Another Look at a Drink Ingredient, Brominated Vegetable Oil


James Edward Bates for The New York Times


Sarah Kavanagh, 15, of Hattiesburg, Miss., started an online petition asking PepsiCo to change Gatorade’s formula.







Sarah Kavanagh and her little brother were looking forward to the bottles of Gatorade they had put in the refrigerator after playing outdoors one hot, humid afternoon last month in Hattiesburg, Miss.




But before she took a sip, Sarah, a dedicated vegetarian, did what she often does and checked the label to make sure no animal products were in the drink. One ingredient, brominated vegetable oil, caught her eye.


“I knew it probably wasn’t from an animal because it had vegetable in the name, but I still wanted to know what it was, so I Googled it,” Ms. Kavanagh said. “A page popped up with a long list of possible side effects, including neurological disorders and altered thyroid hormones. I didn’t expect that.”


She threw the product away and started a petition on Change.org, an online petition platform, that has almost 200,000 signatures. Ms. Kavanagh, 15, hopes her campaign will persuade PepsiCo, Gatorade’s maker, to consider changing the drink’s formulation.


Jeff Dahncke, a spokesman for PepsiCo, noted that brominated vegetable oil had been deemed safe for consumption by federal regulators. “As standard practice, we constantly evaluate our formulas and ingredients to ensure they comply with federal regulations and meet the high quality standards our consumers and athletes expect — from functionality to great taste,” he said in an e-mail.


In fact, about 10 percent of drinks sold in the United States contain brominated vegetable oil, including Mountain Dew, also made by PepsiCo; Powerade, Fanta Orange and Fresca from Coca-Cola; and Squirt and Sunkist Peach Soda, made by the Dr Pepper Snapple Group.


The ingredient is added often to citrus drinks to help keep the fruit flavoring evenly distributed; without it, the flavoring would separate.


Use of the substance in the United States has been debated for more than three decades, so Ms. Kavanagh’s campaign most likely is quixotic. But the European Union has long banned the substance from foods, requiring use of other ingredients. Japan recently moved to do the same.


“B.V.O. is banned other places in the world, so these companies already have a replacement for it,” Ms. Kavanagh said. “I don’t see why they don’t just make the switch.” To that, companies say the switch would be too costly.


The renewed debate, which has brought attention to the arcane world of additive regulation, comes as consumers show increasing interest in food ingredients and have new tools to learn about them. Walmart’s app, for instance, allows access to lists of ingredients in foods in its stores.


Brominated vegetable oil contains bromine, the element found in brominated flame retardants, used in things like upholstered furniture and children’s products. Research has found brominate flame retardants building up in the body and breast milk, and animal and some human studies have linked them to neurological impairment, reduced fertility, changes in thyroid hormones and puberty at an earlier age.


Limited studies of the effects of brominated vegetable oil in animals and in humans found buildups of bromine in fatty tissues. Rats that ingested large quantities of the substance in their diets developed heart lesions.


Its use in foods dates to the 1930s, well before Congress amended the Food, Drug and Cosmetic Act to add regulation of new food additives to the responsibilities of the Food and Drug Administration. But Congress exempted two groups of additives, those already sanctioned by the F.D.A. or the Department of Agriculture, or those experts deemed “generally recognized as safe.”


The second exemption created what Tom Neltner, director of the Pew Charitable Trusts’ food additives project, a three-year investigation into how food additives are regulated, calls “the loophole that swallowed the law.” A company can create a new additive, publish safety data about it on its Web site and pay a law firm or consulting firm to vet it to establish it as “generally recognized as safe” — without ever notifying the F.D.A., Mr. Neltner said.


This article has been revised to reflect the following correction:

Correction: December 14, 2012

An article on Thursday about new concerns over brominated vegetable oil, a common ingredient in many citrus drinks, described incorrectly Change.org, the Web site where a Mississippi teenager started a petition to persuade PepsiCo to remove the substance from Gatorade. It is a B Corporation, a sort of hybrid nonprofit/for-profit entity; it is not a nonprofit Web site. (The company’s online petition platform is supported by advertising.)



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Illinois foreclosures up for 11th month









Foreclosure activity in Illinois posted the 11th straight year-over-year increase in November, but compared with a month earlier, filings are trending in the right direction, according to new data released Thursday.

RealtyTrac said the 13,520 properties within the state that received a foreclosure notice last month was a decrease of 9 percent from October but up 9 percent from November 2011. last month's activity, which equated to one out of every 392 homes in the state receiving a notice, gave Illinois the nation's third-highest state foreclosure rate, surpassed by only Florida and Nevada.

In the Chicago-area counties of Cook, DuPage, Kane, Kendall, Lake and Will, almost 11,000 homes received a foreclosure notice in November, a decrease of 10.5 percent from October's level of activity but up 1.6 percent from November 2011

Most of that activity was in Cook County, where about 2,299 homes received initial notices of default, another 2,651 homes were scheduled for court-ordered sales and 2,086 homes were repossessed by lenders.

Among the nation's metropolitan areas, Rockford and Chicago ranked 11th and 13th, respectively, in terms of their foreclosure rates.

Nationally, the number of homes that were repossessed by lenders and became bank-owned rose on a year-over-year basis for the first time  since October 2010, the company said. In November, more than 59,000 homes across the country were repossessed, an increase of 11 percent from October and 5 percent from November 2011.

"The drop in overall foreclosure activity in November was caused largely by a 71-month low in foreclosure starts for the month, more evidence that we are past the worst of the foreclosure problem brought about by the housing bubble bursting six years ago," said Daren Blomquist, a company vice president. "But foreclosures are continuing to hobble the U.S. housing market as lenders finally seize properties that started the process a year or two ago, and much longer in some cases."

mepodmolik@tribune.com | Twitter @mepodmolik

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Angry Birds beats Samsung in viral marketing as mobile interest surged in 2012






This past year has shown us how effective leading smartphone and mobile app companies have become at leveraging viral videos. In Ad Age’s top-10 viral videos list for 2012, Samsung (005930) and Rovio each hog two spots. The Angry Birds Space video racked up 109 million views and the Angry Birds Star Wars hit the 41 million view mark. Meanwhile, Samsung managed to get 79 million views for its Galaxy S III video and 42 million views for the LeBron’s Day clip. It’s notable that Rovio’s Angry Birds clips were far cheaper to produce, with no major stars or lavish video production gimmickry.


The smartphone/mobile app industry thus held four of the top-10 viral video slots in 2012 — the rest of the list is a motley crew of names ranging from Invisible Children and Red Bull to Intel and M&M. It is telling that the smartphone/mobile app cluster is the only industry or cultural phenomenon that generated more than one spot on the list. Popular interest in mobile content continues surging.






It might also be a sign of the times that Apple (AAPL) did not hit the top-10. Samsung’s ultra-aggressive promotional efforts have started bearing fruit. What was once a boring, stale copycat brand in 2008 has suddenly started gripping the imaginations of consumers in a completely new way.


But perhaps even more interesting is that a mobile app company with less than 100 million euros in sales in 2011 managed to beat the mighty Samsung marketing machine in 2012. Rovio is in the vanguard of spreading mobile gaming into demographic niches that have never been all that interested in technology or gaming.


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Quinn, Emanuel assail court's concealed carry decision









Gov. Pat Quinn on Wednesday indicated he would like to see assault weapons banned in Illinois as lawmakers this spring revise state law to allow some form of concealed carry to comply with a court ruling that tossed aside a long-standing ban on allowing people to carry weapons.


Meanwhile, at City Hall, Mayor Rahm Emanuel blasted Tuesday's federal appellate court decision as "wrongheaded" as he offered legal help to Illinois Attorney General Lisa Madigan as she weighs an appeal.


Judges gave the General Assembly six months to make changes, and the Democratic governor suggested the new rules will have to restrict who can get a permit to carry a gun.





"We have to have reasonable limitations so people who have clear situations where they should not be carrying a gun, for example, those with mental health challenges, those who have records of domestic violence, we cannot have those sorts of people eligible to carry weapons, loaded weapons, on their person in public places" Quinn said.


National Rifle Association lobbyist Todd Vandermyde said the governor is "being very pragmatic in his approach" on concealed carry. Though Vandermyde expected gun rights groups to hold firm on a variety of points, he said his group wanted to "work for a reasonable solution and policy on right to carry."


Quinn also pressed for an assault weapons ban, saying Illinois residents "overwhelmingly support that."


"I want to say today, and I'll say every day, we need to ban assault weapons in our state of Illinois. We aren't going to have people marching along Michigan Avenue, or any other avenue in the state of Illinois, with military-style assault weapons, weapons that are designed to kill people."


An assault weapons ban has been elusive in Springfield because of geographical differences of opinion. Opponents point to the fact that Chicago had a gun ban for decades, even as criminals obtained guns and shot people.


For his part, Emanuel noted his efforts while working for former President Bill Clinton to require background checks for gun buyers and ban semi-automatic assault weapons.


"We fought against the National Rifle Association. They had not been beaten in 30 years in the United States Congress, and we beat 'em," Emanuel said.


"I think this opinion by the 7th Circuit Court is also wrongheaded," he added.


Emanuel said he has offered to make city Law and Police department resources available to the Illinois attorney general. Meanwhile, the city is reviewing its gun registration ordinance to see if it needs modification in light of the court ruling.


Tribune reporter Ray Long contributed.


mcgarcia@tribune.com


hdardick@tribune.com





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Taylor Swift reclaims top spot on Billboard 200






LOS ANGELES (Reuters) – Country-pop star Taylor Swift reclaimed the top spot on the Billboard 200 album chart on Wednesday with her hit album “Red,” keeping three new entries from the No.1 position.


“Red” landed back at No. 1 for the fourth time after selling 167,000 copies last week according to Nielsen SoundScan, ousting Alicia Keys‘ “Girl on Fire,” which fell to No. 7 this week.






New entries this week include rapper Wiz Khalifa‘s sophomore record “O.N.I.F.C.,” which debuted at No. 2 after selling 141,00 copies. Pop star Ke$ ha’s new album “Warrior” landed at No. 6 with sales of 85,000 while country band Florida Georgia Line‘s debut album “Here’s To the Good Times” came in at No. 10.


Ahead of the holidays, festive albums featured heavily in the top 10, with Rod Stewart‘s “Merry Christmas, Baby” at No. 3, Michael Buble‘s “Christmas” at No. 5 and Blake Shelton‘s “Cheers, It’s Christmas” at No. 8.


Bruno Mars’ latest single “Locked Out of Heaven” topped the Billboard Digital Songs chart for the first time with 197,000 copies sold, coming in ahead of Rihanna’s “Diamonds” at No. 2 and will.i.am and Britney Spears‘ “Scream & Shout” at No. 3.


(Reporting By Piya Sinha-Roy, editing by Jill Serjeant)


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Fed adds another $45B per month in stimulus









The Federal Reserve ramped up its stimulus to the economy on Wednesday, expressing disappointment with the pace of recovery in employment as contentious U.S. budget talks heighten uncertainty about the outlook.

The central bank replaced a more modest stimulus program due to expire at year-end with a fresh round of Treasury purchases that will increase its balance sheet. It committed to monthly purchases of $45 billion in Treasuries on top of the $40 billion per month in mortgage-backed bonds it started buying in September.

In a surprise move, the Fed also adopted numerical thresholds for policy, a step that had not been expected until early next year. In particular, the Fed said it will likely keep official rates near zero for as long as unemployment remains above 6.5 percent, inflation between one and two years ahead is projected to be no more than 2.5 percent, and long-term inflation expectations remain contained.

The Fed noted unemployment remains elevated and that inflation is running somewhat below policymakers' 2 percent objective.

"The Committee remains concerned that, without sufficient policy accommodation, economic growth might not be strong enough to generate sustained improvement in labor market conditions," the Fed said in a statement.

Policymakers also repeated a pledge to keep buying bonds until the labor market outlook improves substantially. A drop in the jobless rate to 7.7 percent in November from 7.9 percent in October was driven by workers exiting the labor force, and therefore did not come close to satisfying that condition.

Under the "Operation Twist" program that will expire at the end of the month, the Fed was buying $45 billion in longer-term Treasuries with proceeds from the sale of short-term debt. The new round of government bond-buying it announced on Wednesday will be funded by essentially creating new money, further expanding the Fed's $2.8 trillion balance sheet.

Fed Chairman Ben Bernanke will discuss the central bank's latest decision at a news conference at 2:15 p.m. (1915 GMT).

SWEATING A WEAK RECOVERY

The Fed cut overnight interest rates to near zero in December 2008 and has bought about $2.4 trillion in bonds in a further effort to push borrowing costs lower and spur a stronger recovery.

Despite the unconventional and aggressive efforts, U.S. economic growth remains tepid. GDP grew at a 2.7 percent annual rate in the third quarter, but it now appears to be slowing sharply. According to a Reuters poll published on Wednesday, economists expect the economy to expand at just a 1.2 percent pace in the current quarter.

Businesses have hunkered down, fearful of a tightening of fiscal policy as politicians in Washington wrangle over ways to avoid a $600 billion mix of spending reductions and expiring tax cuts set to take hold at the start of 2013.

Bernanke has warned that running over this "fiscal cliff" would lead the economy into a new recession.

Fed officials will release a new set of quarterly economic and interest rate projections at 2 p.m. (1900 GMT) that could show yet another round of downward revisions to future growth prospects.

Back in September, the Fed predicted the U.S. economy would expand 2.5 percent to 3 percent in 2013, but even that modest rate is looking potentially rosy. The Reuters poll showed a median U.S. growth estimate of 2.1 percent for next year on the same fourth quarter over fourth quarter basis.

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3 dead, including gunman, in Portland, Ore., mall shooting












Police say the man who opened fire in a suburban Portland shopping mall apparently killed himself after fatally shooting two people and wounding a third.

Clackamas County sheriff's Lt. James Rhodes says law enforcement who flooded the Clackamas Town Center in response to the afternoon shooting didn't fire any shots.









Witnesses described a scene of chaos and disbelief as a gunman wearing some sort of camouflage outfit and a white mask shot an initial burst of fire and then more rounds near the mall's food court.

Many shoppers fled and others hid in the backrooms of stores.

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Mexico: Rivera’s plane hit with ‘terrible’ impact






MEXICO CITY (AP) — The plane carrying Mexican-American music superstar Jenni Rivera plunged almost vertically from more than 28,000 feet and hit the ground in a nose-dive at a speed that may have exceeded 600 miles per hour, Mexico‘s top transportation official said Tuesday.


In the first detailed account of the moments leading up to the crash that killed Rivera and six other people, Secretary of Communications and Transportation Gerardo Ruiz Esparza told Radio Formula that the twin-engine turbojet hit the ground 1.2 miles from where it began falling.






“The plane practically nose-dived,” he said. “The impact must have been terrible.”


Ruiz did not offer any explanation of what may have caused the plane to plummet, saying only that “The plane fell from an altitude of 28,000 feet … It may have hit a speed higher than 1,000 kph (621 mph).”


Ruiz said the pilot of the plane, Miguel Perez Soto, had a valid Mexican pilot’s license that would have expired in January. Photos of a temporary pilot’s certificate issued by the U.S. Federal Aviation Administration and found amid the wreckage said that Perez was 78.


Ruiz said there is no age limit for flying a civil aviation aircraft, though for commercial it’s 65.


Mexican authorities were performing DNA tests Tuesday on remains believed to belong to Rivera and the others killed when her plane went down in northern Mexico early Sunday morning.


Investigators said it would take days to piece together the wreckage of the plane carrying Rivera and find out why it went down.


The U.S. National Transportation Safety Board said it was sending a team to help investigate the crash of the Learjet 25, which disintegrated on impact in the rugged terrain in Nuevo Leon state in northern Mexico.


Human remains found in the wreckage were moved to a hospital in Monterrey, the closest major city to the crash, and Rivera’s brother Lupillo was driven past a crowd of reporters to the area where the remains were being kept. He did not speak to the press.


A state official, speaking on condition of anonymity because of the ongoing investigation, said investigators were testing DNA from the remains in order to provide families with definitive confirmation of the deaths of their loved ones.


“We’re in the process of picking up the fragments and we have to find all the parts,” Argudin told reporters on Monday. “Depending on weather conditions it would take us at least 10 days to have a first report and many more days to have a report by experts.”


In an interview on Radio Formula, Alejandro Argudin, head of Mexico’s civil aviation agency, said Mexican investigators weren’t sure yet if the Learjet had been equipped with flight data recorders. He also said there had been no emergency call from the plane before the crash.


Fans of Rivera, who sold 15 million records and was loved on both sides of the border for her down-to-earth style and songs about heartbreak and overcoming pain, put up shrines to her with burning candles, flowers and photographs in cities from Hermosillo, Mexico to Los Angeles.


Some Spanish-language radio stations played her songs nonstop.


A brother, Juan Rivera, as well as mother Rosa Saavedra, still held on to hope that she would be found alive.


“I still trust God that perhaps the body isn’t hers,” Saavedra said in a press conference Tuesday, adding that she could have been kidnapped and another woman was at the crash site. “We’re hoping it’s not true, that perhaps someone took her and left another woman there.”


The 43-year-old California-born Rivera known as the “Diva de la Banda” died as her career peaked. She was perhaps the most successful female singer in grupero, a male-dominated Mexico regional style, and had branched out into acting and reality television.


Besides being a singer, she appeared in the indie film Filly Brown, which was shown at the Sundance Film Festival, and was filming the third season of “I love Jenni,” which followed her as she shared special moments with her children and as she toured through Mexico and the United States.


The Learjet 25, number N345MC, with Rivera aboard was en route from Monterrey to Toluca, outside Mexico City, when it was reported missing about 10 minutes after takeoff.


Ruiz said Mexican officials are investigating why the U.S. plane was carrying passengers between two Mexican destinations, something that’s against regulation. U.S- registered planes can only fly paying passengers internationally into Mexico. He said the plane’s owner, Starwood Management of Las Vegas, said Rivera was not renting the jet, but was receiving a free flight because Starwood thought it would promote the aircraft, which was for sale.


That would be allowed under Mexican law, Ruiz said.


“The Civil Aviation Department has instructions to investigate this point specifically,” he said, adding that he’s also asking other authorities to verify the company’s story about why one of its planes was flying between Mexican destinations.


According to the U.S. National Transportation Safety Board, the same plane was substantially damaged in a 2005 landing mishap at Amarillo International Airport in Texas. It hit a runway distance marker after losing directional control. There were four aboard but no injuries. It was registered to a company in Houston, Texas, as the time.


Starwood has been the subject of a lawsuit and investigations, though none so far have centered on the plane that carried Rivera.


Another of its planes was seized in September by the U.S. Drug Enforcement Administration in McAllen, Texas.


A federal lawsuit in Nevada filed by QBE Insurance Corp. alleges that a Starwood aircraft was ordered seized by the DEA when it landed in McAllen, Texas, from Mexico on Sept. 12. The New York-based insurer sued in October to rescind coverage for the Hawker 700 jet.


Starwood, in a court filing, acknowledged that the DEA was involved in the seizure of the aircraft.


QBE, based in New York, said the DEA also seized a Starwood-owned Gulfstream G-1159A — insured by another company — when it landed in Tucson from Mexico in February. Starwood said in its court filing that it didn’t have enough information to address the allegation.


Nevada secretary of state records list only one Starwood officer — Norma Gonzalez — but QBE alleges that the company is owned and managed by Ed Nunez, who, according to the lawsuit, is also known as Christian Esquino and had a long criminal history.


Starwood rejected the insurer’s description of Nunez’s role at the company.


According to QBE’s lawsuit, Esquino pleaded guilty in federal court in Orlando, Florida, in 1993 to conspiracy to possess and distribute cocaine.


QBE said Esquino also served two years in prison after pleading guilty to conspiracy to commit fraud involving an aircraft in Southern California in 2004. QBE said Esquino’s attorney stated in court back then that his client had been under investigation by the DEA for more than a year.


Starwood said in its court filing that it didn’t have enough information to address either the Florida or Southern California case against Esquino.


George Crow, an attorney for Starwood, did not immediately respond to phone and email messages left after business hours Monday.


___


Ibarra reported from Monterrey, Mexico. Raquel Dillon in Los Angeles and Elliot Spagat in San Diego contributed to this report.


Entertainment News Headlines – Yahoo! News


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Rate of Childhood Obesity Falls in Several Cities


Jessica Kourkounis for The New York Times


At William H. Ziegler Elementary in Northeast Philadelphia, students are getting acquainted with vegetables and healthy snacks.







PHILADELPHIA — After decades of rising childhood obesity rates, several American cities are reporting their first declines.




The trend has emerged in big cities like New York and Los Angeles, as well as smaller places like Anchorage, Alaska, and Kearney, Neb. The state of Mississippi has also registered a drop, but only among white students.


“It’s been nothing but bad news for 30 years, so the fact that we have any good news is a big story,” said Dr. Thomas Farley, the health commissioner in New York City, which reported a 5.5 percent decline in the number of obese schoolchildren from 2007 to 2011.


The drops are small, just 5 percent here in Philadelphia and 3 percent in Los Angeles. But experts say they are significant because they offer the first indication that the obesity epidemic, one of the nation’s most intractable health problems, may actually be reversing course.


The first dips — noted in a September report by the Robert Wood Johnson Foundation — were so surprising that some researchers did not believe them.


Deanna M. Hoelscher, a researcher at the University of Texas, who in 2010 recorded one of the earliest declines — among mostly poor Hispanic fourth graders in the El Paso area — did a double-take. “We reran the numbers a couple of times,” she said. “I kept saying, ‘Will you please check that again for me?’ ”


Researchers say they are not sure what is behind the declines. They may be an early sign of a national shift that is visible only in cities that routinely measure the height and weight of schoolchildren. The decline in Los Angeles, for instance, was for fifth, seventh and ninth graders — the grades that are measured each year — between 2005 and 2010. Nor is it clear whether the drops have more to do with fewer obese children entering school or currently enrolled children losing weight. But researchers note that declines occurred in cities that have had obesity reduction policies in place for a number of years.


Though obesity is now part of the national conversation, with aggressive advertising campaigns in major cities and a push by Michelle Obama, many scientists doubt that anti-obesity programs actually work. Individual efforts like one-time exercise programs have rarely produced results. Researchers say that it will take a broad set of policies applied systematically to effectively reverse the trend, a conclusion underscored by an Institute of Medicine report released in May.


Philadelphia has undertaken a broad assault on childhood obesity for years. Sugary drinks like sweetened iced tea, fruit punch and sports drinks started to disappear from school vending machines in 2004. A year later, new snack guidelines set calorie and fat limits, which reduced the size of snack foods like potato chips to single servings. By 2009, deep fryers were gone from cafeterias and whole milk had been replaced by one percent and skim.


Change has been slow. Schools made money on sugary drinks, and some set up rogue drink machines that had to be hunted down. Deep fat fryers, favored by school administrators who did not want to lose popular items like French fries, were unplugged only after Wayne T. Grasela, the head of food services for the school district, stopped buying oil to fill them.


But the message seems to be getting through, even if acting on it is daunting. Josh Monserrat, an eighth grader at John Welsh Elementary, uses words like “carbs,” and “portion size.” He is part of a student group that promotes healthy eating. He has even dressed as an orange to try to get other children to eat better. Still, he struggles with his own weight. He is 5-foot-3 but weighed nearly 200 pounds at his last doctor’s visit.


“I was thinking, ‘Wow, I’m obese for my age,’ ” said Josh, who is 13. “I set a goal for myself to lose 50 pounds.”


Nationally, about 17 percent of children under 20 are obese, or about 12.5 million people, according to the Centers for Disease Control and Prevention, which defines childhood obesity as a body mass index at or above the 95th percentile for children of the same age and sex. That rate, which has tripled since 1980, has leveled off in recent years but has remained at historical highs, and public health experts warn that it could bring long-term health risks.


Obese children are more likely to be obese as adults, creating a higher risk of heart disease and stroke. The American Cancer Society says that being overweight or obese is the culprit in one of seven cancer deaths. Diabetes in children is up by a fifth since 2000, according to federal data.


“I’m deeply worried about it,” said Francis S. Collins, the director of the National Institutes of Health, who added that obesity is “almost certain to result in a serious downturn in longevity based on the risks people are taking on.”


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HSBC to pay record $1.9B fine

British-owned bank HSBC is paying $1.9B to settle a US money-laundering probe. The bank was investigated for involvement in the transfer of funds from Mexican drug cartels and sanctioned nations like Iran. (Dec. 11)









HSBC has agreed to pay a record $1.92 billion fine to settle a multi-year probe by U.S. prosecutors, who accused Europe's biggest bank of failing to enforce rules designed to prevent the laundering of criminal cash.

The U.S. Justice Department on Tuesday charged the bank with failing to maintain an effective program against money laundering and conduct due diligence on certain accounts.






In documents filed in federal court in Brooklyn, it also charged the bank with violating sanctions laws by doing business with Iran, Libya, Sudan, Burma and Cuba.

HSBC Holdings Plc admitted to a breakdown of controls and apologised for its conduct.

"We accept responsibility for our past mistakes. We have said we are profoundly sorry for them, and we do so again. The HSBC of today is a fundamentally different organisation from the one that made those mistakes," said Chief Executive Stuart Gulliver.

"Over the last two years, under new senior leadership, we have been taking concrete steps to put right what went wrong and to participate actively with government authorities in bringing to light and addressing these matters."

The bank agreed to forfeit $1.256 billion and retain a compliance monitor to resolve the charges through a deferred-prosecution agreement.

The settlement offers new information about failures at HSBC to police transactions linked to Mexico, details of which were reported this summer in a sweeping U.S. Senate probe.

The Senate panel alleged that HSBC failed to maintain controls designed to prevent money laundering by drug cartels, terrorists and tax cheats, when acting as a financier to clients routing funds from places including Mexico, Iran and Syria.

The bank was unable to properly monitor $15 billion in bulk cash transactions between mid-2006 and mid-2009, and had inadequate staffing and high turnover in its compliance units, the Senate panel's July report said.

HSBC on Tuesday said it expected to also reach a settlement with British watchdog the Financial Services Authority. The FSA declined to comment.

U.S. and European banks have now agreed to settlements with U.S. regulators totalling some $5 billion in recent years on charges they violated U.S. sanctions and failed to police potentially illicit transactions.

No bank or bank executives, however, have been indicted, as prosecutors have instead used deferred prosecutions - under which criminal charges against a firm are set aside if it agrees to conditions such as paying fines and changing behaviour.

HSBC's settlement also includes agreements or consent orders with the Manhattan district attorney, the Federal Reserve and three U.S. Treasury Department units: the Office of Foreign Assets Control, the Comptroller of the Currency and the Financial Crimes Enforcement Network.

HSBC said it would pay $1.921 billion, continue to cooperate fully with regulatory and law enforcement authorities, and take further action to strengthen its compliance policies and procedures. U.S. prosecutors have agreed to defer or forego prosecution.

The settlement is the third time in a decade that HSBC has been penalized for lax controls and ordered by U.S. authorities to better monitor suspicious transactions. Directives by regulators to improve oversight came in 2003 and again in 2010.

Last month, HSBC told investors it had set aside $1.5 billion to cover fines or penalties stemming from the inquiry and warned that costs could be significantly higher.

Analyst Jim Antos of Mizuho Securities said the settlement costs were "trivial" in terms of the company's book value.

"But in terms of real cash terms, that's a huge fine to pay," said Antos, who rates HSBC a "buy".

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