Biotechnology Firm, Amgen, Acquires Anti-cancer Drugs

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Although Amgen is the world’s largest biotechnology company, they have not been in the anti-cancer drug market until now. Amgen, like other drug makers, is trying to refresh aging product lines through the acquisition.

Questions:
1. What is the ranking of this takeover of biotechnology firms, in terms of historic purchases? What are examples of those that were larger than this?
2. What has been the share price history of Amgen and Onyx?
3. What are some of the current issues that Amgen is facing from a financial perspective?

Source:
Pollack, A. and M.J. De La Merced. (2013). Amgen to Buy Onyx for $10.4 Billion. The New York Times, August 25 (Retrievable online at http://dealbook.nytimes.com/2013/08/25/amgen-to-buy-onyx-pharmaceuticals-for-10-4-billion/)

The Reinvention of Pawn Shops

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The pawnshop industry is growing. In 2007, there were approximately 6,400 pawn shops nation-wide. Now there are over 10,000. The expansion in pawnshops is fed, in part, by the increased number of Americans with tarnished credit which often bars them from the mainstream financial system. This article explains some of the niche services now offered by pawn shops.

Questions:
1. Why can’t pawnshops officially be banks? Are there any differences between the operations of banks and the chain, Pawn America?
2. Why have pawnshops evolved into “the poor man’s bank,” as the article termed it?
3. What are the costs and benefits of financial transactions through a pawn shop?

Source:
Clifford, S. and J. Silver-Greenberg. (2013) Platinum Card and Text Alert, via Pawnshop. The New York Times, August 24 (Retrievable online at http://dealbook.nytimes.com/2013/08/24/platinum-card-and-text-alert-via-pawnshop/?nl=todaysheadlines&emc=edit_th_20130825&_r=1)

Donald Trump is in the News Again!

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New York Attorney General, Eric Schneiderman, has sued Donald Trump for $40 million as a result of what he terms a fraudulent educational program through “Trump University.” The program promised to make students rich but instead steered them into expensive and useless seminars. They also failed to deliver promised apprenticeships.

Questions:
1. Instead of meeting Donald Trump as part of their educational experience, what did the students get to do?
2. Based on the article, what amount of money did the school take in (on average)? (Use the information in the 3rd paragraph of the article.) Is this more or less than the amount sought in restitution? Comment on the difference.
3. Mr. Trump says that the charges are politically motivated. What are some of the charges? Please list them and then discuss how they constitute the charge of fraud.

Source: Associated Press Staff (2013). NY AG Schneiderman sues Trump, ‘Trump University’ for fraud; Trump says probe is political. The Washington Post, August 24 (Retrievable online at http://www.washingtonpost.com/business/ny-ag-sues-trump-university-says-get-rich-promises-were-fraudulent-deceptive/2013/08/24/8d41ce40-0d21-11e3-89fe-abb4a5067014_story.html?tid=pm_pop)

Beware of rising rates

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This video offers advice for you on when to lock in low interest rates and pay off credit card debt.

Questions:
1. Why does the bond market have so much affect on your life?
2. Why would you want to be as aggressive as you can to pay down credit card debt?
3. Why are individual bonds a good idea to buy now?Money-file-2

Source:
CNN Video. (2013). Beware of Rising Rates. CNN, July 3 (Retrievable online at http://www.cnn.com/video/data/2.0/video/bestoftv/2013/07/03/ym-romans-beware-the-bond-market-rising-interest-rates.cnn.html)

Deutsche Bank Shrinks its Balance Sheet

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Deutsche Bank said it would significantly shrink its balance sheet to comply with stricter leverage rules as the lender missed analysts’ expectations in the second quarter.

Questions:
1. What are some of the factors on why the bank is shrinking its balance sheet? Be specific.
2. Why have Deutsche Bank’s profits fallen recently?
3. Explain the following statement in simplified terms to a classmate: Deutsche has used a combination of retained earnings, adjustments of risk models and the €2.95bn capital increase to catapult itself from a laggard in capital strength to a bank with one of the highest core tier one capital ratios globally.

Source:
Schaefer, D. (2013). Deutsche Bank to cut balance sheet to comply with leverage rules. Financial Times, July 30 (Retrievable online at http://www.ft.com/intl/cms/s/0/ee53cc58-f8d9-11e2-a6ef-00144feabdc0.html)

Here we go again!

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In a release on July 30, 2013, JP Morgan has agreed to pay a $410 penalty over allegations it manipulated U.S. electricity markets. According to the official release, JP Morgan Ventures Energy Corporation is alleged to have manipulated the electricity market through the company’s bidding activities in California and the Midwest during the period from September 2010 through November 2012.

Questions:
1. Look at the J.P. Morgan Corporate Responsibility Report. In your opinion, which specific issues listed in the report were violated? (See http://www.jpmorganchase.com/corporate/Corporate-Responsibility/document/jpm_corpresp091912_hires.pdf)
2. Explain what the penalty was in this settlement.
3. Explain this statement listed in the news release, as if you were simplifying it for a classmate. (Include an explanation about who FERC is.): FERC investigators determined that JPMVEC engaged in 12 manipulative bidding strategies designed to make profits from power plants that were usually out of the money in the marketplace.

Source:

Wile, R. (2013). JPMorgan Agrees to Pay $410 Million To Settle Electricity Market Probe. Business insider, July 30 (Retrievable online at http://www.businessinsider.com/jpmorgan-ferc-settlement-2013-7#ixzz2aXF8V0YF)

Mirror, Mirror on the Wall – Who is the Most Expensive of Them All?

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royal baby-

It is hard to fathom but the newest British royal boy who was born in fanciest hospital ward in Britain cost $15,000. However, that is nothing compared to the average U.S. birth, where new parents are billed $30,000 and eventually pay $18,000.

maternity costs

Questions:

1. What drives the high pregnancy health costs in the U.S. as compared to other countries?
2. What types of separate fees are included in pregnancy health costs in the U.S.?
3. According to Rosenthal, what percentage of women had maternity coverage as part of their health care in 2011?
4. What amount do women with insurance typically pay out-of-pocket for an average maternity stay? How has that changed over two decades?

 

Sources:
Rosenthal, E. (2013). American Way of Birth, Costliest in the World. The New York Times, June 30 (Retrievable online at http://www.nytimes.com/2013/07/01/health/american-way-of-birth-costliest-in-the-world.html?pagewanted=all)
Kliff, S. (2013). The royal birth cost $15,000. The average American birth is billed at $30,000. The Washington Post, July 23 (Retrievable online at http://www.washingtonpost.com/blogs/wonkblog/wp/2013/07/23/the-royal-birth-cost-15000-the-average-american-birth-is-billed-at-30000/?tid=pm_business_pop)

Ring-around-the-Rosy

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Did you know that you are paying a fraction of a cent every time you open a can of soda (or other canned beverages)? Why? It is because Goldman Sachs and other financial players have maneuvered the price of aluminum. Each day, a fleet of trucks shuffles 1,500-pound bars of aluminum among 27 warehouses in the Detroit area with the purpose of lengthening the storage time. As a result many millions of dollars a year are added Goldman’s earnings, which owns the warehouses and charges rent to store the metal. This process also increases prices paid by manufacturers and consumers across the country. Unfortunately, the Fed appears to have no plans to require the banks to sell their storage facilities and other commodity infrastructure assets.

Questions:
1. According to the article, one-tenth of one cent is added to each purchase price of canned beverages. Based on this, estimate how much you have paid to Goldman’s over the last year.
2. What is the estimate of how much this “merry-go-round” of aluminum has cost Americans in the last three years?
3. Based on the article, how much wait time has been added to aluminum deliveries to manufacturers of the cans?
4. What commodity is next up for “manipulation” and why is this expected?

Source:
Kocieniewski, D.(2013). A Shuffle of Aluminum, but to Banks, Pure Gold. The New York Times, July 20 (Retrievable online at http://www.nytimes.com/2013/07/21/business/a-shuffle-of-aluminum-but-to-banks-pure-gold.html?hp&_r=0&pagewanted=all)

Where are the Controls?: Corporate Ethical Breaches Identified by Auditors

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According to a 2011 internal audit, executives at the British drug maker GlaxoSmithKline were warned about critical problems with the way the company conducted research at its drug development center in China. Potential financial risk and regulatory action are likely due to the sales practices that are currently at the center of a bribery and corruption scandal in China. These actions may extend to its Shanghai research and development center, which develops neurology drugs for Glaxo.

Questions:
1. Which of the audit red flags do you see as the most serious?
2. What is described as the “mortal sin” in the world of drug research?
3. What is the scheme that the Chinese claim Glaxo used to funnel illegal payments to doctors and government officials in order to bolster sales?

Source:
Thomas, K. (2013) Drug Research in China Fall Under a Cloud. The New York Times, July 22 (Retrievable online at http://www.nytimes.com/2013/07/23/business/global/drug-research-in-china-falls-under-a-cloud.html?pagewanted=1&_r=0&hp)

Youtube.com. (2013). The China bribery scandal engulfing Glaxo-Smith-Kline, ABC_BBC_Sky_CNN_CBS News, July 18 (Retrievable online at http://www.youtube.com/watch?v=oTXk1GPt5lc)

Cooking Empire Crumbles

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Questions:
1. Do you think that the businesses were right in dropping Ms. Deen’s licensing and merchandise endorsements?
2. Discuss the millions of dollars Ms. Deen will lose in terms of what financial statements and accounts affected. Be as specific as possible.
3. How did the whole Paula Deen incident start and what is the significance of her dropping her legal team?

Source:

CNN Video. (2013). Paula Deen Business Hit by Controversy. (Retrievable online at www.cnn.com)
Associated Press staff. (2013). Paula Deen dumps legal team, July 11 (Retrievable online at http://www.foxnews.com/entertainment/2013/07/11/paula-deen-dumps-legal-team/)