The news at a glance
Stanford Financial: A Madoff in the making?; Satellite radio: Sirius XM gets a lifeline; Retailing: Microsoft takes the plunge; Food safety: Peanut Corp. packs it in; Consumer electronics: Pioneer turns off TVs
Stanford Financial: A Madoff in the making?
With the investing world still reeling over the fallout from Bernard Madoff’s alleged $50 billion Ponzi scheme, another multibillion-dollar scandal is starting to unravel, said Matthew Goldstein in BusinessWeek. Federal regulators this week charged Stanford with fraud in connection with the sale of $8 billion in certificates of deposit. The CDs, issued by an Antigua-based subsidiary of the company, pay more than twice the going rate on U.S. CDs, even though the stocks, real estate, and commodities supposedly backing them have all dramatically declined in value.
Several unusual features of Stanford’s CD sales operation have caught investigators’ interest, said Dionne Searcey in The Wall Street Journal. CDs are generally a low-profit-margin business that nets little income for the brokers who sell them. But Stanford pays “unusually high” commissions for CD sales. Investigators are also checking into reports that Stanford “has been recently advising clients that they can’t redeem their CDs for two months.” Such delays in redemption often precede the collapse of a Ponzi scheme.
Satellite radio: Sirius XM gets a lifeline
Sirius XM, “the only satellite radio game in town, was in desperate need of a savior,” said Paul La Monica in CNNmoney.com. It found one in cable-TV pioneer John Malone, who this week agreed to lend the beleaguered radio company $530 million. With $300 million in bonds coming due this week, Sirius XM faced a bankruptcy filing had Malone not stepped in. Malone and an associate will join Sirius XM’s board.
Retailing: Microsoft takes the plunge
Lifting a page from archrival Apple’s playbook, Microsoft announced that it would open several retail stores this year, said Nick Wingfield in The Wall Street Journal. The software giant hired David Porter, a 25-year Wal-Mart veteran, to “define where to place the Microsoft stores and when to open them.” The company “has long flirted with the idea of doing its own store,” which would give it a chance “to showcase its products” free of distraction from other brands.
Food safety: Peanut Corp. packs it in
Peanut Corp. of America, the company “at the heart of a national salmonella outbreak” that has claimed at least nine lives, said this week it would liquidate its operations and go out of business, said Kate Brumback and Greg Bluestein in the Associated Press. Government investigators have traced the outbreak to Peanut Corp.’s Georgia plant. Authorities say that internal e-mails suggest that company president Stewart Parnell knowingly ordered salmonella-tainted peanuts to be shipped to customers.
Consumer electronics: Pioneer turns off TVs
Pioneer, the struggling Japanese electronics manufacturer, said last week it would depart the TV business and lay off 10,000 employees, more than a quarter of its workforce, said Robin Harding in the Financial Times. The move makes Pioneer “one of the first Japanese companies to abandon a market in response to a dramatic slowdown in consumer electronics.” Videophiles lamented Pioneer’s departure from the TV business. Its high-priced plasma TVs, sold under its Kuro brand, “are favorites among both reviewers and home-theater buffs.”