Ex-Microsoft exec charged with insider trading

NEW YORK (CNNMoney)

The executive, Brian Jorgenson, 32, worked in Microsoft's corporate finance and investment division, according to the Securities and Exchange Commission, which is bringing the civil charges against him and friend Sean Stokke. The two also face up to 20 years in jail on federal criminal charges in U.S. District Court in Washington State. Authorities said they hoped to make enough money on the trades in order to start their own hedge fund.

Microsoft said Jorgenson was fired once the insider trading was discovered, and that it cooperated with authorities on the investigation. A spokesman said the company has "zero tolerance" for insider trading.

Jorgenson admitted to his wrongdoing in an extensive interview with the Seattle Times that was published Thursday morning.

He said it was simply greed that drove him to give information to Stokke, whom Jorgenson described in the article as an experienced day trader. Jorgenson told the paper that he did not know how much money his friend made on the trades, but that he personally received only $40,000 of the illegal profits.

Related: Fortune - The gray art of insider trading

The first illicit trade allegedly came after Jorgenson alerted Stokke about Microsoft's plan to invest in Barnes & Noble's Nook electronic book unit. The $300 million investment, announced in April 2012, sent shares of Barnes & Nobl (BKS, Fortune 500)up more than 50% in a single day and netted the pair nearly a $185,000 profit, according to the complaint.

Then in July 2013, Microsof (MSFT, Fortune 500)reported earnings that fell well short of forecasts, sending shares down 11%. Authorities said that the pair made more than $195,000 on trades betting against Microsoft;s shares.

Finally, the pair made about $13,000 on trades in October when Microsoft reported better than expected earnings.

Attorneys for Jorgenson and Stokke were not available for comment Thursday.

Jorgenson told the paper that he knew the trades were wrong, but that he saw news stories about how members of Congress were allowed to pass on the sort of insider information that he couldn't.

"I told myself, 'Members of Congress can do it,'" he told the paper. He said he used some of the $40,000 to pay tuition at a Christian elementary school for two of his four children.

First Published: December 19, 2013: 5:15 PM ET

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Mortgage servicer accused of 'systemic misconduct'

Richard Cordray, director of the Consumer Financial Protection Bureau.

NEW YORK (CNNMoney)

Mortgage servicers like Ocwen handle customer service and payment collection from millions of borrowers on behalf of lenders like banks and investment firms. Ocwen -- which specializes in subprime and delinquent loans -- is the fourth-largest servicer in the U.S., but doesn't own any loans itself.

Ocwen has been ordered to refund $125 million to borrowers who lost their homes to foreclosure. The company is accused of a wide range of violations including incorrectly calculating interest rates, charging unjustified fees, misleading consumers about foreclosure alternatives and submitting legal documents without confirming their accuracy.

"Deceptions and shortcuts in mortgage servicing will not be tolerated," Consumer Financial Protection Bureau head Richard Cordray said Thursday. "Ocwen took advantage of borrowers at every stage of the process."

Cordray estimated that as many as 185,000 consumers may have been unlawfully foreclosed upon by Ocwen; should all of those consumers qualify for refunds, they would get only about $676 each.

Related: JPMorgan sues FDIC over Washington Mutual

Ocwen must also implement $2 billion worth of loan principal reduction over the next three years to borrowers who are currently underwater on their mortgages.

Because those loans are owned by third-party investors, Ocwen won't take a financial hit on these reductions beyond $2.3 million in administrative expenses. The company said in a securities filing Thursday that the reductions would be designed to give investors a better return than if struggling borrowers remained underwater and at risk of default.

The CFPB brokered the agreement along with authorities in 49 states and the District of Columbia. It requires Ocwen to implement new consumer safeguards and subjects it to oversight from a federal monitor.

Ocwen said Thursday that the agreement was "in alignment with the same ultimate goals that we share with the regulators -- to prevent foreclosures and help struggling families keep their homes."

The government reached a similar settlement last year over foreclosure abuses with the nation's five largest mortgage lenders: Bank of America (BAC, Fortune 500), Citigroup (C, Fortune 500), JPMorgan (JPM, Fortune 500), Wells Fargo (WFC, Fortune 500) and Ally Financial (the former GMAC). Unlike Ocwen, those firms both made mortgage loans and serviced them.

Ocwen paid Ally $585 million earlier this year to purchase servicing rights on mortgages with unpaid balances totaling $85 billion as of January.

First Published: December 19, 2013: 5:24 PM ET

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Katie Couric to end daytime television show

Katie Couric says her show will end after the current television season finishes in the summer.

NEW YORK (CNNMoney)

The television personality, once beloved as the co-host of NBC's "Today" show, said Thursday that she would not continue her daytime talk show, "Katie," after the current television season ends in the summer. The announcement reflected the fact that her show, while successful by some measures, had fallen short of the high expectations that Couric and others had set for it.

Couric and the company that syndicated "Katie," the Disney-ABC Television Group, said they had "mutually agreed" not to continue the show.

Once depicted, if not by Couric and Disney (DIS, Fortune 500) then by the press, as a logical successor to "The Oprah Winfrey Show," "Katie" suffered from behind-the-scenes disagreements about content. Couric, for example, was said to want a more topical, news-oriented hour of television, while Disney executives wanted softer subject matter that was more in line with other daytime programming.

An even bigger point of contention was the cost of the show. "Katie" fared better than most daytime talk shows when it premiered in the fall of 2012; in fact, it garnered higher ratings than any of the other new entrants that year. But it also started with a far higher license fee from the local television stations that carried it -- and some of the stations wound up suffering from buyer's remorse.

Related: Robert Downey: A futurist knows

As an ex-daytime talk show host, Couric will have a lot of company -- syndication is a notoriously difficult corner of the television industry. Most of the other shows that debuted at the same time as "Katie" are long gone; the big exception is "The Steve Harvey Show," which has been renewed several years into the future.

Couric's original producing partner was Jeff Zucker, the former NBC Universal (GE, Fortune 500) chief executive, who had previously worked with Couric at the "Today" show. Zucker left "Katie" a few months after it premiered to become the chief executive of CNN Worldwide, a job he formally assumed in January 2013. Shortly after he took over, Zucker poached one of his longtime deputies, Michael Bass, a co-executive producer of "Katie," for a senior vice president position at CNN. Time Warner inc. (TWX, Fortune 500) is the parent company of CNN and CNNMoney.

Speculation about Couric's future with the talk show began when Zucker exited and it peaked in November, when Yahoo announced that Couric would become the "global anchor" for Yahoo News, a newly-created role for her. At the time talks were still ongoing about "Katie," but the Yahoo (YHOO, Fortune 500) deal suggested that she was eying the exit.

Related: Hulu to pass the billion-dollar mark

She will start at Yahoo in January and will continue to host new episodes of "Katie" through June. (Determining now that the talk show will not return next fall allows local television stations to decide what other show to put in its place.)

Couric wrote on Twitter on Thursday evening, "Incredibly proud of what we've accomplished with @KatieShow. Many thanks to my talented, hard-working staff & still so much to look fwd to!"

First Published: December 19, 2013: 8:53 PM ET

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IPO market expected to stay hot in 2014

The IPO market has bounced back this year and experts say 2014 will bring more of the same.

NEW YORK (CNNMoney)

In 2013, a total of 222 companies went public in the United States, the largest number of new listings since 2000, according to Renaissance Capital, a firm that specializes in IPO research.

While it was the biggest year since the technology bubble burst, the IPO market is still a far cry from 2000, when more than 400 companies went public.

The number of public listings this year is "only slightly above average," said Kathy Smith, principal at Renaissance. "We're not setting any records."

This year's IPO class raised more than $54 billion, compared with nearly $100 billion for the new stocks in 2000. Still, the IPO market has come a long way since the dark days of 2008, when only 31 companies went public in deals that raised a mere $24.5 billion.

Smith expects the market to stay hot in the first quarter of 2014, based largely on how well newly issued shares have performed after their first day of trading.

The average IPO has gone up more than 30% this year from its offering price, the best rate of return since 2004. And 23 companies have doubled from their IPO price. Twitter (TWTR), the most talked about IPO of the year, is one of them. The social network raised $1.8 billion when it went public in November.

Related: Investors cheer Hilton's IPO

So what's in store for next year? Tim Keating, chief executive of Keating Capital, a fund that specializes in making pre-IPO investments, said investors can expect "more of the same" in 2014.

Keating said regulatory changes under the JOBS Act have helped remove some obstacles for smaller companies to go public. But the bull market and lack of volatility have been the most important factors behind this year's IPO bonanza.

Companies want to sell shares when stocks are surging and investors are hungry for those new companies that have big growth opportunities. So as long as the broader market doesn't tank, IPO issuance should remain strong.

Related: AMC offers stock to loyal movie fans

What's in the pipeline? The cream of next year's IPO crop could be Chinese e-commerce giant Alibaba. However, it's unclear where the company will trade.

Alibaba is in talks with officials in Hong Kong to list on Asia's second-largest stock market. But the company has also explored a potential listing in New York or London.

IPO activity in China is set to take off in 2014, after the market had been frozen for most of 2012, according to Ringo Choi, Asia Pacific strategist at Ernst & Young.

Related: China's bad debt breaks Hong Kong IPO logjam

In the United States, Chrysler is expected to return to the public market sometime in the first quarter. The third-largest U.S. automaker, which went bankrupt in 2009, could have a market value of about $30 billion, according to Smith.

Investors are also looking towards Silicon Valley for hot IPOs, said Keating. Specifically, he mentioned mobile payments provider Square, as well as file storage companies DropBox and Box. Photo-sharing website Pinterest is another tech company that some think may look to go public.

But IPOs are often very risky. And this year's new stocks seem more speculative than the IPOs of recent years. While many newly public companies are not yet profitable, there was an unusually large number of money-losing companies that made their debut this year.

Nearly two-thirds of this year's IPO class have posted losses in the 12 months before going public, according to research from IPO expert and University of Florida Professor Jay Ritter. That compares with an average of 47% over the past decade.

So it will be interesting to see if investors continue to embrace IPOs that offer a lot of potential but little in the way of profits. That didn't end well in 2000.

First Published: December 19, 2013: 4:34 AM ET

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Collector car auctions now a $1 billion business

NEW YORK (CNNMoney)

Roughly $1.3 billion worth of automobiles will have been sold at collector car auctions in the United States in 2013, according to data from the collector car insurance company Hagerty Insurance.

In 2004, that figure was around $282 million, or less than $350 million when adjusted for inflation, according to Hagerty. That's a more than 270% increase in a decade.

Experts say the huge increase is not only due to more cars being sold but also the fact that those cars are going for higher prices. The average price of a car sold at a collector auction has risen from $33,000 in 2004 to $61,000 this year. The sheer number of cars sold at auction has gone from 8,600 to 19,600 over that time, according to Hagerty.

Because Hagerty only counts U.S. auctions its figure doesn't include, for instance, the world-record sale of a 1954 Mercedes-Benz race car for $30 million at a July auction in England. It does, however, include the $27.5 million sale of a 1967 Ferrari convertible in California in August. That marked highest price ever paid at auction for a Ferrari.

Gallery - Future collectible cars unveiled at Pebble Beach

Also left out of this figure are all the private person-to-person transactions which constitute the vast majority of collectible car sales. Every year, roughly 80% of all collector car sales happen between individuals and not at public auctions, experts say, but because of their private nature it's virtually impossible to gather reliable data on those transactions.

Auction companies and experts in the field cite a number of factors driving the huge increase in auction sales including an influx of international buyers and an increasing number places and events at which buyers can drive, display and enjoy classic cars.

"This is really kind of a lifestyle hobby," said Alain Squindo, vice president of RM Auctions. "There are races, rallies, concours events."

There are classic car events of some sort taking place virtually every weekend, he said. RM Auctions is the company that sold that $27.5 million Ferrari at Pebble Beach this year.

Increasing globalization is also driving prices higher said Craig Jackson, president of the auto auction company Barrett-Jackson.

"It used to be the U.S. and Europe trading cars, then Japan came in," he said. "Now there are big collectors in Asia and Russia which are creating more demand."

Many buyers are also seeing classic cars as an alternative "asset class" in which to invest money, said David Gooding, president of the auction firm Gooding & Co.

"A lot of people say they'd rather put it into some sort of hard asset," he said.

A similar trend has been driving prices in the market for high-end collectible works of art, said Alan Bamberger, a consultant at San Francisco-based ArtBusiness.com.

"There's a lot of people with a lot of money and not enough places to put it," he said.

First Published: December 19, 2013: 5:15 AM ET

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Stocks draw breath after taper gains

Click chart for in-depth premarket data.

NEW YORK (CNNMoney)

U.S. stock futures showed little movement Thursday morning ahead of the opening bell, though there was a slight negative bias in the markets.

U.S. stocks surged Wednesday after the Federal Reserve announced a modest scaling back of its stimulus program. The program was launched in September 2012 and involved pumping $85 billion per month into the markets through bond purchases.

Beginning in January, the Fed said it will scale the purchases back to $75 billion per month.

The Fed's decision to wind down -- or taper -- its stimulus program can be interpreted as a sign the economy is getting back on its feet and no longer needs as much assistance from the central bank.

Related: Federal Reserve finally tapers its stimulus

The Dow Jones industrial average jumped more than 290 points after the announcement, closing at an all-time high. The S&P 500 and the Nasdaq also moved substantially higher, with the S&P closing at a record.

The Fed has been buying bonds since 2008 and many investors say the liquidity boost has helped drive global stock markets higher.

Related: Fear & Greed Index

Looking ahead to Thursday, the U.S. government will release its weekly report on initial jobless claims at 8:30 a.m. ET. At 10:00, the National Association of Realtors will issue its monthly report on existing home sales and the Philadelphia branch of the Federal Reserve will release its monthly manufacturing survey.

In corporate news, firms including Darden Restaurants (DRI, Fortune 500), Carnival (CCL), KB Home (KBH) and Rite Aid (RAD, Fortune 500) are scheduled to report quarterly results before the opening bell, while Nike (NKE, Fortune 500) is up in the afternoon.

Related: IPO market expected to stay hot in 2014

Looking at equity markets around the world, European markets were playing catch-up with the U.S. in morning trading. Most major European indexes were rising by roughly 1.5%.

Asian markets ended with mixed results. Japan's Nikkei surged 1.7% to close at a six-year high, while Australia's ASX All Ordinaries index jumped 2%. But the main Chinese indexes dipped down by roughly 1%.

First Published: December 19, 2013: 5:20 AM ET

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Potential credit card breach at Target investigated

NEW YORK (CNNMoney)

Secret Service spokesman Brian Leary confirmed the investigation Wednesday evening. He declined to comment further.

Leary's comments came following a report from respected security researcher Brian Krebs that Target had suffered a data breach around the time of Black Friday last month "potentially involving millions of customer credit and debit card records."

Target (TGT, Fortune 500) did not respond to requests for comment Wednesday evening.

Krebs reported that the breach apparently targeted customers at stores rather than online shoppers. The thieves reportedly gained access to data on the magnetic strips of shoppers' cards, potentially allowing them to produce counterfeit versions.

The thieves could also potentially withdraw cash from ATMs using counterfeit debit cards if they were able to intercept PIN data from Target, Krebs said.

American Express (AXP, Fortune 500) and Discover (DFS, Fortune 500) both said they were "aware" of the incident and had fraud controls in place.

"This is an ongoing investigation," an AmEx spokeswoman said, declining to comment further.

MasterCard (MA, Fortune 500) referred questions to Target; Visa (V, Fortune 500) did not respond to requests for comment.

Target competitor TJX Companies (TJX, Fortune 500) -- which operates discount retail chains T.J. Maxx and Marshalls -- fell victim to one of the worst security breaches ever back in 2006, when hackers gained access to at least 94 million domestic and international accounts containing credit card, debit card, and check information.

CNNMoney's Greg Wallace, Julianne Pepitone and James O'Toole contributed to this report.

First Published: December 18, 2013: 7:54 PM ET

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World markets set for rally following Fed announcement

NEW YORK (CNNMoney)

Some market watchers had been holding out hope that the Fed would announce tapering after Fed chairman Ben Bernanke's tenure ends in January. But the job market has been improving and Bernanke told reporters on Wednesday that he and other Fed officials -- including current vice chair and Bernanke successor Janet Yellen -- believe the economy will continue to create jobs.

The Fed said it will reduce its monthly purchases of mortgage-backed securities and U.S. Treasuries to $75 billion per month, down from $85 billion, beginning in January.

U.S. stocks surged on the news Wednesday afternoon, with the Dow and S&P 500 finishing at new closing highs. Japan's Nikkei index was up 1.6% in morning trading Thursday, while Australia's ASX All Ordinaries index was up 1.5% and Taiwan's TSEC 50 rose 0.7%.

Related: Why tapering could be good for stocks

The Fed has been buying bonds since 2008 and many investors say the liquidity boost has been the main driver of the bull market in stocks since 2009. The Fed's decision also can be interpreted as a sign the economy is back on its feet and no longer needs as much stimulus as it once did.

Bernanke said Wednesday that the Fed could take "further measured steps" to reduce its holdings, but he stressed that it will continue buying bonds "at a rapid pace" after the taper. He also said the Fed expects to hold interest rates at historic lows past the point when the unemployment rate falls to 6%.

First Published: December 18, 2013: 8:41 PM ET

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Yuan gains stature as China loosens grip

The yuan has gained this year to trade at record highs against the U.S. dollar

HONG KONG (CNNMoney)

So far this year, the yuan has gained 3% against the dollar, and that trend may well continue -- especially as Beijing seeks to bolster the currency's global role.

Historically, China has kept tight control of the yuan, limiting money flows in and out of the country. The government has even held down the exchange rate as a way to boost manufacturing and exports, prompting allegations of currency manipulation and criticism of its murky markets.

Related story: Investing in China just got easier

But change is afoot. China has loosened some foreign investment restrictions in recent months and made the yuan more widely accessible outside its borders.

The UK became the yuan's newest offshore hub earlier this year, with the British pound the fourth currency to trade directly against the currency after the U.S. dollar, Australian dollar and Japanese yen.

The government has also expanded a program allowing approved foreign firms to invest in mainland stocks, and relaxed the eligibility criteria.

Analysts have cheered China's steps to loosen its grip, and are increasingly optimistic as government officials tout measures to make the yuan -- or renminbi -- freely tradable, and to give markets a bigger role in the economy.

Related: China pledges greater role for markets

"We have also seen more official rhetoric in favor of a market-oriented renminbi," said HSBC's Paul Mackel. "In [light] of such developments, it is hard to see policy makers being more resistant toward a stronger renminbi."

Dealing in the yuan has increased, making it the the ninth most traded currency in the world, according to the Bank for International Settlements.

Related story: Europe, China agree currency deal

A pilot free trade zone in Shanghai that opened in September could also lead to more changes -- further bolstering the yuan's popularity.

Despite these moves, the government still hasn't said when it might allow companies and individuals to trade the yuan across China's borders without major barriers.

Some experts say that step is crucial if Beijing wants the yuan to become a global currency. China will also have to consider a fully market-driven exchange rate.

First Published: December 18, 2013: 10:49 PM ET

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Maryland: A minimum wage battleground

Officials are optimistic a minimum wage increase in Prince George's County won't scare away businesses like the Tanger Outlets, which just opened there.

NEW YORK (CNNMoney)

The Prince George's County executive on Tuesday signed into law an increase that brings the minimum wage there to $11.50 in 2017. Nearly identical legislation was signed last week in neighboring Montgomery County. A similar increase is headed to Washington DC Mayor Vincent Gray's desk after the district council voted, also on Tuesday, to approve the measure.

Officials said if the two Maryland counties hadn't acted in tandem with local lawmakers in Washington, it's likely the Prince George's County increase wouldn't have passed.

The coordinated effort is meant to "eliminate the competitive disadvantage" if one county acted and another did not, explained Councilmember Andrea Harrison.

Related: City votes to raise minimum wage to $15

Minimum wage in the two Maryland counties is currently the federal minimum of $7.25 and will increase gradually over four years. In Prince George's, the first step is to $9.55 next October. Washington is considering an increase phased in over three years.

Prince George's County has long struggled to attract major retailers. County executive Rushern Baker is hopeful his efforts can turn the tide and points to the recently opened Tanger Outlets, which brought dozens of retailers to National Harbor, Maryland.

Baker says he's always thought the minimum wage was too low, but without the regional increase, his county would have been an outlier and a tougher sell.

Going forward, Baker says he'd like the state to "step in and raise the minimum wage so no jurisdiction in the state of Maryland has a competitive disadvantage." Ideally, he said, the federal government would raise the minimum wage nationwide.

Related: The fight for higher pay

Conventional wisdom says increasing wages leads to job losses, but business groups weren't opposed to Prince George's County's increase, said David Harrington, president and CEO of the county chamber of commerce

"Clearly there's a need for an increase, but what is the level to which businesses can still create jobs even while paying a higher wage," he told CNNMoney.

The law doesn't include some exemptions the business community wanted -- like one for seasonal workers -- but it does exempt workers under age 19.

That is a small portion of the low-wage workforce, according to estimates from the left-leaning Economic Policy Institute, which supported the increase.

"We estimate that only about 10 percent of the workers earning less than $12 per hour in Montgomery County are teens," Economic Policy Institute analyst David Cooper advised the county council.

Related: I work four jobs and I'm still struggling

When state lawmakers return to Annapolis in January, they'll be under pressure from Prince George's and Montgomery County officials who want to see an increase statewide -- and even nationwide.

Minimum wage research has disarmed critics at the state house, said Matthew Crenson, professor emeritus of political science at Johns Hopkins University.

"People [are] worried that an increase in the minimum wage would damage Maryland's position in the regional economy," he said.

Several attempts in the state legislature to increase the minimum wage failed last year, but Crenson said next year could be different.

"I think it's very likely that some legislation will pass this session," he said. Several legislative leaders and Gov. Martin O'Malley, a Democrat, announced they support an increase.

Earlier this month, President Obama called on Congress to pass a minimum wage increase. The current federal level of $7.25 took effect in 2009.

First Published: December 17, 2013: 3:57 PM ET

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