What's Important: Chesapeake Scandal Improves, SAC Capital Advisors Widens
Chesapeake Cleans Up Its Act
Chesapeake Energy Corp. (NYSE: CHK) finally has succeeded in throwing out its morally challenged CEO Aubrey McClendon and some of his equally morally challenged board. McClendon not only enjoyed extravagant compensation, he also made investments side by side with the company, which almost certainly was a conflict of interest. Chesapeake stayed within the industry with its new chief executive pick. That is just as well. Chesapeake is a complex energy company with equally complex financials. Marketwatch says of the new Chesapeake Energy CEO pick:
Chesapeake Energy Corp. has chosen Robert Douglas Lawler, a top executive at rival oil-and-gas company Anadarko, as chief executive, the Wall Street Journal reported on Monday. The 46-year-old will replace Aubrey McClendon, who was ousted from the second-biggest natural-gas producer in the U.S. in April. Petroleum engineer Lawler was senior vice president of international and deep-water operations at Anadarko
It is deepwater Lawler will have to get Chesapeake out of.
EU Tax Dodgers Beware
European Union leaders will turn to one of the most crippling parts of the region's economies - tax dodging. Given the size of the underground economies in Spain and Greece, missing taxes are a large portion of the taxable revenue base. Even in the United States, what the IRS collects is only a portion of the real, total income of people. Europe's problem is that most countries have no mechanism to detect who cheats, let alone how to collect money from them. That means the decision to improve the system likely lacks teeth. Bloomberg reports on efforts to fight tax evasion in the EU:
The agenda for this week will include stepping up the fight against tax evasion after finance ministers from Luxembourg and Austria last week blocked efforts to reach agreement on sharing tax data. The accord aims to set standards for how countries collect data on income residents earn in other nations.
"Priority will be given to efforts to extend the automatic exchange of information at the EU and global levels," according to the draft.
So, it may be as hard to get an agreement as it will be to implement it.
Steven Cohen and the Grand Jury
As federal officials investigate insider trading at Steven Cohen's SAC Capital Advisors, the noose has begun to tighten around his neck. There has long been a suspicion that he was aware of the illegal practice within his firm, if he did not employ it himself. Worries about the possible legal effects of the probe have caused many of his investors to flee. If Cohen is caught in the government's web, the process likely escalate. CNBC reported on the investigation of SAC Capital Advisors:
Steven A. Cohen has received a subpoena to testify before a grand jury in the government's insider trading investigation into his hedge fund, SAC Capital Advisors, a development that signals a newly aggressive phase in the multiyear inquiry, according to lawyers and executives briefed on the case.
Issued last week, the grand jury subpoena came as part of a broader round of requests from criminal authorities. Other SAC executives were also named in the subpoenas, the lawyers and executives said, and the fund itself received requests for information about its activities.
The subpoenas suggested that federal prosecutors and the F.B.I. are intensifying their efforts to build a case, not only against SAC executives, but also the fund itself. Typically, a grand jury will hear testimony and review evidence before deciding to approve an indictment.
Filed under: 24/7 Wall St. Wire, Market Open Tagged: CHK