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(Money Magazine) — The stock market keeps taking a hammer to the conventional wisdom about retirement investing. Conventional wisdom, circa autumn 2007 (Dow 14,000): You could be retired for 30 years or more. You need lots of stocks so that your money will grow enough to last that long. Conventional wisdom, circa spring 2009 (Dow 7000): Holding too many stocks is a clear and present danger to your retirement plans. Save what’s left of your portfolio and shift toward bonds. You can’t afford to lose any more. Conventional wisdom, circa autumn 2009 (Dow back up to 9500): Wisdom? Forget it. The market falls, it rises — nobody knows why … Can we talk about something else? Think Favre will make it through the season? Even with the recent pop in stock prices, your 401(k) balance probably isn’t where you want it to be. There are at least two natural responses to the market whipsaw. You can embrace the new momentum, going aggressively back into stocks in the hope of catching up again. Or just check out: With the market so volatile, your chance at a comfortable retirement may seem dicey no matter what you do. According to a recent Vanguard study, 401(k) participants as a group changed their allocations only slightly during the 2008 bear market. Time to get constructive. The retirement you want may be more attainable than you think. Although you might have to save a bigger chunk of your income than you do right now, you also have resources beyond your 401(k), IRA, and Social Security. Your home, your ability to work a few years longer, a pension if you have one (even if it’s small) — all these can have a big impact on your future income. Once you see how much they are worth, you’ll be able to construct a realistic plan that doesn’t force you to take huge gambles. This story will show you what it takes to build up a sufficient nest egg with a conservative portfolio so that you can sleep at night even during volatile markets like this one. Your first task? Putting the long-term risks of stocks and bonds into perspective. 1. Know the risksThe stocks vs. bonds dilemma.When you’re saving for retirement, you have to strike a tricky balance. If you hold a lot in lower-risk bonds, your money won’t grow very fast. You have to let your savings do all the heavy lifting, which can mean accepting a diminished standard of living if you didn’t get a really early start. Even then, you may not have eliminated all the risk. With most kinds of bonds, a spike in inflation can erode the real value of your returns, leaving you with less to live on than you had saved. (That’s what happened to anyone who held Treasury bonds through the 1970s.) You can defend against rising prices with Treasury Inflation-Protected Securities, or TIPS. But their returns are modest — the real yield on a 10-year bond is 1.8%. Against that backdrop, “it’s very tempting to rely on stock returns as the silver bullet for your retirement plans,” says Boston University economics professor Laurence Kotlikoff. It’s also dangerous, he adds. Yes, over the long haul stocks usually do a better job than bonds of growing your nest egg. Since 1926 stocks have returned average gains of 9.6% a year, while corporate bonds have returned only about 6%, according to Ibbotson Associates. But as we’ve learned the hard way recently, those smooth averages hide a lot of wild swings over shorter periods. And if a deep downswing occurs when you are less than 10 or even 15 years from retirement, the consequences can be severe if you have a lot of stocks. “At that point it’s incredibly hard to increase your savings by enough to overcome the damage,” says Alicia Munnell of the Center for Retirement Research. In “You can’t handle the truth about stocks,” economist Zvi Bodie lays out his case for avoiding stocks entirely. But what if you’re willing to live with some risk, yet still want to dial back your exposure? What would you have to change if you decided to hold a portfolio split, say, 50/50 between stock and bonds? If you’re 50 years old, that’s cautious by many standards. A Vanguard target-date mutual fund designed for that age puts only 25% in bonds and the rest in stocks, working its way to 50/50 by age 65. Money’s usual advice is about 40% in bonds at 50. On many online retirement calculators, going to 50/50 in mid-career could point toward a higher savings rate than you may be accustomed to, easily in the 20% to 30% range. That shouldn’t scare you off — most of us have realized by now that the recent era of low savings was unsustainable. And amped-up saving may well beat the easy-seeming alternative of leaning on stocks. 2. Crunch the numbersWhy safety can improve your odds. Since stocks tend to beat bonds over most long periods, any projection of how a hypothetical nest egg will grow has a peculiar effect: It will look — at first glance — as if stocks are the safer bet. Let’s consider a hypothetical 50-year-old earning 100,000 a year, with 300,000 saved in his 401(k). Let’s assume he already ran a few numbers and decided he can live on about 1 million in retirement, which after inflation might work out to 1.65 million by 2024. He definitely has a ways to go. Running those numbers through the Retirement Planner, it turns out that a savings rate of 15% — plus a 3% 401(k) match from his employer — will give him an 8-in-10 chance of hitting his number. That’s if he has a portfolio of 70% stocks and just 30% bonds. Looks like a pretty good option. But now let’s say the volatility of the market has made him nervous and a bit disgusted, and he’s thinking 50/50. In that case, the calculator shows that his odds fall to a little more than 6 in 10. In other words, the conservative portfolio puts him at serious risk of falling short. (Like most calculators, ours makes some simplifying assumptions about the range of future returns and should be used only as a ballpark guide.) In order for our saver to improve his odds, he would have to save at least 22% of his salary, as you can see in the graphic (“Saving more helps aggressive investors,” top right). This is starting to look like a no-brainer: It’s a lot more fun to save 15% of income than 22%, and in both cases the odds of hitting 1.65 million are the same. So more stocks is the way to go, right? Not so fast. The odds we’ve looked at so far express only the chances that the saver will pass that specific 1.65 million finish line. But with the 70/30 portfolio and a 15% savings rate, his potential downside if he doesn’t make that mark is substantial. In one out of 10 cases, he falls short of his goal by 250,000 or more. With the 50/50 split and 22% saved, the comparable shortfall is just 193,000. And in one out of 100 cases, the stock-heavy portfolio falls short by at least 865,000, vs. 657,000 for the balanced portfolio. That could easily be the difference between leaving a small inheritance and dying flat broke. Suddenly, saving more in order to be a bit more conservative looks attractive. It increases your odds of avoiding a big loss. And of course saving more also ups your chances of success even if you stick with an aggressive allocation, as you can see in the chart (“Your goal is closer than it looks,” above, right). 3. Worry lessWhat if you just can’t save that much? If your budget is tight today and you just can’t find another dime to set aside — well, you’re not alone. But you should resist the urge to become really aggressive to make up for what you’ve lost. You probably have some other arrows in your quiver. Just one of the following can go a long way toward getting you to a comfortable retirement: A PENSION, EVEN IF IT LOOKS SMALL. Talk of the demise of traditional pension plans is so widespread that even the people who have them may not appreciate how valuable they still are. Roughly two-thirds of employees at large companies and more than 90% of people who work in local, state, and federal governments still have access to one. If you are over 50, the chances that you’re in a pension plan — or were vested at a previous job — are even higher. Say that our hypothetical 50-year-old was entitled to an annual pension of 12,000 at age 65. That sounds paltry — it’s less than half his Social Security take — but it means that instead of having to save 22% a year to go the 50/50 route, his minimum is closer to 17%. (See graphic “Your goal is closer than it looks,” above, right). YOUR HOUSE, IF YOU OWN IT. As lousy as the real estate market is today, your house should still add up to a very big asset if your retirement is a decade or more off. The simplest means of tapping equity in retirement is to move to a less expensive home and pocket the profit. A 100,000 gain could be converted into an annuity paying about 8,000 a year for life. Again, that would give you some leeway to tamp down your equity exposure today. WORKING A BIT LONGER, EVEN IF IT’S PART-TIME. You could work a couple of extra years beyond 65. That helps even if you make less than you did most of your career. The key is to earn enough to cover living expenses without having to dip into your savings or start collecting Social Security. For each year that you delay Social Security, your eventual payment is boosted 8%. And by the time you do retire for good, your nest egg will have grown larger, and you’ll have fewer years over which you’ll need to spread it. “The combined effect can have an incredibly powerful impact on your retirement lifestyle,” says Steve Vernon, an actuary in Oxnard, Calif. If our 50-year-old worked until age 67 instead of 65, he’d need to save only about 12% of his pay each year. ADJUSTING YOUR GOALS, WITHOUT REGRETS. If our hypothetical investor can’t get to 1.65 million without taking a risk of ending up with half as much, it may make more sense to aim for 1.3 million instead. There’s room to adjust: Many costs diminish as you age. Not only are your kids out of the house, but you may well have it paid off. Also, you are no longer setting aside part of your income for retirement savings. And while the first 10 or so years of retirement may be occupied with travel and expensive hobbies, people tend to slow down later. “The need to accumulate more clothes, more cars, and more technology diminishes,” says John Rekenthaler of Morningstar Associates. Other than the pension, counting on any of these factors could nevertheless be a somewhat risky proposition — your house may not be worth what you hope, you might not end up being healthy enough to work past 65, and you could be hit with big medical costs that increase your income needs. But stocks are risky too. The idea here is that if you think you’ll be able to tap one or two of these resources, you can make a conservative portfolio work even if you can afford only a moderate savings rate today. But by all means, save as much as you can. 4. Choose your toolsWhere to put your money. After you settle on your basic asset-allocation plan, there’s more you can do with your specific investments to ensure a higher return with less risk. EXPENSES AND TAXES: CONTROLLING WHAT YOU CAN. There are some easy ways to bolster your expected return without adding to your portfolio’s volatility at all. First, focus on lower-cost mutual funds. A low-cost index fund charging 0.2% a year has a built-in performance edge over the average stock fund worth almost 1.2 percentage points of performance a year. That adds up quickly. You can also shield your investment income against the very real possibility of higher future tax rates by putting at least some of your savings in a Roth IRA or Roth 401(k). With the Roth, you pay taxes on the money you put in but none when you take it out. BONDS: KEEP YOUR “SAFE” ASSETS SAFE. Compared with stocks, bonds may be low-risk, but they’re not no-risk. Bond prices can fall sharply when interest rates rise. Rates are low now, but there are plenty of concerns that they will rise significantly in coming years. “Stick with bonds that have maturities of no more than three years,” says Chris Cordaro, an adviser in Morristown, N.J. You also need to protect yourself against bond losses caused by defaults, so look at bond funds that concentrate primarily on high-quality issues, such as U.S. Treasuries, high-grade corporate bonds, and high-quality munis. A solid choice: FPA New Income (FPNIX), which is on the Money 70, our list of recommended mutual funds. A stake in TIPS, meanwhile, can protect you against an unexpected inflation spike. Two low-cost options for buying TIPS are Vanguard Inflation-Protected Securities (VIPSX) or going through the government directly at treasurydirect.gov. STOCKS: WHERE TO GET LESS RISK. Stock investing is generally bumpier if you buy equities that are expensive relative to their earnings and assets. “You don’t get rewarded for taking risk; you get rewarded for buying cheap assets,” says Jeremy Grantham, co-founder of the investment firm GMO. So if you are looking beyond low-cost index funds, consider managers with a value bent. Two solid Money 70 funds that hunt for blue-chip values: Jensen (JENSX) and FMI Large Cap (FMIHX). You can also focus on stocks that pay out dividends, which tend to be far less volatile than those that don’t. Consider the iShares Dow Jones Select Dividend Index ETF (DVY) for that. These funds, like all stock investments, will still give you plenty of ups and downs. But with a well-balanced retirement portfolio, you won’t feel so whipsawed. To see if your finances are in peak shape, take our retirement readiness quiz.

(Fortune Small Business) — Years ago i joined my first business advisory group. I was in my late twenties and had already experienced some success running a picture framing company here in Chicago. At the first meeting I told my story to the other members. One of them, a guy in his sixties, looked across the table and asked me this simple question: “Have you toughened up yet?” Twenty-five years later I know exactly what he meant. Entrepreneurs tend to start out young and naive, but sooner or later we all toughen up to survive. Sometimes you need to do difficult things. Sometimes you have to take a hard line. So ask yourself: Have I toughened up? Employees. If you go into management, you must be willing and able to hold people responsible for their work. This can include having uncomfortable conversations about poor performance, personal hygiene and inappropriate relationships. It also includes “unhiring” the unwilling or unable. I had an employee in her late fifties who had worked for me for more than 10 years. We eliminated her department and tried to retrain her in two others. But after a year of counseling and moving her around, my manager concluded that there was no hope for success. We fired her together. She cried, she screamed, she prayed. My manager was in his late twenties, and this was a defining moment for him. I felt awful for her and proud of him. Vendors. I once ordered a set of professionally printed invoices. The result was anything but. I called the vendor and complained that his printing was crooked and sloppy. His answer? “These fall within the standards in the industry.” I was shocked because the invoices were really bad and this was a well-regarded printing company. I told him, “That’s laughable. The invoices will be on my dock. You can pick them up whenever you like.” (Luckily I hadn’t paid for them yet.) The vendor reprinted the forms, and there was no comparison with the first set. That’s how I learned that companies don’t always do the right thing unless you push back. Customers. I’m proud to say that in more than 30 years of business I’ve had to take a hard line with only three customers. One guy had us reframe a print after movers shattered the glass. When he picked up the finished job, he complained that there were small scratches on the print and asked me to replace it. I explained that the scratches were obviously due to the broken glass, and he said I should have noted it on the invoice. I told him he should take up the matter with the moving company. He responded by saying he’d already tried that, and then he threatened to take us to small-claims court. I said: “I’m sorry you feel that way. I guess I’ll see you in court.” Predictably, I never heard from him again. Receivables. Collecting money is one area where you will definitely get eaten alive if you don’t take a stand. And sometimes that means legal action. I know a woman who published a retail guide that ran ads for local businesses in the Midwest. Once we were talking and she complained about a retail customer who owed her money. After 90 days she went to the woman’s store to get paid. The customer brushed her off, saying, “I have more important things to do than deal with you.” I suggested she refer the matter to an attorney, and here’s what she told me: “Oh, I can’t do that. I’m a good Catholic girl!” Several months later she was out of business. The lesson? Successful entrepreneurship isn’t about being a jerk, a screamer or a bully. It’s about standing up for yourself and your company. The meek might inherit the earth, but they will struggle in business. Jay Goltz employs 110 people at Artists Frame Service, Chicago Art Source and Jayson Home & Garden, all based in Chicago. He is the author of The Street-Smart Entrepreneur (Addicus Books).

Source:CNN

NEW YORK: Social networking site MySpace said Wednesday that it agreed to buy popular music application iLike for an undisclosed amount.The deal marks MySpace’s first purchase under Chief Executive Owen Van Natta, who took the helm in April. Once the largest social network, the company has struggled to grow its user base since it was purchased by NewsCorp (NWS, Fortune 500) in 2005. With 55 million total users, iLike is the most popular music application across social networks, including Facebook, which eclipsed MySpace as the world’s biggest social networking Web site in 2008.ILike allows users to share music playlists and concert alerts, as well as connecting them to concert ticket buying Web sites. Van Natta said users will not notice any immediate changes and will still be able to access the application on rival networks.First of many deals. The MySpace CEO said on a conference call that the deal will compliment the MySpace Music unit, a joint venture with major record labels. Van Natta hopes to expand iLike into gaming and video.”ILike provides a great experience,” said Van Natta. “We want to continue to extend that to new users into other categories — it has a broad range across other entertainment categories.”0:00
/2:58Facebook struggles to grow upVan Natta said the iLike acquisition is just the first of many soon-to-come announcements of bringing “world-class” talent to the company. The MySpace chief executive said he doesn’t want to disrupt what iLike is doing, and will keep the company’s founders, Ali and Hadi Partovi, in their current roles. However, he also said he plans on utilizing the Partovi brothers’ skills in other areas of the company as well.”MySpace’s strengths have been a long-time source of inspiration for iLike,” said Partovi, in a statement. “Combining MySpace’s existing platform, reach and resources with iLike’s syndication network and social discovery tools creates the potential for truly exciting innovation and commerce across any vertical entertainment category.”

Source:CNN

ISSAQUAH, Wash. (Fortune Small Business) — Jim Sinegal was a former Price Club executive. Jeffrey Brotman was a lawyer who had returned from a trip to Paris with a vision of importing a retail concept the French embraced. In 1983 they opened the first Costco, in Seattle. Today the company operates more than 550 warehouses worldwide, employs 140,000 workers and generates 70 billion in annual sales. Fortune Small Business met with Sinegal, 73, and Brotman, 66, at Costco headquarters in Issaquah, Wash. to learn about the company’s early days. Their stories are combined here. Where did you get the idea for Costco (COST, Fortune 500)? BROTMAN: At the time, most U.S. grocery chains sold overpriced goods. I had visited Europe and seen what the French called “hypermarkets,” a combination of discount supermarket and department store. I thought the concept would work well in the U.S., so I called around to retail contacts and asked them to list executives who could run such a business. Jim was on most lists. I cold-called him one day and flew to California to meet him. SINEGAL: We planned to clone Price Club and launch in the Northwest because it was one of the least competitive U.S. markets. Later we merged with Price Club, became Price Costco for about a year, and eventually restored the Costco name. How did you finance the business? BROTMAN: Initially with our own funds and credit cards. We were both all-in. If we failed, we’d be broke. In 1983 Jim and I went to a hardware show in Las Vegas. By then we had hired buyers, who were using our credit cards to check in. But the bank had canceled the cards, so they were denied entrance. They had worked with us for only a month and were probably wondering whether we’d make it. I thought we’d lose half of them, but they stayed. SINEGAL: We eventually raised enough money to open three warehouses that year. BROTMAN: Most of the money was our own and from friends and acquaintances. We raised what we thought was all we’d ever need: 7.5 million. SINEGAL: We received checks totaling 11 million. Because the offering documents had been drafted to reflect a 7.5 million shareholder investment, we had to either start over with new documents or return 3.5 million. We chose the latter, but used investment bankers to help us raise money after that. BROTMAN: Even once we had money, Jim and I drew a relatively modest salary — 75,000 per year — for a long time. [In 2008 each drew a salary of 350,000 plus an 80,000 bonus. Each also received stock and option awards in excess of 4 million.] 0:00
/4:48The birth of CostcoIn the early days, 70% of your customers were business owners, as opposed to 55% today. What did you offer those entrepreneurs that they couldn’t get elsewhere? SINEGAL: Back then a small business might have to go to five or six places to get what it needed — office supplies, food, electronics, for example. Our model provided for most of those needs in one stop. What was that first year like? SINEGAL: The crowds weren’t overwhelming at first, but business built up. In Seattle, the first few weeks we were open, sales grew at a weekly rate of 25%. Within 10 weeks we hit 1.4 million in weekly sales. After opening that first warehouse in Seattle, in September 1983, we opened in Portland, Ore. and Spokane later that year. BROTMAN: We worked almost constantly. Fortunately our wives worked with us, so we weren’t totally separated from family. But we didn’t see our kids. Jim and I were probably on the road almost every day for 10 years. It was a tough grind. How did you get manufacturers to distribute through Costco? BROTMAN: Many wouldn’t sell to us, period. But fairly early on we demonstrated our ability to be the best merchant out there — better than the Wal-Marts (WMT, Fortune 500) and Sam’s Clubs of the world. We convinced manufacturers one by one. When Jim met with Sony (SNE) about five years ago, the Sony executives said they would never sell to us. Today we’re one of the largest retailers of Sony products. As we grew and became such a large distribution channel, it got harder for key vendors to ignore us. And in tough times like today, most manufacturers are happy to have customers like us — who pay their bills. What were your early growth projections? SINEGAL: The original business plan called for eventual growth to about 12 Costcos, primarily in the Northwest, and maybe 80 million in sales per store. We thought we’d become a 1 billion company and make a nice return for our shareholders. We hit the 1 billion mark in our third year of operation. BROTMAN: To a certain extent, scale was forced upon us by outside events. When Wal-Mart announced it was going into the discount warehouse business, we had to compete and grow quickly. SINEGAL: We were fortunate in that the first three units we opened succeeded, we were able to get the products we wanted to sell, and we had funding. We started our business back when venture capital was available. How is the recession affecting business? SINEGAL: U.S. sales are flat, which is better than what most retailers can say, and international sales are down 9% when converted to U.S. dollars. Our attitude has always been that the best companies thrive and build market share during tough times. If they offer a great product and great value, they become even more important to the consumer.

Source:CNN

NEW YORK: California will have enough cash to stop issuing IOUs on Sept. 4, almost one month earlier than expected, the state controller said Thursday. That’s also the date when people and companies can redeem their IOUs with the state treasurer.The controller’s office has issued 327,000 IOUs worth a total of 1.95 billion so far. The Golden State was forced to start handing out IOUs on July 2 after Gov. Arnold Schwarzenegger and lawmakers failed to close a 24 billion budget deficit. Controller John Chiang had to start issuing the vouchers so the state would have enough money to cover debt payments and fund education. It was the first time the state issued IOUs since 1992, though it did delay payments in February during another cash crunch.Even after the governor signed a budget agreement in late July, the controller’s office had to determine when there’d be enough money in the state coffers to end the IOU issuance. Since the budget was signed, Chiang has issued 100,000 IOUs totaling more than 800 million.”Along with short-term loans that are routinely obtained in the fall, this spending plan should provide sufficient cash to meet all of California’s payment obligations through the fiscal year,” Chiang said.The IOUs were sent to the state’s vendors, county social service agencies and residents expecting tax refunds. The state’s biggest banks accepted them until July 10, but then most cut them off, hoping to bring lawmakers and the governors to the negotiating table. They were told they could redeem the paper on Oct. 2 or when the state had enough money in the bank, whichever came first. They will be paid an annual interest rate of 3.75%.California still isn’t out of its hole: The state will need to borrow 10.5 billion to meet California’s cash needs for the fiscal year, Chiang said. Ending the IOUs on Sept. 4 is contingent on the state obtaining a 1.5 billion loan by Aug. 28, which the state treasurer assured the controller will happen.

Source:CNN

NEW YORK: U.S. banks will collect a record 38.5 billion in overdraft fees this year, with nearly all the revenue paid by just 10% of customers, according to a research report released Monday.The windfall is nearly double the 19.9 billion collected in 2000, as overdraft fees drift higher despite the recession, said Mike Moebs, chief executive of research company Moebs Services.”Overdrafts are the mother lode of all service-related charges, and they’re often the only source of capital,” Moebs said. “Still, we had never seen fees go higher in any recession until now.”The national median overdraft fee rose to 26 from 25 in 2008, while larger Wall Street banks charge a median of 35, Moebs said.Moebs Services collected data from 2,000 banks and credit unions, and the firm found that 44.5% reported a net overdraft revenue higher than their net income. Fee hikes have helped banks boost profit amid the recession, Moebs said.”Most people paying these fees have a credit score below 590 or so,” Moebs said. “Beyond that, they’re a whole gamut of people: rich and poor, men and women.” Government-mandated overdraft fee increases “are leading the charge,” Moebs said. For example, he said, a local U.S. post office decides to increase its overdraft fee to 35. Area retailers note the increase and in turn raise their own fees. Finally, banks follow suit.”I doubt anybody in Congress is aware of this,” Moebs said. “The customers are angry, and they have a right to be angry.”The Federal Reserve and other lawmakers are discussing rules about overdraft fees, Moebs noted, but he thinks cash-strapped customers need more transparency — and soon.”We need to do everything we can for consumers: send e-mails, text messages, voice-activated alerts,” Moebs said. “It’s essential that we send a wake-up call, especially to Wall Street banks.”A JPMorgan Chase (JPM, Fortune 500) spokesman told CNN that his company did not raise overdraft fees from last year, saying that the bank charges overdraft fees depending on number of times it occurs ranging from 25 to 35. Other banks were not reached for comment by CNN.–CNN’s Ekin Middleton contributed to this report.

Source:CNN

NEW YORK: Bank of America and federal regulators will make their case for a 33 million settlement before a U.S. District Court judge Monday afternoon, just days after the judge refused to give his stamp of approval on the deal. The Securities and Exchange Commission reached the agreement last week after it filed charges against the bank for allegedly misleading investors about billions of dollars in bonuses paid to Merrill Lynch executives. The 33 million settlement requires court approval. But Judge Jed Rakoff refused, citing the “public importance” of the case. The judge issued a two-page order, arguing that a settlement “would leave uncertain the truth of the very serious allegations.”The payouts followed BofA’s takeover of Merrill, which was approved by shareholders late last year.Regulators claimed that BofA had failed to disclose plans to pay out as much as 5.8 billion in bonuses for fiscal year 2008. Instead of issuing the disclosure in its proxy statement, the bank told shareholders that Merrill had agreed not to pay year-end performance bonuses, according to the SEC.Under the agreement with the SEC, Bank of America (BAC, Fortune 500) did not admit to any wrongdoing. Rakoff will hear from attorneys representing both the bank and the the SEC at 4 p.m. ET in New York. Neither BofA nor the SEC were immediately available for comment.Unusual settlement. Legal experts say that Rakoff likely wanted to hold up the deal because of peculiarities in the settlement. “The SEC must have wanted a quick settlement,” said John Coffee, professor of law at Columbia University. “Judge Rakoff has done exactly the right thing.”In the judge’s order, sent to both parties on Aug. 5, Rakoff also said he wanted to ensure that the 33 million did not come from the 20 billion bailout BofA received from the Treasury Department in January.”This was a very unusual settlement, because the SEC usually doesn’t allege there are material wrongdoings at a corporation without trying to identify who the culprits were,” said Coffee. “Corporations don’t tell lies, offices and employees do. We should penalize those people, not the shareholders.”Merrill’s decision to pay big bonuses first came to light in February, after New York state Attorney General Andrew Cuomo accused the firm of “secretly” rewarding executives before its merger with BofA closed.The subsequent investigation by state officials ultimately led to a string of revelations, including Merrill’s decision to move up the date of its year-end bonus payments.Rakoff has been down this road before. In 2003, he refused to sign off on a 500 million settlement between the SEC and bankrupt telecom giant WorldCom. After the parties were forced to renegotiate the settlement, Rakoff later signed off on a 750 million fine and stock set aside for former investors in the company for when WorldCom emerged from bankruptcy.

Source:CNN

NEW YORK (Fortune) — Dear Annie: Call me an old hippie (I served in the Peace Corps in the late ’60s), but I’ve always wished I could find a job that would let me make a decent living while also doing some real good for someone. I’ve volunteered for local nonprofits all through my finance career, but now that I’m “retiring” as chief financial officer of a medium-sized professional-services firm, I plan to keep working full time somewhere, and I want to do more for the planet. Do you have any suggestions? –Palisades PeacenikDear Peacenik: Your timing is terrific. As it happens, a crop of new venture capital firms (some of them started by people who got rich way back in the dot-com boom) are pumping money into startups that aim to earn a profit while also making the world a better place. One of these, a venture outfit called Good Capital, sponsors an annual conference to bring investors, employers, and job seekers like you together in one place (for information, see www.socialcapitalmarkets.net).”We call it ’social capital,’ a blend of the profit motive and the desire to make a difference, and these companies are expanding fast,” says Good Capital founding partner Kevin Jones. “They need people with financial skills, marketing expertise, manufacturing experience, you name it.”A few examples: Root Capital, headquartered in Cambridge, Mass., makes loans to small farms in the developing world that grow sugar, coffee, and vanilla. Just a couple of years old, Root Capital already has hundreds of millions in loans outstanding and 14 million in annual revenues.Another hybrid of nonprofit and for-profit enterprise, Washington, D.C.-based Kaboom, started with the mission of putting a playground in every urban neighborhood in the U.S. and is now launching a for-profit spinoff that makes a playground-in-a-box.Better World Books, growing at a 30% annual rate this year, has seen its revenues jump from 4 million to 31 million since 2005. The company, based in Mishiwaka, Ind., resells used books that volunteers gather from libraries and universities. Most of the profits — 6.5 million so far — go to literacy programs around the world; Better World Books also claims to have saved over 20 million books from landfills.”Everyone in this field is applying business discipline to create social change,” says Arun Gore, a principal at Gray Ghost Ventures in Atlanta, which backs social-capital startups. In his previous career, Gore was the chief financial officer for joint ventures at T-Mobile. “As investors, we do want to see a profit, but the approach to issues is completely different,” he says. “In a corporation, the only goal is to make money. If an enterprise wasn’t profitable [for T-Mobile], we’d wrap it up and get out. Here, even if we don’t stay on as investors, we try to help the startup survive these tough times and get on its feet.”One investment, a 50% stake in an affordable-housing company, didn’t pan out financially, but Gray Ghost is still working with the founders to turn it into a going concern. “You look at the long-term impact on the community, not just the short-term gain or loss,” says Gore, adding that joining a social-capital startup isn’t for novices: “You need fairly strong financial and operational skills to do this.”You also need to be willing to take a pay cut and do without the infrastructure and amenities that big corporations usually provide. John Ujda joined Better World Books five months ago as vice president of marketing in Atlanta, after a long career at Primedia, Earthlink, and elsewhere. He took a 15% pay cut and notes that “our nonprofit literacy-campaign partners get paid first, so sometimes profitability for us is a challenge. Money doesn’t flow quite so freely as in a purely for-profit company.” Still, he says, he loves what he’s doing and calls promoting literacy “a great get-out-of-bed factor.”Kate Tierney couldn’t agree more. Former head of sales for the 1.2-billion-a-year Western region of giant food wholesaler United Natural Foods Inc., where she had 12 direct reports and 80-odd sales associates under her, Tierney just started her new job as national sales director for San Francisco-based AlterEco. AlterEco imports organic food products from small farmers in developing countries. It has five U.S. employees.”The nimbleness of such a small organization is great,” Tierney says. “You make a decision and it happens. I also love knowing that my job directly affects a small farmer in Bolivia, or an olive grower in Palestine, and his ability to feed his family and educate his children. Waking up with that in mind every day is just a fantastic feeling.”Like Ujda, Tierney took a big pay cut to do this, but she’s adapted: “I eat out a lot less, and I planted a garden. I get a thrill out of eating stuff I grew myself.”Talkback: Have you ever considered leaving the corporate world to work for a nonprofit, or a “social capital” startup whose main purpose is to help others? Do you “do good” at work? Do you wish you could do more? Sign on to Facebook below and tell us.

Source:CNN

TRAVERSE CITY, Mich. (Reuters) — General Motors Co. unveiled plans to launch a plug-in SUV for its Buick brand in 2011, its latest move away from gasoline-thirsty vehicles in response to higher fuel-economy standards.The new five-passenger Buick crossover is expected to be the first commercially available plug-in hybrid sport-utility vehicle by a major automaker, and would follow GM’s heavily touted Chevrolet Volt plug-in car into the market.GM Vice Chairman Tom Stephens, announcing plans for the Buick hybrid at an annual industry conference in Traverse City, Michigan, on Thursday, said the company’s “robust” balance sheet following its bankruptcy restructuring gives it flexibility to focus on product development.Major automakers, including GM (GM, Fortune 500) and Toyota Motor Corp. (TMC), have been ramping up plans for a range of electric vehicles to meet higher U.S. fuel-economy standards and increased consumer demand for fuel-efficient vehicles.The Buick plug-in will use some of the same technology GM is developing for the Chevrolet Volt. It will be powered by next-generation lithium-ion batteries to be built by South Korea’s LG Chem and its Compact Power unit, based in Troy, Michigan.LG Chem is also supplying lithium-ion batteries for the Volt, which is slated to hit showrooms in late 2010. The Volt is one of the most eagerly awaited GM vehicles.Last year GM said it would launch a plug-in version of its Saturn Vue SUV, but its dropped that plan earlier this year when it decided to sell the Saturn brand. That sale is pending.The automaker had said the vehicle that would replace the now-scrapped Saturn would be an SUV from one of the four brands it plans to retain after it completes its restructuring: Chevy, Cadillac, Buick and GMC.

Source:CNN

NEW YORK: Microsoft has agreed to hire at least 400 Yahoo employees as part of the companies’ new plan to share revenue on Internet search advertising, a regulatory filing showed Wednesday. The software maker also agreed to pay the Internet search engine 150 million over three years to help implement the new partnership, Yahoo said in a Securities and Exchange Commission filing.Under the deal, which was announced July 29, search results on Yahoo.com will be powered by Microsoft’s technology. Yahoo, in turn, will be responsible for attracting premium advertisers.Microsoft will pay Yahoo 88% of the revenue it gains from searches on Yahoo’s sites. Microsoft will also have the rights to integrate Yahoo’s search technology into its own existing Web search platforms. The partnership is seen as a bid to challenge Google’s (GOOG, Fortune 500) dominance in the lucrative market for internet search advertising. The deal, which is subject to approval by antitrust regulators, is expected to close in early 2010. Microsoft (MSFT, Fortune 500) and Yahoo (YHOO, Fortune 500) shares were little changed in premarket trading.

Source:CNN