HP claims fraud prompted $5 billion overpayment for company
NEW YORK (AP) – Hewlett-Packard Co. said Tuesday that it's the victim of a multi-billion dollar fraud at the hands of a British company it bought last year that lied about its finances.
HP CEO Meg Whitman said executives at Autonomy Corporation PLC "willfully" boosted the company's figures through various accounting tricks, which convinced HP to pay $9.7 billion for the company in October 2011.
Autonomy's former CEO said HP's allegations are false.
HP is now taking an $8.8 billion charge to align Autonomy's purchase price with what HP now says is its real value. More than $5 billion of that charge is due to false accounting, HP said.
Ex-hedge fund trader charged in $276 million insider scheme
NEW YORK (AP) – A former hedge fund portfolio manager was arrested Tuesday in what prosecutors are calling perhaps the most lucrative insider trading scheme of all time – an arrangement to obtain confidential, advance results of tests on an experimental Alzheimer's drug that helped investment firms make more than $276 million.
Mathew Martoma, 38, was charged in U.S. District Court in Manhattan with using the information to advise a hedge fund owner to buy shares in the companies developing the drug, then later to dump those investments and place financial bets against the companies when the tests returned disappointing results.
Martoma's trades helped reap a hefty profit from 2006 through July 2008, while he worked for CR Intrinsic Investors LLC of Stamford, Conn., an affiliate of SAC Capital Advisors, a firm owned by Steven A. Cohen, one of the nation's wealthiest hedge fund managers.
Bernanke warns Congress to avoid `fiscal cliff'
WASHINGTON (AP) – Federal Reserve Chairman Ben Bernanke on Tuesday urged Congress and the Obama administration to strike a budget deal to avert tax increases and spending cuts that could trigger a recession next year.
Without a deal, the measures referred to as the "fiscal cliff" will take effect in January.
Bernanke also said Congress must raise the federal debt limit to prevent the government from defaulting on Treasury debt. Failure to do so would impose heavy costs on the economy, he said. Bernanke said Congress also needs to reduce the federal debt over the long run to ensure economic growth and stability.
Sandy leads to Thanksgiving rental car shortage
NEW YORK (AP) – Thanksgiving travelers who have yet to rent a car in the Northeast are probably out of luck: Superstorm Sandy has created a shortage.
The storm has damaged thousands of cars – including those owned by rental companies. The loss of vehicles has been compounded by rising demand. Thanksgiving and Christmas are normally busy rental periods. And lingering mass transit problems caused by Sandy have added to demand.
Existing reservations are mostly being honored, but people who still want to book for Thanksgiving are finding almost no cars left. The few cars available carry a hefty premium.
US new home starts jump to fastest pace in 4 years
WASHINGTON (AP) – U.S. builders started construction last month on the most homes and apartments since July 2008, more evidence that the housing recovery is gaining momentum.
The Commerce Department said Tuesday that builders broke ground on homes in October at a seasonally adjusted annual rate of 894,000. That's a 3.6 percent gain from September.
Single-family home construction dipped 0.2 percent to an annual rate of 594,000, down from a four-year high in the previous month. Apartment construction, which is more volatile from month to month, rose 10 percent to an annual rate of 285,000.
Unemployment falls in 75 percent of US states
WASHINGTON (AP) – An increase in hiring helped lower unemployment rates in 37 U.S. states last month, the latest indication that the job market is slowly healing.
Unemployment rates are now below 7 percent in 23 of the 50 states. The Labor Department says rates rose in seven states in October and were unchanged in six.
South Carolina's rate fell from 9.1 percent to 8.6 percent, the biggest drop among states. It has fallen a full percentage point in just two months. The state gained 7,300 jobs in October, mostly in hotels, restaurants, education and health care, and government. Alaska and Wisconsin recorded the next biggest declines.
Best Buy reports 3rd-quarter loss
NEW YORK (AP) – Struggling Best Buy Co. reported another dismal quarter on Tuesday, recording a third quarter loss and continued sales slump just as the crucial holiday season revs up.
Adjusted for restructuring charges, it earned 3 cents per share, well below analysts' expectations. The news sent shares down 13 percent to their lowest level in more than two decades.
The electronics chain is trying to reverse a years long decline in its business as competition from online stores and discounters increases, and consumers' tastes shift from more profitable items like TVs and desktop computers to less profitable smartphones and tablets.
UBS rogue trader Kweku Adoboli guilty of fraud
LONDON (AP) – A rogue trader who lost $2.2 billion in bad deals at Swiss bank UBS was sentenced to 7 years in prison Tuesday after being convicted in what prosecutors called the biggest fraud case in U.K. banking history.
Ghanaian-born Kweku Adoboli, 32, exceeded his trading limits and failed to cover his losses, allegedly faking records to hide his tracks at the bank's London office. At one point Adoboli risked running losses of up to $12 billion.
A conviction for fraud carries a maximum jail term of 10 years.
The 10-person jury at Southwark Crown Court in London found Adoboli guilty of two counts of fraud and not guilty of four other false accounting charges.
PIRG warns of toy dangers but finds fewer of them
WASHINGTON (AP) – Toys are safer than ever before, consumer advocates say, but parents should remain vigilant in keeping their little ones away from powerful magnets and small items that can easily cause choking.
PIRG examined more than 200 toys on store shelves at major retailers and dollar stores and tested about three dozen toys for lead and chemicals called phthalates, which are used to make plastic products softer but have been linked to reproductive defects and other health problems. A 2008 product safety law ushered in new standards for children's products, including strict limits on lead and phthalates allowed in toys.
Of the toys tested, only one – a Morphobot action figure – turned up lead levels that exceeded the new stricter federal limit on how much of that metal can be in the toy. For phthalates, the toys all met the federal standard for what's allowed, though a Dora the Explorer backpack had levels that would trigger disclosure under Washington state and California law, the report said.
Eurozone seeks accord on Greece aid
BRUSSELS (AP) – European Union officials made a fresh try to reach political accord on desperately needed bailout loans for Greece – an agreement that eluded them last week.
The Irish finance minister, Michael Noonan, said a main point of contention at the meeting in Brussels among officials of the 17 European Union countries that use the euro is whether to give Greece an extra two years to get to a point where it can raise its own funds – and how to finance that extension.
The finance ministers need to agree on the extension before they can pay Greece the (EURO)31.5 billion ($40.2 billion) rescue loan that has been kept on hold for months. When previously frozen aid is considered along with further aid scheduled to be disbursed later this year, that total could reach (EURO)44 billion ($56.15 billion), said a spokesman for Jean-Claude Juncker, who chairs the eurozone finance ministers' meetings.
By The Associated Press(equals)
The Dow Jones industrial average fell 7.45 points to close at 12,788.51. The Standard & Poor's 500 index gained 0.92 point to 1,387.81. The Nasdaq composite index gained 0.61 to 2,916.68.
Benchmark crude fell $2.53, or 2.8 percent, to finish at $86.75 per barrel in New York. Brent crude, which is used to price international varieties of oil, fell $1.87, or 1.7 percent, to end at $109.83 a barrel in London.
Heating oil fell 4 cents to finish at $3.04 a gallon. Wholesale gasoline fell 4 cents to end at $2.71 per gallon. Natural gas rose 11 cents, or 3 percent, to finish at $3.83 per 1,000 cubic feet.