People enter the Goldman Sachs Group Inc. global headquarters, also known by its address as 200 West Street, in New York's lower Manhattan, April 19, 2010.

WASHINGTON | Thu Aug 9, 2012 9:45pm EDT

WASHINGTON (Reuters) - The U.S. Justice Department said it will not pursue criminal charges against Goldman Sachs Group Inc or its employees related to accusations that the firm bet against the same subprime mortgage securities it was selling to clients.

The decision not to prosecute Goldman, a firm held up by critics as a symbol of Wall Street greed during the 2007-2009 financial crisis, highlights the difficulty in prosecuting crisis-related cases.

Few expected the bank to face criminal charges, but in April 2011, U.S. Senator Carl Levin asked for a criminal investigation after the subcommittee he leads spent more than a year looking into Goldman.

The accusations were aired in a heated 2010 Congressional hearing in which Levin grilled Goldman Chief Executive Lloyd Blankfein for hours about whether it was morally correct for the firm to sell its clients products described internally as "crap".

"The department and investigative agencies ultimately concluded that the burden of proof to bring a criminal case could not be met based on the law and facts as they exist at this time," the Justice Department said in a statement late on Thursday.

The DOJ does not typically make public statements when it concludes an investigation.

Neil Barofsky, a former watchdog for the U.S. government's financial system bailout in 2008, said the announcement was a stark reminder that no individual or institution had been held meaningfully accountable for their role in the financial crisis.

"Without such accountability, the unending parade of megabanks scandals will inevitably continue," said Barofsky, who has been an outspoken critic of the government's response to the financial crisis.

In a brief statement emailed to Reuters, a Goldman Sachs spokesman said: "We are pleased that this matter is behind us."

A Levin aide had no immediate comment.

In a related civil case, Goldman settled with the U.S. Securities and Exchange Commission for $550 million in July 2010, without admitting wrongdoing.

The SEC, in one of its premier financial crisis cases, said Goldman failed to tell investors the Paulson & Co hedge fund helped choose and bet against the subprime mortgage-backed securities underlying an investment product named Abacus.

The SEC is still pursuing a civil complaint against Fabrice Tourre, a Goldman vice president involved in the Abacus deal.

Separately on Thursday, Goldman said the SEC had dropped an investigation into the firm's role in selling a different $1.3 billion subprime mortgage-related deal arranged in 2006.

TARNISHED REPUTATION

The Abacus deal was a major focus of the televised hearings held by Levin's subcommittee in 2010. The hearings and a following report from Levin's Permanent Subcommittee on Investigations weighed on Goldman's shares as the firm suffered a reputational hit from the unwelcome spotlight.

Goldman -- dubbed a "great vampire squid" in a 2009 article in Rolling Stone magazine -- has continued to be dogged by criticism, including from its own ranks.

A Goldman Sachs banker in March published a withering resignation letter in the New York Times, calling the Wall Street titan a "toxic" place.

In its release on Thursday, the Justice Department said there was "not a viable basis to bring a criminal prosecution" against Goldman. If new or additional evidence emerged, it could make a different determination, it said.

Prosecuting financial fraud would continue to be a top priority and it highlighted other investigations, including its probe into banks' alleged manipulation of Libor, a widely used benchmark for interest rates.

The SEC has brought a handful of high-profile cases related to the financial crisis, including against former Countrywide Financial Chief Executive Angelo Mozilo and its case against Goldman. But the Justice Department has struggled to bring criminal charges.

The frustration, in part, has been because such charges involve securing evidence that shows beyond a reasonable doubt a defendant intended to break the law.

For example, a federal jury in 2009 acquitted two former Bear Stearns hedge fund managers accused of continuing to push souring investments as sound.

Jurors said prosecutors did not prove the case, which relied on e-mail evidence, beyond a reasonable doubt. Since then, the Justice Department has brought few major prosecutions tied to the subprime crisis.

In January, President Barack Obama announced a new task force to investigate misconduct that fueled the financial crisis, and the Justice Department has said it has issued more than a dozen civil subpoenas and has multiple inquiries underway.

So far, no cases have come out of that effort, and some critics have dismissed the task force as an election-year stunt.

(Reporting by David Ingram and Aruna Viswanatha, Writing by Karey Wutkowski; Editing by Gary Hill and Richard Pullin)

View the original article here

* Jan-June net profit $312 mln, beats consensus

* Core operating profit falls 22 pct, Europe weak

* Shares up 3 percent ahead of results

HONG KONG, Aug 9 (Reuters) - Supply chain manager Li & Fung Ltd, whose global distribution and trading centres make it a useful barometer of consumer sentiment, reported its half-year core operating profit slipped by more than a fifth due to a slower-than-expected turnaround of its LF USA unit and weak demand in Europe.

The Hong Kong-based group, which manages supply chains for major retailers such as Wal-Mart Stores Inc and Target Corp, said, however, that net profit rose by a third as it booked write-backs on two 2010 acquisitions.

Analysts had predicted that U.S. retailers would be actively re-stocking as consumer confidence improves, boosting top-line growth at Li & Fung this year, but latest data showed spending by consumers fell in June for the first time in nearly a year.

January-June net profit rose to US$312 million from a restated $235.5 million a year ago, beating an average forecast for $272.4 million from five analysts polled by Thomson Reuters. Li & Fung reports every six months in U.S. dollars. Core operating profit fell 22 percent to $221 million.

The company, valued at $16.7 billion, was founded early last century as a trader in porcelain, jade and silk. It now provides one-stop supply chain management - from product design, raw material sourcing and manufacturing to shipping and wholesale.

It is halfway through an ambitious 3-year growth plan and aims to expand its sourcing network to generate higher profits.

In a statement, the company said that while first-half core operating profit was relatively weak, the group was "very focused on taking the necessary steps to improve the second-half results and set the stage for 2013, the last year of its current three-year plan."

U.S. contributions to revenue for Li & Fung are the lowest ever at 60 percent, while Europe's is at a 5-year low at 21 percent as of end-December, Thomson Reuters data shows.

Li & Fung employs more than 28,000 staff worldwide and has a sourcing network of over 15,000 suppliers. The United States and Europe traditionally account for about 90 percent of its business.

The company said in May that its orders had not been affected by a slowing China economy, and it expected China to remain its main sourcing market over the next three years.

EARNINGS REVISED

Analysts have revised down their full-year Li & Fung earnings estimates on concern that high operating costs will keep margin growth in check. They say Li & Fung will have to rely on acquisitions to meet its targeted core operating profit of $1.5 billion in 2013.

Li & Fung's January-June core operating profit margin fell to 2.4 percent from 3.2 percent.

The company is seen as a potential bidder for Los Angeles-based J Brand, a women's apparel maker which hired Morgan Stanley to help it explore its strategic options, including a sale or an initial public offering.

Last month, analysts at Citi raised longer-term concerns over Li & Fung losing customers after U.S. clients such as children's clothing firm Carter's Inc and Gymboree Corp moved towards direct sourcing.

Eleven of the 20 analysts covering Li & Fung rate the stock a 'buy' or 'strong buy', with four recommending investors 'sell' the stock, according to Thomson Reuters data.

Li & Fung shares have risen around 17 percent since hitting a 9-month low late last month. The stock ended up 3.1 percent at a 13-week closing high of HK$15.98 ahead of the results on Thursday.

View the original article here

* Shareholder equity ratio at 2.2 pct in June vs 4.6 pct in March

* Keeps full-year operating profit outlook at 50 bln yen

* Shares drop 2.2 pct ahead of results

TOKYO, Aug 9 (Reuters) - Japan's Olympus Corp suffered a further deterioration in its ability to meet financial obligations as quarterly earnings slumped, adding pressure on the scandal-hit company to enter into a capital deal.

Shareholders' equity fell to 2.2 percent of total assets in June from 4.6 percent in March, the company said on Thursday. That takes Olympus further away from the 20 percent level widely regarded by analysts as indicative of financial stability.

Olympus needs a capital injection before its business year ends in March 2013, Senior Executive Managing Officer Yasuo Takeuchi told reporters at a briefing.

The 93-year-old manufacturer of cameras and medical equipment has held talks with several Japanese companies including FujiFilm Holdings and Sony Corp on a capital tie-up as it tries to mend its severely depleted balance sheet hit by a massive accounting scandal last year.

Olympus booked a 60 percent slump in operating profit to 2.12 billion yen ($27.05 million) for April-to-June as an operating loss at its camera division and a stronger yen offset a profit gain at its medical equipment division.

The company kept its full-year operating profit forecast at 50 billion yen.

Olympus posted a net loss of 49 billion yen in the year ended March 31, after admitting in November to a decade-long scheme of falsifying financial statements and hiding investment losses.

The company has promised investors it will boost its shareholders' equity ratio to 30 percent in five years. To raise it to 10 percent, Olympus said it needs to find some 50 billion yen in fresh capital.

Sources familiar with the matter have said Olympus is in final talks with Sony to accept a cash injection in return for a stake, while medical device maker Terumo Corp said last month it is seeking to form a joint holding company with Olympus as part of a 50 billion-yen capital infusion plan.

Olympus maintained on Thursday that it is in talks with several companies on financial support.

In an unusual turn of events, Terumo slapped its potential partner with a lawsuit last week for failing to disclose its accounting fraud before signing a business and capital tie-up with the medical equipment maker seven years ago.

In a regulatory filing on Thursday, Olympus said it expects creditors to continue providing loans despite the fact that misreported financial statements in the past meant it had violated covenants on some loans.

Shares in Olympus settled 2.2 percent lower before the earnings announcement. Tokyo's benchmark Nikkei average rose 1.1 percent. ($1 = 78.3600 Japanese yen) (Reporting by Mari Saito; Editing by Ryan Woo)

View the original article here

TOKYO | Thu Aug 9, 2012 2:42am EDT

TOKYO Aug 9 (Reuters) - Olympus Corp reported a 60 percent fall in quarterly operating profit and a deterioration in a key barometer of its ability to meet financial obligations, adding pressure on the scandal-hit Japanese company to enter into a capital deal.

For the April-to-June quarter, operating profit was 2.12 billion yen ($27.05 million), the company said on Thursday. Shareholders' equity fell to 2.2 percent of total assets.

The drop in the shareholders' equity ratio from 4.6 percent in March further pushes Olympus away from the 20 percent level widely regarded by analysts as indicative of corporate financial stability.

The 93-year-old manufacturer of cameras and medical equipment, has been in talks with several Japanese companies including FujiFilm Holdings on a capital tie-up as it tries to mend its severely depleted balance sheet hit by a massive accounting scandal last year.

View the original article here