Search This Blog


Search Tool

Dec 19, 2013

FTC | Business Center Blog December 19, 2013: Risky business.

Federal Trade Commission - Business Center Blog Update

By Lesley Fair

No one is sliding across the living room floor in shades lip synching to Bob Seger, but violating the FTC’s Risk-Based Pricing Rule is risky business nonetheless. That’s the message of the FTC’s $1.9 million settlement with telecom company Time Warner Cable, Inc., the first case brought under the Risk-Based Pricing Rule.

Read more

SEC | Enforcement Actions December 19, 2013: SEC Charges Microsoft Senior Manager and Friend With Insider Trading in Advance of Company News

SEC Seal

12/19/2013 02:37 PM EST

The Securities and Exchange Commission today charged a senior portfolio manager at Microsoft Corporation and his friend and business partner with insider trading ahead of company announcements.

The SEC alleges that Brian D. Jorgenson, who lives in Lynwood, Wash., obtained confidential information about upcoming company news through his work in Microsoft’s corporate finance and investments division.  Jorgenson tipped Sean T. Stokke of Seattle in advance of the Microsoft announcements, the most recent occurring in October.  After Stokke traded on the inside information that Jorgenson provided, the two equally split the illicit profits in their shared brokerage accounts.  They made joint trading decisions with the goal of generating enough profits to create their own hedge fund.

In a parallel action, the U.S. Attorney’s Office for the Western District of Washington today announced criminal charges against Jorgenson and Stokke.

“Abusing access to Microsoft’s confidential information and generating unlawful trading profits is not a wise or legal business model for starting a hedge fund,” said Daniel M. Hawke, chief of the SEC Enforcement Division’s Market Abuse Unit and director of the SEC’s Philadelphia Regional Office.  “We thwarted the misguided plans of Jorgenson and Stokke as they sought to illegally profit at others’ expense.”

According to the SEC’s complaint filed in U.S. District Court for the Western District of Washington, Jorgenson and Stokke made a combined $393,125 in illicit profits in their scheme, which began in April 2012.

The SEC alleges that Stokke first traded in advance of a public announcement that Microsoft intended to invest $300 million in Barnes & Noble’s e-reader business.  Jorgenson learned of the impending transaction after his department became involved in the financing aspects of the deal.  Jorgenson tipped Stokke so he could purchase approximately $14,000 worth of call options on Barnes & Noble common stock.  Following a joint public announcement on April 30, Barnes & Noble’s stock price closed at $20.75 per share, a 51.68 percent increase from the previous day.  Jorgenson and Stokke made nearly $185,000 in ill-gotten trading profits.

The SEC alleges that Stokke later traded in advance of Microsoft’s fourth-quarter earnings announcement in July 2013.  As part of his duties at Microsoft, Jorgenson prepared a written analysis of how the market would react to the negative news that Microsoft’s fourth quarter earnings were more than 11 percent below consensus estimates.  He estimated that Microsoft’s stock price would decline by at least six percent.  Jorgenson tipped this confidential information to Stokke, who purchased almost $50,000 worth of Microsoft options.  After Microsoft’s announcement on July 18, its stock price declined more than 11 percent the next day from $35.44 to $31.40 per share.  Jorgenson and Stokke realized more than $195,000 in illicit profits.

According to the SEC’s complaint, Stokke traded in advance of another Microsoft announcement on Oct. 24, 2013.  Jorgenson was aware that the company would be announcing first quarter 2014 earnings that were more than 14 percent higher than consensus estimates.  Rather than purchase Microsoft securities directly, Jorgenson and Stokke purchased more than $45,000 worth of call options on an exchange-traded fund in which Microsoft comprised more than eight percent of the fund’s holdings.  Following the announcement, Microsoft’s share price increased nearly six percent and the price of the ETF increased 0.51 percent.  Jorgenson and Stokke made approximately $13,000 in illegal trading profits.

Jorgenson and Stokke are charged with violating Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5, both directly and pursuant to 20(d) of the Exchange Act.  The SEC seeks permanent injunctions, disgorgement of ill-gotten gains plus prejudgment interest, and financial penalties against Jorgenson and Stokke as well as an officer-and-director bar against Jorgenson.

The SEC’s investigation was conducted by Brendan P. McGlynn, Patricia A. Paw, John S. Rymas, and Daniel L. Koster of the Philadelphia Regional Office.  The SEC’s litigation will be led by John V. Donnelly and G. Jeffery Boujoukos.

The SEC appreciates the assistance of the U.S. Attorney’s Office for the Western District of Washington, Federal Bureau of Investigation, Options Regulatory Surveillance Authority, and Financial Industry Regulatory Authority.

FTC | Enforcement Actions December 19, 2013: Time Warner Cable to Pay $1.9 Million Penalty for Violating the Risk-Based Pricing Rule

FTC Banner

Time Warner Cable, Inc. has agreed to settle Federal Trade Commission charges that the company violated the Risk-Based Pricing Rule, which requires creditors to give notice to consumers who are provided less favorable credit terms based on information in their credit reports.
The settlement marks the first enforcement case the agency has brought since finalizing its amended Risk-Based Pricing Rule in 2011. The proposed settlement requires Time Warner Cable to pay a $1.9 million civil penalty and prohibits the company from violating the Rule in the future.
“Consumers have the right to know if they are paying more for something because of information in their credit report,” said Jessica Rich, Director of the Federal Trade Commission’s Bureau of Consumer Protection. “Getting this notice gives you a right to a free copy of your report, so you can make sure everything on it is correct. Some of Time Warner Cable’s customers were missing out on this important right.”
Time Warner Cable provides video, high-speed data, digital telephony, and other services to consumers in 29 states nationwide. According to the FTC, the company gets prospective customers’ credit reports to evaluate whether they qualify for service.
If the credit report contains negative information, Time Warner Cable may require the consumer to pay a deposit or pre-pay the first month’s bill. Consumers with more favorable credit histories are not required to pay a deposit or the first month’s bill. The FTC’s complaint  alleges that Time Warner Cable failed to provide the required risk-based pricing notices to consumers beginning in January of 2011 and continuing until at least March of 2013.
In addition to the $1.9 million civil penalty, the order settling the FTC’s charges permanently prohibits Time Warner Cable from failing to provide consumers with a risk-based pricing notice whenever the company uses a credit report in connection with an application grant, extension, or any other provision of credit that is primarily for personal, family, or household purposes, and based on the credit report, the company grants, extends, or otherwise provides credit to that consumer on material terms that are less-favorable than the most favorable terms available to most consumers through the company.
In addition, the order requires that, in each risk-based pricing notice, Time Warner Cable provide other statements explaining details about credit reports, credit terms and consumers’ rights under the Rule.
Information for Businesses
The FTC has new information to help businesses comply with the rule on risk-based pricing, as well as a business blog, “Risky Business,” posted on its website.
The Commission vote approving the referral of the complaint and a proposed consent in settlement of the court action to the Department of Justice was 4-0. The complaint and proposed consent were filed in the U.S. District Court for the Southern District of New York on December 19, 2013, against TWC Cable, Inc. The proposed consent decree is subject to court approval.
NOTE: The Commission authorizes the filing of a complaint when it has “reason to believe” that the law has been or is being violated, and it appears to the Commission that a proceeding is in the public interest. Consent decrees have the force of law when signed by the District Court judge.
The Federal Trade Commission works for consumers to prevent fraudulent, deceptive, and unfair business practices and to provide information to help spot, stop, and avoid them. To file a complaint in English or Spanish, visit the FTC’s online Complaint Assistant or call 1-877-FTC-HELP (1-877-382-4357). The FTC enters complaints into Consumer Sentinel, a secure, online database available to more than 2,000 civil and criminal law enforcement agencies in the U.S. and abroad. The FTC’s website provides free information on a variety of consumer topics. Like the FTC on Facebook, follow us on Twitter, and subscribe to press releases for the latest FTC news and resources.
Mitchell J. Katz
Office of Public Affairs 
Katrina Ane Blodgett
Bureau of Consumer Protection

Related Cases

More news from the FTC >>

Ex-Im Bank Finalizes Agreement for U.S. Export Transaction to Mongolia: Ex - Im Bank | Agreements December 19, 2013

FOR IMMEDIATE RELEASE: December 19, 2013
Media Contact: Jamie Radice (202-565-3201)

Ex-Im Bank Finalizes Agreement for U.S. Export Transaction to Mongolia
WASHINGTON, D.C. – Officials from the Export-Import Bank of the United States (Ex-Im Bank) and MIAT Mongolian Airlines (MIAT) participated in a signing ceremony today that finalized the export of a U.S. Boeing 767-300ER aircraft with GE engines to MIAT.

Ex-Im Bank Chairman and President Fred P. Hochberg, MIAT President and CEO Jargalsaikhan Gungaa, and PEFCO Vice President Vince Herman signed the financing documents. Altangerel Bulgaa, Mongolia’s Ambassador to the United States, and representatives from GE and The Boeing Company were also in attendance.

The transaction, guaranteed by Mongolia’s Ministry of Finance, was previously approved by Ex-Im Bank’s board of directors and counts as both the Bank’s first significant transaction in Mongolia and its first transaction with MIAT.
“There are numerous opportunities for U.S. exporters in Mongolia, and I hope that this agreement encourages more Americans to explore this diverse and exciting market,” said Chairman Fred P. Hochberg. “By increasing MIAT’s fleet, we are able to support high-quality jobs in both the United States and Mongolia.”
“Aviation plays a strategic role in Mongolia’s global interactions. Boeing is delighted that MIAT’s latest 767-300ER marks the carrier’s first direct purchase of one of our jetliners and continues the airline’s reliance on quality U.S. made aircraft to meet its mission.  This, in turn, links Mongolia to the success of American aviation manufacturing and the many thousands of U.S. jobs it supports,” said John Wojick, senior vice president, Global Sales & Marketing for Boeing Commercial Airplanes.
“MIAT is pleased to conclude its first financing transaction with the support of Ex-Im Bank,” said President Jargalsaikhan Gungaa. “We are proud to be the first airline in Mongolia to acquire an aircraft directly from The Boeing Company and to finance an aircraft with the support of Ex-Im Bank. This is an important step for the aviation industry in Mongolia, and the confidence shown by Ex-Im Bank in Mongolia will have a positive impact on all industries.”

Last year, Chairman Hochberg participated in a business-development mission in Mongolia, where he encouraged sourcing of U.S. products and services for regional infrastructure projects. Chairman Hochberg also oversaw the signing of a memorandum of understanding with the Development Bank of Mongolia to facilitate trade opportunities between the United States and Mongolia.
Ex-Im Bank is an independent federal agency that creates and maintains U.S. jobs by filling gaps in private export financing at no cost to American taxpayers. The Bank provides a variety of financing mechanisms, including working-capital guarantees, export-credit insurance and financing to help foreign buyers purchase U.S. goods and services. In the past fiscal year alone, Ex-Im Bank earned for U.S. taxpayers more than $1 billion above the cost of operations.
In FY 2013, Ex-Im Bank approved more than $27 billion in total authorizations to support an estimated $37.4 billion in U.S. export sales and approximately 205,000 American jobs in communities across the country. For the year, the Bank approved a record 3,413 transactions-- or 89 percent--for small-businesses. For more information, visit

United States Mint Announcement of Designs December 14, 2013.

United States Mint Logo

FTC | Consumers Update December 19, 2013: Are you affected by the recent Target hack?

Federal Trade Commission Consumer Information

by Nicole Vincent Fleming
Consumer Education Specialist, FTC
Target has announced that any credit or debit card used in a Target store in the U.S. between November 27 and December 15 may have been compromised. According to the announcement, the stolen information includes the customer’s name, credit or debit card number, and the card’s expiration date and three-digit security code (CVV).

In light of this announcement, the FTC has this advice...
Read more >

WSJ | Major Indexes Closing December 19, 2013.

Major Indexes Closing
Major Indexes6:00 p.m. EST 12/19/13
DJ Transportation Average*7206.46-0.71-0.01
DJ Utility Average*483.74-3.17-0.65
Nasdaq 100*3498.63-11.00-0.31
S&P 500*1809.60-1.05-0.06
S&P 400 Mid-Cap*1304.34-10.47-0.80
S&P 600 Small-Cap*645.69-5.30-0.81
DJ Total Stock Market*18970.81-30.59-0.16
NYSE Composite*10151.53-2.67-0.03
NYSE Financial*6202.73-9.23-0.15
Russell 2000*1125.45-8.27-0.73
NYSE MKT Composite*2366.24-3.32-0.14
KBW Bank*
PHLX Gold/Silver*80.41-1.18-1.45
PHLX Housing Sector*192.05-1.97-1.02
PHLX Oil Service*273.55-2.33-0.84
PHLX Semiconductor*517.78-3.29-0.63
See All Major U.S. Indexes
Markets Diary6:08 p.m. EST 12/19/13
New 52 Week High1671361
New 52 Week Low902314
Major World Indexes4:40 p.m. EST 12/19/13
Global Dow*2425.468.040.33
DJ Global Index*306.410.540.18
DJ Global exUS*231.841.090.47
Stoxx Europe 50*2843.3750.671.81
UK: FTSE 100*6584.7092.621.43
Germany: DAX*9335.74153.991.68
Japan: Nikkei 225*15859.22271.421.74
Hong Kong: Hang Seng*22888.75-255.07-1.10
See All Major World Indexes
Indexes may be real-time or delayed based on exchange requirements.

Sources: SIX Financial Information; WSJ Market Data Group

WSJ | Biggest Decliners Closing December 19, 2013.

Biggest Decliners Closing
Biggest Decliners
4:32 pm ET 12/19/2013
Empresa Distribuidora y Comercializadora Norte Cl B ADS (EDN)321,368$5.70-1.00-14.93
Winnebago Industries (WGO)2,146,82827.32-4.32-13.65
Rite Aid (RAD)69,199,4005.17-0.59-10.24
Global Ship Lease Cl A (GSL)755,6005.46-0.59-9.75
Container Store Group (TCS)1,487,95840.25-3.56-8.13
Miller Energy Resources (MILL)1,692,2407.07-0.58-7.58
KB Home (KBH)9,096,28016.47-1.08-6.15
Actuant Cl A (ATU)1,276,34136.15-2.30-5.98
Marcus (MCS)189,12813.24-0.84-5.97
ACCO Brands (ACCO)809,9606.14-0.38-5.83
DRDGOLD ADS (DRD)292,8463.72-0.23-5.82
Gold Fields ADS (GFI)11,467,1533.02-0.18-5.63
Doral Financial (DRL)60,18316.19-0.93-5.43
Cobalt International Energy (CIE)20,580,90814.84-0.82-5.24
NCI Building Systems (NCS)404,98217.00-0.90-5.03
Celadon Group (CGI)215,62919.51-1.03-5.01
RE/MAX Holdings Cl A (RMAX)154,88429.53-1.43-4.62
Pampa Energia ADS (PAM)453,6635.54-0.26-4.48
Rackspace Hosting (RAX)2,640,58535.94-1.67-4.44
Felcor Lodging Trust (FCH)1,445,6177.11-0.33-4.44
Realty Income (O)3,613,27738.04-1.69-4.25
Amrep (AXR)24,0396.80-0.30-4.21
Cambrex (CBM)173,08016.90-0.74-4.20
Zep Inc. (ZEP)38,08317.61-0.77-4.19
Banco Macro ADS (BMA)211,16825.87-1.13-4.19
China HGS Real Estate (HGSH)51,506$4.99-0.76-13.22
Semtech (SMTC)5,131,38124.67-3.40-12.11
VelocityShares 3x Long Silver ETN (USLV)749,92543.81-4.74-9.76
Neogen (NEOG)347,48543.97-4.31-8.93
Esperion Therapeutics (ESPR)67,19812.77-1.21-8.66
Video Display (VIDE)14,6313.39-0.27-7.38
VelocityShares 3x Long Gold ETN linked to the S&P GSCI Gold Index ER (UGLD)350,42312.43-0.98-7.31
Relypsa (RLYP)164,78226.03-2.00-7.14
Tower Group International (TWGP)5,271,2192.55-0.19-6.93
Liquid Holdings Group (LIQD)16,0087.42-0.55-6.90
Lumos Networks (LMOS)214,50820.89-1.52-6.78
Bio-Reference Laboratories (BRLI)1,397,18925.17-1.78-6.60
Oxford Immunotec Global (OXFD)44,96518.59-1.31-6.58
Otelco Cl A (OTEL)39,8695.40-0.36-6.26
Benefitfocus (BNFT)162,76354.64-3.56-6.12
Five Prime Therapeutics (FPRX)33,32114.90-0.96-6.05
Regulus Therapeutics (RGLS)154,6846.56-0.42-6.02
Shiloh Industries (SHLO)221,13620.64-1.32-6.01
MediciNova (MNOV)109,9952.14-0.14-6.00
NumereX Cl A (NMRX)51,11712.33-0.76-5.81
Rosetta Resources (ROSE)3,439,86546.41-2.86-5.80
IntriCon (IIN)18,3013.60-0.22-5.76
China Auto Logistics (CALI)113,3743.77-0.22-5.51
First Niagara Financial Group (FNFG)15,709,04210.22-0.57-5.28
Aratana Therapeutics (PETX)77,91315.99-0.89-5.27
ELEMENTS ETN-SPECTRUM Large Cap U.S. TR (EEH)4,377$10.95-2.05-15.77
VelocityShares 3x Inverse Natural Gas ETN linked to the S&P GSCI Natural Gas Index Excess Return (DGAZ)9,570,8517.80-1.11-12.46
Direxion Daily India Bull 2X Shares (INDL)35,73448.02-4.54-8.64
ProShares UltraShort DJ-UBS Natural Gas (KOLD)68,30662.67-5.83-8.51
Direxion Daily FTSE China Bull 3X Shares (YINN)240,89528.45-2.00-6.57
Direxion Daily Junior Gold Miners Index Bull 3X Shares (JNUG)125,34413.05-0.90-6.45
ProSharesUltraSilver (AGQ)2,684,36515.38-1.02-6.22
Direxion Daily Natural Gas Related Bear 3x Shares (GASX)22,88227.26-1.71-5.90
Direxion Daily Emerging Markets Bull 3x Shares (EDC)2,433,29126.26-1.45-5.23
Direxion Daily Gold Miners Bull 3x Shares (NUGT)6,603,05824.65-1.32-5.09
PowerShares DB Gold Double Long ETN (DGP)250,92624.54-1.27-4.92
ProSharesUltraGold (UGL)178,90640.34-2.02-4.77
SPDR MSCI ACWI IMI ETF (ACIM)9,01761.50-2.91-4.52
ProShares Ultra MSCI Brazil (UBR)2,14543.44-2.05-4.51
ProShares Ultra FTSE China 25 (XPP)71,84955.57-2.58-4.44
iShares MSCI Turkey ETF (TUR)424,40250.56-2.31-4.37
Direxion Daily Real Estate Bull 3x Shares (DRN)237,86337.01-1.65-4.27
E-TRACS UBS Bloomberg CMCI Silver ETN (USV)12,37426.36-1.15-4.18
Global X Pure Gold Miners ETF (GGGG)7,9559.59-0.41-4.10
PureFunds ISE Junior Silver (Small Cap Miners/Explorers) ETF (SILJ)3,9118.85-0.35-3.80
Direxion Daily Brazil Bull 3X Shares (BRZU)20,41119.57-0.77-3.79
ProShares Ultra MSCI Emerging Markets (EET)18,44771.94-2.76-3.69
EGShares India Small Cap ETF (SCIN)55,72210.97-0.40-3.50
iShares MSCI Emerging Markets Small-Cap ETF (EEMS)18,24045.49-1.64-3.48
PowerShares DB Silver Fund (DBS)13,79631.88-1.13-3.42
ELEMENTS ETN-SPECTRUM Large Cap U.S. TR (EEH)4,377$10.95-2.05-15.77
Empresa Distribuidora y Comercializadora Norte Cl B ADS (EDN)321,3685.70-1.00-14.93
Methes Energies International (MEIL)115,1873.34-0.54-13.92
Winnebago Industries (WGO)2,146,82827.32-4.32-13.65
China HGS Real Estate (HGSH)51,5064.99-0.76-13.22
VelocityShares 3x Inverse Natural Gas ETN linked to the S&P GSCI Natural Gas Index Excess Return (DGAZ)9,570,8517.80-1.11-12.46
Semtech (SMTC)5,127,82224.67-3.40-12.11
Rite Aid (RAD)69,199,4005.17-0.59-10.24
VelocityShares 3x Long Silver ETN (USLV)749,92543.81-4.74-9.76
Global Ship Lease Cl A (GSL)755,6005.46-0.59-9.75
IEC Electronics (IEC)39,0003.92-0.41-9.47
Neogen (NEOG)345,55143.97-4.31-8.93
Harvard Apparatus Regenerative Technology (HART)50,2604.38-0.42-8.75
SuperCom (SPCB)988,4053.87-0.37-8.73
Esperion Therapeutics (ESPR)66,96512.77-1.21-8.66
Direxion Daily India Bull 2X Shares (INDL)35,73448.02-4.54-8.64
ProShares UltraShort DJ-UBS Natural Gas (KOLD)68,30662.67-5.83-8.51
Container Store Group (TCS)1,487,95840.25-3.56-8.13
Altisource Asset Management (AAMC)18,042918.53-76.97-7.73
Miller Energy Resources (MILL)1,692,2407.07-0.58-7.58
Video Display (VIDE)14,6313.39-0.27-7.38
VelocityShares 3x Long Gold ETN linked to the S&P GSCI Gold Index ER (UGLD)350,42312.43-0.98-7.31
Relypsa (RLYP)164,78226.03-2.00-7.14
EnviroStar (EVI)84,5222.67-0.20-6.97
Tower Group International (TWGP)5,268,2872.55-0.19-6.93
See All Decliners
Includes common, closed end funds, ETFs, ETNs and REITS with prior day close of $2 a share or higher, with volume of at least 2,000.
x - stock is trading ex-dividend
Source: WSJ Market Data Group