by Kyle Colona on May 7, 2012
Treasury to Sell A.I.G. Shares
In a related story, the government is continuing to unwind its stake from the heart of American International Group.
But this is not just another Vampire story, as painful as it sounds. The Treasury Department priced the latest sale of AIG shares at $30.50. More importantly, this is another sign that the global insurer is recovering from “the depths of the financial crisis.”
The Treasury Department announced that it would sell 163,934,426 shares of A.I.G. — or roughly $5 billion — at $30.50 apiece. A.I.G. plans to buy back around $2 billion of the stock.
“We’re continuing to make significant progress exiting our investment in AIG,” Assistant Secretary for Financial Stability Tim Massad, said in a statement.
The offering comes as A.I.G. has reportedly “bounced back” from its woes and lows and may soon to be back to having ways and means. Meanwhile shares of the global insurer are up more than 40 percent since the beginning of the year, closing at $32.83 on Friday.
In pre-market trading on Monday, A.I.G. stock stood at $30.52, roughly in line with the Treasuries offering price.
Look out below, Dewey & LeBoeuf essentially told employees Friday.
As has widely been reported, the beleaguered firm is in trouble because of possible mishandling of the firm’s finances. This has prompted many of the firm’s partners and associates, particularly the insurance law specialists, to jump ship.
And the saga continues, as the firm’s leaders still on hand have told employees that they could lose their jobs. The initial exodus kicked in after compensation was sharply cut because of poor financial results and “an onerous debt load.” More recently, the firm has started to wind down its operations, and has even shut essential services like the copy center and mailroom.
The copy center? What’s a firm got going on if the document production meter is not ticking?
Meanwhile, job placement firms were brought in to advise employees and legal analysts say that the firm is “effectively under the control of its banks.”
Treasury to Privatize TARP Balance
The Treasury Department announced last week to wind down what’s left of the bank bailout pie through a series of sales to private investors.
The Treasury recently held public auctions of preferred assets in six banks to “a range of private investors,” reports Dealbook. Until recently most banks got out of the TARP game by meeting liquidity requires and raising capital to repay the program.
However, a good chunk of the remaining TARP proceeds are in community banks that cannot tap the broader capital markets. So by selling these shares, the Treasury looks at this as a win win for the agency as well as the banks.
Of course, taxpayers may get the short shrift as the sales may ultimately see the Treasury lose money on the sales. And these losses will invariably be passed on to the taxpayers.
“The government shouldn’t be in the business of owning stakes in private companies for an indefinite period of time,” said Timothy G. Massad (he’s the “assistant Treasury secretary” for financial stability).
Federal Court Approves 2003 CFTC Enforcement Action against Thomas Qualls
While this case has been in play since 2003, a federal court says that that Mr. Qualls and his company must cough up more than $4.6 million in restitution and penalties in connection with off-exchange Forex Future fraud.
This latest order is part of a series of recent cases in which CFTC enforcement action in off exchange Forex plays (a/k/a dark pools) has been decided. The CFTC press release notes that Mr. Qualls has been convicted on fraud and obstruction of justice charges.
In particular the CFTC brought charges of “misappropriation, fraudulent solicitation, and unlawfully offering off-exchange foreign currency (forex) futures contracts.”
The CFTC complaint was filed in July 2003. Then in November 2008: “…in a related criminal action, Qualls was found guilty by a federal jury on 16 counts, including mail and wire fraud, conspiracy to commit mail and wire fraud, and obstruction of justice.” The court’s order essentially means that held that Qualls and his outfit, IFC, had fraudulently solicited customers to trade in illegal off-exchange forex futures contracts.
SEC Reopens Comment Period Net Capital Rule
The SEC has reopened the comment period in connection with proposed amendments to its net capital, customer protections and notifications rules for broker-dealers.
The securities watch dog announced late last week that the comment period was being reopened. These amendments, in turn, are designed to “update financial responsibility rules” for broker-dealers. The Commission previously issued the proposed amendments in March 2007, and the public comment period on the proposal closed on June 18, 2007.
However, the agency did not act on the amendments because of “regulatory developments.” Can you say Dodd-Frank? Of course while many have and continue to champion the reform measure, the SEC has been on its heels trying stay atop the rule crafting wave created by Dodd-Frank.
So, many previous initiatives were put on the back burner, if not on dry ice. However, now that the financial reform measure is slowly being built the agency is backtracking to bring back cold measures.
Kyle Colona is a New York-based freelance writer and a Feature Writer for CompliancEx and the Wall Street Job Report. He has an extensive background in legal and regulatory affairs in the financial services sector and his work has appeared in a variety of print and on-line publications as well as his blog, “Colonaville.” You can find him on linkedin.