February 23, 2012, 12:58 AM EST
By William Selway and Martin Z. Braun
Feb. 23 (Bloomberg) — Shirley Kimber walked off the production line from her $17.56-an-hour job at a Birds Eye Foods plant in Fulton, New York, for the last time in November.
The new owners, Pinnacle Foods Group LLC, a company held by the private equity firm Blackstone Group LP, closed the factory and fired 270 workers. Kimber, 64, got eight weeks severance for her 12 years on the job and lives with her 37-year-old unemployed daughter in the rust-belt town of about 12,000, northwest of Syracuse.
“They just used us. That’s exactly what they did,” Kimber said. “And then they kicked us to the curb.”
While the closing killed union jobs, it may also help protect the retirement benefits that organized labor bargained for on behalf of public employees.
In addition to Blackstone, the world’s largest buyout firm, New York State’s two public employee pensions and four New York City pensions stand to gain from the drive for higher profits at Pinnacle foods. The retirement funds poured $920 million into the $20 billion Blackstone fund that owns Pinnacle, which took over Birds Eye in 2009.
Public pension funds — seeking to boost returns after failing to secure the 8 percent annual investment earnings needed to pay benefits for teachers, police officers and other civil servants — are the biggest source of cash for private equity firms.
Faster Pace
Companies owned by New York-based Blackstone added jobs at a faster pace than the U.S. economy for the past two years, said Peter Rose, a spokesman for the firm. Private equity’s investment returns “are one of the few ways that pension funds can help keep the promises that they have made to their retirees,” he said.
Pinnacle Foods closed the Fulton plant to cut transportation costs by moving operations closer to suppliers, said Michelle Weese, a spokeswoman for the company.
While firms such as Blackstone and Bain Capital LLC, co- founded by Republican presidential candidate Mitt Romney, have drawn scrutiny for their paring of jobs and the low tax rates enjoyed by executives, the role of taxpayer money in financing their acquisitions has received less notice.
By September 2011, public pensions with at least $1 billion in assets had an average of 11 percent of their money in private equity, more than triple their investments a decade earlier, according to Wilshire Associates, a Santa Monica, California- based consulting firm.
Rising Investment
Such funds have about $400 billion with private equity, 29 percent of the total, according to Prequin Ltd., a London-based private equity research firm. That’s more than twice what was put in by private pension funds, the next biggest investor.
Public pensions “have been the investors that have really fueled private equity’s rise,” said Steven Davidoff, a professor of law and finance at Ohio State University’s Moritz College of Law in Columbus, Ohio. “For those people who complain about private equity, the money is really coming from pension funds.”
Private equity firms buy companies and seek to trim costs, improve operations, boost profits and resell them. The takeovers are typically financed by debt taken on by the purchased companies.
The business has been drawn into the presidential contest as Romney parried attacks from Republican rivals who suggested he built a fortune of as much as $250 million with takeovers that cost workers their jobs. He has disputed this characterization.
Private equity executives, including Blackstone managing director and Pinnacle Foods director Prakash Melwani, have helped stock Romney’s campaign war chests. Melwani declined to comment.
Mayor Objects
Fulton Mayor Ronald Woodward, a Republican, said the Birds Eye takeover has devastated his town, adding that he is troubled to learn that New York pension money helped finance the acquisition.
“Isn’t that a slap in the face to the people in Fulton that are losing their jobs and paying the salaries of those union workers and they’re using their investments there,” Woodward said. “It’s like biting the hand that feeds you.”
Her severance exhausted, Kimber now lives off unemployment benefits of $1,620 a month, plus $100 a month in pension payments, she said. She pays 22 percent of that for health insurance. Her daughter, also named Shirley, has a biology degree but can’t find a job using that specialty. To make a few extra dollars, she babysits and sells books online.
Executive Compensation
Robert Gamgort is chief executive officer of Parsippany, New Jersey-based Pinnacle Foods, which also makes Dunkin Hines cake mix, Vlasic Pickles and Hungry Man frozen dinners.
Gamgort was awarded compensation valued at $5.5 million in 2010 and $11.6 million in 2009. Sara Genster Robling, head of the Birds Eye division, got pay packages worth $1.5 million in 2010 and $2.1 million the previous year. Most of the pay was in company stock. Gamgort and Robling weren’t available for comment, she said.
After the collapse of 1990s Internet bubble left pensions reeling from investment losses, state and local government funds poured money into private equity firms. The financial crisis of 2008 and subsequent recession left U.S. state public pensions $694.2 billion short of having enough assets to pay future benefits by the end of their 2010 budget years, according to data compiled by Bloomberg.
Higher Returns
Private equity deals promised higher returns than stocks and bonds. The 15-year median return on stocks for public pension funds with more than $1 billion assets, before fees, is 5.5 percent annualized as of Dec. 31, 2011, while the median return for private equity in that time period is 9.8 percent, according to the Wilshire Trust Universe Comparison Service.
The deals have served pensions well. New York state’s teachers pension’s private equity investments delivered an annual rate of return of 11.8 percent as of June 30, 2011. New York City’s private equity investments in four of its five pension funds have returns ranging from 9.2 percent to 11.1 percent.
That helps save taxpayers money. For workers and the acquired companies, the benefits can be harder to discern.
A study led by the University of Chicago’s Steven Davis, based on 3,200 private equity deals from 1980 to 2005 and published in September, sought to quantify the impact. It found that employment at acquired companies dropped 6 percent in the next five years relative to stand-alone peers as they shuttered lagging businesses.
‘Creative Destruction’
Still, the companies also added workers by opening new business lines and through acquisitions. The study concluded that such deals accelerated the “creative destruction” of jobs, with a “modest” impact on total payrolls.
“Private equity investors are remorseless in their perspective on business,” said Robert Bruner, the dean of the University of Virginia’s Darden School of Business. “That is a manifestation of the rigors of the capitalist system,” he said. “It accelerates the process.”
Rose Pitcher, 50, experienced that first-hand. After working 25 years at the Birds Eye plant in Fulton, she wrapped up her last shift in November, with eight weeks severance, as Pinnacle moved the plant’s jobs to Wisconsin and Minnesota. Other employers in the area, like an apple-packing plant in Oswego, pay less than half the $17 an hour she was making overseeing the machine sealing packages of Voila! ready-made meals at Birds Eye.
“There just doesn’t seem to be anything out there,” she said.
Portfolio Companies
Blackstone says it has a record of boosting employment overall. In 2011, Blackstone’s portfolio companies added 4.6 percent to their payrolls by creating new jobs, rather than through acquisitions, and increased them 3 percent in 2010, said Rose, the company spokesman. That outpaced job growth in the economy, he said.
“Private equity is a vital source of capital to grow and strengthen companies where public capital cannot or is unwilling to invest,” said Rose.
New York Comptroller Thomas DiNapoli, the sole trustee of New York’s $140 billion retirement fund, declined to comment. New York City Comptroller John Liu declined to comment. John Cardillo, a spokesman for New York state’s Teachers’ Retirement System, declined to comment.
Drivers coming into Fulton are greeted by the red-brick Nestle chocolate factory, where for 103 years the company made condensed milk, semi-sweet morsels and Crunch Bars. It shut down in 2003.
The Nestle factory employed 1,500 people at its height. In 1994, Miller Brewing also shut down a plant just outside of town, putting 900 people out of work.
Taking Down Signs
A couple of years after Miller shut its operations, city officials took down signs on Routes 481, 48 and 3, the thoroughfares entering Fulton, that read: “City with a Future.”
It’s a far cry from the 1930s, when the New York Sun wrote a story about Fulton entitled “The Mystery of Fulton, N.Y., the City the Depression Missed.” Then, factories powered by electricity generated by the Oswego River, which bisects the town, churned out knives, textiles and shotguns. The Fort Stanwix Canning Co. opened a plant in Fulton in 1902. In 1938 it began packaging Birds Eye vegetables.
Two Decades
The Birds Eye plant had survived during the past two decades as it passed from General Foods Corp. to Philip Morris Cos. to Dean Foods Inc. In 1998, Dean Foods sold it to Agrilink Foods Inc. for $400 million. In 2002, Agrilink sold a majority stake in the company for $175 million to Vestar Capital Partners, a private equity firm where Melwani was a managing director. Melwani is now at Blackstone.
Vestar transformed the company. In 2006, it shifted focus to brand-named foods and developing new product lines. It announced that it would jettison most of its non-brand frozen food businesses, affecting five facilities, including three in western New York, that employed about 740. In 2007, Birds Eye borrowed money to pay Vestar and Agrilink a one-time $298.2 million dividend, according to corporate filings.
Vestar turned Birds Eye into a smaller, profitable company. By 2009, Birds Eye earned $54 million on sales of $936 million, compared with a $131 million loss and sales of $1 billion in 2002. Its workforce had shrunk to 1,700 from 4,000, filings show.
In November 2009, Pinnacle Foods, owned by Blackstone, agreed to buy Birds Eye for $1.3 billion. The purchase was financed by $1.15 billion of debt. Blackstone contributed $260 million in equity. Carol Makovich, a Vestar spokeswoman, declined to comment.
$17 Million
Blackstone affiliates were paid $17 million in acquisition fees for arranging the Birds Eye deal. Pinnacle has also paid Blackstone at least $15.5 million in management fees since it was taken over by the firm in 2007, according to company filings.
Under Blackstone, Birds Eye’s sales and profits have risen. In the quarter that ended in September, sales were $248 million, an 11.2 percent increase from the year earlier. The growth was driven by expanded distribution and demand for new products, in addition to lower new product distribution expenses, the company said in a filing.
Charles Murphy, 66, had worked at the Birds Eye plant in Fulton through a series of owners for 22 years before retiring at the end of 2010. He said employees were optimistic that the factory would survive.
Schumer Press Conference
In January 2010, U.S. Senator Charles Schumer, the New York Democrat, held a press conference with workers in Fulton, saying he would keep pressuring the company until all the jobs were safe. Schumer said he called Stephen Schwarzman, Blackstone’s chairman and co-founder, and asked him to spare the factory.
“No one expected that place to close,” said Murphy.
Then Pinnacle started cutting jobs. In mid-2010, it began closing down the Rochester, New York headquarters where 200 worked. That December it announced the closure of a Tacoma, Washington, plant that employed 160 and would shift production to Iowa.
On April 13, 2011, a Wednesday, employees coming to work at the Fulton plant saw a makeshift sign taped to a window: A mandatory meeting for all employees would be held at the Fulton War Memorial, the town’s exhibition hall and gymnasium on the 15th.
A Birds Eye lawyer told those gathered that the company would close the Fulton plant and move some of the jobs to Wisconsin and Minnesota.
Paul Robinson, a 59 year-old who ran packing machines remembered asking managers, “What can we do to keep the plant open?”
‘Minds Made Up’
Nothing, he said Pinnacle managers replied. “They had their minds made up.”
Wisconsin had offered Pinnacle $1.3 million in incentives to shift production to the state. Worker’s compensation costs were also lower — an average of $1,100 per employee in Wisconsin compared with $12,000 in New York, Mayor Woodward said.
While new jobs were added elsewhere, the closures cut the Birds Eye’s payroll by about 300, or 17 percent, as it eliminated more jobs than were added elsewhere, according to Weese, the Pinnacle spokeswoman. She said such costs are common after corporate mergers.
“Synergies are true with every deal. It’s not unique to this particular deal,” Weese said. “It’s less expensive to run one company than two.”
Not all public pensions have stood by as a private equity firms managing their money announced job cuts.
Hugo Boss
In 2010, after hearing that clothing-company Hugo Boss AG was planning to close a factory in a Cleveland suburb where it manufactured suits, threatening the jobs of 300 workers, Ohio’s public employee pension fund contacted Hugo Boss’s owner, London-based private equity firm Permira Advisers LLP.
Ohio’s Public Employees Retirement System had invested $80 million in the Permira fund that owned Hugo Boss. After writing to Permira and not getting a response, the pension fund followed up with another letter saying it would “think long and hard” about investing any more money with Permira, said Hugh Quill, a former Ohio pension trustees. The plant was never closed.
“These guys could have cared less about a plant in Cleveland, Ohio, but they did care about not having institutional investors for their next $500 million offering,” Quill said. “I think it was the right thing to do, given the amount of pain and suffering that was going on in the state.”
The California Public Employees’ Retirement System and public pensions from Maryland and Pennsylvania, which invested in Permira, also lobbied the firm. So did New York City’s pension funds.
Liu’s Letter
“New York’s pension funds do not wish to be investing in job loss or in a global ‘race to the bottom,’” New York City Comptroller Liu wrote in a letter to Permira.
Chris Davison, director of communications for Permira, declined to comment.
In Fulton, Charles Murphy’s wife, Donna, had been out on medical leave since October 2010 when the Birds Eye closure was announced. Still struggling with lung cancer, she lost her job when she couldn’t return to work for the factory’s last two months. That meant she didn’t get any severance pay. She worked there for 25 years.
Pinnacle’s Weese said details about medical leave and severance pay were worked out in negotiations with the employees’ union, Workers United Local 1822.
‘Devoting Your Life’
“You spend that many years devoting your life to the company, coming in to work every day, and they think nothing of you,” said Murphy, who lives in nearby Oswego. “This hurt a lot of people’s livelihoods.”
Fulton mayor Woodward, who was a maintenance supervisor with Nestle when the plant shut in 2003, said his story is another sign of the times.
“What you’re doing by doing that — you are systematically eliminating the middle class,” he said. “You’re going to be rich or you’re going to be poor. There’s no in between.”
–Editors: Jeffrey Taylor, Larry Edelman
To contact the reporters on this story: William Selway in Washington at wselway@bloomberg.net; Martin Braun in New York at mbraun6@bloomberg.net.
To contact the editor responsible for this story: Jeffrey Taylor at Jtaylor48@bloomberg.net
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2012年1月23日星期一
Maximize financial aid by filling out FAFSA
As of Jan. 1, the Free Application for Federal Student Aid, or FAFSA, became available for the 2012-13 school year. The FAFSA qualifies students for federal grants, loans and work-study jobs, and serves as the basis for determining aid eligibility for many private awards. In light of other 2012 financial aid changes that will make it tougher for some students to pay for college, maximizing your federal aid eligibility is more crucial than ever. Here’s how to get an A in FAFSA 101.
“Everyone should fill out the FAFSA,” says Beth V. Walker, founder of College Funding Coaches, a college finance planning firm headquartered in Las Vegas. “There are a lot of parents who think they make too much money and that they’re not going to qualify for anything, but I think it’s a surprise to many people to know that the merit-based aid is handed out many times through the need-based door.”
All undergrads, regardless of their family’s income, can qualify for a total of $27,000 in unsubsidized Stafford loans over four years, reports the Department of Education, while families with adjusted gross incomes of $60,000 or less can also usually expect some federal grant aid, says Walker. Unlike student loans, grants need not be repaid, though certain conditions may apply. Before filing, families can get an estimate of their EFC by using the FAFSA4Caster tool at Fafsa.ed.gov.
“Generally, need-based financial aid is going to be harder to get next year than it was last year,” says Jay Murray, president of Solutions for Tuition, a college planning firm in Lone Tree, Colo.
Families can take action. While most families can’t change their income, they can maximize their federal aid eligibility by filing the FAFSA as close to Jan. 1 as possible and by shifting or spending assets held in the student’s name.
“Student assets are assessed at 20 percent,” says Murray, meaning for every dollar in an account in a student’s name, the government will subtract 20 cents from the student’s aid package. This starts with need-based grants. “Parental assets are assessed at (up to) 5.6 percent.” The exception, Murray says, is 529 plans. These are assessed at the parental rate regardless of whether they’re held in a parent’s or student’s name.
Gary Carpenter, executive director of the National College Advocacy Group, a nonprofit organization in Syracuse, N.Y., says families can also increase their aid eligibility by knowing which investment vehicles the government doesn’t take into consideration.
“The FAFSA form does not assess the family home. It does not assess retirement accounts. It does not assess life insurance policies or annuities,” says Carpenter. “Also, they do not assess personal assets like automobiles, clothing, furniture — none of that is assessed.”
Families looking to shift assets from assessable accounts to sheltered ones can do so by maxing out their retirement accounts, paying down the mortgage on their primary home and purchasing personal items the student will need before filing the FAFSA. These personal items can include a computer or dorm supplies. Families who need those assets to be available for college costs can simply move funds from an account in the student’s name to a 529 plan or one held in the parent’s name.
Sandy Baum, a senior fellow at the George Washington University Graduate School of Education, adds that students should also alert their school’s financial aid office about expenses that aren’t considered on the FAFSA.
“For example, if you fill out (the FAFSA) and your parents made a reasonable income last year and then they lose their jobs, you want to be sure you go to the financial aid office,” she says. “Tell them this because they can adjust your aid award to account for those unfortunate new circumstances. That’s terrifically important.”
By letting your aid office know about factors that aren’t included on the FAFSA, such as medical expenses, death in the family, divorce or parental job loss, and by providing documentation, families can keep aid officers abreast of their current financial situation and increase their chances of landing college aid.
More From Bankrate.com
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Understand the basics
The sole purpose of the FAFSA is to determine your expected family contribution, or EFC — the amount the government believes your family can chip in for college that year. Based primarily on your family’s income and assets, the EFC qualifies students for federal grants, loans and work-study programs. It’s also one of the main factors used by colleges to determine how much your family can pay relative to the cost of that school and how much the college will contribute to your total aid package.“Everyone should fill out the FAFSA,” says Beth V. Walker, founder of College Funding Coaches, a college finance planning firm headquartered in Las Vegas. “There are a lot of parents who think they make too much money and that they’re not going to qualify for anything, but I think it’s a surprise to many people to know that the merit-based aid is handed out many times through the need-based door.”
All undergrads, regardless of their family’s income, can qualify for a total of $27,000 in unsubsidized Stafford loans over four years, reports the Department of Education, while families with adjusted gross incomes of $60,000 or less can also usually expect some federal grant aid, says Walker. Unlike student loans, grants need not be repaid, though certain conditions may apply. Before filing, families can get an estimate of their EFC by using the FAFSA4Caster tool at Fafsa.ed.gov.
The loopholes
Understanding the federal aid methodology is especially important in light of 2012 financial aid changes. This year, the interest rate on subsidized Stafford loans for undergrads will increase, subsidized Stafford loans for grad students will be eliminated and students will have fewer semesters to qualify for a Pell Grant. It will also become harder to qualify for the full Pell Grant award. As of last year, families with adjusted gross incomes of $30,000 or less automatically qualified for a full Pell. This year, that threshold will decrease to $23,000, reports the Department of Education.“Generally, need-based financial aid is going to be harder to get next year than it was last year,” says Jay Murray, president of Solutions for Tuition, a college planning firm in Lone Tree, Colo.
Families can take action. While most families can’t change their income, they can maximize their federal aid eligibility by filing the FAFSA as close to Jan. 1 as possible and by shifting or spending assets held in the student’s name.
“Student assets are assessed at 20 percent,” says Murray, meaning for every dollar in an account in a student’s name, the government will subtract 20 cents from the student’s aid package. This starts with need-based grants. “Parental assets are assessed at (up to) 5.6 percent.” The exception, Murray says, is 529 plans. These are assessed at the parental rate regardless of whether they’re held in a parent’s or student’s name.
Gary Carpenter, executive director of the National College Advocacy Group, a nonprofit organization in Syracuse, N.Y., says families can also increase their aid eligibility by knowing which investment vehicles the government doesn’t take into consideration.
“The FAFSA form does not assess the family home. It does not assess retirement accounts. It does not assess life insurance policies or annuities,” says Carpenter. “Also, they do not assess personal assets like automobiles, clothing, furniture — none of that is assessed.”
Families looking to shift assets from assessable accounts to sheltered ones can do so by maxing out their retirement accounts, paying down the mortgage on their primary home and purchasing personal items the student will need before filing the FAFSA. These personal items can include a computer or dorm supplies. Families who need those assets to be available for college costs can simply move funds from an account in the student’s name to a 529 plan or one held in the parent’s name.
Sandy Baum, a senior fellow at the George Washington University Graduate School of Education, adds that students should also alert their school’s financial aid office about expenses that aren’t considered on the FAFSA.
“For example, if you fill out (the FAFSA) and your parents made a reasonable income last year and then they lose their jobs, you want to be sure you go to the financial aid office,” she says. “Tell them this because they can adjust your aid award to account for those unfortunate new circumstances. That’s terrifically important.”
By letting your aid office know about factors that aren’t included on the FAFSA, such as medical expenses, death in the family, divorce or parental job loss, and by providing documentation, families can keep aid officers abreast of their current financial situation and increase their chances of landing college aid.
More From Bankrate.com
http://tourism9.cm/ http://vkins.com/
2012年1月2日星期一
Financial advice extends beyond planning
There is a flurry of activity in the financial planning and advisory space. The practice of earning a commission from the producer is on its way out and several advisers are designing value propositions to earn a fee from the customer. Most financial advisers like the idea of financial goals, their estimation, and investment products designed to get there. Advisory is quickly getting equated to planning, but it should ideally cover a much larger ground.
There is no denying that the clientele for personal financial services is growing. While most open a bank account as soon as they begin to earn, they do not get dependable advice on how to manage their finances after that. Even opening a bank account has now become a matter of advice, with free pricing of deposits and services. Customers need advice on taking loans, managing their liquidity, making and monitoring their investments and ensuring that their wealth is taken good care of. Let me spell out some simple advisory services that customers may be looking for.
First, investors may need help with management of investible surplus. While it makes perfect sense to deploy the surplus, the activities associated with its deployment take time, energy and paperwork, which many of us shun. Advisers working with banks, who have access to investors’ balances, can help in routinely investing this surplus. However, they tend to not do so since it helps their bank to have these low-cost funds lying around unused. Non-bank advisers can step in to see if they can put a process in place, converting routine surpluses to deposits, bonds, or investments in saving schemes. A large number of people will heave a sigh of relief at this possibility.
Second, while motor vehicle insurance is easily done, other forms of insurance are not seen as tools to managing expenses better. Low wage earners, such as drivers and maids, may need health insurance, and there may be generous employers willing to pay the premium, only if an adviser arranges the process and paperwork. Several need general insurance to protect their assets, but may not have the time to complete the tasks that lead to the purchase of an appropriate policy. Then there are people who change their jobs often, but don’t care to check how well they are covered by health insurance. There are others who do not work for employers who provide such a cover. Several may need health plans that protect them and their families adequately. Beyond the greed for Ulip and the plain vanilla term policy, possibilities in insurance remain mostly untapped.
Third, there is the general view that financial advisory services are for the high net worth individuals (HNIs). Nothing can be far from truth, but there are several advisers who do not find it worthwhile to acquire and nurture a large number of small value clients. There is also a clamour for ‘expert’, ‘customised’ or ‘exclusive’, the fancy sales lingo describing financial services that restricts the number of clients an adviser can service. There is a large population requiring far simpler stuff. These can become standardised services, which can be scaled up across a large number of clients. Strangely, this is still not attempted, even by large banks with a huge retail base. Customers may be keen to have their net worth computed, their portfolios listed, their holdings valued, their loans consolidated, their defunct PPF and post office accounts closed, their paper shares dematerialised, their bond redemption reclaimed. A hundred simple services await adviser attention if they cared to look.
Fourth, not all financial advisory is about products, markets and asset allocation. Consider paperwork. Investors need serious help with their holdings, typically kept in multiple names and combinations, in multiple folios, and various stages of completion of formalities of nomination, automation and consolidation. Not everyone is a process expert and some of us can procrastinate endlessly about putting our papers in order. In fact, most would be willing to pay a fee if someone cleaned it all up. Most investors understand the need to have the family’s wealth accessible and listed in good order, so that there is no crisis if there’s a mishap. But there is no reliable adviser service, which can help organise the wealth meaningfully, so it can be used for the purpose for which it was created. Wills and trusts are still in the realm of the exotic, while many families struggle to put the house in order when someone dies without an accessible record of investments and how it can be used. Ensuring business as usual for a family that faces a crisis is as valuable a service as a business process back-up that uses sophisticated technological tools. Advisers do not seem to have taken cognisance of the need for robust processes for their customers.
Fifth, investors need advice not just for buying investment products and reaching financial goals, but for strategic financial choices. They may need advice on managing their erratic income, as can be the case for sporting professionals, media and film professionals, or other self-employed people. They may like to see how their choices in the future about earning and spending will pan out, and how to organise themselves. They may need advice on borrowing, managing credit, funding small businesses using investments, protection from bankruptcy, and restructuring loans and assets. Where a choice about personal finance has to be made, there may be a need for advice. One hopes that financial advisers will move from merely estimating retirement corpus and suggesting SIPs.
–Uma Shashikant The author is Managing Director, Centre for Investment Education and Learning, and can be reached at uma.shashikant@ ciel.co.in
http://tourism9.com/
There is no denying that the clientele for personal financial services is growing. While most open a bank account as soon as they begin to earn, they do not get dependable advice on how to manage their finances after that. Even opening a bank account has now become a matter of advice, with free pricing of deposits and services. Customers need advice on taking loans, managing their liquidity, making and monitoring their investments and ensuring that their wealth is taken good care of. Let me spell out some simple advisory services that customers may be looking for.
First, investors may need help with management of investible surplus. While it makes perfect sense to deploy the surplus, the activities associated with its deployment take time, energy and paperwork, which many of us shun. Advisers working with banks, who have access to investors’ balances, can help in routinely investing this surplus. However, they tend to not do so since it helps their bank to have these low-cost funds lying around unused. Non-bank advisers can step in to see if they can put a process in place, converting routine surpluses to deposits, bonds, or investments in saving schemes. A large number of people will heave a sigh of relief at this possibility.
Second, while motor vehicle insurance is easily done, other forms of insurance are not seen as tools to managing expenses better. Low wage earners, such as drivers and maids, may need health insurance, and there may be generous employers willing to pay the premium, only if an adviser arranges the process and paperwork. Several need general insurance to protect their assets, but may not have the time to complete the tasks that lead to the purchase of an appropriate policy. Then there are people who change their jobs often, but don’t care to check how well they are covered by health insurance. There are others who do not work for employers who provide such a cover. Several may need health plans that protect them and their families adequately. Beyond the greed for Ulip and the plain vanilla term policy, possibilities in insurance remain mostly untapped.
Third, there is the general view that financial advisory services are for the high net worth individuals (HNIs). Nothing can be far from truth, but there are several advisers who do not find it worthwhile to acquire and nurture a large number of small value clients. There is also a clamour for ‘expert’, ‘customised’ or ‘exclusive’, the fancy sales lingo describing financial services that restricts the number of clients an adviser can service. There is a large population requiring far simpler stuff. These can become standardised services, which can be scaled up across a large number of clients. Strangely, this is still not attempted, even by large banks with a huge retail base. Customers may be keen to have their net worth computed, their portfolios listed, their holdings valued, their loans consolidated, their defunct PPF and post office accounts closed, their paper shares dematerialised, their bond redemption reclaimed. A hundred simple services await adviser attention if they cared to look.
Fourth, not all financial advisory is about products, markets and asset allocation. Consider paperwork. Investors need serious help with their holdings, typically kept in multiple names and combinations, in multiple folios, and various stages of completion of formalities of nomination, automation and consolidation. Not everyone is a process expert and some of us can procrastinate endlessly about putting our papers in order. In fact, most would be willing to pay a fee if someone cleaned it all up. Most investors understand the need to have the family’s wealth accessible and listed in good order, so that there is no crisis if there’s a mishap. But there is no reliable adviser service, which can help organise the wealth meaningfully, so it can be used for the purpose for which it was created. Wills and trusts are still in the realm of the exotic, while many families struggle to put the house in order when someone dies without an accessible record of investments and how it can be used. Ensuring business as usual for a family that faces a crisis is as valuable a service as a business process back-up that uses sophisticated technological tools. Advisers do not seem to have taken cognisance of the need for robust processes for their customers.
Fifth, investors need advice not just for buying investment products and reaching financial goals, but for strategic financial choices. They may need advice on managing their erratic income, as can be the case for sporting professionals, media and film professionals, or other self-employed people. They may like to see how their choices in the future about earning and spending will pan out, and how to organise themselves. They may need advice on borrowing, managing credit, funding small businesses using investments, protection from bankruptcy, and restructuring loans and assets. Where a choice about personal finance has to be made, there may be a need for advice. One hopes that financial advisers will move from merely estimating retirement corpus and suggesting SIPs.
–Uma Shashikant The author is Managing Director, Centre for Investment Education and Learning, and can be reached at uma.shashikant@ ciel.co.in
http://tourism9.com/
Financial advice extends beyond planning
There is a flurry of activity in the financial planning and advisory space. The practice of earning a commission from the producer is on its way out and several advisers are designing value propositions to earn a fee from the customer. Most financial advisers like the idea of financial goals, their estimation, and investment products designed to get there. Advisory is quickly getting equated to planning, but it should ideally cover a much larger ground.
There is no denying that the clientele for personal financial services is growing. While most open a bank account as soon as they begin to earn, they do not get dependable advice on how to manage their finances after that. Even opening a bank account has now become a matter of advice, with free pricing of deposits and services. Customers need advice on taking loans, managing their liquidity, making and monitoring their investments and ensuring that their wealth is taken good care of. Let me spell out some simple advisory services that customers may be looking for.
First, investors may need help with management of investible surplus. While it makes perfect sense to deploy the surplus, the activities associated with its deployment take time, energy and paperwork, which many of us shun. Advisers working with banks, who have access to investors’ balances, can help in routinely investing this surplus. However, they tend to not do so since it helps their bank to have these low-cost funds lying around unused. Non-bank advisers can step in to see if they can put a process in place, converting routine surpluses to deposits, bonds, or investments in saving schemes. A large number of people will heave a sigh of relief at this possibility.
Second, while motor vehicle insurance is easily done, other forms of insurance are not seen as tools to managing expenses better. Low wage earners, such as drivers and maids, may need health insurance, and there may be generous employers willing to pay the premium, only if an adviser arranges the process and paperwork. Several need general insurance to protect their assets, but may not have the time to complete the tasks that lead to the purchase of an appropriate policy. Then there are people who change their jobs often, but don’t care to check how well they are covered by health insurance. There are others who do not work for employers who provide such a cover. Several may need health plans that protect them and their families adequately. Beyond the greed for Ulip and the plain vanilla term policy, possibilities in insurance remain mostly untapped.
Third, there is the general view that financial advisory services are for the high net worth individuals (HNIs). Nothing can be far from truth, but there are several advisers who do not find it worthwhile to acquire and nurture a large number of small value clients. There is also a clamour for ‘expert’, ‘customised’ or ‘exclusive’, the fancy sales lingo describing financial services that restricts the number of clients an adviser can service. There is a large population requiring far simpler stuff. These can become standardised services, which can be scaled up across a large number of clients. Strangely, this is still not attempted, even by large banks with a huge retail base. Customers may be keen to have their net worth computed, their portfolios listed, their holdings valued, their loans consolidated, their defunct PPF and post office accounts closed, their paper shares dematerialised, their bond redemption reclaimed. A hundred simple services await adviser attention if they cared to look.
Fourth, not all financial advisory is about products, markets and asset allocation. Consider paperwork. Investors need serious help with their holdings, typically kept in multiple names and combinations, in multiple folios, and various stages of completion of formalities of nomination, automation and consolidation. Not everyone is a process expert and some of us can procrastinate endlessly about putting our papers in order. In fact, most would be willing to pay a fee if someone cleaned it all up. Most investors understand the need to have the family’s wealth accessible and listed in good order, so that there is no crisis if there’s a mishap. But there is no reliable adviser service, which can help organise the wealth meaningfully, so it can be used for the purpose for which it was created. Wills and trusts are still in the realm of the exotic, while many families struggle to put the house in order when someone dies without an accessible record of investments and how it can be used. Ensuring business as usual for a family that faces a crisis is as valuable a service as a business process back-up that uses sophisticated technological tools. Advisers do not seem to have taken cognisance of the need for robust processes for their customers.
Fifth, investors need advice not just for buying investment products and reaching financial goals, but for strategic financial choices. They may need advice on managing their erratic income, as can be the case for sporting professionals, media and film professionals, or other self-employed people. They may like to see how their choices in the future about earning and spending will pan out, and how to organise themselves. They may need advice on borrowing, managing credit, funding small businesses using investments, protection from bankruptcy, and restructuring loans and assets. Where a choice about personal finance has to be made, there may be a need for advice. One hopes that financial advisers will move from merely estimating retirement corpus and suggesting SIPs.
–Uma Shashikant The author is Managing Director, Centre for Investment Education and Learning, and can be reached at uma.shashikant@ ciel.co.in
http://tourism9.com/
There is no denying that the clientele for personal financial services is growing. While most open a bank account as soon as they begin to earn, they do not get dependable advice on how to manage their finances after that. Even opening a bank account has now become a matter of advice, with free pricing of deposits and services. Customers need advice on taking loans, managing their liquidity, making and monitoring their investments and ensuring that their wealth is taken good care of. Let me spell out some simple advisory services that customers may be looking for.
First, investors may need help with management of investible surplus. While it makes perfect sense to deploy the surplus, the activities associated with its deployment take time, energy and paperwork, which many of us shun. Advisers working with banks, who have access to investors’ balances, can help in routinely investing this surplus. However, they tend to not do so since it helps their bank to have these low-cost funds lying around unused. Non-bank advisers can step in to see if they can put a process in place, converting routine surpluses to deposits, bonds, or investments in saving schemes. A large number of people will heave a sigh of relief at this possibility.
Second, while motor vehicle insurance is easily done, other forms of insurance are not seen as tools to managing expenses better. Low wage earners, such as drivers and maids, may need health insurance, and there may be generous employers willing to pay the premium, only if an adviser arranges the process and paperwork. Several need general insurance to protect their assets, but may not have the time to complete the tasks that lead to the purchase of an appropriate policy. Then there are people who change their jobs often, but don’t care to check how well they are covered by health insurance. There are others who do not work for employers who provide such a cover. Several may need health plans that protect them and their families adequately. Beyond the greed for Ulip and the plain vanilla term policy, possibilities in insurance remain mostly untapped.
Third, there is the general view that financial advisory services are for the high net worth individuals (HNIs). Nothing can be far from truth, but there are several advisers who do not find it worthwhile to acquire and nurture a large number of small value clients. There is also a clamour for ‘expert’, ‘customised’ or ‘exclusive’, the fancy sales lingo describing financial services that restricts the number of clients an adviser can service. There is a large population requiring far simpler stuff. These can become standardised services, which can be scaled up across a large number of clients. Strangely, this is still not attempted, even by large banks with a huge retail base. Customers may be keen to have their net worth computed, their portfolios listed, their holdings valued, their loans consolidated, their defunct PPF and post office accounts closed, their paper shares dematerialised, their bond redemption reclaimed. A hundred simple services await adviser attention if they cared to look.
Fourth, not all financial advisory is about products, markets and asset allocation. Consider paperwork. Investors need serious help with their holdings, typically kept in multiple names and combinations, in multiple folios, and various stages of completion of formalities of nomination, automation and consolidation. Not everyone is a process expert and some of us can procrastinate endlessly about putting our papers in order. In fact, most would be willing to pay a fee if someone cleaned it all up. Most investors understand the need to have the family’s wealth accessible and listed in good order, so that there is no crisis if there’s a mishap. But there is no reliable adviser service, which can help organise the wealth meaningfully, so it can be used for the purpose for which it was created. Wills and trusts are still in the realm of the exotic, while many families struggle to put the house in order when someone dies without an accessible record of investments and how it can be used. Ensuring business as usual for a family that faces a crisis is as valuable a service as a business process back-up that uses sophisticated technological tools. Advisers do not seem to have taken cognisance of the need for robust processes for their customers.
Fifth, investors need advice not just for buying investment products and reaching financial goals, but for strategic financial choices. They may need advice on managing their erratic income, as can be the case for sporting professionals, media and film professionals, or other self-employed people. They may like to see how their choices in the future about earning and spending will pan out, and how to organise themselves. They may need advice on borrowing, managing credit, funding small businesses using investments, protection from bankruptcy, and restructuring loans and assets. Where a choice about personal finance has to be made, there may be a need for advice. One hopes that financial advisers will move from merely estimating retirement corpus and suggesting SIPs.
–Uma Shashikant The author is Managing Director, Centre for Investment Education and Learning, and can be reached at uma.shashikant@ ciel.co.in
http://tourism9.com/
Credit Agricole quits commodity trade as crisis bites
(Reuters) – Credit Agricole will stop trading commodities and will also slash its financing of the multi-billion-dollar market, the most sweeping commodity cuts yet among European banks strained by the euro zone crisis.
Credit Agricole, the formerly farm-focused bank that had boosted its energy trading in recent years, warned on Wednesday of losses and write-downs as it struggles to cope with the credit crunch. The cuts come just weeks after rival Societe Generaleshut down its year-old U.S. gas and power trading desk, and leader BNP Paribas consolidated.
The deepening euro zone debt crisis has hit French banks hard as traditional sources of dollar funding have evaporated and as they face pressure to meet tougher capital requirements.
Volatile commodity prices, dimmer growth prospects and tougher regulation are also forcing some firms to question the outlook for the decade-long boom in trading raw materials.
Cargill Inc., which has voiced a bleaker economic outlook for next year than most of its peers, is cutting 125 jobs worldwide from its energy, transportation and metals operations as part of plans to reduce 2,000 or 1.4 percent of its global workforce over the next six months.
Trade sources said more companies may follow.
“What is happening with Credit Agricole is certainly a major trend across banking where the entire commodities trading business is shrinking,” said a senior commodities trader who recently left a major bank for an independent trading house.
“It is happening because of regulations, as proprietary trading is not allowed any more and because people have overspeculated in the past years and got badly burnt.”
Credit Agricole’s commodities trading employs around 100 staff globally, including traders, analysts, marketing teams and technical staff, sources close to Credit Agricole said.
A source in the bank said many employees had only learned of the closure of the commodities trading unit on Wednesday:
“It has all happened very quickly. It is a shock.”
CREDIT PRESSURE
On Wednesday, Credit Agricole Chief Executive Jean-Paul Chifflet said the bank was pulling out of commodities because it had less expertise in the field than other core areas:
“We preferred to stop it completely and devote our energy to other activities,” he said.
But Chifflet told Les Echos newspaper the bank would not sell its holding in Newedge, a commodities futures and clearing brokerage it co-owns with Societe Generale.
Last year, the head of Credit Agricole’s commodities trading division, Martin Fraenkel, told Reuters energy was a key growth area because “clients of the bank have ever more need for hedging services in these markets”. The bank had just secured a potentially potent tie-up with power trading giant ETF Trading.
But nearly two years on, European banks are under enormous pressure in credit markets and only very large banks have scope to expand. Credit Agricole may be the first of several banks to drop commodities trading, said the senior commodities trader:
“The major players – Goldman Sachs, Morgan Stanley, Merrill Lynch, Deutsche Bank – are still hiring to replace people who leave to funds and trading houses. But small and medium-sized banks are just shutting everything down.”
Morgan Stanley said on Wednesday it would cut 1,600 employees in the first quarter; it did not say how many, if any, would be in its commodities division, which ranks with Goldman Sachs and JP Morgan as one of the three largest in the world.
A senior oil trader at a major European bank said only very large players could now survive in commodities: “They (Credit Agricole) wanted to have a commodities arm but the appetite for risk was so small it was impossible to do big deals.”
Credit Agricole, which has expanded from its agricultural origins in recent years, said on Wednesday it would cut 2,350 jobs and exit 21 of the 55 countries where it operates and shutter entire businesses including equity derivatives.
BNP Paribas, Europe’s trade finance leader in commodities, has been cutting its trade finance portfolio, drastically reducing exposure to small and medium sized oil and metals firms and reselling part of that exposure, bankers say. A spokeswoman declined to comment.
In November, traders said the bank would close its Houston energy trading office and move some of the team to New York. It has also lost a senior metals trader.
Last week, Societe Generaletold employees it would shut down its Stamford, Connecticut-based physical gas and power operation and lay off most of the 140 or so employees at the trading unit it bought less than a year earlier from RBS Sempra.
“VERY, VERY STRONG REDUCTION”
Many details of the changes only emerged on Thursday.
The bank’s commodities derivatives business, trading oil, gas, metals and softs, is based in London and Hong Kong. It also has market representatives in Tokyo, Singapore and New York.
Credit Agricole has been active in oil hedging, traders said, and does not have a reputation for taking on major risk.
“It was very flow-based, rather than proprietary,” said a London-based trader with a bank. He said the bank hedged oil positions for airlines, taking positions on over-the-counter jet fuel derivatives and gas oil on the IntercontinentalExchange.
Sources close to Credit Agricole say the bank also plans to cut dramatically its commodities trade financing, which involve commitments of tens of billions of euros, but the exact scale of the retrenchment was unclear.
“In terms of commodities financing, they plan a very, very strong reduction in their activities,” a source close to Credit Agricole said, adding the full array of short-term and longer-term letters of credit and export credit would be affected.
The bank’s Geneva-based trade finance activities have about 120 people spread around the world, according to a former head of a commodities unit at Credit Agricole Corporate and Investment Banking who left the company just months ago.
Credit Agricole’s commodities financing activities concern around 600 people, of which at least half are in France, and involve commitments of tens of billions of euros.
TOUGH MARKETS
Cargill is not alone among trading houses responding to a disappointing 2011 performance, Swiss-based coal traders said.
Coal has been a particularly tough market for traders this year because prices have been largely stagnant and liquidity has been lower. Without liquidity and volatility, trading profits have been hard to come by.
“We can confirm that as a result of the internal structural changes there have been some personnel changes which will affect around 125 employees in our Energy, Transportation and Metals operations around the world,” a Cargill spokesman said.
Cargill has 600 employees in its Geneva office and around 1,100 worldwide in the non-oil Energy Transportation Industrial (ETI) business group.
Cargill will keep the split in its energy business between oil and non-oil with a global non-oil division made up of coal, gas, power and carbon trading and headed by Frank Rivendal, formerly head of power and gas in the U.S. for Cargill.
“Broadly speaking, the big changes are over and very few have been fired so far but there may be a few more job cuts,” one source said.
“In 2008-2009 everybody made money because prices were so volatile but this year prices have been stagnant and for the first time in a decade, even the big trading houses are facing a downturn in earnings,” he added.
Last month Cargill former head of coal based in Geneva, Patrick Bracken, left to return to the U.S. and Peter Biston, Geneva-based head of power and gas, a junior gas trader and a power trader lost their jobs.
Cargill Ferrous International in November shut its physical steel trading desks in Hong Kong and Geneva and its top sugar trader, Jonathan Drake, left in early December.
“That (restructuring) makes sense. In the previous structure oil made a lot of money and they couldn’t bonus traders as power and gas were down. Now oil can live or die by its own performance,” said Peter Henry, senior consultant with Commodity Search Partners.
(Additional reporting By Jonathan Leff; Editing by David Gregorio)
http://tourism9.com/
Credit Agricole, the formerly farm-focused bank that had boosted its energy trading in recent years, warned on Wednesday of losses and write-downs as it struggles to cope with the credit crunch. The cuts come just weeks after rival Societe Generale
The deepening euro zone debt crisis has hit French banks hard as traditional sources of dollar funding have evaporated and as they face pressure to meet tougher capital requirements.
Volatile commodity prices, dimmer growth prospects and tougher regulation are also forcing some firms to question the outlook for the decade-long boom in trading raw materials.
Cargill Inc.
Trade sources said more companies may follow.
“What is happening with Credit Agricole is certainly a major trend across banking where the entire commodities trading business is shrinking,” said a senior commodities trader who recently left a major bank for an independent trading house.
“It is happening because of regulations, as proprietary trading is not allowed any more and because people have overspeculated in the past years and got badly burnt.”
Credit Agricole’s commodities trading employs around 100 staff globally, including traders, analysts, marketing teams and technical staff, sources close to Credit Agricole said.
A source in the bank said many employees had only learned of the closure of the commodities trading unit on Wednesday:
“It has all happened very quickly. It is a shock.”
CREDIT PRESSURE
On Wednesday, Credit Agricole Chief Executive Jean-Paul Chifflet said the bank was pulling out of commodities because it had less expertise in the field than other core areas:
“We preferred to stop it completely and devote our energy to other activities,” he said.
But Chifflet told Les Echos newspaper the bank would not sell its holding in Newedge, a commodities futures and clearing brokerage it co-owns with Societe Generale
Last year, the head of Credit Agricole’s commodities trading division, Martin Fraenkel, told Reuters energy was a key growth area because “clients of the bank have ever more need for hedging services in these markets”. The bank had just secured a potentially potent tie-up with power trading giant ETF Trading.
But nearly two years on, European banks are under enormous pressure in credit markets and only very large banks have scope to expand. Credit Agricole may be the first of several banks to drop commodities trading, said the senior commodities trader:
“The major players – Goldman Sachs, Morgan Stanley, Merrill Lynch, Deutsche Bank – are still hiring to replace people who leave to funds and trading houses. But small and medium-sized banks are just shutting everything down.”
Morgan Stanley said on Wednesday it would cut 1,600 employees in the first quarter; it did not say how many, if any, would be in its commodities division, which ranks with Goldman Sachs and JP Morgan as one of the three largest in the world.
A senior oil trader at a major European bank said only very large players could now survive in commodities: “They (Credit Agricole) wanted to have a commodities arm but the appetite for risk was so small it was impossible to do big deals.”
Credit Agricole, which has expanded from its agricultural origins in recent years, said on Wednesday it would cut 2,350 jobs and exit 21 of the 55 countries where it operates and shutter entire businesses including equity derivatives.
BNP Paribas, Europe’s trade finance leader in commodities, has been cutting its trade finance portfolio, drastically reducing exposure to small and medium sized oil and metals firms and reselling part of that exposure, bankers say. A spokeswoman declined to comment.
In November, traders said the bank would close its Houston energy trading office and move some of the team to New York. It has also lost a senior metals trader.
Last week, Societe Generale
“VERY, VERY STRONG REDUCTION”
Many details of the changes only emerged on Thursday.
The bank’s commodities derivatives business, trading oil, gas, metals and softs, is based in London and Hong Kong. It also has market representatives in Tokyo, Singapore and New York.
Credit Agricole has been active in oil hedging, traders said, and does not have a reputation for taking on major risk.
“It was very flow-based, rather than proprietary,” said a London-based trader with a bank. He said the bank hedged oil positions for airlines, taking positions on over-the-counter jet fuel derivatives and gas oil on the IntercontinentalExchange.
Sources close to Credit Agricole say the bank also plans to cut dramatically its commodities trade financing, which involve commitments of tens of billions of euros, but the exact scale of the retrenchment was unclear.
“In terms of commodities financing, they plan a very, very strong reduction in their activities,” a source close to Credit Agricole said, adding the full array of short-term and longer-term letters of credit and export credit would be affected.
The bank’s Geneva-based trade finance activities have about 120 people spread around the world, according to a former head of a commodities unit at Credit Agricole Corporate and Investment Banking who left the company just months ago.
Credit Agricole’s commodities financing activities concern around 600 people, of which at least half are in France, and involve commitments of tens of billions of euros.
TOUGH MARKETS
Cargill is not alone among trading houses responding to a disappointing 2011 performance, Swiss-based coal traders said.
Coal has been a particularly tough market for traders this year because prices have been largely stagnant and liquidity has been lower. Without liquidity and volatility, trading profits have been hard to come by.
“We can confirm that as a result of the internal structural changes there have been some personnel changes which will affect around 125 employees in our Energy, Transportation and Metals operations around the world,” a Cargill spokesman said.
Cargill has 600 employees in its Geneva office and around 1,100 worldwide in the non-oil Energy Transportation Industrial (ETI) business group.
Cargill will keep the split in its energy business between oil and non-oil with a global non-oil division made up of coal, gas, power and carbon trading and headed by Frank Rivendal, formerly head of power and gas in the U.S. for Cargill.
“Broadly speaking, the big changes are over and very few have been fired so far but there may be a few more job cuts,” one source said.
“In 2008-2009 everybody made money because prices were so volatile but this year prices have been stagnant and for the first time in a decade, even the big trading houses are facing a downturn in earnings,” he added.
Last month Cargill former head of coal based in Geneva, Patrick Bracken, left to return to the U.S. and Peter Biston, Geneva-based head of power and gas, a junior gas trader and a power trader lost their jobs.
Cargill Ferrous International in November shut its physical steel trading desks in Hong Kong and Geneva and its top sugar trader, Jonathan Drake, left in early December.
“That (restructuring) makes sense. In the previous structure oil made a lot of money and they couldn’t bonus traders as power and gas were down. Now oil can live or die by its own performance,” said Peter Henry, senior consultant with Commodity Search Partners.
(Additional reporting By Jonathan Leff; Editing by David Gregorio)
http://tourism9.com/
Questions and Answers: Form I-924A
Background
8 CFR 204.6(m)(6) provides that regional centers must continue to meet the requirements of Section 610(a) of the Appropriations Act by continuing to promote economic growth, improved regional productivity, job creation or increased domestic capital investment in the approved geographic area.
Form I-924A, Supplement to Form I-924 (“I-924A”) is used to demonstrate a regional center’s continued eligibility for the regional center designation and must be filed with USCIS on an annual basis for each fiscal year (October 1 through September 30) within 90 days after the end of the fiscal year (on or before December 29th).
Form I-924A may be obtained on the USCIS website.
Below you will find questions and answers regarding the regional center Form I-924A filing and reporting requirements.
Part I. Questions and Answers
Q. Form I-924A asks in Part 1 for the provision of the USCIS-assigned number for the designated regional center. My regional center has had several case numbers assigned to its regional center filings. Which USCIS-assigned number should I provide?
A. USCIS assigned a unique identifier to every approved or prospective regional center in August of 2011. Unlike a receipt number which changes with every filing, this unique identifier is permanently assigned to each approved regional center, and will be associated with all Form I-924 applications that are filed by the regional center. The regional center unique identifier’s naming convention is as follows:
IDxxxxxxxxxx
Please provide the regional center’s unique identifier (if known) and a copy of the regional center’s most recently issued approval notice.
Q. Form I-924A asks in Part 2 for the regional center to check box a. or b. Part 2.a. appears to be the box to check for a filing for a specific fiscal year. Part 2.b. appears to be the box to check for a filing for a range of fiscal years. Under what circumstances is Part 2.b. to be used?
A. 8 CFR 204.6(m)(6) requires regional centers to provide information demonstrating continued eligibility for the regional center designation on an annual basis, on a cumulative basis, and/or as otherwise requested by USCIS. In some instances USCIS may request that a regional center submit information covering a succession of fiscal years on Form I-924A. Part 2.b. should be checked by the regional center in those instances to specifically identify the period of time covered by the Form I-924A information submission.
Q. In Part 3, does “capital investment” refer only to the investments made by EB-5 capital investors, or should it include other financing that is part of the EB-5 capital investment project?
A. “Capital investment” in Part 3 of Form I-924A refers solely to investments made by EB-5 investors. A regional center has the option to supplement the required information in Form I-924A, such as other financing that is part of an EB-5 capital investment project.
Q. At what point is capital considered “invested” for purposes of inclusion in Part 3 of Form I-924A; Form I-526 filing, I-526 approval, release from escrow (if any), or expenditure in a project?
A. Capital investment occurs when the EB-5 investor’s capital is actually transferred into the new commercial enterprise. Funds held in escrow should not be counted as capital invested for the purposes of completing Form I-924A, Part 3, as these funds have yet to be actually transferred into the new commercial enterprise.
Q. At what point are jobs considered to be created for purposes of inclusion in Part 3 of Form I-924A; I-526 approval – the time of the expenditure of the capital in the capital investment project or the accomplishment of other milestones in the business plan for the project?
A. In reporting statistics, USCIS estimates job creation (10 jobs per investor) based upon the number of Form I-829 petitions that were approved within the period of time under study. Regional centers may opt to adopt this timing approach to simplify the record keeping and data analysis required to be responsive to Part 3 of Form I-924A.
If a regional center chooses to adopt a job creation reporting methodology using economic impact modeling for the job-creating business activities that occurred within its capital investment projects during the fiscal year, then a detailed narrative and analysis should be provided with the Form I-924A that identifies the jobs that were created during the fiscal year and the methodology used to estimate the job creation. Further, regional centers should consistently use the same methodology from year-to-year to avoid erroneous or duplicative job creation estimates.
Q. Should capital investment and job creation numbers be reported strictly within the fiscal year in which they were respectively accomplished?
A. Yes, the amount of capital invested and jobs created through the regional center’s capital investment projects should be reported strictly within the fiscal year in which they were respectively accomplished. For Form I-924A filings for fiscal year 2011, the capital investment and job creation in Part 3 should only include events that occurred between October 1, 2010 and September 30, 2011.
Q. Where should a regional center account for jobs that were maintained in a “troubled business” during the fiscal year?
A. The number of jobs that were maintained in a “troubled business” should be identified in the section entitled “Aggregate Jobs Maintained” in Part 3.2 of the Form I-924A.
Q. What level of detail must a regional center use to identify the NAICS code for the Industry Category in Part 3.2 of Form I-924A?
A. The purpose of collecting North American Industry Classification System (“NAICS code”) information regarding the industries in which EB-5 capital is invested and jobs are created is to enable USCIS to provide information to internal and external stakeholders about the industries that are participating in EB-5 capital investment projects.
According to the U.S. Census Bureau’s FAQs regarding the NAICS codes , NAICS is a two- through six-digit hierarchical classification system, offering five levels of detail. Each digit in the code is part of a series of progressively narrower categories, and the more digits in the code signify greater classification detail. The first two digits designate the economic sector, the third digit designates the subsector, the fourth digit designates the industry group, the fifth digit designates the NAICS industry, and the sixth digit designates the national industry.
The NAICS code identified in Part 3.2 of Form I-924A should have sufficient detail to identify the industry for the primary business activity of the capital investment project. In general a NAICS code with four-digits, which identifies the industry group of a given economic activity would be an appropriate entry. For example, if the capital investment project involved Fruit and Nut then the appropriate NAICS code to use would be 1113.
Q. If a regional center creates jobs in numerous industry categories, should the regional center identify multiple industry categories, or indicate only the largest industry category in Part 3.3 of Form I-924A?
A. All of the industry category titles relating to the primary business activities conducted by the commercial enterprise should be identified in the event that the commercial enterprise engages in investments in multiple capital investment projects that span industries. Form I-924A indicates on page 2 of the form that if extra space is needed to complete any item, that the regional center should attach a continuation sheet, indicate the item number, and provide the response.
Last updated:12/06/2011
http://tourism9.com/
8 CFR 204.6(m)(6) provides that regional centers must continue to meet the requirements of Section 610(a) of the Appropriations Act by continuing to promote economic growth, improved regional productivity, job creation or increased domestic capital investment in the approved geographic area.
Form I-924A, Supplement to Form I-924 (“I-924A”) is used to demonstrate a regional center’s continued eligibility for the regional center designation and must be filed with USCIS on an annual basis for each fiscal year (October 1 through September 30) within 90 days after the end of the fiscal year (on or before December 29th).
Form I-924A may be obtained on the USCIS website.
Below you will find questions and answers regarding the regional center Form I-924A filing and reporting requirements.
Part I. Questions and Answers
Q. Form I-924A asks in Part 1 for the provision of the USCIS-assigned number for the designated regional center. My regional center has had several case numbers assigned to its regional center filings. Which USCIS-assigned number should I provide?
A. USCIS assigned a unique identifier to every approved or prospective regional center in August of 2011. Unlike a receipt number which changes with every filing, this unique identifier is permanently assigned to each approved regional center, and will be associated with all Form I-924 applications that are filed by the regional center. The regional center unique identifier’s naming convention is as follows:
IDxxxxxxxxxx
Please provide the regional center’s unique identifier (if known) and a copy of the regional center’s most recently issued approval notice.
Q. Form I-924A asks in Part 2 for the regional center to check box a. or b. Part 2.a. appears to be the box to check for a filing for a specific fiscal year. Part 2.b. appears to be the box to check for a filing for a range of fiscal years. Under what circumstances is Part 2.b. to be used?
A. 8 CFR 204.6(m)(6) requires regional centers to provide information demonstrating continued eligibility for the regional center designation on an annual basis, on a cumulative basis, and/or as otherwise requested by USCIS. In some instances USCIS may request that a regional center submit information covering a succession of fiscal years on Form I-924A. Part 2.b. should be checked by the regional center in those instances to specifically identify the period of time covered by the Form I-924A information submission.
Q. In Part 3, does “capital investment” refer only to the investments made by EB-5 capital investors, or should it include other financing that is part of the EB-5 capital investment project?
A. “Capital investment” in Part 3 of Form I-924A refers solely to investments made by EB-5 investors. A regional center has the option to supplement the required information in Form I-924A, such as other financing that is part of an EB-5 capital investment project.
Q. At what point is capital considered “invested” for purposes of inclusion in Part 3 of Form I-924A; Form I-526 filing, I-526 approval, release from escrow (if any), or expenditure in a project?
A. Capital investment occurs when the EB-5 investor’s capital is actually transferred into the new commercial enterprise. Funds held in escrow should not be counted as capital invested for the purposes of completing Form I-924A, Part 3, as these funds have yet to be actually transferred into the new commercial enterprise.
Q. At what point are jobs considered to be created for purposes of inclusion in Part 3 of Form I-924A; I-526 approval – the time of the expenditure of the capital in the capital investment project or the accomplishment of other milestones in the business plan for the project?
A. In reporting statistics, USCIS estimates job creation (10 jobs per investor) based upon the number of Form I-829 petitions that were approved within the period of time under study. Regional centers may opt to adopt this timing approach to simplify the record keeping and data analysis required to be responsive to Part 3 of Form I-924A.
If a regional center chooses to adopt a job creation reporting methodology using economic impact modeling for the job-creating business activities that occurred within its capital investment projects during the fiscal year, then a detailed narrative and analysis should be provided with the Form I-924A that identifies the jobs that were created during the fiscal year and the methodology used to estimate the job creation. Further, regional centers should consistently use the same methodology from year-to-year to avoid erroneous or duplicative job creation estimates.
Q. Should capital investment and job creation numbers be reported strictly within the fiscal year in which they were respectively accomplished?
A. Yes, the amount of capital invested and jobs created through the regional center’s capital investment projects should be reported strictly within the fiscal year in which they were respectively accomplished. For Form I-924A filings for fiscal year 2011, the capital investment and job creation in Part 3 should only include events that occurred between October 1, 2010 and September 30, 2011.
Q. Where should a regional center account for jobs that were maintained in a “troubled business” during the fiscal year?
A. The number of jobs that were maintained in a “troubled business” should be identified in the section entitled “Aggregate Jobs Maintained” in Part 3.2 of the Form I-924A.
Q. What level of detail must a regional center use to identify the NAICS code for the Industry Category in Part 3.2 of Form I-924A?
A. The purpose of collecting North American Industry Classification System (“NAICS code”) information regarding the industries in which EB-5 capital is invested and jobs are created is to enable USCIS to provide information to internal and external stakeholders about the industries that are participating in EB-5 capital investment projects.
According to the U.S. Census Bureau’s FAQs regarding the NAICS codes , NAICS is a two- through six-digit hierarchical classification system, offering five levels of detail. Each digit in the code is part of a series of progressively narrower categories, and the more digits in the code signify greater classification detail. The first two digits designate the economic sector, the third digit designates the subsector, the fourth digit designates the industry group, the fifth digit designates the NAICS industry, and the sixth digit designates the national industry.
The NAICS code identified in Part 3.2 of Form I-924A should have sufficient detail to identify the industry for the primary business activity of the capital investment project. In general a NAICS code with four-digits, which identifies the industry group of a given economic activity would be an appropriate entry. For example, if the capital investment project involved Fruit and Nut then the appropriate NAICS code to use would be 1113.
Q. If a regional center creates jobs in numerous industry categories, should the regional center identify multiple industry categories, or indicate only the largest industry category in Part 3.3 of Form I-924A?
A. All of the industry category titles relating to the primary business activities conducted by the commercial enterprise should be identified in the event that the commercial enterprise engages in investments in multiple capital investment projects that span industries. Form I-924A indicates on page 2 of the form that if extra space is needed to complete any item, that the regional center should attach a continuation sheet, indicate the item number, and provide the response.
Last updated:12/06/2011
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