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TCW and Jeffrey Gundlach reach settlement

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Star bond trader Jeffrey Gundlach and his former employer, TCW Group Inc., have agreed to settle a lawsuit over allegations that he stole trade secrets to set up his own firm. Both sides announced the deal late Thursday but did not disclose terms.

Gundlach was found liable in September for breaching his fiduciary duty to TCW, which fired him in December 2009. But in what essentially was viewed as a win for Gundlach, the Los Angeles jury found no harm to TCW in that breach and awarded the firm no financial compensation.  

Furthermore, the jury found that TCW must pay $66.7 million to Gundlach and his three codefendants for failure to pay wages owed them before leaving the money-management firm to set up a rival company in 2009.

Both sides were still battling over TCW's claim that Gundlach had misappropriated the company’s trade secrets, causing harm to TCW. Any damages on that claim were to be decided by a judge, though TCW was asking for $89 million.

TCW, which manages about $120 billion in assets for clients, fired Gundlach in December 2009 in a shake-up that rocked the mutual-fund world. One month later the company sued Gundlach, alleging that he and key aides conspired against the firm and stole TCW proprietary information to set up a new fund-management business, DoubleLine Capital, almost overnight.

Gundlach, 51, then countersued and accused TCW, the parent of Trust Co. of the West, of ousting him after 24 years at the firm to cheat him out of a huge chunk of promised income.

The two lawsuits were combined into one trial, which began in late July and was closely watched on Wall Street.

RELATED:

TCW chief defends firing Gundlach

Gundlach blames rift on TCW broken promises

Greed at center of TCW Group vs. Jeffrey Gundlach trial

-- Joe Bel Bruno

Photo: Jeffrey Gundlach. Credit: Los Angeles Times

S&P 500 up for the year as stock market rises solidly

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The S&P 500 might enjoy a merry Christmas after all.

The blue-chip index turned positive for the year this morning, thanks to a recently steady stream of encouraging economic data and the breaking of the congressional deadlock over the extension of the payroll tax cut.

The index is up about 0.6% today, enough to notch a gain of 0.4% for the year.

It's too soon, of course, to say the stock market has turned any kind of a permanent corner and is headed even higher. Stocks are no doubt getting a boost from light trading volume in the holiday week when the tilt of economic news can have an outsized effect on the direction of the market.

But it's encouraging that stocks appear to be ending the year strongly. The market has historically fared well in the third year of a presidential election cycle, and the S&P's underwhelming performance had raised concerns about its prospects in 2012.

One obstacle the market might have to confront in the new year: the percentage of S&P 500 companies pre-announcing positive fourth-quarter earnings in the past couple of weeks dropped below 60% for the first time since early 2009.

Thus far, just 57% of companies pre-announced better-than-expected fourth-quarter earnings, according to FactSet Research Systems. That's the first time since the 59% mark in the first quarter of 2009 that the percentage has dropped below 60%.

RELATED:

U.S. savings rate falls again as consumer spending rises

American dissatisfaction with nation's outlook near record highs

Down stock market in 2011 might continue in 2012

-- Walter Hamilton

Photo: The New York Stock Exchange. / Credit: Associated Press

 

LGBT employees welcome at big banks and law firms, report says

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The corporate world -- especially at law firms and big banks –- is a much better place for lesbian, gay, bisexual and transgender employees than it was a decade ago, according to a new report from LGBT advocacy group Human Rights Campaign.

When the Corporate Equality Index was first calculated in 2002 to check major American companies for policies mandating equal treatment of workers regardless of sexual orientation, just 13 businesses of 319 had a perfect score. This year, with even more criteria, 190 companies out of 636 participants landed a 100% rating.

That included 55 law firms and 22 banks and financial services such as Bank of America Corp., JPMorgan Chase & Co., Citigroup Inc. and Wells Fargo & Co.

Consulting companies did well, as did retailers and those in the food-beverage-grocery sector. Other companies with 100% ratings included AT&T Inc. and Ford Motor Co.

Transportation and travel businesses had few perfect scorers. Oil and gas companies, as well as mining and metal firms, also did not have many scorers at the top. Wal-Mart Stores Inc. had a 60% rating, as did General Electric Co. Exxon Mobil Corp. scored a -25%.

The majority of participants scored above 80%, with many more firms now offering nondiscrimination policies that included both "sexual orientation" and "gender identity," medical benefits that don’t distinguish between spouses and partners, and healthcare that factors in transgender needs.

Human Rights Campaign invited publicly traded companies from the Fortune 1000 list as well as firms in the top 200 of American Lawyer magazine’s rankings. Any private employer with at least 500 full-time U.S. employees could also ask to be included.

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Target, gay rights supporters at odds over how to settle dispute

Gay marriage proponent who urged halt to Prop. 8 enforcement dies

-- Tiffany Hsu

Photo credit: Felipe Dana / Associated Press

Occupy movement's next stop? Foreclosed homes.

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After being evicted from parks and public spaces, the Occupy movement is set to move into foreclosed homes.

Organizers said Tuesday that they plan to help families across America fight foreclosure and eviction next week by "occupying" those properties. Some of the families will be moving back into their vacant properties, while others will resist eviction, said Peter Kuhns, an organizer with the Alliance of Californians for Community Empowerment, which is organizing some of the actions in Southern California.

“The original intent of Occupy Wall Street was to protest the excess of the big banks and Wall Street banks, so it seems like a pretty natural step for people to protest foreclosed properties,” Kuhns said. “Foreclosures are one of the biggest aspects of the economic crisis created by Wall Street bankers.”

Protesters also plan to disrupt foreclosure auctions across the country, where troubled homes are sold to investors and other cash buyers or repossessed by lenders. A website for the actions has been created, detailing in videos the histories of some homeowners facing foreclosure.

More than 30 foreclosed properties will be declared as "occupied" Tuesday, Kuhns said.

At least two of the homes will be in Southern California -- one in Los Angeles County and another in the Inland Empire, Kuhns said.

This is not the first incident of homeowners resisting foreclosure led by the group. Rose Gudiel, a homeowner in La Puente, refused to leave her property in September despite an eviction order, insisting she qualified for a loan modification. She ultimately won that modification.

RELATED:

Banks' foreclosure activity picks up

Many Americans say they will have to work until they're 80

Victims of improper foreclosure practices can submit claims

— Alejandro Lazo
Twitter.com/alejandrolazo

Photo: Rose Gudiel, who purchased a home in 2005 in La Puente, fought eviction with family members. Credit: Michael Robinson Chavez / Los Angeles Times

Fed action won't stave off threats to euro or global economy

GetprevThe coordinated action by the Federal Reserve and five other major central banks will help dollar-strapped European banks, but analysts said it doesn’t address the fundamental problems threatening the breakup of the euro and the global economy.

The Fed, with the European Central Bank, the Bank of Japan and three others, jointly announced Wednesday that they would offer cheaper access to dollars in an attempt to quell growing fears of a global funding crunch.

The Fed said the move, which expands on a joint effort by the central banks first announced in September, was intended to "ease strains in financial markets" and mitigate the resulting effects of a credit squeeze for businesses and households.

The announcement gave an immediate huge lift to European markets, and U.S. stocks surged. The euro rose against the dollar.

The markets also got a boost by a separate announcement by the People’s Bank of China, which announced a plan to inject more cash into its economy by lowering bank reserve requirements by half a percentage point. It was Beijing’s first monetary easing in three years and comes amid signs of economic slowing in the world's second-largest economy.

The Fed and other central banks’ action lowers the cost of so-called dollar swap lines by a half-percentage point, a move that would likely increase the flow of cash to European lenders. The new pricing would take effect next Monday.

As the debt crisis has intensified, European banks have seen a dwindling of dollar funding as vital sources such as U.S. money market funds have been reducing their exposure to the continent’s lenders.

“The open market used to be a cheap source of obtaining dollar funding by European banks, but this is becoming more economically unviable,” said Enam Ahmed, senior economist at Moody’s Analytics in London. “Banks are responding by reducing their dollar assets in a bid to raise dollar funds,” which has resulted in increasing evidence that European banks are pulling back from dollar-funded projects around the globe and raising the risk of a credit crunch.

“This action would reduce some of the strains in the global financial system,” he said.

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Many Americans say they will have to work until they're 80

Retire-hammock-SpencerWeiner-LAT
Forget about retiring at age 55. Or 65. Or perhaps even 75.

One-quarter of middle-class Americans fear they will have to work until they're at least 80 years old to afford a comfortable retirement (if "retirement" is even the right word, given that many of these people may never actually retire).

That conclusion, in a survey released Wednesday by Wells Fargo & Co., found that nearly three-quarters of Americans expect to continue working into what long has been retirement age. A little more than half of those said they'll need to work to pay their bills, while the rest said they want to keep working.

The survey was the latest of many showing that Americans are dangerously unprepared for retirement. With only limited savings, many people are realizing they must work much longer, must dramatically scale back their lifestyles, or both.

More than half of middle-class Americans in the Wells Fargo survey said say they must slash their current spending "significantly."

The average person has squirreled away a mere 7% of their hoped-for retirement savings -- a median of just $25,000 versus a desired goal of $350,000, according to the survey. Three in 10 people in their 60s have less than $25,000, suggesting they'll have no choice but to live on Social Security.

The Wells Fargo survey painted a more dire picture than most other polls, which typically pin the worst-case retirement age in the mid-to-late 60s.

But pessimism may be a sign of the times. A new survey by Yahoo Finance found that 41% of people ages 18 to 64 feel the American Dream is "out of reach." The poll found that 37% of people have no retirement savings, and more than half of them have socked away nothing for their children's college educations.

The specter of having to work until age 80 raises a host of issues, including the risk that illness could force many people to drop out of the workforce. And in an era of corporate cutbacks, even healthy  people could be pushed out of their jobs through layoffs or buyouts.

“The fact that the vast majority of middle-class Americans expect to work well past the traditional retirement age has significant societal and economic implications,” said Joe Ready, director of Wells Fargo's institutional retirement and trust unit.

The survey of 1,500 Americans was conducted from early August to late September.

RELATED:

Nest egg should be 10 times your annual salary, study says

Workers are more pessimistic about retirement, study finds

Baby boomers prize financial certainty above all else, survey shows

-- Walter Hamilton

Photo: Americans may not have much time to lounge in hammocks in old age.Credit: Spencer Weiner/Los Angeles Times

 

Raj Rajaratnam to pay record $93 million in insider-trading case

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After receiving an 11-year prison sentence, Raj Rajaratnam is now getting the bill for his insider-trading misdeeds.

A judge today ordered the once-celebrated Wall Street financier, who was convicted in May of spearheading a massive insider-trading scheme, to pay a civil penalty of nearly $93 million. That comes on top of an earlier $10-million criminal fine and forfeiture of $53.8 million in ill-gotten gains.

Rajaratnam's total tab: $156.6 million.

Both the prison sentence and the $92,805,705 civil penalty are the largest ever in an insider-trading case.

“The penalty imposed today reflects the historic proportions of Raj Rajaratnam’s illegal conduct and its impact on the integrity of our markets,” Robert Khuzami, enforcement chief at the Securities and Exchange Commission, said in a statement.

The SEC alleged that Rajaratnam and more than two dozen others who have been caught up in a massive illicit-trading dragnet garnered illicit profits (or avoided losses) of more than $90 million through improper trading in at least 15 publicly traded companies.

The one-time hedge-fund kingpin was found guilty May 11 of 14 counts, including nine for securities fraud and five for conspiracy to commit securities fraud.

RELATED:

Raj Rajaratnam sentenced to 11 years for insider trading

Galleon hedge fund billionaire Raj Rajaratnam found guilty in insider trading case

Former Goldman Sachs director Rajat Gupta arrested

-- Walter Hamilton

Photo: Raj Rajaratnam leaving federal court after his sentencing last month. Credit: Peter Foley/Bloomberg

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