2011 Local Heroes that Rock!

In these troubled economic times, as the Country struggles to stabilize and return a healthier financial future, families have had to reinvent ways to survive the higher cost of living with lower income. What, with news of global financial crisis, natural disasters, and local proliferation of human assaults; from abuses to homicide, it's only blind faith and inner strength that safeguards our sanity.

That said, there are indeed fewer and fewer reasons to smile, and increasingly difficult to keep a body’s self-esteem intact. But alas, there are needles in haystacks to be found if we look hard enough, and rays of sunshine that threaten to warm the hearts and souls of communities around the city. One such ray of sunshine comes to us in the form of Evan and Glenn Turtel, who I’d like to call heroes.The dynamic Duo saw the disparity in the math scores of students in the inner city public schools, and sought to answer the cry for help. The disparity in resources and education for inner city students is no less than a crime, so in the spirit of Batman, Superman, perhaps even Spiderman, Glenn and Evan Turtel, graduates of Wharton and Cornell respectively, founded Top Honors.

This organization is a non-profit math tutoring program that serves the New York community by shoring up the basic math skills and confidence of thousands of boys and girls. Their mission is simply this; "To provide all students with fundamental math and critical thinking abilities for success as students and productive members of society". Top Honors is a no frills, grassroots tutoring program that serves the underserved demographic of students throughout the city with impressive results. They’ve developed a unique curriculum, designed to pinpoint and strengthen each of the student’s problem areas. This remarkable organization is almost completely operated on volunteers.

For those of you with young children needing tutoring from time-to-time, you already know the cost of tutoring can run from $40 - $75 per hour, and as much as $400 for Saturday programs working out of various University sites. The cost of tutoring is even more expensive at programs like Sylvan and Score. As a parent, and grad student who has watched my work hours dwindle down to a frightening level, I am eternally grateful for this program. Top Honors has provided over 3,100 hours of tutoring this past year alone! So, for thousands of students who have already benefited from this awesome organization, and those yet to discover them, I emphatically elect Glenn Turtel and Evan Turtel NYC Local Heroes of the Year for their unyielding, uncompromising leadership and service to our community.

Source: Photos Used for the above Collage, were taken from Top Honors WebSite at WWW.TopHonors.org

K. Reilly
The Cohn-Reilly Report

$700 Million Bank Heist: SEC files charges

Did Citbank swipe $700 million from investors? Well according to an SEC filing, which alleges that Citibank sold securitized housing bonds, which they knew were sub-standard, and bet against them, something is definitely amiss. It’s easy to see why Banks are no longer seen as a safe place to invest your money, as a depositor or shareholder.

Citibank, being charged with fraud, is fighting the charges, but Recommended settlement of $285 million is likely going to stick. The SEC asked a federal judge to approve the amount, citing that $285 million would not unfairly punish the shareholders, who were essentially victims of the bank's unethical acts. Of the $285 million, the settlement breaks down as follows: $95 million is the fine, $160 million in for ill-gotten profits and $30 million in interest. We're about 18 months post signing of the Finance Reform Bill, and we're still unraveling the spoils of unbridled greed.

The national Occupy Wall Street Protest was founded on just this type of offensive conduct. I had a feeling that the near collapse of our financial markets in 2008 was the tip of the iceberg, and so far it has proven to be true.

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K.Reilly
The Cohn-Reilly Report

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Geithner Joins EU Finance Ministers in Poland

Germany’s Chancellor, Merkel met with the Prime Minister of Finland on Tuesday, where I would have liked to have been a fly on the wall, given the growing concerns about several members of the Union. The Finance Ministers are gearing up for their meeting on Friday, with U.S. Treasury Secretary Geithner in tow.
Perhaps this is a smart move for the European Union’s Finance Ministers, considering what’s at stake. We can’t ignore the fact that Geithner has first had experience in helping to save a major economy from “falling off a cliff “in 2008. All while maintaining a cool, “everything is in control” façade, avoiding fear and panic, which would have caused total mayhem.

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DOW: Tripple Digit Gains – 9/14/11
It is believed that the Merkel, Germany’s Chancellor strongly declared the EU’s commitment to resolving the issues surrounding Greece’s fiscal troubles. Germany and France are applying pressure in an attempt to urge Greece to implement additional austerity measures.
The Dow Industrial Average closed up 140 point to yield 11, 246.73

Parents & Kids Check Out Great Math Site: Math Club

Big Insider Trading Case Begins Today

The former head of Galleon Group is set to go on trial today in Manhattan's Federal Court to answer to charges of insider trading. Rajaratnam is accused of acting on confidential information concerning Warren Buffet's plans to invest billions in Goldman Sachs in 2008. Buffet was getting great value for his investment, as the stock price at the time was $115, which was less than half of the price just one year earlier. Rajaratnam sought to take advantage of this insider information and purchase share of Goldman Sachs before Buffet's mulit-billion transaction which would create a surge in demand and lead to higher stock price. As predicted, after Warren Buffet's investment the market responded with buying frenzy and the Goldman shares increased to as much as $135 a share in after-hours trading. Needless to say, the Galleon Group's mission for windfall-like profit was accomplished. Was it really worth it Rajaratnam? Click chart below to see the complex web of insider trading that amounted to millions of illegal profits.

The use of surveillance and wire-tapping helped to being down the greedy trading ring, who all used pre-paid phones to avoid detection.

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K. Reilly
The Cohn-Reilly Report.com

Goldman: Witness for the Prosecution

Turning the tables, Lloyd Blankfein, CEO of Goldman Sachs is expected to testify in the hedge fund trail in Federal court as a witness for the prosecution. The testimony of the Wall Street big, should be a significant blow to the hedge fund titan Raj Rajaratnam. The SEC complaint contends that a tip from ex-Goldman Director, Rajat Grupta to Raj Rajaratnam concerning a large investment by Warren Buffet, lead to his purchase of securities. It was bad enough that Grupta breached confidentiality when he tipped his friend Rajaratnam off. However, Raj Rajaratnam transformed the breach to a federal fraud level by acting on the tip. It is alleged that Rajaratnam, bought shares within minutes of receiving the tip. No surprise that Rajat Grupta is also being charged with leaking confidential information to his friend at Galleon Group.
This insider trading case, has been in the NYC trial queue nearly 18 months. In late October of 2009, while the financial market was turning upside down, and cases fraud was beginning to hit a raw nerve in America, Raj Rajaratnam, was taken into custody for charges of insider trading. Raj Rajaratnam was founder of Galleon Securities which was investigated for insider trading of massive proportions, spanning no less than 6 other firms. Others cited as part of the insider trading ring include:

<

Charged With Insider Trading
Name	Company	State
Danielle Chiesi,	New Castle Funds	NYC
Rajiv Goel,	Intel Capital (Subsidiary of Intel)	CA
Anil Kumar,	McKinsey & Company	CA
Mark Kurland,	New Castle Fund	Upstate NY
Robert Moffat,	IBM	CT

The trial that starts this week promises intriguing and disturbing headlines, as yet another tale of greed and entitlement is uncovered. Raj Rajaratnam is charged with 5 counts of conspiracy to commit securities fraud, and 6 counts of securities fraud.

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K. Reilly
The Cohn-Reilly Report.com Check out the new Music and Art Forum on BlogSpot! "Its a refreshing departure from economics. it's like life's little desert snack."doARTorDIE

Gift of Leniency: IRS’s Surprising Changes to Aid Taxpayer in Debt

Climbing your way out of debt is not an easy task under any circumstances, but if that debt includes back taxes, the pressure alone can add to the burden. Low and behold, in a show of compassion uncharacteristic of the IRS, those struggling to claw out of tax debt have been handed a gift of leniency. This past Thursday the Internal Revenue Service announced a new set of rules structured to aid individuals and small businesses in their effort to pay off tax debt.

The IRS commissioner, Doug Shulman, stated that it will place fewer claims on properties, and make any such liens much less of an impact on the credit ratings of anyone unfortunate enough to be subjected to property liens from the IRS. Additionally, the IRS was previously able to take legal claim to property in the amount of unpaid tax debt when taxes exceed $5,000.

The new regulations increase that to taxes exceeding $10,000, before the IRS can take legal claim. Shulman is quotes in the Wall Street Journal as saying that the new rules are an effort to “stand in the taxpayers shoes”. This clearly is a step in the right direction though more should be done to assist homeowners, in the wake of the worst recession in generations.

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K. Reilly
The Cohn-Reilly Report.com

Madoff: Victims' Recovery Efforts get Ugly

The Madoff plot thickens, as lawyers for his victims expand their hunt for associates and partners, who could be tapped for retrieval of funds. JP Morgan Chase is the latest in a string of suits filed against the Bernie Madoff clan. (A similar suit was filed against the Mets owners, claiming that Wilpon, et al, profited hundreds of millions of dollars from Bernie’s scheme, and ignored the warning signs) The Wall Street Journal reported that a sealed 115 page lawsuit was waged against JPM. Irving Picard’s, the victims’ trustee for recovery of Ponzi funds, filed the $6.4 billion lawsuit in December.

Pardon me for saying, but there is enough blame to go around with respect to watchdogs that did not watch, and market regulators that failed to regulate. Matters were made worse by the lack of enforcement of the limited regulations that survived deregulation of the finance industry. For the record, JPM Chase called the allegations meritless, but it all remains to be seen. In JP Morgan’s defense, two months prior to Madoff’s scheme being made public, there is evidence that the someone from the bank's US division sent a Memo to a department head in Great Britten concerning their suspicions about Bernie Madoff’s fund. If this is true, it does not support the claims delineated in the suit.

In all fairness, it’s important to remember that Bernie Madoff had established himself as being extremely smart and prosperous. He was instrumental in setting up NASDAQ, which propelled his reputation as a mover and a shaker. Bernie was often asked to participate in think-tanks concerning developing systems to automate trading, he was regularly invited to round table discussions for Financial News shows. Consequently, portfolio managers, hedge funds and banks all had immense respect for him, particularly since Madoff was associated with success, and being on the cutting edge of the convergence of technology and trading systems. Therefore, I am inclined believe that most of the firms involved with Madoff thought of him as a golden child, and not a criminal. Who would have thought the worst case scenario could be possible on such a grand scale, and executed over a 15 year period?

On the other hand, there are certainly legitimate partners-in-crime that can be identified, such as his “storefront” accountant - particularly the firms that received fees for steering wealthy investors to the Madoff’s fund. The associates of Madoff’s Ponzi scheme, may or may not have been fully aware of Madoff’s sinister scheme. I tend to think they did not know he was a scamming their clients. It could not have been sustainable for so long if there were so many people who knew about it. If nothing else, these firms are clearly guilty of letting greed be their primary focus, instead of the best interest of the client.

Victims recovery allegations are (in some cases) reaching too far, and thus taking an ugly turn. There seems to be plenty of unwitting associates sympathizing with the victims and cooperating by returning much of the funds affiliated with Madoff 's plot - amounting to over $7 billion. I think that is more than what we ever expected to dig out of this hideous set of circumstances.

See Video of initial Recovery Plan
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K. Reilly
Cohn-Reilly Report

Dangerous Liaison: Goldman, Zuckerberg and Facebook

The alliance that rocked the investment community, is making new headlines as the dust settles on the $450 million transaction. The awe inspiring transaction that made Mark Zuckerberg’s net worth more than triple, was structured to take advantage of loop holes in the SEC regulations to raise capital for Facebook. The SEC’s regulatory concerns were entirely justified, but may have been egged on by the media attention to the Goldman continued above-the-law attitude. According to the SEC regs, corporations with more than 499 investors must disclose their financials to the public. To circumvent this provision, Goldman’s bankers have set up a ”Special Purpose” vehicle which establishes Goldman Sachs as the fund manager, and sole investor. The sole investor of record could then seek to pool outside investments.

Initially the small investors were shunned, since Goldman opened the Facebook financing exclusively for its wealthiest clients, seeking larger denominations. The (clearly unwanted) attention to the behind the scenes deal has sparked a new ripple in this financing. Now, it appears that US investors are being left out all together. At this juncture, it is reported that no U.S. investor will be afforded the opportunity to invest in the transaction – large or small. This is probably one of the most sought after investment of the decade – for those who are serious players in the investment community, this is the transaction of a lifetime, and now is the Facebook shares have been taken off the U.S. market. Goldman seeks to avoid the glaring eyes of the SEC by looking overseas for their investors.


K Reilly
The Cohn-Reilly Report

Verizon Gets the iPhone

The long awaited news finally came today, announced in a joint meeting with Apple in New York City. This will end AT&T’s three plus years of strong growth driven by its monopolistic hold on the iPhone.Verizon will start shipping to customers as early as February.

Many analysts expect AT&T to lose contract customers this quarter without a powerful, unique incentive to lure subscribers.The operator also suffers from a perception that its wireless network is ill-equipped to handle iPhone users' heavy data usage. AT&T could lose up to 3.5 million customers, although it will take time for that to happen due to contractual obligations. AT&T will also face additional pressures from Verizon Wireless, which may offer new iPhone customers the same privileges all of its smartphone customers enjoy: unlimited wireless data usage for a flat monthly fee.

Verizon will initially take a hit on its Earnings Per Share, due to the subsidy it will incur for the iPhone. However, in the long run it will profit greatly from the increased customer base. Overall, a great coup for Verizon.

C. Cohn
Cohn-Reilly Report

Goldman, Zuckerberg and Facebook: Taking No Prisoners

One of the Oldest investment banking firms pairs up with the youngest billionaire in the world to form a strategic alliance of huge proportions.
Goldman Sachs is in the news again regarding a questionable transaction involving Facebook. The 26-year old billionaire, Mark Zuckerberg is the beneficiary of Goldman’s creative financing, while SEC Chief Mary Shapiro is being prodded to investigate by New Yorker's John Cassidy. Apparently Goldman established a “Special Purpose” vehicle to create an opportunity for its high net worth clients to invest in Facebook, which is not yet publicly traded. This is raising eyebrows and even concern. Why? Because the SEC requires companies with more than 499 investors to disclose their financial results to the public. To get around this provision, Goldman’s "best and brightest" have hatched a Special Purpose vehicle which establishes Goldman Sachs(fund manager) as “one” investor, who could be pooling investments from thousands of clients. Nice Work.

Facebook ‘s valuation was estimated to be $50 billion, which is more than EBay Inc.’s value of $39.3 billion , placing it third in the competitive internet businesses, just under Amazon ($74.4 billion) and Google ($192.9 billion). This makes it official: social-networking is serious business, attracting over a half a billion global users and more advertisers than ever imagined 6 years ago.

According to the Huffington Post , a Georgetown University professor, James Angel, opines that the special purpose vehicle can still be ruled illegal if it can be proven that it was specifically designed to circumvent the SEC rules. The Times reported that the SEC is “looking into” the hot trading market of privately held shares of networking sites. Given the backlash the investment bank suffered last year, I can't see the legal minds at Goldman leaving any room for more legal battles and negative press.

The Goldman and Zuckerberg combo is more likely to be poised for massive success, rather than trouble from the SEC. Time Magazine names Mark Zuckerberg "Person of The Year" However, I would not be surprised if media pressure forces the SEC's hand to launch an official probe.

To Follow-up Story
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K Reilly
Cohn-Reilly Report

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Also Check out: Socially responsible Investing site below:
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-COMMENT HIGHLIGHTS-

________________Comment
Anonymous said......

Extraordinary submit! Will you follow-up on this specific matter?
January 9, 2011

________________Comment
K. Reilly said...
Yes, I will be following up on this matter. This is certainly an intriguing set of circumstances, so it would be interesting to see how the dynamics of this liaison plays out. Wow...I think I have the heading for the follow-up article: Dangerous liaison.
Anyway, thanks - your feedback is much appreciated.
January 9, 2011

Check out the new Music and Art Forum on BlogSpot! "Its a refreshing departure from economics. it's like life's little desert snack."doARTorDIE

New Jobs Growth in December. Highest one-month increase in a decade:

There were reportedly 297,000 jobs created in December, according to the ADP National Employment Report. Raising news hopes and aspirations for the U.S. economy. "Great News" I thought, Kudos to the White House, who had been saying all along that it will take some time, but we should begin to see the fruits of their stimulus programs soon. Soon was longer than we were willing to wait, as the midterm elections spoke volumes about the voters’frustration, and the President's popularity declined. As the employment data came trickling in from Bureau of Labor Statistics (BLS) the "jobs created" number for December was much less impressive. In fact, it was below expectations.

I read several articles and reports and found many different approaches to how these figures were stated. It is easy to see how this could be confusing to the average citizen. Perhaps the discrepancy was in the "gross" jobs created versus "net" jobs created. I read a few reports from the BLS's Unemployment Statistics for December (which was like deciphering the DeVinci Code) and verified that the drastic drop in jobs growth was due to the nearly 200,000 jobs that were lost last month - bringing the net increase to 103,000. Meanwhile, the relatively big drop in the unemployment rate was due to those who are no longer receiving unemployment benefits, thus no longer included in the unemployment "count". This is unfortunately a warped way of accounting for the unemployed. For a while there was a movement to establish a better accounting system for deriving more realistic figures, but that seems to have fizzled.

We have seen the Retail market rebound, the Stock Market flourish, Tourism explode and record Corporate Revenues, but the Unemployment Rate remains a sore spot, and the source of much criticism of the Obama Administration.

Say what they want, there were actually 297,000 new jobs created in December and that illustrates that businesses are feeling better about the future stability of this country. With 12 straight months of job growth, and 1.3 million new jobs created in 2010, we can safely say that Corporations are no longer sitting on cash, reluctant to expand their workforce. The economy is gaining traction, and the Republicans will not be able to take credit for this one. Let's Hope that this is finally a true sign of better days ahead.

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K. Reilly
Cohn-Reilly Report

Milton Wolf's Global Forecast

The world crisis is a problem for politicians and economists alike. Politics has used the crisis to their advantage in some cases. In the US careers have been made and destroyed as a result of this serious global financial discord. According to Milton Wolf the U.S. is in recovery. Wolf went on to say that the financial System has been saved, lead by the feds and very aggressive policies. "The CentralBank has done a good job managing the global crisis. In aggregate, we saved the financial system, and the Central Bank has been aggressive to keep the banks liquid. The Central Banks have ignored the criticism, and they have brought us to recovery"

That said, there needs to be some adjustment in the EU Zone. Members of the European Union had indulged in a lot of bad lending and borrowing practices. This is illutrated by the spreading financial troubles in Portugal, Belgium and Spain, after bailouts offered to Ireland and Greece. The EU Zone (with the help of IMF) has provided just enough money to avoid defaults. Given the financial crisis, the Euro, may cease to exist anytime soon. The world crisis is a problem for politicians and economists alike. Politicians has used the crisis to their advantage in some cases. In the US careers have been made and destroyed as a result of this serious global financial discord.

Listen to Milton Wolf's view of the Global Economy, and what can we expects. Click Here

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K. Reilly
Cohn-Reilly Report