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Fallout From Apple’s Loss on E-Books

July 10, 2013 by Leave a Comment

A federal judge on Wednesday said that some of Mr. Jobs’s words helped persuade her that Apple had violated antitrust law in conspiring with publishers to raise prices of e-books. Although it appears unlikely that the ruling will have an immediate effect on the book-buying public, it could affect how Apple cuts deals with media companies that provide the music, books and movies that help make its iPhones and iPads compelling.

Charles E. Elder, an antitrust lawyer at Irell Manella, said that the ruling could lead Apple and other technology companies negotiating with media companies to “proceed with extreme caution” to avoid any appearance of collusion.

On Wednesday, Apple continued to assert it had done nothing wrong, and said it would appeal the decision. A trial to determine damages will follow.

“Apple did not conspire to fix e-book pricing and we will continue to fight against these false accusations,” Tom Neumayr, an Apple spokesman, said. “When we introduced the iBookstore in 2010, we gave customers more choice, injecting much needed innovation and competition into the market, breaking Amazon’s monopolistic grip on the publishing industry.”

In her ruling, Denise L. Cote of United States District Court in Manhattan said Apple had taken advantage of the publishers’ “fear of and frustration” over Amazon.com’s control of e-book pricing, and the tight window of opportunity in the weeks leading up to the iPad’s introduction in 2010, to get the publishers to agree to its terms. “Apple seized the moment and brilliantly played its hand,” she wrote.

Five major publishers had also been named in the suit, but they all settled before the trial. Apple continued to fight the charges despite what increasingly looked like uphill odds. Publicly, the company said it refused to settle as a matter of principle because it had done nothing wrong.

The Justice Department said the judge’s decision was a victory for people who buy e-books.

“Companies cannot ignore the antitrust laws when they believe it is in their economic self-interest to do so,” the Justice Department said in a statement. “This decision by the court is a critical step in undoing the harm caused by Apple’s illegal actions.”

The main reason e-book prices will probably not move sharply in the near term is that the publishers who settled are operating under the settlement’s terms, which prohibit publishers from restricting a retailer’s ability to discount books.

“The changes to the industry have already happened,” said Mike Shatzkin, the founder and chief executive of the Idea Logical Company, a publishing consultant.

Since those settlements have gone into effect, prices on many newly released and best-selling e-books have gone down. One New York Times best-seller, “And the Mountains Echoed,” by Khaled Hosseini, is sold on Amazon.com for $10.99. But other e-books seem to have held closer to presettlement prices: “The Ocean at the End of the Lane,” by Neil Gaiman, is listed for $12.80 on Amazon.com.

The antitrust suit underscored the turmoil in the book industry as readers shift from ink and paper to electronic devices like tablets and smartphones, where they can buy books with the push of a button. The publishers want to embrace new media, but they are also trying to protect their profits and retain control of their businesses.

A recent survey of the publishing industry revealed that in the United States, e-books account for 20 percent of publishers’ revenue, more than $3 billion, up from 15 percent the year before. Amazon.com dominates the e-book market.

The outcome will probably inflict some damage to Apple’s reputation. The judge’s decision casts Apple as a cold and manipulative bully whose actions have harmed consumers, contrary to the way the company markets itself, as a maker of products that improve people’s lives.

Article source: http://www.nytimes.com/2013/07/11/technology/judge-rules-against-apple-in-e-books-trial.html?partner=rss&emc=rss

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In Embattled Detroit, No Talk of Sharing Pain

June 17, 2013 by Leave a Comment

Now another large city, Detroit, appears to be on the brink of filing for bankruptcy, but there is little talk of sharing the pain. Instead, the fiscal crisis in Michigan is setting up as a gigantic clash between bondholders and city retirees.

The city’s proposals, which could give some bondholders as little as 10 cents on the dollar, are making some creditors think they would be better off in bankruptcy. They see the specter of a federal judge imposing involuntary losses as less ominous than it was for New York.

“The haircut is so severe,” said Matt Fabian, a managing director of Municipal Market Advisors, “I think it’s scaring them into bankruptcy, rather than away from bankruptcy.”

But city retirees, facing the prospect of sharply reduced benefits whether in bankruptcy or under Detroit’s restructuring proposal, think they stand squarely on the moral high ground because despite the poverty of many current and retired members, they have already offered big concessions.

“It’s not the employees that are costing the city money,” said Edward L. McNeil, an official with the American Federation of State, County and Municipal Employees who is leading a coalition of 33 unions that will be affected by any restructuring of Detroit’s debts, which total roughly $17 billion. Just last year, he said, those unions offered concessions that could have saved the city hundreds of millions of dollars a year. But Detroit “botched the implementation,” he said.

And Michael VanOverbeke, interim general counsel for the general workers’ retirement plan, said bondholders were investors hoping for returns, who should expect “a certain amount of risk.”

“Planning for retirement and working for employers was not an investment into the market,” he added. “These are people who are on a fixed income at this point in their life. They can’t go back to work and start all over again.” He said it was unthinkable to cut retirees’ pensions outside of bankruptcy.

A bankruptcy in Detroit would have no precedent, despite an unusual flurry of municipal bankruptcies after the financial crisis. Rhode Island hurriedly passed a law giving municipal bondhholders priority over other creditors, including retirees, just before the small city of Central Falls filed for bankruptcy. That helped Central Falls resolve its bankruptcy quickly, but no one thinks Michigan could pass such a law. In Jefferson County, Ala., a large majority of the financial trouble grew out of debt issued to rebuild a sewer system, not pensions or other employee benefits. The rights of public workers and bondholders are in conflict in the bankruptcy of Stockton, Calif., but that case is not yet far enough along to be of any guidance to Detroit.

With talks on labor issues scheduled for Thursday, municipal bond market participants say one of their main concerns is that the city’s proposal would flatten the traditional hierarchy of creditors, putting say, a retired librarian on par with an investor holding a general obligation bond. That does not square with the laws and conventions of the municipal bond market, where for decades small investors have been told that such bonds are among the safest investments and that for “general obligation” bonds cities could even be compelled to raise taxes, if that’s what it took to make good. The “full faith and credit” pledge was supposed to make such bonds stronger than the other main type of muni — revenue bonds, which promised to pay investors out of project revenue.

Public finance experts have warned that broad societal problems could follow a loss of faith in municipalities’ commitments to honor their pledges. In a major report on the state of the muni market last year, the Securities and Exchange Commission warned that communities would find it increasingly costly to raise money, throwing into question the time-honored practices of building and financing public works at the local level.

Article source: http://www.nytimes.com/2013/06/18/business/in-embattled-detroit-no-talk-of-sharing-pain.html?partner=rss&emc=rss

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More States Look to Sports Betting as Leagues Line Up Against It

March 28, 2013 by Leave a Comment

Voters in New Jersey passed a referendum by a 2-to-1 margin making sports betting legal, and last year Gov. Chris Christie signed a law legalizing it at Atlantic City’s 12 casinos and the state’s 4 horse racing tracks. Illinois is considering allowing sports betting, and California lawmakers are looking to reintroduce a sports gambling bill that the State Senate passed last year.

All this has the sports’ governing bodies on high alert. The N.C.A.A. has filed a lawsuit with the N.F.L., the N.H.L., the N.B.A. and Major League Baseball claiming that sports betting in New Jersey would “irreparably” corrupt sports in the United States. This year they were joined by the Justice Department, which defended the constitutionality of a 1992 law banning sports betting outside Nevada and a few other states that had long allowed such gambling.

The N.C.A.A. also canceled several tournaments and sporting events in the state and said it would bar New Jersey from hosting events in the future if sports betting were put into effect.

Last month, a federal judge ruled against New Jersey and upheld the ban on sports betting. The state is appealing, and legal experts say the case will likely reach the Supreme Court.

As gamblers poured into Las Vegas in anticipation of three weeks of betting on unpredictable tournament action, the N.C.A.A. sounded this warning on its official Twitter account: “Student-athletes, coaches admins: A reminder that betting on #MarchMadness isn’t worth the risks,” with a link to a release detailing the arguments against wagering on sports.

In a statement, the organization was concise in explaining its opposition. “The N.C.A.A. maintains that the spread of legalized sports wagering is a threat to the integrity of athletic competition and student-athlete well-being,” it said.

Nevertheless, the money being wagered on the tournament will more than double the record $98.9 million bet on last month’s Super Bowl.

The federal law on sports betting, which was championed by then-Senator Bill Bradley of New Jersey, a former player for the Knicks, was intended to limit its expansion beyond Nevada, Delaware, Oregon and Montana. But New Jersey and advocates in other states say there are too many dollars at stake for that policy to continue to make sense.

Nevada took in more than $3.4 billion in bets on sports last year, generating $15 million to $20 million in tax revenue. The F.B.I. estimates that $2.6 billion is bet illegally on the college basketball tournament alone, while the National Gambling Impact Study Commission says $380 billion is bet annually with bookies or offshore betting operations, often controlled by organized crime, on all sporting events together.

Last March, Nevada sports books handled $288.5 million in bets on basketball, an estimated 70 percent of them — or $201 million — on college games, according to the state’s gambling commission.

In Britain, where bookmaking shops are ubiquitous and online wagering is readily available, bookmakers paid 900 million pounds in taxes (about $1.36 billion), 24 percent of it, or about $343 million, on sports and horse racing, according to a study by Deloitte on behalf of the Association of British Bookmakers.

The predawn scene at the Las Vegas Hotel and Casino last week served as a vivid illustration of Nevada’s special lure. At 4:30 a.m., a group had claimed a table in the sports book area of the casino, and within three hours, hundreds of people were in a line that snaked through slot machines and onto the casino floor.

“This is the only place to be during the tournament,” said Laurie Moss, a Denver software architect who has made the pilgrimage here for 13 years to bet on college games.

The growing acceptance of legalized sports betting has been reflected in an array of polls. Most recently, one from Fairleigh Dickinson University’s PublicMind in December found that 51 percent of registered voters favor legalizing sports betting in states where it is not legal. That was up from its March 2010 poll, which showed 39 percent of voters supported expanding sports betting.

Article source: http://www.nytimes.com/2013/03/28/sports/more-states-look-to-get-in-the-sports-betting-game.html?partner=rss&emc=rss

Filed Under: Economy News Tagged With: , ,

Media Decoder Blog: A Tale From Gore’s Quest for Current TV

January 9, 2013 by Leave a Comment

I left one out.

Last week, in an article detailing Al Gore’s negotiations with cable and satellite carriers about the sale of his cable channel Current TV, I wrote, “Mr. Gore, who lost his last big legal argument — the one in 2000 — succeeded.” He got most of the big carriers to consent to the takeover of Current by Al Jazeera.

There was actually another big legal argument by Mr. Gore between the time he lost the presidency in 2000 and he won support for the Current TV sale in 2013. It’s a tale almost no one knows about, of something that took place in 2005 when Mr. Gore and his business partner, Joel Hyatt, were trying to get Current off the ground. This one, Mr. Gore won.

The year before, Mr. Gore and Mr. Hyatt had acquired a small international news channel called Newsworld International from Vivendi. They were initially going to rename the channel INdTV. But Mr. Hyatt came up with another name, Current TV, while on a ski vacation in Utah with his son.

He and Mr. Gore announced the new name in April 2005, four months before the planned start (or, rather, restart) of the channel. But a company called Current Communications objected. This Current was a provider of broadband Internet through electric power lines in Cincinnati, with ambitious plans to expand to other states.

The company owned trademarks for “Current Communications” and “Current Broadband,” and had submitted applications for a batch of other Current-related names. So Current Communications filed a trademark lawsuit and sought a preliminary injunction to stop Current TV from being born.

The ensuing hearing was held “in a federal courthouse in Cincinnati, in front of a federal judge appointed by George H.W. Bush, who also was a former Republican county commissioner,” said Joseph R. Dreitler, the lead lawyer for Current TV.

Cincinnati is a Republican city, and there was some concern that Mr. Gore would “get homered by a local Republican,” Mr. Dreitler said, meaning that the judge would favor the home team, not the out-of-town Democratic visitor.

The hearing for the injunction was scheduled for late July, a week before Current TV’s scheduled restart date. Mr. Dreitler recalled that Mr. Gore and Mr. Hyatt told him shortly before the hearing, “If you lose, we will have lost $75 million.” He answered, “Thanks, guys, no pressure there.”

Mr. Gore was present for the entire hearing. During the break for lunch, he and Mr. Hyatt dined at a nearby Wendy’s.

According to Judge Sandra S. Beckwith’s subsequent ruling, Current TV’s lawyers asserted in court that if the injunction were granted, the channel would have “virtually no programming to put on the air (all of its logos, etc. have already been incorporated into its programming), the network will ‘go dark’ — i.e. stop broadcasting.”

“It will then default on its leases,” their argument continued, “be compelled to cease business, and investors’ contributions of $75 million will be lost.”

Current Communications’ lawyers said that it had spent a lot of money, too: millions of dollars marketing its brand-name service. Looking a few years into the future, the company said it envisioned providing fast access to video via its power-line broadband. It’s easy to imagine that service being called Current TV.

But Judge Beckwith found that this service still appeared to be in the planning stages. And she said that the claim about millions in marketing expenditures was “suspect.” Over all, she concluded, “neither party appears to be clearly headed for a collision with the services presently contemplated by the other, and neither party appears capable of providing the other’s services.”

Judge Beckwith ruled that Current Communications would most likely not prevail at trial, so she denied the company’s request for a preliminary injunction.

Mr. Dreitler said the case was his defining moment as a trademark lawyer. He recalled walking out of the courthouse with his clients and hearing Mr. Gore say to Mr. Hyatt, loud enough so Mr. Dreitler could hear, “If Dreitler had done that argument in the Supreme Court, I would be president.”

Today, the tale is just a footnote for history. The Current Communications name has been retired; the company now goes by Cincinnati Communications. In a few months the Current TV name will be retired, too, and Al Jazeera will take its place.

“It’s just a shame they could never break through the clutter and talking heads of cable,” Mr. Dreitler said.

Article source: http://mediadecoder.blogs.nytimes.com/2013/01/08/a-tale-from-gores-quest-for-current-tv/?partner=rss&emc=rss

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Federal Judge in Wisconsin Challenges an S.E.C. Settlement

December 29, 2011 by Leave a Comment

That represents a significant expansion of the impact of the Citigroup case, in which Judge Jed S. Rakoff of the Federal District Court in New York threw out a proposed settlement between the company and the S.E.C.

Judge Rakoff said he had rejected the Citigroup settlement because there were no established facts on which to base a decision whether the settlement was “fair, reasonable, adequate and in the public interest.”

At the time of the November decision, lawyers who were watching the case noted that the ruling did not constitute a precedent that would bind other judges in New York or elsewhere.

But the fact that a federal judge halfway across the country cited the case less than a month later means that other judges have noticed the ruling — which is significant because most S.E.C. enforcement cases rely on similar, negotiated settlements.

In a Dec. 20 letter to the S.E.C., Judge Rudolph T. Randa of the Federal District Court for the Eastern District of Wisconsin questioned the commission about its proposed settlement of fraud charges against the Koss Corporation, a Milwaukee-based maker and seller of stereo headphones.

Judge Randa asked the S.E.C. for “a written factual predicate for why it believes the court should find that the proposed final judgments are fair, reasonable, adequate and in the public interest.” In doing so, the judge cited Judge Rakoff’s opinion and language in S.E.C. v. Citigroup Global Markets.

John Nester, an S.E.C. spokesman, said, “We will provide the court with the information as requested.” The S.E.C. has until Jan. 24 to file a response.

Koss and its chief executive, Michael J. Koss, were accused of maintaining materially inaccurate financial statements, books and records from 2005 through 2009, a period when the company’s principal accounting officer embezzled more than $30 million from the company. The company and Mr. Koss were also charged with failing to maintain adequate financial controls. They agreed to settle the case without admitting or denying the charges.

Such language is standard in S.E.C. settlements, but Judge Randa raised concerns about the vagueness of a proposed injunction that would restrain Koss from violating the same securities laws. The settlement would require the company to maintain adequate records and a system of internal accounting controls.

“If enforcement becomes necessary,” he wrote, “the terms of such a vague injunction would make it difficult for the court.”

C. Evan Stewart, a partner at the New York law firm Zuckerman Spaeder, said that the judge in Wisconsin appeared to pick up on one of Judge’s Rakoff’s most prominent points — that while the S.E.C. was not required to get a court injunction to settle fraud cases, if it did so the court should not rubber-stamp an agreement.

Judge Randa also cited an earlier Rakoff opinion, in a 2009 S.E.C. case against Bank of America, in which the judge declined to accept a proposed settlement and made the parties draw up another agreement, which called for a bigger fine against the bank.

In 2010, two federal judges in the District of Columbia questioned the adequacy of proposed S.E.C. settlements, one with Barclays and another in an unrelated case involving Citigroup.

The S.E.C. and Citigroup have appealed Judge Rakoff’s most recent decision, and the United States Court of Appeals for the Second Circuit on Tuesday put the case on temporary hold while it decides whether to grant an expedited hearing.

“A lot of judges are going to take a little time to see what the Second Circuit does before falling in line behind Judge Rakoff,” Mr. Stewart said. But, he added, he believed that the most recent citing of Judge Rakoff “undoubtedly will not be the last.”

Article source: http://www.nytimes.com/2011/12/29/business/judge-in-wisconsin-challenges-sec-settlement.html?partner=rss&emc=rss

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DealBook: AT&T Ends $39 Billion Bid for T-Mobile

December 19, 2011 by Leave a Comment

ATT said on Monday afternoon that it had withdrawn its $39 billion takeover bid for T-Mobile USA, acknowledging that it could not overcome opposition from the Obama administration to creating the nation’s biggest cellphone service provider.

The company said in a statement that it would continue to invest in wireless spectrum, but could not overcome resistance from both the Justice Department and the Federal Communications Commission. It added that American wireless customers “will be harmed and needed investment will be stifled” by the regulators’ decisions.

ATT had lain the groundwork for its decision in recent weeks, including by withdrawing its proposal for F.C.C. approval and by asking a federal judge to postpone proceedings in a lawsuit filed by the Justice Department. Both regulators have indicated strong opposition to the deal.

ATT said last month that it would take a $4 billion accounting charge this quarter to reflect the potential breakup of the deal.

Article source: http://feeds.nytimes.com/click.phdo?i=f8fa746f2bf01bd55b994033bc4769a7

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U.S. Clears Google Acquisition of Travel Software

April 8, 2011 by Leave a Comment

In a victory with strings attached for Google, the Justice Department proposed a settlement on Friday under which it would approve the search giant’s $700 million acquisition of ITA Software, a maker of travel search software.

After an intensive, eight-month investigation, regulators decided that Google could complete the acquisition, but outlined conditions that will limit how the company uses the technology, licenses it to competitors and handles complaints. The department’s proposed settlement will now undergo judicial review.

The deal is Google’s latest antitrust battle as it faces growing scrutiny from regulators worldwide. It recently agreed to 20 years of privacy audits by the Federal Trade Commission in a settlement over deceptive privacy practices in its introduction of Buzz, the social networking tool. And a federal judge in New York rejected a settlement that would have allowed it to create a digital library, saying it would give too much control to Google’s search engine.

The settlement over the ITA acquisition would be in place for five years, after which Google can use ITA’s technology however it chooses. But because it allows the government to monitor how Google offers travel search, the settlement it would open the door for regulators to collect information that could be used in a broader antitrust case.

“This merger monitoring actually creates an ongoing investigation of sorts,” said Rebecca Arbogast, an analyst with Stifel Nicolaus. “Anything related to search or travel, the government’s going to be permitted to get information, which looks very much like an investigation.” She compared it to early moves the government made in the antitrust case against Microsoft.

The Justice Department said the acquisition, without conditions, would have broken the law by lessening competition and reducing choice for consumers. Under the settlement, Google must continue to license the flight software to other companies and continue to develop ITA products and offer them to other companies. The settlement also said that Google must erect a firewall so it cannot see sensitive information from competitors, and develop a formal reporting mechanism for complaints that Google is acting unfairly.

“It’s important to us that ITA continue with business as usual, providing great service to its business partners,” Jeff Huber, Google’s senior vice president for commerce and local, wrote in a company blog post. “We indicated last July that we would honor ITA’s existing contracts. Today we’ve formally committed to let ITA’s customers extend their contracts into 2016.”

The department’s approving of an acquisition with restrictions is common, said Prof. Herbert Hovenkamp, an antitrust expert who teaches at the University of Iowa College of Law. “The Justice Department operates under what is sometimes called a ‘fix it first rule,’ which is that if you want us to approve your deal, we’re going to instruct you on some changes or terms you have to make.”

Professor Hovenkamp added, “It’s a victory for both sides because the parties get to go ahead with the merger and the Justice Department gets to go to the public and say, ‘We’ve protected you from the anti-competitive possibilities.’ “

Google announced its intention to buy ITA in July, and said at the time that it was bracing for close regulatory scrutiny.

ITA, which was started at M.I.T. in the 1990s, makes software to search for flights and compare prices. Many airlines and online travel agents license the software, including Orbitz, Kayak, American Airlines, United Airlines and Microsoft’s Bing Travel.

Google has said it does not plan to sell airline tickets itself. Instead, it will develop a flight search engine, similar to Microsoft’s Bing Travel, that sends shoppers to the airlines’ own Web sites or to online travel agencies.

It also wants to develop a more advanced kind of flight search. For instance, a traveler could tell Google to find someplace to go that was snowy and fewer than five hours away for less than $300 round-trip, and Google would present different itineraries.

Opponents of the acquisition, including Microsoft, Kayak and Expedia, said they worried that Google would not renew ITA’s licenses so their sites would no longer be able to use ITA’s software. Google could also show its travel results above links to other online travel sites, according to FairSearch, a group formed by companies opposing the deal. Ms. Arbogast said she expected the settlement to include government oversight of Google travel search results, which it did not. 

“The merger review did not impose any substantive search neutrality conditions on Google,” she said. “That remains to be decided another day.” 

FairSearch called the decision “a clear win” in a statement. “The department concluded Google’s unrestricted control over ITA’s key flight search technology would have violated the antitrust laws,” it said. “By putting in place strong, ongoing oversight and enforcement tools, the department has ensured that consumers will continue to benefit from vibrant competition and innovation in travel search.” 

Google has repeatedly said that it would renew the licenses and strike new deals, and that it would not poach traffic from other travel search sites because they get only a small percentage of their traffic from Google.

Christine A. Varney, head of the Justice Department’s antitrust division, has been aggressive about pursuing antitrust cases. But these issues become trickier online, where competition is a click away, an argument that Google often makes.

Google is still fighting other antitrust battles. The Texas attorney general is investigating whether Google has skewed search results in favor of advertisers or its own products and the European Union is investigating Google’s domination in search. Microsoft filed an antitrust complaint against Google in the European Union last month.

Google’s biggest loss was in 2008, when the Justice Department prepared to file a lawsuit to block a search advertising partnership involving Google and Yahoo, prompting Google to walk away from the deal.

Google also suffered a defeat last month when a federal judge in New York rejected a $125 million legal settlement the company had made with groups representing authors and publishers so that it could pursue its ambition to digitize every book ever published and make them widely available. In rejecting the deal, the judge cited antitrust, copyright and other concerns.

But Google has also had its share of victories in antitrust matters. Last year, the Federal Trade Commission approved Google’s $750 million acquisition of AdMob, the mobile advertising company, only after Apple eased antitrust concerns by buying a similar start-up. In 2007, the F.T.C. approved Google’s $3.1 billion acquisition of DoubleClick, the display advertising firm, after Google executives were called to defend it in Congress.

Article source: http://www.nytimes.com/2011/04/09/technology/09google.html?partner=rss&emc=rss

Filed Under: Global Business Tagged With: , ,

U.S. Seeks HSBC Customers’ Names as Part of Tax Inquiry

April 7, 2011 by Leave a Comment

The request, from the civil tax division of the Justice Department, is part of a widening investigation into private offshore services that helped scores of wealthy American clients avoid income taxes. The suit is an indication that federal authorities are broadening their scrutiny to include countries and regions beyond Switzerland, Liechtenstein, Singapore and the Caribbean. India is not usually thought of as a tax haven.

Federal authorities filed a similar request on UBS, the Swiss banking giant, in 2008. The government dropped the lawsuit last August after the Swiss government agreed to turn over the names of 4,450 UBS American clients as part of a broad investigation of the bank’s offshore private banking services. The bank also paid $780 million to settle criminal accusations that it had defrauded the I.R.S. by allowing wealthy Americans to hide billions of dollars in taxes in secret offshore bank accounts.

Pressure on HSBC, one of the world’s largest banks, threatens to expose more layers of Swiss-style banking secrecy, a tradition that began in the Middle Ages and that has spread around the world.

The request, made in court papers filed in the Federal District Court in San Francisco, seeks to force HSBC’s main United States affiliate, HSBC Bank USA, to turn over details of accounts held by wealthy American from 2002 through 2010 through the bank’s affiliate in India, HSBC India. Approval from a federal judge is required before the Internal Revenue Service can issue the summons. HSBC USA operated representative offices for HSBC India under the name N.R.I. Services, in New York and Fremont, Calif., according to court documents. Offshore private banking services were offered to people of Indian origin living outside of India.

Federal authorities said in January that they were considering filing the request, known as a John Doe summons, on HSBC after the indictment of a wealthy Indian-American client of an international bank that was not named but was identified by people briefed on the matter as HSBC.

The client, Vaibhav Dahake, who was born in India and became a naturalized American citizen in 2006, told prosecutors that HSBC had sought out wealthy Indian-Americans for undeclared offshore banking services through N.R.I. Services.

Article source: http://feeds.nytimes.com/click.phdo?i=c3850655c15f12bf6443a94a894b2b87

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