December 1, 2023

Tesco Backs Away From U.S. Operations

Tesco said it was considering different options for the business and that it received several approaches to buy all or parts of Fresh Easy over the recent months. It might also partner with other companies, Tesco said. Tim Mason, Fresh Easy’s chief executive, would leave Tesco, the company added.

Aldi Group, the German discount supermarket chain, could be among those interested in acquiring the business, some analysts said.

“It is now clear that Fresh Easy will not deliver acceptable shareholder returns on an appropriate timeframe in its current form,” Tesco said.

Tesco turned its focus on its home market earlier this year with a $1.6 billion investment program to reverse a drop in profit in Britain and amid criticism about an expansion abroad, including into the United States, that failed to pay off.

Tesco started its Fresh Easy brand about five years ago, hoping to have discovered a market niche of running smaller stores that offer warm meals, but only a few stores actually made a profit. Earlier this year, Tesco said it would slow down new store openings in the United States and remodel the existing stores, with in-store bakeries and stands selling fresh flowers.

But analysts have repeatedly warned that the U.S. business would struggle to make a profit amid fierce competition and a difficult economic environment.

“Whilst the business has many positives, its journey to scale and acceptable returns will take too long relative to other opportunities,” Philip Clarke, Tesco’s chief executive, said in a statement. “I have therefore decided to conduct a strategic review of Fresh Easy, with all options under consideration.”

Tesco said it hired the advisory firm Greenhill to help review its options. It expects to give an update on its plan for Fresh Easy in April.

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JPMorgan Settles Case With S.E.C.

In a case simultaneously brought and settled, the S.E.C. asserted that JPMorgan’s investment bank had structured and marketed a security known as a synthetic collateralized debt obligation without informing buyers that a hedge fund that helped select the assets in the portfolio stood to gain, in most cases, if the investment lost value.

The S.E.C. also separately accused Edward S. Steffelin, an executive at the investment advisory firm responsible for putting together the mortgage security that was sold by JPMorgan. Both JPMorgan and Mr. Steffelin were accused of negligence but not intentional or reckless misconduct.

The agency accused Mr. Steffelin of misleading investors into believing that a unit of the firm he worked for, the GSC Capital Corporation, had selected the mortgage securities in the investment portfolio. Instead, the S.E.C. said, a hedge fund named Magnetar Capital chose the assets. A lawyer for Mr. Steffelin said he intended to fight the charges.

The settlement comes after a $550 million agreement the S.E.C. reached with Goldman Sachs last year to resolve similar claims.

Investors harmed in the JPMorgan transaction, known as Squared CDO 2007-I, will receive all of their money back, according to the S.E.C., a total of $125.87 million. JPMorgan also voluntarily paid $56.76 million to some investors in a separate transaction known as Tahoma CDO I, a similar deal in which investors lost money. The S.E.C. did not bring any action related to Tahoma.

“We believe this settlement resolves all outstanding S.E.C. inquiries into J.P. Morgan’s C.D.O. business,” Joseph Evangelisti, a JPMorgan Chase spokesman, said in a statement. In settling the case, the company neither admitted nor denied wrongdoing. JPMorgan said it sustained losses of $900 million related to Squared CDO.

The case is part of a raft of litigation stemming from the mortgage crisis. The S.E.C. is still investigating accusations of improper sales practices at Deutsche Bank, Morgan Stanley and several other companies. In addition, the New York State attorney general recently opened a number of cases involving several big banks as part of a broad sweep of Wall Street’s loan packaging business.

Private investors are looking to recoup some of their losses in the courts. There are still about $200 billion in private legal claims over mortgage securities against major banks, according to Institutional Risk Analytics.

In the JPMorgan case, the S.E.C. asserted that the bank undertook “an aggressive effort” in 2007 to unload the securities on investors outside its usual circle of customers for deals involving collateralized debt obligations.

In one e-mail on March 22, 2007, the JPMorgan employee in charge of the sales effort wrote, “We are soooo pregnant with this deal, we need a wheel-barrel to move around. … Let’s schedule the cesarian, please!”

The S.E.C. also cited numerous JPMorgan e-mails noting Magnetar’s involvement in the selection. But no executives, traders or salesmen from JPMorgan were accused of wrongdoing.

That contrasts with the case the S.E.C. brought against Goldman Sachs last year. That case also accused a trader at Goldman, Fabrice Tourre, who is fighting the claims.

Robert S. Khuzami, the S.E.C.’s director of enforcement, said in a conference call with reporters that the decision not to take action against any JPMorgan executive was based on the evidence in the case.

“We look hard at the conduct of individuals,” Mr. Khuzami said. “First and foremost, you have to show that an individual is aware that information is not being disclosed, that it is material and that they knew the facts.”

Those elements were present in the company’s conduct, he said. “What JPMorgan failed to tell investors was that a prominent hedge fund that would financially profit from the failure of the C.D.O. portfolio assets heavily influenced the C.D.O. portfolio selection,” he said.

The S.E.C. previously notified at least one other individual — Michael Llodra, the former head of structured C.D.O.’s at JPMorgan — that he might be sued for his role in marketing such securities. And Magnetar has been involved with multiple C.D.O.’s arranged by other brokerage firms. Mr. Khuzami declined to comment on whether any other such cases were still proceeding.

Eric Dash contributed reporting from New York.

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Charitable Giving Rose Last Year for First Time Since 2007

Individuals, companies and philanthropic institutions made gifts and pledges totaling an estimated $290.89 billion in 2010, an increase of 2.1 percent on an inflation-adjusted basis over a revised estimate of $284.85 billion the year before.

The increase was the first since 2007, when the recession started and led to the biggest decline in giving in more than 40 years.

“I was greatly encouraged that giving showed this slight uptick in 2010,” said Edith H. Falk, chief executive of Campbell Company, a fund-raising advisory firm, and chairwoman of the foundation, an arm of the Giving Institute. “We all know how difficult the prior two years had been because we experienced it personally in the work we do.”

Still, if giving were to continue to grow at the same pace it did last year, it would be five to six years before it reached its 2007 peak of $326.57 billion. “One of the challenges charities face is whether this represents the new normal or whether, if the economy starts growing more robustly again, giving also will grow more vigorously,” said Patrick M. Rooney, executive director of the Center on Philanthropy at Indiana University, which does the research and analysis that goes into the report.

Philanthromax, a fund-raising consulting firm, estimates that total charitable donations will increase 4.3 percent this year on a nominal basis.

Rob Mitchell, chief executive of the firm and formerly chief of the American Cancer Society Foundation, said although giving rose 8.3 percent through April, it most likely would start slowing and begin to decline in October, November and December, typically the strongest fund-raising season. “We’re looking at 2011 as the tale of two halves, with the first half of the year being quite strong and declining giving in the second half,” Mr. Mitchell said.

Neal Litvack, chief development officer at the American Red Cross, said its core fund-raising over the last six months, which excludes disaster-related giving, was up roughly 10 percent, a much faster pace than it experienced in the first half of its fiscal year, which ends June 30. The organization expects to raise a total of $839 million this year, compared to $1.06 billion in the previous fiscal year, which includes the outpouring of gifts to support relief work after the Haitian earthquake.

“We’re expecting fund-raising revenue to be up at least 5 percent year over year in fiscal 2012,” Mr. Litvack said. “It’s bold, but we’ve gotten some great television coverage this spring” — of Red Cross work to address tornado– and flood-related disasters — “and are using some new technologies internally that should help us make that goal.”

This year, Giving USA made adjustments to the methodology it used to estimate charitable donations, which had been criticized in the last two years for producing overly rosy estimates. The changes decreased its original estimates of total giving in 2008 and 2009 to an inflation-adjusted $303.76 billion and $284.85 billion, respectively, from $307.65 billion and $303.75 billion.

“The economic literature suggest that in what is a period of greater uncertainty and economic volatility it made more sense to take a look at the model and make some adjustments,” Mr. Rooney said.

Giving by individuals, which accounts for the bulk of total charitable giving, rose just 1.1 percent to $211.77 billion, compared with corporate giving, which rose 8.8 percent to $15.29 billion. Corporate giving figures include values placed by companies on non-cash gifts like drugs.

KaBOOM!, an organization that builds playgrounds to help increase physical activity among children, benefited from that increase, raising about the same amount in 2010 as it did in 2009, when it took in $19.1 million, according to its chief financial officer, Gerry Megas.

This year, donations are up in part because of the publication of “KaBOOM! How One Man Built a Movement to Save Play,” a memoir by Darrell Hammond, the organization’s founder, which has raised awareness of the charity. “Darrell’s book has opened up some more attention to the cause, and that’s been good for us,” Mr. Megas said.

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Google Expected to Introduce a Wireless Payment System

Google will offer mobile payments with MasterCard and Citibank, according to one of the people, as well as with cellphone carriers, hardware manufacturers and retailers. 

Initially, the mobile wallets will be available only on Google’s Nexus S phone and will use a Citibank-issued MasterCard credit card number and a virtual Google MasterCard prepaid card. Consumers will be able to make payments at any of the 124,000 merchants that have MasterCard’s PayPass terminals, which accept contactless payments, a person briefed on the deal said.

The people familiar with the deal were not authorized to speak until the deal was publicly announced. The news of the announcement was first reported by Bloomberg News.

The three companies have also teamed up with a few retailers — Macy’s, American Eagle Outfitters and Subway, a person familiar with the deal said. After these retailers upgrade their terminals — at first, only retailers in New York and San Francisco will participate — consumers will also be able to redeem discounts and participate in loyalty programs.

While several companies have been working on mobile wallets for years, they have not yet been widely adopted because all of those involved need to agree on how the wallets will take shape and how the various stakeholders will get paid. Mobile phone carriers, banks, credit card issuers payment networks and technology companies have been battling over their roles.

“Google is dipping their toe into the water and it will accelerate other efforts from other providers,” said Rick Oglesby, a senior analyst at the Aite Group, a research and advisory firm focused on the financial services industry.

Google plans to use a technology called near-field communication, or N.F.C., which is incorporated into a chip in mobile phones to make payments, redeem coupons, earn loyalty points and receive special offers. When a phone is waved in front of a credit card reader, it wirelessly sends an encrypted signal with a person’s credit card information. After that, the transaction is processed like a normal credit card transaction at a store. 

Google’s announcement has been expected since it introduced the latest version of its Android mobile phone software, which has the capacity for N.F.C., and its Nexus S phone, which includes an N.F.C. chip. 

Representatives for Google, MasterCard, Citigroup and Sprint, a carrier for Google’s Nexus phones, declined to comment. 

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