Monday, November 4, 2013

DealBook: SAC Nears an Insider Trading Guilty Plea | Inquiry Broadens Into JPMorgan's Asia Hiring | Preparing a Bid for BlackBerry | Mary Jo White's Latest Challenge

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Monday, November 4, 2013
TODAY'S TOP HEADLINES

M & A Tri Pointe to Buy Weyerhaeuser's Home Building Unit

INVESTMENT BANKING HSBC Profit Rises; Bank Is Cooperating With Foreign Exchange Inquiry

PRIVATE EQUITY Blackstone to Buy Stake in Chinese Mall Operator

HEDGE FUNDS A Rocky Transformation for Sears

OFFERINGS Shares of Container Store Double in Trading Debut

VENTURE CAPITAL Internet Connectivity Won't Save the World's Poor, Gates Says

LEGAL/REGULATORY When an 'Annus Horribilis' Was Anything But

For the latest updates, go to dealbook.nytimes.com »
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BY WILLIAM ALDEN

SAC NEARS AN INSIDER TRADING GUILTY PLEA The criminal case against SAC Capital Advisors has reached a conclusion, with the government expected to announce on Monday that the hedge fund will plead guilty to insider trading charges and pay a fine of roughly $1.2 billion, Ben Protess and Peter Lattman report in DealBook.

But the deal will not remove SAC or its owner, Steven A. Cohen, from the legal spotlight. The agreement does not resolve a separate civil lawsuit that the Securities and Exchange Commission brought against Mr. Cohen in July, accusing him of failing to supervise his employees, people briefed on the matter told DealBook. Mr. Cohen and his firm will also remain under scrutiny during the trials of two other employees, Michael S. Steinberg and Mathew Martoma, which are expected to provide the first detailed witness testimony about the firm's inner workings and Mr. Cohen's role at the center of the cases.

And federal authorities still view Mr. Cohen and other SAC employees as targets of the continuing insider trading investigation, even though Mr. Cohen has not been charged criminally, Mr. Protess and Mr. Lattman report. "In recent weeks, the people said, the F.B.I. has been poring over SAC's trading records and increasingly pursuing the cooperation of potential witnesses. With the help of one person who is now cooperating, authorities have scrutinized SAC trading in shares of Gymboree, the children's clothing and music chain, said these people, who spoke on condition of anonymity because the guilty plea had not been announced."

INQUIRY BROADENS INTO JPMORGAN'S ASIA HIRING A federal investigation into JPMorgan Chase's hiring practices has expanded beyond China, where the bank faces questions about whether it hired the children of powerful Chinese officials to win lucrative business, Jessica Silver-Greenberg and Ben Protess report in DealBook. The bank disclosed on Friday that authorities were now looking into "its business relationships with certain related clients in the Asia Pacific region and its engagement of consultants in the Asia Pacific region."

JPMorgan did not specify where the inquiries were directed. "But according to people briefed on the matter, government authorities are examining JPMorgan's hiring practices throughout Asia, focusing on South Korea, Singapore and India. That scrutiny comes after JPMorgan itself flagged those countries for further review, the people said," according to the DealBook report. "The investigations from the Securities and Exchange Commission and the Justice Department, the people noted, are still in fledgling stages."

PREPARING A BID FOR BLACKBERRY "BlackBerry may be on its last legs, but the company still has multiple suitors," David Gelles and Ian Austen report in DealBook. "A consortium that includes the wireless company Qualcomm, the private equity firm Cerberus Capital Management and BlackBerry's co-founders, Mike Lazaridis and Doug Fregin, is preparing a bid for the company ahead of a Monday deadline, according to people briefed on the process." Though the effort could still fall apart, "the consortium had the makings of a serious bid that could set it apart in what has become a messy auction process."

Should the group submit an offer on Monday, its only competition would be a highly conditional $9-a-share bid from Fairfax Financial Holdings, a Canadian insurance and investment company, which faces a deadline of Monday afternoon.

ON THE AGENDA Hertz reports earnings after the market closes. Data on factory orders in August is released at 10 a.m. Michael Milken is on CNBC at 10:05 a.m. Sheila Bair, former chairwoman of the Federal Deposit Insurance Corporation, is on CNBC at 4:30 p.m.

MARY JO WHITE'S LATEST CHALLENGE Mary Jo White, the new head of the Securities and Exchange Commission, is described by friends and colleagues as "the most competitive and driven person they have ever encountered," Nicholas Lemann writes in The New Yorker. "White's life is about working, and winning."

In an interview with the magazine, Ms. White said she set out to become a psychologist after graduating from college, though she also applied to law school. "Litigators get a mess," she said. "I prefer that. It's back to problem-solving." Mr. Lemann writes: "Wall Street is the problem that White is now charged with solving."

DEALBOOK'S COMING CONFERENCE On Nov. 12, The New York Times will host its second annual DealBook conference in Manhattan. Speakers include Preet Bharara, David Bonderman, Ray Dalio, Barry Diller, Laurence D. Fink, Valerie Jarrett, Daniel S. Loeb, Elon Musk, Ruth Porat and David M. Rubenstein, among others. Don't hesitate to submit questions online.

Contact: @williamalden | E-mail

MERGERS & ACQUISITIONS »

Tri Pointe to Buy Weyerhaeuser's Home Building Unit Tri Pointe Homes said on Monday that it had agreed to buy the home building division of the Weyerhaeuser Company for roughly $2.7 billion, creating "one of the 10 largest home builders in the United States based on estimated combined equity market value."

Twitter Prepares to Go Shopping "Twitter is set to embark on an acquisition spree after its imminent initial public offering, going on the hunt for companies to help bolster its monetization efforts," The Financial Times writes.

Under Mayer, Yahoo Still Seeks Its Voice When Marissa Mayer took over as chief executive of Yahoo in July of last year, "it seemed she would at the very least bring a renewed vigor to the design of the struggling company," Nick Bilton writes on the Bits blog. "But it is not at all clear that the interface decisions she has made so far are paying off."

Roche Agrees to Buy Experimental Antibiotic The Swiss drug company Roche is paying up to 500 million Swiss francs ($548 million) in a licensing deal for an experimental antibiotic developed by Polyphor, Reuters reports.

Pricewaterhouse Takeover of Booz Risks Culture Clash Restrictions enacted after the Enron scandal mean advisory services employees at Booz & Company could end up battling with PricewaterhouseCoopers accountants over clients, Kevin Allison of Reuters Breakingviews writes.

A Brazilian Entrepreneur's Setback Eike Batista, once a symbol of Brazil's rapid rise, has come to represent a Brazilian elite that views itself as above the rules. DealBook's Peter Lattman examined the downfall of Mr. Batista's oil company with Anthony Mason on "CBS This Morning."

INVESTMENT BANKING »

HSBC Profit Rises; Bank Is Cooperating With Foreign Exchange Inquiry The bank said pretax profit rose to $5.1 billion in the three months ended Sept. 30 from $4.6 billion in the period a year earlier.

Goldman Plans a Fund With a Social Mission Goldman Sachs is starting a $250 million "social impact" fund, which will benefit from the success of projects like affordable housing and preschool education, The Financial Times reports.

Berkshire Hathaway Profit Rises 29% The conglomerate run by Warren E. Buffett said its profit in the third quarter was bolstered by investments and gains by non-insurance businesses like the Burlington Northern Santa Fe railroad.

ING to Unwind Mortgage Securities

ING to Unwind Mortgage Securities In another sign of improving conditions for European banks, the Dutch financial services firm said on Friday that it would unwind a portfolio of securities tied to mortgages in the United States.

Manage Fatigue in a Nonstop World With a Nap

Manage Fatigue in a Nonstop World With a Nap No single behavior has more power to influence overall well-being and productivity than additional sleep, Tony Schwartz writes in the Life@Work column.
For the latest updates, go to dealbook.nytimes.com »
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PRIVATE EQUITY »

Blackstone to Buy Stake in Chinese Mall Operator The Blackstone Group is investing about $400 million for a 40 percent stake in the Chinese shopping mall developer SCP, Bloomberg News reports, citing an unidentified person with knowledge of the matter.

HEDGE FUNDS »

A Rocky Transformation for Sears "For sure there is more money we could be investing in our stores, but when we did invest in our stores, we didn't see a return," Edward S. Lampert, the hedge fund manager who is chairman and chief executive of Sears Holdings, told Gretchen Morgenson in the Fair Game column in The New York Times. "If I can't invest in 100 stores and do well, doing that across 1,000 stores doesn't make sense."

As Banks Increase Pay, Fewer Hedge Funds Start Up "Only 418 hedge funds have been set up so far this year, compared to 725 and 780 established in the two preceding years respectively, according to Preqin, the data provider," The Financial Times reports.

I.P.O./OFFERINGS »
Shares of Container Store Double in Trading Debut

Shares of Container Store Double in Trading Debut The stock climbed as high as $36.74 during the trading day, 104 percent above the initial public offering price.

Chinese I.P.O.'s Try to Make a Comeback in U.S.

Chinese I.P.O.'s Try to Make a Comeback in U.S. The return, still in its early days, comes after several years of accounting scandals that pummeled their share prices and prompted scores of companies to delist from markets in the United States.

VENTURE CAPITAL »

Internet Connectivity Won't Save the World's Poor, Gates Says Asked by The Financial Times whether giving everyone on earth an Internet connection is more important than finding a malaria vaccination, Bill Gates said: "As a priority? It's a joke."

He continued: "Take this malaria vaccine, [this] weird thing that I'm thinking of. Hmm, which is more important, connectivity or malaria vaccine? If you think connectivity is the key thing, that's great. I don't."

Twitter Helps Revive a Seedy Part of San Francisco After Twitter moved its headquarters to the Mid-Market neighborhood of San Francisco, 15 other companies have committed to take 1.3 million square feet in the area, which has been known as a seedy place to visit day or night, The New York Times reports.

LEGAL/REGULATORY »

When an 'Annus Horribilis' Was Anything But In 2009, which was supposed to be a difficult year for the rich, the 400 people with the highest adjusted gross incomes still made, on average, $202 million each, and they paid an average federal income tax rate of less than 20 percent, James B. Stewart writes in the Common Sense column in The New York Times.

A Tension Between Plutocrats and Populists "The plutocrats have never been richer, and their economic power continues to grow, but the populists, the wilder the better, are taking over," Chrystia Freeland writes in an opinion essay in The New York Times.

Currency Traders Put on Leave Amid Investigation

Currency Traders Put on Leave Amid Investigation Authorities in Britain, the United States, Switzerland and Hong Kong are investigating whether traders colluded to rig some areas of currency trading.

Dodd-Frank Is Indeed Taking Root The slow rollout of the Dodd-Frank Act has left many frustrated, but regulators are slowly chipping away at the extensive rules and regulations needed to carry out the overhaul, writes David Zaring, assistant professor of legal studies at the Wharton School of Business at the University of Pennsylvania.
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