World financial news

French bank Societe Generale has admitted that a gap in control systems allowed a junior trader to take a $73 billion losing bet on European share prices, but defended its handling of the world’s biggest trading scandal.

Prosecutors said the trader, 31-year-old Jerome Kerviel, would remain in custody until Monday after handing himself in on Saturday and was co-operating with a probe into how the bank racked up $7 billion losses on alleged illicit deals.

Kerviel’s new lawyer said he had been doing a trader’s job by taking on risk and accused the bank of setting him up for a public “lynching” by letting him carry all the blame.

“He has not embezzled anyone, he hasn’t taken a cent for himself and he was just doing his job as best he could,” Christian Charriere-Bournazel told Reuters.

Three days after stunning world finance with news that a lone, lowly trader had punched a hole in its compliance systems and forced the bank to seek a lifeline of new capital, SocGen set out in detail how it says he took dizzying risks undetected.

Like rogue trader Nick Leeson who sank Britain’s Barings bank in 1995, the picture that emerged from Kerviel’s employer on Sunday was of a young man trained by his own bank to detect fraud and then using these skills to work round controls as a trader.

Both tried to cover up for bad trading decisions by doubling their bets and waiting for the market to turn in their favour.

The similarities do not end there faxless payday loans. Both were involved in arbitrage — taking advantage of price differences between markets — on stock index futures and covered their tracks by juggling real deals against fake ones with fictitious people, according to the results of a forensic data search at SocGen. 

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The Federal Communications Commission has officially approved the pending sale of media giant Clear Channel Communications Inc. to a private equity group led by Bain Capital LLC and Thomas H. Lee Partners LP.

The FCC, according to a document released on Thursday, has granted the company's merger and divestiture applications, subject to certain conditions.

Some of those conditions include Clear Channel finalizing the sale of its television group, the sale of 42 radio stations in the top 100 markets and an order blocking representatives from the private equity group from serving on boards of certain competing media companies.

Clear Channel officials and some industry observers have previously stated that they believe the $19.5 billion deal could close during the first quarter of this year direct payday loan cash advance.

The company's shareholders have already agreed to approve the transaction with the private equity group, accepting its offer of $39.20 per share of Clear Channel stock.

San Antonio-based Clear Channel is a global media company with operations in radio, television and outdoor displays. Locally, it owns eight radio stations, including WLW-AM and WEBN-FM. It is selling its television stations, including WCPO-TV, to a Rhode Island equity firm.

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For the chief executive officer of AT&T, the largest U.S. wireless company, it just isn’t a big deal that American homeowners are getting their phone lines and high-speed Internet disconnected for non-payment in increasing numbers these days. Randall Stephenson told a conference in Phoenix, Ariz., on Tuesday that the home phone and Internet business only accounts for 20 per cent of his revenue anyway. With nearly 66 million wireless subscribers, he expects double-digit earnings growth this year and next.

The market took it a little differently.

Within minutes of Stephenson’s comments about cutting phone service to U.S. homeowners, AT&T shares dropped $4.50, or 10 per cent, to $37.14, recovering to end the session down five per cent at $39.16.

The rest of the U.S. market was not nearly as resilient. After a pleasant morning of trading where the Dow Jones Industrial Average was up 78.93 points at one point, the benchmark plunged 268 points, finishing lower by 238.42, or 1.9 per cent, at 12,589.07. The S&P 500 dropped 25.99, or 1.8 per cent, to 1,390.19, while the Nasdaq composite skidded 58.95, or 2.4 per cent, to 2,440.51. Phone companies in the S&P 500 lost 4.8 per cent of their value, the steepest one-day drop in five years. Verizon, the number-two U.S. phone company, fell 93 cents to $41.99 US.

Homebuilders, mortgage lenders and bond insurers took another big drop after the U.S. realtors association said sales of previously occupied homes dropped 2.6 per cent in November from a year earlier. KB Home fell 9.2 per cent to $16.78 US after writing off big losses in the third quarter. rel=”external nofollow”Lennar dropped 7.3 per cent to $14.62 US. Countrywide, the biggest U.S. mortgage lender, sank $2.17, or 28 per cent, to $5.47, the most since Black Monday in 1987, after denying reports that a bankruptcy filing is imminent pay day advance. MGIC, the biggest mortgage bond insurer, dropped 15 per cent to $16.51. Credit card issuer Capital One fell eight per cent to $43.19 US.

Canadian markets weathered the sell-off better, as U.S. dollar weakness pushed gold to a new record high while other commodities rallied. The S&P/TSX Composite Index finished the session lower by 77.12 points, or 0.6 per cent, at 13,541.75, after rising as much as 152 points earlier in the session. The S&P/TSX Venture composite gained 0.23 of a point to 2,820.21.

The February gold contract reached $884 US an ounce, surpassing the all-time record of $875 US set in January, 1980, before ending the session at $880.30 US, up $18.30, or 2.1 per cent. The February crude oil contract climbed $1.24 to $96.33 a barrel. The Canadian dollar climbed half a cent to finish just under $1 US.

Goldcorp added 73 cents to $38.05, up two per cent. Barrick gained $1.98, or four per cent, to $49.46, a new high. Yamana advanced $1.13, or eight per cent, to $15.50. Alamos Gold added 82 cents, or 14 per cent, to $6.57, after production rose 43 per cent in the third quarter to 31,000 ounces.

Richmond-based CHC Helicopter fell $1.36, or five per cent, to $23.58. Moody’s bond-rating service cut CHC’s credit outlook to “negative” after the company borrowed to add 43 new choppers to its fleet. CHC is the world’s biggest transport provider to offshore oil-drilling platforms. After markets closed, Richmond’s MacDonald Dettwiler announced the sale of its satellite-related defence business to Alliant Techsystems of Minnesota for $1.325 billion, or $32 a share. Shares of MacDonald Dettwiler last traded at $42.51, well off its 52-week high of $53.82.

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