Business news in brief

QUOTE OF THE DAY

“A GE back to its core roots is a very compelling investment story.This is the GE we grew up with.”

Scott Davis, Barclays analyst

G-20 backs plan to curb tax evasions

MOSCOW - Government officials from the world’s largest and richest economies have endorsed a blueprint to curb widely used tax avoidance strategies that allow some multinational corporations to pay only a pittance in income taxes.

In one widely cited example, Starbucks has managed to post a profit of nothing in Britain even after selling untold millions of beverages and baked goods. Apple drew scrutiny for leaving billions of dollars in profits overseas and instead passing along the fruits of its commercial success to shareholders by taking out loans.

In light of such practices - which are entirely legal but take advantage of differing tax rules around the world - the Organization for Economic Cooperation and Development is proposing that all nations adopt a list of 15 new tax principles for corporations. The plan focuses only on corporations and would, if adopted widely, shift some of the global tax burden toward large companies and away from small businesses and individuals.

The list was presented Friday at a meeting of finance ministers of the Group of 20 countries in Moscow. The group also recommended strict rules for defining where a company has a permanent presence. If accepted, the countries in the Group of 20 would commit to the reform at a gathering of heads of state in St. Petersburg, Russia, in September.

Drugmaker sends senior exec to China

LONDON - GlaxoSmithKline PLC has sent its head of emerging markets to China to oversee the drugmaker’s response to a government investigation of suspected economic crimes, according to person with knowledge of the matter.

Abbas Hussain, the London-based company’s president of Europe, Japan, emerging markets and Asia Pacific, was sent by Chief Executive Officer Andrew Witty, said the person, who asked not to be named because he wasn’t authorized to speak about the matter.

Sending a senior executive such as Hussain shows GlaxoSmithKline PLC wants to be seen as a company that’s doing what’s expected of them, said Fabian Wenner, a health-care analyst with Kepler Capital Markets in Zurich. Four senior executives have been detained in the investigation involving $489 million of spurious travel and meeting expenses, and trade in sexual favors, China’s Public Security Ministry said July 15.

“Investors are increasingly asking questions about this,” Wenner said Friday. “They want more visibility.”

Witty will hold briefings Wednesday with reporters and analysts after the company announces second-quarter earnings. The company said in June it had found “no evidence of corruption or bribery in our China business” after a four-month investigation.

Time share’s stock rises during 1st day

NEW YORK - Shares of Diamond Resorts International Inc. surged Friday in their first day of trading on the New York Stock Exchange.

The time-share company’s stock jumped $2.15 to close Friday at $16.15. The shares were priced at $14, below the expected range of $16 to $18 per share.

Diamond Resorts raised $217 million from its initial public offering of 15.5 million shares. The Las Vegas company is selling 14 million shares, while a selling stockholder is selling 1.5 million shares. Diamond Resorts won’t receive any proceeds from shares sold by the selling stockholder.

Diamond Resorts and the selling stockholder are giving the underwriters a 30-day option to buy up to an additional 2.1 million shares from the company and up to 225,000 additional shares from the selling stockholder to cover any excess demand.

Diamond Resorts said in a regulatory filing that it plans to use its net proceeds from the offering to repay some loans and for other purposes.

Shares are trading under the “DRII” ticker symbol.

Study: Fracking did not harm aquifer

PITTSBURGH - A new federal study on hydraulic fracturing, or fracking, shows no evidence that chemicals from the natural gas drilling process moved up to contaminate drinking water aquifers at a western Pennsylvania drilling site, the Department of Energy said Friday.

Researchers found that the chemical-laced fluids used to free gas trapped deep below the surface stayed thousands of feet below the shallower areas that supply drinking water, geologist Richard Hammack said.

Although the results are preliminary - the study is still ongoing - the report is positive news for a natural gas industry that has fought complaints from environmental groups and property owners.

Drilling fluids tagged with unique markers were injected more than 8,000 feet below the surface but were not detected in a monitoring zone 3,000 feet higher.

“This is good news,” said Duke University scientist Rob Jackson, who was not involved with the study. He called it a “useful and important approach” to monitoring fracking, but cautioned that the single study doesn’t prove that fracking can’t pollute, since geology and industry practices vary widely.

  • The Associated Press

SEC sues hedge-fund founder Cohen

WASHINGTON - The Securities and Exchange Commission leveled its most direct shot against billionaire hedge-fund manager Steven A. Cohen on Friday by filing civil charges that accuse him of failing to prevent insider trading.

The SEC alleged that Cohen, who founded and runs SAC Capital Advisors, failed to prevent two of his portfolio managers from illegally reaping profits and avoiding losses of more than $275 million. Both managers provided information to Cohen in 2008 that suggested they had access to inside information, the SEC said. But rather than raise any red flags, Cohen praised one of the managers and rewarded the other with a $9 million bonus, the SEC said.

Cohen, 57, faces possible fines and could be barred from managing investor funds.

Cohen’s firm, which once managed more than $15 billion in assets, is at the center of one of the biggest insider trading fraud cases in history. Four employees have already been criminally charged with insider trading - two of whom have pleaded guilty.

  • The Associated Press

Business, Pages 28 on 07/20/2013

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