Economic Calendar

Saturday, February 18, 2012

Congress Extends Payroll Tax Cut to 2013

By Steven Sloan, Richard Rubin and Kathleen Hunter - Feb 18, 2012 1:51 AM GMT+0700

A coalition of Democrats and Republicans in the U.S. Congress united to extend a payroll tax cut through the rest of the year, less than two weeks before it was scheduled to expire.

The Senate today cleared the $145 billion measure 60-36, minutes after the House passed it 293-132. White House spokesman Jay Carney said President Barack Obama would sign the package “right away.”

In addition to the two percentage-point tax cut for workers, the agreement will continue expanded unemployment benefits and avoid a cut in doctors’ Medicare reimbursements through the end of this year. The provisions would have expired at the end of the month if Congress didn’t act.

Senator Charles Schumer of New York, the Senate’s third- ranking Democrat, called today’s votes a “miracle” after a year in which a divided Congress was unable to agree on many questions of fiscal policy until the last minute.

“It is very hard these days to pass legislation through the Senate and through the House,” Schumer told reporters. “But maybe we’re past the old days of ‘If I don’t get it all my way, I’m going to block it from happening.’ That’s what hopefully this is a sign of.”

Health-Care Cuts

In negotiations led by Representative Dave Camp, a Michigan Republican, and Senator Max Baucus, a Montana Democrat, both parties made political sacrifices. Democrats agreed to health- care cuts and a reduction in emergency unemployment benefits while Republicans abandoned their insistence on covering the cost of the full measure.

“Both sides gave a little to get something done,” Senate Majority Leader Harry Reid said today.

The arrangement meant that House Speaker John Boehner, an Ohio Republican, had to rely on votes from Democrats to cancel out the no votes cast by some Republicans backed by the Tea Party. Many Democrats said they reluctantly supported the deal.

“We have to vote for this bill because it does a lot of very important things,” Representative Frank Pallone, a New Jersey Democrat, said on the floor before the vote. “But I also have to express my reservations.”

Democratic opposition mostly centered on concern about cutting maximum unemployment benefits, imposing new requirements on federal worker pensions and health-care cuts.

Federal Workers

House Minority Whip Steny Hoyer, a Maryland Democrat whose district is home to many federal workers, spoke against the pension provision on the House floor, saying Congress should stop “dissing” federal workers.

“Nobody is targeted in this bill other than federal employees,” Hoyer said. “You can tell I’m angry about that, because that’s not fair and that’s not how you ought to treat our employees, America’s employees.”

In the House, 146 Republicans and 147 Democrats supported the measure while 91 Republicans and 41 Democrats voted against it. Fourteen Senate Republicans joined 45 Democrats and one independent in voting for the plan, while 30 Republicans, five Democrats and one independent opposed it.

The extended reduction in the payroll tax funding Social Security means employees will continue to pay 4.2 percent of their wages, down from the typical 6.2 percent, for all wages up to $110,100.

Social Security

The tax break would cost $93.2 billion, which would be borrowed and then transferred from the general fund to Social Security. The cost of the measure’s other provisions would be covered by spending cuts and other changes, and the bill would increase the deficit by $89 billion over the next decade, according to the Congressional Budget Office.

The $30 billion unemployment extension would gradually reduce the number of weeks that recipients can receive benefits, down from the current 99 weeks, according to separate summaries provided by Democrats and Republicans on the House Ways and Means Committee. By the end of the year, most states would offer maximum benefits for 63 weeks while people in high-unemployment states would be eligible for 73 weeks of benefits.

According to summaries of the legislation, the bill would make other changes to unemployment policy, such as allowing states to require drug tests of some benefit recipients.

The bill includes revenue-raising provisions and spending cuts to cover the cost of the unemployment and Medicare extensions.

Wireless Spectrum

These include the $15 billion auction of a portion of the wireless spectrum and a $15 billion requirement that new civilian federal employees and members of Congress pay more for their pensions. The pension change would require employees hired starting in 2013 to contribute an additional 2.3 percentage points of their wages toward their pensions, according to the Finance Committee.

Hospitals will bear much of the cost of the bill. They will lose about $11 billion in government payments for bad debt, incurred when Medicare patients don’t make co-payments or pay deductibles, and for charity care.

Clinical laboratories such as Laboratory Corporation of America Holdings will take a 2 percent Medicare payment cut in 2013, according to congressional documents.

The agreement also would trim $5 billion over a decade from a $2 billion-a-year fund created by the 2010 health-care law to support community preventive and public health-care programs.

The measure is H.R. 3630.

To contact the reporters on this story: Steven Sloan in Washington at; Richard Rubin in Washington at; Kathleen Hunter in Washington at

To contact the editor responsible for this story: Jodi Schneider at


Foxconn Auditor Finds ‘Tons of Issues’

By Peter Burrows - Feb 18, 2012 3:55 AM GMT+0700

Feb. 17 (Bloomberg) -– The Fair Labor Association, a watchdog monitoring working conditions at makers of Apple Inc. products, has uncovered “tons of issues” that need to be addressed at a Foxconn Technology Group plant in Shenzhen, China, FLA Chief Executive Officer Auret van Heerden said.

Van Heerden made the comments in a telephone interview after a multiday inspection of the factory. Apple, the first technology company to join the FLA, said on Feb. 13 that it asked the Washington-based nonprofit organization to inspect plants owned by three of its largest manufacturing partners.

“We’re finding tons of issues,” van Heerden said en route to a meeting where FLA inspectors were scheduled to present preliminary findings to Foxconn management. “I believe we’re going to see some very significant announcements in the near future.”

He declined to elaborate on the findings. The FLA plans to release more information about its inspection in the coming weeks. By then, the company will have had a chance to contest or agree to steps to prevent further violations.

Representatives of Foxconn didn’t immediately respond to requests for comment outside regular business hours. Steve Dowling, a spokesman for Cupertino, California-based Apple, referred to the company’s Feb. 13 statement about the audits.

Van Heerden said later in an interview with Reuters that Foxconn’s plants were “first class.” He said he was surprised “how tranquil it is compared with a garment factory.”

Hard-to-Find Violations

Heather White, the founder of Verite, another monitoring group, said that many alleged violations -- say, forced overtime or use of certain toxic chemicals -- can be hard to detect.

“Those are not things one would see on a hosted tour that was planned in advance,” she said.

Van Heerden said the comments reflected his previous interactions with Foxconn.

Apple had commissioned the FLA to carry out smaller projects in the past two years, in order to try out some of the inspection techniques used by the group to more effectively root out workplace problems.

Van Heerden said he had been impressed with Apple and Foxconn’s responses to hazards related to the polishing of aluminum, which led to explosions at Foxconn and another Apple supplier, Pegatron Corp., that killed at least three workers and injured more than 70 people last year. Van Heerden said that Apple researched the problem and hired a respected consultant.

Apple shares gained less than 1 percent to $502.36 at 3:45 p.m. in New York. Before today, the stock had risen 24 percent this year, extending Apple’s lead as the world’s most valuable company.

Workplace Improvements

In response to the consultant’s recommendations, Foxconn bought state-of-the-art extraction and ventilation equipment to prevent dust buildup, and developed an automated approach so that no humans are involved in the polishing work.

“I’ve seen the improvements that have been made, and they’re dramatic,” he said. “The room is full of robots. It’s totally automated. But people need to see the proof.”

Van Heerden said that FLA’s 30-person inspection team will interview 35,000 Foxconn employees, via meetings with small groups of randomly picked workers, chosen to reflect the demographics of the campus in terms of age, gender and skill levels. As part of the process, workers log answers to questions on tablets connected to FLA servers so they can be tabulated.

White, who is now a fellow at Harvard University’s Edmond J. Safra Center for Ethics, says group meetings on Foxconn’s premises may not yield honest responses. She says she found it more productive to talk to workers in their homes or other off- site locations.

“It’s very hard to get people to speak openly about very serious issues,” she said.

To contact the reporter on this story: Peter Burrows in San Francisco at

To contact the editor responsible for this story: Tom Giles at


S&P 500 Nears Three-Year High on Optimism

By Rita Nazareth - Feb 18, 2012 4:33 AM GMT+0700

U.S. stocks advanced, sending the Standard & Poor’s 500 Index near the highest level in about three years, amid optimism Greece will get a bailout.

Banks had the biggest gain in the S&P 500 among 24 groups, rallying 1.7 percent. H.J. Heinz Co. (HJN), the biggest ketchup maker, and Campbell Soup (CPB) Co., the largest soup maker, climbed at least 2.6 percent as earnings beat projections. Gilead Sciences Inc. (GILD) tumbled 14 percent as some patients relapsed on its hepatitis C drug. General Mills Inc., the maker of Cheerios cereal, retreated 3.6 percent after cutting its profit forecast.

The S&P 500 rose 0.2 percent to 1,361.23 at 4 p.m. New York time. The index is 0.2 percent below its April peak of 1,363.61, the highest level since June 2008. The Dow Jones Industrial Average added 45.79 points, or 0.4 percent, to 12,949.87.

“Greece is the word,” Philip Orlando, the New York-based chief equity strategist at Federated Investors Inc., which oversees about $370 billion, said in a phone interview. “We’re just reacting to what the euro zone is telling us in terms of the state of negotiations. Do I believe that the euro zone will give Greece more money? Yes. Otherwise, Greece defaults.”

Equities rose as euro-area governments closed in on a deal to unlock a 130 billion-euro ($171 billion) aid package for Greece, seeking to avert the region’s first sovereign default. Germany signaled that finance ministers may be ready to back Greece’s second bailout in two years when they meet Feb. 20.

“The bar has been raised,” Eric Thorne, who helps oversee about $6 billion at Bryn Mawr Trust Co. in Bryn Mawr, Pennsylvania, said in a phone interview. “If things don’t go quite smoothly as expected, then the market would experience a fairly steep selloff.”

Economic Optimism

Today’s gain extended this year’s rally in the S&P 500 to 8.2 percent. Stocks climbed as Europe stepped up efforts to tame its debt crisis and after reports on U.S. manufacturing, housing and jobs bolstered optimism in the world’s largest economy.

Seven out of 10 groups in the S&P 500 rose today as consumer discretionary and financial shares had the biggest gains. The KBW Bank Index (BKX) of 24 stocks added 1 percent. JPMorgan Chase & Co. (JPM) advanced 1.2 percent to $38.47. Bank of America Corp. (BAC) lost 0.9 percent to $8.02. Intel Corp. (INTC) had the biggest advance in the Dow, rallying 2 percent to $27.37. It’s the highest level since 2007.

Should the S&P 500 rally above its closing peak in April, the gauge would extend its gains, according to Ryan Detrick at Schaeffer’s Investment Research. He said the next target for the S&P 500 would be 1,440, the intraday peak in May 2008.

‘Good Sign’

“It would be a good sign that confidence is coming back,” Detrick, senior technical strategist at Schaeffer’s, said in a telephone interview from Cincinnati. “People are realizing that things are on much better footing and that should lead to higher equity prices.”

H.J. Heinz (HNZ) gained 4.6 percent to $54.47. The company reported third-quarter earnings excluding some items of 95 cents a share, beating the average analyst estimate of 85 cents.

Campbell Soup added 2.6 percent to $32.90. The company reported second-quarter earnings excluding some items of 64 cents a share. On average, the analysts surveyed by Bloomberg estimated profit of 62 cents.

First Solar Inc. (FSLR) surged 7.3 percent to $42.59. The biggest maker of thin-film solar panels resolved a permitting issue with Los Angeles County for a $1.36 billion power project under construction, paving the way for financing to resume.

Chesapeake Energy Corp. (CHK) jumped 4 percent to $24.71 after being raised to “buy” from “hold” at Stifel Nicolaus & Co. The 12-month share-price estimate is $29.

Gilead Tumbles

Gilead tumbled 14 percent to $47. Among eight patients with hepatitis C genotype 1 in a clinical trial, six had a viral relapse within four weeks after stopping a 12-week treatment with the medicine, GS-7977, plus ribavirin, Gilead said today in a statement. The two other patients are two weeks out from stopping treatment, and haven’t relapsed, the company said.

General Mills (GIS) dropped 3.6 percent to $38.34. The company said “weak volume performance” across U.S. retail food categories in December and January hurt results in its fiscal third quarter.

The companies investors hated the most in 2011 have returned twice as much as the S&P 500 this year, burning speculators who bet stocks from Sears Holdings Corp. (SHLD) to Netflix Inc. would keep falling.

The 26 companies in the S&P 500 with the highest so-called short interest relative to shares available for trading rallied 18 percent this year, compared with 8 percent for the full index, data compiled by Bloomberg show. Speculators who borrowed Sears shares and sold them to profit from a drop got hammered as the stock surged 73 percent. Netflix, with short interest of 17 percent at the end of 2011, rose 76 percent.

Biggest Gains

Banks (S5BANKX), commodity and industrial companies, the only groups to post losses last year, are leading stocks higher on signs the U.S. economy is gaining momentum. That’s forcing speculators to cut bearish wagers after pushing them to the highest levels since the market bottomed in 2009, according to a survey by International Strategy & Investment Group.

“It’s been a rotation back into fundamentally sound, economically sensitive companies that had been unduly punished in the second half of last year,” David Spika, who helps oversee $13 billion as an investment strategist at Westwood Holdings Group Inc. in Dallas, said in a telephone interview. “When the market turns, those shorts have to be covered and that creates momentum.”

To contact the reporter on this story: Rita Nazareth in New York at

To contact the editor responsible for this story: Nick Baker at


Ex-Goldman Programmer Aleynikov Freed After Theft Conviction Overturned

By Patricia Hurtado - Feb 18, 2012 6:43 AM GMT+0700

Sergey Aleynikov, a former Goldman Sachs Group Inc. (GS) computer programmer, walked out a New York courthouse the day after his conviction for stealing the bank’s high-speed trading code was reversed by a U.S. appeals court.

Wearing a grey sweatsuit, white tennis shoes and a huge grin, Aleynikov, 42, left the building where he had been convicted in December 2010 and entered a waiting car with his lawyer, Kevin Marino.

“Justice occasionally works,” Aleynikov told reporters as he left. “This was such big news to me I haven’t had any time to think about what would happen.”

Aleynikov, a naturalized U.S. citizen born in Russia, said he hoped to be with his three daughters, ages 8, 6 and 3. Until today, he had been serving an eight-year sentence at the federal prison in Fort Dix, New Jersey.

“I’m very grateful to my mother and my aunt who supported me from Russia, and my friends who stood by me and believed in my innocence,” he said. “One lesson you learn is to really start valuing your life, day-to-day is a victory.”

After hearing oral arguments from both prosecutors and Marino yesterday, the U.S. Court of Appeals in Manhattan issued a one-page order vacating Aleynikov’s convictions for economic espionage and the interstate transportation of stolen property. The appeals court said it would issue an opinion explaining the ruling later.

‘We Won’

“Kevin e-mailed me at 6 a.m.,” Aleynikov said as he left the courthouse. “I woke up at 5:30 a.m. and I read it five times. The words were, ‘We won.’”

The appeals court also issued a mandate that would have foreclosed any further challenge to its decision. The office of Manhattan U.S. Attorney Preet Bharara persuaded the court to set aside the mandate so it can argue for a rehearing of the appeal, either before a three-judge panel or all the court’s available judges. Ellen Davis, a spokeswoman for Bharara’s office, declined to comment on the ruling.

Marino said he was confident the appeals court’s decision would stand.

“It’s over now,” said Marino, of Marino, Tortorella & Boyle PC in Chatham, New Jersey. “We’re on firm ground. This was a wrongheaded prosecution that should never have been brought.”

Source Code

U.S. District Judge Denise Cote, who presided over the trial, ordered Aleynikov released from prison this morning. After a brief hearing this afternoon with prosecutors, Aleynikov and his lawyers, she agreed to release him on his own recognizance.

Aleynikov was convicted by a jury in December 2010 of violating the Economic Espionage Act and the Interstate Transportation of Stolen Property Act. He was sentenced last March.

On his last day of work at New York-based Goldman Sachs in June 2009, Aleynikov uploaded hundreds of thousands of lines of source code from the firm’s high-frequency trading system, prosecutors said.

He circumvented Goldman Sachs’s security, sent the code to a server in Germany, compressed and encrypted it, and took it with him to a meeting with new employers in Chicago, the U.S. said. Prosecutors argued Aleynikov wanted it as a “cheat sheet” to start a trading system at his new job.

Espionage Act

During oral arguments yesterday, the three-judge appeals panel criticized the government’s application of the espionage act to Aleynikov’s actions, asking the prosecutor how the crime occurred and how it affected commerce.

The judges -- Dennis Jacobs, 67, Guido Calabresi, 79, and Rosemary Pooler, 73 -- also asked if taking Goldman Sachs’s trading code was comparable to taking copyrighted material or bringing an employee manual to a new job.

Marino argued that the trial judge had “bent over backward” to let the government apply the espionage statute and argued the case should have been prosecuted in state court.

Marino argued, as he had during the trial, that Aleynikov only took open-source code he had written at Goldman Sachs. He said the government had tried to expand its reading of the Economic Espionage Act to encompass that.

“There is no trade secret,” Marino told the court. “He took it to make his new job easier, he never intended to harm Goldman.”

The case is U.S. v. Aleynikov, 1:10-cr-00096, U.S. District Court, Southern District of New York (Manhattan).

To contact the reporter on this story: Patricia Hurtado in New York at

To contact the editor responsible for this story: Michael Hytha at


Gold Bulls Expand as Billionaire Paulson Says Buy

By Nicholas Larkin - Feb 18, 2012 12:13 AM GMT+0700

Gold traders are getting more bullish after billionaire hedge-fund manager John Paulson told investors it’s time to buy the metal as protection against inflation caused by government spending.

Twelve of 22 surveyed by Bloomberg expect prices to gain next week and five were neutral. Paulson & Co. is already the biggest investor in the SPDR Gold Trust, the largest exchange- traded product backed by bullion, with a stake valued at $2.9 billion, a Securities and Exchange Commission filing Feb. 14 showed. Investors have 2,389.7 metric tons in ETPs, within 0.2 percent of the record reached in December and more than all but four central banks, according to data compiled by Bloomberg.

Speculators in U.S. gold futures are now their most bullish since September after the Bank of England and Bank of Japan said they will buy more assets and the Federal Reserve said it was considering purchasing more bonds. Central banks are also expanding their bullion reserves, adding 439.7 tons last year, the most in almost five decades. They may buy a similar amount in 2012, the London-based World Gold Council said yesterday.

“The appalling state of fiscal finances of most industrial nations does lead to concerns about the possibility of inflation,” said Mark O’Byrne, executive director of Dublin- based GoldCore Ltd., a brokerage that sells everything from quarter-ounce British Sovereigns to 400-ounce bars. “Gold is a crucial diversification given the various risks out there.”

Bank of America

Gold rose 9.9 percent to $1,722.20 an ounce this year on the Comex in New York. The Standard & Poor’s GSCI gauge of 24 commodities gained 6.6 percent and MSCI All-Country World Index (MXWD) of equities climbed 9.7 percent. Treasuries lost 0.5 percent, a Bank of America Corp. index (MXWD) shows.

Hedge funds and other money managers boosted wagers on higher prices by 57 percent since mid-January. They raised their net-long position by 8.6 percent to 173,172 futures and options in the week ended Feb. 7, the highest level since mid-September, Commodity Futures Trading Commission data show.

Central banks are keeping interest rates at or near record lows and expanding stimulus measures to spur growth that the International Monetary Fund predicted on Jan. 24 will be 3.3 percent this year, down from a previous forecast of 4 percent. Greece is seeking more aid on top of the 110 billion euros ($145 billion) awarded in 2010 and Moody’s Investors Service cut the ratings of six European nations on Feb. 13.

‘Build a Position’

“By the time inflation becomes evident, gold will probably have moved, which implies that now is the time to build a position in gold,” New-York based Paulson said in a letter to investors obtained by Bloomberg. Armel Leslie, a spokesman for Paulson, declined to comment.

The 56-year-old manager’s SPDR Gold Trust holdings fell 15 percent in the fourth quarter as his $23 billion hedge fund company had its worst-ever year. His Advantage Plus Fund lost 51 percent in 2011, and the firm said in a third-quarter letter that financial services companies were the “primary drag.” Paulson became a billionaire in 2007 by betting against the U.S. subprime mortgage market. Gold rose 10 percent last year in New York trading, an 11th consecutive annual gain.

Europe’s deepening debt crisis may spur some investors to retreat to cash. Bullion dropped 3.4 percent in the three months through December, the first quarterly decline since 2008, as the value of global equities slumped more than $10 trillion from the May peak, data compiled by Bloomberg show.

Debt Crisis

“Despite the strong start to global markets this year, the underlying sentiment is still one of fear,” said Chris Weafer, the chief strategist at Troika Dialog, an investment bank in Moscow. “Until the euro zone debt crisis is put to bed, all assets, even gold, are in the risk category.”

Investors should avoid gold because its uses are limited and it lacks the potential of farmland or companies to produce new wealth, Warren Buffett, the billionaire chairman of Berkshire Hathaway Inc., wrote in an adaptation of his annual letter to shareholders that appeared on Fortune magazine’s website on Feb. 9.

Vinik Asset Management LP, Tudor Investment Corp. and SAC Capital Advisors LP sold shares in the SPDR Gold Trust in the fourth quarter, filings showed this week. George Soros, the billionaire founder of Soros Fund Management LLC, raised his stake to 85,450 shares from 48,350.

Record investment drove gold demand to 4,067.1 tons last year, the most since 1997, the World Gold Council estimates.

Nine of 24 traders and analysts surveyed by Bloomberg expect copper to climb next week and seven were neutral. The metal for delivery in three months, the London Metal Exchange’s benchmark contract, rose 7.4 percent to $8,161.50 a ton this year after declining 21 percent last year.

ICE Futures

Ten of 14 people surveyed expect raw-sugar prices to drop next week. The commodity is up 1.8 percent this year at 23.72 cents a pound on ICE Futures U.S. in New York.

Eleven of 21 people surveyed anticipate lower corn prices next week, while 12 of 22 said soybeans will advance. Corn fell 0.3 percent to $6.4475 a bushel this year as soybeans rose 5.7 percent to $12.77 a bushel.

“By initiating further rounds of quantitative easing, central banks should be one of the supporting factors for commodity prices,” said Daniel Briesemann, an analyst at Commerzbank AG in Frankfurt. “The high uncertainty and growing risk aversion among market players surrounding the Greek debt saga should depress any meaningful price increases.”

Gold survey results: Bullish: 12 Bearish: 5 Hold: 5
Copper survey results: Bullish: 9 Bearish: 8 Hold: 7
Corn survey results: Bullish: 7 Bearish: 11 Hold: 3
Soybean survey results: Bullish: 12 Bearish: 9 Hold: 1
Raw sugar survey results: Bullish: 2 Bearish: 10 Hold: 2
White sugar survey results: Bullish: 2 Bearish: 9 Hold: 3
White sugar premium results: Widen: 5 Narrow: 6 Neutral: 3

To contact the reporter on this story: Nicholas Larkin in London at

To contact the editor responsible for this story: Claudia Carpenter at


Record $6 Trillion of Fake U.S. Bonds Seized

By Elisa Martinuzzi - Feb 18, 2012 1:01 AM GMT+0700

Italian anti-mafia prosecutors said they seized a record $6 trillion of allegedly fake U.S. Treasury bonds, an amount that’s almost half of the U.S.’s public debt.

The bonds were found hidden in makeshift compartments of three safety deposit boxes in Zurich, the prosecutors from the southern city of Potenza said in an e-mailed statement. The Italian authorities arrested eight people in connection with the probe, dubbed “Operation Vulcanica,” the prosecutors said.

The U.S. embassy in Rome has examined the securities dated 1934, which had a nominal value of $1 billion apiece, they said in the statement. “Thanks to Italian authorities for the seizure of fictitious bonds for $6 trillion,” the embassy said in a message on Twitter.

The financial fraud uncovered by the Italian prosecutors in Potenza includes two checks issued through HSBC Holdings Plc (HSBA) in London for 205,000 pounds ($325,000), checks that weren’t backed by available funds, the prosecutors said. As part of the probe, fake bonds for $2 billion were also seized in Rome. The individuals involved were planning to buy plutonium from Nigerian sources, according to phone conversations monitored by the police.

The fraud posed “severe threats” to international financial stability, the prosecutors said in the statement. HSBC spokesman Patrick Humphris in London declined to comment when contacted by telephone. The U.S. Secret Service assisted the Italian authorities, spokesman Edwin Donovan said.

Money Laundering

Creating fake Treasuries is a “common scam, especially in Italy,” he said. The tipoff was the “astronomical” face value of each bond, he said. Fake bonds in high denominations are more common in Europe, where people are less familiar with the face value of U.S. Treasury bonds than in the U.S., he said.

Zurich’s public prosecutor’s office provided material to their Italian counterparts in Potenza in 2011, according to Corinne Bouvard, a spokeswoman for the senior public prosecutor’s office of the canton of Zurich. The Swiss part of the investigation ended on July 22, she said.

The Italian investigation initially focused on a Sicilian who was living in Potenza and was “already known for money laundering and exporting currency abroad,” according to the statement from the Potenza prosecutor’s office.

Phony U.S. securities have been seized in Italy before and there were at least three cases in 2009. Italian police seized phony U.S. Treasury bonds with a face value of $116 billion in August of 2009 and $134 billion of similar securities in June of that year.

The U.S. Secret Service averages about 100 cases a year related to bonds and other fictitious instruments.

To contact the reporter on this story: Elisa Martinuzzi in Milan at

To contact the editor responsible for this story: