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Posts with tag Parmalat

Citigroup goes on trial for Parmalat collapse

Posted May 5th 2008 2:35PM by Zac Bissonnette
Filed under: Law, Scandals, Citigroup Inc. (C)

Because the subprime mess hasn't been invigorating enough, Citigroup (NYSE: C) will now have to go to court to deal with a lawsuit brought by Parmalat, the Italian dairy company that collapsed under the weight of a massive accounting scandal back in 2003.

Enrico Bond, who was brought in to run Parmalat by the Italian government, is reportedly seeking $2-4 billion in damages from Citigroup. Parmalat claims that Citigroup was aware of the company's treacherous finances, and concealed and helped to conceal the truth from investors.

According to Paramalat, "Citigroup faces a very serious charge at the trial in New Jersey - that its bankers helped the corrupt insiders dress up Parmalat's financial statements and loot the company over a number of years."

Citigroup countered that "Citi is a victim of Parmalat's fraud and is confident that the merits of our position will be demonstrated in court."

Continue reading Citigroup goes on trial for Parmalat collapse

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Bank of America will stand trial in Italy

Posted Jul 6th 2007 12:01PM by Brent Archer
Filed under: Law, Bank of America (BAC), Options, Technical Analysis

Bank of America Corp (NYSE: BAC) opened at $49.31. So far today the stock has hit a low of $49.00 and a high of $49.37. As of 10:35, BAC is trading at $49.00, down $0.37 (-0.7%).

After hitting a one-year high of $55.08 in November, the stock has been mostly flat around $50 over the past six months. A Milan judge has ordered Bank of America to stand trial for alleged market-rigging by some of its employees in connection with Italian dairy firm Parmalat's collapse. According to Bank of America, four other banks are also going to trial over the issue, and the company maintains that the charges are "completely unfounded." Recent technical indicators for BAC have been bearish and steady, while S&P gives the stock a very positive 5 STARS (out of 5) strong buy rating.

For a bearish hedged play on this stock, I would consider a November bear-call credit spread above the $55 range. BAC has only been above $55 by a few cents in the past year and has shown resistance around $50.50 recently. This trade could be risky if the company's earnings (due out on July 19) are a positive surprise, but even if that happens, this relatively stable stock has had some serious resistance around $52 for much of the past four months.

Brent Archer is an options analyst and writer at Investors Observer.
DISCLOSURE: Mr. Archer owns and/or controls diversified portfolios of long and short stock and option positions that may include holdings in companies he writes about. At publication time, Brent controls a moderately bullish hedged position in BAC.
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Last updated: July 05, 2008: 03:15 PM

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