Five sue Ernst and Young over failed tax dodge

Five prominent Silicon Valley businessmen are suing Ernst & Young, accusing the Big Four accounting firm of roping them into an illegitimate tax shelter which resulted in millions of dollars in IRS penalties, interest and professional fees.
Thomas Fallon, Carl Redfield, Richard Timmins, Robert Puette and Alexandre Balkanski filed suit in Santa Clara County Superior Court on Jan. 30.
According to the lawsuit, the men are five of 125 people in the U.S. who bought an Ernst & Young tax shelter product called a "contingent deferred swap" or "CDS" between 1999 and 2002. The five men all purchased the tax shelter product as a way to reduce exposure to taxes on a collective $51 million.
The Internal Revenue Service said in 2002 it wouldn't recognize the swap as a legitimate tax strategy.

Cayman Retains Leadership In Financial Services

Not only has the Cayman Islands continued to maintain its leadership position in international financial services and national economic performance, but it is also moving ahead of competitors, the government has claimed, pointing to a new credit rating report.
Moody's, the international credit rating agency, has raised Cayman's ceiling for foreign currency bonds and notes from Aa3 or high grade, to Aaa or exceptional - which means that it is now alongside the UK, US, Canada and Bermuda. This resulted from a change in the rating methodology last year which included raising the foreign currency country ceilings of approximately 70 countries. Of these countries, the Cayman Islands is among only three countries which had their ceilings upgraded to Aaa, according to reports.
The country ceiling is the highest rating obtainable for an issuer of long-term foreign currency-dominated bonds.

Taxes are not trusts' only problem

CALGARY, Alberta (Reuters) - With their tax advantages ripped away, investing in Canada's energy trusts looked set to become a mug's game. Units prices are down, costs are an issue and commodity prices have been volatile.
The sector has been a headache for investors since the surprise Halloween announcement from Ottawa that the tax advantages enjoyed by trusts would end in 2011. They had been able to avoid most corporate taxes if they distributed their cash to investors, an edge that gave them a premium value.
Since the October 31 tax decision, the sector has badly lagged. Despite oil prices that are now sticking around $60 a barrel and robust natural gas prices, the Toronto Stock Exchange's energy trust index has dropped nearly 18 percent.
"There's still a lot of anger in the market and an awful lot of uncertainty," said Leslie Lundquist, a portfolio manager at Bissett Investment Management.