Business news roundup: Dell vote postponed, regulator investigating high-frequency trades

Technology

Dell puts off vote on founder’s buyout bid

Dell has delayed a vote on founder Michael Dell’s plan to take the slumping computer maker private in a sign that the board needs more time to rally support.

Dell called a special shareholders meeting to order Thursday, then quickly adjourned without a formal vote of the $24.4 billion buyout offer from Michael Dell and a group led by the investment firm Silver Lake.

The vote was rescheduled for Wednesday at the company’s headquarters in Round Rock, Tex.

The postponement is a significant setback for Michael Dell and the company’s board, which has spent five months trying to persuade shareholders to approve the buyout.

Supporters of the proposal believe Dell stands a better chance of turning around if it can make long-term strategic decisions without worrying about meeting Wall Street’s quarter-to-quarter expectations.

The mounting opposition to the deal is likely to increase the pressure on Michael Dell and Silver Lake to sweeten their offer. Dell’s stock rose nearly 2 percent, to $13.12.

The delay is a vindication for two major Dell shareholders, Carl Icahn and the Southeastern Asset Management fund. They own a combined 13 percent of Dell and have been leading the mutiny against the proposed deal. They have argued the price undervalues Dell’s long-term prospects.

In a statement, Icahn and Southeastern Asset said the delay “reflects the unhappiness of Dell stockholders with the Michael Dell/Silver Lake offer.”

— Associated Press

FINANCIAL MARKETS

Regulator looking at effects of fast trading

The Financial Industry Regulatory Authority is investigating whether high-frequency traders have established controls to ensure their algorithms don’t malfunction and cause broader harm to markets.

FINRA sent letters this week to about 10 trading firms asking nine detailed questions about how they use and deploy algorithms, according to George Smaragdis, a spokesman for the U.S. brokerage industry’s self-regulator. FINRA had expressed concern about how firms supervise trading algorithms after Knight Capital Group bombarded exchanges in August with mistaken orders that cost the company $400 million.

The review is part of an effort to explore technology controls more deeply, according to examination priorities that the Washington-based regulator published in January. FINRA asks firms in the letter to disclose whether they use kill switches to halt individual algorithms and under what conditions they would shut off trading.

“In light of several high-profile algorithmic trading failures that caused significant market disruption in 2012, FINRA continues to be concerned about how firms are supervising the development of algorithms and trading systems,” the regulator said.

— Bloomberg News

Also in Business

l  Authorities in the United Kingdom have banned a Coca-Cola TV ad because they say it can mislead viewers about how easy it is to burn off the calories in a Coke. The ad, a version of which has aired in the United States, shows a variety of activities, such as dog walking, dancing and laughing, it says would burn off the “139 happy calories” in a single serving. But the Advertising Standards Authority, which regulates advertising in Britain, says the ad doesn’t make clear enough that all of the activities need to be done in combination to burn 139 calories. Coca-Cola representatives did not immediately return a request for comment.

l  U.S. crude oil hit its highest level in 16 months Thursday, rising above $108 a barrel and shrinking its discount to North Sea Brent to the narrowest in almost three years. U.S. crude oil, commonly called West Texas Intermediate, or WTI, settled at a 16-month high of $108.04 a barrel, up $1.56. Brent crude rose 9 cents to settle at $108.70, with its premium over U.S. crude touching an intraday low of 51 cents a barrel, the narrowest spread since August 2010. The premium eventually settled at 89 cents. The price difference between the world’s two most heavily traded crude contracts has narrowed sharply as increased pipeline capacity has reduced the glut of oil around the WTI delivery point of Cushing, Okla.

l  U.K. air accident investigators recommended Thursday that aviation authorities temporarily disable a Honeywell emergency transmitter on all Boeing 787s following a fire last week aboard an Ethiopian Airlines Dreamliner parked at London’s Heathrow Airport. The Air Accidents Investigation Branch also recommended that the U.S. Federal Aviation Administration and other regulators carry out a safety review of lithium-battery powered emergency locator transmitter systems in other aircraft. Investigators said it was not clear whether the fire was caused by the transmitter’s lithium-manganese dioxide batteries or a short near the transmitter.

l  Panasonic and its Sanyo Electric unit agreed to plead guilty to conspiring to fix prices of car parts and batteries and pay $56.5 million in criminal fines, the U.S. Justice Department said. Panasonic, based in Osaka, Japan, agreed to pay $45.8 million for its role in the conspiracy, while Sanyo agreed to pay $10.7 million, the Justice Department said in an e-mailed statement Thursday. Seoul-based LG Chem also agreed to plead guilty and pay a $1.1 million criminal fine for price-fixing involving battery cells, Justice said.

l  Moody’s Investors Service raised its U.S. sovereign outlook to stable from negative Thursday and affirmed its top Aaa rating for the country, noting the resilience of the economy. Moody’s said the federal government’s debt trajectory is on track with criteria previously laid out by the rating agency. The economy is “progressing at a faster rate compared with several Aaa peers and has demonstrated a degree of resilience to major reductions in the growth of government spending,” Moody’s said in a statement.

— From news services

Coming Today

l  Earnings: Dole Food, General Electric, Honeywell International, Whirlpool.

 
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