Administration November 4, 2006

Fraud Facilitated by Advance Copies of BusinessWeek

April 11, 2006 (PLANSPONSOR.com) - A bond analyst at Goldman Sachs, a junior-level banker at Merrill Lynch and a worker at the plant that prints BusinessWeek magazine have been arrested, charged with participating in an international insider trading ring that netted $6.7 million and involved more than a dozen people.
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Reuters reports that authorities said the schemes involved stealing pre-publication copies of BusinessWeek magazine to gain advance knowledge of share tips and persuading an investment banker to pass on details about upcoming mergers.   The three face insider trading and securities fraud charges.

The case is linked to the arrest last year of David Pajcin, a former Goldman employee who allegedly made stock trades from stolen pre-publication copies of BusinessWeek, according to Reuters.

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The Securities and Exchange Commission (SEC) said the schemes were orchestrated by Eugene Plotkin, the Goldman Sachs bond analyst and Pajcin, who persuaded the Merrill Lynch banker, Stanislav Shpigelman, to provide tips on upcoming mergers in return for a share of trading profits.   Plotkin and Pajcin traded stocks based on those tips, making at least $6.4 million in illicit gains, according to the complaint.

In a second scheme, Plotkin and Pajcin recruited two individuals, including Juan Renteria, to obtain jobs at a printing plant, steal advance copies of BusinessWeek and tip them about the names of companies discussed in the magazine’s “Inside Wall Street” column, on the trading day before it hit the newsstands.   The two traded in approximately 20 different stocks on this basis, earning $340,000 in illicit gains, the complaint said.

Plotkin, aged 26, faces a maximum penalty of 70 years in prison; Shpigelman, aged 23, could get up to 55 years; and Renteria, aged 20, could be jailed for 15 years.

Separately, the SEC filed civil insider trading charges against Shpigelman, Plotkin, Renteria and a number of people who allegedly received inside tips, including Pajcin’s aunt Sonya Anticevic, a former underwear factory worker living in Croatia.

Shpigelman has been placed on administrative leave from Merrill Lynch.

Investing November 3, 2006

Unemployment Rate Lowest Since 2001

November 3, 2006 (PLANSPONSOR.com) - Total non-farm payroll employment increased by 92,000 jobs in October and the unemployment rate fell to 4.4%, according to data from the Bureau of Labor Statistics (BLS).
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Reuters reports that the 4.4% unemployment rate is the lowest since May 2001, when the rate was 4.3%. The addition of 92,000 jobs for the month was lower than the 125,000 forecast by Wall Street analysts, according to Reuters.

BLS revised its numbers up for jobs added in August and September. According to a BLS news release, the number of jobs added in August was 230,000 versus the previously reported 128,000 (See Job Growth Modest, Unemployment Down in August ) and job growth in September was actually 148,000 – well above the 51,000 previously reported (See Job Growth Nearly Stagnant, Unemployment Drops ).

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Professional and business services employment grew by 43,000 in October, with a gain in management and technical consulting services of 12,000 and in business support services of 6,000, according to BLS data.  Employment in temporary help services was little changed over the month.

  
Health care employment continued its growth with a gain of 23,000 in October, BLS said. Over the year, health care employment has increased by 302,000. 

In leisure and hospitality, food services and drinking places added 27,000 jobs in October. Also, in the goods-producing sector, mining employment grew by 5,000 during the month. Over the last 12 months, mining has added 54,000 jobs. Within financial activities, commercial banks added 5,000 jobs in October.

Both wholesale and retail trade employment were little changed in October.

Construction lost 26,000 jobs in October as employment declines in residential specialty trade contractors (-31,000) more than offset gains in non-residential specialty trades. Manufacturing lost 39,000 jobs in October. 

BLS noted that October was the final month in which special questions were asked of Hurricane Katrina evacuees.

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