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Goldman pulls every lever to make machine run

By Antony Currie

The author is a Reuters Breakingviews columnist. The opinions expressed are his own. 

Goldman Sachs pulled every lever to ensure its machine ran properly over the summer. The bank earned $2.1 billion in the three months to September, blowing past Wall Street expectations. Its dealmakers and traders played their part, as did the firm’s own investments. The real fillip, however, to the bank’s annualized 11.8 percent return on equity came from socking away less for pay.

Virtually all Goldman’s businesses performed better than they did a year ago, pushing revenue up by a quarter. Its fixed income, currencies and commodities desks raked in 53 percent more, after some minor adjustments, including the value of its own liabilities.

That increase outstripped its universal banking rivals who reported earnings earlier this week. Merger advice and equity underwriting were up, too. And investing and lending turned in a solid quarter, thanks in part to a $285 million gain from the initial public offering of Tesla supplier Mobileye.

Dialing down the expense line was the most important move by boss Lloyd Blankfein. Goldman set aside just 35 percent of its adjusted revenue to cover compensation. That’s a significant drop from the 43 percent ratio in the first half. Had Goldman clung to that level, return on equity for the quarter would have fallen short of its theoretical cost of capital, at 9.4 percent.

The quantum of the drop surprised some, including Barclays, Citigroup and KBW analysts. That may explain a bigger dip in Goldman shares on Thursday morning than many of its rivals experienced. The bank, however, has shown an increasing willingness to dial back pay earlier rather than waiting until the fourth quarter. Last year, for example, the compensation ratio was also around 35 percent.

Employees aren’t suffering either. The average sum paid, annualized from the numbers for the first nine months of 2014, clocks in at $427,000. That’s virtually the same as last year, despite the addition of 900 employees. It means shareholders are getting a healthy cut of the 6 percent increase on the top line.

Ultimately, it’s a smart way to wring the most from the revenue being generated. In tough times especially, that’s how investment banking should work.

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Ebola Disease Units Boast High-Level Tools, Few Rooms

The state-of-the-art infectious disease centers now treating Ebola patients in the U.S. have world-class doctors and nurses with years of training, hot pressure chambers that can sterilize more than a ton of contaminated waste, and a record of success handling some of the world’s most demonic pestilence. 

What they don’t have is a lot of room for patients. 

Only four hospitals in the country have high-level containment units specially designed for treating exotic infectious diseases such as Ebola, according to the U.S. Centers for Disease Control and Prevention. Each has the capacity to treat only a handful of Ebola patients at once. 

“If there are any more mishaps we’re going to need more beds,” said Robert Glatter, an emergency room doctor at Lenox Hill Hospital in New York. “We need to significantly increase” the number of sophisticated containment units. 

The debacle at Texas Health Presbyterian Hospital Dallas, where two health workers were infected with Ebola while treating Thomas Eric Duncan before he died, exposed the lack of preparedness for treating Ebola at many hospitals. While various major hospitals are now gearing up to treat Ebola, for now patients are being treated at just these handful of centers. 

A video frame grab shows Texas Health Presbyterian Hospital nurse Nina Pham, who...Read More

Atlanta Hospital 

Emory University Hospital in Atlanta, which is treating Amber Vinson, the second Dallas health-care worker to be infected by Ebola, has capacity for three patients in its biocontainment unit, which was created in 2002, said Holly Korschun, an Emory spokeswoman, in an e-mail. 

Over the years, its workers “were trained in the use of personal protective equipment like full-body suits, and they ran drills for a dozen different scenarios,” she said. 

The National Institutes of Health Clinical Center, which is treating Nina Pham, the first Dallas health-care worker to be infected with Ebola, has capacity to take two patients, an NIH official told Congress on Thursday. The unit, in Bethesda, Maryland, is designed to provide high-level isolation capabilities, the NIH said in a statement. 

The biocontainment facility at the Nebraska Medical Center, which is treating NBC cameraman Ashoka Mukpo, would most likely be able to handle two to three patients at a time, depending on the severity of the cases, said Christopher Kratochvil, associate vice-chancellor for clinical research at the University of Nebraska Medical Center, in a telephone interview. 

Montana Facility

A fourth biocontainment facility in Montana, designed to treat workers from the NIH’s Rocky Mountain Laboratories in cases of accidental infection, has three patient rooms, according to a 2010 article in Emerging Infectious Diseases. 

The high-level containment units weren’t necessarily designed with Ebola in mind, said Rick Davey, deputy clinical director of the National Institute of Allergy and Infectious Diseases division of clinical research, on a conference call with reporters. Instead, they were developed to safely treat workers from various national facilities who became infected with pathogens in accidents, he said. Among other features, the units have state-of-the-art air handling capabilities so microbes can’t get out. 

“The staff training and drilling and re-training and re-drilling that all of these units have undertaken over a process of years has prepared them thoroughly for this current outbreak,” Davey said. 

Ebola is challenging to treat safely because patients release large amounts of vomit, diarrhea or blood as the disease becomes more advanced, and the fluids can contain large amounts of infectious virus. Patients can lose as much as 5 to 10 liters of bodily fluids a day, according to a presentation by an Emory University infectious disease specialist, Bruce Ribner, at a medical conference in early October. 

350 Boxes

At Emory, in just a three-week period after its first Ebola patient arrived, the hospital had to sterilize 350 boxes of medical waste weighing more than 3,000 pounds using a device called an autoclave, according to a webcast of Ribner’s presentation at idweek.org. 

They filled several trailers sent off for incineration, according to the presentation. 

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Hong Kong activists regroup to force police retreat in protest hotspot

(Reuters) - Hong Kong pro-democracy activists recaptured parts of a core protest zone early on Saturday, defying riot police who had tried to disperse them with pepper spray and baton charges.

About a thousand protesters, some wearing protective goggles and helmets, helped to build fresh barricades from wooden fencing and other materials in the gritty, densely populated Mong Kok district. Some chanted "black police" after the police struck demonstrators' umbrellas with their small metal batons.

The area has become a flashpoint for ugly street brawls between students and mobs, including triads, or local gangsters, intent on breaking up the prolonged protests that pose one of the biggest political challenges for China since the crushing of pro-democracy demonstrations in Beijing in 1989.

Demonstrators chanting "open the road" tried late on Friday to break through multiple police lines, using umbrellas as a shield from pepper spray at a major traffic intersection.

In the melee, police used batons and scuffled violently with activists, but were eventually forced into a partial retreat, less than 24 hours after re-opening most of the area to traffic.

"Occupy Mong Kok!" a jubilant sea of several thousand people chanted afterwards. "We want real universal suffrage!"

Twenty-six people were arrested and 15 officers were injured, the government said in a statement.

"The police have no right to throw us out," said Fish Tong, a 20-year-old student in the crowd. "We are just here to take back what is supposed to belong to us."

"FIGHT TO THE END"

The renewed clashes came just hours after Hong Kong's pro-Beijing leader Leung Chun-ying offered talks to student leaders next week in an attempt to defuse weeks of protests that have paralyzed parts of the city and grabbed global headlines amid scenes of violent clashes and tear gas rising between some of the world's most valuable office buildings.

The protesters are demanding free elections for their leader in 2017, but China insists on screening candidates first and Leung reiterated that the government would not compromise.

"We will stay and fight till the end," Joshua Wong, a bookish 18-year-old whose fiery speeches have helped drive the protests, told the seething crowds late on Friday while standing atop a subway station exit.

Before dawn on Friday, hundreds of police had staged their biggest raid yet on a pro-democracy protest camp, forcing out student-led activists who had held the traffic intersection in one of their main protest zones for more than three weeks.

The raid was a gamble for the 28,000-strong police force who have come under criticism for aggressive clearance operations with their tear gas and baton charges and for the beating of a handcuffed protester on Wednesday. What initially seemed to be a smooth clearance operation has now sparked a bigger backlash. 

The escalation in the confrontation illustrates the dilemma faced by police in striking a balance between law enforcement and not inciting the protesters who have been out for three weeks in three core shopping and government districts.

The protesters, led by a restive generation of students, have been demanding China's Communist Party rulers live up to constitutional promises to grant full democracy to the former British colony which returned to Chinese rule in 1997.

In August, Beijing offered Hong Kong people the chance to vote for their own leader in 2017, but said only two to three candidates could run after getting backing from a 1,200-person "nominating committee" stacked with Beijing loyalists.

The protesters decry this as "fake" democracy and say they won't leave the streets unless Beijing allows open nominations.

Besides Mong Kok, about 1,000 protesters remained camped out on Hong Kong Island in a sea of tents on an eight-lane highway beneath skyscrapers close to government headquarters.

Despite Leung's offer of talks next week, few expect any resolution without more concrete concessions from authorities.

China rules Hong Kong under a "one country, two systems" formula that gives the city wide-ranging autonomy and freedoms not enjoyed in mainland China, with universal suffrage stated as the "ultimate aim".

(Additional reporting by Twinnie Siu and Diana Chan; Writing by James Pomfret; Editing by Gareth Jones)

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Bangkok Airways sets IPO price at 25 baht/share -sources

BANGKOK Fri Oct 17, 2014 9:58pm EDT

Oct 18 (Reuters) - Thai full-service carrier Bangkok Airways Co Ltd has priced its initial public offering (IPO) at 25 baht (0.77 U.S. cents) per share, as it raises 13 billion baht ($401 million) to fund expansion, people with knowledge of the matter said on Saturday.

The IPO price was in the middle of the range of 23 and 27 baht, the sources, who declined to be identified, told Reuters.

Bangkok Airways, which describes itself as a "boutique airline", plans to sell 520 million new shares, or a stake of 24.8 percent.

The sale proceeds will go to expand its fleet, buy engines and spare parts and renovate aircraft hangers at the Suvarnabhumi and Samui international airports, the airline has said. ($1=32.40 baht) (Reporting by Manunphattr Dhanananphorn; Writing by Khettiya Jittapong; Editing by Clarence Fernandez)

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Silver price-fixing lawsuits consolidated in Manhattan federal court

Oct 14 (Reuters) - Litigation alleging that Deutsche Bank AG , Bank of Nova Scotia and HSBC Plc illegally fixed the price of silver has been centralized in Manhattan federal court.

Lawsuits filed by investors since July over the alleged price-fixing were consolidated on Tuesday in the U.S. District Court for the Southern District of New York, following an order issued last Thursday by the U.S. Judicial Panel on Multidistrict Litigation, a special body of federal judges that decides when and where to consolidate related lawsuits.

The panel ruled that the cases should be handled by U.S. District Judge Valerie Caproni in Manhattan, who is already overseeing similar litigation over alleged gold price-fixing.

Three suits were originally filed in Manhattan, while two were filed in Brooklyn. The plaintiffs in the Brooklyn suits had sought to have the litigation consolidated there.

The banks had also asked that the litigation be consolidated in the Eastern District of New York in Brooklyn, but the multidistrict litigation panel said Manhattan made more sense because the defendants all had corporate offices there and because the cases involved issues similar to the gold litigation.

The plaintiffs allege that the banks abused their power as participants in the silver fix, a London-based benchmark pricing method dating back to the Victorian era, in which banks set silver prices once a day by phone. In August, the system was replaced by a new benchmark system administered by the Chicago Mercantile Exchange and Thomson Reuters.

HSBC spokesman Neil Brazil declined to comment.

Representatives of the other banks did not immediately respond to requests for comment.

The case is In re London Silver Fixing Ltd Antitrust Litigation, U.S. District Court, Southern District of New York, No. 1:14-md-02573. (Reporting by Brendan Pierson in New York; editing by Alexia Garamfalvi and Matthew Lewis)

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IASB confirms membership of transition resource group for impairment of financial instruments

The International Accounting Standards Board (IASB), responsible for International Financial Reporting Standards (IFRS) required for use by more than 100 countries1, today announced the membership of an Impairment Transition resource Group (ITG) to support stakeholders on implementation issues that may arise as a result of the new impairment requirements of IFRS 9 Financial Instruments, which was issued in July 2014.

The objective of the ITG is to provide a forum for stakeholders to discuss emerging implementation issues arising from the new impairment requirements following the issue of IFRS 9 (2014).  The ITG will also provide information that will help the IASB to determine what, if any, action will be needed to resolve such diversity, although it will not itself issue guidance.  Meetings will also be observed by regulatory bodies including experts from the Basel Committee on Banking Supervision.

The IASB expects that the ITG will meet approximately two to three times a year, depending upon the volume and complexity of the issues raised.  The first meeting is planned for the last quarter of 2014, with details to be announced in due course.  All meetings will be public and chaired by IASB member Sue Lloyd.

Any stakeholder can submit a potential implementation issue for discussion at ITG meetings.  The IASB staff will evaluate each submission and prioritise the issues for discussion at ITG meetings.

More information about the ITG, including instructions and the criteria for submitting a potential implementation issue, is available on the IFRS Foundation website on the ITG webpage.

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Getty fails to get injunction on Microsoft image widget

Oct 16 (Reuters) - Getty Images Inc has failed to convince a federal judge to halt Microsoft Corp's Bing Image Widget, which it said enabled massive copyright infringement, because the software company had already taken it down voluntarily.

The multimedia photo and video agency sued Microsoft on Sept. 4 over the widget, which it said permitted the display of images without giving their owners a licensing fee or attribution. Getty owns or represents the owners of more than 80 million digital images.

Getty asked U.S. District Judge Denise Cote in Manhattan to slap Microsoft with an injunction on the new product. Even though Microsoft removed the widget the day after the lawsuit was filed, Getty pressed forward with its case.

Getty told Cote not to believe Microsoft's claims that it would not relaunch the widget because it did not rule out creating a new widget that could still infringe on Getty's content.

"This argument is purely speculative," Cote said in her ruling on Thursday, adding that there was no basis to question Microsoft's word on its future conduct.

"We would have preferred a judicial mandate for (the widget) to stay down," said John Lapham, Getty's general counsel. "But the question of whether or not you're allowed to take and use somebody else's copyrighted materials without any attribution or compensation is still live and before the court."

Microsoft told Getty during the lawsuit that if it did launch a similar product in the future, it would include "search filters, attribution notices" and other details important to copyright.

Representatives from Microsoft could not immediately be reached for comment.

The case is Getty Images Inc v. Microsoft Corp, U.S. District Court for the Southern District of New York, No. 14-7114. (Reporting by Andrew Chung; Editing by Ted Botha and Richard Chang)

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VeriFone has $15.4 mln verdict tossed by federal appeals court

Oct 17 (Reuters) - A federal appeals court said it overturned a $15.4 million verdict against card payments company VeriFone Systems Inc because a lower court judge improperly interpreted the patents it had allegedly infringed.

The U.S. Court of Appeals for the Federal Circuit on Friday said a jury in 2012 had wrongly concluded that VeriFone infringed the patents of CardSoft Inc because it had relied on a judge's interpretation of a patent term that was too broad.

CardSoft in 2008 sued San Jose, California-based VeriFone, a maker of credit card swipe machines, and Hypercom Corp -- which VeriFone later acquired -- for allegedly infringing two of its patents covering payment terminals.

In 2012, a Texas jury awarded CardSoft $15.4 million from the two companies. The jury said another defendant, Ingenico SA, did not infringe the patents.

CardSoft's patents referred to a "virtual machine" used to operate payment software. The appeals panel said, however, the district judge's interpretation did not reflect the "ordinary and customary meaning" of the term.

The appeals panel decision reflects its authority to second- guess lower court determinations of a patent's meaning. The U.S. Supreme Court is currently weighing a case called Teva Pharmaceuticals v. Sandoz on whether that authority is appropriate.

Attorneys for CardSoft and VeriFone were not immediately available for comment.

The case is CardSoft Inc v. Verifone Systems Inc et al, U.S. District Court for the Eastern District of Texas, No. 8-cv-98.

(Reporting By Andrew Chung; Editing by Ted Botha and Alan Crosby)

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Mass Mutual sues JP Morgan over 'smart' retirement trademark

Credit: Reuters/Mike Segar /Files

A sign outside the headquarters of JP Morgan Chase & Co in New York, September 19, 2013. 

Credit: Reuters/Mike Segar /Files

(Reuters) - Unable to reach a compromise with JPMorgan Chase & Co (JPM.N) over the use of the term "smart" in relation to its lucrative retirement savings products, major life insurance provider MassMutual is taking the banking company to court.

MassMutual said discussions on Friday over its RetireSmart brand and the bank's SmartRetirement trademark had failed, prompting it to immediately file a lawsuit in Massachusetts federal court. 

The insurer is asking for a declaration that it is not infringing on JPMorgan's trademark.

MassMutual, formally known as Massachusetts Mutual Life Insurance Co, is owned by policyholders and manages $147 billion in assets in its retirement business. It has used the brand RetireSmart for its mutual fund and retirement planning services for eight years, the lawsuit said. The company also has a website under the same mark. 

JPMorgan first told MassMutual it was infringing the bank's trademark last May. The two sides engaged in discussions over the summer, according to the court filing, and a coexistence agreement was drafted, but it ultimately failed. 

Finally, in a telephone conversation on Friday, Dan Serrao, a managing director at the bank, told MassMutual's corporate vice president Todd Picken that they were at an impasse. 

The suit by MassMutual demands the cancellation of JPMorgan's trademark, because "many individuals and companies" use the terms "smart" and "retirement" in connection with helping people save for their post-work years. The company also argued there should be no trademark on a term that was "merely descriptive."

"We are confident in our position," MassMutual spokesman David Potter said. 

Representatives for JPMorgan did not immediately return a request for comment. 

The case is Massachusetts Mutual Life Insurance Co v. JPMorgan Chase & Co, in the U.S. District Court for the District of Massachusetts, No. 14-cv-30183. 

(Reporting By Andrew Chung; Editing by Ted Botha and Andre Grenon)

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IASB confirms membership of transition resource group for impairment of financial instruments

The International Accounting Standards Board (IASB), responsible for International Financial Reporting Standards (IFRS) required for use by more than 100 countries¹, today announced the membership of an Impairment Transition resource Group (ITG) to support stakeholders on implementation issues that may arise as a result of the new impairment requirements of IFRS 9 Financial Instruments, which was issued in July 2014.

The objective of the ITG is to provide a forum for stakeholders to discuss emerging implementation issues arising from the new impairment requirements following the issue of IFRS 9 (2014).  The ITG will also provide information that will help the IASB to determine what, if any, action will be needed to resolve such diversity, although it will not itself issue guidance.  Meetings will also be observed by regulatory bodies including experts from the Basel Committee on Banking Supervision.

The IASB expects that the ITG will meet approximately two to three times a year, depending upon the volume and complexity of the issues raised.  The first meeting is planned for the last quarter of 2014, with details to be announced in due course.  All meetings will be public and chaired by IASB member Sue Lloyd.

Any stakeholder can submit a potential implementation issue for discussion at ITG meetings.  The IASB staff will evaluate each submission and prioritise the issues for discussion at ITG meetings.

More information about the ITG, including instructions and the criteria for submitting a potential implementation issue, is available on the IFRS Foundation website on the ITG webpage.

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