The news at a glance
SAC Capital to face indictment; Goldman Sachs’s aluminum scam; Boeing profits take off; Apple results top expectations; Miami charged with fraud
Crime: SAC Capital to face indictment Federal prosecutors are readying criminal charges against SAC Capital Advisors, said Ben Protess and Peter Lattman in The New York Times. The charges would bring an end to a nearly decade-long insider-trading investigation that “could cripple” one of Wall Street’s most prominent and successful trading firms. While CEO and founder Steven Cohen “is not expected to be charged criminally,” sources said authorities could bring individualcharges against other SAC employees. People familiar with the investigation said the Justice Department plans to “navigate around” the statute of limitations on some charges by filing a larger conspiracy case against SAC.
An indictment would be a huge blow for SAC, said Jenny Strasburg and Michael Rothfeld in The Wall Street Journal. To date, “no major financial firm has survived a criminal indictment.” Already, the investigation has “taken a toll on SAC.” Four former employees have pleaded guilty to criminal insider-trading activity; one other and a current employee still face trial. This week, the Securities and Exchange Commission slapped Cohen himself with civil charges, alleging he failed to properly supervise two rogue traders. And earlier this year, the firm paid a record $616 million penalty to settle civil insider-trading allegations with the SEC.
Markets: Goldman Sachs’s aluminum scamIf your sodas are getting more expensive, blame the can, said David Kocieniewski in The New York Times. Then blame Goldman Sachs. In the past three years, American consumers have paid $5 billion extra as a result of the bank’s manipulation of aluminum commodities. A Times investigation found that a firm subsidiary has added millions to Goldman’s coffers by slowing down aluminum deliveries, driving up rent costs at Goldman-owned aluminum warehouses, and inflating the metal’s price for manufacturers and, eventually, consumers.
Airlines: Boeing profits take offNothing can keep Boeing down, said Bijoy Anandoth Koyitty, Mridhula Raghavan, and Alwyn Scott in Reuters.com. The plane-maker posted a 13 percent jump in second-quarter profits this week, thanks to an upswing in deliveries of commercial and military jets. The news sent Boeing stock up, “overshadowing concern about a fire aboard an Ethiopian Airlines 787 at London’s Heathrow airport earlier this month.” The problems plaguing Boeing’s flagship Dreamliner jet—battery issues grounded the entire fleet for more than three months earlier this year—have barely dented the firm’s performance.
Tech: Apple results top expectationsApple’s third-quarter earnings beat analyst estimates, said Peter Burrows in Bloomberg.com. The iPhone and iPad maker saw shares climb this week after announcing that its sales topped estimates and rose to $35.3 billion. “The results helped soothe investor concerns that increased competition and saturation in the smartphone market would drag Apple into a prolonged slump.” Yet sales do seem to be slowing. Some analysts say consumers are postponing purchases in the face of recent rumors that the company is experimenting with a new wristwatch device and larger screens for its iOS products.
Regulators: Miami charged with fraudFederal regulators say the city of Miami has been playing “shell games” with city bank accounts, said Patricia Mazzei and Jay Weaver in The Miami Herald. The SEC charged Miami and its former budget director with civil securities fraud this week, accusing officials of using fund transfers “‘to mask’ mounting deficits and ‘falsely inflate’ reserves,” thereby deceiving bond investors and city leaders about Miami’s financial health. The city said it would fight the “baseless” allegations.