Glaxo wrestles with its past 28 May 2014 A UK Serious Fraud Office investigation into the pharma group has knocked almost $2 bln off its market value. Fines in China are well flagged, but the scale of SFO’s concern is unclear, as is the cost of staying ethical in future. Investors are still betting on a benign outcome.
U.S. energy independence death greatly exaggerated 27 May 2014 A new government report slashes California’s estimated oil endowment by 96 pct, roughly halving the nation’s supply of frackable crude. But it only impacts total resources, not reserves that can be drilled profitably. These remain intact, as do U.S. hopes of curbing oil imports.
Guest view: Let sun shine on corporate donations 27 May 2014 Fresh from governance wins on dual-class shares and golden parachutes, Teamsters boss James Hoffa is taking aim at the growing role of companies in U.S. elections. Investors ought to know about these campaign contributions, he says. And it’s up to the SEC to force disclosure.
Patent trolls again elude would-be captors 27 May 2014 The U.S. Supreme Court roughed up the infringement-lawsuit racket by giving its targets more leeway to recoup legal fees. New coverage for such costs provides a workaround, however. And with legislation just killed to rein in trolls, they seem free to prey on companies unscathed.
U.S. firms get caught in China spying crossfire 26 May 2014 China has threatened to block foreign companies due to a cyber espionage row with the United States. For most groups, the People’s Republic is still a small proportion of sales, but a bigger share of potential new orders. China’s weapon is shutting them out from future growth.
China ruling does little to end foreign audit spat 26 May 2014 A Hong Kong judge says Ernst & Young should have handed papers on a Chinese client to local regulators. It has been too easy for auditors to use strict mainland rules as a shield. But the big problem remains unsolved: how accountants can satisfy two apparently opposing systems.
Dull industrials could make shiny tax-arb targets 22 May 2014 Juiced up on drug deals that promise big tax savings, like Pfizer’s bid for Astra, bankers are pitching copycat transactions before Congress gets wise. Tyco, Ingersoll-Rand and Pentair went abroad during a previous exodus and may tempt acquirers seeking inversions of their own.
Chinese real estate is in real trouble 21 May 2014 The coming correction could take several forms: shrinking investment, disappearing funding for developers, and lower prices. All three are connected. Financial pressures could be wide-ranging, but a downward spiral in property values is the hardest to reverse.
Long arm of U.S. law doesn’t extend to cyberspace 20 May 2014 Credit Suisse’s guilty plea and $2.5 billion fine for helping tax dodgers shows Uncle Sam’s hold over finance is strong even beyond its borders. Yet hacking accusations against Chinese military personnel have produced only defiance. It’s a sign of the limits to U.S. legal power.
Credit Suisse’s guilty-lite plea lacks a point 20 May 2014 U.S. prosecutors secured their first criminal conviction of a bank in years. But they took care to limit the damage to the Swiss institution. Top bankers weren’t charged, either. Doing more than imposing fines is commendable, but the Credit Suisse case may not accomplish much.
America’s top lawyer needs homegrown bank scalps 19 May 2014 Attorney General Eric Holder is close to getting guilty pleas and mega-fines from BNP Paribas and Credit Suisse. Their crimes don’t threaten the financial system, raising fears he’s shaking down foreign banks. Criminal penalties against U.S. lenders would quell such suspicions.
Populism may come back to bite Argentine president 16 May 2014 Cristina Fernandez nationalized YPF to win votes and control the nation’s oil. A growing fight over fracking pits those two motives against each other. Caving to demands to stop shale drilling and curb foreign investment might be popular. But it would raise costs and hurt growth.
Greenspan’s swipe at big bank bailouts misses mark 15 May 2014 The former U.S. Fed chair says the inevitable rescue of financial behemoths means government debt is understated. That ignores the tidy profit taxpayers made from saving Wall Street’s hide. Regulators deserve a lot more credit for limiting likely losses in future crises.
Smaller markets ripe for less Anglo-Saxon activism 15 May 2014 The threat of proxy fights or proposals to borrow heavily won’t sway the family or government owners common in emerging-market companies. While hedge fund Cartica’s fight with Chile’s CorpBanca may remain a rarity, there’s still money to be made from more consensual agitation.
FCC needs thick skin to weather its moment in sun 14 May 2014 The U.S. telecom watchdog is tackling flashy issues on mergers, net neutrality and wireless spectrum. Resolving them won’t be easy, given the agency’s mandate to spark competition while also promoting efficiency and consumer choice. Current commissioners seem up to the task.
Review: A crisis-like evaluation of "Stress Test" 12 May 2014 To judge the merits of Tim Geithner’s reflections, six Breakingviews columnists digested different pieces in a short amount of time. Like the regulators who often lacked broader context, the assessments vary. Yet there’s also consensus it’s a useful tome for the financial library.
Top U.S. patent court stuck in own tech bubble 12 May 2014 The tribunal’s focus on minutiae and IP owners can lead to head-scratchers like a copyright ruling for Oracle over Google. The Supreme Court may confuse iCloud with Dropbox, but its broader view allows it to get tech cases right. Even in law, expertise can’t replace common sense.
China’s central bank tames unruly internet finance 12 May 2014 Authorities are reining in the banking ambitions of the country’s web giants. News of potential curbs on online payments and funds has alarmed investors. But by providing some much-needed order in web finance, China’s central bank seems to be endorsing rather than killing it.
Clearers have yet to shake off TBTF menace 8 May 2014 Post-crisis reforms shifted the lion’s share of banks’ derivative risk to clearing firms. Critics say this has just moved too-big-to-fail threats to opaque, undercapitalised behemoths. Regulators and clearers have made good progress tackling the problem. But both could do more.
Regulators get in on the private equity joke 7 May 2014 After two-and-a-half years of poking around, the SEC has discovered the model lends itself to greedy behavior. For one thing, over half the firms the agency probed had abused expenses and fees. Given where the buyout business is headed, watchdogs could be kept plenty busy.