![\"\"](\"https:\/\/www.technologyinvestor.com\/wp-content\/uploads\/2010\/06\/Dow3percent.jpg\" "\\"Dow3percent\\"")
<\/a><\/p>\nIt fell because of lots of simultaneous bad news. The Wall Street Journal reported the reasons as “slumping U.S. consumer confidence, the downward revision of a Chinese economic indicator and worries about the health of Europe’s banks.” The Journal also reported that yields on 10-year Treasury notes fell below 3% to their lowest level since April 2009, a sign investors were seeking out safe investments.<\/p>\n
The market has been in freefall since late April 2010.<\/p>\n
An example:<\/p>\n Yields on virtually all our high-yielders have improved.<\/p>\n Wall Street does good by its selected clients. <\/strong>Tesla Motors was a hot IPO. It rose 41% yesterday — its first day of trading. <\/span><\/span><\/p>\n The IPO was managed by Goldman Sachs Group Inc. (GS), Morgan Stanley (MS), J.P. Morgan Chase & Co. (JPM) and Deutsche Bank AG (DB). I’m a long-time client of two of them — GS and MS. I didn’t get a nickel’s worth of shares. But that’s to be expected. Here’s how IPOs work on Wall Street. If the IPO is hot, institutions are given the shares. If the IPO is <\/span><\/span>fair to poor, retail (that’s you and me) get it.<\/p>\n Wall Street remains stacked against you and me. <\/strong>Surprise. Surprise.<\/p>\n This is beyond disgusting.<\/span> <\/strong>Goldman Sachs remains a cockroach stock. From today’s Bloomberg:<\/p>\n Scrutiny of Goldman’s Board Focuses on Silence Over Conflicts Greg Palm, Goldman Sachs Group Inc. general counsel, took a call in his 37th-floor office at One New York Plaza on Dec. 16, 2008. It was his old boss, Stephen Friedman, a former Goldman chairman who was then head of the audit committee of its board of directors. Goldman\u2019s stock was down 65 percent from its 52-week high during an accelerating global financial breakdown.<\/p>\n Friedman, who had become chairman of the Federal Reserve Bank of New York that year, told Palm he wanted to buy, Bloomberg Markets magazine reports in its August issue.<\/p>\n Palm says he couldn\u2019t think of a reason why Friedman shouldn\u2019t: Goldman had made the necessary disclosures in that day\u2019s filings, Palm says.<\/p>\n \u201cWe\u2019d just reported earnings,\u201d says Palm, whose job includes approving trades by directors. \u201cThere was no material information that wasn\u2019t public from Goldman\u2019s standpoint.\u201d<\/p>\n Friedman, 72, who is still a Goldman director, bought 37,300 shares at an average of $80.78 each on Dec. 17. Five weeks later, he picked up 15,300 more at an average of $66.61. By yesterday, the stock had doubled to $133.76, giving Friedman a paper profit of $3 million.<\/p>\n Now, the U.S. House Oversight and Government Reform Committee is investigating Friedman\u2019s stock purchases. It wants to know why he was permitted to buy stock in a bank he was regulating as chairman of the New York Fed.<\/strong><\/p>\n Friedman held both that post and his Goldman board seat when the firm became a bank holding company in September 2008. The Federal Reserve Act forbids an official at the New York Fed in his position from also being a director of a bank or buying its stock.<\/strong><\/p>\n The New York Fed sought a waiver from the Federal Reserve Board in September 2008 so that Friedman could keep his position there. Michele Davis, a spokeswoman for Friedman, says New York Fed general counsel Tom Baxter told Friedman that the rules were in abeyance while the waiver was pending.<\/p>\n \u201cTherefore, Mr. Friedman\u2019s purchases of Goldman Sachs stock were perfectly legal,\u201d she says. The waiver was granted in January 2009.<\/p>\n Jerry Jordan, a former president of the Cleveland Fed, says the section of the Federal Reserve Act barring Friedman from owning bank stock or buying new shares could not be waived. \u201cIt was not allowed,\u201d he says. \u201cYou can\u2019t get permission to violate the law.\u201d<\/p>\n Goldman Sachs\u2019s ties to the New York Fed pose another potential conflict for Friedman, says James Cox, a professor at Duke University School of Law. Goldman was a prime beneficiary of the New York Fed-engineered bailout of American International Group Inc.\u2019s bank counterparties, receiving, by its own count, $12.9 billion for the credit protection it held on mortgage- related securities. That figure was not publicly disclosed by AIG until March 2009 — after Friedman had bought his shares.<\/p>\n \u201cIt raises at the least an eyebrow in terms of what he knew about those payments,\u201d Cox says.<\/p>\n New York Fed spokesman Jack Gutt responds: \u201cFriedman had no involvement in nor was he provided with confidential information related to the New York Fed\u2019s negotiation with any AIG counterparties.\u201d<\/p>\n Friedman resigned from the New York Fed on May 7, 2009, days after the Wall Street Journal reported his stock buying. At the time, Baxter said in a statement, \u201cIt is my view that these purchases did not violate any Federal Reserve statute, rule or policy.\u201d<\/p>\n As the Friedman saga unfolds — and Goldman\u2019s regulatory and legal entanglements escalate — the firm\u2019s nine outside directors, who aren\u2019t Goldman employees, are keeping mum.<\/p>\n The board members said nothing publicly, for instance, when on April 16 the U.S. Securities and Exchange Commission filed a civil suit alleging Goldman had committed fraud in underwriting and marketing a mortgage-related security called Abacus 2007-AC1 without disclosing to clients that a bearish hedge fund customer, Paulson & Co., was involved in creating it.<\/p>\n Goldman calls the SEC suit \u201ccompletely unfounded.\u201d<\/p>\n Federal prosecutors in New York are also investigating Goldman transactions to determine whether to pursue a criminal fraud case, according to two people familiar with the matter.<\/p>\n Nell Minow, co-founder of the Portland, Maine-based Corporate Library, a governance research firm, says that when the SEC suit was filed, the outside directors should have immediately set up a committee to investigate, hired independent counsel and announced that they would make the results of their probe public.<\/p>\n The board should also have been riding herd on its members\u2019 stock trades, says Cornell University Law School Professor Robert Hockett, who specializes in financial regulation from his office in Ithaca, New York. Goldman spokesman Lucas van Praag says directors are periodically informed of such trades. The bank received a Wells notice dated July 28, 2009, notifying the firm that it was the target of an SEC fraud investigation.<\/p>\n At least three company executives, including Vice Chairman Michael Evans, unloaded more than $27 million of Goldman stock from October 2009 through February 2010 in open market sales unrelated to the recent exercise of options or delivery of restricted stock, according to data compiled by Bloomberg.\u00a0 (Harry’s note. The sales were made at much higher prices than where GS closed last night.)<\/em><\/p>\n Van Praag says Goldman\u2019s board was informed of the Wells notice, which was not made public until after the SEC filed its suit. He says the firm\u2019s lawyers determined it wasn\u2019t material.\u00a0 (Harry’s note: And pigs will fly.)<\/em><\/p>\n \u201cOn the face of it, the idea that that would not be material — I can\u2019t imagine anybody saying that with a straight face,\u201d Hockett says.<\/p>\n Jacob Zamansky of Zamansky & Associates LLC filed a class- action lawsuit on April 30 on behalf of Goldman shareholders, saying that Goldman made false statements relating to the SEC suit and failed to disclose adverse facts about the company to shareholders.<\/p>\n \u201cThe Wells notice was a material fact going to the heart of their business,\u201d he says. Goldman had not formally responded to the suit as of late June.<\/p>\n The number of issues Goldman executives, and their board, need to address continues to build.<\/p>\n Director Rajat Gupta did not stand for re-election to the board in May. U.S. investigators suspect him of leaking word of a $5 billion investment in Goldman by Berkshire Hathaway Inc. in 2008, according to a person with knowledge of the matter.<\/p>\n Gary Naftalis, a lawyer for Gupta, former worldwide managing director of McKinsey & Co., says, \u201cRajat Gupta has never violated any law or rule.\u201d<\/p>\n On April 27, the Senate Permanent Subcommittee on Investigations held an 11-hour hearing on Goldman\u2019s role in the financial meltdown.<\/p>\n \u201cGoldman repeatedly put its own interests and profits ahead of the interests of its clients and our communities,\u201d Senator Carl Levin, a Michigan Democrat, said at the hearing.<\/p>\n \u201cWe respectfully disagree,\u201d van Praag says.<\/p>\n On June 7, the Financial Crisis Inquiry Commission subpoenaed Goldman, accusing it of attempting to hinder its probe of the firm by electronically sending it the equivalent of more than a billion pages of documents. Yesterday the leaders of the commission told journalists in a conference call that the firm has become more responsive.<\/p>\n \u201cThe outside directors haven\u2019t been visible on any of this,\u201d says Patrick McGurn, special counsel at RiskMetrics Group, a New York adviser to shareholders. \u201cYou have to ask if it\u2019s setting the correct ethical tone.\u201d<\/p>\n Van Praag says: \u201cBoard chairman Lloyd Blankfein has made the views of the board well-known.\u201d<\/p>\n Goldman\u2019s board consists of two insiders, Chairman and Chief Executive Officer Blankfein and President Gary Cohn, and nine outsiders. There are five scheduled meetings per year and more as needed, the company says.<\/p>\n The outside directors are: Friedman; Lois Juliber, 61, former vice chairman of Colgate-Palmolive Co.; William George, 67, ex-CEO of Medtronic Inc.; Lakshmi Mittal, 60, CEO of steelmaker ArcelorMittal; John Bryan, 73, ex-CEO of Sara Lee Corp.; Lee Scott, 61, ex-CEO of Wal-Mart Stores Inc.; Claes Dahlback, 63, ex-CEO of Sweden\u2019s Investor AB; James Johnson, 66, vice chairman of merchant bank Perseus LLC and former CEO of Fannie Mae; and James Schiro, 64, former head of insurer Zurich Financial Services AG.<\/p>\n Directors who completed a full year in 2009 were paid an average of $460,852 in stock and options<\/strong> compared with $255,519 in cash and stock for JPMorgan Chase & Co.\u2019s 10 outside directors and $337,803 for Morgan Stanley\u2019s 11 outsiders, proxies show.<\/p>\n Goldman\u2019s board may have been able to preempt criticism of the company by speaking out, says Sean Coffey, a former partner at Bernstein Litowitz Berger & Grossmann LLP, who\u2019s running for New York state attorney general.<\/p>\n The board should have established a committee of outside directors with an independent counsel to investigate ethics matters and get the facts, says Coffey, who won more than $50 million from WorldCom Inc. directors in a 2005 settlement with the telecom company.<\/p>\n \u201cThe right decision might be to take out advertisements and apologize or it might be to batten down the hatches,\u201d Coffey says. \u201cDon\u2019t omit disclosing material information that investors ought to know.\u201d<\/p>\n Minow says the Goldman board should have nominated someone who had securities law enforcement experience, who could have led an internal investigation.<\/p>\n Instead, in March, Goldman nominated — and shareholders later approved — the appointment of Walmart\u2019s Scott. After an exchange in which a person at the May 7 annual meeting asked how Scott had been selected, CEO Blankfein deadpanned, \u201cActually, I like shopping at Walmart.\u201d<\/strong><\/p>\n At the meeting, Goldman announced the creation of an internal committee that will examine possible conflicts of interest and other issues such as transparency and disclosure. It\u2019s headed by Vice Chairman Evans and E. Gerald Corrigan, chairman of Goldman Sachs Bank USA. No board members are involved.<\/p>\n Former EBay CEO Meg Whitman, who joined Goldman\u2019s board in 2001, says then-CEO Henry Paulson brushed aside her questions to move a meeting along.<\/p>\n \u201cThey wanted to keep acting like a group of partners who did much of their discussion and decision-making in private and then expected to get the board\u2019s rubber stamp,\u201d Whitman writes in her new book, The Power of Many (Crown, 2010). She resigned after 15 months.<\/p>\n Whitman is now the Republican candidate for governor of California.<\/p>\n Cornell\u2019s Hockett says that if Friedman violated any laws, the entire Goldman board is to blame.<\/p>\n \u201cBoards are intended to police the actions of their members,\u201d he says.<\/p>\n Friedman spokesperson Davis says the waiver exonerates him.<\/p>\n The New York Fed\u2019s nine-person board consists of three classes of directors serving staggered terms. Class A directors are elected by member banks to represent commercial banks; one class A director today is JPMorgan Chase Chairman and CEO Jamie Dimon. Class B directors are elected by member banks to represent the public, while class C directors such as Friedman, who also represent the public, are appointed by the Fed Board of Governors.<\/p>\n Former Cleveland Fed President Jordan says the law is clear: As a Class C director, Friedman could not own, much less buy, bank stock.<\/p>\n Section 4, Number 15 of the Federal Reserve Act reads, \u201cNo director of class C shall be an officer, director, employee, or stockholder of any bank.\u201d<\/p>\n The New York Fed argued that because Goldman was a bank holding company and not a bank, a waiver could be granted, according to a person with knowledge of the matter. The Fed agreed.<\/p>\n How much the Goldman board\u2019s silence in the face of adversity has cost the firm is difficult to gauge. Goldman shares have surged 157 percent as of June 29 since hitting an all-time low in November 2008. In May, shareholders approved those directors standing for election by margins of more than 95 percent or greater.<\/p>\n Still, says Coffey, the board\u2019s somnolence in the face of so much controversy has done nothing to support Goldman\u2019s storied franchise. Buy your kids a headphone.<\/strong> <\/span><\/strong>Get them (and youself) a corded one. Insist they use it. It’s an important precaution. <\/span><\/span><\/p>\n I’ve been in telecom ever since cell phones were invented.\u00a0 The FCC cut power to handhelds (from car phones) by 80% because it believed in the danger. Can you get cancer from a cell phone? Scientists say Yes. The industry, naturally,\u00a0 says No.<\/p>\n Last week, the Board of Supervisors in San Francisco passed a law — the first in the nation — requiring retailers to inform their customers how much radiation the cellphones on their shelves emit, so shoppers can figure out how close the devices come to the upper limits on radiation set by the Federal Communications Commission.<\/p>\n The law, which goes into effect early next year, didn’t mention the word, but it was all about one thing: cancer, and whether cellphones cause it.<\/p>\n In 2006, Lennart Hardell, a professor of oncology and cancer epidemiology at the University Hospital in Orebro, Sweden, reported that adults he followed who had used cellphones for more than 10 years “give a consistent pattern of increased risk for acoustic neuroma and glioma,” forms of brain tumors. That study has been used as the basis for public health alerts by way of commercials, billboards and warning labels in nations including Britain, Israel, Finland and France, but it has had little resonance in the United States.<\/p>\n Hardell published a report last year that said teens and children have a fourfold increased chance of getting brain cancer.<\/p>\n In a Senate subcommittee hearing in September, a member of the NTP (The National Toxicology Program\u00a0 part of the National Institutes of Health), said there is potentially a greater risk that children, with their thinner skulls, would suffer from the absorption of radio frequencies in their brain tissue.<\/p>\n Some companies offer guidelines of their own. The Nokia 1100, for instance, warns that the phone meets radio-frequency guidelines only when it is held at least 1.5 centimeters from the body. Motorola recommends keeping the antenna of a device at least 2.5 centimeters (1 inch) from the body. BlackBerry warns that one of its devices “SHOULD NOT be worn or carried on the body” without a BlackBerry-approved belt clip.<\/p>\n The easiest way to avoid the danger is to use a corded headset.<\/p>\n For more on this, Click here.<\/strong><\/a><\/strong><\/p>\n China’s energy.<\/strong><\/strong><\/span> <\/strong>China is now the world’s largest maker of wind turbines and solar panels. It plans to be the biggest builder of nuclear power plants in the coming decade. China will continue to rely on coal. It has the world’s third largest reserves after the U.S. and Russia. they also have much of our manufacturing.<\/p>\n Miracles happen.<\/strong><\/span>This obituary is from the New York Times.<\/p>\n Nicolas Hayek Dies at 82; His Swatch Saved an Industry<\/strong><\/p>\n Nicolas Hayek, a Lebanese-born business consultant who is widely credited with having saved the Swiss watch industry with the introduction of the Swatch, the inexpensive, plastic \u2014 and, as it transpired, highly collectible \u2014 wristwatch that made its debut in 1983, died Monday in Biel, Switzerland. He was 82.<\/p>\n Mr. Hayek, a founder and the chairman of the Swatch Group, died of heart failure while working at the company\u2019s headquarters, according to an announcement on the company Web site.<\/p>\n The formation of the Swatch Group, which in addition to Swatch today comprises high-end watch brands like Breguet, Omega, Longines, Tissot, Calvin Klein and Mido, made Mr. Hayek one of Switzerland\u2019s wealthiest men. The exquisite irony is that the company came about after Mr. Hayek was brought in to help shut the foundering Swiss watch industry altogether.<\/p>\n A flamboyant figure with a roguish sense of humor, Mr. Hayek was \u201ca rare phenomenon in Europe \u2014 a genuine business celebrity,\u201d as The Harvard Business Review described him in 1993.<\/p>\n<\/a><\/p>\n<\/a><\/p>\n<\/a><\/p>\n
\n<\/strong>By Richard Teitelbaum – Jun 30, 2010<\/p>\n
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