UPI NewsTrack Business

U.S. markets end flat on BP, Goldman hopes

NEW YORK, July 15 (UPI) -- U.S. stock indexes did a late U-turn Thursday to end flat on news oil from the BP spill stopped flowing and a Goldman Sachs civil fraud deal was imminent.

The Dow Jones industrial average closed down 7.41 points, or 0.07 percent, at 10,359.31. It was earlier down as much as 120 points.

BP shares jumped nearly 8 percent to close down 2 cents at $38.94 after news broke the company had stopped oil from shooting out of the blown Gulf of Mexico well for the first time since April 20 by capping the gushing oil wellhead.

The broader Standard & Poor's 500-stock index edged up 1.31 points, or 0.12 percent, to close at 1,096.48.

Volume on the New York Stock Exchange was about 4.6 billion shares traded.

The technology-heavy Nasdaq closed down 0.76 points, or 0.03 percent, at 2,249.08.

After the market closed, the U.S. Securities and Exchange Commission said Goldman Sachs Group Inc. would pay $550 million and improve its business practices to settle charges it defrauded investors in a subprime mortgage product known as a collaterized debt obligation.

Wall Street spent much of the day deep in the red after the U.S. Labor Department said U.S. wholesale prices fell 0.5 percent in June, the biggest drop since February, and the Federal Reserve Banks of Philadelphia and New York lowered their general economic indexes to reflect the slowest pace of manufacturing expansion this year.

At the same time, the Labor Department also said weekly initial jobless claims fell 29,000 to 429,000, the lowest level since August 2008, although claims lasting more than a week jumped.

In London, Britain's FTSE 100 index closed down 42.23 points, or 0.8 percent, at 5,211.29.

Japan's Nikkei 225 index dropped 109.71 points, or 1.12 percent, to close at 9,685.53.

The dollar weakened against the euro and the yen. The euro, in U.S. dollars, rose to $1.2933 from $1.2738 late Wednesday. The dollar fell to 87.45 yen from 88.28.

Demand for U.S. treasury notes grew, pushing yields down. The yield on the 10-year note fell about 0.6 percent to 2.994 percent. The two-year note yield was 0.609 percent, after breaking through the previous record low set in late June.

Senate passes sweeping financial reform

WASHINGTON, July 15 (UPI) -- The U.S. Senate voted Thursday for a sweeping financial overhaul bill that amounts to the biggest rewrite of Wall Street rules since the Great Depression.

The 60-39 vote to overhaul the U.S. financial regulatory system, intended to address the causes of the 2008 economic crisis, touches almost all areas of the financial markets, including a mechanism to liquidate failing financial firms whose collapse would disturb markets.

That piece of the legislation lets federal regulators seize and break up large financial services firms that pose a risk to the larger economy or are on the verge of collapse.

The landmark measure's 533 rules also strengthen oversight of executive compensation and prevent credit card and mortgage abuses that contributed to the current financial crisis.

The Dodd-Frank Wall Street Reform and Consumer Protection Act, as the new law is called -- named after Sen. Christopher J. Dodd, D-Conn., and Rep. Barney Frank, D-Mass., who pushed it through the Congress -- now goes to U.S. President Barack Obama for his signature.

The White House said Obama, who proposed the regulatory overhaul in 2009, would sign the bill in a ceremony next week.

Speaking outside the White House Thursday, Obama said the new law would "crack down on abusive practices and unscrupulous mortgage lenders," ban unfair credit-card rate hikes "and ensure that folks aren't unwittingly caught by overdraft fees when they sign up for a checking account."

It will also "give students who take out college loans clear information to make sure lenders don't cheat the system. And it will ensure that every American receives a free credit score if they are denied a loan or insurance because of that score," Obama said.

Three Republican senators -- Scott Brown of Massachusetts and Olympia Snowe and Susan Collins of Maine -- joined 57 Democrats in voting for the measure.

Sen. Russell Feingold, D-Wis., was the only Democrat opposing it, saying he believed it didn't go far enough in controlling the financial recklessness and regulatory failures that led to the financial crisis. There were only 99 votes because of the vacancy created by the recent death of Sen. Robert C. Byrd, D-W.Va.

The House passed its version of financial overhaul legislation in December. The Senate passed its bill in May. Several dozen House and Senate members finalized a single Dodd-Frank bill last month after resolving differences between the House and Senate versions.

The House passed Dodd-Frank June 30, before the July Fourth holiday recess.

Goldman pays $550M to settle fraud charges

NEW YORK, July 15 (UPI) -- Goldman Sachs Group Inc. agreed to pay a record $550 million to settle charges of securities fraud tied to mortgage investments, U.S. regulators said Thursday.

The U.S. Securities and Exchange Commission settlement, which must still be approved by a U.S. District Court judge, included an acknowledgment by Goldman that its marketing materials for a complex subprime product called Abacus 2007-ACI "contained incomplete information," although Goldman neither admitted nor denied wrongdoing, the SEC said.

Goldman also agreed to reform several business practices, including the way it draws up marketing materials for complex mortgage securities and the way it educates employees in that part of its business, the SEC said.

Goldman had no immediate comment on the settlement. Some analysts earlier said ending the lawsuit might cost the firm as much as $1 billion.

Goldman agreed to pay $300 million in fines to the U.S. Treasury Department and make $250 million available to compensate "harmed investors," the SEC said.

"Half a billion dollars is the largest penalty ever assessed against a financial services firm in the history of the SEC," SEC Enforcement Division Director Robert Khuzami said in a statement.

"This settlement is a stark lesson to Wall Street firms that no product is too complex, and no investor too sophisticated, to avoid a heavy price if a firm violates the fundamental principles of honest treatment and fair dealing."

The SEC said the settlement did not cover Goldman Vice President Fabrice Tourre, who allegedly played a key role in marketing the Abacus security to investors. The litigation against Tourre would continue, the regulator said.

Penthouse parent offers $210M for Playboy

BOCA RATON, Fla., July 15 (UPI) -- Penthouse magazine's parent company offered $210 million for Playboy Enterprises Inc., topping Hugh Hefner's $185 million bid to take his U.S. company private.

FriendFinder Networks Inc. proposed it would partner with Playboy empire founder Hefner, giving Hefner editorial control and letting him live in the Playboy mansion.

FriendFinder would also be willing to keep Playboy's senior management in place, Chief Executive Officer Marc Bell said.

Playboy said in a statement its board would give Friendfinder's offer "appropriate consideration."

The board can say no to either bid.

Bell's offer to partner with Hefner apparently seeks to "dislodge" private-equity firm Rizvi Traverse Management LLC, which Hefner said Monday he was working with to finance his take-private offer, the Chicago Tribune said.

Hefner -- who owns 69.5 percent of Playboy's Class A common stock and 27.7 percent of its Class B common -- offered to buy all remaining Playboy shares.

The Class B shares outnumber Class A 6 to 1, but only Class A shares can vote.

Hefner said he was not interested in selling his controlling stake in his company. He is interested only in taking Playboy private, out of concern for "the PEI brand, the editorial direction of the magazine and PEI's legacy," Playboy said Monday.

Hefner repeated his reluctance to sell in a Twitter post Tuesday.

"Playboy isn't in play," the post said. "I'm buying not selling."

Bell, whose FriendFinder also runs several social networks and adult-content Web sites, said in his letter to Playboy's board Thursday his company's ownership would " reinvigorate" Playboy "and enhance the legacy of the Playboy brand."