Katharyn notes

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SEC reviews "plain-English" brochures for 1st time

*Review could help SEC craft better questions for advisersBy Suzanne BarlynBALTIMORE, Oct 18 (Reuters) - U.S. securities regulators are taking their first stab at reviewing "plain-English" disclosure brochures that most investment advisers developed earlier this year to comply with new rules.The review could ultimately lead to improvements to questions the Securities and Exchange Commission uses to help advisers make clearer disclosures to clients.These more transparent disclosures could be particularly useful for customers or clients of larger businesses where there are many conflicts of interest, said Daniel Kahl, associate director of the SEC's office of investment adviser regulation, late on Monday.SEC staffers are looking at disclosure documents advisers filed as the agency's Form ADV Part 2, which it amended after a ten-year review. The rules require the roughly 11,000 investment advisers registered with the agency to file, for the first time, a publicly available brochure that includes plain English disclosure about the firm's business. Most advisers had to file the brochure by March 31, 2011.Now the SEC is trying to determine how well those efforts turned out, said Kahl. An initial look revealed that the brochures were "very, very informative," said Kahl, speaking at a conference organized by the National Society of Compliance Professionals, an organization for securities industry compliance officials. Investors can view the brochures on a database available through the SEC's website.Brochures for smaller advisers that served a "targeted" group of clients are easy for laypeople to understand, said Kahl. But brochures for larger, more complex firms revealed "the writing of more lawyers and more conflicts," said Kahl."It's not a criticism, but it's something we need to look at to see if there are areas where we can improve the questions" to elicit clearer responses, he said.EARLY STAGES"We're very much in the early stages of scoping out the project," Kahl told Reuters. The SEC is not looking at every brochure, but could look at potentially hundreds, depending on staffing, he said. The reviews aren't examinations, but an effort to "assess the quality of the disclosure," he said.Determining if disclosures are understandable will depend, in part, on an investment adviser's clients, said Kahl. Disclosures for institutional clients, for example, may be more complex than disclosures for individual investors.There is presently no timetable for completing the project. It is "hard to say" whether recommendations will follow the review, he said. Advisers had to follow 174 pages of directions for writing the brochure. Many were uncertain about how to comply.But even more direction from the SEC may only add to the confusion, especially for firms that offer multiple investment services, said Keith Marks, a partner for Ascendant Compliance Management, a consultancy in Salisbury, Connecticut. "Firms have to look at some broadly based questions and make the effort to apply them," he said.The reviews could also lead to full-blown examinations for advisers with the worst brochures, whom the agency may view as posing a greater risk to investors, said Marks.

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Hong Kong stocks slide as short squeeze ends, China shares weaken

* Support lacking after decreased short-selling: traders* Sinohydro debuts strongly, bucks Shanghai declineBy Clement TanHONG KONG, Oct 18 (Reuters) - Hong Kong stocks fell sharply in thin trade on Tuesday, with short-term investors knocking down Chinese financial, property and material stocks and aiming to retrace most of October's gains after a bout of short covering fizzled out.Support for falling share prices was lacking, as the level of short-selling had dropped significantly following the Hang Seng Index's 16 percent bounce, as of Monday, from a 2-1/2-year low plumbed on Oct 4."The problem now is that nobody is willing to buy at current levels...we rallied quite a bit in the past week, the short squeeze that sustained that rally is over for now," said Alex Wong, Ample Finance Group's director of asset management.The Hang Seng Index closed down 4.3 percent at 18,076.5 points, holding above a gap that formed when the benchmark rose significantly on Sept. 11 -- between the high on Sept. 10 at about 17,800 and the low of Sept. 11 at about 18,041.The China Enterprise Index slumped 5.2 percent, while the Shanghai Composite Index declined 2.3 percent to finish at 2,383.5 points after data on Tuesday showed China's third-quarter growth at the slowest pace in two years.Bucking the broader negative tone on Tuesday was Sinohydro Group , which had built the Three Gorges Dam and made its listing debut in Shanghai. Investors piled into the stock, helping it surge almost 40 percent at one stage.While market watchers said Sinohydro's performance bodes well for future mega-IPOs, they attributed the magnitude of its gains on the day, which spurred a 30-minute mandatory trading suspension, to speculative money.GROWTH-SENSITIVE SECTORS HARD HITChinese material, financial and property counters, among the hardest hit by fears of a sharp slowdown in China's economy in the last quarter, led losses on the day in Hong Kong.Such fears were not undercut by fresh China data which showed that while GDP growth slowed in the third quarter, it remained above 9 percent. To some market-players, the numbers were not strong enough to spawn optimism, and not weak enough to suggest any policy-loosening was imminent. The data prompted some investors bearish on China to liquidate long positions in growth-sensitive sectors.Steel producer Citic Pacific Ltd , the top beta play among Hang Seng Index components, bled 11.8 percent, while China Overseas Land & Investments Ltd slumped 9.8 percent.Industrial and Commercial Bank of China (ICBC) lost 6.1 percent, almost halving its bounce up from a trough on Oct. 4 to a peak on Oct. 13.ICBC, considered the healthiest of the "Big Four" Chinese banks partly because of its large deposit base, had less than 1.0 percent of its total turnover on Monday shorted.In Shanghai, PetroChina Co Ltd , China Shenhua Energy Co Ltd and Sinopec Corp were among the top drags on the benchmark, while Anhui Conch Cement lost 5.4 percent.

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New stem cell method makes functioning liver cells

A team of researchers led by the Sanger Institute and the University of Cambridge used cutting-edge methods to correct a genetic mutation in stem cells derived from a patient's skin biopsy, and then grew them into fresh liver cells.By putting the new liver cells into mice, they showed they were fully functioning."We have developed new systems to target genes and ... correct ... defects in patient cells," said Allan Bradley, director of the Sanger Institute.At a briefing about the work, Bradley said the technique -- the first success of its kind -- leaves behind no trace of the genetic manipulation, except for the gene correction."These are early steps, but if this technology can be taken into treatment, it will offer great possible benefits for patients," he added.Stem cells are the body's master cells, the source for all other cells. Scientists say they could transform medicine, providing treatments for blindness, spinal cord and other severe injuries, and new cells for damaged organs.Research is focused on two main forms -- embryonic stem cells, which are harvested from embryos, and reprogrammed cells, also known as induced pluripotent stem cells or iPS cells, which are reprogrammed from ordinary skin or blood cells.When they were first discovered in 2006, iPS cells looked like a perfect solution to the ethical debate over the use of embryonic stem cells because they are made in a lab from ordinary skin or blood cells. Embryonic stem cells are usually harvested from leftover embryos at fertility clinics and their use is opposed by many religious groups.But in recent years, concerns have been raised that iPS cells may not be as "clean" or as capable as embryonic cells.Last year, a group led by Robert Lanza, of the U.S. firm Advanced Cell Technology, compared batches of iPS cells with embryonic stem cells and noticed the iPS cells died more quickly and were much less able to grow and expand.CORRECTING MUTATIONIn Wednesday's study, published in the journal Nature, the British team took skin cells from a patient with a mutation in a gene called alpha1-antitrypsin, which is responsible for making a protein that protects against inflammation.People with mutant alpha1-antitrypsin are not able to release the protein properly from the liver, so it becomes trapped there and eventually leads to liver cirrhosis and lung emphysema. This is one of the most common inherited liver and lung disorders and affects about one in 2,000 people of North European origin, the researchers said.Having harvested the skin cells, the scientists reprogrammed them back into stem cells and then used a type of "molecular scissor" technique known as a zinc finger nuclease to snip the cells' genome at precisely the right place and insert a correct version of the gene using a DNA transporter called piggyBac.The leftover piggyBac sequences were then removed from the cells, cleaning them up and allowing them to be converted into liver cells without any trace of residual DNA damage at the site of the genetic correction."We then turned those cells into human liver cells and put them in a mouse and showed that they were viable," David Lomas, a Cambridge professor of respiratory biology who also worked on the team, told reporters at the briefing.Ludovic Vallier, also from Cambridge University, said the results were a first step toward personalized cell therapy for genetic liver disorders. "We still have major challenges to overcome...but we now have the tools necessary," he said.The researchers said it could be another five to 10 years before full clinical trials of the technique could be run using patients with liver disease. But if they succeed, liver transplants -- costly and complicated procedures where patients need a lifetime of drugs to ensure the new organ is not rejected -- could become a thing of the past."If we can use a patient's own skins cells to produce liver cells that we can put back into the patient, we may prevent the future need for transplantation," said Lomas.

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TEXT-S&P rts Com Hem parent company 'B'; otlk stbl

-- On Sept. 29, 2011, private equity firm BC Partners acquired Swedish cable operator Com Hem AB through a leveraged buyout.-- We are assigning a 'B' long-term corporate credit rating to Norcell Sweden Holding 2 AB (Com Hem), a holding company within the Com Hem group.-- We are also assigning a recovery rating of '3' to the proposed SEK5.82 billion term loans to be issued by Norcell Sweden Holding 3 AB.-- The stable outlook reflects our belief that Com Hem will rapidly refinance its bridge loans, and generate positive and growing free cash flows, but will remain highly leveraged.Standard & Poor's Ratings Services said today that it had assigned its 'B' long-term corporate credit rating to Norcell Sweden Holding 2 AB (Com Hem), a holding company within the Com Hem group. The outlook is stable.At the same time, we assigned a 'B' issue rating and a recovery rating of '3' to the proposed Swedish krona (SEK) 5.82 billion term loans, borrowed from another group holding company Norcell Sweden Holding 3 AB and operating entity Com Hem AB.The rating on the proposed term loans is subject to our satisfactory review of the final documentation. In the event of any changes to the amount, terms, or conditions of the instruments, we could review and change the issue rating.The corporate credit rating is constrained by Com Hem's high financial leverage and our expectation of only modest deleveraging potential and moderately positive free operating cash flow (FOCF) generation. Furthermore, Com Hem faces intense competition from various technology platforms, translating into meaningful churn rates among customers subscribing to more than basic TV access. In mainly multidwelling areas, Com Hem competes with large incumbent TeliaSonera AB (A-/Stable/A-2) and other players using several alternative technologies, mainly digital subscriber line and fiber.The corporate credit rating benefits from the group's solid established position within its 1.8 million connected household footprint, providing a stable utility-like basic analog TV subscriber base, solid positions in digital TV, fixed broadband, and telephony markets within the footprint, and likely growth opportunities through increasing the penetration of digital TV and associated services (such as video on demand). Additional supports include the healthy Swedish economy, and Com Hem's superior network offering internet speeds of 100-200 megabits per second.The rating also benefits from the group's proposed long-term capital structures with limited debt amortization until 2017, and anticipated adequate liquidity position.The stable outlook reflects our belief that Com Hem will remain highly leveraged for the next two years, while generating positive and growing FOCF.The ratings could come under pressure if Com Hem does not rapidly refinance its bridge loans, if deleveraging did not materialize according to our expectations or if liquidity came under pressure. Specifically, we could lower the ratings if adjusted debt to EBITDA ratio remains materially above 8x in 2012 (currently 8.3x) or if FFO to adjusted debt falls below 5% (currently 6.3%).Near-term rating upside is unlikely in our view, as we do not expect adjusted gross debt to EBITDA to fall below 6x in the near future.RELATED CRITERIA AND RESEARCHAll articles listed below are available on RatingsDirect on the Global Credit Portal.-- 2008 Corporate Criteria: Analytical Methodology, April 15, 2008-- Criteria Methodology: Business Risk/Financial Risk Matrix Expanded, May 27, 2009-- Standard & Poor's Revises Its Approach To Rating Speculative-Grade Credits, May 13, 2008-- 2008 Corporate Criteria: Ratios And Adjustments, April 15, 2008-- LBO Equity Hybrids: Too Good To Be True, Aug. 10, 2007

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Issuance rumours fuel China bank funding concerns

The rumours first surfaced on Monday when Huijin Investment - the subsidiary of China's sovereign wealth fund which owns major stakes in the country's banks and is charged with investing in the China FIG sector - was in the market picking up the stock of Agricultural Bank of China, BOC, China Construction Bank, and Industrial and Commercial Bank of China. The purchases, although for a paltry US$31m total across the four lenders, caused a sharp reversal of the recent decline in their Hong Kong-listed stock prices, pushing them up between 8% and 16%."Fast money thinks some of the Chinese banks are in trouble, which has been reflected in the upward surge in their CDS spreads since July. No one believes the official figure for NPLs at the big banks, which is supposed to be in the 1% area, but which the hedge funds and prop traders believe is higher. There is an underlying sense that Huijin was telegraphing the government's implicit support for those banks and trying to staunch rumours of trouble which might choke off the banks' access to wholesale funding markets," said a regional syndicate banker.On the day of the Huijin purchases, BOC was rumoured to be preparing a 10-year subordinated US dollar Lower Tier 2 bullet, structured to convert to senior with a reduced coupon should Basel III regulatory changes deem that the paper not qualify as bank capital. The bank was taken on non-deal roadshows by BOC International, Citi and Deutsche Bank early last month, added credence to the gossip.Outstanding BOC 2020s backed off 5bp on the chatter to Treasuries plus 350bp bid. The syndicate banker suggested a new deal would need to price 100bp back from there to clear, a level which - if agreed to by BOC - would have repriced the entire China bank offshore curve, as well as adding to the general unease swirling around the sector.Former PBOC deputy governor Wu Xiaoling told Reuters in August that the large Chinese banks face capital shortfalls of Rmb400bn-500bn (USD63bn-USD78bn) over the next five years due to Basel III compliance, and that: "Along with a quick expansion of domestic loans, banks will generally face relatively heavy pressure on ordinary capital."But he added that with capital adequacy ratios averaging 12% and core capital averaging 9% there was no immediate funding pressure at the mainland's large lenders - something doubted by a somewhat sceptical large segment of the Asia-focused fast-money community given the PRC banking sector's large exposure to regional governments and the increasingly precarious property and shipping industries.MAYBE, MAYBE NOTMeanwhile, China Merchants Bank (CMB) is planning a USD300m three-year CD led by ANZ and Standard Chartered, which is dividing the market by raising the thorny issue of whether or not it marks the reopening of the public Asia dollar offshore primary bond space.A banker away from the trade suggested it was driven by reverse enquiry, would involve only a limited number of investors already in close contact with CMB, and was essentially a cross trade being facilitated by the leads who would earn minimum wallet on the deal.ANZ, which has almost zero presence in the Asia G3 primary bond markets, was rumoured to have been mandated solely on the back of providing a bilateral loan to CMB at an ultra-tight rate, potentially wearing a loss on the loan versus its own cost of funds.A banker close to the deal, however, sees it as a true reopening of the Asia ex-Yen G3 public markets, and predicted full distribution statistics following a print, which would involve a significant number of investors and a geographical/investor split typical of a public G3 issue. Books have been heard around USD150m, with a further tightening of guidance from the mid-swaps plus 300bp area likely before pricing.

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Not subtly, Obama campaign prepares for Romney race

A day after Representative Michele Bachmann, businessman Herman Cain, and Texas Governor Rick Perry debated the economy with the former Massachusetts governor in New Hampshire, the Obama campaign held a conference call with reporters to zoom in on Romney alone.The call was a sign the Obama campaign is preparing for the man most likely to take on the president in 2012, even if they cannot say that explicitly.Political campaigns often use media calls to get their message out, and Obama's senior strategist David Axelrod did just that, pointing out inconsistencies he saw in Romney's record on issues from healthcare to tax cuts.But it was as much what Axelrod did not say that gave an opening into the Obama campaign's views about the Republican primary battle.By targeting Romney, the veteran strategist showed the Obama campaign believes -- without explicitly saying so -- that the Republican frontrunner will likely be the nominee.Asked whether that was the case, Axelrod demurred."I'm not going to make that decision for the Republican Party," he said. "One of his (Romney's) problems has been that he hasn't inspired a whole lot of confidence and enthusiasm among Republicans."The Romney campaign seemed to take the attention as a badge of honor. "It is clear President Obama and his campaign see Mitt Romney as the one candidate who can beat him," said the candidate's spokesman Ryan Williams."They know President Obama has failed on the issues most important to voters: creating jobs and the economy."Axelrod said Romney had changed positions on issues such as abortion and gay rights, giving a window into the topics the Obama campaign sees as vulnerabilities if Romney wins the Republican presidential nominating contest next year."Across the political spectrum people have the same question...if you are willing to change positions on fundamental issues of principle, how can we know what you would do as president, how can we trust who you would be?" Axelrod said."That's the problem he has in his own party. That's the problem, if he does become the nominee, he's going to have in general."

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US auto workers split in early voting on Ford pact

* Chrysler talks continue* Chrysler union leaders to meet Wed. on contract progressDETROIT, Oct 11 (Reuters) - Workers at a large Ford Motor Co union local near Detroit rejected the proposed Ford-United Auto Workers contract in early voting, indicating it could be a cliff hanger until voting is finished on Oct. 18.The union and Detroit automakers are striving to ink new contracts so they can get on with the business of rebuilding the U.S. auto industry after an historic downturn that led to bankruptcy for two of the three.Last month, General Motors Co workers voted almost 2-to-1 in favor of a new four-year contract that is slightly less generous than the proposed Ford pact. From early returns, the GM-UAW vote indicated the contract would be ratified.Late on Tuesday, the UAW and Chrysler Group LLC were still at the bargaining table.Union president Bob King told plant leaders on Monday that he wanted to present a new tentative agreement between the union and Chrysler on Wednesday morning.At UAW Local 900, which represents about 2,700 workers at Ford assembly and stamping plants in Wayne, Michigan, 51 percent voted against the proposed contract, and 49 percent were in favor, UAW officials said.Local 900 is one of the first locals to complete voting on the proposed deal, which was reached last week between UAW and Ford negotiators who had been talking since July.The UAW represents hourly workers at the three major U.S. automakers. GM has about 48,500 UAW-represented workers, Ford has about 41,000, and Chrysler has about 26,000.The union said that with 7.3 percent of its locals reporting, 50.1 percent of production workers had voted in favor of the proposed Ford contract, and 54.8 percent of skilled trades workers had voted against it.TOO EARLY TO CALLLabor analyst Kristin Dziczek said it was too early to call the Ford contract ratification as being in danger."Remember that GM had a big local, Lansing Delta Township (in Michigan), turn their contract down and it still passed easily," said Dziczek, noting that the chairman of Local 900, Bill Johnson, had lobbied against the contract."The fact that it came in so close with the chairman opposed to it shows a lot of people still like this agreement," said Dziczek.Johnson did not return telephone calls for comment on Tuesday.Both the GM and Ford contracts offer signing and profit-sharing bonuses, but no pay raises for veteran hourly workers, and both allow the companies to expand the use of lower-paid entry-level workers to help lower labor costs.Ford's tentative deal with the UAW calls for each veteran hourly worker to get at least $16,000 in bonuses. Ford may benefit as lower-paid new workers fill new positions or replace veteran employees.Heading into this year's talks, the Center for Automotive Research said the cost to the companies of average hourly pay and benefits for production workers was about $58 per hour at Ford, $56 at GM and $50 at Chrysler. That compares to about $54 to $56 per hour at Toyota Motor Corp's U.S. plants and $50 to $51 at Honda Motor Co's U.S. plants.As a result of 2009 GM and Chrysler bankruptcies, their workers cannot call a strike on contract terms. So, if Chrysler and the UAW have an impasse, either can request binding arbitration. Both King and Chrysler Chief Executive Sergio Marchionne have said they want to avoid arbitration.Chrysler emerged from bankruptcy managed by Italy's Fiat SpA .Ford's unionized workers are allowed to strike.

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NYSE website inaccessible for 30 mins Mon-monitor

On Monday, the day hackers said they would attack the site, the NYSE website was unavailable from 5:30 p.m. EDT (2130 GMT) to 6 p.m. EDT (2200 GMT) and there was also an incident at 3:30 p.m. that lasted for about one minute, according to California-based Keynote Systems, which monitors websites.A spokesperson for the NYSE said there was no interruption to web traffic and no sign of a hacker attack."We don't know if it was a hacker attack," Keynote spokesman Daniel Berkowitz said in an email. "We only see what end users see and so (we are) not sure if the cause was a DDOS (Distributed Denial of Service) attack."A person familiar with the matter said on Tuesday that internal monitoring systems indicated the NYSE website had not experienced service issues and that the NYSE servers were not compromised.The source said there may have been some slowness during the day originating from the external Internet service provider.A video posted on YouTube, which claimed to be from the activist hacker group Anonymous, said the NYSE website would be "erased from the Internet" on Monday. The video said the move was in sympathy with the ongoing "Occupy Wall Street" protests in Lower Manhattan.The threat was made against the NYSE website not the trading platform, which is used to process billions of share transactions each day. It was not possible to verify the origin of the threat.So-called hactivists have used DDOS attacks, using supporters to crash websites by overwhelming the servers with traffic.The Anonymous group launched DDOS attacks against Visa Inc and MasterCard Inc recently, claiming the companies were hostile to WikiLeaks and its founder Julian Assange.