UBS CEO Resigns Over $2.3 Billion Rogue Trading Loss

Sebastian Derungs/AFP/Getty Images(LONDON) -- UBS chief executive Oswald Gruebel has resigned over a $2.3 billion rogue trading loss, the Swiss bank announced Saturday, ending days of speculation.

The board of directors asked UBS Europe chief Sergio P. Ermotti to take over immediately as interim CEO until Gruebel's replacement is appointed, the bank said in a statement.

"The Board regrets Oswald Gruebel's decision," UBS Chairman Kaspar Villiger said, according to the statement.

"Oswald Gruebel feels that it is his duty to assume responsibility for the recent unauthorized trading incident. It is testimony to his uncompromising principles and integrity," Villiger said.

Villiger thanked Gruebel on behalf of the board of directors for "having helped make UBS one of the world's best capitalized banks."

"He achieved an impressive turnaround and strengthened UBS fundamentally," Villiger said.

London-based UBS securities trader Kweku Adoboli, 31, was arrested last week and charged with fraud and false accounting for the unauthorized trades, which led to a $2.3 billion loss. On Thursday, a judge ordered him to be held in jail until a hearing next month.

Adoboli started working for UBS as a trainee investment adviser in March 2006 and has had no disciplinary action taken against him previously, according to the Financial Services Authority register of advisors, as reported by the Press Association.

Erin Davis, senior stock analyst with Morningstar, said it seems Adoboli worked in the back office until he was promoted to the trading floor, which points to "below average" risk controls at the bank.

"A lot of banks won't allow that kind of promotion explicitly to avoid creating this kind of opportunity. It appears that the trader, because of his back office experience, was able to bypass the risk management systems," she said.

According to the statement, the board of directors will implement measures to prevent such incidents from reoccurring.

"We are committed to further expanding our already leading global wealth management franchise. The Investment Bank will continue to strengthen its alignment with UBS's wealth management businesses, in addition to serving its corporate, sovereign and other institutional clients," Villiger said. "In the future, the Investment Bank will be less complex, carry less risk and use less capital to produce reliable returns and contribute more optimally to UBS's overall objectives."

During the financial crisis, UBS lost nearly 30 billion Swiss francs, or $34.5 billion, and had to be bailed out due to its investments in low-quality assets, especially U.S. subprime mortgages. As a result, UBS raised more than $5 billion from the Swiss government and it was permitted to transfer up to $60 billion in distressed assets to a fund supported by Switzerland's central bank.

Davis said UBS' private bank is its "crown jewel," and its main challenge in recent years has been to regain its clients' trust, but it has had only "moderate success." The bank's net new asset inflows, while now positive, are weak relative to its competitors.

Copyright 2011 ABC News Radio

Washington Spending: No $16 Muffins

iStockphoto/Thinkstock(WASHINGTON) -- Remember those $16 government muffins that outraged critics of Washington spending? Turns out, there’s no such thing.

After Hilton Hotels denied reports that it charged $16 per muffin to the Department of Justice at a 2009 conference, the Department of Justice said the $16 fee included much more than muffins.

“Under a complete accounting of the services provided for the Executive Office for Immigration Review conference, it is clear that the muffins did not cost $16,” DOJ spokeswoman Gina Talamona said in a written statement. “The abbreviated banquet checks did not reflect all of the food and services provided. The package consisted of food, beverages, staff services and function space, including a 450-seat ballroom and more than a dozen workshop and breakout rooms each of the five days of the conference.”

The Justice position on the $16 paying for multiple items, not just muffins, squared with a Hilton spokesman’s claim to ABC News.

“Dining receipts are often abbreviated and do not reflect the full pre-contracted menu and service provided,” a Hilton statement said, “as is the case with recent media reports of breakfast items approved for some government meetings. In Washington, the contracted breakfast included fresh fruit, coffee, juice, and muffins, plus tax and gratuity, for an inclusive price of $16 per person.”

Without the tax and tip, a spokesman noted, the cost of the continental breakfast was $14 per person.

The melee over the muffins went viral this week, with presidential candidates, politicians and the public citing the cost of muffins a new symbol of government waste.

The original report on the muffin costs came from the Justice Department’s Office of Inspector General, which reviewed spending for the Executive Office for Immigration Review (EOIR) Legal Conference in August, 2009.

The IG reports said “the EOIR spent nearly $40,000 on refreshments at the conference. The service and gratuity charges applied to each bill equaled 20 percent of the total price of refreshments. Applying the 534-attendee figure to the total cost of refreshments over the five days of the event, EOIR spent an average of $14.74 per person per day on refreshments.”

On Friday, a spokesman for the Justice Department inspector general said, “We stand by our report.”

But Hilton suggested the inspector general did not dig deeply enough. If the IG had followed up and asked the hotel for details, it would have found out that the $4,200 covered a full continental breakfast for each person, at a price that was competitive for most full-service hotels.

But the gnashing of teeth within the federal government had already started. Vice President Joe Biden criticized the cost of muffins, and the White House budget office responded with a memo directing federal agencies to review policies associated with conference expenses.

Copyright 2011 ABC News Radio

Jewelers Suffer From High Gold Prices

Ablestock.com/Thinkstock(LOS ANGELES) -- It may be a Gold Rush on Wall Street, but for jewelers around the country trying to penny-up for the precious metal, it’s anything but.

The Los Angeles Times reports that the jewelry business is suffering after gold hit $1,900 an ounce a few weeks ago, raising prices on wholesale items and forcing retailers to increase prices beyond their typical customer’s budget.

While gold fell under $1,650, during the week's big drop in financial markets, the price is still nearly 16 percent higher year to date.

Copyright 2011 ABC News Radio

Blockbuster to Launch Movie Rental Application via Facebook

Blockbuster Inc.(MCKINNEY, Texas) -- Blockbuster is making friends—and lots of them. The movie rental giant is slated to link with Facebook in the near future with an application that will allow customers to rent and watch movies through the social media site.

Facebook’s new Blockbuster app is primarily focused on digital rentals and will provide customers with an enhanced digital catalog that will feature video playback through an embedded player.

People will be able to navigate the library through their Facebook accounts.

For those without Facebook accounts, Blockbuster has merged with the site to create a seamless account creation process.

The application’s announcement was made at the f8 Developer Conference in San Francisco Friday.

Copyright 2011 ABC News Radio

Bringing America Back: Are Infrastructure Jobs Being Shipped to China?

ABC News(WASHINGTON) -- Rebuilding America's crumbling infrastructure is a growing priority, with President Obama highlighting construction jobs as part of his $447 billion jobs plan.

The president visited the "functionally obsolete" Brent Spence Bridge in Ohio Thursday and called on lawmakers to do their part in fixing America's infrastructure.

"Mr. Boehner, Mr. McConnell, help us rebuild this bridge," he said in a speech. "Help us rebuild America. Help us put this country back to work."

In New York there is a $400 million renovation project on the Alexander Hamilton Bridge.

In California, there is a $7.2 billion project to rebuild the Bay Bridge connecting San Francisco and Oakland.

In Alaska, there is a proposal for a $190 million bridge project.

These projects sound like steps in the right direction, but much of the work is going to Chinese government-owned firms.

"When we subsidize jobs in China, we're not creating any wealth in the United States," said Scott Paul, executive director for the Alliance for American Manufacturing.

The renovation of the Alexander Hamilton Bridge in New York is being overseen by China Construction America, a subsidiary of the China State Construction Engineering Corporation. The company uses mostly U.S. labor, but many coveted skill jobs such as engineering and design work are Chinese. The profits will also go overseas.

In Alaska, they are set to spend millions on foreign materials for the Tanana River Bridge Crossing and would largely fabricate the bridge overseas. Iron union workers took to the airwaves to express their outrage in seeing jobs go abroad.

"This is not the time to send more jobs to China," said the Alaska Iron Workers in a radio advertisement. "Our tax dollars will provide hundreds of jobs there, not at home."

U.S. law does require major infrastructure projects to give American companies preferential treatment under Buy America, but companies can opt out and choose a foreign company if there is a significant cost differential. In the Alaska case, officials contend that even with laws that favor domestic companies, the difference in cost was still too high.

The state of California rejected federal funding for a major portion of the Bay Bridge in order to go with a Chinese company that offered the lowest bid. The move cost Americans almost 3,000 jobs -- jobs that cost the struggling California economy millions of dollars in wages, taxes and potential consumer spending.

An official from the California Department of Transportation defended the decision to go with a Chinese company, saying that most of the bridge is being made in America, and that U.S. companies could not have done the work that was contracted abroad on time.

U.S. firms said that, had they been given enough time, they could have put together a successful bid. They added that Chinese firms have the advantage of being state-subsidized. And they warned that hiring abroad today, for any reason, will hurt the country tomorrow.

"Even though we may be saving a couple of pennies now," said Paul, of the Alliance for American Manufacturing, "the cost to our country down the road is going to outweigh that, and we're short changing the future."

Copyright 2011 ABC News Radio

Facebook's 'Defriend Finder' Among New Features

Justin Sullivan/Getty Images(SAN FRANCISCO) -- If Facebook’s recent changes have left you angry and perplexed, brace yourself for some more unsettling news.
 
When Facebook fully rolls out its latest overhaul in the coming weeks, anonymous “defriending” -- or the simple act of removing someone from your Facebook friends list without their knowledge -- will become a thing of the past. Sort of.
 
On Thursday, Facebook CEO Mark Zuckerberg introduced a new feature called Timeline, which aims to provide users with a visual display of their lives, as documented on the social media site. "[A]ll your stories, all your apps, a new way to express who you are," Zuckerberg said at the company’s annual developers conference in San Francisco.
 
But as BuzzFeed reported Friday, Timeline will also let you see older versions of your friends list and a button that not-so-subtly indicates whether you’re still “friends.”
 
“There is a way where you can go in to a certain point in time and basically, if you look at your friends tab, maybe from three years ago, and you see the ‘Add Friend’ button from someone in that list, that will basically tell you that they have defriended you since you became their friend,” said Meghan Peters, community manager at Mashable. Click here to see how to unfriend.
 
But rest assured: those old college acquaintances, distant relatives, and annoying serial posters whom you’ve since given the social axe, can’t easily find out that you’ve decided to cut ties.
 
“It’s not going to automatically notify you and it’s not publicly being pushed into any streams anywhere,” Peters said.
 
Users will have to know where to look for the information, Peters said, and that’s a good thing. “I think that people will definitely be upset by it. I mean, it always hurts to know that someone isn’t your friend anymore.”
 
“Some people might understand, ‘Well, hey, I haven’t talked to that person in four years anyway. Maybe we shouldn’t be friends on Facebook.”
 
Along with Timeline, Zuckerberg announced Thursday the integration of a number of streaming music services like Rdio, Slacker and Spotify, into Facebook’s interface.

Copyright 2011 ABC News Radio

'Wizard of Oz' Red Slippers to be Auctioned for Whopping $2M

Original "Ruby Slippers" as worn by actress Judy Garland in the 1939 classic film 'The Wizard of Oz.' Jemal Countess/Getty Images(LOS ANGELES) -- They brought Dorothy home to Kansas, and now the iconic red ruby slippers made famous in the Wizard of Oz could be brought home by you.

A pair of the ruby slippers worn on-screen by Judy Garland, the actress who played Dorothy in the 1939 film, is scheduled to go on the auction block Dec. 16 in Los Angeles as part of a Hollywood memorabilia sale.

Three clicks of the slippers while repeating the phrase, “There’s no place like home” brought Dorothy back to Kansas from Oz in the movie.  In real life, a cool $2-3 million could bring the slippers from the California auction house handling the sale, to you.

The slippers are marked “#7 Judy Garland” on the inside lining, and the leather soles are painted red. Representatives from the California-based Profiles in History auction house have described the shoes as being in “mint condition,” with only light scuffs on the soles.

Those circular scuffs, according to the auction house, suggest the slippers were used in close-up shots of Garland kicking her heels together three times.  It’s also possible they were the same shoes worn by the Wicked Witch of the East when she was crushed underneath Dorothy’s house in another scene from the movie.

The slippers are one of only four pairs used on-screen that are known to have survived since the making of the movie.

One of the pairs of slippers is on exhibit at the Smithsonian Museum in Washington, one is owned privately and another was stolen from the Judy Garland museum in Minnesota.

The privately-owned pair was sold from the Hollywood collection of actress Debbie Reynolds for $612,000 in May.

The pair of slippers up for auction in December were originally found in the early 1970s by a costume department worker on the MGM lot where the movie was made.  They were later sold at auction in 1988 to a private collector.

The auction house has so far declined to reveal the identity of the slippers’ current owner.

Copyright 2011 ABC News Radio

Many Job Applicants Include False Info on Their Resumes

Jupiterimages/Thinkstock(NEW YORK) -- Having a solid resume is more important than ever in today’s tight job market, but a new survey shows many office managers believe applicants have included dishonest information on their resume.

A survey commissioned by OfficeTeam.com of 1,013 senior managers finds 43 percent of respondents believe job applicants include false information on their resumes somewhat often or very often.

Some 431 employees were also polled in the same survey.  More than one in five workers said they know someone who stretched the truth on resumes.  When asked what type of information did the person misrepresent or exaggerate, 58 percent cited job duties, followed by education, employment dates and job experience.

Copyright 2011 ABC News Radio

Shopping Secrets: Ways Supermarkets Get You to Spend More Money

Hemera/Thinkstock(NEW YORK) -- The next time you take your weekly trip to the grocery store, take a look around you. It turns out all of the minute details -- the fresh flowers greeting you in the entrance, the shining vegetables on the tables -- may all be ploys by the supermarket to get you to spend more than you thought you would.

"We're priming the shopper to tune in to a kind of experience," said Liz Crawford, author of The Shopper Economy. "It's fall, it's a farmer's market. ... We're here at the farm stand."

Soon, you're immersed in the aisles, where items the store wants you to pair together are strategically placed next to each other. Next to the barrel of apples, for example, is caramel.

"So while I'm buying the apples, I'm thinking, 'Oh, you know, I could also buy some caramel and have caramel apples. Great idea.' Now I've got an impulse buy," she said. "That's a cross-sell."

The products you see, where they are displayed, even what you smell can all be a part of a sophisticated, market-tested method to get you to buy.

The apples, sitting in their pretty little baskets, look like they're straight from the farm. They put you in a pleasant mood, thinking of autumn. That's what they call a "symbolic."

Vegetables also are staged to excite the senses. They are sprayed with water every few minutes -- giving them a fragrant smell and a glistening appearance. Nearby, the cheese stand is loaded with choices so you have to linger to find the exact kind you want.

"So while I may have come for some feta, wow, here's some crumble bleu cheese, which I can have as an alternative in my salad during the day," said Crawford.

Another means of persuasion is packing food in ice.

"It signals to the shopper, 'Hey, this is perishable. It's perishable right now,'" said Crawford. "Now's the time to pick it."

Shoppers tend to stay on the edges of the store, circling around counter-clockwise. Retailers sometimes place an eye-catching sale item near the track.

"Once I get enticed down the aisle, the chances I'll buy something go up dramatically," she said.

Shopper Sharon McCain said she was influenced to buy something she didn't intend to. She didn't come to the store to buy apples -- but still left the store with some.

"Well, they were stacked up and looked good," she said. "So I bought some apples."

Copyright 2011 ABC News Radio

Stocks Jump Slightly After Shaky Week of Trading

Medioimages/Photodisc/iStockphoto(NEW YORK) -- The markets end the week with gains after a tumultuous week that saw triple digit drops on three days.
 
The Dow closed up 37 points, the Nasdaq gained 28 and the S&P added seven Friday.
 
Oil prices dropped for a third day on many of the same concerns that dogged the stock market.  Crude traded below $80 a barrel before closing just above that mark.
 
Meanwhile, Amazon.com has worked out a compromise with California lawmakers and retailers looking to raise revenue. Governor Jerry Brown Friday signed legislation allowing the internet retailer time to lobby for an online sales tax rule.  Amazon.com offered to generate thousands of jobs as part of the compromise.

Copyright 2011 ABC News Radio