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More lead found: This time it's in children's jewelry, and stores across California are being ordered to pull bracelets, rings and necklaces contaminated with as much as 600 times the legal limit. State regulators said it’s just the first step in an enforcement campaign authorized by a new law banning unhealthful levels of lead. From the LAT:
In Southern California, inspectors said they purchased lead-laced bangles at three stores in the Glendale Galleria: Macy's, GapKids and Sanrio Surprises, best known for its "Hello Kitty" paraphernalia. The lead content in items at these stores ranged from 2,140 to 47,500 ppm. Ingesting even minute amounts of lead can cause developmental defects and serious health problems, especially in children. The new state law bans the sale of children's jewelry with lead content of more than 600 parts per million.
More cancelled policies: The state insurance commissioner has accused Blue Shield of more than 1,000 violations of claims-handling laws that resulted in 200 or so folks losing their medical coverage. He'll seek a $12.6 million fine. Blue Shield rescinds policies based on what it considers misstatements on applications, but the Insurance Department alleges that the insurer didn't properly vet applications before issuing the policies in the first place. Blue Shield called the charges "grossly unfair" and vowed to contest them. (LAT)
Fooled 'ya: Don't believe all the gloom-and-doom you read in the papers. It turns out that retail sales increased twice as much as forecast in November, despite record gas prices and the sick housing market. Actually, the increase was the biggest since May, and it's sure to raise hopes that the nation will avoid falling into a recession. Purchases of furniture, electronics, building material, and department stores all registered gains. (Bloomberg)
Clinton ditches Burkle: The former president is in the process of cutting off his business relationships with the L.A. billionaire in the event that his wife becomes the Democratic nominee for president. Good move - Burkle's investment firm, Yucaipa Cos., has been involved in several controversial deals that will likely come up during the campaign. From the WSJ:
Early this year one of the Yucaipa domestic funds where Mr. Clinton was senior adviser became embroiled in a battle to win control of a bankrupt auto-hauling company. Critics contended Mr. Clinton's union connections helped Mr. Burkle win big concessions from the Teamster's union, which represented many of the workers at the company. Spokesmen for Mr. Clinton, Mr. Burkle and the union strongly denied that there were any improper dealings. Yucaipa eventually won control of the auto hauler. More recently, controversy erupted over a joint real-estate venture between Yucaipa and a young Italian businessman named Raffaello Follieri. Mr. Follieri had been introduced to Mr. Burkle by Douglas Band, Mr. Clinton's closest aide, say people familiar with the matter. Earlier this year, Yucaipa filed suit in Delaware state court against Mr. Follieri, claiming that he had misappropriated more than $1 million from the joint venture to finance a lavish personal lifestyle.
More questions for Countrywide: Illinois Attorney General Lisa Madigan has subpoenaed documents from the Calabasas-based mortgage giant relating to its loan origination practices - specifically, whether it trapped borrowers in high-cost mortgages they can no longer afford. The inquiry follows a complaint filed against One Source Mortgage, a Chicago mortgage broker that was Countrywide's primary lender. From the NYT:
The attorney general’s lawsuit contended that One Source put borrowers into loans with terms they did not understand, especially so-called pay option adjustable-rate mortgages. These loans allow borrowers to pay only a fraction of the interest owed and none of the principal, resulting in a growing rather than a shrinking mortgage balance. Countrywide was One Source’s main provider of pay option loans, documents in that case show.
Dow Jones shareholders approve sale: No surprise, but now it's finally a done deal - Rupert Murdoch takes control of the WSJ and its parent DJ. Shareholders this morning accepted a $5.3 billion offer (the vote was 60.27 percent in favor). (NYT)
Speaking of done deals: Endeavor Acquisition's purchase of L.A.-based American Apparel - that's the racy retailer founded by the eccentric entrepreneur Dov Chaney - has finally gone through, just three days before its expiration date. Endeavor is one of those "blank check" companies that exists for the sole purpose of buying other companies. As explained by DealBook's Andrew Ross Sorkin, time was of the essence because special purpose companies must cut a deal within 24 months or so or face liquidation.
Digital Domain to go public?: The Venice-based special effects company wants to raise about $100 million to pay off debt and maybe produce films. But there's skepticism about the IPO, mostly because market conditions aren't exactly great (United Online just canceled its plans to spin off Classmates.com into a public company). (THR)
"Jackasss 2.5" skips the theaters: Paramount says it will be the first studio-backed feature film to have its premiere online, through Blockbuster's Movielink service, though calling it a "feature" might be pushing things. Most of “Jackass 2.5” was shot for “Jackass: Number Two,” which made $73 million at the domestic box office. The new material includes opening and closing sequences and documentary-style interviews, mainly about what did not work. From the NYT:
Other studios have distributed Web-only short films (as Fox Searchlight did to promote “The Darjeeling Limited”) or teaser segments of their theatrical movies as part of promotional campaigns (as Sony did last weekend with “Walk Hard: The Dewey Cox Story”). But Viacom executives emphasized that this was a stand-alone venture that would pay for itself. They described the online premiere as an experiment aimed at gauging the potential revenue streams for studio-produced, longer-form Web material that could take advantage of the consumer appetite for user-generated content. “If this works, it could open up and really change the game about additional content that studios can create,” said Thomas Lesinski, president of Paramount Pictures Digital Entertainment. Then again, Paramount executives acknowledged it might not be the fairest test of long-form films.
Judgment Day: The much-awaited George Mitchell report on the use of performance-enhancing drugs in baseball will be released later this morning, and it's expected to name dozens of former and active players. One of Mitchell's sources is believed to be Kirk Radomski, a former Mets bat boy who pleaded guilty to steroid distribution last April. If all this is true, it will be more than many in the game had been anticipating. It also puts the squeeze on Commissioner Bud Selig, who holds a press conference after the Mitchell report comes out. (NYT)
Automakers rebuffed: You can be sure this isn't the end of it, but Federal District Judge Anthony W. Ishii affirmed a 2002 California law that would require automakers to raise the average fuel economy of their fleets by about 30 percent by 2016. The auto companies challenged the law, saying that it is technically and financially impossible to meet (yeah right). They also argued that regulation of vehicle mileage is the responsibility of the federal government, not the states. A bill now pending in Congress demands a 40 percent mileage increase by 2020. From the NYT:
Judge Ishii said that California was entitled to set its own, stricter standards under the Clean Air Act, provided the federal Environmental Protection Agency grants California a waiver from federal law, which it has done dozens of times over the past 35 years. California applied to the Bush administration for such a waiver in December 2005. The White House has said that it intends to issue its decision by the end of this month. While Republican and Democratic administration have routinely granted California waivers on pollution programs, this one is more controversial because the auto companies and other industries are lobbying heavily against it, claiming it will cost them too much to comply. The White House has not tipped its hand on how it intends to act on California’s application.
Billionaire's plea deal: OC developer Igor M. Olenicoff pleaded guilty to a federal tax felony and has paid $52 million in back taxes, interest and penalties to settle charges that he lied for years about his ownership of accounts in the Bahamas, Switzerland, Liechtenstein and Britain. He has also agreed to move all his offshore money back to the U.S. The single felony is punishable by up to three years in prison, but Olenicoff's deal with the feds will bring that down to at most six months - and perhaps just home detention or probation. (Forbes)
Mark Lacter created the LA Biz Observed blog in 2006. He posted
until the day before his death on Nov. 13, 2013.