My finance view

Citigroup said Thursday it would pay $73 million to settle charges by the Securities and Exchange Commission that the bank, as well as two of its executives, misled investors about the company’s exposure to the subprime mortgage market.

Wall Street’s top regulator said Citigroup repeatedly made misleading statements in investor presentations and in public filings about the actual size of assets it controlled that were backed by subprime mortgages.

Between July and mid-October 2007, the company maintained its holdings of what have now been dubbed "toxic assets", stood at $13 billion, when in fact the number was closer to $50 billion, according to the SEC.

"The rules of financial disclosure are simple — if you choose to speak, speak in full and not in half-truths," Robert Khuzami, director of the SEC’s Division of Enforcement, said in a statement.

Also charged in the case were two Citigroup executives, including former chief financial officer Gary Crittenden and Arthur Tildesley, Jr., who currently serves as the head of cross marketing at the company.

Crittenden agreed to pay $100,000 to settle the charges while Tildesley, the former head of investor relations, agreed to pay $80,000.

In a statement issued Thursday, Citigroup stood behind the men, calling them both "highly valued" employees.

"We are pleased that we have reached agreement with the SEC to put this matter concerning certain 2007 disclosures behind us, and that the SEC is not charging Citi or any individual with intentional or reckless misconduct," the company said in a statement.

Citigroup neither admitted or denied the SEC’s allegations. But Thursday’s settlement is the federal agency’s latest attempt to crack down on fraud and misbehavior on Wall Street during the crisis.

Earlier this month, the SEC struck an agreement with Goldman Sachs (GS, Fortune 500). The company agreed to pay $550 million to settle charges that the company defrauded investors in the sale of an investment tied to subprime mortgages.

Citigroup (C, Fortune 500) stock edged higher in afternoon trading Thursday. 

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The outlook for the global refining and marketing sector has been upgraded to “stable” from “negative,” according to rating agency Moody’s Investors Service.

Though the agency expects conditions to remain difficult, margins for the sectors will average “significantly higher” over the next 12 to 18 months.

Moody’s says distillate and gasoline inventories remain very high, though gasoline demand will be dogged by high unemployment, rising ethanol use, rising world refining capacity, and the economic slowing in major economies.

“In the absence of clear-cut strong demand and margin momentum for gasoline, distillate and crude oil price differentials, our stable outlook largely reflects that the mix of wider gasoline and distillate margins, and wider crude oil price differentials we’ve seen, supported by firming demand from industrial and freight transport will average out to support a stable outlook,” said Andrew Oram, vice president and senior credit officer with Moody’s corporate finance group payday loan lenders.

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Temperatures will heat up again Tuesday and continue right through the middle of the week before some cooling and potential rainfall appears in the forecast.

The National Weather Service forecasts highs of around 90 or a little higher through Thursday and leads to a few reminders about the range of temperatures away from lakes Erie and Ontario and air quality payday loan.

For those wondering, the record high for July 6 in Buffalo was 97 degrees in 1988 and the normal high for this date is 79 degrees.

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Planet Fitness has leased about 22,680 square feet of space at the Charlestown Shopping Center in Kernersville, marking the third company location in the Triad.

YOT Fitness Kernersville LLC, which conducts business as Planet Fitness, leased the space from Greenwood and Charles Inc. and joins Rite Aid and other tenants in the shopping center.

Raymond D. Collins Jr., of Collins Commercial Properties Inc., represented YOT Fitness/Planet Fitness in the Kernersville lease.

Ladd Freeman Jr low rate payday loans., of Freeman Commercial Real Estate, represented Greenwood and Charles Inc. as landlord in the lease.

Planet Fitness in Kernersville is slated to open in the fourth quarter with an initial 15 employees. Other Planet Fitness centers are located in Greensboro and High Point.

Martin Sinozich is principal and managing partner of the three Triad locations.

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1. ENTERPRISE HOLDINGS

600 Corporate Park Drive

Clayton, Mo. 63105

314-512-5000

www.enterprise.com

Sales $12.1 billion

CEO Andrew C. Taylor

Founded 1957

Main products and services

Jack Taylor started his leasing business out of the basement of a St. Louis car dealership in 1957. The company now owns and operates the largest fleet of passenger vehicles in the world today — more than 1 million cars and trucks, operating more than 8,000 car rental locations including every major airport worldwide.

2. APEX OIL CO.

8235 Forsyth Boulevard, Suite 400

Clayton, Mo. 63105

314-889-9600

www.apexoil.com

Sales $5.5 billion

CEO Paul Novelly

Founded 1932

Main products and services

Apex is engaged in wholesale sales, storage and distribution of petroleum products including asphalt, kerosene, fuel oil, diesel, heavy oil, gasoline and marine bunkers. The company has terminals in the Midwest, East Coast, Gulf Coast and California.

3. GRAYBAR ELECTRIC CO.

34 North Meramec Avenue

Clayton, Mo. 63105

314-573-9200

www.graybar.com

Sales $4.4 billion

CEO Robert A. Reynolds Jr.

Founded 1925

Main products and services

Graybar distributes electrical, communications and networking products. One of the largest employee-owned companies in North America, it has a network of about 6,900 employees and nearly 240 locations across the U.S., Canada and Puerto Rico.

4. EDWARD JONES

12555 Manchester Road

Des Peres, Mo. 63131

314-515-2000

www.edwardjones.com

Sales $3.5 billion

CEO James D. Weddle

Founded 1922

Main products and services

Tracing its roots to its first branch office in Mexico, Mo., investment house Edward Jones now has more than 10,000 offices in the U.S., Canada and Britain. Believing that online trading encourages rash decision-making, the company instead prefers to have one-broker offices and personal contact with investors. Edward Jones, which is the largest U.S. financial services company in terms of number of offices, serves more than 7 million clients.

5. CENTER OIL CO.

600 Mason Ridge Center Drive

Town and Country, Mo. 63141

314-682-3500

www.centeroil.com

Sales $3.3 billion

CEO Gary R. Parker

Founded 1986

Main products and services

Center Oil distributes gasoline and other refined petroleum products throughout the U.S. by pipeline, ship, barge and truck to and from 10 petroleum-product terminals in the Midwest and East Coast.

6. McCarthy Holdings Inc.

1341 North Rock Hill Road

St. Louis, Mo best payday advance. 63124

314-968-3300

www.mccarthy.com

Sales $3.1 billion

CEO Michael D. Bolen

Founded 1864

Main products and services

McCarthy Holdings Inc., comprised of McCarthy Building and MC Industrial, provides construction services from coast to coast with full-service offices in Missouri, Texas, California, Arizona, Nevada and Georgia. An employee-owned company, McCarthy was ranked the 20th largest U.S. construction firm in trade publication Engineering News-Record’s 2010 listing of top 400 contractors.

7. SCHNUCK MARKETS INC.

11420 Lackland Road

Maryland Heights, Mo. 63146

314-994-9900

www.schnucks.com

Sales $2.5 billion

CEO Scott C. Schnuck

Founded 1939

Main products and services

The family-owned grocery chain operates more than 100 supermarkets in Missouri, Illinois, Indiana, Wisconsin, Tennessee, Mississippi and Iowa. Nearly all are operated under the Schnucks brand.

8. WORLD WIDE TECHNOLOGY INC.

60 Weldon Parkway

Maryland Heights, Mo. 63043

314-569-7000

www.wwt.com

Sales $2.2 billion

CEO James P. Kavanaugh

Founded 1990

Main products and services

The St. Louis area’s largest minority-owned business, World Wide Technology provides technology and supply chain solutions to commercial, government and telecommunications customers.

9. ALTER TRADING CORP.

700 Office Parkway

St. Louis, Mo. 63141

314-872-2400

www.altertrading.com

Sales $1.8 billion

CEO Robert Goldstein

Founded 1898

Main products and services

Alter Trading is a fourth-generation family-owned company. Its principals also own 40 percent of Isle of Capri Casinos. Alter is one of the nation’s largest scrap metal recyclers and brokers, with processing plants and office locations throughout the central U.S. Alter has rapidly expanded, offering full product recycling capabilities and trading directly with consumers. It operates 32 scrap recycling facilities with shredders, shears and balers.

10. UNIGROUP INC.

One Premier Drive

Fenton, Mo. 63026

636-305-5000

www.unigroupinc.com

Sales $1.6 billion

CEO H. Daniel McCollister

Founded 1987

Main products and services

UniGroup is parent of moving companies United Van Lines and Mayflower Transit. It also controls a global mobility management service company, and an insurer for trucking companies and movers.

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RESEARCH: Matthew Fernandes | Post-Dispatch

Data on Apex and Alter compiled from Sorkins.com

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NEW YORK — Simon Hallett, chief investment officer of Harding Loevner, knows a thing or two about international markets. The nearly 30-year investment-industry veteran manages two highly rated mutual funds, Harding Loevner International Equity, and Harding Loevner Emerging Markets. His firm manages more than $7.3 billion. Here are his views on the European debt crisis and the global economy:

With all the discussion about Greece and the decline of the euro, what’s on your mind?

All that we’re seeing now in Europe is a kind of a ripple effect from what began here three years ago.

We wrote to our mutual fund shareholders in October, and talked about the twin big risks that the world faced. One is the risk of higher inflation resulting from the massive expansion of monetary supplies.

That helped finance the other big risk: the contraction in assets that came as a result of terrible lending by the banks. So there’s this kind of tradeoff between inflationary pressures in the future, and massive deflationary pressures now.

We don’t know what policy is going to enable us to steer between these two monsters. There is a tremendous risk of policy errors at a time when government involvement is much, much greater. But we basically said, deflationary pressures are the ones that are going to win out over the coming years, and that has some implications for the kind of companies in which we should invest.

What can we expect now?

We’re seeing a contraction in bank assets because they made stupid loans. And equity markets, in particular, seem to be very short-sighted about where the strains are going to emerge next. Governments in Europe have too much leverage. Not just in terms of their balance sheets, but also in terms of their unfunded commitments, such as welfare benefits, and unemployment benefits. In order to fix the credit problems that the banks have, governments have to generate more revenue, so they have to push tax rates up and that threatens the economic growth. So I think we’re going to continue seeing strains on government finances, strains on the finances on anybody who has too much debt.

What kind of companies can best operate in this kind of environment?

Our philosophy is to make sure that balance sheets are strong, cash flow is strong, that management is capable, and that the competitive position is invulnerable — or at least as strong as you can possibly assure. And that this is the kind of company that can eke out fairly modest amounts of growth wherever they can find it. They’re not reliant upon very strong economies.

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Just a few months after putting its Buffalo headquarters up for sale, the Girl Scouts of Buffalo and Erie County have found a buyer for their Jewett Parkway complex.

The Hillside Family of Agencies, a not-for-profit that serves youth and others in Erie and Niagara Counties, has agreed to purchase the Girl Scouts headquarters. A formal announcement is due Friday afternoon.

The Girl Scouts, which is merging with three other regional Girl Scout councils, is relocating from Buffalo to a suburban site.

The Girl Scouts listed its Jewett Parkway headquarters, a 10,900-square-foot building located just a few blocks from the Darwin Martin House complex, for sale this winter with a $675,000 asking price. The building was listed by Paula Blanchard and Ed Woods from RealtyUSA.

The council has used the Jewett Parkway building as its headquarters since it bought the property in 1969, Approximately 40 people work in the building.

The decision to put the building on the real estate market was made as an outgrowth from the merger between the Girl Scouts of Buffalo and Erie County, Girl Scouts of Niagara County, Girl Scouts of Genesee Valley and Girl Scouts of Southwestern New York. The council now covers a jurisdictional area that covers nine counties and 6,700 square miles in a region that extends from Niagara and Erie Counties eastward towards Rochester.

The Girl Scouts of Western New York – the newly merged entity – serves more than 22,000 girls and a network of more than 10,000 volunteers.

Girl Scout officials said they needed a more central location.

Besides the 40 people who work in Buffalo, the council has more than 100 employees in offices it operates in Lockport, Jamestown, Rochester and Batavia.

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Treasurys were little changed Wednesday, as investors looked for direction amid mixed signals out of Europe and the United States.

What prices are doing: Prices straddled the breakeven point much of Wedneday before dipping a bit after the afternoon release of the Federal Reserve’s upbeat minutes.

The benchmark 10-year note fell 2/32 to 101-7/32, pushing the yield up to 3.36%. Bond prices and yields move in opposite directions.

The 30-year bond dropped 3/32 to 102-12/32 and yielded 4.24%; the 2-year note inched lower to 100-14/32, with a 0.76% yield. The 5-year note was down 7/32 to 101-26/32, yielding 2.11%.

What’s moving the market: Treasurys struggled to find direction Wednesday as investors weighed mixed signals in Europe and the United States.

Germany announced it would ban some "naked" short selling and said its banks are not on the brink, which helped the euro rise against the dollar for the first time in several trading sessions. The euro hit a fresh four-year low on Tuesday, but rose 1.5% against the dollar Wednesday.

But this assurance from German officials did little to assuage investors, who are wary about the strength of Europe’s banks, and Treasurys rebounded.

The government-backed bonds turned lower, however, after the Fed raised its outlook for economic growth and reduced its estimate for the unemployment rate.

Investors view Treasurys as "safer" assets in times of economic uncertainty because they are backed by the U.S. government. In recent weeks, the euro zone’s debt concerns and worries about the sustainability of the shared currency have caused riskier assets, such as stocks traded in global markets, to plummet, boosting the government-backed bonds.

What analysts are saying: "Everyone’s focused on the euro problem," said William Larkin, a portfolio manager at Cabot Money Management. "The flight to quality has caused a lot of volatility in the treasury market."

Analysts have said that Germany’s ban on short-selling is an effort to protect banks from the damage of speculators can cause. But following the announcement, European stock markets fell and U.S. stock markets traded lower as investors continued to move money out of riskier assets, such as stocks and commodities, and into relatively safer ones.

"They would have been better off having a press release, detailing the rationale of the ban and its connection to the larger austerity plans," Larkin said. "It looks like a patch, panic. It doesn’t look coordinated."

At yields lower than 3.5% on the benchmark 10-year note, Treasurys are quite expensive, Larkin said. But the trend is unlikely to change in the near-term, as uncertainty clouds Europe.

"As long as fear is out there, Treasurys will trade expensively with very low yields," Larkin said. 

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The Pentagon is telling bidders for a major tanker project to be ready to start the contract on Nov. 12.

The contract is worth at least $35 billion to build 179 refueling jets. Bids are expected from Boeing Co. and European Aeronautic Defence and Space Co.

Pentagon spokesman Geoff Morrell said Tuesday that the Pentagon still hopes to award the contract in the fall, but that it set the Nov. 12 start date so that bidders could plan around it.

The request for proposals calls for the contract to be awarded on Aug. 12. That has appeared unlikely since the Pentagon extended the bidding deadline by two months, until July 9, so that EADS could bid.

The Nov. 12 date was set in an update on the tanker posted on a federal procurement website on Thursday. It includes a question about the estimated date the contract will be awarded. The answer says bidders should "prepare their proposals assuming a contract start date" of Nov. 12. Morrell said the contract start date is not the same as the date it will be awarded.

The Pentagon has said it will try to compress the time between when the bids come in and when it picks a winning bidder.

The Air Force needs to replace its KC-135 refueling tankers, which date to the 1950s. It has been trying to pick someone to make the new tanker since 2003.

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The Wichita school board on Monday will consider a list of more than $7.5 million in proposed budget cuts that would include laying off 117 workers.

USD 259 Superintendent John Allison announced the possible cuts Thursday as the district wrestles with cutting $25 million from its 2010-11 budget. The district has been notifying affected personnel this week of the possible jobs cuts.

“This has been difficult as we have informed employees that they may no longer have a job because it not only affects them, it affects their families and the economy,” Allison said in a statement. “We can’t make these kinds of cuts without cutting positions or affecting programs. Each cut that we make has a direct impact on students, teachers and our schools.”

The district is proposing to eliminate 44 learning services staff positions, 15 facilities staff members, five safety services personnel and three human resources positions, among others.

Other proposed cuts include eliminating the district’s drivers’ education program, eliminating job sharing positions at the elementary level and closing the Metro-Midtown Alternative High School, which was announced April 14 and could save $1 million.

To date, the district has recommended $14.2 million in cuts, which leaves another $10.7 million to slash.

Allison notified district employees of the proposed cuts in an e-mail Thursday afternoon.

“It is with great sadness that I share with you the next phase of budget reductions,” Allison wrote.

Allison said the proposed cuts were not taken lightly.

“I said from the beginning of this very difficult budget process that we would make necessary cuts as far away from the classroom as possible, and I can assure you we have worked to do just that,” Allison wrote. “However, we have now reached the point that people and classrooms are directly impacted.”

The district will be finalizing its list of cuts in the coming weeks as it prepares to adopt its budget for next year.

Proposed phase one budget cuts include changing start and end times at eight schools beginning next year, which represents $2.5 million in savings.

Phase two reductions include reducing overtime, eliminating the remaining four school resource officers at the district’s middle schools and suspending the Grow Your Own Teacher program. Those proposals equal $4.2 million.

Allison’s recommendations Thursday represent two additional phases of cuts, one totaling $5.2 million and the other $2.3 million.

Additional cuts will be shared in May, along with recommendations concerning the reductions schools must make. The district won’t know the total amount it has to cut until the Kansas Legislature finalizes its budget.

USD 259 is Wichita's third-largest employer with 9,343 employees district wide, according to a Wichita Business Journal list that published in January.

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