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Wall Street Schemes, BlackBerry, Best Buy Take Front and Center

Tuesday morning: In the world of finance, one trial ends and another begins; in business, BlackBerry and Best Buy each struggle to improve sales; in the aftermath of Sandy, utility poles are being rushed to the Northeast to help restore power.

Federal Commission Loses Wall Street Case

A federal jury in Manhattan exonerated Bruce Bent Sr., credited with creating the original money market fund, and his son Bruce Bent II, from charges of defrauding investors at the height of the 2008 financial crisis. The Securities and Exchange Commission (SEC) had accused the Bents of falsely reassuring investors that one of their foundering money market funds was solvent.

The SEC’s suit alleged the Bents told investors that the Reserve Primary Fund – their flagship investment vehicle, which they presented as a nearly risk-free asset – was not in danger of going under.

In reality, the fund was collapsing under the weight of hundreds of millions of dollars in bonds that bottomed out after their underwriter, Lehman Brothers, went bankrupt.

The verdict is seen as a setback for the SEC’s enforcement division. It highlights the difficulty faced by the agency and other federal regulators when prosecuting individuals whose irresponsible behavior helped crash the economy.

Best Buy Names New CFO

Sharon McCollam, former Chief Financial Officer of home furnishing retailer Williams-Sonoma, has been named CFO of Best Buy Co., the world’s largest consumer electronics chain.

Investors roundly welcomed the appointment, and  Best Buy shares rose 4.2 percent upon the news. This is a much-needed boost; the company has been suffering from declining sales for the past few years even as it commands 16 percent of the electronics market.

The store’s critics maintain its weak performance results from its positioning as a “showroom.” Shoppers go to Best Buy to inspect products, but then go home and buy them online from other vendors.

Utility Poles Reach Storm Area

Suppliers are struggling to keep up with the demand for utility poles to replace those that were downed or damaged by Superstorm Sandy.

Poles made from Southern pines, 40 to 45 feet tall, have been transported in numbers not seen since 2005, when about 100,000 poles were delivered to the Gulf Coast after Hurricanes Katrina and Rita swamped the area.

Utility companies, which are trying to return power to millions of storm victims in the Northeast, maintain that their supply of poles is adequate and that their restoration efforts are on track.

 

Can BlackBerry Bounce Back?

Canadian manufacturer Research in Motion (RIM) is going for broke with its planned January 2013 launch of BlackBerry 10. This is the latest operating system for the company’s BlackBerry smartphone, once a consumer favorite in the very competitive personal communication device market.

In recent years, the company’s U.S. subscriber share has dwindled to 9.5 percent. In contrast, Apple’s iPhone commands 33.4 percent of the smartphone market and Android-powered devices claim over half.

Industry analysts are skeptical as to whether the BlackBerry 10 upgrades will convince enough users of other smartphone platforms to switch, or return, to the RIM brand.

Trial Begins in Insider Trading Case

Anthony Chiasson and Todd Newman, two hedge fund traders, are set to go on trial today in Federal District Court in Manhattan. They are accused of being part of an insider trading conspiracy that netted approximately $68 million on illegally traded computer company stocks.

Six other indicted traders have already pleaded guilty in the case and are expected to testify against the two defendants.

The case is one of many prosecutions brought by the government as part of a sweeping investigation into insider trading. To date, there have been 69 convictions and dozens of prison sentences handed out to guilty hedge fund traders.

Bill “No Pay” Fay has lived a meager financial existence his entire life. He started writing/bragging about it in 2012, helping birth Debt.org into existence as the site’s original “Frugal Man.” Prior to that, he spent more than 30 years covering the high finance world of college and professional sports for major publications, including the Associated Press, New York Times and Sports Illustrated. His interest in sports has waned some, but he is as passionate as ever about not reaching for his wallet. Bill can be reached at [email protected].

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