December 22, 2024

DealBook: 2 Top Officers at Barclays to Step Down

LONDON – Barclays said on Sunday that its chief financial officer and its general counsel would resign, the latest departures after the British bank’s involvement in a series of scandals, including an investigation into the manipulation of global interest rates.

The announcement comes less than two weeks before Barclays is to announce a far-reaching overhaul of its business. The finance chief, Christopher G. Lucas, and the group general counsel, Mark Harding, will remain in their jobs until the bank appoints their successors, Barclays said in a statement.

Mr. Lucas is one of four current and former Barclays executives who have been ensnared by a regulatory investigation into how the bank raised capital from a Qatari fund during the financial crisis.

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Antony P. Jenkins, the bank’s chief executive, said Mr. Lucas and Mr. Harding told him late last year that they were considering resigning.

“The rationale which each shared with me was consistent and, typically, grounded in wanting to do what is best for the bank,” Mr. Jenkins said. “Their decision to retire was theirs alone.”

Mr. Lucas said it was an “appropriate time, as we start the implementation of the transform program, to begin my retirement from my role on the board and executive committee, and to pass the mantle on to a successor.”

Since taking over the top job from Robert E. Diamond Jr. last year, Mr. Jenkins has been seeking to repair the bank’s reputation and regain trust among investors by improving profitability and reducing risks.

Mr. Diamond resigned amid an investigation into the bank’s role in the manipulation of the London interbank offered rate, or Libor, which Barclays settled for $450 million in June. Marcus Agius resigned as chairman, and the chief operating officer, Jerry del Missier, also left Barclays.

Mr. Jenkins said on Friday that he would give up his bonus for 2012, which could have totaled as much as $4.3 million, under some pressure from lawmakers. The bank also recently faced a $1 billion bill to compensate clients to whom it inappropriately sold payment insurance, and it might yet have to compensate some customers that had bought a certain interest rate-hedging product.

In the statement, Mr. Jenkins said he planned to turn Barclays into the “go to” bank for customers and said the planned changes were expected to take five to 10 years.

Mr. Lucas became finance chief in 2007. He previously worked for the accounting firm PricewaterhouseCoopers, where he was head of financial services in Britain.

Mr. Harding joined Barclays in 2003 from the law firm Clifford Chance. He is also chairman of the bank’s reputation council.

Article source: http://dealbook.nytimes.com/2013/02/03/barclays-c-f-o-to-step-down/?partner=rss&emc=rss

Wealth Matters: Defined-Benefit Plans Allow Fast Retirement Saving, but With Risks

So I couldn’t help but be skeptical when I was told about a plan aimed at small-business owners in their 50s who have saved little for retirement but can now afford to put aside a lot of money each year. They can then deduct that money as a business expense, resulting in a significant tax savings.

But I checked with the Internal Revenue Service, and the plan is indeed legitimate.

It is a defined-benefit plan, much like the one large employers once regularly offered their workers, that guarantees a set monthly payment in retirement. In this case, though, the plan works best for really small businesses — those that employ just one or two people.

The I.R.S. allows a maximum annual contribution to the plan of about $255,000 for people in their 50s. (For younger workers, the contribution limit is lower, because the calculation is based on the number of years until retirement. In some cases, the limit is so low that other retirement savings options might be better.) Total holdings in the plan are limited to $2.3 million to $2.4 million, enough to cover the maximum allowed payment in retirement of $200,000 a year.

Advisers said the plans were less effective in companies with more employees, particularly older ones, because the owner would be required to make contributions for all of them, and at a high level, since older employees are typically better paid and closer to retirement. (If the additional employees were young and low-paid, the cost of offering the plan to them might be low enough for it to make sense.)

“It’s not too good to be true,” said Lisa C. Germano, president and general counsel at Actuarial Benefits and Design Company in Midlothian, Va. “But you need to be able to fund the plan and fund it for an indefinite period. It’s a commitment. That’s one of the reasons you get the reward.”

Some advisers like Ms. Germano were worried that, like other generous deductions, this one could be threatened in the current tax and budget negotiations. But regardless of how the talks in Washington turn out, this is still the time of year when many small-business owners need to decide whether to set up a defined-benefit plan or stick with more traditional forms of retirement savings, like SEP I.R.A.’s for the self-employed or a profit-sharing plan.

Here is some of what I learned.

UPSIDE Defined-benefit plans are mainly a way for small-business owners who neglected to save for retirement to catch up. The ideal candidates can put away $100,000 to $150,000 a year for at least 10 years, said Leigh Goldblatt, vice president and chief compliance officer at Glazer Financial Network.

This was the case with John Rogers, a Denver businessman. “I was in my late 50s and I didn’t have a penny saved for retirement,” he said.

He lost his life savings in his 40s, he said, in a recycling company he started with friends. He also raised six children, four of whom he said he put through college.

But by 2006, he was six years into being an independent contractor for Univera, a company that makes nutritional supplements. (The company’s sales model is similar to Amway’s, where people like Mr. Rogers sell to individuals or find other people to sell for them.)

With his business providing steady, predictable income — he and his wife are ranked as top sellers for the company — he wanted to start saving. He said a defined-benefit plan was attractive for both deferring taxes and for saving for retirement.

“Our adviser tells us at the beginning of the year what we have to contribute,” said Mr. Rogers, 63. “We’re very disciplined. We pay our defined-benefit plan first and then our business expenses.”

But even though the I.R.S. assumes the plan will make monthly payments in retirement, which is why it allows people to save so much over a short period of time, owners shut down most of these plans and roll the money in them to a regular retirement account, said Mr. Goldblatt, whose firm advised Mr. Rogers. This reduces expenses and gives the owner control over how to withdraw the money.

DOWNSIDES Such a chance for a retirement savings do-over, as it were, does not come without catches. And skeptics say these plans lure people with the prospect of quick and large retirement savings without discussing the risks.

Article source: http://www.nytimes.com/2012/12/01/your-money/defined-benefit-plans-allow-fast-retirement-saving-but-with-risks.html?partner=rss&emc=rss

DealBook: At Gupta’s Insider Trial, a Star Goldman Witness and Charts

Lloyd Blankfein, chief executive of Goldman Sachs, arriving at federal court on Thursday with Gregory Palm, Goldman's general counsel, at left.Scott Eells/Bloomberg NewsLloyd Blankfein, chief executive of Goldman Sachs, arriving at federal court on Thursday with Gregory Palm, Goldman’s general counsel, at left.

8:13 p.m. | Updated

Lloyd C. Blankfein, the chief executive of Goldman Sachs, brought star power to the courtroom at the trial of Rajat K. Gupta on Thursday, his second day on the witness stand in the insider trading case.

But while Mr. Blankfein’s presence aroused the packed spectators’ gallery, the jury might have been more impressed with a series of “summary charts” — trading data, bar charts and phone records that crystallized the case that prosecutors have presented over the last three weeks.

The government has charged Mr. Gupta, a former director of Goldman and Procter Gamble, with leaking confidential information about those two companies to Raj Rajaratnam, the former head of the Galleon Group hedge fund. Judge Jed S. Rakoff is presiding over the trial at Federal District Court in Manhattan.

Mr. Rajaratnam was convicted by a jury about a year ago and is serving an 11-year prison term.

The government used James Barnacle Jr., an F.B.I. agent, to methodically walk the jury through the summary charts. The exhibits consisted of phone records documenting Mr. Gupta’s participation in Goldman and P. G. board calls previewing the companies’ earnings. Then, the jury saw charts of aberrational trading at Galleon in the two companies’ stocks in advance of the earnings announcements. Next, the jury was shown the news releases announcing those earnings, followed by spreadsheets listing Galleon’s supposed illegal gains on the trades.

For instance, evidence showed that on March 12, 2007, Mr. Gupta dialed in to Goldman’s board call from Galleon’s offices. About a half-hour after the call ended, Galleon’s traders loaded up on Goldman stock, buying 450,000 shares worth about $91 million.

The next day, Goldman announced a better-than-expected quarter, surprising Wall Street analysts by posting earnings that were 32 percent above estimates. Galleon made about $2 million on the trade.

On cross-examination of Mr. Barnacle, David S. Frankel, a lawyer for Mr. Gupta, highlighted two different money-losing Goldman and P. G. trades that Galleon made after Mr. Gupta is said to have tipped off the firm. Mr. Frankel pointed out that the F.B.I. had not prepared charts highlighting when Galleon lost money, insinuating that the government’s evidence was misleading.

“So you made charts for trading profits but not for losses, correct?” Mr. Frankel asked.

“No, I did not,” Mr. Barnacle said.

Mr. Blankfein followed Mr. Barnacle on the witness stand. He had started his testimony on Monday, but had a two-day hiatus because the trial went dark on Tuesday and on Wednesday the judge granted Mr. Blankfein permission to attend his daughter’s high school graduation.

The government’s direct examination of Mr. Blankfein largely consisted of his testifying about the secrecy surrounding the various board discussions that Mr. Gupta reportedly leaked to Mr. Rajaratnam.

The March 12, 2007, meeting, for example, was confidential, Mr. Blankfein said, because it was “potentially market-moving with respect to our stock.”

During Mr. Blankfein’s cross-examination, Gary P. Naftalis, a lawyer for Mr. Gupta, homed in on September 2008. That month, Mr. Gupta planned to resign from the Goldman board because he was going to take a job at the private equity firm Kohlberg Kravis Roberts Company, presenting potential conflicts. Goldman had prepared a news release on Mr. Gupta’s departure that praised his work on the board. The bank even gave him cuff links as a token of its gratitude for his service, Mr. Blankfein acknowledged.

But given the Lehman Brothers bankruptcy and the global financial crisis that ensued that month, Mr. Blankfein persuaded Mr. Gupta to stay on as a director, he testified, to avoid any perception of instability. Mr. Naftalis used the questioning to suggest to the jury that Mr. Gupta was a valued member of the board.

Mr. Blankfein, dressed in a gray suit and navy tie, appeared at ease on the witness stand, grinning and smirking his way through the testimony. Known for his rapier wit, Mr. Blankfein happily engaged in banter with Mr. Naftalis.

Early in his cross-examination, Mr. Naftalis reviewed Mr. Blankfein’s résumé for the jury, taking him through his brief, earlier career as a lawyer and his ascension at Goldman. Mr. Naftalis noted that Mr. Blankfein became chief executive of Goldman in 2006.

“You became the No. 1 person at Goldman Sachs,” Mr. Naftalis said.

Mr. Blankfein corrected him.

“Chairman and chief executive is my official title,” Mr. Blankfein said. He then broke into a smile. “No. 1’s not an official title.”

Judge Rakoff expressed further frustration with the trial’s slow pace.

He had originally wanted Mr. Blankfein’s testimony to finish on Thursday and the government to rest its case. But Mr. Blankfein was still testifying when the trial broke for the day, meaning that Goldman’s No. 1 will be back in court on Friday, his third day on the witness stand.


This post has been revised to reflect the following correction:

Correction: June 7, 2012

An earlier version of this article referred incorrectly to some of the evidence presented at the trial on Thursday. The evidence showed that Rajat K. Gupta listened to a Goldman Sachs board call from the offices of the Galleon Group hedge fund. It did not suggest that Mr. Gupta allowed Raj Rajaratnam, the former head of Galleon to listen to a conference call among Goldman board members in March 2007.

Article source: http://dealbook.nytimes.com/2012/06/07/at-guptas-insider-trial-a-star-goldman-witness-and-charts/?partner=rss&emc=rss

Slipstream: Bill Would Let Video Consumers Disclose All Their Choices

Netflix is backing a bill in Congress that would amend the Video Privacy Protection Act, a 1988 law that requires a video services company to get a customer’s written consent when it seeks to disclose that client’s personal information, such as rental history. The new bill, passed by the House last Tuesday, would allow consumers to give one-time blanket consent online for a company to share their viewing habits continuously.

In a social networking ecosystem where sharing information about personal activities is already ubiquitous, the bill may seem to be a no-brainer. After all, Foursquare already shares its members’ locations. Spotify already shares the titles of songs its members are playing with their Facebook cohorts. And Facebook publishes links to articles that its members’ friends have read. So, Netflix executives argue, it’s high time for a bill that would give members of video services the same option to divulge their personal details.

“It really is meant to empower the consumer to be able to share with their friends,” says David Hyman, the general counsel of Netflix. He says the bill simply updates an outmoded law so that it matches the way we live now. “It really kind of levels the playing field in social media.”

But some privacy scholars and advocates are warning that the bill actually diminishes a person’s ability to select what to share — and with whom — on a case-by-case basis. If the Senate passes the bill as currently written, they say, the revised law would undermine consumers’ control over information collected about them even as it empowers companies to create and share more detailed customer profiles. Netflix isn’t lobbying for a mere amendment, they argue; it wants Congress to dismantle a gold standard among privacy statutes.

“They are not trying to modernize the law,” says Marc Rotenberg, executive director of the Electronic Privacy Information Center, a public interest research group in Washington. “They are trying to gut the law.” At stake, he argues, is not the ostensible sharing of a person’s video viewing history, but rather the larger issue of meaningful consent.

The Video Privacy Protection Act came about under unusual circumstances.

In 1987, the Washington City Paper, a weekly newspaper, published the video rental records of Judge Robert H. Bork, who at the time was a nominee to the Supreme Court. One of the paper’s reporters had obtained the records from Potomac Video, a local rental store. Judge Bork’s choice of movies — he rented a number of classic feature films starring Cary Grant — may have seemed innocuous.

But the disclosure of Judge Bork’s cultural consumption so alarmed Congress that it quickly passed a law giving individuals the power to consent to have their records shared. The statute, nicknamed the “Bork law,” also made video services companies liable for damages if they divulged consumers’ records outside the course of ordinary business.

To proponents of the new amendment, the law looks like a relic. Members of social networks today, they say, don’t want to be asked, each time they’ve watched another installment of “The Office,” whether that information can be shared with their friends.

People prefer frictionless sharing, a convenience hindered by the current law, says Christopher Wolf, a lawyer who is co-chairman of the Future of Privacy Forum, a Washington research group that receives financing from Google, Facebook and other digital media companies.

Moreover, Mr. Wolf says, the law restricts video services that seek to integrate with social networks like Facebook even as some music sites have already introduced sharing.

“Companies should not be exposed to hundreds of millions in damages just because particular hoops weren’t jumped through,” he says. “If people can share what they are listening to on Spotify, why shouldn’t they be able to share what videos they are watching?”

Still, video viewing remains a delicate area for many people because movie choices may open a window to a person’s religious or sexual preferences.

“Do you want your conservative friends to know that you watched a hyperviolent “Saw” movie or movies about the gay experience like ‘Brokeback Mountain’?” says Kevin Bankston, a senior staff lawyer at the Electronic Frontier Foundation, a digital civil rights group in San Francisco. “Do you want your liberal friends to know you watch an enormous amount of religious movies?”

Any amendment, he argues, should preserve a person’s ability to choose what to share, case by case, rather than ceding control by giving a general waiver to a company.

“You should have the option to decide what goes on your wall,” he says.

But Netflix argues that the marketplace should dictate consumers’ level of control. Mr. Hyman, Netflix’s general counsel, says the bill lets people opt in to continual sharing by giving their affirmative consent — or to choose not to share at all.

Netflix, he adds, has already introduced a feature for its subscribers in Canada and Latin America who want to share the movies and TV shows they watch with their friends on the video site and on Facebook. Netflix gives these subscribers a choice of opting out of sharing an individual film or show.

“If it is determined that consumers want more control over what they share on a granular basis,” Mr. Hyman says, “you will see that being offered as opposed to it being legislated.”

To advance its agenda, Netflix has increased its presence in Washington. It spent $325,000 on lobbying in the first three quarters of this year, versus $30,000 in the same period in 2009, according to a report from the Center for Responsive Politics, a research group that tracks political spending.

Last week, some legislators complained that proponents of the bill rushed it through the House without a hearing or a full-scale debate. The bill is likely to face tougher scrutiny in the Senate.

Privacy advocates say they expect Senator Al Franken, the Minnesota Democrat who is chairman of the privacy, technology and law subcommittee of the Senate Judiciary Committee, to hold a hearing on the amendment early next year. And the Judiciary Committee, which has often opposed amending laws for the primary benefit of one company, may decide to strengthen the Bork law — by clarifying that it covers online video streaming, not just the old-fashioned rental of physical videos. (Hulu, a streaming video service, has already introduced a sharing option on Facebook.)

In an interview last week, Judge Bork, a distinguished fellow at the Hudson Institute, said he was glad Congress had remedied the unauthorized disclosure of video rental records with a law. But, he added, the amendment seemed to call for further public discussion.

“If you are going to enact change to a statute,” Judge Bork said, “you have to debate the question of whether the costs outweigh the benefits.”

E-mail: slipstream@nytimes.com.

Article source: http://feeds.nytimes.com/click.phdo?i=1a0a98d3d88ed42f1a3044af251bf959

Labor Board Drops Case Against Boeing

The N.L.R.B.’s acting general counsel, Lafe Solomon, said the labor board had decided to end the case after the machinists’ union — which originally asked for the case to be brought — urged the board on Thursday to withdraw it.

On Wednesday night, the union announced that 74 percent of its 31,000 Boeing workers in Washington State had voted to ratify a four-year contract extension that includes substantial raises, unusual job security provisions and a commitment by Boeing to expand aircraft production in the Puget Sound area.

Mr. Solomon, who has faced heavy criticism for bringing the case, said he was delighted that it was settled, noting that 90 percent of the cases the labor brings are settled.

“This is the outcome we always preferred, and that is typical for our agency,” Mr. Solomon said in a telephone conference call with reporters.

Mr. Solomon had filed the case against Boeing last April. Agreeing with the union’s position, he asserted that Boeing’s decision to build the $750 million plant in South Carolina constituted illegal retaliation against the union’s members in Washington for having engaged in their federally protected right to strike.

The case against Boeing enraged South Carolina officials, who saw it as an insulting blow to one of their greatest economic development successes. It also angered Republican lawmakers and presidential candidates, who asserted that federal regulators should not engage in heavy-handed regulation that tells companies where they can or cannot invest. Mitt Romney has called the labor board’s case a job killer, while Newt Gingrich has proposed cutting off the board’s funds.

The machinists’ local that asked the labor board to bring the case — Local 751 of the International Association of Machinists and Aerospace Workers, which represents Boeing workers in Washington State — was angry at Boeing’s decision to build the South Carolina plant because it feared that it would result in the loss of thousands of jobs in the Puget Sound area.

Local 751’s new contract went far to please and reassure the union and its members because Boeing pledged to build a new generation of its Boeing 737 passenger jet in the Puget Sound area, a move that will create several thousand more jobs there.

“The case was always about the loss of future jobs in the Seattle area,” Mr. Solomon said. “This agreement has resolved that issue. There is job security in the Washington area.”

Boeing had argued that it did not engage in any illegal retaliation against union members in Washington, and it further asserted that its new plant in North Charleston, S.C., which is producing 787 Dreamliner passenger jets, had in no way reduced employment in Washington State. Many business leaders and Republicans said it was outrageous for the labor board to seek to punish Boeing for deciding to build a new plant outside Washington State to avoid the continued labor strife there. The machinists’ union has engaged in five strikes against Boeing since 1977, including a 58-day strike in 2008 that cost the company $1.8 billion.

Boeing applauded the N.L.R.B.’s move. “We have maintained from the outset that the complaint was without merit and that the best course of action would be for it to be dropped,” said Tim Neal, a Boeing spokesman. “Today that happened. Boeing is grateful for the overwhelming support we received from across the country to vigorously contest this complaint and support the legitimate rights of businesses to make business decisions.” 

 But some business groups did not seem ready to turn the page on their fight with the labor board over this issue. Randel K. Johnson, senior vice president for labor at the United States Chamber of Commerce, welcomed the board’s decision to drop the case, but he added, “More needs to be done to prevent this outrageous overreach in the future.”

Calling the N.L.R.B. case “one of the great examples of pro-union activism and government overreach in history,” Mr. Johnson said, Congress should push ahead with legislation that bar cases, like the Boeing one, in which the board sought to prevent a company from locating a plant where it wanted. 

In its complaint against Boeing, the labor board had asked a judge to order the company to move its three-plane-a-month South Carolina production line to Washington State.

The labor board’s case against Boeing so enraged Lindsey Graham, a Republican senator from South Carolina, that he threatened to block confirmation of any of President Obama’s future nominees to the N.L.R.B.

“This case was never about the union or the N.L.R.B. telling Boeing where it could put its plants,” Mr. Solomon said. “This was a question for us of retaliation, and that remains the law.” And, not backing down, he said that if the labor board were ever faced with a similar situation, “we might well issue a complaint.”

Mr. Solomon said it was always the board’s goal to promote — and settle matters by — collective bargaining, and he said that filing the case against Boeing helped lead to a settlement through collective bargaining.

A problem if Mr. Solomon had proceeded with the case was that the labor board will drop to two members from the current three, when the term of a Democratic recess appointee, Craig Becker, expires at the end of this month. The Supreme Court ruled last year that when the board, which has five seats, dwindles to fewer than three members, it no longer has the power to rule on any cases.

Article source: http://feeds.nytimes.com/click.phdo?i=f055f02c6f923fd980170c78b33ec3cb

House Approves Bill Restricting N.L.R.B.

Republicans denounced the labor board’s case against Boeing, asserting that the board is overreaching its authority and should not be trying to tell companies where they can locate their operations. But many Democrats and their union allies condemned the legislation, asserting that the bill undercuts an independent federal agency and favors Boeing, a potent lobbying force and prominent political donor.

Under the bill, an unusual effort to halt a federal agency’s actions in a pending case, the labor board would be barred from seeking to have an employer shut, transfer or relocate employment or operations “under any circumstances.”

The bill, called “The Protecting Jobs from Government Interference Act,” is expected to face an uphill battle in the Democratic-led Senate. In the House vote on Thursday, the partisan divide was clear: only 8 Democrats voted for the bill and only 7 Republicans voted against it.

Republicans have repeatedly criticized the complaint that the board’s acting general counsel filed against Boeing last April, which accused the company of building an assembly line in North Charleston, S.C., as a form of retaliation against unionized Boeing employees in Washington State who had engaged in five strikes since 1977, including a 58-day-walkout in 2008. The National Labor Relations Act prohibits companies from taking any actions, whether firing employees or relocating a factory, against workers for exercising federally protected rights that include forming a union or going on strike.

Republicans asserted that the N.L.R.B.’s move was causing some foreign companies to think twice about opening operations in the United States, while Democrats maintained that the bill would speed the exodus of American jobs overseas.

Representative John Kline, a Minnesota Republican who is chairman of the House Education and the Workforce Committee, said: “This legislation represents an important step in the fight to get our jobs back on track. It tells job creators they don’t have to worry about an activist N.L.R.B. telling them where they can locate their business.”

But Representative Rush Holt, a New Jersey Democrat, said the bill “would be devastating to workers across this country.”

“It makes it easier to shift jobs overseas,” he said. “It eliminates the only remedy to force companies to bring back work from overseas. This ‘Outsourcers’ Bill of Rights’ is not only bad for the interests of workers, it’s bad for the economy at large.”

The board’s critics say the Boeing case favors heavily unionized states over right-to-work states and unionized workers over nonunion workers. Critics often blame President Obama, noting that it was brought by an official he appointed.

The Boeing case is pending before an administrative law judge, who is to decide whether to order Boeing to move the South Carolina production line, which assembles 787 Dreamliners, to Washington State. The House bill has a retroactivity clause that would bar the labor board from seeking an order to have Boeing transfer the assembly line to Washington State.

Republicans argued that the bill would only remove one remedy of the dozen in the N.L.R.B.’s arsenal. They say that the board can pursue other actions, among them ordering the company to post a notice saying it has acted illegally or to pay back pay. The opening of the assembly line in South Carolina has not caused any layoffs of Boeing workers in Washington State, but it might soon layoff more than 1,000 there as the new plant gets up to speed.

The labor board’s acting general counsel, Lafe Solomon, issued a statement on Wednesday saying his decision to file a complaint against Boeing “was based on a careful investigation and a review of the facts under longstanding federal labor law.”

Article source: http://feeds.nytimes.com/click.phdo?i=3c630fe7719058124b99ca6d32592ea9