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Dan David was a one-time jewelry executive who didn’t know a word of Mandarin. Yet he helped unmask several frauds among the dozens of U.S.-listed China stocks that have burned investors in the last couple of years and has raised allegations against others. When the Securities and Exchange Commission filed civil-fraud charges in February against the chairman of China’s Puda Coal, its complaint cited a report that the 43-year-old David had put out at GeoInvesting, a financial-information Website focused on small-cap stocks and based in Skippack, Pa. Why weren’t investment bankers and other Wall Street pros able to do what he did? Why didn’t they listen to his warnings? And how are investors now endangered by efforts in China to shut off information sources for researchers like David? He explains below.

Barron’s
: How did you get into investment research?

David: I was a director of stores for Finlay Fine Jewelry, running the Lord & Taylor division. We had 88 stores across the country under my supervision. I met my GeoInvesting partner Majed Soueidan playing on a flag-football team. People said, “That guy works for himself. He made himself millions just trading his own money.” He never talked about it. But it ended up being the truth.

We developed a friendship and he asked me to come work for him. For two years he stayed after me to come run his business. At some point, I saw that leasing space in department stores to sell fine jewelry was going the way of leasing space to sell shoes. Stores all decided they could make a profit running the shoe sections themselves. Finlay offered me a promotion, but rather than taking it, I went back to Philadelphia and began working with Maj. He’s the driving force behind our fundamental research.

You guys had a small hedge fund. How did you start publishing research?

People kept calling us and asking about our research. We figured we’d start a Website where we’d put our research. It would save us time and provide information to the average investor–whom we wanted to reach out to. So in 2008, we launched GeoInvesting.com.

As a free Website?

It is mostly free and has a long bias. We’re investors at heart. We were noticing that for many micro-cap stocks, the companies’ financial data appearing on Bloomberg or Reuters was inaccurate. We would get with these companies and post their correct financial information on our site. Just a flow-through portal that would give attention to stocks that the major portals didn’t. For $9.99 a month, subscribers today can get risk-analysis reports on certain U.S.-listed China stocks and reports from our on-the-ground due diligence.

How did you first find your way to the U.S.-listed China stocks?

Some of the most egregious reporting differences were in the U.S.-listed China stocks. We dabbled in those stocks in ’06, ’07 and ’08. But 2008 was a horrible year, obviously, for a long investor, and our world was shaken along with everybody else’s. So we just put our noses to the grindstone and all these China stocks kept popping up to the top of the list. We went long the Chinese market in a big way.

Their fundamentals and valuations looked good?

In 2009, we picked up 229% in investing in China. Our portfolio was 80% in China–all long. We never shorted a stock. We made a killing on China MediaExpress Holdings (ticker: CCME). We got out of the stock not because we thought they were a fraud, but because they hit a valuation target.

Then some researchers challenged China MediaExpress’ claims about the size of its bus-advertising business?

We saw some of these short reports that research firms like Alfredlittle.com and Muddy Waters were doing. We decided right away that they were wrong. What we needed to do was invest some money in hiring our own team. We were going to go prove them wrong and bring that information back to our subscribers and to the investment community.

You started research to rebut the shorts?

We did just that. And what we came back with just rocked us to our core. Fraud was pervasive and out in the open. We would ask our investigators to go visit a facility and they found it wasn’t operating. I was shocked. We then approached our China attorney and asked for these filings that companies make to the SAIC, the State Administration for Industry and Commerce. In July 2010 we got filings on China MediaExpress. He charged us $5,000 for two filings that must’ve cost him a couple of hundred dollars. Then we realized we didn’t read Mandarin.

None of you?

Not at that time. When I called the attorney back, he said, “Okay. We can translate them for you for another $5,000.” So we fired him.

After you hired your own lawyer and translator, what did you do with the information?

We didn’t know what to do with China MediaExpress. We just stayed away from it. Some six months later, China MediaExpress’ auditor and some directors resigned. It stopped reporting to the SEC.

So we started pulling more and more SAIC filings. We took what we found on the cemetery-operator China Redstone Group (CGPI) and the drug maker Lotus Pharmaceuticals (LTUSE) directly to their investor-relations firms and to the companies themselves. We said, “Here is what we found. We have no position in your company. We are not long. We are not short. We want to help you fix it.” We hoped they’d make the corrective disclosures and mention how we helped them. Investors would ultimately reward their honesty.

Did they appreciate the information?

They tried to convince us we were wrong.

With Lotus Pharmaceuticals, they had indicated that they spent $32.7 million on land in Inner Mongolia. We had an independent appraisal done on the land and it appraised for less than $7 million. With China Redstone, they said they owned a cemetery. They didn’t own it. They didn’t have a license to operate it. We had government documents that showed that it was owned by another entity. We sent our guy there and we bought cemetery plots. Lo and behold, the receipt for the cemetery plots had a different company’s name on it, and the prices were different from what they said they were selling cemetery plots for. They sent us a letter of cease and desist.

Did you desist?

No. We said that we will appeal to the investment community, still not taking a position long or short.

We released our findings on both Lotus and China Redstone. And the investor community hated us. They said we were short sellers and didn’t care if we said we weren’t.

Lotus later returned its Mongolian assets to the previous owner for no cash, and recently said that it can’t afford to employ an auditor. It has stopped reporting to the SEC. China Redstone’s chief financial officer resigned, and it, too, has stopped reporting to the SEC.

Nobody appreciated your work?

We had just spent $50,000 and we made no money because we didn’t trade it at all. Nobody wanted to hire us from the investment-banking community. Their answer was: “How does this help us? We can’t collect fees from this company if we think they are a fraud.” The investor-relations firms kind of felt the same way: “I can’t represent them if I take you at your evidence and consider them a fraud.”

Our information was accurate, truthful, and from public records, so we finally decided that we might as well start selling these stocks short–as we were entitled to do. We have no long or short positions now in any of the stocks I’m discussing here, by the way.

When did anyone start paying attention?

People started taking our research seriously when we released a story on Subaye (SBAY), a cloud-computing company that claimed to have 1,539 employees at a certain location. We sent our investigator there.

What did he do?

He stood outside for two days and watched the employees come in and out. Then he called and said, “There’s a problem. They have many fewer employees there than they claim.” And I said, “Okay, they say they have about 1,500. What are we looking at, half that?” And he said, “No, 40 to 50.” The investigator also talked to the community at large. The local people would tell you, “You are not here on the wrong days. This is really how many people come in and out of there.” So we published that report and Subaye got delisted. The CFO resigned.

In February 2012, the SEC cited your report when it alleged that the chairman of Puda Coal (PUDA) had looted the company and left shareholders with an empty shell.

Puda’s Chairman Zhao Ming transferred ownership of the business to himself and then pledged 49% to the government-owned Citic Trust—all prior to [securities firms] Macquarie and Brean Murray, Carret raising $100 million from U.S. investors. If Macquarie had pulled an SAIC filing worth a few hundred dollars, I would like to think they wouldn’t have done that fund raising. Puda’s audit committee confirmed the allegations of wrongdoing. Puda’s been delisted. In a couple of weeks, the underwriters will file their responses to a shareholder suit in Manhattan’s federal court.

Unfortunately, Zhao is still a billionaire. He hasn’t answered the SEC and drives around Hong Kong in a Bentley with the license plate PUDA.

Is it now getting harder to check the SAIC records that exposed these frauds?

It’s changed in two ways. SAIC filings can be amended. So most companies have gone back and amended their filings to match the SEC filings in the U.S. There is nothing on the SAIC document that says “amended version.” The only way you know now that an SAIC filing has been amended is if you had pulled a copy previous to its being amended–which is why I have thousands of them.

What’s the other change?

I hear they are requiring you to get a “statistics license” to do investigations in China—at the risk of criminal charges.

So is GeoInvesting going to be able to get a statistics license?

I sincerely doubt it. Make no mistake, GeoInvesting will get around it. But I don’t think anybody is going to give us a license.

Has research gotten harder to do in unofficial ways?

SAIC employees now ask who you are and why you want these filings. Then they alert the company.

Have you ever had any of your people hurt?

I’ve had a person on my team that was compromised when viewing a company and was beaten up. Thrown down. Hit in the head a few times…that kind of a thing.

Did he keep working for you?

Yeah that one did. He is a good guy. He was near enough that security could see him lingering and making a truck count. Security was just doing their job, I guess. I’m thankful that they didn’t harm him severely.

Any other troubling trends for investors in China?

Just the longstanding moral hazard posed by the VIE structure that so many of these companies use.

You mean the “variable-interest entity” arrangement in which U.S. investors don’t really have an ownership in the Chinese businesses?

The VIE is a contract structure between a Chinese company and the investor that allows this entity to be listed here in the U.S. They agree to share the business’ profits with the foreign investors. But the contract can be canceled at any time by the executives of this company. And they would break no Chinese law in doing so.

These VIEs include huge companies, by the way, such as Internet giants SINA (SINA) and Baidu (BIDU). The argument defending VIEs is, if the managers own 20% of the listed shares here in the United States, they have a vested interest just like other U.S. investors. The moral hazard is, what happens when keeping 100% of the profits in China is worth more than the 20% stake in the U.S.-listed entity? There is no Chinese law that says you can’t get away with canceling this VIE contract.

Is GeoInvesting ever going to make a profit from its research and Website?

You can make money on subscriptions for parts of the site that are more valuable. You can make money on advertising, once your site has enough traffic. Nobody is helping the common person. Short sellers don’t necessarily care to inform the common person until the last minute. The fee collectors in New York only care about the fees they are collecting and want to continue to collect. The whole idea behind GeoInvesting is to try and put investors nearer to a level playing field with the big funds by giving them research.

Let’s hope it works. 

E-mail:
editors@barrons.com

Tax planning is seldom simple, but lately it has been next to impossible. At year’s end, a host of temporary provisions expire, and lawmakers have put forth radically different proposals for what to do next. Throw in an election year, and predictions become all the more difficult.

For the confused, here is what is clear (not much) and unclear (a great deal) about tax rates in 2013, plus expert guesses about what will actually happen.

Rates on “ordinary” income, such as wages and interest. The current regime expires at year-end. The top rate of 35% will rise to 39.6%, and millions of poor and middle-income taxpayers removed from the tax rolls by the “Bush tax cuts” of 2001-3 will again owe income taxes.

A limit on itemized deductions adding up to 1.2 percentage points to the tax rate will return as well.

Next year also brings a new 0.9% Medicare tax on wages for most joint filers with adjusted gross income above $250,000 ($200,000 for single filers). The tax will apply to the income above the threshold, not below.

President Obama’s budget, proposed Monday, seeks to retain current tax rates for people in lower brackets and let them expire for most joint filers with adjusted gross incomes of more than $250,000 ($200,000 single). It also would cap the value of itemized deductions for people in higher brackets.

Mr. Obama’s budget also calls for replacing the alternative minimum tax, which imposes extra tax on people with big deductions, with a different levy. Known as the “Buffett rule,” because billionaire Warren Buffett has famously noted that his tax rate is lower than that of his secretary, the proposal would subject people making more than $l million to an average tax rate of no less than 30%.

The president’s budget offered no projections on how much the new tax would collect or details on how it would work.

Lawmakers in the House and Senate each have their own version of a tax based on the Buffett rule, called the “Pay a Fair Share Act,” with the same 30% and $1 million thresholds.

According to Roberton Williams of the nonpartisan Tax Policy Center, Congress’s version would raise $20 billion in 2015 from 116,000 taxpayers—assuming no one changed behavior, which many would. By contrast, the AMT has been raising some $40 billion a year from 4 million taxpayers.

Rates on investment income. The current investment-tax regime also expires at the end of this year. The top 15% rate on long-term capital gains (those held over a year) will rise to 20%, and the current zero rate for those in the bottom two tax brackets will rise to 10%.

Qualified dividends will again be taxed as ordinary income, with a top rate of 39.6%.

In 2013 a new 3.8% tax on investment income debuts for most joint filers with adjusted gross income above $250,000 ($200,000, single).

It covers capital gains, dividends, rents and royalties, among other things. It doesn’t apply to gains from home sales unless the gains exceed the cap of $250,000 (for single filers) or $500,000 (joint filers).

Mr. Obama favors letting the top 15% rate on capital gains rise to 20%. New this year is a proposal to tax dividends like ordinary income for those with adjusted gross income above $250,000 ($200,000 for single filers).

In addition, both he and the lawmakers sponsoring the Buffett-rule proposal would like to see investment income taxed at an average rate of 30% for people earning more than $1 million.

Estate and gift taxes. The current regime expires at year-end. The $5 million-per-individual estate-tax exemption will drop to $1 million, and the top estate-tax rate will rise from 35% to 55% for most and 60% for some. The gift-tax exemption will fall to $1 million and the rate will rise to 55%.

Mr. Obama wants to return these taxes to 2009 levels. That would mean an estate-tax exemption of $3.5 million and a gift-tax exemption of $1 million. The top rate for both would be 45%.

The bottom line. It is an election year and much depends on what happens Nov. 6. Most tax experts believe Congress won’t address tax rates before the election—although legislation is notoriously unpredictable. All the proposals mentioned above, plus others, are in play.

After Nov. 6, the current Congress might pass another temporary extension, as happened in late 2010, says Clint Stretch, a principal at Deloitte Tax in Washington: “A straight extension of the current system will be the path of least resistance, especially if it comes with a promise of tax reform in 2013.”

On the other hand, says Michael Graetz, a former top Treasury official now teaching at Columbia University’s Law School, the election results could mean that “for ‘millionaires and billionaires’ with more than $250,000 of income, there may be a substantial tax increase.”

—Email: taxreport@wsj.com

A version of this article appeared February 18, 2012, on page B9 in some U.S. editions of The Wall Street Journal, with the headline: More Uncertainty for 2013.

By MARY PILON

This summer, droves of school-age children will attend summer camp, where they will paddle canoes, play tennis and make crafts from paste and yarn. Others, will go to finance camp, where they will take excursions to a local bank or delve into budgeting and investing simulations. Rather than singing around the campfire, they will chant personal-finance mantras like these sung at Camp Millionaire in Santa Barbara, Calif.: “Financial freedom is your choice” and “Assets feed you, liabilities eat you.”

Ed Koren

In the past, business and finance camps attracted high-achieving high-school students. Now, with the country’s uncertain economy, financial education is expanding to an unlikely audience — younger kids, even grade-school students. They are also reaching out to those from diverse economic backgrounds. And the lessons are surprisingly sophisticated, teaching campers how to rebalance portfolios, invest in real estate and use credit cards without getting dinged on fees.

At Camp Millionaire, campers in five days create a minieconomy based around “moola” — mock currency that features a cow’s portrait — which kids use to spend, invest in stocks and compete with each other. They also use the fake currency to pay their “bills,” running around and depositing moola in large envelopes with labels like “phone bill” and “credit card bill.” Parents spend the real moola to send their kids to the weeklong session, which ranges from $279 to $300. Scholarships are available, based on financial need.

“Adults underestimate kids’ abilities. Investing — they’ll get it and be interested in it,” says counselor Pamela Capalad.

Andrew Adams, of Santa Barbara, attended the camp twice, once when he was 10 years old and again two years later. “He was coming home with words like ‘adversely affect your credit score,’ ” says his mother, Denice Adams.

Andrew pointed out to his mother that her credit-card billing cycle had changed, and that she wasn’t keeping up with payments. Her delays were racking up late fees, jacking up her interest rate and hurting her credit score. After considering her non-discretionary household expenses (his words), Andrew also pronounced that the mortgage on their Santa Barbara home was too high for her income. Now 15 years old, Andrew has launched his own small travel business and is a financial-news junkie.

Gauging Risk

At YoungBiz’s Smart Start to Money Camp in Sarasota, Fla., campers ages 13 to 18 are asked to toss a ball into a bucket, earning more points the farther away they stand. It aims to teach kids about risk tolerance and lead them into a discussion about stocks and asset allocation. How far away from the bucket they’re willing to stand might tell them something about their investing style.

Bonding Over Banking

Girls only? Read about finance camps for girls, and join a discussion on WSJ.com’s Front Lines.

Campers pay $100 to $300 for the three-day session, in which they form teams and compete to create the best portfolio. In 2001, during one of the first camps, one camper pleaded with his teammates to buy stock in a then-risky company, eBay

. His peers lobbied for safer bets, like utility companies. After a fiery debate, the team passed on eBay but agreed on an alternative stock allocation. They won the competition because counselors were so impressed with their cooperation.

Camp Challenge, a joint effort between the North Carolina Bankers Association and 4-H, mixes financial education in the morning with traditional activities, such as horseback riding or swimming, in the afternoon. For $350, kids 10 to 14 years old learn the basics of everyday finance using the FDIC’s Money Smart curriculum.

Robin Diamond

Federal Reserve Chairman Ben Bernanke with campers from Camp Challenge.

Camp Challenge is also part of the America’s Promise Alliance, a business and nonprofit cooperative that works to reach students at risk of drug abuse or dropping out, for example. The weeklong overnight camp in Westfield, N.C., has drawn the attention of Federal Reserve Chairman Ben Bernanke and former Secretary of State Colin Powell, who have been known to mingle with campers when they’re in the area.

In Denver, the Young Americans Center for Financial Education takes a macroeconomic approach to financial education.

Creating a Ghost Town

In weeklong sessions that cost $185, fourth- and fifth-graders take part in large-scale simulations of the economy of a small town. Campers apply for jobs. They create business plans for 17 different businesses, patronize others along Main Street and even buy health insurance. (It costs two AmeriDollars.) One year, the counselors had a camp of savers, and AmeriTowne turned into a ghost town when the kids refused to spend any money. The incident sparked a fruitful discussion about free enterprise. Counselors asked campers to imagine what would happen to AmeriTowne’s Main Street if no one spent any money in the long term. The grim consequences of an inactive economy soon became apparent, especially when they realized that they, too, were business owners.

Global Economics

The fifth- and sixth-graders take the minitown approach and bump it up a notch to the International Towne. It is like a model United Nations with a robust focus on trade, currencies and deficits. They’re thrown questions about environmental protection and sustainability. When counselors asked campers to write down how they would cope with limited water resources on the planet, they ran out of paper.

“They really run the world at the end of the week,” former banker C.J. Juleff, vice president of programming for the camp, said.

Write to Mary Pilon at mary.pilon@wsj.com

Printed in The Wall Street Journal, page D1

A pair of changes for 2011 could mean big headaches for taxpayers who report business or partnership income on their individual tax returns.

Both changes involve so-called 1099 forms, which are reports submitted to the Internal Revenue Service so it can cross-check information from different taxpayers.

Tim Foley

The first change is momentous: It requires third parties—credit- or debit-card firms, PayPal and the like—to tell the IRS about their payments to businesses. For 2011 and after, these firms must issue 1099-K forms to the IRS and the taxpayer giving the amount of such payments.

Why does that matter? This information can help the IRS flush out unreported income by small businesses. Cheating and mistakes cost Uncle Sam $122 billion a year, the IRS estimates, making it the largest single element of the $385 billion in annual unpaid taxes, known as the tax gap.

The new third-party payment information cuts two ways. It can help the IRS identify firms, such as online merchants, who aren’t reporting income at all. But it also can shine a light on businesses that are underreporting their income, such as a restaurant that does a big cash business but declares income only equal to its credit- and debit-card payments.

There is some good news on the 1099-K front: After an outcry by the National Federation of Independent Businesses, or NFIB, and other groups, the IRS recently decided to drop plans to have businesses break out 1099-K receipts on their tax forms. Doing so would have imposed a huge burden, says Chris Walters, an official with NFIB, because it involved an onerous reconciliation process.

“Grocery stores would have had to show that $15 of a shopper’s $40 debit charge was for food and the rest was a cash withdrawal, or else the IRS might think they’re underreporting income,” he explains.

But business owners shouldn’t be lulled into a false sense of security. While they won’t have to report the information on their returns, third parties must still provide 1099-Ks, and the IRS can still use those data in audits.

“Firms that might be ‘outed’ by this form should remember it’s very much alive,” says Don Williamson, a tax preparer who heads the Kogod Tax Center at American University.

***

The other potential trap: two new lines on several forms, including Schedule C (for sole proprietorships), Schedule E (landlords), 1120S (Subchapter S corporations) and 1065 (partnerships).

They say: “Did you make any payments in 2011 that would require you to file Form(s) 1099?” and “If ‘Yes,’ did you or will you file all the required Forms 1099?”

These simple-seeming questions could cause large penalties for some taxpayers.

Here is why: Firms usually are required to issue 1099 forms to providers of more than $600 worth of services during the year, unless the vendors are incorporated. That could include, for example, an accountant, a plumber, a website designer or a consultant.

In 2010 Congress stiffened the penalties on taxpayers who neglect to provide 1099 forms. The higher penalties took effect in 2011, and now the penalty for nonfiling is $100 per violation—$200, in most cases, because two forms are due, one to the IRS and one to the provider. The penalty for “intentional failure to file” is $250.

Mr. Williamson recalls one case in which penalties for multiple vendors and multiple years amounted to $35,000, even though nothing else on the return was disallowed.

By asking the two questions prominently on the return, the IRS isn’t only reminding taxpayers of their obligations but also setting a snare for scofflaws. If a taxpayer answers “no” and an audit shows he should have sent the forms, the answers could be evidence in favor of higher penalties. So “he’s hoist on his own petard,” Mr. Williamson says.

In extreme cases, he adds, it would be easier for the IRS to allege civil fraud, because the taxpayer’s answer is evidence that he or she was willfully noncompliant.

Write to Laura Saunders at laura.saunders@wsj.com

A version of this article appeared March 17, 2012, on page B9 in some U.S. editions of The Wall Street Journal, with the headline: Traps for Small Businesses.

Is the tide finally turning for paid digital content?

Microsoft (ticker: MSFT) kicked off the good news Monday with its $300 million infusion in Barnes & Noble‘s Nook e-reader business. Barnes & Noble (BKS) shares soared as much as 90%, before finishing the week up 30%, to $17.91. Shares of the brick-and-mortar bookseller have jumped 50% in the last year, all due to the company’s digital efforts.

Then, on Tuesday, the Audit Bureau of Circulations delivered impressive news for the New York Times (NYT) and its new digital paywall. For the 12 months ended March 31, the Times saw its total paid-subscription base jump 73%, to 1.6 million. Print sales are still slipping, so all the growth came from online subscriptions, which were launched a year ago.

In any other industry, analysts would cheer a model that practically doubled the number of paying customers in just 12 months. Alas, old-fashioned journalism remains a tough sell with investors; Times stock finished the week down 6%, to $5.98.

Also on Tuesday, Sirius XM (SIRI), the satellite radio operator left for dead in the credit crisis, proved consumers are still willing to pay up for content, even in the face of free offerings from the likes of Pandora (P) and Spotify. Sirius reported an 8% jump in paid subscribers, an impressive figure given that many customers were hit with a 12% price increase during the quarter. New customers now pay $14.49 a month for Sirius’ mix of music, talk and sports.

PERHAPS THE ONE DISAPPOINTMENT on the paid-content front last week came from Comcast (CMCSA), which reported a small slip in its cable-TV subscriber base on Wednesday, in an otherwise strong first quarter. Shares sold off 4% by Friday’s close.

Investors now tune in to Comcast’s quarterly report primarily for the latest dish on cord-cutting. Bears still argue that Internet streaming will cause a wave of cable-TV cancellations, dooming Comcast and its peers. The trend isn’t nearly so dire. In the quarter, Comcast lost a net total of 37,000 cable-television subscribers. The decline has narrowed in recent quarters, and the current losses look like a rounding error for a company with 22 million total video subscribers.

Overlooked in the headlines is that Comcast still increased its video revenue by 2%, thanks to a price hike, probably the real cause of any subscriber losses. Comcast customers now pay an average of $143 a month, a jump of 8% in the past year.

Strip out the impact of recently acquired NBCUniversal and Comcast is still growing at a healthy clip. Its legacy cable unit is forecast to grow 5% this year to $39.2 billion. Total revenue could reach $62 billion, an 11% gain, with earnings up 26% to $5.3 billion, or $1.89 a share.

But the number that really matters for Comcast is free cash flow, the cash earnings left over after interest payments, taxes and capital expenditures. Free cash was a staggering $3 billion during the quarter, some $1 billion of which went immediately to shareholders in the form of dividends and buybacks. For the year, free cash could hit a record $7.8 billion, equal to almost 10% of the company’s $79.5 billion market value.

The fact is, Comcast’s cords are only getting stronger. The company added 439,000 high-speed Internet connections in the March quarter. (Another 164,000 customers were added to voice plans.) The cable giant’s sprawling broadband pipeline gives it a rare grip on the Internet, which is the “competition” at the crux of bears’ concerns. If consumers do cut the cord on cable, they will only become more reliant on Comcast’s broadband link. 

Overcast

Solar panel maker First Solar replaced its top brass, while reporting lower sales and a big loss. The Nasdaq Composite Index ended the week at 2,956 — down 3.7%.

ALEXANDER EULE can be reached at alexander.eule@barrons.com