GLENCORE IS SAID TO PLAN DEBT INVESTOR MEETING | Glencore will meet debt investors on Wednesday, , citing people with knowledge of the matter. They said Barclays would host the meeting in London and that management was also planning one-on-one meetings and conference calls with bond investors.
Glencore, a Swiss miner and trader, has had to reassure investors over its borrowings, even after announcing a $10 billion debt-reduction plan this month. It said on Tuesday that its solvency was not at risk.
Its shares have come under pressure as analysts and investors worry about the company’s heavy debt and the weakness in commodity prices. After a huge plunge in its share price on Monday, its stock rallied on Tuesday after Citigroup analysts suggested that the company should be taken private if the stock market continued not to value it “fairly,”
Citigroup said that the sell-off in Glencore was “overdone” and that it was unlikely that the company’s debt would be downgraded to junk status.
Citigroup is Glencore’s corporate broker and was one of the banks leading its share placement this month.
Glencore had about $29.6 billion in debt as of June 30 and announced this month that it planned to reduce that by about a third by the end of 2016. It has also eliminated its dividend and sold $2.5 billion in shares. It is also considering $2 billion in asset sales in an effort to pare its debt.
UBS FINED OVER PUERTO RICO FUNDS | A Senate panel told Puerto Rican officials arguing for changes in federal laws that the numbers they were using to make their case were too unreliable,
The officials identified federal laws and programs that they said were discriminatory and ought to be changed, but lawmakers were not convinced that help was warranted or that the money would be well spent.
Senator Orrin G. Hatch of Utah, chairman of the Senate Finance Committee, said he sympathized with the island’s plight, but needed to know more about the causes and structure of its debt.
“I want to help you,” Mr. Hatch told them. “I don’t think Puerto Rico is treated fairly. But we have to get really good information in order to help you.”
While this hearing was underway, the Securities and Exchange Commission and the Financial Industry Regulatory Authority, took action for a group of Puerto Rican investors who had lost money in the purchase of mutual funds contained in risky Puerto Rican bonds. They levied fines and restitution of $34 million against UBS Puerto Rico and two of its officers for their handling of the funds and failing to disclose the risks.
UBS was also the underwriter of the bonds.
It had been hired to bring them to market in 2008, but after struggling to sell them on open markets, it packaged them in its mutual funds, which it marketed as a source of retirement income.
This would have been prohibited on the United States mainland, but the federal law governing mutual funds has an exception for mutual funds in Puerto Rico.
UBS did not admit any wrongdoing.
As part of the settlement, UBS will pay $15 million into a fund for harmed investors. Finra required UBS to pay a $7.5 million fine and $11 million in restitution to investors.
At the Senate hearing, the Puerto Ricans told of other federal laws they considered inequitable, particularly those that govern health care for the elderly and the poor. Puerto Rico’s population is older and poorer than the rest of the United States.
THE WAR OVER CORPORATE GOVERNANCE | A war has erupted over what constitutes good governance and it was the mutual funds that emerged victorious in the latest skirmish,
They defeated a move by pension funds to force Bank of America to split the roles of chairman and chief executive. The vote shows the extent of disagreement that there is on corporate governance.
Advocates for separating the jobs say it will lead to better corporate oversight. According to that argument, the chances of the chief executive’s leading the company blindly to ruin are reduced with a chairman to keep them in check. But research has not yet shown that it increases the value of the company.
There is also no evidence of any link between the number of independent directors on a board and a company’s worth.
In the case of Bank of America, pension funds argued that it needed a greater degree of oversight after its reckless maneuvers before the financial crisis led to the destruction of tens of billions of dollars of shareholder value.
They also pointed to the lagging stock price and the fact that Bank of America had defied its shareholders by adopting the joint title.
Mutual funds were more skeptical and eventually swayed the vote.
Although there is no clear party line in corporate governance, there is a corporate governance industry, in which proposals are brought by many investors, which doesn’t necessarily help shareholders, Mr. Solomon says.
“Some investors appear simply to be caught up in the rush of exercising power,” Mr. Solomon writes. “Shareholders are gleefully telling companies that ignored them for decades that they are now in charge.”
ON THE AGENDA | Janet L. Yellen, the Fed’s chairwoman, and James Bullard, the president of the Federal Reserve Bank of St. Louis, will speak at the start of the Community Banking Research and Policy conference at 3 p.m. ADP Research Institute releases its latest national employment report at 9 a.m.
THE DRONE COMPANY READY FOR SPIN-OFF | Robert Wolf, the financier who is a confidant of President Obama, is raising his bet on the drone industry. His advisory firm plans to announce on Wednesday that it is spinning off its drone-services arm into a separate company,
The industry has already attracted Amazon, GoPro and top venture capital firms. Now this business, Measure, is betting that its ability to use the devices to take pictures of farmland and oil rigs will draw interest from a potentially huge number of customers.
Mr. Wolf’s 32 Advisors set up Measure two years ago to provide “drones as a service” — flying them for customers, rather than making them.
“We think that over the next 24 to 36 months, we’ll be able to fulfill something that doesn’t exist around the world,” Mr. Wolf said.
Measure has worked with the American Red Cross to study how the aircraft can bolster rescue and recovery efforts in disaster zones. It has also teamed up with the American Farm Bureau Federation on a tool to calculate how much farmers can save by using drones to scout crops.
Brandon Torres Declet, Measure’s chief executive, and Mr. Wolf have lobbied the Federal Aviation Administration to expand its drone guidelines. They succeeded, gaining permission to fly 324 different aircraft for business uses.
Drone start-ups raised $107 million last year. By June this year, such companies had already surpassed that with $172 million raised, according to data from CB Insights. And analysts estimate the industry could swell to scores of billions of dollars in annual revenue.
Some applications are obvious, says Mike Abbott, a partner at Kleiner Perkins Caufield & Byers, which has put $40 million into a company creating a software platform for drones. Drones can be used to survey land for farms or disaster areas for insurance companies at a fraction of the cost of helicopters. They can replace human inspections for structures like cellphone towers, reducing the risk to workers.
Mr. Abbott says he thinks that drones could later be used as companions for police departments or emergency aircraft on cruise ships.
Investors point out that there are still regulatory hurdles to be cleared — for example, letting operators fly drones out of their field of vision and letting them become the airborne helpers of science fiction.
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EMC Executive Says Breaking Up Is the Wrong Move | The data storage company should not be broken up because there are real revenue synergies that would be put at risk, said David Goulden, chief executive of EMC Information Infrastructure. The hedge fund Elliott Management has been pressuring EMC to sell its stake in the virtualization software maker VMware.
Online Lender Avant Raises $325 Million | Avant, the start-up lender for borrowers with less-than-stellar credit, raised $325 million of equity in a funding round led by the private equity firm General Atlantic that also included JPMorgan Chase.
Rio’s Mayor Decides to Sign Bill Banning Ride-Hailing Services | The mayor of Rio de Janeiro signs a bill intended to ban ride-hailing services like Uber.
I.M.F. Cautions on Concentrated Positions in U.S. Mutual Funds | Underpinning the fund’s worries has been the tremendous increase in bonds issued by large emerging market corporations.
Trump Tax Plan a Triumph of Showmanship Over Common Sense | The plan would greatly reduce the taxes of most business owners, bankers, lawyers and other high income professionals.
Despite Volkswagen Scandal, Europe’s Diesel Habit Could Be Hard to Kick | Drawn by better fuel economy and lower prices, European consumers have long leaned toward diesel, even with the ecological drawbacks.
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