Investment News Briefs: UBS Fined $13.3 Million; Exxon And Shell Sign Iraq Oil Contract; Shares Of Ancestry.com Soar On IPO

Retail Sales Slump; U.K. Government Fines UBS $13.3 Million; Exxon and Shell Sign Iraq Oil Contract; BOE Expands Quantitative Easing; FBI Arrests 14 in Galleon Probe; Petrobras Finds Gas in Peru; Shares of Ancestry.com Soar on IPO; Mortgage Rates Drop Below 5%

• More than half of U.S. retail chains posted October sales that fell short of Wall Street’s heightened expectations in an ominous sign for the upcoming holiday season, Reuters reported. “October results are not going to give investors the overall warm and fuzzy that we’re on track for a strong Christmas,” said Brean Murray, Carret & Co analyst Eric Beder, “It looks like we’re on track for kind of a mediocre season right now based upon October.” Department store chains and teen retailers were especially hard hit by consumer reluctance.

• Swiss bank UBS AG (UBS) yesterday (Thursday) received a $13.3 million (8 million pound) fine from the British government for management failures that allowed employees to make unauthorized trades with customers’ accounts, The Associated Press reported. Four employees and at least 39 accounts in UBS’ wealth management business were involved in the unauthorized transactions, which took place in 2006 and 2007. UBS has paid more than $42 million compensation to the wealthy customers who were affected.

• Exxon Mobil Corp. (XOM) and Royal Dutch Shell PLC (RDS-A) yesterday (Thursday) won the right to develop Iraq’s giant West Qurna oilfield. The agreement is the third such deal this year and marks the first time a U.S.-led consortium will re-enter Iraq’s oil industry in more than 30 years, The Financial Times reported.

• The Bank of England (BOE) yesterday (Thursday) said it would expand its policy of quantitative easing, by $41.5 billion (25 billion pounds). The increase brings the central bank’s total asset-buying program to $332 billion (200 billion pounds), the equivalent of more than 14% of Great Britain’s gross domestic product (GDP).

• U.S. prosecutors expanded the massive insider trading case against Galleon Group when the FBI charged 14 more people, including hedge fund managers and an ex-employee of Galleon, with securities violations.  Zvi Goffer, a former Galleon employee, and Craig Drimal, who worked at the Manhattan firm’s offices, were arrested yesterday (Thursday) the FBI said. Goffer, the alleged ringleader of the scheme and founder of Incremental Capital LLC, paid his tipsters for information on mergers and acquisitions, and gave them pre-paid mobile phones to avoid detection, as part of a probe of an alleged insider trading scheme totaling $40 million the government said. Five of those charged pleaded guilty, Bloomberg News reported.

• Peruvian President Alan Garcia indicated Brazil’s Petrobras SA (PBR) has about 1 trillion cubic feet of natural gas in Peru’s Amazon jungle and the discovery of could turn out to be much larger, Reuters reported. The new discovery might calm a controversy that has nagged Garcia. His critics say plans to export liquefied natural gas might crimp domestic supplies in the future. “They are talking about 1 trillion and a half cubic feet in the first well which some experts at Perupetro say could reach more than 5 tcf,” Garcia said on RPP radio. Perupetro is Peru’s agency that sells oil and gas concessions.

• Shares of Ancestry.com Inc., the world’s largest online provider of family histories, surged on the first day of trading after raising $100 million in an initial public offering. The Provo, Utah-based company’s shares advanced as much as $1.25, or 9.3%, to $14.75 in Nasdaq Stock Market composite trading. Ancestry.com, private-equity firms Spectrum Equity Investors and W Capital Partners, and other owners sold 7.41 million shares at $13.50 each, the midpoint of its forecast range in its IPO. The sale valued the company at about $572 million.  “They’re the leader in the market,” Eric Guja, an analyst at Renaissance Capital LLC in Greenwich, Connecticut told Bloomberg. “Their profit margins are impressive.”

• Mortgage rates for 30-year fixed U.S. home loans fell for the first time in a month this week as the Federal Reserve pledged to keep its benchmark rate near zero for an extended period.  The average 30-year mortgage rate declined to 4.98% from 5.03%. The 15-year rate was 4.40%, mortgage buyer Freddie Mac (FRE) of McLean, Virginia, said today in a statement, according to Bloomberg.

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