SEC shuts down Beverly Hills hedge fund and wealth management business

  3:45pm

In an unusual move, the Securities and Exchange Commission has temporarily shut down a Beverly Hills hedge fund and wealth management business -- which allegedly sought to defraud investors -- before anyone actually invested.

Elijah Bang and Daniel Lee, who operated IU Group Inc., allegedly targeted retirees, professors and Christians by misrepresenting the business and its financial performance, soliciting clients using a variety of company names and claiming that the fund managed over $800 million, according to an SEC statement on Monday.

Some websites stated that the company was founded by "devoted Christians who believe in God, Jesus Christ and the Holy Spirit," the SEC said. Lee sent email solicitations to college professors. Both men told potential clients that they handled money for professional athletes, actors, executives and politicians. 

The SEC obtained a temporary restraining order to halt business activities and filed a complaint in the U.S. District Court in central California accusing Bang and Lee of fraud and seeking financial penalties.

John McCoy III, the associate regional director for the Los Angeles office of the SEC, said it was unusual, but not unheard of, for the SEC to stop a business scam before any investors were lured in.

"Often, particularly with defrauded investors, we don't get a complaint or tip until someone actually puts in money, tries to get it out and then the person says, 'Oh well, I don't actually have any of it,' " McCoy said.

In this case, the SEC received an early tip from the public, and subsequent investigations have uncovered zero investors and no money, McCoy said. But further digging could turn up new evidence.

"Part of the problem with these cases is the lack of transparency," he said. "There's always the caveat that we don't know what we don't know."

According to the SEC, Bang and Lee are also old hands at securities fraud. In 2009, the California Department of Corporations ordered the two to desist and refrain from illegal and fraudulent sale of securities.

But last year, they began soliciting money again under UI Group, whose business license was suspended in California, and under a variety of other company names not registered with the SEC or the state.

Calls and emails to Bang and Lee were not returned. David Van Havermaat, an attorney for the SEC, said neither men had hired a lawyer yet.

McCoy added that the district attorney's office or U.S. attorney's office could also bring criminal charges against the two men.

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KCET sells Sunset Boulevard studio to Church of Scientology

  4:06pm

Financially strapped KCET-TV has sold its landmark Sunset Boulevard studio to the Church of Scientology for an undisclosed price, the station said Monday.

KCET will remain at 4401 W. Sunset Blvd. for as much as a year while searching for a new location. The station is in discussions with several production facilities, according to a statement by its president, Al Jerome.

Leaf, Volt electric vehicles get top safety marks

  6:03pm

The first of the new mass-market electric cars have won the highest safety ratings from an insurance industry trade group.

The Nissan Leaf, which is a powered only by electricity, and the Chevrolet Volt, which technically is a plug-in hybrid vehicle because it also has a small gasoline engine, were named Top Safety Picks by the Insurance Institute for Highway Safety. 

Best Stocks to Invest In 2011 -Top Stock Picks to Buy

Despite the market’s recent resuscitation, many stocks are still trading at fire-sale prices-no surprise given the immense decline that preceded the advance. But which stocks to invest in 2011?

Between March 9 and May 4, Standard & Poor’s 500-stock index surged 34%. Beaten-down “value” stocks and stocks of smaller companies have been the best performers during the recovery. Examples of revived value stocks are Citigroup (symbol C), which tripled from an intra-day low of 99 cents on March 9 to $3.20 at the May 4 close, and Bank of America (BAC), which skyrocketed from $3 to $10.38. Meanwhile, Morningstar’s small-company-value index rose 22% in April, and its large-company-growth index gained just 8%.

I’m not jumping on the bandwagon. Given the fragility of the markets, the financial system and the economy, I don’t think stocks of small companies or companies with huge problems are the ones to buy. Instead, I think you should put most of your money into the highest-quality blue chips (companies with little or no debt and the ability to generate a lot of cash).

If you’re looking for ideas, Morningstar StockInvestor ($119 annually) is a great resource. According to the authoritative Hulbert Financial Digest, the newsletter’s stock picks returned an annualized 2.6% from the end of 1999 through last February, a period in which the broad-based Dow Jones Wilshire 5000 stock index lost an annualized 5.0%. What’s more, the Morningstar letter is less risky than the index and tends to do little trading; on average, the letter holds stocks for about three years.

Editor Paul Larson says he looks for companies with competitive advantages over their rivals: “My strategy is fairly simple. I focus on high-quality companies, and I buy them when they’re cheap.”

Morningstar’s 100-plus stock analysts estimate “intrinsic value” for every company they cover. They compare intrinsic value to a company’s share price to arrive at a star rating. Larson then draws up two lists — a “tortoise” portfolio and a “hare” portfolio-consisting of about 25 highly rated stocks each.

Larson’s favorite is Warren Buffett’s Berkshire Hathaway (BRK.B)(best stocks to invest in 2011). At $3,114.90 a share on May 4, the stock has shed more than one-third of its value in the past year. But Larson believes that Berkshire’s collection of more than 70 businesses, dominated by insurance, is dirt-cheap. Says Larson: “For a long time, people have been pricing Berkshire as though Buffett were no longer around. But he’s still alive and kicking-and adding value. And the balance sheet is still one of the strongest around, even though the company no longer carries a triple-A debt rating.”

The world’s largest and most diverse health-care company, best stocks to invest in 2011 -Johnson & Johnson (JNJ), is another favorite. Larson says that the company is largely insulated from economic downturns. “People need to take their medicines regardless of what the economy is doing,” he says. J&J is well-managed, has little debt and generates a staggering $1 billion in free cash flow per month (free cash flow is the money left after a company makes the capital expenditures needed to maintain the business). The stock closed at $53.76 on May 4.

Defense giant best stocks to invest in 2011- General Dynamics (GD) is another company that’s built to withstand recessions. It builds ships and armored vehicles, as well as information-technology systems for the military. “The government has a vested interest in maintaining the health of this company,” Larson says. “It came through the Defense Department budget cuts relatively unscathed.” The company boasts a rock-solid balance sheet. The stock closed at $54.00.

Wal-Mart Stores (WMT), the world’s largest retailer, has increased its market share during the economic slump. Its sales of consumer staples at discount prices have been increasing as other retailers have been going out of business. The company’s managers are focusing on cutting costs and satisfying customers. Wal-Mart, one of only two stocks in the Dow industrials to climb last year, closed at $50.84.

As employee benefits grow ever more complex, The best stocks to invest in 2011-Automatic Data Processing (ADP) benefits. It provides such services as payroll processing and benefits administration. Its large scale and respected brand, and the high cost of switching to another vendor, give it a big competitive advantage. The share price: $34.86.

When competitors were spending enormous sums to build up oil-and-gas reserves during last year’s bubble in oil prices, ExxonMobil (XOM) stayed focused on increasing profit margins. Because of that, Exxon can continue to buy back shares, raise its dividend and increase capital spending (at a price of $68.20, the stock yields 2.5%). It’s the world largest integrated oil-and-gas company, and participates in almost every facet of the business.

Best Stocks To Invest

Stock market is a high risk investment venue offering high returns to the investors. The investors will always think of the best stocks to invest and call the stock market related television channels where there will be stock market experts interacting with the investors.

Most of the queries by the investors will be related to the best stocks to invest and the experts reply that a particular sector will be performing well in the next few years and ask the investors to invest their money in these sectors. Some investors roughly follow the mutual fund companies and invest their money in the stock where the fund managers of the mutual funds invest. These investors consider that the fund managers will select the best stocks to invest and just follow them as an investment strategy. Some people having no experience in the stock market or lack knowledge about the stock market prefer the mutual funds for their investments. The stocks are selected based on the fundamental and technical analysis of the company stocks.

The fundamentals are considered if the investor wants to invest for a long time period of about 2 to 3 years. The technical analysis is used by the investors to select the best stocks to invest based on the past performance and certain patterns. The investors following the technical analysis will follow a certain pattern in the stock performance and predict that the stock will move up or down and arrive at the high and low. Then the investors will try to sell the stocks at the high and buy the stocks at the low.

The entries of speculators in the form of day traders make the stock market fluctuate to a great extent. The foreign institutional investors play a pivotal role in the performance of the stock market. Since the investors consider that the American and the London stock market have matured, they have shifted investing in the Asian stock markets where the returns are more. Currently, the Asian stock markets and the stocks listed in the stock exchange in the developing countries are the best stocks to invest. The stock experts comment that banking sector is always considered to be safe and will yield a steady return after some years. The blue chip and the information technology sector stocks can yield good returns in a quick manner. Similarly, each expert will give their comments about each industry and offer their buy and sell recommendation to the investors.

How to Choose the Right Financial Advisor

In light of the recent stock market roller coaster and financial service company meltdowns, it’s hard to know who to trust today for guidance about investing. Yet, even with all of the uncertainty, as each day passes, you still grow closer and closer to retirement. And with that, you need to know where to put your hard earned dollars to keep them safe, yet growing.

The truth is that most people today spend more time planning a two week vacation than they spend planning their retirement. And, oftentimes people will put their life savings in the hands of a total stranger they picked from a Yellow Pages ad because they simply don’t know how to research financial planners. And, this could prove to be a big mistake.

Although there are no iron clad guarantees, there are some questions you need to ask any financial advisor you are considering placing your money with. After all, this is the money you plan to live on for 20, 30, or more years! So this is a job that you definitely want done right.

Some experts have even likened picking a financial planner to hiring somebody for a job. And this makes a lot of sense. This person will be dealing with the business of your finances – so you will definitely need to hire the right person for the job.

Some of the most important questions you will need answers to include:

* What is your experience? Today, just about anybody can call themselves a financial professional. But where the rubber meets the road is whether or not the person is truly qualified to give good, knowledgeable financial advice. Therefore, inquire as to what licenses and other qualifications they possess such as professional or industry designations like a Certified Financial Planner (CFP) or Chartered Financial Consultant (ChFC). You should also ask how long they have been in the financial services industry. Because, while it’s nice to give everyone a chance, you will likely be much more secure with an experienced professional who has worked in both up and down markets successfully.

* How do you get paid? This is a biggie because an advisor’s pay source may have more to do with his or her recommendations than you think. There are numerous types of compensation structures in the financial services industry. The advisor could be paid on commission, a flat fee, an hourly rate, or a combination of any or all of these. Be sure to inquire as to any conflicts of interest as well. For example, if a financial services representative is paid on commission and they only offer a limited number or types of products, then this could be a red flag as to where their true interests lie. Search here for a list of local, pre-screened fee-based financial planners to match your needs.

* What is your track record? There are actually a variety of ways to evaluate an advisor’s track record. One such method is to simply inquire as to how many clients’ portfolios are performing in line with or better than their goals. Include both short and long term goals in this conversation. In addition to investment performance, you will also want to know their track record in terms of any disciplinary actions for unlawful or unethical actions in their professional career. If the advisor is registered with the United States Securities and Exchange Commission, then you can actually look up this information online

* Can I get it in writing? Once you feel comfortable with an advisor, ask them if you can have an agreement in writing that will detail the services that they will provide for you as well as the fees that you will be paying them for those services. Information in this document should include their investing strategies, specific benchmarks for performance, and suggested products to help get you there. And, always keep this document in your files for reference.

Regardless of how well your relationship is with your financial advisor, always keep in mind that it is you who is ultimately responsible for your money. You may not be at the helm making every trade, but you are responsible for ensuring that your advisor works in your best interests and that they handle your finances properly.

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‘Foundation’ stocks: ‘Prudent’ trio

We like stocks. And we like a lot of ‘em. We focus on broadly diversified investments in undervalued stocks for their long-term appreciation potential.

Each month, we suggest a group of stocks that could help serve as a portfolio foundation. Here’s a look at Kraft Foods (KFT), Verizon Communications (VZ) and Waste Management (WM).

Kraft Foods is the world’s second largest food and beverage company, trailing only Nestlé.

With 51% of revenue derived outside of North America, Kraft materially altered its product portfolio and its capital structure earlier this year when it acquired control of Cadbury plc for $18 billion.

Despite the high price and associated acquisition- related risks, we believe Cadbury is a good strategic fit for Kraft which should accelerate growth and provide access to a number of developing international markets.

While many investors fear that weak consumer spending trends and rising raw material prices will pressure Kraft’s margins, we think the company has a good handle on how to manage through such an unfavorable environment, even if conditions weaken further.

Through ‘Six Sigma’ and various technology enhancements, the company is already emphasizing overhead cost reductions and improvements in productivity.

With a market cap of $55 billion and a dividend yield of 3.6%, Kraft is a dominant player and, we believe, a core holding in the Food, Beverage & Tobacco industry group.

Widely regarded as having one of the best networks in mobility, Verizon Communications offers wireless, broadband and wireline services throughout the United States.

Verizon is a perennial favorite of ours in the communications sector mostly because of its strong cash flow generation and pricing power, but also because it boasts the largest subscriber base and lowest churn rates.

We expect top-line growth to be driven by continual increases in wireless data services, especially now that Verizon can offer service on the cult-like iPhone, which your editor just picked up.

Just a few months ago, Verizon declared a 3% dividend increase despite the spinoff of cash-flow-generating properties.

Margins and revenues are strong, cash flows are booming, and there is no reason to suspect that the fat 5.3% dividend yield is in danger.

Moreover, the company has been cutting costs through staff reductions and in conjunction with landline divestitures.

A dominant player in the communications area, we view Verizon as a core holding and expect the next generation of wireless connectivity to boost margins through higher data-service usage.

It is oft said that one man’s junk is another man’s treasure. True or not, the owner of those green refuse trucks is the nation’s largest provider of collection, disposal, recycling and waste-to-energy services.

Waste Management (WM) has nearly a 30% market share and almost 40% of overall landfill capacity. The company’s revenue stream is well diversified both geographically and by business segment.

While WM continues to face headwinds from the slow-down in waste volumes from construction, the company has been able to drive increased profitability via favorable pricing and an efficient cost structure.

WM generated strong free cash flow ($1.2 billion) during 2010, which supports management’s continued efforts to return cash to shareholders in the form of dividends and share repurchases.

The company announced that it expects to pay $1.36 per share in dividends during 2011 and will allocate up to $575 million towards stock buybacks.

Considering the new dividend level, shares are trading with a current yield of 3.7%