Paw Print Rewind #011: May 9th, 2015

Editor’s Note: This is the Paw Print Rewind, a daily look at the top news headlines.

Goldman Sachs must face $120 million suit over mortgage securities

New York’s Court of Appeals revived ACA Financial Guaranty’s $120 million lawsuit claiming Goldman Sachs lied about a pool of securities backed by subprime mortgages during the period leading up to the financial crisis.

Goldman deceived ACA Financial into believing hedge fund Paulson was a long investor in Abacus when it knew the hedge fund was betting the underlying mortgages would fail, according to ACA.

ACA lost approximately $900 million on the deal when the subprime mortgage market collapsed, according to the company.

A fraud case may only proceed if the plaintiff can show it “justifiably relied” on representations made by the defendant, according to state law.

ACA Financial specifically asked Goldman about Paulson’s participation in the transaction and received assurances it was a long investor, according to the Court of Appeals.

“ACA merely relied on what it says Goldman told it without checking the course.”

-Susan Reed, Court of Appeals judge

Alibaba revenue up; new CEO named

Alibaba has posted a 45 percent rise in quarterly revenue.

COO Daniel Zhang will become CEO on May 10, according to the company, to replace Jonathan Lu. Lu will remain on the board as vice chairman

Alibaba’s quarterly revenue jumped to $2.81 billion.

“It was a very good quarter, which is especially important considering there were a lot of expectations that the results would not come in strong. Sentiment is going to swing back to the favorable side.”

-Wedbush Securities’ Gil Luria

“He [Zhang] quietly gets things done.”

-Tian Hou, Capital Research analyst

The total value of transactions made on Alibaba’s platforms (gross merchandise volume, GMV) grew 40 percent to $97 billion in the quarter that ended March 31.

The group will continue to invest in areas like digital entertainment, cloud computing and mobile Internet, according to CFO Maggie Wu during a conference call.

Alibaba’s net income excluding one-off items grew 16 percent year-on-year, a far cry from the 48 percent growth the year before and triple-digit gains in the year before that.

MasterCard doubles card numbers in Middle East, Africa

MasterCard has doubled the number of cards to about 100 million in the Middle East and Africa over the last three years, where they have begun setting up government partnerships to provide access to its payments system.

“This is the fastest growing region. We continue to expect growth above the global average.”

-Michael Miebach, MasterCard Middle East and Africa president

Within the Middle East and Africa, Saudi Arabia and the United Arab Emirates were among the fastest growing markets, according to Miebach. In the UAE, robust Chinese spending helped to offset weakness in transaction volumes by Europeans and Russians as a result of euro and rouble softness against the U.S. dollar.

Business is faster in debit cards rather than credit cards, with expansion also driven by the popularity of prepaid cards, according to Miebach.

Growth is also strong in Sub-Saharan Africa, according to Miebach, supported by buoyant economies and people swapping out cash for cards.

Australia’s Sex Party stripped of official registration

The Australian Sex Party, which is known for its name and Election Day antics, has been deregistered after the country’s election watchdog ruled it did not have enough activists.

The party will “vigorously” appeal that decision handed down by the Australian Election Commission (AEC) that removed its official status following a membership review, according to co-founder Robbie Swan.

A political party must have either an elected representative in federal parliament of 500 members to keep its registration, according to Australian law. The Sex Party has one lawmaker in the Victoria state legislature, but none federally.

The Sex Party is primarily comprised of young people who change addresses frequently, do not have home phone numbers, and are much more transient than traditional party voters, according to Swan.

“They [The Australia Election Commission] are gaming the system against minor parties.”

-Robbie Swan on the group’s website

Following the ruling, the Sex Party will still be able to field candidates but will not be able to put its name on ballot papers or receive federal funding available to registered parties.

BP wins right to appeal some Gulf spill damages claims

BP deserves the right to appellate review of some damage claims awarded to people and businesses in connection with the 2010 Gulf of Mexico oil spill, according to the 5th U.S. Circuit Court of Appeals in New Orleans.

BP originally expected to pay $7.8 billion to resolve claims under a 2012 settlement, but by late April, the estimate was boosted to $10.3 billion, according to a regulatory filing.

About $5.13 billion has been paid out so far to 63,597 claimants, according to claims administrator Patrick Juneau.

Rules adopted by U.S. District Judge Carl Barbier compromised BP’s right to appeal awards he approved and which the company did not like to the 5th Circuit, according to its’ appeal.

“Where a settlement agreement does not resolve claims itself but instead establishes a mechanism pursuant to which the district court will resolve claims, parties must expressly waive what is otherwise a right to appeal from claim determination decisions by a district court.

“The point at which a party seeks the district court’s discretionary review is the point at which further review by this court becomes a possibility.”

-Fortunato Benavides, judge writing for the appeals court

The 5th Circuit separately rejected BP’s appeal of awards to three non-profit groups. Lawyers for spill victims accused the company of appealing the awards to relitigate the entire settlement.

BP has already taken $43.8 billion in pre-tax charges for clean-up and other costs.

Starbucks moves Ethos water bottling out of California

Starbucks will stop sourcing water for its Ethos Water brand in California, which is in the fourth year of a serious drought that has prompted the governor to order the state’s first-ever mandatory water use cuts of 25 percent.

Beginning this month, Starbucks plans to move production to its Pennsylvania supplier, according to the company.

The Seattle-based company is also looking for a new source and supplier for its West Coast Ethos Water distribution.

Former American Apparel CEO Charney sues investor for defamation

Dov Charney, American Apparel’s ousted CEO has filed a $30 million defamation lawsuit against a New York hedge fund that controls a large stake in the clothing company he founded and refused to support his return.

Standard General paid outside law firm Jones Day millions of dollars to “manufacture” reasons to show he was not fit to be chief executive in a “sham” probe into his conduct that would justify his removal, according to Charney.

Standard General then defamed him by telling media that they respected the board’s decision to fire him for cause based on the imprimatur from the “independent, third party” probe, according to Charney, which was actually a “witch hunt” and “whitewash.”

“The facts speak for themselves, and we are confident that Mr. Charney will be held accountable for this knowing intentional abuse of the legal system.”

-Standard General, in a statement

McDonald’s April global restaurant sales dip

McDonald’s reported a fall in worldwide sales at its established restaurants in April.

Same-store sales at McDonald’s restaurants globally fell 0.6 percent in April, for the 11th straight monthly decline.

Same-restaurant sales grew one percent in Europe, as United Kingdom and Germany gains offset French and Russian declines.

Sales at the company’s U.S. restaurants open at least 13 months fell 2.3 percent for its third straight monthly decline. US customer visits were down in April, according to McDonald’s.

Same-restaurant sales dropped 3.8 percent in the company’s Asia Pacific, Middle East and Africa (APMEA) business, which includes China.


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