FT Lex : Kraft Heinz: the next meal ticket

Kraft Heinz: the next meal ticket --> https://ig.ft.com/kraft-heinz-merger/

Lex analysis of the tasty options left on the Buffett-3G table

The financial engineers who run Kraft Heinz value returns on acquisitions through a “risk-adjusted” lens. The bigger the reward, the more the American food group and its backers, 3G Capital and Warren Buffett, are willing to venture out on a limb. Likely paybacks vary widely from target to target.

A Lex analysis shows the group’s swashbuckling, if futile, pursuit of Unilever made sense. Kraft Heinz, with an enterprise value of nearly $150bn, would have got a bang for its buck with the similarly-sized, Anglo-Dutch group. A tie-up could have boosted earnings per share by perhaps as much as a fifth (at least before the recent rally in Unilever shares). More modest businesses may now be more receptive to the overtures of Kraft Heinz. But rewards will be commensurately humble.

The deep pockets of the company’s Brazilian and Nebraskan patrons get disproportionate attention. However, Kraft Heinz stock itself represents formidable firepower. The forward P/E ratio based on 2018 estimated earnings is 22 times, a premium to most potential targets. Issuing shares then comes out to a rough cost of capital of less than 5 per cent, probably less than the company’s cost of debt. The group has said it wishes to keep its investment grade credit rating. With such a high valuation multiple, using its stock as big chunk of its M&A currency is a plausible choice.

Snack company Mondelez, once part of Kraft, is thought to be one object of Kraft Heinz’s affections. Assuming it pays a 25 per cent premium, offer a quarter of the price in its own shares and knocks off a quarter of Mondelez’s overheads, Kraft Heinz’s earning per share could jump by a tenth. In this, as in other deals, cost cuts should cover the premium.

Two other rumoured targets, Colgate-Palmolive and Clorox, happen to trade at higher respective multiples than Kraft Heinz. Each also represents a way to diversify into personal care and household goods.

For the reputedly number-focused Kraft Heinz, risk then is not just about deal tactics and valuation but also strategic direction. 

>>> Asian Update

Asia Mid-Session Market Update: RBA minutes balance rising property prices and slower wage growth; Strong performance by Macron in France debates lifts EUR

***US Session Highlights***
- (US) Fed's Kashkari (dove, dissenting vote): job market showing more signs of slack and we are still short on inflation; The economy is growing more slowly than we would like - CNBC interview
- (US) Fed's Evans (dove, voter): Three rate hikes in 2017 is possible; could be more or less - Fox Business interview
- (US) Fed's Harker (hawk, FOMC voter): Would not rule out more than three rate hikes this year; all meetings are live for rate decisions; Would like to get well north of 1% rates before halting bond reinvestments, maybe close to 1.5% - CNBC interview
- (US) House Intel Chair Nunes: there was not a wiretap of Trump Tower; it is possible there was other surveillance against Trump and his aides - hearings on Russia interference in elections
- (US) FBI Director Comey: confirms that FBI is investigating Russian govt efforts to interfere in election, including potential links between Trump campaign and Russia - press

***US markets on close: Dow flat, S&P500 -0.2%, Nasdaq flat***
- Best Sector in S&P500: Materials
- Worst Sector in S&P500: Financials
- Biggest gainers: CF +3.8%, NVDA +3.2%, CAT +2.7%, BHI +2.5%, IFF +2.5%
- Biggest losers: KSS -4.8%, FSLR -4.7%, M -3.8%, JWN -3.1%, GPS -2.7%
- At the close: VIX 11.3 (+0.1 pts); Treasuries: 2-yr 1.30% (flat), 10-yr 2.47% (-3bps), 30-yr 3.09% (-2bps)

***US movers afterhours***
- FSM: Announces possible delay in filing its annual financial results; -2.5% afterhours
- GEL: Offering 4M Common Units (3.4% of outstanding); -5.7% afterhours

***Politics***
- (FR) France Elabe poll: Macron was most convincing in presidential debate; Melenchon 2nd; Le Pen and Fillon tied for 3rd
- (US) Pres Trump: Preparing executive order to put coal miners back to work; Working to remove regulations in auto industry

***Asia Key economic data:***
- (AU) AUSTRALIA Q4 HOUSE PRICE INDEX Q/Q: 4.1% (biggest increase in 5 years) V 2.5%E; Y/Y: 7.7% V 6.3%E
- (AU) Australia ANZ Roy Morgan Weekly Consumer Confidence Index: 112.0 v 113.1 prior
- (NZ) NEW ZEALAND FEB CREDIT CARD SPENDING M/M: -1.4% V 0.4% PRIOR; Y/Y: 5.3% V 7.1% PRIOR
- (NZ) New Zealand Feb Net Migration: 6.0K v 6.4K prior (6-month low)

***Asia Session Notable Observations, Speakers and Press***
- Asian equity markets traded mixed and mostly in narrow ranges, tracking another flattish day on Wall St. Bullish sentiment has been tempered by uncertainty regarding Pres Trump's pro-business tax agenda as the cabinet continues to wrestle with Congressional inquiry into Russia election ties as well as negotiation on Obamacare repeal legislation that needs to get passed before tax reform can begin. Modest safehaven bid of US Treasuries continued on Monday as yield curve flattened and financials struggled.
- In Asian hours, futures are pointing to more optimism attributed to initial response from Elabe poll in France that showed Macron as the most credible candidate in today's debate, potentially defusing concerns of a populist revolt propelling Le Pen to a surprise victory in May. EUR/USD bounced on the poll release, rising some 50pips to 1.0770, while USD/JPY reversed some of the early pressure to rise over 40pips above 112.70.
- Outside of the political risks, the absence of meaningful economic data has otherwise contributed to a fairly lackluster session. Release of RBA March meeting minutes produced a brief ripple in AUD with an initial 10pips rise to session highs of 0.7735 followed by steady retreat to 0.77 handle. RBA expanded on its statement with growing concern over home prices, improved global conditions, and forecast commodity prices to remain firm for longer than expected. On the other hand however, RBA was more downbeat about sustained momentum in wage inflation following latest disappointing labor data, while also maintaining focus on uncertainty in policies of China and US. Traders will look ahead to tomorrow's speech from RBA's Debelle for any more clarity, though analyst consensus of a neutral RBA over the near term is likely to be maintained.

China
- (CN) China Ministry of Commerce (MOFCOM) and National Development Reform Commission (NDRC) may announce rules this year restricting outbound investment
- (CN) China Vice Foreign Minister Zheng Zeguang: Premier Li's upcoming visit to Australia and New Zealand will send a positive message to the world that the nations are bundled with free trade

Japan
- (JP) Japan Chief Cabinet Sec Suga: Japan to actively engaged in macro and FX talks at G-20
- (JP) Japan said to mull shortening period between auction and issuance of some JGB's - financial press

Australia/New Zealand
- (AU) RBC: Today's RBA minutes erred more on the hawkish side - SMH
- (NZ) NZ Institute of Economic Research (NZIER) shadow board: RBNZ should keep interest rates at 1.75% with a tightening bias

Korea
- (KR) South Korea Acting President Hwang Need to closely monitor financial markets - press

***Asian Equity Indices/Futures (00:30ET)***
- Nikkei -0.3%, Hang Seng +0.2%, Shanghai Composite +0.2%, ASX200 -0.1%, Kospi +1.0%
- Equity Futures: S&P500 +0.2%; Nasdaq +0.2%; Dax +0.2%; FTSE100 +0.2%

***FX ranges/Commodities/Fixed Income (00:30ET)***
- EUR 1.0720-1.0770; JPY 112.30-112.80; AUD 0.7700-0.7740; NZD 0.7040-0.7065
- Apr Gold -0.5% at $1,228/oz; May Crude Oil +0.4% at $49.11/brl; May Copper -1.0% at $2.63/lb
- SPDR Gold Trust ETF daily holdings fall 3.8 tonnes to 830.3 tonnes; 3rd straight decline
- iShares Silver Trust ETF daily holdings rise to 10,342 tonnes from 10,303 tonnes prior
- (CN) PBOC SETS YUAN MID POINT AT 6.9071 V 6.8998 PRIOR; weakest Yuan setting since Mar 15th; 3rd straight weaker setting
- (CN) PBOC to inject combined CNY80B v CNY100B prior in 7,14, and 28-day reverse repos
- (KR) South Korea MoF sells 10-yr pre-issuance Govt bond at 2.2%

***Asia equities / Notables / movers by sector***
- Consumer discretionary: 1107.HK Modern Land China -10.0% (FY16 result); HVN.AU Harvey Norman +3.3% (denies speculation about ASIC review of reporting); TGA.AU Thorn Group -7.5% (guidance)
- Consumer staples: 1432.HK China Shengmu Organic Milk -3.8% (FY16 result)
- Financials: 1528.HK Red Star Macalline Group -6.6% (FY16 result); 1238.HK Powerlong Real Estate Holdings +5.5% (FY16 result); SPO.AU Spotless Group +48.6% (bid by Downer)
- Industrials: 3836.HK China Harmony Auto Holding -7.5% (guidance); AZJ.AU Aurizon -0.9% (UBS cuts rating); 6448.JP Brother Industries +4.2% (Goldman Sachs raises rating)
- Technology: 698.HK Tongda Group Holdings -3.1% (FY16 result); 1357.HK Meitu -10.3% (regulator requests trading records); 6502.JP Toshiba Corporation +3.2% (Westinghouse Electric bankruptcy consideration)
- Materials: 2068.HK China Aluminum International Engineering Corp +14.2% (FY16 result); 5423.JP Tokyo Steel Mfg -4.9% (maintains steel prices); NHC.AU New Hope Corporation +4.9% (H1 result)
- Energy: 2386.HK Sinopec Engineering Group Co +4.7% (JPMorgan raises rating)
- Healthcare: VRT.AU Virtus Health -3.7% (Morning star cuts rating); BKL.AU Blackmores +13.4% (China has indefinitely delayed new cross-border e-commerce laws)
- Telecom: TPM.AU TPG Telecom +5.6% (affirms guidance)

>>> US After Hours Summary: Christopher & Banks (CBK) up on insider bu


After Hours Summary: Christopher & Banks (CBK) up on insider buy, Calithera Biosciences (CALA) down on stock offering

After Hours Gainers:

Companies trading higher in after hours in reaction to news: CBK +13.3% (CEO Joel Waller discloses the purchase of 20k shares at $1.26), WCST +0.9% (Enters into a Capital Increase Agreement with Guizhou Sun Seven Stars Technology Company Limited), VRX +0.7% (FDA sets PDUFA date of August 24, 2017 for its decision on the New Drug Application for latanoprostene bunod ophthalmic).

After Hours Losers:

Companies trading lower in after hours in reaction to news: CALA -7.2% (Commences 4.5 mln common stock offering), AKAO -3.9% (Chief Medical Officer Ian R. Friedland, M.D. to resign), OCUL -3.7% (CFO W. Bradford Smith resigns effective March 31 to pursue other opportunities), LJPC -3.2% (commences $100 mln common stock offering), FSM -2.5% (Announces possible delay in filing its annual financial results), GBDC -2.4% (To make a public offering of 1.75 mln shares of its common stock), GEL -1.9% (Commences registered underwritten public offering of 4 mln common units), KEYS -1.5% (Launches underwritten public offering of $400 mln of common shares).

Iran struggles to coax Bank of England to open clearing accounts: sources


Exclusive - Iran struggles to coax Bank of England to open clearing accounts: sources

The Bank of England is seen in the City of London, Britain,

Iran has asked the Bank of England to set up special clearing accounts for its banks, but has so far been rebuffed in its effort to resolve an impasse that has left it excluded from banking in London more than a year after sanctions were lifted.

Tehran has been hoping for swift reintegration into global trade after its deal in 2015 aimed at curbing Tehran's nuclear programme in return for the lifting of international sanctions. Its failure to persuade Western banks to accept its business has been one of the main choke points preventing its rehabilitation.

Banking sources from both Iran and the West, and Iranian political sources close to the talks, said Tehran has approached the Bank of England to seek clearing accounts directly with the UK central bank.

Such accounts, for Iran's own Central Bank or for the British subsidiaries of Iranian banks, would allow them to make and receive payments in sterling, business so far rejected by commercial banks.

"That would send a huge message to the market. What commercial bank is practically going to stop Bank of England payments? None," said one Western source.

However, the sources said the BoE seems uninterested in resolving the problem for now.

"The Bank of England has proved resistant to intervening in any kind of positive way in order to assist trade between Iran and UK," said the Western source.

A senior Iranian banking official in Tehran said: "The Bank of England has suspended anything related to Iran, even the latest scheduled meeting was cancelled. Everything has been put on hold."

A Bank of England spokesman declined to comment. Iran's Central Bank officials were not available to comment.

The sources all spoke on condition of anonymity as talks between Iran and the bank have not officially been made public.

Although EU and United Nations sanctions over Iran's nuclear programme were lifted a year ago, the United States still has separate measures in place over Iran's missile programme, and the new U.S. administration has promised a hard line.

The risk of falling afoul of U.S. measures has been enough to persuade Western banks to steer clear, including in London, where Iran is particularly keen for a presence in the main global financial centre outside of the United States.

Even Iran's embassy in London has so far been unable to open a British bank account.

Three Iranian banks have subsidiaries with licenses to operate in Britain: Melli Bank Plc, Bank Sepah International Plc and Persia International Bank Plc. But none has been able to persuade a commercial bank to clear its payments in sterling, the British currency.

"TOTALLY UNACCEPTABLE"

"It is totally unacceptable that a UK bank which has a banking licence, which is in good standing with its regulators, is unable to access the sterling system," said Sue Millar, partner with law firm Stephenson Harwood that represents those three UK-based arms of Iranian banks, as well as Bank Saderat Plc, which remains on the U.S. blacklist.

Iran considers the failure of Western countries to allow it back into the international financial system to violate the spirit of the 2015 nuclear deal. It says Britain in particular, given its large capital markets, should do more to ensure Iranian banks operating there legally are treated fairly.

The issue is particularly sensitive within Iran for the future of the nuclear deal's architect, President Hasan Rouhani, a pragmatist elected in a landslide in 2013 on a promise to reduce Iran's economic isolation. He faces re-election in May against hardliners who say his deal has never yielded the promised economic benefits.

The UK government, eager to boost trade with new markets like Iran after last year's vote to leave the European Union, has struggled to convince British banks to boost trade with Iran, sources have told Reuters.

British trade minister Liam Fox told a parliamentary committee last week he had commissioned work from his department to look at how to normalise "effective payment channels" with Iran to try to open up trading opportunities.

An official close to Rouhani said while the British government had promised to do more, so far there had been no progress. The senior Iranian banking official added that meetings between Iranian and British government officials had yielded no change in the commercial banks' policies.

"They (banks) are worried about Trump's Iran approach - and now that Iran has been 'put on notice', the process will be much more difficult," the official said, referring to remarks made in Washington last month by then U.S. national security advisor Michael Flynn threatening an unspecified response after an Iranian ballistic missile test.

In response to questions from Reuters, the British government said it was committed to working closely with all parties, including UK banks and industry groups, to help open opportunities for trade between Britain and Iran.

"This will be a vital part of Iran's re-integration into the international community and we will continue to work to strengthen and expand our trading relationship for mutual benefit," said a statement attributed to a government spokesperson.

"IRANOPHOBIA"

In April last year, Iran's Supreme Leader Ayatollah Ali Khamenei accused Washington of undermining the nuclear deal by scaring investors away from Iran.

"On paper America lets foreign banks deal with Iran, but in practise they create Iranophobia so no one does business with Iran," Khamenei said at the time.

In addition to concern over the remaining U.S. sanctions, banks are wary of business with Iran because of the high cost of ensuring that any transactions comply with rules.

Iran is one of just two countries, along with North Korea, declared "high risk and non-cooperative jurisdictions" by the Financial Action Task Force (FATF), a global group of nations that monitors money laundering.

Iran is implementing an "action plan" to have that designation lifted, and the watchdog has set a June 2017 deadline to evaluate its progress. Meanwhile, the FATF still advises countries to tell their banks to impose extra due diligence on transactions with Iranians. The FATF's guidance cites in particular the risk of funding terrorism.

Banking officials said reintegrating Iranian banks into the financial system would take time, and may require support from the government to help allay the cost to commercial banks of taking on added risk and performing additional checks.

"When you have had such broad ranging sanctions over such a long period of time, it is completely unrealistic to re-enter this space without considerable risk analysis. That may involve creative risk sharing," said Justine Walker, director financial crime with industry lobby the British Bankers' Association.

"So, industry will be looking at some kind of tie up with government."

For Iranians hoping to trade abroad, that means waiting.

"As a businessman, I cannot open an account in Britain's major banks. How am I supposed to do business with the world?" said the chief executive of an import-export company in Tehran, who asked not to be identified.

>>> Ant Financial Said Considering Higher Offer for MoneyGram

Ant Financial Said Considering Higher Offer for MoneyGram (2)

Monday, March 20, 2017 08:12 PM
By Selina Wang

China-based company is confident the deal will go through
Rival Euronet claims it will face easier regulatory review
(Bloomberg) --
Billionaire Jack Ma’s Ant Financial is considering whether to make a higher offer for MoneyGram International Inc., according to a person familiar with the negotiations, after the U.S. company said a smaller rival’s bid could be a better deal.

In January, China-based Ant Financial announced its plan to acquire MoneyGram for $13.25 a share in cash, pending regulatory approval. Last week, Euronet Worldwide Inc. swooped in with a $15.20-a-share offer, a proposition that “could reasonably be expected” to result in a superior proposal, Dallas-based MoneyGram said Monday in a statement.

Douglas Feagin, Ant’s head of international operations, said he’s “confident” that the deal will go through. It’s likely that Ant Financial will either counter the bid with a higher offer, or say that it will wait until Euronet finishes carrying out its due diligence before delivering a rival bid, according to a person familiar with the negotiations.

Formerly a part of Alibaba Group Holding Ltd., Ant was valued at $75 billion by securities firm CLSA in September. Euronet has a $4.38 billion market value.

Euronet Chief Executive Officer Michael Brown has said that the bid from his Kansas-based company is superior also because it’s more likely to get approved by U.S. regulators.

Analysts have said that the Committee on Foreign Investment in the U.S. (CFIUS), an inter-agency panel that examines acquisitions of companies by foreign investors for national security concerns, could reject the deal, since it would likely be influenced by Trump’s America First policy.

Yet Ant is confident that the deal will succeed. Ant began the approval process with CFIUS immediately after the bid was announced, and the talks have been "going well" and proceeding as usual, according to people familiar with the matter.

If MoneyGram declares Euronet’s bid superior, Ant will have four days to respond. MoneyGram’s shares rose 0.9 percent to $16.43 at the close in New York. They have more than doubled in the past year.

Ant Financial also plans to keep MoneyGram’s headquarters in Dallas, its management team, and its employees. Euronet said in its takeover announcement that it expected the deal with MoneyGram to have cost synergies of about $60 million. U.S. regulators will also have to weigh Alibaba’s commitment to increasing jobs in the U.S., one of Trump’s chief concerns, the people said. In January, Ma met with Trump to discuss how Alibaba could help create 1 million new U.S. jobs.

>>>NYSE Says 90% Of Stocks Had No Closing Price

NYSE Says 90% Of Stocks Had No Closing Price, Says This Is "Absolutely A Big Deal"

March 20, 2017 6:45 pm
Details are thin but 90% of NYSE stocks were unable to have a closing auction today. In a statement to Street Insider a NYSE insider who wishes to remain anonymous tells us that NYSE ARCA was the error point and was unable to give us further details. The source tells us there was no closing auction for the direct feeds. The exchange, which is operated by the Intercontinental Exchange (NYSE: ICE) said there would be "no closing auction tonight".

The source tells use verbatim that this inability to issue a closing auction is "absolutely a big deal" but stopped short of admitting that there was an effort to sabotage the tape.

The official statement from NYSE on the website has been: "Corrected Official Closing Prices will be represented as .9 and .M on the Consolidated Tape. NYSE Arca will not resume trading for the remainder of the trading day. Trading will resume at 4:00 am ET on March 21, 2017. "

We will update Street Insider clients accordingly but there appears to be some lack of communication between NYSE and Wall Street traders. We asked point blank if this was an issue with a system update and we were told "no".

NYT : There Are No Perry Mason Moments in Insider Trading Cases

A powerful claim in a criminal case is the defense lawyer’s proclamation of the client’s innocence, exemplified by the near-perfect record of the fictional defense lawyer Perry Mason getting the real perpetrator to break down on the witness stand and confess to the crime.

White-collar crime prosecutions have no shortage of innocence claims, but figuring out whether the defendant committed a crime is much more difficult because these are quintessentially offenses of the mind, revolving around intent and knowledge. It is a fine line between guilt and innocence when no one disputes what happened while everything depends on what the defendant understood and intended.

The trial of William T. Walters on insider trading charges now taking place in Federal District Court in Manhattan is a prime example of how difficult it will be to figure out whether a defendant is not guilty of a white-collar crime. He is a world-renowned gambler who has been prosecuted four times before on different charges but never convicted.

Mr. Waters is accused of trading on information he received from Thomas C. Davis, a former chairman of the board of Dean Foods who was also a consultant in an activist campaign involving Darden Restaurants. Mr. Davis is cooperating in the case, claiming that Mr. Walters gave him disposable cellphones — one nicknamed the Bat Phone — and that they used code names for companies, like Dallas Cowboys for Dean Foods, to cover up passing along confidential information.

Mr. Walters does not deny trading in the two companies, but his lawyer, Barry H. Berke, assailed Mr. Davis as a liar who implicated Mr. Walters to save himself. The New York Times reported that Mr. Berke told the jury in his opening statement that “we’re going to unravel every single lie Tom Davis is going to tell here.”

To explain the trading, Mr. Berke asserted that Mr. Walters used the skills he developed as a gambler by picking stocks much the way a poker player scopes out an opponent based on “tells,” or “little clues that are not obvious.”

This is similar to the mosaic theory offered by the hedge fund founder Raj Rajaratnam when he was charged in 2009 with multiple counts of insider trading in Federal District Court in Manhattan, claiming that the information he received was just one tidbit among a wealth of data he put together to decide whether to buy or sell a stock. The jury rejected the defense by finding him guilty and he received an 11-year prison sentence.

The defense of Mr. Walters is a claim that he has a better account for his trading that does not involve inside information, but it does not eliminate the possibility that Mr. Davis was one of his tells in assessing the companies for an investment. Is that really a claim of innocence or an alternative explanation that raises enough doubt for the jury to return a not guilty verdict?

Jurors are not asked to decide if a defendant is innocent, despite the defense lawyer’s appeal that the client did nothing wrong. The only issue in a criminal prosecution is whether the government introduced sufficient evidence to prove the elements of the offense beyond a reasonable doubt.

That high burden means a defendant might have committed the crime but there could be enough doubt so that it is proper not to convict. This reflects the oft-repeated principle of the famous English jurist William Blackstone, who wrote in the 18th century that “it was better that 10 guilty persons escape, than that one innocent suffer.”

There has been a significant amount of publicity about wrongful convictions in which defendants have been exonerated after spending years in prison for crimes they did not commit. Many of these cases involve DNA evidence showing conclusively that the perpetrator was not the defendant, while others involved confessions extracted by the police through high-pressure interrogations that were shown to be false.

The core of these innocence cases involves a misidentification, not a claim that a crime did not take place. Thus, in ordinary street crimes the identity of the perpetrator is paramount, and typical defenses involve an alibi or questions about whether the victim properly identified who committed the offense.

White-collar crimes do not involve any of the issues typical in the exoneration cases, so the claim of innocence instead hinges on what the defendant knew about the transactions at issue and their purpose. The recent announcement by Joon H. Kim, the acting United States attorney in Manhattan, about the decision not to charge any crimes involving fund-raising by Mayor Bill de Blasio of New York that may have involved pay-to-play contract awards shows how equivocal evidence of wrongdoing can be.

In closing the investigation, Mr. Kim noted “the particular difficulty in proving criminal intent in corruption schemes where there is no evidence of personal profit,” indicating that the conduct came close to the line — well short of any declaration of innocence.

In insider trading cases, jurors have often been unwilling to credit assertions of innocence when the trades were particularly well-timed and quick profits raise suspicions that confidential information must have been used.

The conviction last week of Robert M. Schulman, a former patent law partner at Hunton & Williams, for tipping an investment adviser about an impending merger involving King Pharmaceuticals shows how difficult it can be to persuade a jury to accept the claim made by his lawyer after the indictment that “evidence at trial will show that my client is innocent.” The government’s case was built around testimony from a cooperating witness that Mr. Schulman tried to cover up that he had “a few glasses of wine and let spill about the King Pharmaceuticals acquisition by saying that ‘it would be nice to be King for a day.’”

The jury chose not to accept the assertion of innocence, but that does not necessarily mean a defendant like Mr. Schulman will desist from a claim that he did nothing wrong. Many insider trading defendants continue to proclaim their innocence long after a guilty verdict.

Michael Kimelman, who was convicted of insider trading in 2011 along with two co-defendants, argues in a new book, “Confessions of a Wall Street Insider: A Cautionary Tale of Rats, Feds, and Banksters,” that he was innocent, but that his defense was hamstrung by being tried with others who more clearly engaged in illicit trading on confidential information. His efforts to overturn the conviction, contending that there were errors in the jury instructions, have been fruitless so far.

Joseph P. Nacchio, the former chief executive of Qwest Communications, asserted that he was innocent despite his conviction on 19 counts of insider trading in the company’s stock before it disclosed negative financial information, spending over four years in prison. He argued that the government set him up after he stood up to pressure from the National Security Agency to turn over customer phone records.

Whether white-collar defendants are innocent can never truly be known because these crimes are not susceptible to the type of proof that would definitively exonerate a person, making it almost impossible for there to be any Perry Mason moments of vindication. There is no DNA that can establish conclusively what was in a defendant’s mind at the time the conduct took place, so professions of innocence based on a lack of intent can never be proved — or disproved.

Reuters - Trump's cut to flood map program could trigger insurance rate hikes: g

Trump's cut to flood map program could trigger insurance rate hikes: group

A proposal by the Trump administration to cut $190 million in funding for updating U.S. maps of flood-prone areas would trigger higher insurance rates or more homebuilding in risky locations, a consumer group said on Monday.

Flood-mapping provides important details about where it is safe to build, whether flood insurance is needed and how to price coverage, Robert Hunter, director of insurance for the Consumer Federation of America, said in a statement.

Slashing funding for the National Flood Insurance Program's (NFIP) retooling of U.S. flood maps will lead to relying on old maps and construction in areas that are now flood prone, or hiking insurance premiums to pay for new maps, Hunter said.

The White House 2018 budget, unveiled last Thursday, would eliminate a $190 million "discretionary appropriation" for the National Flood Insurance Program's (NFIP) updating of U.S. flood maps and "explore other more effective and fair means of funding flood mapping efforts."

Costs for mapping have been shared by insurance policyholders and the federal government for the past 15 years, said a spokeswoman for the Federal Emergency Management (FEMA), which operates the flood insurance program.

"The president’s budget directs us to explore avenues to shift these costs away from general appropriations," the FEMA spokeswoman said.

Updating U.S. flood maps is seen by consumer and insurance industry advocates as a necessary step toward modernizing the U.S. flood insurance market.

The White House 2018 budget is the first step in a long process that will be debated by U.S. lawmakers.

The NFIP, whose authorization is set to expire in September, could face other sweeping changes. The program is $24.6 billion in debt to the U.S. Treasury Department, the FEMA spokeswoman said.

Insurance industry groups are also concerned about the mapping proposal. "Understandably, we’re all concerned about the potential to undermine efforts to modernize the maps," said Leigh Ann Pusey, president and chief executive officer of the American Insurance Association.

Still, the budget process is at an early stage, Pusey said.

FT : Tullow shares slide on worries over $750m cash call

Tullow shares slide on worries over $750m cash call
Another record high for FTSE 100 with support from a weaker pound

Tullow Oil hit a seven-month low on Monday amid fears that its $750m cash call signals a reversion to its high-spending past.

The decision last week by Paul McDade, Tullow’s incoming chief executive, to launch a rights issue has undermined its investment thesis of organic debt reduction and production growth, said Merrill Lynch.

Shareholders will be paying a heavy price with the share count increasing 50 per cent, just to hit a year-end debt reduction target that would have been reached anyway by mid-2018, it forecast.

“With ‘growth’ mentioned numerous times on Friday’s conference call, we believe new management may be tempted to prioritise growth [and] exploration at a time when investors are looking for free cash flow,” said Merrill.

“We are concerned about a potential loosening of capital expenditure discipline established over the last three years.”

Tullow closed 2.4 per cent lower at 197.5p in a mixed wider market that found support from a weaker pound. The FTSE 100 edged 4.85 points higher at 7,429.81, another record high.

AB Foods climbed 1.6 per cent to £26.59 after Goldman Sachs added the Primark owner to its “buy” list with a £30 target.

With group earnings growing at 10 per cent per annum, AB could be sitting on £2bn of net cash by the end of 2021, it forecast.

Primark’s return to like-for-like growth since September shows its discount pricing and short lead-time supply chain remains differentiated from the wider retail sector, said Goldman. And unlike peers, Primark’s guidance assumes its will absorb cost inflation this year rather than try to pass it on to consumers and suppliers, said the broker.

Diageo hit a record high, up 0.4 per cent to £23.28. Kathryn Mikells, Diageo’s chief finance officer, told a London conference that cost savings are on track and second-half prospects look stronger, with price cuts for Smirnoff and Captain Morgan in the US helping to slow declining volumes.

Nostrum Oil & Gas dropped 5.8 per cent to 442.6p after a Kazakhstan court froze the 13.5 per cent stake in the explorer belonging to Frank Monstrey, the company founder and chairman.

The court order was in connection with ongoing proceedings commenced by BTA Bank against Mukhtar Ablyazov, the Kazakh tycoon and dissident.

Security outsourcer G4S faded 1.8 per cent to 295.6p after a downgrade to “sell” from HSBC.

While G4S qualifies as a turnround story, the biggest challenge for investors is to identify the continuing business given a stream of disposals and an opaque divisional reporting structure, HSBC said. It also cited intensifying wage-cost pressures for the group’s guarding division.