentum from regulations that would curtail their use of leverage, or borrowed money. The pressure is especially intense in Europe. Regulators were generally slower than in the United States to require banks to build up more capital after the global financial system all but froze up in the autumn of 2008 because those banks did not have the ability to withstand a sudden collapse in the market for mortgage-backed securities.

On Tuesday, Deutsche Bank, Europe’s biggest investment bank, reported a 50 percent decline in profit, worse than expected. More significant, it announced that it would shrink its financial holdings by 16 percent, or 250 billion euros, to reduce its exposure to risk.

The bank also added 630 million euros, or about $836 million, to a fund to cover the costs of defending against suits brought by investors who blame Deutsche Bank for losses they suffered, including some investments linked to the United States mortgage market.Barclays, of Britain, in reporting a loss, said it would raise £7.8 billion, or about $12 billion, in capital in part by selling new shares. Reporting a second-quarter loss of £168 million, Barclays said it would set aside an additional £2 billion to compensate investors after regulators ruled that the bank improperly sold them insurance and complex financial hedging products.

Antony P. Jenkins, the chief executive of Barclays, said the increase in capital would help stabilize the bank and allow it to increase its dividend to shareholders next year.

“It is early days, and there is a long way to go,” he said, “but I’m pleased with our progress.”

The Swiss bank UBS reported a nearly one-third increase in profit, but like Deutsche Bank and Barclays, its earnings were weighed down by legal costs and by pressure to build up capital reserves.

Investors duly punished Barclays, whose shares fell 6 percent, and Deutsche Bank, whose shares declined 4 percent. UBS shares rose more than 2 percent on what, on this day, looked almost like good news.

The three lenders symbolize problems in the broader European banking system, which is both a victim of the Continent’s economic malaise and a cause of it. American banks like Goldman Sachs and JPMorgan Chase have been able to ride an improving economy in the United States, but the European banks are still working through huge portfolios of damaged government bond holdings or sour real estate loans.

As the big European banks lick their wounds, their stinginess with credit is one of the main reasons that the euro zone is stuck in recession.

Jack Ewing reported from Frankfurt and Mark Scott from London.

Article source: http://www.nytimes.com/2013/07/31/business/global/banks-focus-on-recovery-is-miring-europes-economic-growth.html?partner=rss&emc=rss

Filed Under: Global Business Tagged With: , ,

Cheryl Boone Isaacs Chosen to Head Film Academy

July 30, 2013 by

LOS ANGELES — Cheryl Boone Isaacs, a veteran film marketer, was named president of the Academy of Motion Picture Arts and Sciences, the Academy said on Tuesday. Ms. Isaacs is the first woman to hold the Academy’s presidency since Fay Kanin, who was president from 1979 to 1983, and is the first African-American to serve as president in the group’s 86-year history. She previously held various Academy offices, and was most recently the group’s first vice president.

Ms. Isaacs succeeds Hawk Koch, who served for only one year but was precluded by an elaborate term-limits system from running again. A president may serve for four successive terms, but must come from the governing board, and may not run again if — as with Mr. Koch — the permitted period as a governor has expired.

As she steps into the presidency, Ms. Isaacs, who may serve for as many as four years, faces decisions that include those surrounding the renewal of contracts for the Academy’s top staff executives. Those are Dawn Hudson, the chief executive officer, and Ric Robertson, the chief operating officer. She is also expected to oversee the opening of a Los Angeles movie museum, which promises to become the Academy’s largest venture to date. The Academy, which includes about 6,000 film professionals, is best known for its annual Oscar ceremony. Custom precludes active campaigning for its top office, though Ms. Isaacs and Robert G. Friedman, the co-chairman of Lionsgate’s movie group, were widely considered to be the leading prospects for the presidency.

The election of Ms. Isaacs by the group’s governing board was announced via Twitter, even as the governors continued meeting to elect other officers on Tuesday.

Article source: http://www.nytimes.com/2013/07/31/movies/cheryl-boone-isaacs-chosen-to-head-film-academy.html?partner=rss&emc=rss

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N.F.L. Television Pioneer to Step Down Next Year

July 30, 2013 by

He will be succeeded by Brian Rolapp, the chief operating officer of NFL Media since January 2011.

Bornstein, 61, joined the N.F.L. in 2002 and laid the groundwork for the growth of the league’s media operations, in part by establishing the NFL Network, which made its debut in 2003.

Much of Bornstein’s time was spent securing full distribution for the new network on cable systems throughout the country. Known throughout the industry as aggressive, Bornstein engaged in sometimes contentious negotiations with cable operators. When deals finally closed with Cablevision and Time Warner in 2012, the NFL Network was available in more than 70 million households in the United States.

“Steve was great making sure we understood it was not going to be an easy road,” N.F.L. Commissioner Roger Goodell said .

Rolapp was also involved in the negotiation with the cable operators, as well as in the talks for the eight-year deal that will keep “Monday Night Football” on ESPN through 2021. Before joining the N.F.L., Rolapp worked in acquisitions and strategy for NBC Universal in New York.

“Technology is a great opportunity for the N.F.L., and Brian understands that,” Goodell said. “He’s been at the center of what we’ve been doing in technology, and that’s going to be his focus now that we have our broadcasting agreements in place.”

Before it was NBC Universal and when it was still owned by General Electric, NBC figured in one of Bornstein’s biggest accomplishments with the N.F.L. — persuading Dick Ebersol, then the chairman of NBC Sports, to bring the N.F.L. back to the network in 2006. The negotiations involved switching the league’s cable TV package from Sunday to Monday nights so NBC could have marquee games for its new “Sunday Night Football” lineup and could take advantage of flexible scheduling late in the season.

In 2006, Bornstein also presided over the first season of games on the NFL Network — eight games in prime time, which echoed the first season of eight Sunday-night N.F.L. games carried by ESPN in 1987, when Bornstein was the sports network’s programming chief. Securing N.F.L. games was a breakthrough for ESPN, enabling it to increase the fees it charged cable systems.

Bornstein joined ESPN in 1980, during its first year of existence, and in 1990, at 38, became the network’s president. He stayed through 1997, when he was named chairman of ESPN and president of ABC, its broadcast-network counterpart. In 1998, ESPN began broadcasting its first full season of N.F.L. games.

Bornstein, who will also give up his title as the N.F.L.’s executive vice president for media, said he had not decided what he would do next.

“If you want to talk about what’s on my tombstone, which I hope is far away, both the NFL Network and ESPN would have to be mentioned,” he said. “The difference is, the N.F.L. was going to thrive with or without me. At ESPN, we were faced with a touch-and-go situation. There were no guarantees that business was going to survive.”

Article source: http://www.nytimes.com/2013/07/31/sports/football/nfl-television-pioneer-to-step-down-next-year.html?partner=rss&emc=rss

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Plan Aims to Enliven Paris’s Financial District, Long Called Soulless

July 30, 2013 by

The ceremony celebrated a decade-long building boom at La Défense, the sprawling array of office buildings long envisioned as Paris’s answer to Lower Manhattan or the City of London.

But La Défense, begun during the presidency of Charles de Gaulle in the late 1950s and built just west of Paris by bulldozing slums and paving over farmland, has always worked better in architectural theory than in anthropological practice.

Rather than the Parisian business hub its founders described, it often seems more like the isolated end of a spoke that has highlighted a crucial flaw in urban planning — a concern with making architectural statements — rather than an affinity for the people in and around the buildings.

When non-French planning experts assess La Défense, they say it shares the same problems as the Canary Wharf complex in London, where developers have tried to supplant the City with Big Architecture and whose artificial origins may be hard to overcome. The experts look more favorably on the somewhat organic mix of business and residential of Lower Manhattan, which has evolved over the last century.

“La Défense has always suffered from a creative hypothermia,” said Wojciech Czaja, an Austrian architecture critic. “It is a sad area because it is atmospherically and emotionally perceived as a business district only.”

The public agency that manages the complex has hired an architectural firm to draft a new master plan in hopes of making the grandiose vision for La Défense a livable reality. It is difficult to determine whether the plan can withstand the headwinds of Europe’s continuing financial woes, and France’s lingering recession and an unemployment rate near 11 percent.

But it would be wrong to call La Défense a business failure, because it is home to 1,500 head offices, including those of 15 of the world’s 50 largest companies. French corporations with their signature headquarters here include the oil and gas giant Total, the big bank Société Générale and Areva, a leading builder of nuclear power plants. And developers continue to build.

Critics have long derided the mixed commercial, residential and retailing complex, which covers 1.6 square kilometers, or 0.62 square miles, as dehumanizing. While about 20,000 mainly low- and middle-income people live here, the vast central plaza can feel like a ghost town after 5 p.m. and on weekends, once most of the district’s 150,000 office workers have left by train, bus or subway to more desirable parts of Paris or its less surreal suburbs.

“There is nothing good about living here,” said Carlin Pierre, 54, who works at a waste disposal center in the district and resides in one of the Brutalist communal, rent-subsidized housing blocks tucked amid the high-rise office buildings. “Sure, it’s a nice area to come as a tourist, or even to work,” Mr. Pierre said, “but it’s terrible to live in La Défense.”

Alessandra Cianchetta, a partner at AWP, the firm mapping the master plan, acknowledges the enormousness of her task. “La Défense as a concept is a bit obsolete,” Ms. Cianchetta said. “There is no interaction, no hospitality here.”

Vacancy rates at La Défense, long an up-and-down indicator of the French economy, are once more on the rise. Next to the Grande Arche is the site of what was to be a 71-story office tower, Tour Signal, commissioned with much fanfare in 2008 to the French architect Jean Nouvel. It has been canceled.

Still, three new, architecturally ambitious office towers are under construction at La Défense. And the recently financed Hermitage Plaza project on the Seine River at the easternmost edge of La Défense, if it opens as planned in 2018, will include Europe’s tallest residential building. Some of the continued activity, of course, has to do with the long lag between conceiving a commercial real estate project and getting it built — a speculative roll of the dice that has paid little heed to shorter-term considerations like France and Europe’s current economic travails.

Catherine Chapman contributed reporting.

Article source: http://www.nytimes.com/2013/07/31/business/global/a-new-effort-to-bring-life-to-paris-financial-district.html?partner=rss&emc=rss

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ABC News Dethrones NBC in Crucial Ratings Race

July 30, 2013 by

One year after a significant reordering of television’s morning shows swept ABC into first place in the ratings race, the same thing might be happening in the evening.

ABC’s 6:30 p.m. newscast, “World News With Diane Sawyer,” bested “NBC Nightly News With Brian Williams” among 25-to-54-year-old viewers last week, ending a winning streak of almost five years by NBC and rekindling interest in the once-predictable ratings competition.

NBC remained on top among total viewers. But ABC’s win was significant because television ads on news programs are bought and sold based on the coveted demographic of 25- to 54-year-olds. Ms. Sawyer has been seeking to snap Mr. Williams’s streak in that category ever since she took over “World News” from her colleague Charles Gibson in 2009.

ABC said the victory was its first since the week of Nov. 17, 2008, shortly after the election of President Obama.

It was a narrow victory: 38,000 viewers in the relevant age group separated the two shows. Partly for that reason, people at NBC News cautioned that the results could be a one-time aberration. Last spring and summer, though, those same people saw their prized morning show, “Today,” fall to second place behind ABC’s “Good Morning America,” first in total viewers and then in the 25-to-54-year-old demographic. The first time “G.M.A.” won, the gap was just 31,000 total viewers. Now its streak is nearly a year old, and it wins every week by an average of 650,000 viewers.

In the evenings, “World News” and the third-place “CBS Evening News With Scott Pelley” have shown some momentum this year at the expense of “NBC Nightly News,” which Mr. Williams has anchored since 2004. “This is just one week, so it is clearly too early to talk about a sea change in the evening,” said Amy Mitchell, the director of journalism research at the Pew Research Center. “But if you look at it alongside the larger NBC News narrative, this is one more sign of a chipping-away at their long-dominant news ratings.”

The battle between NBC News, a unit of Comcast, and ABC News, a unit of the Walt Disney Company, has been evident at other hours of the day as well. Some at NBC were pleased when ABC’s late-night program “Nightline” was moved an hour later to make way for “Jimmy Kimmel Live” in January; some at ABC were equally pleased when Mr. Williams’s prime-time newsmagazine, “Rock Center,” was canceled in May. (Its last broadcast was on June 21.)

At both networks’ news divisions, hundreds of millions of dollars in advertising revenue is on the line every year. While that represents just a tiny fraction of the total revenues of their parent companies, the news divisions are expected to post a profit and show growth, which is not easy at a time of stepped-up competition on television and online.

As is the custom in these bitterly contested ratings competitions, NBC’s news release about the 6:30 ratings on Tuesday made no mention of ABC’s gains; it simply excluded the 25-to-54-year-old viewership totals and emphasized that “Nightly News” had been winning among total viewers for years.

For NBC, which is still struggling to right itself in the mornings, a more permanent loss to ABC in the evenings would be doubly embarrassing. Turning around the “Today” show has been identified as the top task for Deborah Turness, a British news executive who will start as president of NBC News next Monday. The ratings results last week suggest that shoring up “Nightly News” will be a priority as well.

Among total viewers, “Nightly News” had an average of 7.54 million last week, besting “World News” by about a quarter of a million. Over all, ratings for the big three nightly newscasts have held relatively steady for the last couple of years after decades of slow and steady erosion. About 22.1 million people watched one of the three programs on an average weeknight in 2012, down 2 percent from an unusually strong 2011.

The ratings, of course, bestow bragging rights upon the best-performing network. On Tuesday, the executive producer of “World News,” Michael Corn, bought pizza for his staff ahead of a more elaborate newsroom celebration planned for later in the week. In a statement, Mr. Corn thanked the viewing audience and added: “We have a lot more work to do. We’re just getting started.”

In a twist that television industry gawkers immediately homed in on, the victory was shared by Ms. Sawyer and one of her regular fill-ins, David Muir. That was because Mr. Muir substituted for Ms. Sawyer three nights last week — the same three nights, it turned out, that ABC beat NBC in the all-important ratings demographic. Mr. Williams prevailed, barely, on the two nights that Ms. Sawyer was at work.

Mr. Muir, who usually anchors “20/20” and the weekend editions of “World News,” and George Stephanopoulos, who hosts “G.M.A.” and moderates “This Week,” are widely seen in the industry as the two most likely successors to Ms. Sawyer. For now, that is purely theoretical; Ms. Sawyer, who became the anchor at the end of 2009, has given no signal that she plans to step down soon.

Article source: http://www.nytimes.com/2013/07/31/business/media/abcs-evening-news-bests-nbc-in-coveted-age-group.html?partner=rss&emc=rss

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Stocks & Bonds: Market Closes Tightly Mixed After Day of Wary Trading

July 30, 2013 by

Wall Street lacked direction on Tuesday as it awaited the week’s main economic news, and the stock market wandered between slight gains and losses before closing barely higher.

Traders were especially disinclined to make big bets before the Federal Reserve issues its policy statement on Wednesday, which may offer hints about the future of its economic stimulus program. They were also standing pat in anticipation of the government’s initial report on second-quarter economic growth on Wednesday and the July employment report on Friday.

“This week it’s all about Bernanke and the Fed statement,” said Bill Strazzullo, chief strategist of Bell Curve Trading, referring to Ben S. Bernanke, chairman of the central bank. “Stocks need a supportive statement to go higher. That is the key driver.”

To some, the market’s inertia resembled the inactivity typical of mid- to late August, when trading usually dwindles. “It seems like the doldrums of summer have set in,” said Dave Abate, senior wealth adviser at Strategic Wealth Partners.

The Dow Jones industrial average rose as much as 72 points in early trading on Tuesday — less than 0.5 percent — before flickering lower, closing down 1.38 points, or 0.01 percent, at 15,520.59.

The Nasdaq composite index rose 17.33 points, or 0.5 percent, to 3,616.47. But the Nasdaq gained largely because Apple, its largest component, jumped more than 1 percent, rising $5.53, to $453.32.

The Standard Poor’s 500-stock index ended slightly higher, up 0.63 point, or 0.04 percent, to 1,685.96. Its worst performer was Mosaic, a maker of potash, a major ingredient of crop fertilizers, which plunged $9.15, or 17.3 percent, to $43.81 after a Russian fertilizer company said it would drop out of a cartel that keeps potash prices high.

Company earnings provided little guidance. Coach, the maker of luxury handbags, slumped $4.55, or 8 percent, to $53. 30 after reporting a lower quarterly profit. But Goodyear Tire and Rubber jumped $1.52, or 9 percent, to $18.56 after announcing that its quarterly earnings had doubled.

This earnings season has been encouraging on some fronts and troubling on others. Many companies, including big names like Apple and Visa, have posted better-than-expected results, and analysts predicted that second-quarter earnings would be up 4.7 percent for companies in the S. P. 500, according to SP Capital IQ. But many of the gains were based on cost-cutting, not on business growth.

Traders continue to look for clues from the Fed, which began a two-day meeting on Tuesday, about when it might pull back on its bond-buying stimulus program.

The Fed has said it might act this year if the economy continues to improve, but the timing remains uncertain. The central bank has also said it will not raise its benchmark short-term interest rate until the unemployment rate, which was 7.6 percent in June, dips below 6.5 percent.

In the bond market, interest rates were little changed on Tuesday. The price of the benchmark 10-year Treasury note fell 2/32, to 92 21/32. Its yield edged up to 2.61 percent, from 2.60 percent late Monday.

Article source: http://www.nytimes.com/2013/07/31/business/daily-stock-market-activity.html?partner=rss&emc=rss

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Warrantless Cellphone Tracking Is Upheld

July 30, 2013 by

The closely watched case, in the Fifth Circuit of the United States Court of Appeals in Texas, is the first ruling that squarely addresses the constitutionality of warrantless searches of historical location data stored by cellphone service providers. Ruling 2 to 1, the court said a warrantless search was “not per se unconstitutional” because location data was “clearly a business record” and therefore not protected by the Fourth Amendment.

The ruling is likely to intensify legislative efforts, already bubbling in Congress and in the states, to consider measures to require warrants, based on probable cause, to obtain cellphone location data.

The appeals court ruling sharply contrasts with a New Jersey State Supreme Court opinion in mid-July that said the police required a warrant to track a suspect’s whereabouts in real time. That decision relied on the New Jersey state Constitution, whereas the ruling Tuesday in Texas was made on the basis of the federal Constitution.

The Supreme Court has yet to weigh in on whether cellphone location data is protected by the Constitution. The Texas case is not expected to go to the Supreme Court because it is “ex parte,” or filed by only one party — in this case, the government.

But the case could renew calls for the highest court to look at the issue, if another federal court rules differently on the same question. And two other federal cases involving this issue are pending.

“The opinion is clear that the government can access cell site records without Fourth Amendment oversight,” said Orin Kerr, a constitutional law scholar at George Washington University Law School who filed an amicus brief in the case.

For now, the Texas ruling sets an important precedent: It allows law enforcement officials within the Fifth Circuit to chronicle the whereabouts of an American with a court order that falls short of a search warrant based on probable cause.

“This decision is a big deal,” said Catherine Crump, a lawyer with the American Civil Liberties Union. “It’s a big deal and a big blow to Americans’ privacy rights.”

The group reviewed records from more than 200 local police departments last year, concluding that the demand for cellphone location data had led some cellphone companies to develop “surveillance fees” to enable police to track suspects.

In reaching its decision on Tuesday, the appeals court in Texas went on to agree with the government’s contention that consumers knowingly give up their location information to the telecommunications carrier every time they make a call or send a text message on their cellphones.

“That means it is not protected by Fourth Amendment when the government goes to a third-party service provider and issues something that is not a warrant to demand production of those records,” said Mark Eckenwiler, a former Justice Department lawyer who worked on the case and is now with the Washington law firm Perkins Coie. “On this kind of historical cell site information, this is the first one to address the core constitutional question.”

Historical location data is crucial to law enforcement officials. Mr. Eckenwiler offered the example of drug investigations: A cellphone carrier can establish where a suspect met his supplier and how often he returned to a particular location. Likewise, location data can be vital in establishing people’s habits and preferences, including whether they worship at a church or mosque or whether they are present at a political protest, which is why, civil liberties advocates say, it should be accorded the highest privileges of privacy protection.

The decision could also bear implications for other government efforts to collect vast amounts of so-called metadata, under the argument that it constitutes “business records,” as in the National Security Agency’s collection of Verizon phone records for millions of Americans.

“It provides support for the government’s view that that procedure is constitutional, obtaining Verizon call records, because it holds that records are business records,” said Mr. Kerr, of George Washington University. “It doesn’t make it a slam dunk but it makes a good case for the government to argue that position.”

An important element in Tuesday’s ruling is the court’s presumption of what consumers should know about the way cellphone technology works. “A cell service subscriber, like a telephone user, understands that his cellphone must send a signal to a nearby cell tower in order to wirelessly connect his call,” the court ruled, going on to note that “contractual terms of service and providers’ privacy policies expressly state that a provider uses a subscriber’s location information to route his cellphone calls.”

In any event, the court added, the use of cellphones “is entirely voluntary.”

The ruling also gave a nod to the way in which fast-moving technological advances have challenged age-old laws on privacy. Consumers today may want privacy over location records, the court acknowledged: “But the recourse for these desires is in the market or the political process: in demanding that service providers do away with such records (or anonymize them) or in lobbying elected representatives to enact statutory protections.”

Cellphone privacy measures have been proposed in the Senate and House that would require law enforcement agents to obtain search warrants before prying open location records. Montana recently became the first state to require a warrant for location data. Maine soon followed. California passed a similar measure last year but Gov. Jerry Brown, a Democrat, vetoed it, saying it did not strike what he called the right balance between the demands of civil libertarians and the police.

Article source: http://www.nytimes.com/2013/07/31/technology/warrantless-cellphone-tracking-is-upheld.html?partner=rss&emc=rss

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Lawyer Who Beat Chevron in Ecuador Faces Trial of His Own

July 30, 2013 by

Possibly both.

For the last two decades Mr. Donziger has been battling the Chevron Corporation over an environmental disaster that happened in the jungles of Ecuador. Two years ago, he won an $18 billion case against the oil giant, the kind of victory that most lawyers can only dream of.

But Chevron has yet to pay a penny of the award, and has turned the tables on him. Now, he is defending himself against a Chevron lawsuit charging that he masterminded a conspiracy to extort and defraud the corporation. The trial is scheduled for October.

Across a table in his two-bedroom apartment on the Upper West Side of Manhattan, Mr. Donziger for the first time in recent years spoke publicly about the personal travails that he says have engulfed him. He says shadowy men have trailed him. Watched his family. Sat in cars outside his home. He had his apartment swept for bugs, but found nothing.

All of that might sound like the ravings of a Grade A conspiracy theorist. But Mr. Donziger, who played basketball with Barack Obama at Harvard Law School, has a serious following among environmentalists. He and his supporters say he is being vilified — potentially ruined — for unmasking Chevron’s questionable environmental record. Chevron, which is suing him and his associates for damages that could reach billions of dollars, says he is simply a con artist.

It is a remarkable turn of events for Mr. Donziger, who has chased after Chevron with the single-mindedness of Ahab. Reports of questionable ethical conduct have cast doubt over his motives. He is accused of engineering the ghostwriting of a crucial report submitted to the Ecuadorean court that decided the case, a claim he says is exaggerated and misconstrues local legal customs. Some of his former allies have abandoned him and signed statements taking Chevron’s side.

Even his lawyer in the fraud case has withdrawn himself because, he said, Mr. Donziger could no longer pay his bills. And this month U.S. District Court Judge Lewis A. Kaplan denied Mr. Donziger’s plea for a delay in the trial, expressing skepticism that he and his backers did not have the money to hire another lawyer. (Judge Kaplan noted in his ruling that Mr. Donziger stood to gain a fee of over $1 billion should the Ecuadorean judgment, which Chevron is challenging, be enforced.)

The particulars of the case have been litigated and relitigated. Mr. Donziger insists that Chevron’s predecessor, Texaco, cut through the Amazon, spilled oil into pristine rain forests and left behind what remains to this day a toxic mess. Chevron says he is an ambulance-chaser who has fabricated facts for his own financial ends, blaming the company for pollution mostly caused by Petroecuador, the national oil company that was once a partner of Texaco and continues to produce oil in the region.

But Mr. Donziger, a bear of a man with a quick laugh and a robust ego, says he is unbowed.

“It is creepy and scary,” Mr. Donziger, 51, said of his experiences during a six-hour interview at his home. Chevron, a company worth $240 billion, is trying to scare him away, he says. “When I walk into a deposition and see 15 Chevron lawyers there ready to eat me for lunch, I realize I’ve been bestowed an honor,” he said, smiling.

To which Chevron says: Nonsense. “He thinks he can one-up P. T. Barnum and fool all the people all the time,” said Randy Mastro, a lawyer working for Chevron. “But it’s his own confidants who have now turned on him.”

Many environmentalists, perhaps predictably, are still behind him.

“I have admiration for anyone who is willing to take on a rich, powerful oil company,” said Michael Brune, executive director of the Sierra Club and a longtime supporter of Mr. Donziger’s efforts. “And to do it for more than two decades is either crazy or impressive and probably both.”

These days, Mr. Donziger spends much of his time working at his dining room table below an expansive portrait of Mao walking among his people — more of a joke than an expression of his political beliefs, he says. He still finds time to take his 6-year-old son to school, take yoga classes and walk the dog. His apartment is virtually a gallery of the case. Photographs of Ecuadorean Indians, jungle pipelines and the first day of the Ecuadorean trial hang on its walls.

The origins of the case go back to the 1970s, when Texaco, which was later acquired by Chevron, operated as a partner with the Ecuadorean state oil company Petroecuador in the Amazon.

Article source: http://www.nytimes.com/2013/07/31/business/steven-donziger-lawyer-who-beat-chevron-in-ecuador-faces-trial-of-his-own.html?partner=rss&emc=rss

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