Pennsylvania Governor and NCAA Go to Court to Cover Their Own Asses

Some post-Soviet states kept Lenin statues up longer than Penn State kept JoePa’s.

The Commonwealth of Pennsylvania is about to do what the Southeastern Conference (the “SEC” that actually takes down its targets) does every week on the recruiting trail: tell the NCAA to get bent.

Yesterday, Governor Tom Corbett filed a federal antitrust suit in Harrisburg alleging that the NCAA overstepped its authority in dropping the hammer on Penn State’s football program in the wake of the Jerry Sandusky sexual abuse scandal.

Apparently the NCAA may not have quasi-governmental authority to take millions in direct fines from public institutions in an effort to protect its brand name.

Pennsylvanian officials are understandably miffed because Penn State is directly paying millions in fines and missing out on millions more in bowl revenue. Taxpayer dollars intended for the public education of students that had nothing to do with the scandal are being siphoned away from the state to finance programs at the sole discretion of the NCAA leadership and the majority is spent outside Pennsylvania.

The NCAA counters that the criminal activity at Penn State was enabled by a culture of winning-at-all-costs and only the NCAA can appropriately discipline the school for that mindset.

But really this lawsuit comes down to two parties, the NCAA and Corbett, making desperate PR moves to cover their own asses. Is that in poor taste? Sure. Is it in even worse taste that the NCAA and Corbett are using this tragedy for their own purposes? Well let’s look at what they’ve been up to….

For those who were living under a rock last year, Jerry Sandusky served as an assistant football coach for Penn State University. In this role, he coached great linebackers and sexually abused kids. He’s in jail now.

There’s also a good deal of evidence that university officials, including University President Graham Spanier and athletic director Tim Curley, probably knew that Sandusky was a criminal and decided to cover it up. They’ve been indicted. Football coaching legend Joe Paterno may have had some idea too… but he’s dead, so he’s not facing prosecution.

And this is where the embarrassing stories of the NCAA and Governor Corbett come in:

1) The NCAA got in way over its head hoping no one would notice.

This lawsuit was a long time coming. The NCAA has nebulous authority to do much of anything, and the idea that a loose, voluntary association of colleges possessed the authority to rob a state institution for anything other than a violation of the NCAA’s own rules always seemed suspect. Once the organization decided to take a bite out of a public university, repercussions became inevitable.

Lest you have an inaccurate impression of the NCAA’s power and wise leadership role, this is an organization that banned bagels and cream cheese as recently as last year. Whether a school can serve cream cheese with bagels is actually a topic that requires meetings for the NCAA.

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Nasdaq Offers $40 Million to Cover Facebook IPO Losses

June 7, 2012Email ThisPrintNewslettersTweetArticleCommentsNasdaq OMX Group Inc. said it will offer cash and rebates totaling $40 million to compensate clients affected by the problems with Facebook Inc.’s initial public offering, an amount well short of the losses claimed by top market makers for the IPO.

After approval by regulators, Nasdaq said on Wednesday, $13.7 million would be paid to its affected member firms and the balance would be credited to members to reduce trading costs, with all benefits expected to be awarded within six months.

The idea of rebates has caused some concern at other exchanges. Sources at Nasdaq rivals said that such a plan would force brokers to trade at Nasdaq, taking market share from competing exchanges.

“This is tantamount to forcing the industry to subsidize Nasdaq’s missteps and would establish a harmful precedent that could have far reaching implications for the markets, investors and the public interest,” NYSE Euronext, Nasdaq’s main competitor, said in a statement Wednesday afternoon.

“We intend to strongly press our views that Nasdaq’s proposal cannot be allowed to permit an unjust and anti-competitive situation.”

The top four market makers in the $16 billion Facebook IPO – UBS, Citigroup, Knight Capital, and Citadel Securities – together lost upward of $115 million due to technical problems that prevented them from knowing for about two hours if their orders had gone through after Facebook began trading.

Smaller market makers that might have suffered losses would also receive a part of the $40 million. Two senior executives in the financial industry have said they expect Nasdaq member claims to total $150 million to $200 million.

“Our expectation is that every firm will receive some measure of cash and that every firm will receive their full accommodation by year end if current trading patterns persist,” Eric Noll, executive vice president for transaction services at Nasdaq OMX, said in a webcast to member firms.

Under the plan, investors who attempted to buy the company’s shares at $42 or less, but whose orders were not executed, would be eligible for compensation. In addition, trades that were executed at an inferior price would also be eligible, as well as trades that did go through successfully but were not confirmed because of Nasdaq’s technical problems.

A filing with the U.S. Securities and Exchange Commission is expected soon, and an executive from a rival exchange declined to comment until its publication.

“They clearly screwed up. They clearly owe their customers money,” said former SEC Chairman Arthur Levitt. He declined to comment on whether the situation warranted an SEC investigation or fine.

Nasdaq’s Noll said the exchange is still engaged in a review process with the SEC. It is unclear how long that process will take or how long the SEC will take to decide if Nasdaq’s proposal for compensation is adequate.

He said that the factors that went into determining the $40 million figure included the exchange’s liability cap of $3 million a month, Nasdaq’s proceeds of $10.7 million from the Facebook IPO, and an estimated $7 million in revenue forecast over the next five years from Facebook trading and listing fees.

During the first day of Facebook trading, technical glitches left the market makers – who facilitate trades for brokers and are crucial to the smooth operation of stock trading – in the dark for hours as to which trades had gone through.

Nasdaq’s immediate response amounted to a members-only call with one of its executive vice presidents and a statement that the exchange would set aside a pool of $13.7 million to accommodate losses.

On a call with select reporters the Sunday after the Facebook IPO, Nasdaq Chief Executive Robert Greifeld said Nasdaq was “humbly embarrassed” over the trading glitch, but he stopped short of a public apology.

 

 

Copyright 2012 Reuters. Click for restrictions.Email ThisPrintNewslettersTweetCategories: National NewsTopics: Facebook IPO, NasdaqHave a hot lead? Email us at newsdesk

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Travelers’ event cancellation cover extended

Travelers has announced that it is rolling out its Lloyd's event cancellation cover to regional brokers through its company operation so that more clients around the UK can access this bespoke cover.

The product is designed for businesses staging events such as annual general meetings, conferences, trade shows and corporate entertainment.

The cover was developed after the syndicate saw increasing demand for their product from around the country. 

Growing demand

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