Cliffs Natural Resources Inc. (NYSE: CLF) shares fell sharply after the proposed with rival Alpha Natural Resources (NYSE: ANR) fell through toady. This didn't come as a surprise to many shareholders as the value of the deal fell from $8.3 billion when announced to just $2.9 billion right now. However, the failure marks a victory for Philip Falcone's Harbinger Capital who faught the merger agreement since it was announced. The activist hedge fund criticized the move and suggested that Cliffs instead put itself up for sale.

Harbinger owns about 15% of Cliffs Natural Resources and is now facing further declines in the stock price. As part of the settlement, Cliffs will have to pay a $70 million breakup fee, but the hedge fund is optimistic. A combined company could have not only prevented the eventual sale of Cliffs to a third party, but also created an entity with substantial debt and problems. After all, the economies of scale argument doesn't work in every situation.

Cliffs Natural Resources Inc, formerly Cleveland-Cliffs Inc, is an international mining company, a producer of iron ore pellets in North America and a supplier of metallurgical coal to the global steelmaking industry. It operates six iron ore mines in Michigan, Minnesota and Eastern Canada, and three coking coal mines in West Virginia and Alabama. Cliffs also owns 80.4% of Portman, an iron ore mining company in Australia, serving the Asian iron ore markets with direct-shipping fines and lump ore. In addition, it has a 30% interest in the Amapa Project, a Brazilian iron ore project, and a 45% economic interest in the Sonoma Project, an Australian coking and thermal coal project. It is organized into three business segments: North America Iron Ore, North American Coal and Asia-Pacific Iron Ore.

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Alpha Natural Resources Inc. (ANR)

Bio-Imaging Technologies, Inc. (NDAQ: BITI) shares moved higher after a large shareholder recommended changes to improve the firm in a Schedule 13D filing with the SEC. Heathinvest Partners disclosed a 5.3% stake in the firm and said they are very frustrated with the recent performance of the company that has resulted in the deterioration of value in 2008. Although the Imaging Services division, which has grown 19%, and the newly acquired Phoenix Data Systems unit seem to be developing well, the company's share price has declined 66% year-to-date.

"We believe that the source of the problem lies in the CapMed division," said Anders Hallberg of Healthinvest. "Despite allocating large resources to this loss-making unit for several years, significant revenues have failed to materialize. For example, in the most recent quarter, the division posted revenues of a mere $11,000 despite incurring approximately $776,000 in operating expenses. If the Company had sold CapMed to a third party or closed it down before the start of this year, the Company’s operating earnings for the first nine months in 2008 would have been around 43 percent higher without significant impact on revenues.

"CapMed is an expensive development project with no synergies with Imaging Services and Phoenix Data Systems. If CapMed cannot be sold, it should be closed down. While the decision to divest or close a division is always difficult, it should now be evident to the Company’s Board and senior management that CapMed is having a significant, negative impact on shareholder value, which should be the Board’s highest priority. Surely, the Company’s Board and senior management agree that it is imperative that investor confidence in the Company not be undermined any further. Committing to either divest CapMed or close it down before the end of 2008 would go a long way in this direction."

Combined, Healthinvest believes that these changes could help boost the company's troubled shares.

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How much are you spending on your Christmas presents this year? Lazard Capital apparently spent too much on its gift-giving after regulators found some $600,000 spent "improperly entertaining" Fidelity Investments employees to generate brokerage business. The SEC found that former head of Lazard Capital Market's US sales and trading department, David Tashjian, and a few employees gave extraordinary gifts to, among others, Fidelity equity trader Thomas Bruderman.

What kind of gifts cost so much? The commissioner found that Lazard executives were taking the Fidelity representative on trips to destinations like Europe, the Bahamas, the Caribbean, Florida, and Napa Valley, often by private plane, and paying for meals and lodging at high end restaurants and hotels. According to the orders, they spent money on race car driving lessons, adult entertainment, expensive wine, and even threw a $50,000 bachelor party in Miami!

What's the problem with a little fun? According to the SEC: "Mutual fund traders owe their loyalty and allegiance solely to the funds and their investors. When registered representatives provide mutual fund traders with prohibited travel, entertainment and gifts, it may impair their objective judgment and harm investors. Brokerage firms and their supervisory personnel must reasonably implement procedures to prevent employees from illegally providing compensation for brokerage business."

A slight conflict of interest...