After Investors Lose Millions, Property Swaps Face Regulation and J&J Shares Dip On Kickback, Recall News

The property swap method, named for a section of the Internal Revenue Code, can defer tax on capital gains. But two monumental blowups in the industry cost investors hundreds of millions of dollars over the last few years, prompting calls for more oversight.

The Wall Street Reform and Consumer Protection Act, approved by the House of Representatives in December, would put a new, controversial Consumer Financial Protection Agency in charge of qualified intermediaries, parties that hold investor sale proceeds in 1031 exchanges.

No federal oversight of qualified intermediaries exists now, said Mi-chael Halloran, CEO of Nationwide Exchange Services, a San Jose, Calif., qualified intermediary. He advocates regulations that would spell out the kinds of accounts in which proceeds could be held, subject facilitators to annual audits and protect proceeds from bankruptcy. [Read the full article]

The Justice Department accused J&J of paying millions of dollars in kickbacks to Omnicare (OCR) to buy and recommend J&J drugs.

The alleged kickbacks included providing Omnicare, which sells drugs to nursing homes, with increased rebates as well as payments for data that were never furnished, the Justice Department said.

J&J also made other payments, called “grants” and “educational funding,” that were meant to persuade Omnicare to recommend J&J medicines, Justice said.

Meanwhile, J&J’s consumer division said it’s recalling more than 500 lots of over-the-counter products, including Tylenol, Motrin and Rolaids, after reports of an unusual odor, expanding on an issue that led to a Tylenol recall last year. The latest voluntary recall followed reports of “an unusual moldy, musty, or mildewlike odor” that led to nausea, stomach pain and vomiting.

It’s been around for years, and most of the time it had operating losses. [Read the full article]

That need includes avoiding the kinds of problems that led to a viral contamination in the plant that makes Genzyme’s two key products: Cerezyme for Gaucher’s disease, and Fabrazyme for Fabry disease. The contamination caused a June shutdown at the plant, located in Allston, Mass. The virus wasn’t harmful to people, but the shutdown cost Genzyme millions in revenue well into last quarter.

The company expects to post a 7.7% drop in Q4 revenue when it reports results on Feb. 17. Full-year sales will show a 2% dip to $4.5 billion – the decade’s first annual decline.

Genzyme blamed the decline in part on slower production and lower sales of Cerezyme and Fabrazyme.

Production at the Allston facility restarted in September, though it didn’t begin shipping Cerezyme until Dec. 1. The company says it has cured the problems. And to make sure they don’t happen again, it has hired a troubleshooter with a track record of quality control management. [Read the full article]

Analysts generally agree that the strongest candidate is Symetra Financial, a health and life insurer owned partly by Warren Buffett. The firm is large and profitable with revenue of $1.3 billion and net income of $96 million in the first nine months of last year.

But the company has had a rough road to the market. It first filed in 2007, but withdrew, then refiled in October with a lower price range. But it shrank the size of its offering slightly last week as Buffett and his partners decided not to sell their own shares.

“If I had to speculate, I’d say that’s half a vote of confidence for the company and maybe half because of the general vibe in the IPO market,” he said. [Read the full article]

You may also like...