American Apparel adopts plan to prevent a takeover

NEW YORK (CNNMoney)

On Saturday, the company announced that it has adopted a one-year shareholders rights plan in an effort to prevent Charney, or any other person or group, from seizing a controlling interest in the company.

The company's "poison pill" provision kicks in once anyone purchases 15% or more of the company's outstanding stock. At that point, shareholders will be granted the right to purchase shares at $2.75 each in an effort to dilute any potential acquirer's interest.

Related: American Apparel's ousted CEO fights back!

American Apparel (APP) said the plan is in response to documents Charney filed with the Securities and Exchange Commission that expressed his "intent to acquire control or influence over the Company."

On Friday, Charney submitted a regulatory filing with the SEC announcing that he's partnering with investment firm Standard General in an effort to buy large amounts of American Apparel stock.

Charney currently owns 27.2% of the company's stock, according to the filing.

Charney was ousted as chairman earlier this month. An American Apparel director told CNNMoney the decision came after the board learned of "disturbing" information that suggested "misconduct" by Charney.

Allegations of misconduct are not new for Charney, who has faced several lawsuits claiming everything from sexual harassment to assault and battery.

Related: 6 endangered brands

Charney's lawyer Patricia Glaser sent a letter to the company's board of directors last week saying the company acted in "a manner that was not merely unconscionable but illegal."

Charney founded the company in 1998 and took the company public in 2005 at $8 per share. The shares eventually rose to nearly $17. But in recent years, American Apparel has been fighting to stave off bankruptcy.

American Apparel's stock closed Friday at 97 cents a share.

First Published: June 28, 2014: 11:42 AM ET

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Stocks: 2014 half-time report

After a tumultuous start, the S&P 500 has continued its record rise this year.

NEW YORK (CNNMoney)

While the all-important monthly jobs report comes out on Thursday (a day earlier than usual because of the three-day weekend), there's not much else on the economic or earnings calendars to move the markets.

But as the first half of the year comes to a close this week, we here at CNNMoney are in a reflective mood. After all, you can't know where you're going until you know where you've been.

Here's what you need to know about the markets year-to-date, and what to possibly expect for the rest of 2014.

The calm after the storm: It wasn't pretty at first. After a record run in 2013, stocks were hit by turmoil in the first quarter as harsh winter weather dampened corporate profits and the emerging markets rapidly sold off as investors worried that the tightening of Federal Reserve's easy money spigot would reverberate to those countries that were relying on cheap foreign investment to fuel growth.

Throw in the crisis in Ukraine, it it looked like investors were in for a wild ride.

But warmer Spring weather eventually came, the emerging markets' fears subsided, and the tense standoff between Russia and the West has seemingly been dialed back for now.

Related: Russian markets: They're baaack!

Stocks have been the "little engine that could," slowly pushing higher. The S&P 500 closed at a record high 22 times this year, according to Jeffrey Hirsch of the Stock Trader's Almanac.

The blue chip index has gained about 6% so far this year, and the tech-heavy Nasdaq is up 5%. The Dow's rise has been less pronounced, but it is still positive at about 1.6%.

Even emerging markets have rebounded. The iShares MSCI Emerging Markets ETF, which was battered in the first quarter, is now in positive territory for the year.

Further, as companies take advantage of a rising stock market and ultra-low interest rates, mergers and acquisitions activity and initial public offerings have been hot this year. GoPro (GPRO) is the latest mega success, having jumped 50% since its debut on Thursday.

Winners and Losers: The stocks with the most gains so far in 2014 have come from a wide range of sectors. In the S&P 500: Keurig Green Mountain Coffee (GMCR) has jolted up 65%, while Electronic Arts (EA, Tech30), the best performer on CNNMoney's Tech 30 Index, has soared 55%.

Southwest (LUV)and Delta Airlines (DAL) have both climbed over 40%, and Under Armour (UA) has risen around 35%.

In the loser category, Coach (COH) has taken the worst with an almost 40% decline, while Whole Foods (WFM) has dropped over 30%. Staples (SPLS), Bed Bath & Beyond (BBBY), Best Buy (BBY), and Amazon (AMZN, Tech30) aren't far behind in the unglamorous contest for the biggest loser.

Ok, now what? What will happen in the second half of the year is anybody's guess, but that doesn't mean market strategists of all stripes aren't trying to predict the future.

In a midyear report, analysts at BlackRock said that while stocks aren't cheap, the market should continue to rise. They recommend favoring large cap stocks and cyclical sectors like energy over small cap stocks and companies in the consumer discretionary sector such as retailers.

CNNMoney's most recent survey of investment strategists finds that most are still bullish. They anticipate a 6.5% gain for the S&P 500 this year. The index is well on track for that already.

Related: Excited for iPhone 6? Check out this stock

Another question for the markets going forward revolves around interest rates. Although the Federal Reserve has maintained that it plans to keep its key federal funds rate near zero for the rest of the year, the Bank of England is likely to start hiking rates in the fall, and that could have repercussions for the U.S., according to economists from Barclays.

"The lesson here is that rate expectations can change very quickly," they said.

First Published: June 29, 2014: 8:52 AM ET

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Obama's pick to fix veterans affairs tried to fix Procter & Gamble, too

Bob McDonald, a former CEO of Procter & Gamble, is President Obama's nominee for Veterans Affairs secretary.

NEW YORK (CNNMoney)

Bob McDonald has been in the hot seat before. He took the helm of global consumer products giant Procter & Gamble (PG) in 2009 amid the throes of the Great Recession. His task was to restructure and streamline the company, no easy task for a company with recognizable brands as diverse as Bounty paper towels, Duracell batteries, Pampers diapers and Tide detergent.

Although he was ousted from the top job four years later, his legacy at the company includes growing sales and profits in rough economic waters.

His critics argued the company wasn't moving fast enough to improve efficiency. Chief among them was hedge fund investor Bill Ackman, who charged that McDonald served on the boards of too many other organizations to focus properly on P&G's needs; the company said Ackman's claims were overstated.

McDonald will be announced on Monday as Obama's nominee to lead the troubled Veterans Affairs department, a White House official told CNN's Jim Acosta. Secretary Eric Shinseki stepped down in late May amid allegations of shortcomings in medical care for veterans. To land the job, McDonald must be confirmed by the Senate.

Related: Obama taps CEO to lead VA

McDonald began his rise to the corner office in 1980, when he joined P&G as an entry-level employee in 1980 after five years in the Army.

By the time he took over in 2009, the company was in need of cost-cutting. McDonald responded with a plan that would save about $10 billion over four years, including a significant cut to the marketing budget and a 10% workforce reduction.

That wasn't enough for Ackman, who bought nearly $2 billion in P&G stock. The board eventually let McDonald go. He was replaced by A.G. Lafley, who was also his predecessor. Ackman told CNNMoney at the time that Lafley's only mistake "was who he picked to succeed him, and now he's going to fix that."

The company won several awards under McDonald's tenure: it was twice named best company for leaders by Chief Executive Magazine, and ranked first among over 2,000 companies in a leadership study by the management consultants at Hay Group.

McDonald currently serves on the board of the Xerox Corporation (a post he held while CEO of P&G) as well as U.S. Steel and several advisory groups. Presidents George W. Bush and Obama appointed McDonald to their administrations' Advanced Manufacturing Partnership Steering Committee.

First Published: June 29, 2014: 7:17 PM ET

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GM's 'culture' blamed for current crisis

NEW YORK (CNNMoney)

In an exclusive interview that aired Saturday on CNN's "Smerconish," former GM manager Bill McAleer told host Michael Smerconish that employees who work at GM were "faced with a culture where you get fired if you do talk about quality and safety issues, and you get fired if you don't talk about them."

GM (GM) is dealing with a backlash for delaying the recall of 2.6 million vehicles for an ignition switch defect that's been tied to at least 13 deaths. Some GM employees knew the part was causing trouble more than a decade before the recall was issued in February.

McAleer, who started on the assembly line in 1968, says he was in charge of the Global Delivery Survey from 1988 to 1998 that GM used to help assess the quality of its cars before they were delivered to dealers.

Related: Two died in 2006 Cobalt crash. But GM counts only one

He says he found a "wide variety" of what he called "catastrophic defects" beginning in 1995, when GM added a routine obstacle course drive to its quality checklist. Problems ranged from gasoline leaks to steering linkage issues that pointed to overall quality defects.

McAleer said that while the company seemed responsive to fixing problems in the mid '90's, that changed.

"In 1997 something happened internally in GM where no problem could be admitted. Whether it was safety or any kind of problem. We couldn't have a problem," he said.

"That's what happened with the ignition switch," he added. "People knew there was a problem, but problems were not acceptable. They just ignored it."

McAleer eventually was laid off from GM in 2004. He tried to sue the company under a whistleblower law but said he was unsuccessful.

Related: GM's recall nightmare

McAleer said he sent a letter to the GM board of directors to tell them about the overall quality problems and the lack of action by management, but he thinks that the letter might have been intentionally misdirected once it got there.

GM issued a statement saying,"If McAleer's concerns were submitted by an employee today, they would be thoroughly investigated within the safety organization, however that is not to imply that in this particular case, his issues weren't."

The company also said that while McAleer lost his case against GM, it will still look at his allegations to see what "we can learn."

First Published: June 28, 2014: 9:13 AM ET

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Aereo suspends TV service...but not 'shutting down'

NEW YORK (CNNMoney)

The court ruling found that Aereo violates copyright law by picking up the signals of local television stations and retransmitting them via the Internet to paying subscribers.

"As a result of that decision, our case has been returned to the lower Court," Aereo founder Chet Kanojia said in an email message to subscribers on Saturday morning.

Related: The future of media

"We have decided to pause our operations temporarily as we consult with the court and map out our next steps."

The "pause" will take place at 11:30 a.m. Eastern on Saturday.

Kanojia said all subscribers (the company has never specified how many it has) will be refunded "their last paid month."

Kanojia ended his email by saying "our journey is far from done." And in a subsequent email message to reporters, an Aereo representative said "We want to emphasize that this is a pause, and that the company is not shutting down."

However, conventional wisdom following Wednesday's ruling held that Aereo would either have to close up shop or radically change its business model.

Related: 6 cool innovations we're still waiting for

"For broadcasters, this is a huge relief, and lifts a cloud of uncertainty," Needham & Co. analyst Laura Martin wrote in an investors' note on Wednesday. "Although there was a low probability the Supreme Court would decide against them, the cost would have been billions of dollars of lost revenue through lower retransmission fees."

In the wake of the court ruling, "the only option that remains available to Aereo would be to change its model and pay the broadcasters to distribute the content," just like cable and satellite distributors do, Nomura analyst Anthony DiClemente wrote in a research note. He said Aereo could essentially offer "a slimmed-down content package delivered over the Internet."

First Published: June 28, 2014: 10:27 AM ET

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American Apparel adopts plan to prevent a takeover

NEW YORK (CNNMoney)

On Saturday, the company announced that it has adopted a one-year shareholders rights plan in an effort to prevent Charney, or any other person or group, from seizing a controlling interest in the company.

The company's "poison pill" provision kicks in once anyone purchases 15% or more of the company's outstanding stock. At that point, shareholders will be granted the right to purchase shares at $2.75 each in an effort to dilute any potential acquirer's interest.

Related: American Apparel's ousted CEO fights back!

American Apparel (APP) said the plan is in response to documents Charney filed with the Securities and Exchange Commission that expressed his "intent to acquire control or influence over the Company."

On Friday, Charney submitted a regulatory filing with the SEC announcing that he's partnering with investment firm Standard General in an effort to buy large amounts of American Apparel stock.

Charney currently owns 27.2% of the company's stock, according to the filing.

Charney was ousted as chairman earlier this month. An American Apparel director told CNNMoney the decision came after the board learned of "disturbing" information that suggested "misconduct" by Charney.

Allegations of misconduct are not new for Charney, who has faced several lawsuits claiming everything from sexual harassment to assault and battery.

Related: 6 endangered brands

Charney's lawyer Patricia Glaser sent a letter to the company's board of directors last week saying the company acted in "a manner that was not merely unconscionable but illegal."

Charney founded the company in 1998 and took the company public in 2005 at $8 per share. The shares eventually rose to nearly $17. But in recent years, American Apparel has been fighting to stave off bankruptcy.

American Apparel's stock closed Friday at 97 cents a share.

First Published: June 28, 2014: 11:42 AM ET

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Red Bull settles with U.S. on Cuba violations claims

Red Bull North America has settled with the U.S. over alleged Cuba sanction violations

NEW YORK (CNNMoney)

The Treasury Department said Friday that the company has agreed to pay $89,775 over allegations it failed to get authorization from the Treasury to travel to Cuba in 2009.

The more than half-century old U.S. boycott of Cuba strictly prohibits businesses from visiting the island without first obtaining a license.

The Treasury says that between June 8 and June 18, 2009, seven representatives of Red Bull North America traveled to Cuba in order to film a documentary, without first obtaining approval.

In a statement, Treasury said Red Bull had prior knowledge of U.S. sanctions on Cuba and took steps to conceal the visits. It also said that Red Bull's management had approved of the film and the travel involved.

The penalties could have been worse. The government says the maximum penalty could have been $455,000.

Red Bull North America did not respond to a request for comment.

First Published: June 27, 2014: 4:03 PM ET

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Aaron Swartz's father: He'd be alive today if he was never arrested

NEW YORK (CNNMoney)

Swartz faced multiple charges for breaking and entering into an MIT wiring closet and downloading academic journals, including two counts of wire fraud and 11 counts of violating the Computer Fraud and Abuse Act. Swartz, who was battling the court, also battled with depression. Prosecutors dropped the charges after his death.

I first met Swartz's father, Robert, last year as he explained his mission to fight for his son's memory by helping to change outdated laws. He wanted answers about why he lost his son.

His son's story is now the subject of a new documentary called "The Internet's Own Boy: The story of Aaron Swartz."

More than a year after his death, Robert Swartz still seeks answers, which he discussed with me this week.

How would you describe your son's impact?

Robert Swartz: He was someone who tried to understand technology and use it as a force for good. He came up with the notion of Wikipedia before Wikipedia started. It was very clear that he felt that putting academic research behind a pay wall was wrong and that it limited the diffusion of knowledge.

11 out of the 13 charges against your son were violations of the Computer Fraud and Abuse Act. Do you believe the law is outdated?

There's no question the law is outdated. At the moment, that law makes it a felony for you to give your password to HBO to a friend. That has to be changed.

You believe the criminal justice system failed your son. If it weren't for the charges, do you believe Aaron would still be alive?

Without question.

How does that make you feel?

Like one who's gone into the abyss.

Describe what Aaron went through.

I remember after he was arrested, he got a call from MIT saying could he come back and get his backpack and bicycle, which they had seized. I was in Cambridge [Massachusetts] and he asked if I would accompany him. We waited there for a long period of time and finally a policeman came out and went into a room and retrieved his bicycle and said to us, 'The rest of this is in the hands of the Secret Service.' And we looked at each other and realized at that point that this was much more serious than we'd imagined, and we couldn't make any sense of it. We were just devastated.

How did this affect him?

It was overwhelming. He was afraid, he was concerned. [The police] went to his apartment, went through all his personal effects. He was worried about his phone being tapped. He couldn't go to MIT, he couldn't go to Harvard. He couldn't leave the country because they took his passport. The prosecutor was cruel and vindictive and bordered ... on sadism. They strip-searched him and they left him in solitary confinement for hours and after he met his bond, they kept him in solitary confinement for three or four hours with absolutely no explanation -- all with the goal of attempting to break him. This is not a system in which people are treated fairly or reasonably. They're bullied and destroyed.

What is your message to the judicial system?

We need to do a better job. Rather than trying to prosecute someone who's trying to make the world a better place, there are immense amounts of cybercrime going on where people are exploiting credit cards and doing things that are really bad. Even if you argue, which i think is completely false, that Aaron was guilty of something, there was no proportionality in the way that they acted.

[Apple founders] Steve Jobs and Steve Wozniak started a business by selling a box that allowed criminal fraud against the phone company. Bill Gates started in business at Harvard without paying for the computer time to write BASIC. Edwin Land who invented the Land camera broke into Columbia University to do experiments.. Mark Zuckerberg, in a similar way to Aaron, scraped the data off of Harvard's computer system to start Facebook. These people are lionized for their accomplishments despite the fact that they did things that weren't exactly legal.

In Aaron's case, he did things that were not illegal and he was destroyed for it. And he was trying to make the world a better place. We need to celebrate people who do this . We need more Aaron Swartzes.

First Published: June 27, 2014: 4:13 PM ET

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GM: Four more safety recalls, 430,000 cars

GM's recalls continue as the automaker announces four more, affecting nearly 430,000 vehicles in the U.S.

NEW YORK (CNNMoney)

The recall covers nearly 30,000 air bag inflators in 2013-2014 model year Chevrolet Cruze sedans. GM (GM) says the inflators could fail or rupture, which could propel metal pieces that could injure the driver. GM says its aware of one injury related to the issue.

The automaker told dealerships to stop selling those Cruze models on Tuesday, but lifted that stop-sale order late Wednesday, after identifying all the affected vehicles.

Related: Steps to a recall nightmare

The part in question was manufactured by Japanese company Takata, a supplier tied to airbag problems in millions of cars that other automakers recalled earlier this week. The Cruze problem stems from a defective part instead of a chemical issue that affected other recalled vehicles, said GM spokesman Jim Cain.

The Cruze is GM's best-selling car in the United States. It sold 248,000 of them last year.

Also covered in today's announcement: Transmission software in nearly 400,000 trucks and SUV's that needs updating so that the vehicles don't slip into neutral on their own. Vehicles covered are four wheel drive versions of the 2014-2015 Silverado and GMC Sierra models; 2015 Tahoes and Suburbans; and the 2015 GMC Yukon and Yukon XL.

In addition, GM says it will inspect, and replace if necessary, the windshield wiper assemblies in about 5,000 2013-2014 Caprice police cars and SS sport sedans. The company says if gears get stripped the motors may fail and the wipers might not operate.

Finally, GM says it will replace the two rear shock absorbers in nearly 2,000 2014 model year Corvettes to repair a weld that could potentially lead to failure of the shock absorbers.

The news comes as the automaker is already in damage control mode for delaying the recall of 2.6 million vehicles for an ignition switch defect that's been tied to at least 13 deaths. Some GM employees knew the part was causing trouble more than a decade before the recall was issued in February.

Now, GM is facing dozens of lawsuits and a number of investigations concerning how it handled that recall.

The company has also issued a number of additional recalls this year for problems unrelated to the faulty ignition switch. It has recalled more than 20 million vehicles worldwide since January.

On Monday, the automaker and Kenneth Feinberg will unveil a compensation plan to victims and their families. Feinberg is a consultant who also determined payouts after the 9/11 terrorist attacks, the BP oil spill, and the Boston Marathon bombing.

First Published: June 27, 2014: 6:54 PM ET

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Millennial-driven housing boom seen on the horizon

NEW YORK (CNNMoney)

According to a report released Thursday by Harvard's Joint Center for Housing Studies, as the economy shows signs of improvement, by 2025 Millennials could form 24 million new households and spur a huge comeback in the U.S. real estate market.

The report also found that, traditionally, the number of young people who buy homes increases as their incomes grow. Recently, hiring of Millennials has improved as the economy heals. If the trend continues, parents of Milennials could soon become empty-nesters.

Weak job prospects, tight lending standards and student debt, have left the 86 million members of the Millennial generation -- defined by the study as those born between 1985 and 2004 -- with few options for achieving independence. Nonetheless, like previous generations, Millennials crave it and this pent-up demand will give a big boost to the housing sector, the report's authors said.

"We really have not seen any cultural shift yet in anyone's desire to be independent," said JCHS Research Director Christopher Herbert in a panel discussion that followed the release. "When the job market recovers and their income recovers, they are going make their mark on this housing market."

Related story: Millennials 'overwhelmed' by debt

Nearly 22 million people in the U.S. age 18 to 31, lived in the home of a parent in 2012, according to Pew Research. The homeownership rate for those under age 35 was 36.2% in the first quarter of 2014, down from a historical high of 43.1% at the end of 2005, according to the Census.

Getting those rates back up will require the economy to keep improving, but if it does, those new households could mean a virtuous cycle. Booming demand for starter homes (as well as apartments) would stoke the housing sector, which accounts for about 18% of GDP, according to the National Association of Home Builders. It would also get a sluggish market moving by providing trade-up opportunities.

"If somebody wants to move up from a starter house to a larger house, they need someone to sell the starter house to," Mike Calhoun, the president of the Center for Responsible Lending, said on the panel.

Calhoun estimated U.S. building activity of about 1 million building permits issued per year could easily increase by two-thirds to meet demand without risking an unsustainable boom.

The report pointed out that some factors could restrain household formation. Despite economic news improving, Millennials face only slow economic gains. Unemployment is falling, but wage growth has been persistently stagnant. Plus, Millennials must confront increasing student debt burdens and tight lending standards.

Instead of a mass exodus from their parents' homes, the authors said Millenials' might just trickle out, mirroring what Herbert called the economy's "steady, slow recovery."

The report also pointed out that borrowers of color, who are expected to see demographic growth that could help drive household formation and building, face mortgage denials at far higher rates than white counterparts, which might well imperil a housing surge.

First Published: June 26, 2014: 6:32 PM ET

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