Unemployment in Nigeria: Independent National Electoral Commission (INEC) Aptitude Test In Abuja reveals high rate of Unemployment among Nigeria's youths..

First Solar (FSLR) Surges In After-Hours Trading

Shares of First Solar, Inc. (NASDAQ: FSLR) have surged in after-hours trading, following the first-quarter results reported by the company. In its first-quarter, First Solar has reported a profit of $172.3 million, or $2 per share, compared with a profit of $164.6 million, or $1.99 per share it reported for the same period last year.

Revenue surged by 36% to $568 million in the quarter. Analysts surveyed by Thomson Reuters were on average expecting First Solar to report a profit of $1.63 per share and revenue of $541 million. Gross margin declined by 660 basis points to 49.7% in the quarter.

Shares of First Solar, Inc. are up by 6.93% to $137.01 in after-hours trading.


www.benzinga.com

First Solar (FSLR) Raises Guidance, Up 7% AH

• Smashes Estimates

By  Tate Dwinnell

First Solar (FSLR) is a company that many like to bash and bet against, but the company continues to deliver and they did so again after the bell today, keeping their long history of quarter over quarter growth alive (just barely).  The company smashed the analyst estimate of $1.65/share by posting $2.00/share which also beats the whisper number of $1.87.  That $2.00 EPS is about what they reported a year ago, so quarter over quarter growth isn’t great, but anytime you smash estimates like that the stock is going to pop.  Revenue growth remains strong with a 36% quarter over quarter bump to $568 million which beat expectations by about $20 million.''

The company is raising guidance as well.  They now expect 2010 EPS in the $6.80 – $7.30 range  vs the Wall St consensus of $6.12.  However, revenue estimates are a bit shy of the Wall St consensus.  They see revenues in the $2.6 – $2.7 billion range vs $2.74 for the Street.

On the capacity side, the company’s Board of Directors has approved an additional four line manufacturing plant with an annual capacity of 220MW, but it isn’t expected to begin production at the plant for over a year.

All in all, not a world beating quarter, but much better than expected. For a stock that has been basing for nearly two years now and recently emerging from a down trend, it should be enough to keep the stock moving up the right side of a new base.  That is, unless the overall market completely falls apart.  The stock is up about 7% in after hours trading and surging back above the 200 day moving average.

Source: http://greenstockscentral.com

First Solar, Inc. Announces First Quarter 2010 Financial Results

• Net Sales $568 million
• EPS $2.00 per fully diluted share
• Increased 2010 EPS guidance to $6.80-$7.30 per diluted share
• Board of Directors approves an additional four line factory

First Solar, Inc. (FSLR 136.67, +8.54, +6.67%)  today announced its financial results for the first quarter ended March 27, 2010. Quarterly net sales were $568.0 million, up 36% from $418.2 million in the first quarter of 2009, mainly due to strong PV module demand and increased production, partially offset by a decline in pricing. First quarter 2010 net sales declined $73.3 million from the fourth quarter of 2009 primarily due to a shift from turnkey system sales to module sales.

The first quarter 2010 net income was $172.3 million or $2.00 per fully diluted share, up from the prior year of $164.6 million or $1.99 per fully diluted share, which included a $0.14 per share one-time tax benefit related to our Malaysian tax holiday. Net income for the first quarter was up from $141.6 million or $1.65 per fully diluted share for the fourth quarter 2009 because of higher volumes, increased module prices and the absence of certain non-recurring expenses.

The First Solar Board of Directors has approved an additional four line manufacturing plant with an annual capacity of over 220 MW at the first quarter 2010 line run-rate. The plant is expected to begin production in the fourth quarter of 2011.

For 2010, First Solar forecasts net sales of $2.6 to $2.7 billion, reflecting reallocation of module capacity from our systems business to meet stronger module demand by our European customers. Earnings per fully diluted share are projected in the range of $6.80 to $7.30, and include $0.09-0.10 per share dilution for the pending acquisition of NextLight Renewable Power, LLC. Total capital spending is projected to be $625 to $650 million. The company expects to generate $725 to $775 million of operating cash flow. First Solar has posted its First Quarter Earnings Call Presentation, which includes guidance for fiscal 2010 and additional details regarding the key assumptions relating to this guidance, in the Investor section of its website at www.firstsolar.com.

First Solar will discuss these results and outlook for fiscal 2010 in a conference call scheduled for today at 1:30 p.m. MST (4:30 p.m. EDT). Investors may access a live audio webcast of this conference call and the earnings call presentation in the investors section of the Company's web site at www.firstsolar.com.

An audio replay of the conference call will also be available approximately two hours after the conclusion of the call. The audio replay will remain available until Monday, May 3, 2010 at 11:59 p.m. EDT and can be accessed by dialing 888-203-1112 if you are calling from within the United States or 719-457-0820 if you are calling from outside the United States and entering the replay pass code 9534574. A replay of the webcast will be available on the Investor section on the Company's web site approximately two hours after the conclusion of the call and remain available for approximately 90 calendar days. If you are a subscriber of FactSet or Thomson One, you can obtain a written transcript within 2 hours.

Source: www.marketwatch.com

Greece takes measures to stop speculators as debt crisis escalates.

The troubled country triggered a sell-off in global markets after its debt was yesterday slashed to junk status, making it harder to pay down its deficit and raise money to fund its budget.
Concerns that the situation could have repercussions across Europe were heightened by a cut in the credit rating of Portuguese government debt.

Vince Cable, the Liberal Democrat Treasury spokesman, warned that unprecedented levels of Government borrowing meant that Britain itself had become exposed.

"The Greek position is much more serious but is a salutary warning that unless the next government gets seriously to grips with the deficit problems, as we're determined to do, we could have a serious problem," Mr Cable told Reuters Insider television.

"It's worth reflecting that Greece and Britain have one thing in common: they have one-party governments that haven't carried the public with them, and that's one danger that I think we need to be mindful of going into this election."

This morning, the Greek regulator banned speculators from shorting the Athens market – trying to make money from betting shares will fall further – after widespread selling which saw London's FTSE 100 tumble 2.6pc, Germany's DAX 2.7pc, and France's CAC 3.7pc.

This spread to New York where the Dow Jones dropped 1.9pc before moving to Asia, where Japan's Nikei index and Hong Kong's Hang Seng fell 2.5pc and 1.2pc respectively.

The sell-off continued in Europe in early trading after an uneasy halt as investor took stock as markets opened. Major markets in London, German and France were down around 1pc.

Southern European markets were hard hit, with Portugal tumbling 6pc and Spain 3pc.
Lorraine Tan, director of equities research at Standard & Poor's in Singapore, said "The fear is that Greece and Portugal are just the appetisers.

"The concern is it is going to spread and have an impact on the financial system and ultimately on the economy."
As a further indication of investor jitters, the premium being demanded to hold Greek government bonds jumped to its highest since late 1996.

ASIAN MARKETS, OIL FALLS
The worsening European debt crisis rattled Asia, as stock markets across the region fell and oil slid to near $82 a barrel.

Tokyo's Nikkei-225 index was down 287 points, or 2.5pc, by lunchtime at 10,924.75 points, while Hong Kong's Hang Seng index fell 260 points, or 1.24pc, to 20,998 points.
South Korea's Kospi index fell 1.2pc to 1,728.25 while the losses were more restrained in Shanghai, which dipped 2.32 points to 2906.
Concerns about Europe, which remains the largest market for Asian exports, increased after Standard & Poor's, the rating agency, downgraded Greece's debt to junk status and hit Portugal's rating with a two-notch cut.
The concerns about Europe overshadowed a strong set of earnings from Japanese companies, showing a fragile recovering is under way in Tokyo.

OIL TRADERS EYE EUROPEAN WOES
Meanwhile, US crude oil for June delivery fell 27 cents to USD82.17 a barrel, touching a $2 drop over its last two trading sessions.

Analysts said oil traders were taking note of a possible economic crisis in Europe and that the market had reacted to new inventory figures from the US, which showed that stockpiles were up 5.3m barrels in the week ending April 23.

"Market sentiment remains fragile and there is a possibility that if we have more adverse economic news we could see prices decline further," said David Moore, an analyst at the Commonwealth Bank of Australia, adding that US demand for oil was weak.

Source: www.telegraph.co.uk

Standard and Poor's downgraded Spain's debt repayment ratings.

Standard and Poor's downgraded the sovereign debt ratings of Spain to a lower investment grade status Wednesday, citing "risks to budgetary position" for the troubled European nation.

Spain's long-term sovereign debt rating was reduced to "AA" from "AA+." The short-term rating was left unchanged at "A-1+."

The downgrade primarily reflects S&P's revision of the country's economic outlook. The ratings agency reduced Spain's 2010-2016 economic growth forecast to an annualized rate of 0.7% from a previous 1%.

"We now believe that the Spanish economy's shift from a credit-fueled economic growth is likely to result in a more protracted period of sluggish activity than we previously assumed," said Marko Mrsnik, S&P credit analyst, in the report.

The ratings action follows Tuesday's downgrade of both Greece and Portugal, which resulted in a precipitous decline in the U.S. stock market.

"This is an expected reaction, because for sometime now, Spain has been in doldrums," said Andreas Carbacho-Burgos, an economist for Moody's Economy.com. "It was not sharing in the output recovery that was happening in Germany, France and Britain."

Other so-called PIIGS nations -- Portugal, Italy, Ireland and Spain -- have seen their borrowing costs spike in recent weeks amid growing concerns that Greece's debt problems could spread. Greek bond yields hit an all-time high Wednesday.

S&P said it considered the possibility that Spain's public and private borrowing costs could remain elevated throughout 2011, further slowing the nation's economic recovery.

"Our conclusion is that challenging medium-term economic conditions will further pressure Spain's public finances," said Mrsnik. "Additional measures are likely to be needed to underpin the government's fiscal consolidation strategy."

The ratings agency placed the country on negative outlook, which implies that future downgrades could be in the offing.

Many analysts say that problems in Europe are unlikely to disappear quickly, and drastic measures in Greece may be needed to put troubled nations back on solid footing.

"Greece is going to have to undergo a massive bailout, which Germany's hesitant to give, or some sort of default," said Carbacho-Burgos.

Although the idea of a default spooks investors, who recall the Argentine debt crisis earlier in the decade, Carbacho-Burgos said an orderly default, managed by the European Union and International Monetary Fund, would be more likely.

"I don't think there would be [a unilateral default]," he said. "That typically happens when there's a change in government, but Greece's prime minister is relatively new and has shown commitment to service debt with help from a bailout."


www.money.cnn.com

Finance Chiefs Demand Quick Greek Aid Deal at Washington Talks .

By Theophilos Argitis and Flavia Krause-Jackson

Finance ministers urged European governments and the International Monetary Fund to complete an aid package swiftly for cash-strapped Greece as its officials held emergency loan talks in Washington.
U.S. Treasury Secretary Timothy F. Geithner “encouraged them to move quickly,” his department said yesterday after he met his Greek counterpart George Papaconstantinou, IMF Managing Director Dominique Strauss-Kahn and European officials. U.K. Chancellor of the Exchequer Alistair Darling said “the longer this situation carries on, the more damaging it is for Greece.”
Papaconstantinou is negotiating terms for a financial lifeline of as much as 45 billion euros ($60 billion) this year as investors doubt his country can finance itself after its budget deficit totaled 13.6 percent of gross domestic product last year. Any delay in striking a deal may trigger a further sell-off in the country’s assets and hurt markets elsewhere.

Canadian Finance Minister Jim Flaherty told reporters in Washington that some Group of 20 countries, including Europeans, fear the aid plan is “not enough” and want to ensure any rescue is a “one-time event.” Papaconstantinou will hold a press conference at about 10:30 a.m. today.

‘Not Buying’
Papaconstantinou also met yesterday with European Central Bank President Jean-Claude Trichet and European Union Economic and Monetary Affairs Commissioner Olli Rehn. Discussions centered on the appeal for cash and “the progress of work under way in Athens for the preparation of the medium-term economic program of reforms supporting EU and IMF financing,” the Greek finance ministry said in a statement.
Even with the first bailout of a euro-area member nearing, investors are signaling concern about the country’s ability to end its fiscal crisis. A rebound in Greek bonds after the government’s request for support on April 23 fizzled out with the yield on the two-year note rising to 10.23 percent having fallen to 9.63 percent.
Greece’s travails helped weaken European stocks for a second week with the country’s banks including National Bank of Greece SA and EFG Eurobank Ergasias sinking as Moody’s Investors Service cut its credit rating.
“We are not buying Greek debt while so many problems remain unsolved,” said Ralf Ahrens, who holds Greek bonds as part of the about $20 billion he manages as head of fixed-income at Frankfurt Trust. “Asking for the package will not calm down the market.”

2010-11 Plan
European policy makers have only spelled out the aid that Greece would receive over the next year, sparking concern about how the country will fund itself beyond 2011. Germany’s government, which would be the biggest euro-area donor to the package, must pass legislation before it can dispense the money.
While Greece has pledged to lower its budget gap below the EU’s 3 percent limit by 2012, Goldman Sachs Group Inc. says the country’s challenge is so great it may cut or delay payments to bond investors.
“We wouldn’t touch Greece at the moment,” said Rod Davidson, head of fixed income at Alliance Trust Plc in Dundee, Scotland. “The market needs some clarity on whether or not there will be some kind of restructuring of Greek bonds. There’s too much uncertainty and volatility.”

Early May
Rehn told reporters in Washington on April 23 that an aid program will likely be agreed by early May and extend over three years. Greece faces 8.5 billion euros of bonds maturing May 19. Strauss-Kahn declined to answer reporters’ questions on Greece yesterday other than to say its citizens “shouldn’t fear the IMF.”
Greek unions and opposition political parties have already slammed Prime Minister George Papandreou for turning to the lender, criticized in the past by Asian and Latin American nations for demanding too much austerity. ADEDY, the Athens- based federation representing the more than 500,000 Greek civil servants who have had wage cuts this year, called the move a “barbaric attack” and planned a rally for April 27.
Papaconstantinou arrived at his hotel about 2 a.m. yesterday dressed in black tracksuit pants and a hooded top. He arrived to find the reception unstaffed and declined to comment when asked by Bloomberg News about his plans in Washington.
He is also scheduled to meet today with Chinese Finance Minister Xie Xuren, according to the Greek embassy in Washington.

Contagion Risk
Foreign officials differed over the risk posed by Greece’s turmoil to the global economic recovery. Brazilian Finance Minister Guido Mantega said it “is not big enough to threaten” the rebound. Darling said “as long as this problem is allowed to continue to smolder it will hold back peoples’ confidence in the ability of Europe to come through the recession.”
Brazilian central bank President Henrique Meirelles said Greece’s fiscal mess served as a warning to other governments to cut their budget deficits.

“The whole world will have to face the fiscal issue, even larger countries have public debts substantially above what they had before the crisis,” Meirelles said. “This was an alert in the sense that we have a problem ahead.”

European central bankers in Washington played down speculation that Greece’s woes could spill over to other high- deficit countries such as Spain or Portugal. Trichet said April 23 that “Spain is not Greece.”
“Is there a risk for other countries in the zone? No, the other situations have absolutely nothing to do with that of Greece,” Bank of France Governor Christian Noyer said. His Austrian counterpart, Ewald Nowotny, said in an interview that “with Portugal and Spain, if you look at the numbers they do not compare with those of Greece.”

www.bloomberg.com

Broadway Bank, a bank owned by Giannoulias family, shut down by FDIC.

Alexi Giannoulias

 Federal regulators have shut down the bank owned by the family of Alexi Giannoulias (jeh-NOO'-lee-ehs), the Democrat running for President Barack Obama's former Senate seat.

The Federal Deposit Insurance Corp. made the announcement on its website after the close of business Friday.

Broadway Bank was heavy into real estate loans and lost $75 million last year. Regulators had given it until Monday to raise about $85 million in new capital.

Giannoulias is a first-term Illinois treasurer and a former bank loan officer. Giannoulias says the bank was financially healthy when he left but has suffered the same as other community banks.

But his GOP opponent has made it a central campaign issue.

Customers accounts are insured by the FDIC up to $250,000.

CHICAGO (AP) — U.S. Sen. Dick Durbin says he thinks the Democrat running for President Barack Obama's old Senate seat can still win despite the troubles at his family's bank.

And it looks like Alexi Giannoulias (jeh-NOO'-lee-ehs) could get a boost from the White House.

Obama's deputy press secretary says the president intends to help Democratic candidates in Illinois "up and down the ballot."

That would be good news for Giannoulias who is running in a tight race and whose campaign has been marred by financial struggles at his family's bank.

Durbin said Friday that the White House inquired about the state of Giannoulias' campaign, asking about organization and fundraising. Durbin also defended Giannoulias and says he believes he can win the race against Rep. Mark Kirk.

Associated Press Writer Henry C. Jackson contributed to this report from Washington

What Fabrice Tourre of Goldman Sachs and Jeffrey Skilling of Enron have in common.

Fabrice Tourre

Jeffrey Skilling

If we look carefully, I think that there are key features that record breaking financial scammers have in common. I have decided to correlate the attributes Mr. Fabrice Tourre shares with Mr. Jeffrey Skilling of memorable Enron. I hope this will be useful to Human Resources Managers and investors.

They both have questionable nicknames
Fabrice Tourre called himself the “Fabulous Fab” and Jeffrey Skilling said he was “Fucking Smart”


They both earn their advanced degrees from prestigious universities
Fabrice Tourre is a graduate of Stanford University while Jeffrey Skilling had his MBA from Harvard Business School.


Both Tourre and Skilling do not have professional designation such as Certified Public Accountant, Certified Financial Planner (CFP), Certified Financial Manager (CFM) e.t.c
Neither Fabrice Tourre nor Jeffrey Skilling has a professional license in business, accounting or finance. They were not business and finance majors in their undergraduate degrees. Both Fabrice Tourre and Jeffrey Skilling had science background. Mr. Tourre studied mathematics at École central Paris while Skilling received his B.S. in applied science at Southern Methodist University.


They both worked for financial institutions.
Mr. Jeffrey Skilling started his career as an analyst for First City Bancorporation of Texas in Houston while Fabrice Tourre works for Goldman Sachs.


They were rapidly promoted to the top level of management


They both violated the tenets of corporate ethics

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Goldman Sachs Revokes Fabrice Tourre's United Kingdom Banking licence

By Christine Seib, Katherine Griffiths and Helen Power

Goldman Sachs yesterday pulled the UK licence of the man at the centre of fraud charges brought against it in the United States, within hours of Britain’s financial regulator opening an inquiry into the allegations.

The move came as Goldman’s top lawyer admitted that the US investment bank had tried to offload its share of the toxic mortgages that it has been accused of mis-selling to investors. Goldman had emphasised previously that it had continued to own the investment.

The admission by Gregory Palm surfaced as the bank reported a bumper set of profits and bonuses for the first three months of this year.

Goldman’s shares dropped 1.8 per cent as it revealed an expectation-beating $3.4 billion (£2.2 billion) first-quarter net profit, up 91 per cent on last year. Net revenue was $12.7 billion. The bank put aside $5.5 billion for compensation in the first quarter, equal to $166,000 per employee.

The results followed the announcement by the Financial Services Authority that it had opened an investigation into the bank. A few hours later, Goldman removed Fabrice Tourre’s FSA registration.

Harvey Knight, a lawyer at Withers who used to work at the FSA, said that the timing suggested the City regulator had put pressure on Goldman to suspend Mr Tourre.

Mr Tourre, 31, is accused along with Goldman of misleading investors over a complex investment based on sub-prime mortgages. Mr Tourre was in New York when the alleged fraud took place but moved to Goldman’s London office in 2008.

Goldman maintains that Mr Tourre did nothing wrong.

In a conference call after the publication of Goldman’s first-quarter earnings, Mr Palm admitted for the first time that the bank tried to find a buyer for its estimated $100 million exposure to Abacus 2007-AC1.

The SEC alleges that Mr Tourre allowed Paulson & Co, a hedge fund, to construct Abacus as an imploding investment, then mis-sold this to two investors, ACA Capital Management and IKB, the German bank.

Goldman, which has strenuously denied the allegations, has pointed to its own $90 million loss on Abacus.

It became clear yesterday, however, that the bank had not intended to hold the investment. Mr Palm said: “I believe we did attempt to see if there was any interest on the other side.”

The bank said that it had been contacted by the FSA.

Referring to events after Goldman made a submission formally refuting the claims made against it by the Securities and Exchange Commission in America, Mr Palm said: “At some point they usually tell you they believe they still have a case or they don’t believe what you’re saying, and you’re contacted and told that, but that never happened.”

Barclays investors urged to vote ‘no’

Investors in Barclays have been urged to vote down the bank’s remuneration report at its annual meeting next week (Katherine Griffiths writes).

Pirc, which analyses companies’ corporate governance, criticised the bank over a new pay policy which could produce “potentially excessive” awards.

Barclays’ chief executive, John Varley, and its president, Bob Diamond, both waived their bonuses for 2009 amid widespread criticism of bankers’ pay.

Mr Diamond did receive £26 million for his shares in BGI, the bank’s fund management business, which was sold to America’s BlackRock. Barclays has also given Mr Diamond a shares-based bonus deal over three years that could be worth £20 million at completion.

Pirc said of Barclays’ pay schemes: “We consider the performance conditions to be insufficiently stretching ... We do not consider that shareholders are given sufficient information.” Pirc is also advising shareholders to vote against the reappointment of Sir Richard Broadbent as chairman of Barclays’ remuneration committee.

Source: http://www.timesonline.co.uk/

Related Posts:

• Fabrice Tourre’s profile, Contact Information and Picture

Jeffrey Tesler, a retired sales executive to be extradited to United States for Nigerian bribery trial

Jeffrey Tesler  Photograph: Stefan Rousseau/PA

Jeffrey Tesler, a former employee of Haliburton firm, is second Briton threatened with conspiracy charges over $6bn gas contract in Nigeria.

Jeffrey Tesler is accused of being involved in a huge international bribery scheme would be sent to the US to stand trial, a judge ruled today.

 District judge Caroline Tubbs decided at Westminster magistrates court that the 72-year-old retired sales executive, Wojciech Chodan, should be extradited to Texas to be tried.

 US prosecutors accuse him and a 61-year-old London lawyer, Jeffrey Tesler, of conspiring with others to pay bribes of $132m (£86m) to Nigerian officials to secure a $6bn contract to construct liquefied natural gas plants at Bonny Island, on the coast of Nigeria.

 The duo, who face up to 55 years in jail if convicted, have the right to appeal to the higher courts if the Home Secretary also decides that they should be extradited.

 There has been disquiet that the British government has been too willing to allow its citizens to be flown to the US to be prosecuted for a range of crimes.

 Tubbs rejected Chodan's attempt to stop the extradition proceedings. It follows her ruling last month that Tesler should be extradited.

 Chodan worked for a firm owned by the US oil services group Halliburton, which led the consortium seeking the Nigerian contract.

 The US alleges that Chodan, who lives in the Somerset village of Nunney, was on a committee that devised plans to bribe the Nigerians. He had "numerous discussions" with Tesler and others to ensure that the bribes were paid over a 10-year period, the court heard.

 The cash is alleged to have been laundered through Switzerland and Monaco.

Tubbs ruled that Chodan's alleged conduct had "sufficiently substantial connection" with the US to justify the extradition.

She decided that KBR, the US firm he worked for, "received considerable financial benefit from the corrupt scheme" and that executives of the firm "committed acts in furtherance of the corrupt bribery scheme in Houston, Texas".

Tesler and Chodan are alleged to have conspired with Jack Stanley, the Texan chief executive of KBR, who has already pleaded guilty to his involvement in the bribery scheme, as a result of the investigation by the US prosecutors.

Chodan declined to comment.

Source: http://www.guardian.co.uk/

Related Posts:

• U.S. v. Jeffrey Tesler and Wojciech J. Chodan
• British lawyer Jeffrey Tesler faces extradition to US over corruption charges

Fabrice Tourre’s profile, Contact Information and Picture. Fabrice Tourre is a Stanford University graduate.

 

Fabrice Tourre (Dailymail UK)

Fabrice Tourre is a London based Executive Director at Goldman Sachs who was charged by the SEC on the 16th April 2010 in a $1 billion landmark fraud case. Fabrice Tourre is popularly called the “Fabulous Fab” by his colleagues, and referred to as a French trader in the media circles. Mr. Tourre is the subject of a Securities and Exchange Commission probe on Collateralized debt obligations (CDOs) fraud.

Mr. Tourre is a 2001 graduate of École centrale Paris, where he studied mathematics, and a 2001 graduate of Stanford University, where he received a Master’s degree in Operations Research. He joined Goldman Sachs in 2001 and moved to the structured products correlation trading desk in New York around 2005, managed by Jonathan Egol.

Fabrice Tourre allegedly maximized the greatest economic disaster the world has ever recorded. Mr. Tourre earned approximately $2 million in 2007 for his role in structuring and marketing the ABACUS CDO deals. The ABACUS CDO deals led to a complete lost of great deal of money for investors. He was able convinced Goldman Sachs’ clients to buy into a securities deal called Abacus 2007-AC1. The clients lost $1 billion in what the US Securities and Exchange Commission say “was a scam in which Goldman Sachs capitalized on an impending economic disaster that nearly triggered a global depression.”

How it all started

Fabrice Tourre was only 27 when Goldman Sachs was approached by a hedge fund maverick raised in Queens named John Paulson (who is now is #45 on the list of the world’s wealthiest billionaires). This how Abacus 2007-AC1 was born, and as you might expect, the push for this strategic move did not come from a “greenhorn” Tourre.

According to the New York Times, top Goldman executives, “decided in December 2006 to change the firm’s overall stance on the mortgage market, from positive to negative, though it did not disclose that publicly. Even before then, however, pockets of the investment bank had also started using Collateralized debt obligations (C.D.O.) to place bets against mortgage securities, in some cases to hedge the firm’s mortgage investments, as protection against a fall in housing prices and an increase in defaults. Mr. Egol was a prime mover behind these securities.”

Below is Fabrice Tourre's Bloomberg Profile

GOLDMAN SACHS INTL

120 Fleet Street

River Court,

London EC4A 2HS

United Kingdom

ftourre@Bloomberg.net

Related Posts: 

• What is the meaning of Collateralized Debt Obligations (CDOs)?
• The SEC Press Release on Goldman Sachs Scandal
• The Securities and Exchange Commission (SEC) Accuses Goldman Sachs of Civil Fraud
• Goldman earns staggering $3.3billion In First Quarter despite of Sec’s Fraud Allegations
• 
  
  Goldman Sachs Revokes Fabrice Tourre's United Kingdom Banking licence

Goldman Sachs earns staggering $3.3Billion in First Quarter despite of SEC’s fraud allegations.

Goldman Sachs Group Inc. said Tuesday its first-quarter earnings almost doubled to $3.3 billion as its trading business again surpassed the rest of the financial industry. Company executives, again defending the bank against government civil fraud charges, said Goldman Sachs would "never intentionally mislead anyone."

Goldman Sachs earned $5.59 a share on revenue of $12.78 billion as bond, commodities and currency trading buoyed its profits for yet another quarter. That was well above expectations of analysts surveyed by Thomson Reuters. It was Goldman's second most profitable quarter since going public in 1999. In the fourth quarter, Goldman Sachs earned a record $4.79 billion.

The charges against Goldman Sachs took investors by surprise. The company's stock fell almost 13 percent on Friday, although it has recovered somewhat since then. In preopening trading, the stock rose more than 2 percent, a sign that investors found Palm's discussion of the case satisfactory.

Palm repeated the company's statement that it did not know charges were going to be filed against it.

The SEC alleges that Goldman Sachs did not tell two clients that the CDOs they bought were crafted in part by billionaire hedge fund manager John Paulson, who was betting on them to fail.

The two clients, the German bank IKB Deutsche Industriebank AG and the financial consulting firm ACA Management LLC, "were institutions with significant resources and extensive experience in the CDO market," Palm said.

"We would never intentionally mislead anyone," Palm said.

Goldman Sachs, which has outperformed other financial companies for years, has been the strongest bank throughout the financial crisis. It had less exposure to toxic mortgage-related securities than other companies and also has been more aggressive in its trading.

Goldman Sachs also said Tuesday that the executive at the center of the civil fraud case is voluntarily taking some time off from work.

Fabrice Tourre, who was named in the SEC lawsuit against the firm, is taking a break from his position at the firm's London offices, Goldman Sachs spokesman Michael Duvally said.

"It is voluntary. He decided to take some time off," Duvally said.

Tourre was a vice president in his late 20s when the alleged fraud was orchestrated in 2007. Tourre, the SEC said, boasted to a friend that he was able to put such deals together as the mortgage market was unraveling in early 2007.

Tourre, 31, has since been promoted to executive director of Goldman Sachs International in London.

Source: AP

Related Posts:

• What is the meaning of Collateralized Debt Obligations (CDOs)?
• The Securities and Exchange Commission (SEC) Press Release on Goldman Sachs Scandal.
• The Securities and Exchange Commission (SEC) Accuses Goldman Sachs of Civil Fraud

What is the meaning of Collateralized Debt Obligations (CDOs)?

Collateralized debt obligations (CDOs) are a type of structured asset-backed security (ABS) whose value and payments are derived from a portfolio of fixed-income underlying assets. CDO is an investment-grade security backed by a pool of bonds, loans and other assets. CDOs do not specialize in one type of debt but are often non-mortgage loans or bonds.  Collateralized debt obligations are similar in structure to a collateralized mortgage obligation (CMO) or collateralized bond obligation (CBO), CDOs are unique in that they represent different types of debt and credit risk.

Collateralized Debt Obligations Chart

CDOs securities are split into different risk classes, or tranches, whereby "senior" tranches are considered the safest securities. Interest and principal payments are made in order of seniority, so that junior tranches offer higher coupon payments (and interest rates) or lower prices to compensate for additional default risk. The higher the risk, the more the CDO pays.

A few academics, analysts and investors such as Warren Buffett and the IMF's former chief economist Raghuram Rajan warned that CDOs, other ABSs and other derivatives spread risk and uncertainty about the value of the underlying assets more widely, rather than reduce risk through diversification. Following the onset of the 2007-2008 credit crunch, this view has gained substantial credibility. Credit rating agencies failed to adequately account for large risks (like a nationwide collapse of housing values) when rating CDOs and other ABSs.

Many CDOs are valued on a mark to market basis and thus have experienced substantial write-downs on the balance sheet as their market value has collapsed.

Source: Wikipedia/ Investopedia

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The Securities and Exchange Commission (SEC) Press Release on Goldman Sachs

SEC Charges Goldman Sachs With Fraud in Structuring and Marketing of CDO Tied to Subprime Mortgages

FOR IMMEDIATE RELEASE
2010-59

Washington, D.C., April 16, 2010 — The Securities and Exchange Commission today charged Goldman, Sachs & Co. and one of its vice presidents for defrauding investors by misstating and omitting key facts about a financial product tied to subprime mortgages as the U.S. housing market was beginning to falter.


Additional Materials
Litigation Release No. 21489
SEC Complaint


The SEC alleges that Goldman Sachs structured and marketed a synthetic collateralized debt obligation (CDO) that hinged on the performance of subprime residential mortgage-backed securities (RMBS). Goldman Sachs failed to disclose to investors vital information about the CDO, in particular the role that a major hedge fund played in the portfolio selection process and the fact that the hedge fund had taken a short position against the CDO.

"The product was new and complex but the deception and conflicts are old and simple," said Robert Khuzami, Director of the Division of Enforcement. "Goldman wrongly permitted a client that was betting against the mortgage market to heavily influence which mortgage securities to include in an investment portfolio, while telling other investors that the securities were selected by an independent, objective third party."

Kenneth Lench, Chief of the SEC's Structured and New Products Unit, added, "The SEC continues to investigate the practices of investment banks and others involved in the securitization of complex financial products tied to the U.S. housing market as it was beginning to show signs of distress."

The SEC alleges that one of the world's largest hedge funds, Paulson & Co., paid Goldman Sachs to structure a transaction in which Paulson & Co. could take short positions against mortgage securities chosen by Paulson & Co. based on a belief that the securities would experience credit events.

According to the SEC's complaint, filed in U.S. District Court for the Southern District of New York, the marketing materials for the CDO known as ABACUS 2007-AC1 (ABACUS) all represented that the RMBS portfolio underlying the CDO was selected by ACA Management LLC (ACA), a third party with expertise in analyzing credit risk in RMBS. The SEC alleges that undisclosed in the marketing materials and unbeknownst to investors, the Paulson & Co. hedge fund, which was poised to benefit if the RMBS defaulted, played a significant role in selecting which RMBS should make up the portfolio.

The SEC's complaint alleges that after participating in the portfolio selection, Paulson & Co. effectively shorted the RMBS portfolio it helped select by entering into credit default swaps (CDS) with Goldman Sachs to buy protection on specific layers of the ABACUS capital structure. Given that financial short interest, Paulson & Co. had an economic incentive to select RMBS that it expected to experience credit events in the near future. Goldman Sachs did not disclose Paulson & Co.'s short position or its role in the collateral selection process in the term sheet, flip book, offering memorandum, or other marketing materials provided to investors.

The SEC alleges that Goldman Sachs Vice President Fabrice Tourre was principally responsible for ABACUS 2007-AC1. Tourre structured the transaction, prepared the marketing materials, and communicated directly with investors. Tourre allegedly knew of Paulson & Co.'s undisclosed short interest and role in the collateral selection process. In addition, he misled ACA into believing that Paulson & Co. invested approximately $200 million in the equity of ABACUS, indicating that Paulson & Co.'s interests in the collateral selection process were closely aligned with ACA's interests. In reality, however, their interests were sharply conflicting.

According to the SEC's complaint, the deal closed on April 26, 2007, and Paulson & Co. paid Goldman Sachs approximately $15 million for structuring and marketing ABACUS. By Oct. 24, 2007, 83 percent of the RMBS in the ABACUS portfolio had been downgraded and 17 percent were on negative watch. By Jan. 29, 2008, 99 percent of the portfolio had been downgraded.

Investors in the liabilities of ABACUS are alleged to have lost more than $1 billion.

The SEC's complaint charges Goldman Sachs and Tourre with violations of Section 17(a) of the Securities Act of 1933, Section 10(b) of the Securities Exchange Act of 1934, and Exchange Act Rule 10b-5. The Commission seeks injunctive relief, disgorgement of profits, prejudgment interest, and financial penalties.

For more information about this enforcement action, contact:

Lorin L. Reisner
Deputy Director, SEC Enforcement Division
(202) 551-4787

Kenneth R. Lench
Chief, Structured and New Products Unit, SEC Enforcement Division
(202) 551-4938

Reid A. Muoio
Deputy Chief, Structured and New Products Unit, SEC Enforcement Division
(202) 551-4488

Source: www.sec.gov

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• SEC accuses Goldman Sachs of civil fraud

The Securities and Exchange Commission (SEC) accuses Goldman Sachs of civil fraud

• SEC accuses Goldman Sachs of fraud in failing to disclose conflict in mortgage securities

WASHINGTON (AP) -- The government has accused Goldman Sachs & Co. of defrauding investors by failing to disclose conflicts of interest in mortgage investments it sold as the housing market was collapsing.

The Securities and Exchange Commission said in a civil complaint Friday that Goldman failed to disclose that one of its clients helped create -- and then bet against -- subprime mortgage securities that Goldman sold to other investors.

The SEC said the fraud, a blow to the reputation of Wall Street's most powerful firm, was orchestrated in 2007 by a Goldman vice president then in his late 20's. The employee, Fabrice Tourre, has since been promoted to executive director of Goldman Sachs International in London.

Tourre, the SEC said, boasted to a friend that he was able to put such deals together as the mortgage market was unraveling in early 2007.

In an email to the friend, he described himself as "the fabulous Fab standing in the middle of all these complex, highly leveraged, exotic trades he created without necessarily understanding all of the implications of those monstrosities!!!"

Two European banks that bought the securities lost nearly $1 billion, the SEC said. The agency is seeking to recoup profits reaped on the deal

Goldman Sachs denied the allegations. In a statement, it called the SEC's charges "completely unfounded in law and fact" and said it will contest them.

Goldman, founded more than 140 years ago, built a reputation as a trusted adviser to its investment banking clients. In recent years, it shifted toward taking more risks with its clients' money and its own. Goldman's trading allowed the firm to weather the financial crisis better than most other big banks.

It earned a record $4.79 billion in the last quarter of 2009.

The SEC's enforcement chief said the agency is investigating a wide range of practices related to the crisis. The prospect of possible legal jeopardy for other major financial players roiled the stock market.

Goldman Sachs shares fell more than 12 percent. The Dow Jones industrial average sank more than 100 points in midday trading.

The charges come as lawmakers seek to crack down on Wall Street practices that helped cause the financial crisis. Among proposals Congress is weighing are tougher rules for complex investments like those involved in the alleged Goldman fraud.

The Goldman client implicated in the fraud is one of the world's largest hedge funds, Paulson & Co. The SEC said it paid Goldman roughly $15 million in 2007 to put together an investment offering that was tied to mortgage-related securities the hedge fund viewed as likely to decline in value.

Separately, Paulson took out a form of insurance that allowed it to make a huge profit when those securities became nearly worthless.

ABN Amro, a major Dutch bank, was the biggest loser in the securities, having paid Goldman $841 million, according to the SEC. And IKB, a German commercial bank, lost nearly all its $150 million investment, the agency said. Most of the money they lost went to Paulson in a series of transactions between Goldman and the hedge fund, the SEC said.

The civil lawsuit filed by the SEC in federal court in Manhattan was the government's most significant legal action related to the mortgage meltdown that ignited the financial crisis and helped plunge the country into recession.

The SEC is seeking unspecified fines and restitution from Goldman Sachs and Tourre.
Asked why the SEC did not also pursue a case against Paulson, Enforcement Director Robert Khuzami said: "It was Goldman that made the representations to investors. Paulson did not."

Paulson & Co. is run by John Paulson, who reaped billions by betting against subprime mortgage securities. He is not related to former Treasury Secretary Henry Paulson.

In a statement, Paulson & Co. said: "As the SEC said at its press conference, Paulson is not the subject of this complaint, made no misrepresentations and is not the subject of any charges."

Goldman told investors that a third party, ACA Management LLC, had selected the pools of subprime mortgages it used to create what are known as synthetic collateralized debt obligations. But, the SEC alleges, Goldman misled investors by failing to disclose that Paulson & Co. also played a role in selecting the mortgage pools and stood to profit from their decline in value.

"Goldman wrongly permitted a client that was betting against the mortgage market to heavily influence which mortgage securities to include in an investment portfolio, while telling other investors that the securities were selected by an independent, objective third party," Khuzami said in a statement.

The SEC charges come after Goldman Sachs denied last week it bet against clients by selling them mortgage-backed securities while reducing its own exposure to them.

In an annual letter to shareholders, Goldman said it began reducing its exposure to the U.S. mortgage market in late 2006. It said it did so by selling mortgage investments or buying credit default swaps. The swaps are a form of insurance that pays out if the value of the underlying asset declines.

Those hedges, also known as short positions, served Goldman well. As the housing market began cratering and losses piled up for other big banks, Goldman suffered less damage. That led to criticism that the bank benefited at the expense of clients who bought mortgage-backed securities that became toxic. Goldman denied that.

"Our short positions were not a 'bet against our clients,'" Goldman said in the letter. "Rather, they served to offset our long positions. Our goal was, and is, to be in a position to make markets for our clients while managing our risk within prescribed limits."

In the letter, Goldman also rejected claims that it profited from the mortgage market meltdown.

AP Business Writers Alan Zibel in Washington and Stevenson Jacobs in New York contributed to this report.

Source: http://www.finance.yahoo.com/

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