Bernard Madoff To Plead Guilty

In a surprise move, Ira Sorkin, the attorney for Bernard Madoff says the disgraced investor will plead guilty to 11 counts against him. Madoff is facing 150 years in prison if he’s convicted of all charges. Madoff has been under house arrest since December 2008, when he confessed he was operating the world’s largest Ponzi Scheme.

At that time Madoff told his sons that he had engineered a $50 billion fraud. Now prosecutors have upped the amount to $64.8 billion. The actual amount of money stolen is unknown. Investigators are using numbers that include probably false profits that Madoff included in his documents.

So far investigators have only recovered $1 billion.

Assistant U.S. Attorney Marc Litt said that there was no plea agreement with Madoff and that the sentence could be 150 years.

Madoff is expected to plead guilty on Thursday.

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Bernard Madoff To Face Victims In Court

Bernard Madoff is finally going to meet his victims in court. Madoff admitted to the largest Ponzi Scheme in December, yet he’s remained out of jail the whole time.

Madoff, the former Chairman of NASDAQ, has been under house arrest since December 2008.

On Friday US District Judge Denny Chin invited victims to attend court this Thursday, when Madoff is expected to enter his “Guilty” plea.

It’s widely being speculated that Madoff is likely to enter into a “plea agreement” in order to minimize his legal damages. After his guilty plea, it’s expected that the District Attorney will hit the disgraced financier with even more charges.

“Madoff is about to enter his guilty plea,” SEC attorney Jacob Frenken said. “A criminal information is a consented-to criminal charge used to enter a guilty plea.”

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Monsanto Moves To S&P 100

Monsanto, (NYSE:MON) a leading agriculture business that specializes in crop seeds, biotechnology, agricultural chemicals and other products, will be recognized as an S&P 100 company.

Monsanto replaces TYCO, (NYSE:TYC) a diversified International company that sells various types of safety equipment including electronic security to breathing apparatus. TYCO is in the process of moving their operations to Switzerland, making them ineligible for the S&P indice listing.

Monsanto is headquartered in St. Louis, Missouri and has over 18,800 employees worldwide. The company developed the Roundup brand of herbicide, as well as genetically modified seeds and the bovine growth hormone.

Monsanto’s GICS ECONOMIC SECTOR is ‘materials’ and GICS SUB-INDUSTRY is ‘Fertilizers & Agricultural Chemicals’.

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Bank Of America Stock – Dead Cat Bounce Or Real Rally?

Bank of America investors have been suffering from severe mood swings lately. Based on concerns that the bank would be nationalized, huge volumes of the market cap have disappeared as everyone waits to see which way the regulatory winds will blow. Ben Bernanke seemed very clear that the nationalization of banks is not something the Treasury department wants to do. However, the US government already holds huge amounts of Bank of America preferred stocks which could be converted into common shares.

Such a conversion would likely be bad for share holders. But the big question would be: who to screw worse, the bond holders or the shareholders? One thing seems relatively certain, few investors are purchasing Bank of America stock as a long term hold due to the company’s outstanding track record.

Bernanke said that nationalization of Bank of America and Citigroup “just isn’t necessary.” This was less than one week after former Treasury head Alan Greenspan said such action “may be necessary.”

Not knowing exactly what the government plans on doing adds uncertainty to an investment in Bank of America, and it’s a rare day when uncertain investments are made with conviction. If the chance exists that you can lose all your money buying into a company, prudent investors are likely to take their time to make sure they’re making the right choice?

Right now investing in Bank of America stock is like reaching into a cookie jar that’s actually a blender in disguise. Sure, you might get out of the deal with a few fingers left, but you better believe the cookie won’t be worth it.

Nationalization doesn’t seem to be a pressing issue, which brought some money back to the fold, but clearly people holding BAC stock should be concerned about what happens to their investment in the event of government intervention in banking affairs.

Ever since the Bush administration first released funds to “save the financial institutions” of America, few have seen evidence the plan is working. Obama has seemingly picked up where Bush left off, keeping banks alive but unable to restore the “frozen credit” to the masses. Without consumer spending, as we’ve all learned, companies in the U.S just can’t make money.

Whether any of the current stimulus ideas can actually work is a matter of intense debate. Currently the back of the consumer is broken. Facing foreclosure and unemployment, even those who haven’t yet lost their jobs or homes are worried as news reports constantly remind people of the “downward spiral” of the economy and how future prospects look bleak. Not exactly the rallying cry that will get people to the stores to say “Charge It!” with reckless abandon.

The fate of AIG is one that the government wants to avoid re-living by nationalizing either Bank of America or Citigroup. The losses just keep coming in at AIG and having a company that bleeds red ink but never dies is not something any politicians wants on their watch indefinitely.

Luckily for Bank of America investors, they’ve still got Kenneth Lewis at the helm to lead the company during its darkest days. Lewis spoke to Bloomberg news and was absolutely ebullient about Merrill Lynch, saying the acquisition was “a thing of beauty. Not only that, but “Everything we thought is playing out” since the purchase of the company.

That type of sentiment is tough to find, considering Bank of America lost $15.84 billion in the fourth quarter of last year, mainly due to the Merrill Lynch deal. It’s good to see the continuing troubles at BAC haven’t affected Lewis’ sense of humor, err, his optimism.

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GM Loses Butt-Load Of Cash In 2008

General Motors lost a few bucks in 2008. Okay, that’s a bit of an understatement. For the fiscal year ending December 2008 the Detroit auto manufacturer lost $30.9 billion. Not only is losing money the main business of GM these days, it’s an expensive one. GM also stated they burned through $6 billion of cash in the last quarter.

The question of how to keep GM alive is becoming increasingly complex as expense rise and losses mount. So far Uncle Sam has already lent the company $13.4 billion. Last week GM said they’d need at least $30 billion more to keep operational. Even with this giant influx of money, there’s no guarantee GM will stay afloat.

Rick Wagoner, a master of the obvious, said that 2008 “was an extremely difficult year for the U.S. and global auto markets, especially the second half.”

Not only that, Wagoner said he doesn’t expect things to get much better the rest of the way this year.

“These conditions created a very challenging environment for GM and other automakers, and led us to take further aggressive and difficult measures to restructure our business,” he said. “We expect these challenging conditions will continue through 2009.”

2008 ended with an 11 percent decline in GM sales. The company sold a total of 8.35 million cars worldwide.

GM stated that they might be downgraded by auditors. They expect to receive a “going concern” notice from auditors who are expected to decide whether the company can move forward, with or without government help.

Almost all metrics by which GM could be judged are down. Revenue for the latest quarter dove from $46.8 billion to $30.8 billion. The net loss went from $722 million to $9.6 billion.

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R. Allen Stanford – Don’t Worry, Be Happy

R. Allen Stanford, the chairman of Stanford International Bank was apparently heavily influenced by the work of singer Bobby McPherin, who once famously sang “Don’t Worry, Be Happy.” He wooed prospective customers by touting his CDs as being as safe as, if not safer than, government backed securities.

The siren song of safety and a decent return was enough to attract investors who were concerned with preservation of capital. One such investor was Pedro, a 62 year old from Mexico City. The software engineer put $150,000 into Stanford International CDs.

“Security was the key aspect,” he said “They told me that they had insurance. The broker told me not to worry and that the bank was safe.”

Confusion from customers was likely due to the fact that bank CDs that are FDIC-insured carry a $250,000 guarantee from the government. The CDs being marketed by Stanford held no such guarantee.

The SEC has now charged Stanford, 58, with running a “massive, ongoing fraud.” Prosecutors have received numerous complaints about Allen, but didn’t act until publicity from the Bernard Madoff Ponzi scheme caused them to intensify efforts.

The SEC began a formal probe of Stanford’s activities in October 2006 that culminated in charges being brought against him on February 17th.

The SEC says delays in the case were often a result of jurisdictional problems related to the complexity of the scheme.

The company has been sued several times for operating a Ponzi scheme. They settled the cases.

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Coca Cola 4Q Profit – It’s The Real Thing

The Coca-Cola Co. bucked the trend that many companies have been following these days and actually turned a profit. Of course the company’s profits were down 18% from the year earlier period, but these days that’s like hitting a home run.

Although they probably didn’t dance in the streets, analysts were probably still ecstatic that Coca Cola’s earnings exceeded their estimates. That’s as rare as lunar eclipse these days on Wall Street.

Foreign expansion pushes revenue growth

One area where KO excelled was in growing foreign markets. The company say double digit sales growth in China, Eastern Europe, and India.

The company earned $995 million, which translated to 43 cents per share, in the quarter that ended December 31st 2008. This was down from $1.21 billion, or 52 cents per share, in the 2007 period.

“Our performance in the fourth quarter was very solid,” said CEO Muhtar Kent in a statement.

Overall revenue was lower at $7.13 billion from $7.33 billion a year ago. This represented a 3% decline in sales.

The real money’s in water

Coca-Cola has done an excellent job in recent years marketing water. H20 is a big hit with consumers, and adds to the bottom line. But water wasn’t the only product that sold well.

Overall unit case volume grew 4 percent during the quarter, and Coca-Cola, the flagship product, managed a 2% gain. Even in troubled times, people still wanted their coke.

The company has recently opened the World of Coca Cola in Atlanta to showcase company history.

Coca-Cola is still the real thing when it comes to business.

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Bank of America Leads Bank Stocks Into Gutter As Ken Lewis Gets Chatty

Bank of America shares shed 19.2% of their value yesterday on a day that was particularly brutal for financial institutions on Wall Street. Investors didn’t care for details of Timothy Geithner’s vision of a financial bailout, and stocks were hammered as a result.

Bank of America CEO Ken Lewis sent a prepared statement to Congress yesterday in which he defended BAC’s record, and said the company is loaning money.

“Notwithstanding these headwinds, the new loans we made in the fourth quarter included: $59 billion in commercial loans; Nearly $7 billion in commercial real estate loans; $45 billion in mortgages; Nearly $8 billion in domestic card and unsecured consumer loans; More than $5 billion in home equity products; About $2 billion in consumer Dealer Financial Services (auto, marine, RV loans). And nearly $1 billion in new credit to more than 47,000 new Small Business customers,” wrote Lewis.

All the heads of major banks are expected to tell Congress the exact same thing: we are lending to credit worthy customers. With the average consumer up in arms about the deteriorating condition of the economy, bank heads have become an obvious target.

Congress is also expected to delve into the controversial subject of executive compensation. They’ll attempt to learn why bank executives are being paid so highly when many people blame them for the economic meltdown in the first place.

At Bank of America, more reports are emerging that employee morale is hitting a low point. The company is currently paring 35,000 jobs throughout its division, and most people aren’t sure if they’re next on the chopping block.

Lewis has been busy communicating with workers about the rumors that are swirling around the company.

“It is one thing to say that in an interview. But I know that talk can be cheap. Which is why I — along with several of our directors and executive officers — have continued to purchase Bank of America stock over the past few weeks. I bought another 200,000 shares last week. Of course, I am not recommending nor encouraging anyone inside or outside the company to buy Bank of America stock. I only hope my actions speak for my confidence in our company, and in all of you,” Lewis wrote.

Lewis and insiders have been buying up stock, but it hasn’t done much to restore confidence from investors or employees. This week promises to be an extremely volatile one for BAC.

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Harry Markopolos Attacks SEC Over Madoff Scheme

Harry Markopolos had some choice words for the SEC, when called to testify about his numerous attempts to blow the whistle on the enormously damaging Bernard Madoff Ponzi Scheme.

“You are both a captive regulator and a failed regulator,” said Markopolos in his testimony to a U.S. House subcommittee.

Markopolos said he spent nine years trying to get the SEC interested in Madoff’s doings. He also stated they couldn’t understand the scheme because of the complex financial instruments involved.

“The SEC was never capable of catching Mr. Madoff,” Markopolos said.

Markopolos also said more “feeder funds” are out there, but haven’t come out of the woodwork just yet.

“My team was out there in the field talking to the Madoff feeder funds and identifying who they were,” he said. “There are 12 more out there lying low in the weeds in Europe that you have not heard of yet.”

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Bank Of America Blows Bailout Cash On Super Bowl Bash

Bank of America has been one of the largest recipients around of TARP funds. The company has received over $45 billion from the government, yet seems unable of reigning in spending. Bank of America has been coming under increasing fire in recent days by politicians and angry taxpayers alike. Now, we learn that executives attended a huge Super Bowl party that probably cost $10 million.

“The prominent sponsorship of the Super Bowl says to the American people we’ll take your money and then we’re going to go waste it,” Tom Schatz, president of Citizens Against Government Waste, a watchdog group, told ABC News.

Leading Congressional critic, Congressman Elijah Cummings, (D-MD), said, “They should know better, but obviously they don’t.”

One look at Bank of America’s track record with bailout funds, and it’s pretty easy to understand why the average person is upset with this bank.

The SEIU wants Bank of America to kick CEO Ken Lewis to the curb because the company approved $4 billion in bonuses for Merrill Lynch executives after accepting $25 billion in bailout funds last October. Is there any wonder why Bank of America is bad for America? While the nation’s largest bank was handing out hefty bonus checks, they were drawing up plans to layoff 35,000 of their 247,000 employees; investing billions in overseas banks and Washington lobbyists; flying executives around on corporate jets; foreclosing on homes; cutting credit to consumers; and refusing to pay employee health care. To top it off, they had the nerve to request $20 billion more from our Treasury.

Not only are politicians and employees feeling screwed over by BAC these days, but so are millions of the banks customers. Reports are streaming in concerning the company increasing interest rates and/or closing down credit lines. The one thing that BAC hasn’t used bailout money for is to lend money to people.

The credit crisis continues to worsen as companies like Bank of America tend to their own agenda first and foremost. Today Barney Frank announced he’ll be dragging the heads of many of the nation’s major banks in front of a hearing to grill them on the whereabouts of the bailout cash. That seems like a case of “too little too late.”

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