Texas Financier Stanford Charged With Fraud; Trump Casinos File for Chapter 11; Amex and Capital One Defaults Rise; WalMart Beats Expectations; Blackberry Execs Pay Back $2.2 Million; Oil Prices Fall Below $35
- The Securities and Exchange Commission yesterday (Tuesday) charged Texas financier R. Allen Stanford and three of his firms with a "massive" fraud that centered around high-interest-rate certificates of deposit, and raided some of the companies' offices, MSNBC reported. In a complaint filed in federal court in Dallas, the Securities and Exchange Commission alleged Stanford conducted a fraudulent investment scheme in an $8 billion CD program that promised "improbable and unsubstantiated high interest rates."
- Trump Entertainment Resorts Inc. (TRMP), the three Atlantic City casinos once run by Donald Trump filed for Chapter 11 bankruptcy protection yesterday (Tuesday) – for the third time. Trump was frustrated that bondholders and their allies on the board rebuffed his offer to buy the company and take it private. "Other than the fact that it has my name on it – which I'm not thrilled about – I have nothing to do with the company," Trump told The Associated Press.
- American Express Co. (AXP) and Capital One Financial Corp. (COF) fell in trading yesterday (Tuesday) after they reported overdue loans and payments increased in January. American Express, the biggest U.S. credit-card company by purchases, said defaults on loans packaged into securities rose to 8.29% from 7%, while payments at least 30 days overdue climbed to 5.28% from 4.86% in December. Capital One said that defaults rose to 7.82% and late payments reached 5.02%, Bloomberg reported.
- Wal-Mart Stores Inc (WMT) posted profits that beat Wall Street forecasts, and said it expects to outperform rivals as the global downturn forces shoppers to seek low prices, Reuters reported. Fueled by sales at its namesake U.S. discount stores, Wal-Mart has been outpacing competitors like Target Corp. (TGT) and Costco Wholesale Corp. (COST), as well as lower-priced department stores like J.C. Penney Company Inc. (JCP), in recent months as consumers stretch limited budgets by shopping its stores for necessities like food and medicine.
- Four executives at Research in Motion Ltd. (RIMM), the maker of the Blackberry phone, agreed to pay more than $2.2 million to settle claims by U.S. regulators that they backdated stock options for eight years, Bloomberg reported. The executives agreed to pay fines totaling $1.4 million and return more than $840,000, which represents the value of the backdated options they had exercised, the Securities and Exchange Commission said. By backdating options, companies retroactively change grant dates to periods when share prices were lower, boosting recipients' profits while potentially distorting earnings.
- U.S. oil prices fell more than 7% yesterday (Tuesday) below $35 a barrel, as grim economic indicators battered markets and raised concerns about slumping demand, Reuters reported. U.S. crude for March delivery fell to $34.82 a barrel, down $2.69 from Friday's close. London Brent crude for April delivery dropped $1.91 to $41.37 a barrel. A report that eastern Europe's economic slump will further drag down Western banks raised fears that emerging economies will deepen the recession in the U.S.