Good morning, dear readers. Here’s what I’ve been perusing.
Confess or else
Peter Henning has a good round-up in the New York Times of GlaxoSmithKline’s legal troubles in China over a bribery investigation. First the drug maker denied there was a problem. Then it started admitting to all sorts of allegations. It turns out the government has taken a bunch of Glaxo’s employees into custody. Should we believe Glaxo’s admissions? Who knows? Even if the bribery claims were all false, it wouldn’t be a shock to find out that a huge Western company copped a plea to mollify the Chinese authorities and make sure its business there didn’t suffer major interruptions.
The beatings will continue until Sony’s stock price improves
It’s always fun to read Dan Loeb’s letters to investors at his hedge fund Third Point, especially when he’s in activist mode. Commenting on Sony’s entertainment division, the fund says it remains “poorly managed, with a famously bloated corporate structure, generous perk packages, high salaries for underperforming senior executives, and marketing budgets that do not seem to be in line with any sense of return on capital invested.” Give Loeb credit for trying to do something about it. Third Point bought its Sony stake earlier this year.
There’s never a shortage of Big Four accounting-firm scandals
This time it’s Deloitte & Touche’s U.K. affiliate. The Daily Mail writes that the firm “was sweating on Monday night over the size of fines it might suffer for its role in the collapse of MG Rover,” the carmaker. A tribunal found the firm and a partner had displayed a “persistent and, in our view, deliberate disregard” for proper accounting practice. No worries, though. Deloitte will pay whatever fine it must, and then move on to the next scandal.
Yet another sign we’re in a Fed-fueled bond bubble
“Investors are pumping money into junk bonds globally at the fastest pace ever while tempering their enthusiasm for higher-rated debt, demonstrating a preference for yield over stability,” writes Lisa Abramowicz of Bloomberg News. Remember what Chuck Prince said in 2007 when he was boss at Citigroup: As long as the music is playing, you have to dance. The market is still dancing.
Fraud indictments are for little people
The Justice Department may not prosecute many big-time bankers. But it sure knows how to get indictments against small-fry accused of lying to banks on loan applications. Yesterday’s catch: Teresa and Joe Giudice, stars of the Bravo channel television show “Real Housewives of New Jersey.” At least it might help ratings.
(Jonathan Weil is a Bloomberg View columnist. Follow him on Twitter.)