Current Events in May 2015

Consumers who own homes have access to a flexible and attractive source of credit in a home equity line of credit (HELOC). But like any credit product, it must be used carefully or you can quickly land in trouble.

Experian, one of the three credit agencies that keep up with consumers' credit histories, is voicing some concern that borrowers who tapped equity 7 to 10 years ago could be facing some stress.

Experian has just issued a study showing that a large portion of HELOC loans issues between 2005 and 2008 – just before the financial crisis – are outstanding and nearing the repayment phase of the loan. With most HELOCs, the borrower can draw money for a 10-year period, then begin to repay the money – often over another 10-year period but sometimes in less time.

Financial stress

Here's Experian's concern: If there is a significant balance on the HELOC and the borrower must now stop drawing and start repaying, it could put him or her under a lot of financial stress.

There is added worry about borrowers who tapped their home's equity before the housing crash. While the housing market has recovered nicely in some areas, many people with HELOCs could still owe more than the home securing the loan is worth.

Experian estimates that outstanding balances on HELOCs taken out between 2005 and 2008 total $265 billion.

“This analysis is critical as we want to not only help lenders prepare and understand the payment stress of their borrowers, but also give consumers an opportunity to understand what the impact may be to their financial status and how to be better prepared for it,” said Michele Raneri, Experian’s vice president of analytics and business development.

More likely to go delinquent

The study concludes that consumers coming to the end of draw on their HELOC are more likely to go delinquent — not just on the HELOC loan, but also on other types of debt. It stands to reason that if you suddenly have a new debt taking funds from your monthly budget, you will have less to meet current obligations.

The Experian report highlights another trend. Since the end of the housing crash HELOCs have been steadily increasing as more homeowners take advantage of this convenient source of credit. As of the fourth quarter of last year, loan originations are up 81% over the same period of 2010.

Experian isn't quite sure how to interpret this.

Good news or bad?

“This could be a sign of the economy further recovering, yet there are still concerns about the pre-recession HELOCs that are now in repayment and how that could negatively impact consumers and the economy as a whole,” Raneri said.

Offsetting some of the concern is a bit of good news contained in the report. The percentage of HELOCs that are in late-stage delinquency – those 90–180 days past due – is down to 0.5% from its highest level of 1.81% in 2009.

Raneri says that can be viewed as a positive sign for both consumers and the industry, at least for now.

A bill that would prevent homeowners' associations in drought-stricken California from penalizing residents who install fake turf as a water-conservation measure took one step closer to passing into law yesterday, after the state Assembly approved it by a vote of 69 to 2.

California is currently deep into the fourth year of a record-breaking and still-worsening drought which inspired Governor Jerry Brown to declare an official state of emergency in January 2014. Since then the state government has passed a series of water-conservation measures including various mandatory water-use restrictions – which have not prevented various HOAs and even municipalities throughout the state from nonetheless mandating lush green lawns despite ever-drier conditions.

In July, the state legislature voted for and the governor signed a law prohibiting HOAs from penalizing homeowners whose lawns turn brown during drought conditions.

Before the drought, in 2010 and 2011, the state legislature passed bills which would require HOAs to allow artificial turf if residents want it. But then-governor Schwarzenegger vetoed the 2010 bill, and current-governor Brown vetoed the 2011 one.

However, the drought's had four years to gain severity since Brown last vetoed a fake-turf bill. The current incarnation, Assembly Bill 349, was sponsored by Assemblywoman Lorena Gonzalez (D-San Diego). Last month, Gonzalez said that even though the previous bills were vetoed, she hopes this time will be different because “I expect the Governor, given his commitment to changing behavior in this drought, probably will take a second look at it.”

AB 349 will now move forward to the state Senate. If the Senate votes in favor of the bill and the governor signs it, the law will immediately come into effect.

Summer is approaching and with it comes high humidity and ripe conditions for fleas.  Those pesky little fleas can really cause havoc with your cats.

The flea's saliva can cause an allergic reaction that is extremely itchy. You may find your cat itching so much it gets a secondary infection.

It doesn’t take a lot of fleas to cause an issue. Your cat can become uncomfortable with getting bitten just a couple of times every few weeks. If your cat is allergic to fleas it will be itching like crazy all the time. Some cats are more susceptible than others.

The really awful news about fleas is they don’t just take a bite and die. They have a tendency to hang around the house for a while. They have a life span of 6-12 months and will be happy to suck out as much blood as they possibly can from your little feline.

Humidity makes it worse

Heat is an invitation but the teal  key is the humidity. When the humidity is 75 to 85 percent and the temps are 65 to 80, conditions are truly flea-friendly. 

You will want to look for in your cat is severe itching. Watch for it gnawing at its tail and constantly biting it. It will also be uncomfortable on the rear end and back legs. It can scratch so severely that it will develop hot spots. Keep an eye on those if you see them because your cat can start to get infections from hot spots.

How can you tell if it’s a flea allergy or another condition? One of the best ways is to get flea medication. If it works, you have found your culprit. Your cat's past history will also be a clue. If you had the same issues last year and it’s back for this summer, then you know your cat is really allergic to fleas.

Being proactive is the best way to prevent a comeback or even a startup. Use an effective safe flea control product on your cat on a regular basis beginning one month before the flea season starts and continuing up until one month after the flea season ends.

Keep the carpet clean. Be sure to frequently vacuum and clean the carpet to remove eggs and larvae from the cat's indoor environment. Use a professional carpet cleaner to make sure you clean the carpet thoroughly.

You wouldn't normally think of industrial bleach as being a miracle cure. Or any kind of cure for that matter. But that didn't stop Louis Daniel Smith from selling many gallons of the stuff by labeling it "Miracle Mineral Solution."

A federal jury in Washington state sat through seven days of testimony, alleging that Smith, 45, of Spokane, sold the toxic liquid as a miracle cure for numerous diseases and illnesses, including cancer, AIDS, malaria, hepatitis, lyme disease, asthma and the common cold.

It then convicted him of conspiracy, smuggling, selling misbranded drugs and defrauding the United States. He faces up to 34 years in prison.

Potentially fatal

In 2010, the FDA said it had received several reports of health injuries from consumers using the product, including severe nausea, vomiting, and life-threatening low blood pressure from dehydration. Consumers who have MMS should stop using it immediately and throw it away, the FDA said.

Evidence at trial showed that Smith operated a business called “Project GreenLife” (PGL) from 2007 to 2011.  PGL sold a product called “Miracle Mineral Supplement,” or MMS, over the Internet.  MMS is a mixture of sodium chlorite and water. 

Sodium chlorite is an industrial chemical used as a pesticide and for hydraulic fracking and wastewater treatment.  Sodium chlorite cannot be sold for human consumption and suppliers of the chemical include a warning sheet stating that it can cause potentially fatal side effects if swallowed.

“This verdict demonstrates that the Department of Justice will prosecute those who sell dangerous chemicals as miracle cures to sick people and their desperate loved ones,” said Principal Deputy Assistant Attorney General Benjamin C. Mizer of the Justice Department’s Civil Division.  “Consumers have the right to expect that the medicines that they purchase are safe and effective.”  Mizer thanked the jury for its service and its careful consideration of the evidence.

Chlorine dioxide

The government presented evidence that Smith instructed consumers to combine MMS with citric acid to create chlorine dioxide, add water and drink the resulting mixture to cure numerous illnesses. Chlorine dioxide is a potent agent used to bleach textiles, among other industrial applications.  It is a severe respiratory and eye irritant that can cause nausea, diarrhea and dehydration. 

According to the instructions that Smith provided, diarrhea and vomiting were all signs that the miracle cure was working.  The instructions also stated that despite a risk of possible brain damage, the product might still be appropriate for pregnant women or infants who were seriously ill.

According to the evidence presented at trial, Smith created phony “water purification” and “wastewater treatment” businesses in order to obtain sodium chlorite and ship his MMS without being detected by the U.S. Food and Drug Administration (FDA) or U.S. Customs and Border Protection.  The government also presented evidence that Smith hid evidence from FDA inspectors and destroyed evidence while law enforcement agents were executing search warrants on his residence and business. 

In all, the jury convicted Smith of one count of conspiracy to commit multiple crimes, three counts of introducing misbranded drugs into interstate commerce with intent to defraud or mislead and one count of fraudulently smuggling merchandise into the United States.  The jury found Smith not guilty on one out of four of the misbranded drug counts. He faces a statutory maximum of 34 years in prison at his Sept. 9 sentencing.

Nearly 78,000 members of the U.S. military will be getting checks ranging from $10 to more than $100,000. The checks represent excessive interest charges imposed by Navient Corp. when it was servicing student loans as part of Sallie Mae. 

The checks, totaling about $60 million, are scheduled to be mailed on June 12 and will average $771. Check amounts will depend on how long the interest rate exceeded 6% and by how much, and on the types of military documentation the service member provided.

“This compensation will provide much deserved financial relief to the nearly 78,000 men and women who were forced to pay more for their student loans than is required under the Servicemembers Civil Relief Act,” said Acting Associate Attorney General Stuart F. Delery.  “The Department of Justice will continue using every tool at our disposal to protect the men and women who serve in the Armed Forces from unjust actions and illegal burdens.”

The payments are required by a settlement that the Justice Department reached with Navient last year to resolve the federal government’s first-ever lawsuit filed against owners and servicers of student loans for violating the rights of service members eligible for benefits and protections under the Servicemembers Civil Relief Act (SCRA). 

Nationwide pattern

The United States alleged that Navient engaged in a nationwide pattern, dating as far back as 2005, of violating the SCRA by failing to provide members of the military the 6% interest rate cap to which they were entitled for loans that were incurred before the military service began. 

There are actually three defendants -- Navient Solutions Inc. (formerly known as Sallie Mae, Inc.), Navient DE Corporation (formerly known as SLM DE Corporation), and Sallie Mae Bank -- referred to collectively as Navient.

The settlement covers the entire portfolio of student loans serviced by, or on behalf of, Navient.  This includes private student loans, Direct Department of Education Loans, and student loans that originated under the Federal Family Education Loan (FFEL) Program. 

The department’s investigation of Navient was the result of a referral of negative reports from service members by the Consumer Financial Protection Bureau’s Office of Servicemember Affairs, headed by Holly Petraeus. 

The Department of Education is now using a U.S. Department of Defense database to proactively identify borrowers who may be eligible for the lower interest rate under the SCRA, rather than requiring service members to apply for the benefit.

There often seems to be little rhyme or reason to auto insurance rates. If you drive a sports car, have had a couple of claims or a speeding ticket or two, you understand why your rate may be higher than average.

But other reasons for a high insurance bill aren't always so clear cut.

The fact is, insurance companies take many things into consideration when setting individual rates. The Consumer Federation of America (CFA) says some of them aren't fair to consumers and the group will lobby for reform.

CFA has seized on a new report by Bankrate.com, illustrating how living in a particular ZIP code can affect what you pay for auto insurance. The report notes you can get vastly different quotes from the same insurance company at two addresses a relatively short distance apart but in different ZIP codes.

Illegal in California

This is not exactly new information. In fact, California bars insurance companies from using ZIP codes as a factor in setting auto rates. But CFA says the Bankrate report underscores the extent to which other states allow the practice and the extent to which it can make a difference in what consumers pay.

For example, in one extreme example a 30-year-old Chicago are man could pay 64% more for the exact coverage as another 30-year-old man who lived three-tenths of a mile away but in a different ZIP code.

CFA notes that insurance companies claim that the use of ZIP codes is related to actuarial loss data, but argues that whatever differences there might when comparing dense neighborhoods with sparsely populated communities cannot account for dramatic price differences being charged to drivers on different sides of a street.

"State laws require that every driver has to buy auto insurance, no matter where they live," said Stephen Brobeck, Executive Director of CFA. "So how can it be fair that insurers charge the same person radically different rates for moving just a few blocks away?"

Impact on low-income consumers

CFA says it has researched the cost of auto insurance and its impact on low to moderate income consumers. It concludes that in many low-income communities across the country, good drivers have access to few or no policies that cost less than $500 per year, which meets the standard of a reasonable price for basic insurance coverage.

It says it has also found 100% premiums spikes for good drivers with low credit scores, another metric insurance companies use to assess risk when they set rates. A recent CFA report found that some large insurers do not even consider mileage when setting auto premiums.

Trying to predict what your auto insurance premium will be isn't always easy. A recent study by personal finance website WalletHub.com found some factors you would expect to impact insurance costs didn't.

The price of the car, for example. The study found cars in the same price range could have a difference in premiums of up to 39%.

Price optimization

Price optimization is another way insurance companies set rates, and it is a practice that California is also targeting. Price optimization is a technique by which insurance companies measure the shopping habits of its customers in order to set individual premiums as high as possible regardless of a customer's risk profile.

In other words, long-time customers who do not shop other car insurance rates tend to be charged higher rates.

In February California's insurance commissioner sent notices to more than 750 insurance companies they must end that practice in the state within 6 months.

The economy petered out in the first three months of this year.

According to the "second" estimate released by the Bureau of Economic Analysis, real gross domestic product (GDP) -- the value of the production of goods and services in the U.S. adjusted for price changes -- decreased at an annual rate of 0.7% in the first quarter. It was the first contraction since the first quarter of 2014 and the worst quarterly showing since the Great Recession.

In the advance estimate, released last month, real GDP increased 0.2 percent. With the second estimate, which is based on more complete source data than were available earlier, imports increased more and private inventory investment increased less than previously estimated.

Real GDP grew by 2.2% in the final 3 months of 2014.

The first-quarter declined primarily reflected declines in exports, nonresidential fixed investment, and state and local government spending. They were were partly offset by positive contributions from personal consumption expenditures (PCE), private inventory investment, and residential fixed investment. Imports, which are a subtraction in the calculation of GDP, increased.

GDP inflation

The price index for gross domestic purchases, which measures prices paid by U.S. residents, fell 1.6% in the first quarter, a downward revision of 0.1% point from the advance estimate; this index decreased 0.1 percent in the fourth quarter.

Excluding food and energy prices, the price index for gross domestic purchases increased 0.2 percent, compared with an increase of 0.7 percent.

PCE

Real PCE increased 1.8% in the first quarter, compared with an increase of 4.4% in the fourth. Durable goods increased 1.1% versus 6.2%, while nondurable goods increased 0.1%, compared with an increase of 4.1%. Services increased 2.5%, compared with an increase of 4.3%.

The complete GDP report is available on the Commerce Department website.

The U.S. Department of Education has reviewed four major student loan servicers to make sure they followed the law by extending the proper interest rates to active duty members of the U.S. armed forces.

For the most part, it found that they did. The report said Navient, Great Lakes, PHEAA and Nelnet complied in the vast majority of cases with the Servicemembers Civil Relief Act (SCRA) as required by the Higher Education Act (HEA).

The reviews closely examined active-duty servicemembers' SCRA eligibility between 2009 and 2014. They reveal that in fewer than 1 percent of cases, borrowers were incorrectly denied the 6% interest rate cap required by the laws.

"For all of the sacrifices they have made on behalf of our country, our brave service members have the right to the benefits provided to them under federal law and should not be subjected to additional red tape to manage their student loans," said Under Secretary Ted Mitchell. "What's more, every student who has taken out a federal student loan should have the peace of mind that the Education Department's servicers are following the law and treating all borrowers fairly."

Streamlined process

The government says the laws for those in the military have streamlined the process for those students when they are called to active duty. Their loan rates are more or less automatically adjusted when they report for duty. Before, they had to apply for the lower interest rate and then prove they were on active duty.

The just-completed reviews were triggered by last year's Justice Department settlement with Navient and its predecessor, Sallie Mae. The settlement addressed

Navient's violations of the SCRA on federal and private student loans.

Th report also presents the results of the review of Navient’s compliance with the SCRA for federally-held FFEL Program and Direct Loan Program loans it serviced under the TIVAS contract.

Results

For the period under review, the government found that in Navient's case, it notified 52 borrowers of their potential eligibility. Navient eventually granted the cap to 16 borrowers, including 6 who were not eligible. It denied the lower rate to 7 borrowers, including 1 who should have received it.

The review found similar results for Great Lakes, PHEAA and Nelnet.

The Department of Education said it is also expanding its review of compliance with the SCRA and HEA to the Department's seven non-profit servicers as well as commercial Family Federal Education Loan (FFEL) servicers. These reviews are expected to be completed later this year.

Interest rates on student loans can vary widely, depending on the type of loan and the type of student that is borrowing. You can check current interest rates here.

Three companies that allegedly violated hazardous materials regulations could face civil penalties ranging from $54,000 to $81,669.

In each case, the Federal Aviation Administration (FAA) claims the shipments were not accompanied by shipping papers to indicate the hazardous nature of their contents and were not marked, labeled or packaged in accordance with the federal regs.

The companies also allegedly failed to provide emergency response information and ensure their employees received required hazardous materials training.

DGI Menard

The FAA contends that on Jan. 12, 2015, DGI Menard knowingly offered an undeclared hazardous material shipment to FedEx for air transport from Carnegie, Pa., to Crystal Lake, Ill. The shipment included 8 1-pint cans of Lubemaster’s Fire Up, which is a flammable liquid, and 6 bottles of Diesel Mate All Seasons, which is a flammable petroleum distillate.

FedEx employees at the company’s sort facility in Cary, Ill., discovered the package was leaking and notified the FAA.

DGI Menard which could be fined $81,669, has 30 days from receipt of the FAA’s enforcement letter to respond.

Aqua-Chem

The FAA is proposing a $54,000 penalty against Aqua-Chem of Knoxville, Tenn, alleging that on April 3, 2013, the firm offered UPS an undeclared shipment containing 6 1-pint plastic containers of corrosive phosphoric acid solution. Workers at the UPS package sort facility in Louisville, Ky., discovered the shipment.

Aqua-Chem has contacted the FAA about the case.

Rust-Oleum

The FAA alleges that on Jan. 5, 2015, Rust-Oleum of Vernon Hills, Ill., offered 4 containers of spray paint to FedEx for shipment by air from Vernon Hills to Huntington Beach, Calif. Employees at the FedEx sort facility in Northbrook, Ill., discovered the flammable paint and notified the FAA.

Rust-Oleum has 30 days from receipt of the FAA’s enforcement letter to respond to the agency, which has proposed a civil penalty of $54,000.

Cycling Sports Group of Wilton, Conn., is recalling about 160 GT Fury downhill mountain bicycles,

The front wheel hub can break and cause the disc brake system to fail, posing crash and injury hazards to the consumer.

The company has received 2 reports of broken hubs. No injuries have been reported.

This recall involves all 2015 model year GT Fury Elite and GT Fury Expert downhill mountain bicycles. The recalled 2015 Fury Elite model is white with blue and red accents. The recalled 2015 Fury Expert model is metallic grey with lime green accents.

The bicycles have front and rear disc brakes and come with rear shock absorbers and front suspensions. "Fury" is printed on the top tube, the GT logo is on the down tube and the chainstay. The model names are printed in small letters on the top tube of the bicycles near the word Fury.

The bicycles, manufactured in Taiwan, were sold at authorized GT dealers from November 2014, to March 2015, for between $3200 and $4400.

Consumers should immediately stop using the recalled bicycles and return them to the nearest authorized GT dealer to have the complete front wheel replaced free of charge.

Consumers may contact Cycling Sports Group at (800) 726-2453 from 9 a.m. to 6 p.m. ET Monday through Friday, or by email at custserve@cyclingsportsgroup.com.

The Great States Corporation of Shelbyville, Ind., is recalling about 1,200 cordless 17-inch electric lawn mowers.

The mower can start when the key is not in the starting position, posing an injury hazard to the user.

No incidents or injuries have been reported.

This recall involves Earthwise cordless electric push lawn mowers with a 17-inch mowing deck. The recalled mowers have a silver motor housing and deck with a side discharge chute, a black foldable handle and a bright green bail lever, height adjustment lever and handle knobs.

The mowers have a 24-volt removable, rechargeable battery. Brand name “Earthwise” and “17” appear on the front of the mowers. Model number 60517 is on the name plate on the back of the motor cover.

The mowers, manufactured in China, were sold at Menards stores, Seventh Avenue catalogs and online at PowerSales.com and SeventhAvenue.com from January 2014, to May 2014, for about $250.

Consumers should immediately stop using the recalled electric mowers, remove the battery and contact Great States Corporation for a replacement mower.

Consumers may contact Great States Corporation at (800) 633-1501 between 8 a.m. and 4 p.m. ET Monday through Friday, or by email at sales@reelin.com.

LQNN of Garden Grove, Calif., has added additional items to the list of products it recalled earlier this month.

The added products should have been part of the original 213,192 pounds of chicken, beef and pork products that were recalled on May 20, 2015. The new total recalled poundage is 440,923pounds.

The products used, without approval, another facility’s mark of inspection, which has been identified as Establishment number 18995. LQNN, operating as Lee’s Sandwiches, has been processing products from federally-inspected establishments and re-packaging them without the benefit of inspection. Products produced without inspection present potential of increased human health risk.

There are no reports of adverse reactions due to consumption of these products.

These additional poultry, beef and pork items, produced prior to May 26, 2015, are being recalled:

• 63,734-lb of “Ham & Cheese CROISSANT.”
• 5,218-lb. of “Coo ked Dry SHREDDED PORK Cha Bong Thit Heo.”
• 8,631-lb. of “SHREDDED PORK Bi.”

Consumers with questions about the recall may contact Tom Quach at (714) 333-8688.

Vitamin Cottage Natural Food Markets of Lakewood, Colo., is recalling two lots of Natural Grocers brand Macadamia nuts.

The product may be contaminated with Salmonella.

The company has received no reports of illness

The following product, distributed to Natural Grocers’ 96 stores located in Arkansas, Arizona, Colorado, Idaho, Kansas, Missouri, Montana, Nebraska, Nevada, New Mexico, Oklahoma, Oregon, Texas, Utah, Washington and Wyoming is being recalled:

Only packages bearing the Julian packed on dates listed above are subject to recall.

Consumers who purchased this product should return it to the store for credit or refund.

Consumers with questions may contact the company at (303) 986-4600, ext. 531, Monday through Friday 8 a.m. to 5 p.m. (MST).

You’ve lived the American dream, starting your own business from the ground up, building it into a thriving successful enterprise that has supported your family, provided a needed product or service and created jobs.

Now that it’s time to retire, what do you do with the business?

You have a number of options. Many business owners sell to current key employees. Others sell to a competing or complementary company.

Regardless of the type of sale, many owners of “middle market” companies hire the services of an investment bank to facilitate a sale for the best price and on the best terms. There is no precise definition of a middle market company but it’s generally considered to be a business generating between $5 million and $1 billion in revenue per year.

One of the most important things an investment bank will do is establish a value for the business. Setting the right price means selling it quickly without leaving money on the table.

When entering into an agreement with one of the investment banks serving this sector, it is important to understand how it goes about its job and how it will analyze and help you establish a fair value for your business.

Industry experts say personalities will be very important. A seller needs to be comfortable with the bank’s representatives and confident they will be able to deliver.

There are many investment banks but we’re going to review 5 that may be ideally suited to help Baby Boomer business owners transition to retirement. They are Houlihan Lokey, Harris Williams, Baird, William Blair and Lazard Middle Market.

Houlihan Lokey

Houlihan Lokey, Inc., based in Los Angeles and founded in 1972, is one of the largest privately owned investment banks in the world. Its wide-ranging business includes advising large public, as well as closely held companies. It also provides services to institutions and government entities.

It specializes in mergers and acquisitions (M&A), capital markets, restructuring, fairness opinions and valuations.

Houlihan Lokey is known for assembling smart, talented teams. Its rigorous hiring practice tries to identify and employ quantitative thinkers who can devise creative solutions to clients’ problems.

Global in its reach, Houlihan Lokey has more offices than you might expect for a middle market bank – throughout the U.S. as well as Europe and Asia. Its U.S. presence is evenly spread across the country.

Most banks have specialties and Houlihan Lokey is highly experienced dealing with aerospace and defense, financial services, business services, energy, consumer food and retail, health care, media and telecommunications, real estate, hospitality, technology and transportation.

Our experts say Houlihan Lokey is a good choice for owners of privately held or publicly traded companies, owners of family businesses, executives at any middle market business and representatives at private equity firms.

Harris Williams

Harris Williams was founded in 1991 by 2 Harvard Business School graduates and since 2005, has operated as a subsidiary of PNC Financial Services. Based in Richmond, Va., the firm has offices in San Francisco, Boston, Philadelphia, Cleveland, Minneapolis, London and Frankfurt.

From the beginning the company built its reputation on its expertise in leveraged buyout (LBO) services. Because of this it has extensive connections to private equity sponsors.

Harris Williams takes a team approach, setting up industry groups that focus on aerospace, defense and government, building products and materials, business services, consumer, energy and power, health care and life sciences, industrials, specialty distribution, technology, media and telecom and transportation and logistics.

In one of its recent transactions, Harris Williams advised Health & Safety Institute, Inc. (HIS) on its sale to The Riverside Company. The firm deployed 2 of its teams to guide the transaction – Todd Morris, Andy Dion and Andrew Hewlett of the Healthcare & Life Sciences Group and Mike Wilkins of Harris Williams’ Technology, Media & Telecom Group.

"We are thrilled to have represented HSI’s shareholders in this transaction,” Morris said. HSI’s history of innovation and outstanding product quality, customer service and dedication to helping save lives has positioned it for strong continued growth and success in partnership with Riverside."

“HSI is well positioned to capitalize on training industry trends driving demand for its online and mobile products and services,” Wilkins said. "We expect to see additional growth and consolidation in the broader education and training markets.”

Our experts suggest Harris Williams is a good fit for owners of both privately held and public companies, owners of family businesses, executives at any type of middle market business, representatives at private equity firms and family offices, and representatives of local governments and sovereigns.

Baird

Baird is a major global middle market investment bank with a wide array of talent and a broad focus. It provides advisory, financing and restructuring services to publicly traded corporations, privately held and entrepreneur-owned companies, and private equity firms through an interconnected and highly specialized international team.

Founded in 1919 as the securities department of First Wisconsin National Bank, the Milwaukee-based financial services firm today has offices on 3 continents, providing investment banking, capital markets, private equity, wealth management and asset management services to individuals, businesses, institutional investors and governments.

Baird’s primary middle market investment banking offerings and focus are in equity raises, M&A and public finance. One of its most recent M&A transactions was when it advised Bad Daddy’s International LLC on its acquisition by Good Times Restaurants Inc.

In 2007, Bad Daddy’s founders’ created an upscale burger concept with “simple foods prepared to high culinary standards.” Bad Daddy’s became known for its signature burgers, salads, appetizers and sandwiches paired with local craft microbrew beers and signature cocktails and has won many awards and accolades for its culinary creations.

Bad Daddy’s, based in Charlotte, N.C., consists of seven company-owned restaurants and six franchised / licensed restaurants in North Carolina, South Carolina, Tennessee and Colorado.

Good Times Restaurants Inc. operates Good Times Burgers & Frozen Custard, an upscale quick-service restaurant chain focused on fresh, high quality, all natural products, making it a good fit with Bad Daddy’s Burger Bar, a full service, “small box” better burger casual dining chain.

Baird also specializes in equity financing. It recently completed a $249 million refinancing of P&L Development’s existing debt. PLD is a company that manufactures, packages and distributes over-the-counter pharmaceutical products and health care goods.

Baird is often referred to a “one-stop  shop” investment bank because of the range of services it provides. Our experts say it is a good fit for many middle market business owners who can profit from Baird’s expertise.

William Blair

Founded in 1935, in the midst of the Great Depression, William Blair today is an employee-owned firm providing investment banking and other financial services from its Chicago base and offices in London, San Francisco, Tokyo, Liechtenstein and Zurich.

Much like Baird, William Blair is thought of as a one-stop shop, whether a company is trying to raise equity or launch an initial public offering (IPO). It benefits from a stellar reputation among its peers, a result of rigorously protecting its brand.

The company has deep ties into the private equity community which can benefit both it and sellers hoping to be acquired by a private equity firm. Its strategic investment in BDA, another international investment bank, gives Blair special access to Asia, a significant source of investment dollars.

The investment bank’s focus is on consumer and retail, energy, financial services, health care, industrials, services and technology. Its advisory services include comprehensive sell- and buy-side advice for publicly traded and privately held companies. Its strength, the company says, is being able to identify the best transaction partners anywhere in the world, structure and negotiate transactions, and deliver the best outcomes for clients.

It can facilitate financing through equity capital markets or by providing access to private equity, leveraged finance and debt capital markets.

In early 2015 William Blair acted as the exclusive financial advisor to PowerPlan, Inc., a portfolio company of JMI Equity and TPG Growth, in connection with its sale to Thoma Bravo. The transaction closed in February.

Blair said it positioned PowerPlan as the only enterprise software vendor capable of helping asset-centric businesses such as utilities and oil and gas pipelines optimize financial performance of fixed assets.

“As the undisputed leader in a market with high barriers to entry and a strong growth profile, PowerPlan commanded strong interest from both private equity investors and strategic acquirers,” the bank said in a statement.

Our experts say William Blair is an ideal fit for privately held corporations, owners of publicly traded companies,, owners of family held businesses, executives at any type of middle market business,, representatives at private equity firms and family offices.

Lazard Middle Market

Lazard Middle Market (Lazard MM) is the middle market arm of the elite boutique investment bank Lazard, founded in 1848. Lazard Middle Market focuses primarily on putting together deals in the U.S. It. has offices in Chicago, Charlotte, Houston, Minneapolis and New York.

Lazard Middle Market is highly active in the area of M&A, making it a good choice for middle market firms that would like to be acquired. Because the bank works closely with private equity groups it is ideally placed to put buyers together with sellers.

Like other banks, Lazard Middle Market has its areas of specialty: business services, education services and technology, financial services, food and consumer, healthcare and industrials. Senior bankers focus on specific industries, allowing them to use their insight into and understanding of the various business sector ds and key players.

The bank tailors its services to meet the unique needs of mid-sized companies. It is able to provide the sophisticated services, global perspective and broad resources of Lazard, its parent.

Our experts believe Lazard Middle Market is a good fit for owners of both privately held and publicly traded companies and executives at any type of middle market business. It could be especially advantageous for companies in the higher end of the middle market.  

Here's a bit of bad news that's guaranteed to get worse: Since the start of 2015, three major health insurance companies have discovered and admitted that hackers breached their customer-information databases.

In February, Anthem admitted that hackers had compromised the records of 80 million current and former Anthem customers dating back to 2004. In March, Premera Blue Cross admitted to a breach compromising 11 million medical and financial records dating back to 2002. And earlier this month, CareFirst Blue Cross/Blue Shield discovered a breach compromising up to 1.1 million customer records.

And remember: it's almost certain that those were not the only three American health insurance companies to have been hacked, merely the only three to have discovered and admitted such security breaches.

Of all the many types of identity theft Americans must worry about, medical identity theft is arguably the worst of all. Consider: If criminals steal your bank account or credit card numbers, it's fairly easy (albeit annoying and time-consuming) for you to cancel the contaminated accounts and switch over to new ones. Changing your Social Security number is far more difficult, but it can be done if absolutely necessary.

But you can't change your health and medical history; if that information falls into untrustworthy hands, there's nothing you can do to make it obsolete.

Life-threatening

Most identity theft threatens your financial well-being, but medical identity theft can threaten your very life. Earlier this month, the Ponemon Institute published a study (sponsored by the Medical Identity Fraud Alliance, or MIFA) focusing on medical ID theft cases in the United States. Ann Patterson of MIFA defined medical I.D. theft not merely as theft of medical records and related data, but “when someone uses someone else's identity to obtain medical goods or services.”

Imagine someone steals your health insurance information and uses it to get health care for themselves: “Your medical identity is corrupted with the identity thief's health information. So their blood type, their allergies, their diseases, their health conditions that are not accurately reflecting your health.... It is most certainly a life-or-death situation,” Patterson said.

However, the available evidence suggests that the hackers who broke into Anthem, Primera and CareFirst weren't trying to score free medical care for themselves — security investigators familiar with those cases say that the available evidence suggests the hackers enjoyed backing from the Chinese government. (China's government, however, denies any role in America hacking activities, and points out that hacking is illegal under Chinese law.)

Your child's medical file

Yesterday, Larry Ponemon of the Ponemon Institute and Rick Kam of ID Experts, writing for the Dark Reading security blog, went so far as to suggest that “escalating cyberattacks threaten U.S. healthcare systems.”

Imagine a hostile nation-state with your psychiatric records. Or an organized crime ring with your child’s medical file. Or a disgruntled employee with your medical insurance information.

(Indeed, when news of the Anthem hacking first broke, the security investigators who first suggested the possibility of Chinese-government involvement also offered an ominously plausible motivation for it: “The attack appears to follow a pattern of thefts of medical data by foreigners seeking a pathway into the personal lives and computers of a select group -- defense contractors, government workers and others.” And CareFirst primarily serves customers in Washington, D.C. and its immediate suburbs — in other words, a region where a huge proportion of the population works for either the federal government or its various contractors.)

Even for hackers interested in money rather than medical care or political power, stolen healthcare and health insurance data is far more lucrative than stolen bank account or payment-card information. Jim Trainor, from the FBI's cyber security division, talked about the black-market value of various types of stolen data bought and sold by identity thieves: “Credit cards can be say five dollars or more, where [protected health information] records can go from 20 say up to — we've even seen $60 or $70.”

It's getting worse

And Kam and Ponemon suggest the problem of medical-record theft will only get worse, mainly because the healthcare and health insurance companies don't have the money to defend against it:

… criminal attacks are up 125 percent since 2010, according to benchmark study data. For the first time, in fact, criminal attacks are now the number one root cause of data breaches, rather than user negligence/carelessness or system glitches. … Despite these growing threats, half of all organizations have little or no confidence in their ability to detect all patient data loss or theft. In addition, only 40 percent of covered entities and 35 percent of business associates are concerned about cyber attackers. This lack of concern is reflected in a lack of appropriate budget....

And there's another potential problem Kam and Ponemon didn't mention: the possibility that the very concept of “Internet security” might be inherently impossible, even a contradiction in terms.

Remember the early days of the Internet, when it was often called the “information superhighway?” The Internet as we know it was designed with the explicit purpose of making it easier to share information, whereas “Internet security” seeks the opposite, making information harder (if not impossible) for certain people to access.

You can make it easier to share something, or you can make that something harder to steal – but if you try accomplishing both tasks at once, with the same tool, you're setting yourself up for failure.

The data breach at the Internal Revenue Service (IRS), compromising as many as 100,000 taxpayers, is a wake-up call for government as well as businesses. Department stores like Target and Neiman Marcus aren't the only lucrative targets for cyber thieves.

Security specialists have been warning us for a decade or longer. In a November 2014 interview with ConsumerAffairs, Larry Bridwell, the global security strategist at password management software provider Sticky Password, said that today's cyber thieves are focusing their efforts on big targets more than individual consumers.

“What we've seen over the last 18 months to 2 years has been the larger loss of personal and financial data hasn't come from the individual being tricked into doing things like clicking on links or providing information like we used to see,” Bridwell told ConsumerAffairs. “It's because there's been a security breach at the point-of-sale services.”

Or in this case, the IRS. Either way, consumers lose, whether their credit cards are stolen from a store or their identities are stolen from a government agency.

“Medieval strategy”

Dr. Bruce McMillin, professor of computer science and associate dean of the College of Engineering and Computing at Missouri Science and Technology University, says the way U.S. institutions defend sensitive information systems is a throwback to the Dark Ages.

“Most of our cyber defenses are modeled after medieval perimeter security – a firewall is much like a castle moat – and the idea of ‘keeping the bad guys out,’” McMillin said. “We live inside modern systems that are both physical and computational, and in such a smart living environment, attacks can come from multiple different sources, some even inside what we consider protected.”

McMillin took note earlier this year when the chief of U.S. Cyber Command testified before Congress that the federal government’s efforts to deter computer attacks are falling short. On March 19, Adm. Michael S. Rogers, the head of the U.S. Cyber Command and the National Security Agency, told the Senate Armed Services Committee that the command’s efforts are not working.

He pointed out that criminals attacking the U.S. cyber infrastructure want to move beyond disrupting those networks to establish “a persistent presence” on them.

Training students in new approaches

McMillin says he and other researchers at the university are working to produce improvements in cyber security while passing on what they learn to the students preparing to enter the field.

“We must focus on the information that both flows into and out of every portion of our smart living environment, both hiding what we consider security and private, and disrupting the ability of our adversaries to launch information attacks,” McMillin said.

And it's not just taxpayer information that requires protection. McMillin says he and his colleagues are developing new ways to protect the electric power grid, oil, gas and water systems and transportation systems from attack.

For-profit colleges lost a round in court this week as a federal judge dismissed an industry lawsuit challenging the U.S. Department of Education's "gainful employment" rule.

The rule, scheduled to go into effect in July, cuts off federal aid to schools whose students graduate with high debt loads and low earnings. The schools' lawsuit said the rule violated their right to due process.

U.S.  District Judge Lewis Kaplan of New York ruled that the Education Department had the legal power to create the controversial rule in the first place and that it followed proper procedures in developing its second iteration of the regulations. The first version of the rule was thrown out in 2012 in an earlier lawsuit.

Dorie Nolt, press secretary at the U.S. Department of Education, said the department was pleased with the ruling.

"Every student deserves to graduate from higher education with a degree or certificate that equips them for success. These regulations will hold career colleges accountable for the programs they offer and promote improvements that protect students, benefit consumers, and honor taxpayers’ investment,” Nolt said.

"Steadfast conviction"

The lawsuit was brought by the Association of Proprietary Colleges, which represents 20 for-profit colleges in New York.

The group's executive director, Donna Stelling-Gurnett, said she was disappointed with the ruling.

“While we agreed with the department’s goals for this rule from the outset, we remain steadfast in our conviction that this regulation does not achieve those goals,” Stelling-Gurnett said in a statement.

In dismissing the suit, Judge Kaplan said that for-profit colleges don’t have a “vested right" to participate in federal student aid programs and they therefore don't need to be afforded due process protections.

“While for-profit colleges have become heavily reliant on federal student aid, that reliance is of their own creation, not of necessity,” he wrote.

Kaplan had sharp words for the association's argument that the rule infringed upon the states' role in overseeing colleges.

“This argument is quite surprising, but not for its merit,” Kaplan wrote. “It is surprising because it is at best ill-conceived and at worst misleading.”

If you think those identity-verification security questions actually keep your data secure, think again — a study by Google researchers shows most typical security questions fail on one of two levels: Hackers can easily guess the answers, while the actual account owners are likely to forget them.

Google anti-abuse researcher Elie Burzstein and software engineer Ilan Caron posted on Google's security blog last week a summary of a more detailed paper they'd presented at the WWW 2015 conference.

… secret questions are neither secure nor reliable enough to be used as a standalone account recovery mechanism. That’s because they suffer from a fundamental flaw: their answers are either somewhat secure or easy to remember — but rarely both.

Downright useless

Turns out that certain easy-to-remember security questions are also downright useless, although which specific questions prove useless vary throughout the world:

With a single guess, an attacker would have a 19.7% chance of guessing English-speaking users’ answers to the question "What is your favorite food?" (it was ‘pizza’, by the way)

With ten guesses, an attacker would have a nearly 24% chance of guessing Arabic-speaking users’ answer to the question "What’s your first teacher’s name?"

With ten guesses, an attacker would have a 21% chance of guessing Spanish-speaking users’ answers to the question, "What is your father’s middle name?"

With ten guesses, an attacker would have a 39% chance of guessing Korean-speaking users’ answers to the question "What is your city of birth?" and a 43% chance of guessing their favorite food.

Of course, companies could offset such problems by adding more, and harder, security questions, but that would lead to the exact opposite problem: Too many legitimate account holders would forget the answers, and be unable to recover their accounts.

Surprise, surprise: it’s not easy to remember where your mother went to elementary school, or what your library card number is! Difficult secret questions and answers are often hard to use. … 40% of our English-speaking US users couldn’t recall their secret question answers when they needed to.

So what can tech companies do to protect their customers from this question conundrum? Probably nothing, as Burzstein and Caron said in the abstract of their research paper: “We conclude that it appears next to impossible to find secret questions that are both secure and memorable.”

As important as STEM careers are, the notable dropout rate in STEM focused college programs and the growing segregation of students into STEM versus non-stem categories shows our broad misunderstanding of what STEM really is at its core.

Every career is a STEM career. The only difference is the amount of education required for a specific field and the financial compensation received.

From bug exterminator to aerospace engineer, STEM skills are required on a daily basis. This can only call into question our approach to filling career field shortages and how STEM is understood and incorporated into every curriculum.

A corrected understanding of STEM in our daily lives can only provide less resistance to STEM discussions and career considerations from an early age as well as clarify the hardwired STEM characteristics inherent in our brains from birth.

When teachers and students are aware of their use of science, technology, the engineering method and mathematics in their personal, non-professional lives, the application to careers and their required skill set become very clear.

Engineering method

By definition, we all use the engineering method (a decision making process) several times per day without realizing it. The same can be said when defining science, which is the “intellectual and practical activity encompassing the systematic study of the structure and behavior of the physical and natural world through observation and experimentation”. When we truly understand our daily use of “systematic study” and “decision making” we quickly see that we are engineers and scientists in practice well before a career choice is made.

Regarding math and technology use, those two are fairly easy to see, from cooking recipes and simple measurements (math) to smart phone and computer use (technology).

The creation of STEM schools, degrees and specialized pathways could make one question our STEM understanding and solution planning in light of a one third college STEM degree dropout rate, not to say they don’t have an important role to play.

Out of focus?

Could we be focused in the wrong direction regarding STEM in America and world-wide? It wouldn’t be the first time we made an education miscalculation.

The incorporation of STEM understanding in grades K-12 is easily accomplished without increasing the budget or creating a new curriculum, both of which the typical school is unwilling to embrace to say nothing of the teachers already overwhelming time constraints.

An early start to a clear and comprehensive knowledge of STEM use in our daily lives can only increase our curiosity and interest in career possibilities that would have otherwise been ignored or deemed unattainable by many if not most students and their families. That simple curiosity is the foundation of all student exploration into fields of interest. When clearly understood, no career choice is unreachable, and its STEM applications no longer scary and unattainable.

“I use STEM every day, no matter my future career choice,” are the words we should be hearing from students in all grades. For those who drop out of college level STEM paths, they will soon discover that they still need and will use STEM skills anyway, everyday.

We need to redefine our misconception of STEM by definition, career category, and curriculum development. A 60 second STEM activity a few times per week in every subject is the foundation of a corrected understanding of how we think, what we can accomplish, a new encouragement to be curious and a welcome embrace of all things STEM without fear or discouragement.

Young man or women….all are born hard wired for STEM and destined to use STEM daily as a plumber, teacher, auto mechanic, politician, aerospace engineer or geochemist.

---

Wayne Carley is the publisher of STEM Magazine