SEC sues over Avon, Rocky Mountain stock hoax

Ding dong! Fake Avon takeover calling!

The Securities and Exchange Commission filed a complaint in federal court Thursday against two investment firms, two fake companies, and one Bulgarian man for manipulating stock prices.

The complaint accuses Nedko Nedev and the companies of filing false documents with the SEC -- including an offer in May to buy up Avon (AVP) shares for almost double their trading price, which sent shares up 20%. The complaint links that hoax to a fraudulent filing from May 2014 offering to buy Tower International Group (TWGP) shares, which those shares soaring 32%. It also cites a December 2012 offer to acquire Rocky Mountain Chocolate (RMCF) stock, boosting those shares 4.6%.

The SEC also announced Thursday that it obtained an emergency court order to freeze the assets of two brokerage accounts that stood to profit from the scheme -- at least one of which was controlled by Nedev and held a combined $2 million in assets.

"Only three weeks after the manipulation of Avon stock occurred, this emergency court order keeps not only the alleged illicit profits from being transferred offshore, but preserves the SEC's ability to recover substantial penalties," said Andrew Ceresney, Director of the SEC Enforcement Division, in a press release.

Nedev held positions in all three companies whose stocks were manipulated prior to the fake filings, according to the court documents. While he is the only person named in the complaint, the filing indicates others were involved in the scheme.

"Nedev and others executed this scheme to manipulate the prices of these securities so that he could sell his positions at artificially-inflated prices," the complaint says.

The SEC estimates the two accounts made more than $20,000 off of the alleged Tower Group manipulation and Nedev made about $5,000 in excess profits after the Avon incident last month.

Related: Avon's sad tale: An American icon in decline

A brokerage account with Nevada-based Strategic Wealth Investments, Inc. also had investments in the three companies and was a beneficiary of the stock manipulation, according to the complaint. As of April last year, 99% of its portfolio was made up of Avon, Rocky Mountain and Tower Group stock. According to the court filing, that account was opened by a Bulgarian citizen.

Strategic Capital Partners Muster Ltd., a company incorporated in the British Virgin Islands, is accused of operating in tandem with Strategic Wealth Investments (both accounts were allegedly managed from the same IP address in Sofia, Bulgaria).

Nedev is a 37-year-old trader from Sofia who works for Strategic Capital, according to the complaint. The other two financial firms named in the complaint -- PTG Capital Partners LTD and PST Capital Group -- are identified as fictional companies invented for the purpose of the hoax.

An Avon spokesperson said the company "continues to work with regulators, as appropriate, regarding this matter." Tower Group and Rocky Mountain representatives were not immediately available for comment.

Related: Ding dong! Avon kicked out of S&P 500 after 50 years

Related: Losers! These 9 stocks missed the bull market

Wall Street banker gives summer interns ’10 Commandments’

ten commandments

Want to succeed on Wall Street? A Barclays analyst has some advice for summer interns in the form the "10 Commandments."

Actually, he calls them 10 power commandments.

Justin Kwan, a global power and utilities analyst in the investment banking division, advises Wall Street newbies to be the first to get in at the office in the morning and the last ones to leave at night.

"Enjoy your casual 9:15AM arrival time this Friday, but I wouldn't get used to it," he cautions in a June 2 email obtained by the Wall Street Journal. In fact, he recommends bringing a pillow or yoga mat in as soon as possible to make sleeping under the desk a bit more enjoyable.

Dressing for success is a must. It's Commandment #1. Kwan, a second-year analyst, says the more conservative your style is, the better.

"Men: On your first day at the desk, it is customary to wear a bowtie and/or suspenders," he writes. And never take off your jacket.

Related: From Wall Street newbie to millionaire by age 27

Interns should do everything possible to ingratiate themselves with their superiors. Commandment #6 tells them to bring breakfast for higher-ups on the team and #8 says to use the late-night company dinner allowances (in the office, of course) to buy extra appetizers for their office mentors.

Though some of these commandments ring true for many, the email is meant as a joke. The subject line is "Welcome to the Jungle."

Commandment #9 recommends having a spare tie or scarf at your desk because "you never know when your associate will run out of napkins."

Commandment #10 is to remember to fill in the sign out sheet whenever you step outside your cubicle.

Barclays stresses that the email was "in no way authorized" by the bank.

Toward the end of the lengthy note Kwan writes: "I hope it is clear from the rules above that the internship really is a 9-week commitment at the desk" before claiming that when he was an intern someone asked for a weekend off for a family reunion and was asked to hand in his Blackberry and pack up his stuff.

Wall Street's long hours and dog-eat-dog culture are once again in the spotlight after the recent death of a 22-year-old Goldman Sachs analyst. The young man's father claims the bank worked his son to his breaking point.

"We have implemented policies and training guidelines to enable employees to gain valuable experience while at the same time maintaining a healthy work-life balance," a Barclays spokeswoman told CNNMoney.

Kwan did not respond to request for comment. He still lists that he is employed at Barclays on his LinkedIn profile.

Related: More bankers ok with breaking the law to get ahead

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Related: Women are in charge of only 2% of mutual funds

HP’s Meg Whitman: More job cuts ahead

HP CEO: 'Yes' more layoffs are ahead

The pink slips are not done flying at Hewlett-Packard.

Since being hired to run HP (HPQ, Tech30) in 2011, Meg Whitman has overseen a dramatic downsizing that has cut about 55,000 jobs. The painful moves have been central to Whitman's efforts to turn around a once-iconic company.

But Whitman is now warning more layoffs are likely in the near future, given turbulence in the global economy.

"I think we are through the vast majority but I suspect there will be more fine-tuning over the next couple of years," Whitman told CNN's Poppy Harlow in an interview at HP Discover this week in Las Vegas.

Asked how many cuts are ahead -- Whitman declined to specify, but noted it will depend on how the economy fares between now and November 1. That's when the 76-year-old company is splitting itself into two publicly-traded entities.

HP Enterprise will focus on hyper-growth businesses like cloud technology and cyber security, while the second company, HP Inc., will continue selling slower-growth products such as PCs and printers.

Whitman said her team has discovered many ways to make both companies cost-effective, nimble and agile.

"There is more work to be done to get to these companies exactly where we need to be," said Whitman, who will serve as CEO of HP Enterprise and chairman of HP Inc.

HP has already announced plans to lay off as many as 21,000 workers just in the past year. That's the highest number of layoffs disclosed by a U.S. company since March 2014, according to outplacement firm Challenger, Gray & Christmas.

Related: HP and the 7 other biggest job-killing companies

Leaner HP needed: The tens of thousands of layoffs have been "tough on morale," Whitman said. But she also believes many HP employees realize they have to be done, particularly given the lightning pace of change in the tech world.

"I've never seen it move as fast," Whitman said, pointing to the rapid adoption of cloud technology, Big Data, cybersecurity and software-as-a-service.

"We've got to be able to take advantage of those market trends -- and frankly shape the market trends," she said.

Related: HP: Death of a Silicon Valley titan

Economic headaches: That job is being complicated by challenges in the economy -- both at home and abroad, where HP makes a big chunk of its money.

"I'm pretty concerned about the U.S. economy. ... It's not a robust recovery," Whitman said.

Whitman is also worried about the trajectory America is on. Top on her list of things that need reforming is the tax system and education policy.

"We've got to fix our education system or we are not going to have the pipeline of science, technology, engineering and math" talent, she said. "If we're not careful this will not be the American century."

Whitman is already seeing more weakness in the PC market this year than she anticipated. She blames that partly on an industry shift toward tablets and smartphones as well as on the volatility in the currency market, where the U.S. dollar soared in value until recently. The stronger greenback makes things sold overseas more expensive.

Related: PCs are dead. So says Wall Street. Again.

Related: IMF: Fed shouldn't raise rates until 2016

Greece delays IMF payment as cash runs short

Merkel: Greece should be more like Ireland

Greece needs money fast.

The heavily indebted country has postponed a payment to the International Monetary Fund, underlining how urgently it needs its creditors to release more bailout funds to avoid default and possible exit from the eurozone.

Athens was supposed to pay the IMF about 300 million euros on Friday, but said Thursday it would bundle all the payments due this month into one. That means Greece now owes the fund 1.54 billion euros ($1.7 billion) by June 30.

IMF rules allow borrowers to combine payments of principal due in a calendar month, but the provision has been used only once before -- by Zambia in the mid-1980s.

Greece has survived for nine months without access to the final 7.2 billion euro ($7.9 billion) tranche of its 240 billion euro bailout. But only by forcing local government and other public bodies to hand over cash reserves, and by tapping an emergency account at the IMF.

The country's five-year debt crisis deepened early this year when a new anti-austerity government insisted on renegotiating the terms of the biggest international bailout in history. That rescue kept Greece in the euro, but helped drive the economy deep into recession and unemployment to record levels.

Other eurozone countries -- which now hold most of Greece's debt -- and the IMF agreed to continue talking, but won't release the remaining cash until Greece agrees to budget targets and economic reforms.

Related: Merkel: Greece needs to make 'harsh reforms'

German Chancellor Angela Merkel held emergency talks this week with top officials from the IMF and European Central Bank to craft a proposal to break the deadlock. But discussions with Greek Prime Minister Alexis Tsipras failed to produce a breakthrough.

Analysts said the decision to delay the IMF payment marked a significant escalation in the crisis. Just hours earlier, Tsipras had signaled it would go through.

"It is quite a quick and surprising U-turn that takes it to another level, really," said Raoul Ruparel, the co-director of independent think tank Open Europe.

Ruparel said the decision could reflect tensions within Greece over how to use the government's rapidly diminishing government funds.

"I think they probably have the money ... but they don't want to risk paying [the IMF] and then not having enough money to pay wages and pensions."

News of the IMF postponement rattled markets -- the Dow extended its losses by about 75 points.

Greece has been unable to borrow from international bond markets, and if the bailout expires at the end of June without a new creditor agreement, the country will be on its own financially. And it owes another four billion euros to the ECB and IMF in July.

Related: Grexit 101: How Greece could drop out of the euro

The uncertainty over Greece's financial position has snuffed out a tentative economic recovery. Savers have pulled billions of euros from Greek banks -- leaving the banks dependent on emergency funding from the ECB.

Unless an agreement with Europe and the IMF comes soon, Greece risks a new bank run and could be forced to introduce limits on how much cash Greeks can withdraw from their account or take out of the country.

With its banking system tottering, and the economy in recession again, the government may then have no choice but to issue IOUs -- in effect a parallel currency to the euro -- to pay its domestic bills.

At some point those notes would have to be converted into cash, and that's when Athens may have to abandon the euro and print its own money.

-- Ivana Kottasova contributed to this article.

The stock market is long overdue for a big drop

market correction

The U.S. stock market is long overdue for a big fall.

It has been 925 trading days since the stock market had a correction, according to a recent Deutsche Bank (DB) report. That's more than double the average length of time it usually takes.

A correction is a 10% or greater decline in the stock market in a short period of time. The average rally period without a correction is 357 trading days, according to a Deutsche Bank analysis of stock market moves since the 1950s.

The Deutsche Bank strategists aren't quite ready to say a correction is imminent, but they add their voices to those saying: Beware!

"We believe the probability of a 5%+ dip is high this summer," the report by chief U.S. equity strategist David Bianco says.

Stocks look very pricey, the report warns, especially given signs that American economic growth isn't picking up in 2015 as many had hoped. On top of that, corporate sales and earnings have been disappointing.

Related: IMF: Fed shouldn't raise rates until 2016

What to watch for: Bianco points to three possible sell-off triggers: the Federal Reserve botching the timing of the first rate hike, the U.S. dollar getting too strong and the bond market -- especially the U.S. 10-year yield -- rising too fast.

The Fed's efforts to keep interest rates at historic lows in order to boost economic growth may be backfiring.

"We know central banks want to be supportive of markets and confidence, but this has its risks now especially in the U.S.," the report cautions.

The current rally is the third-longest without a correction. The mid-1990s had an even longer stretch of seven years before there was a 10% correction.

trading days

That rally finally ended in October 1997 after a "mini-crash" in Asia sparked a sell-off around the world.

Since over three and a half years have passed without a correction greater than 10% again, Deutsche Bank advises re-examining your portfolio.

The solution isn't to exit stocks. Instead, look for opportunities to buy during the dips. Stocks often go up after a correction. It doesn't mean the bull market is done.

To avoid volatility, the researchers recommend steering away from "consumer companies [with] tired brands or facing tough competition" and "commodity and industrial capital goods producers."

Stock market rallies don't just die of old age, but history is a valuable guide, and it suggests a correction may be coming sooner rather than later.

Related: The US and world economies are slowing down

Related: 8 top stocks to buy in June

China is hoarding cheap oil in a fleet of supertankers

China is hoarding oil

As Middle East oil producers drive prices lower and make life difficult for the U.S. fracking industry, one clear winner is emerging: China

The world's second-largest economy become the top oil importer in April. The key reason? China is taking advantage of cheap oil to boost its strategic reserves.

"They've been building out strategic storage. The goal is to build out to about 500 million barrels, compared to the U.S. capacity of 700 million to 800 million barrels," said Jeff Brown of Singapore-based energy consultants FGE.

Brown said that while the numbers are a little murky, China has already built out about 150 million barrels of extra storage, with more capacity planned through the end of the year.

"They take a lot of pride in buying oil when it's cheap," he said.

Related: Why OPEC can't kill the U.S. oil boom

Despite the massive capacity boom, China is still buying more oil than it can store -- and all that crude has to go somewhere.

The solution lies in the Strait of Malacca. At anchor just a few kilometers off the coast of Malaysia lies the TI Europe, brimming with about 3 million barrels of oil destined for China.

This 440,000 tonne monster is the world's biggest tanker. She has been leased by the China's state owned oil company at an estimated cost of $40,000 a day, to store oil until it can be shipped to China in smaller vessels.

And she's not the only one. Oil tanker analyst Richard Matthews of Gibson Shipbroking in the U.K. says there has been a surge in the number of supertankers being leased for storage.

"Normally, excluding Iranian ships, you might see only two or three ships storing, and they could be supporting offshore projects," he said. "Now there are up to 17 or 18 non-Iranian tankers."

Related: Plunging oil prices won't solve China's economic problems

Supertankers can also be used to store oil in a market where the future price of crude is expected to be significantly higher than the current price.

Speculators buy cheap, bear the huge cost of storage and finance, and still make a profit when they sell a few months later.

But analysts say that, for now, the difference between the current and future price is not wide enough to rake in speculative profits, which points to China filling its boats.

China could also turn to land facilities for storage, mainly in South Africa. But the Strait of Malacca has an advantageous location, situated halfway between the big oil producers and the Chinese mainland.

Even as China builds out and fills it strategic oil reserves, consumers continue to gobble up fuel. Much of the demand comes from motorists, who are in the middle of a love affair with gas-guzzling SUVs. In the first three months of the year, sales of SUVs soared an eye-watering 48% in China over last year.

Neil Beveridge, senior oil analyst at Sanford C. Bernstein in Hong Kong, said that oil consumption in China has remained steady at around 10 million barrels a day over the past few months, despite slower economic growth of nearly 7%.

The good news for Chinese drivers is that the price of oil shouldn't rise much higher. In fact, it is more likely to fall, at least in the short term.

"We think the market is way oversupplied right now," said FGE's Brown. "We expect in the next few months a big pullback and oil could drop below $50 a barrel again."

Related: China's 3 richest men are in hot water

Onesies have never been so hot

Wall Street's hot fashion trend? Footies

Fashion is fickle and consumers aren't spending much this year. A lot of apparel companies -- especially those that cater to teens and other youthful customers -- are struggling.

But don't tell that to Carter's (CRI). The baby and young kid's clothing maker, which also owns Oskosh, is doing extremely well. The stock is up 20% this year and trading at an all-time high. Why?

Sales have been strong, especially at its retail stores in the United States. The company reported first quarter revenues and profits in April that easily topped Wall Street's forecasts.

Let's face it. A sluggish economy isn't going to stop parents, grandparents, aunts and uncles from buying adorable onesies and footie pajamas with jungle animals on them for their precious little bundles.

I have two young boys. Based on the amount of Carter's clothing we have in our house, I should have followed the Peter Lynch buy what you know model and invested in the stock years ago!

Carter's is the clear leader in the market. Its earnings are growing at a better clip than rival Children's Place (CRI).

Related: Tiny models look just like Oscar A-listers

Gymboree, which is owned by private equity firm Bain Capital, reported a net loss in its most recent quarter and is planning to close 30 to 40 stores this year.

Of course, no retailer is immune to macroeconomic trends. But it's telling that Carter's did so well in the first quarter while many other retailers were busy playing the blame game for lousy results: The dollar is too strong and tourists aren't coming here to shop! The weather stunk! The labor issues at ports in California created a backlog of our products!

Carter's CEO Michael Casey specifically mentioned the latter two issues in the earnings report. He said that sales were up "despite the winter storms and West Coast port delays."

Target's (TGT) new CEO made similar comments when that retailer reported solid results last month.

It goes to show that strong retailers just deliver. They don't need to make excuses.

And it doesn't hurt that the babies and toddlers who wind up wearing Carter's clothes aren't old enough yet to be asking their parents to shop at Zara or Forever 21 instead.

Related: Goldman Sachs doubles paternity leave to 4 weeks

Related: 'Connected' babies = more sleep for you

IMF: Fed shouldn’t raise rates until 2016

Lagarde LW

Christine Lagarde just told Janet Yellen to chill out.

The International Monetary Fund wants the Federal Reserve to wait until 2016 before it raises its interest rates off their historic lows. The U.S. economy isn't healthy enough to act before that, the IMF concludes.

That goes against what Fed Chair Janet Yellen said just two weeks ago during a speech in Rhode Island. Yellen sees signs of a recovery and believes the Fed will be able to raise rates sometime this year. Most experts believe the Fed will raise rates in September, but the IMF recommendation will likely re-open the debate.

Thursday's IMF report is another worrisome sign that the U.S. economy is stalling. Although the IMF still expects America's economy to grow this year at a rate of 2.5%, that is almost in line with last year's growth.

The hope was that America would have a break out year in 2015. As recently as April, the IMF projected 3.1% growth for the U.S. Now the IMF sees too many factors holding the economy back.

Related: The U.S. and world economies are slowing down

"The underpinnings for continued growth and job creation remain in place. However, momentum was sapped in recent months by a series of negative shocks," the IMF, led by Lagarde, said in its report.

The IMF recommends that the Fed should wait until the economy shows better wage growth and lower levels of part-time employment, among other improvements.

While hiring has picked up, pay has not. Wages only grew by 2.2% in April compared to year ago, well below the Fed's goal for 3.5% growth. And 6.6 million Americans are working part-time jobs but want full-time jobs -- much higher than the pre-recession level.

America's economy contracted in the first quarter this year, leading the IMF to believe that the first few months of 2015 will drag down growth for the year.

The Fed hasn't raised rates in almost a decade. A rate hike would show that the Fed is confident enough about the economy's health to take off the training wheels that have been in place since the financial crisis. A spokesperson for the Federal Reserve declined to comment on the IMF's report.

After dropping over 110 points early Thursday morning, the stock market trimmed its losses somewhat. Investors are concerned a rate hike could disrupt the bull market's 6-year run. Any delayed rate hike is good news to some investors.

Related: The 10 best cities where you can earn a living wage

Merkel: Greece needs to make ‘harsh reforms’

Merkel: Greece should be more like Ireland

Greece needs to return to the path of tough economic reforms to secure its future in the eurozone, German Chancellor Angela Merkel said Thursday.

Speaking to CNN after hours of talks Wednesday between Greece and its creditors failed to produce a breakthrough, Merkel said a solution to the current crisis needed "big efforts" by both sides.

But she made clear that Greece should look to the example of other countries in the eurozone -- such as Ireland -- that had implemented painful changes to their economies in response to the financial crisis.

"They went through such a program and now have the best growth in the eurozone," she said.

"That is the kind of course Greece needs to get on. And that is why the negotiations are tough, but they are clearly aimed at keeping Greece in the eurozone."

Merkel hosted an emergency session of talks with French President Francois Hollande, ECB President Mario Draghi and the head of the International Monetary Fund Christine Lagarde in Berlin Monday.

They agreed a proposal to solve the Greek crisis, which was put to Prime Minister Alexis Tsipras in Brussels on Wednesday. Tsipras came to the meeting with his own proposal. There was little evidence that the talks produced major progress on the big stumbling blocks.

Related: How Greece could drop out of the euro

Greece has to pay the IMF 300 million euros ($336 million) on Friday, and about 1.6 billion euros in total this month.

But Athens is running out of money. Its current international bailout program expires at the end of June.

Without access to the remaining 7.2 billion euros ($7.9 billion) in bailout funds, it may not be able to continue to pay wages and pensions, as well as its creditors.

It only managed to stay afloat last month by raiding its emergency reserves, and forcing local government and other public bodies to hand over cash. Without the bailout cash Greece will be forced into default, and could stumble out of the euro.

Related: These investors are getting killed in Greece

CNN's Ivana Kottasova and Chris Liakos contributed to this report.

T-Mobile and Dish Network in talks to merge

T-Mobile and Dish Network in talks to merge

T-Mobile and the Dish Network may merge, creating a more formidable competitor in the wireless industry.

Talks between the two companies are ongoing, a source told CNNMoney Wednesday night, confirming a Wall Street Journal report that outlined the possible merger.

The source insisted on anonymity. Representatives of both companies declined to confirm or deny the talks.

The pairing is logical for several reasons -- Dish (DISH), the No. 2 satellite television provider in the United States, has been acquiring vast amounts of wireless spectrum. T-Mobile (TMUS) could put that spectrum to use.

The two companies could come up with new products and services using the spectrum; Dish's relationships with major media companies; and both companies' connections to millions of households.

But first, they'd have to strike a deal.

There is no word on the purchase price or the structure of an eventual combination of the two companies. But the Journal said there is "close agreement" about a leadership team, "with Dish Chief Executive Charlie Ergen becoming the company's chairman and his T-Mobile counterpart, John Legere, serving as the combined company's CEO."

The deal talks come amid a dramatic period of consolidation in the telecommunications industry. One of T-Mobile's larger rivals, AT&T, is seeking to merge with Dish's biggest rival, DirecTV.

And just last week, Charter Communications (CHTR) announced a plan to merge with Time Warner Cable (TWC), creating a more muscular competitor to the No. 1 cable company, Comcast.

Related: Charter merging with Time Warner Cable: what now?