Morning Take-Out

TOP STORIES

Knight Capital Reaches Rescue Deal With Investor Group  |  The Knight Capital Group reached a deal on Sunday to secure a financial lifeline from an investor group that included TD Ameritrade and the Blackstone Group, capping its efforts to stay alive, people with direct knowledge of the matter said.

The lifeline came together days after the trading firm disclosed a $440 million trading loss tied to a glitch in its software that sent shares in 148 companies gyrating on Wednesday.

Under the terms of the plan, the new investors - which also include the trading firm Getco, and Stifel, Nicolaus & Company, a financial services company - would receive securities that give them the right to buy new shares in Knight at a price of roughly $1.50 each, these people said. On Friday, the shares closed at $4.05.

The rescue package, w hich was arranged by the Jefferies Group and is worth about $400 million, will significantly dilute the holdings of existing shareholders, with the new investors owning roughly 70 percent of the firm, one of these people said. But it will leave Knight alive and independent, averting a potentially messy bankruptcy. (The company confirmed the deal in a filing on Monday morning.)
DealBook '

As Libor Fault-Finding Grows, It Is Now Every Bank for Itself  |  Major banks, which often band together when facing government scrutiny, are now turning on one another as an international investigation into the manipulation of interest rates gains momentum.

With billions of dollars and their reputations on the line, financial institutions have been spreading the blame in recent meetings with authorities, according to government and bank officials with knowledge of the matter. While acknowledging their own wrongdoing, institutions are pointing out actions at other banks that they believe are worse - and in some cases, extend to top executives.

One official involved in the case said that banks are emphasizing that “we're not as bad as the next guy.”

The Swiss bank UBS, which has a history of regulatory run-ins, has shared e-mails, instant messages and other information suggesting it had colluded with traders at Deutsche Bank, HSBC and the Royal Bank of Scotland to manipulate key interest rates, according to court documents and bank employees. In talks with authorities, HSBC is providing its own account of the activities, according to a lawyer briefed on the matter. Citigroup has also detailed rate manipulation with other banks.
DealBook '

DEAL NOTES

Stock Exchange Head Who Ushered in Modern Era Has Died  |  John Phelan, who rose to become chairman of the New York Stock Exchange during a tenure stretching from 1975 to 1990, has died at 81, Bloomberg News reports. He was known for maintaining a confident tone during the crash of 1987.
BLOOMBERG NEWS

Techies Show Off Their Louboutins  |  In Silicon Valley, a place not known for its fashion sense, “a growing group of women is bucking convention not only by being women in a male-dominated industry, but also by unabashedly embracing fashion,” The New York Times re ports.
NEW YORK TIMES

Optimism Emerges From Greek Talks With Lenders  |  In separate statements, inspectors for Greece's international creditors and Greek government officials said they had made progress in discussions over mandatory budget cuts, The New York Times reports.
NEW YORK TIMES

Mergers & Acquisitions '

Advent to Buy Control of Maker of Serta and Simmons Bedding  |  Advent International said on Sunday that it has agreed to buy a majority stake in the parent company of Serta and Simmons bedding, taking control of one of the country's biggest makers of mattresses.
DealBook '

Lawmakers Raise Concerns Over Universal-EMI Deal  |  The two ranking members of the Senate's subcommittee for antitrust issues, a Democrat and a Republican, said in a letter to the Federal Trade Commission that the proposed tie-up between Universal and EMI “presents significant competition issues that merit careful FTC review,” The Wall Street Journal reports.
WALL STREET JOURNAL

Silver Lake Resources to Buy Integra Mining  |  Silver Lake Resources, the Australian mining firm, has agreed to buy Integra Mining for about $450 million, Reuters reports.
REUTERS

BC Partners to Buy German Drug Maker  |  The private equity firm BC Partners is buying Aenova, a German company t hat makes vitamins and generic prescription drugs, for a price that was said to be about $617 million, Reuters reports.
REUTERS

Taiwan Semiconductor to Invest in European Firm  |  Taiwan Semiconductor Manufacturing is investing 1.11 billion euros ($1.4 billion) in ASML Holding, a European company that makes computer chip equipment, and taking a 5 percent stake, Bloomberg News reports.
BLOOMBERG NEWS

National Bank of Greece Said to Eye Credit Agricole Unit  |  National Bank, the Greek lender, is planning to bid for Emporiki, the struggling Greek unit of Credit Agricole, Reuters reports, citing unidentified “banking sources.”
REUTERS

INVESTMENT BANKING '

European Bond Traders Deal in Fear  |  The New York Times reports that some traders of European bonds “confessed to being fearful and confused. They now juggle astonishing levels of risk and wealth for investors - some 6.7 trillion euros, or $8.3 trillion, in euro zone government debt, according to the European Central Bank.”
NEW YORK TIMES

Eyeing Europe, Wall Street Battens Down the Hatches  |  The Financial Times writes: “Wall Street banks are increasingly telling counterparties and borrowers to restructure contracts or find another bank as they prepare for the potential exit of a country from the eurozone.”
FINANCIAL TIMES

Euronext Said to Plan an Exchange for Smaller Companies  |  The Financial Times reports: “A new pan-European stock exchange for entrepreneurs is being planned by NYSE Euronext to plug the gap in funding for small companies and help them raise money from investors more easily.”
FINANCIAL TIMES

Berkshire Hathaway's Profit Falls 9 Percent in 2nd Quarter  |  Berkshire's second-quarter results were affected by bigger paper losses on derivatives, but the company said but many of its subsidiaries performed well, The Associated Press reports.
ASSOCIATED PRESS

Rise of the Machines on Wall Street  |  Joe Nocera writes about the debacle at Knight Capital in his column in The New York Times : “Wall Street is now as blindly reliant on computers, on algorithms, on high-frequency trading, as it was once blindly reliant on the risk models that allowed ‘toxic bonds' to be rated Triple A. Wall Street has created its own Frankenstein. The machines are now in charge.”
NEW YORK TIMES

Tax Evasion Crackdown May Prompt Withdrawals From Swiss Banks  |  As authorities in the United States and Europe pursue tax dodgers, financial industry officials are saying Swiss banks could lose a significant portion of their assets, Bloomberg News reports.
BLOOMBERG NEWS

Small Banks Are Vocal in Distaste for New Rules  |  A public outburst by a bank official on a conference call with regulators highlighted the small banking ind ustry's “extreme anxiety and agitation over forthcoming rules,” The Wall Street Journal writes.
WALL STREET JOURNAL

PRIVATE EQUITY '

A Bain Deal Remains Controversial in Italy  |  A deal that Bain Capital did in Italy during Mitt Romney's tenure atop the private equity firm has led to “at least three books, separate legal and regulatory probes and newspaper columns alleging investors made a fortune at the expense of Italian taxpayers,” Bloomberg News reports.
BLOOMBERG NEWS

Boston Private Equity Boss Steps Aside  |  Kevin Landry is retiring after 45 years at the Boston-based private equity firm TA Associates, The Boston Globe reports. The newspaper write s: “Few in private equity can imagine the business without Landry, known as its straightest shooter and a big-hearted mensch.”
BOSTON GLOBE

Apollo Looks to Invest in Asian Real Estate  |  The private equity firm Apollo Global Management is raising $750 million for two funds to invest in commercial real estate in Asia, Bloomberg News reports.
BLOOMBERG NEWS

Brazilian Mogul Said to Plan to Take Companies Private  |  The Brazilian billionaire Eike Batista “plans to delist one or more companies of his empire EBX Group, according to two sources familiar with the situation,” The Wall Street Journal reports.
WALL STREET JOURNAL

HEDGE FUNDS '

Smaller Hedge Funds Show Up Their Big Rivals  |  In a year of lackluster returns for the hedge fund industry, some upstart firms are doing remarkably well, Reuters reports.
REUTERS

Funds Focused on the Big Picture Have a Hard Time  |  The Wall Street Journal writes, “even those who made the correct calls are finding it nearly impossible to time the frequent ups and downs of jittery, fast-moving markets where swings are often driven by pronouncements from politicians or central bankers.”
WALL STREET JOURNAL

Commodities Firm to Invest in Financial Stocks  |  Armajaro Asset Management, a $1.5 billion commoditi es hedge fund firm, is starting a new fund in October to invest in financial stocks, The Financial Times reports.
FINANCIAL TIMES

I.P.O./OFFERINGS '

Zynga Makes an Uncertain Push Into Mobile  |  The social games company is wrestling with how to charge customers for mobile games, as it tries to capture an audience of players that has shifted away from personal computers, The Wall Street Journal reports.
WALL STREET JOURNAL

Zynga Accused of Copying Game Traits  |  The video games company Electronic Arts sued Zynga, saying the social games maker copied elements of the Sims Social game for its own title, The Ville, Reuters reports.
REUT ERS

The Long-Term Value of Internet Companies  |  Bill George, a Harvard business professor, argues that investors should be focusing on Facebook's future instead of wondering why it had lost so much of its I.P.O. value.
DealBook '

I.P.O. Market Set for Biggest Week Since Facebook  |  Among the companies set to go public this week are Manchester United and the operator of Outback Steakhouse.
WALL STREET JOURNAL

VENTURE CAPITAL '

Security Start-Ups Strike Investors' Fancy  |  The New York Times reports: “In the last 12 months, the initial public offerings of once o bscure security start-ups have outperformed offerings from household names like Facebook and Zynga.”
NEW YORK TIMES

Can Internet Pirates Be Defeated?  |  Nick Bilton writes in an op-ed piece in The New York Times: “Stopping online piracy is like playing the world's largest game of Whac-A-Mole. Hit one, countless others appear. Quickly. And the mallet is heavy and slow.”
NEW YORK TIMES

Start-Up Tries to Make a Business in Comparisons  |  A Web site called FindTheBest.com, which attracted $6 million from Kleiner Perkins Caufield & Byers, offers an online comparison engine not for a single product or service but for a broad range, the Bits blog reports.
NEW YORK TIMES BITS

LEGAL/REGULATORY '

S.E.C. Gets Encouragement From Jury That Ruled Against It  |  The jury that acquitted a former Citigroup executive in the Securities and Exchange Commission's case against him included with the verdict a statement supporting financial investigations.
DealBook '

New York Fed Faces New Scrutiny on Rate-Rigging Scandal  |  In a letter to the New York Fed and the Federal Reserve Board in Washington, Senator Sherrod Brown challenged the regulators to defend their response to the rate-rigging s candal.
DealBook '

UBS Said to Dismiss Traders Over Libor  |  The Swiss bank “has dismissed about two dozen traders and managers in connection with an investigation of manipulation of the London interbank offered rates, Der Sonntag reported,” according to Bloomberg News.
BLOOMBERG NEWS

Investigation Into Silver Market May Be Dropped  |  The Financial Times reports: “A four-year investigation into the possible manipulation of the silver market looks increasingly likely to be dropped after US regulators failed to find enough evidence to support a legal case, according to three people familiar with the situation.”
FINANCIAL TIMES

Treasury to Reduce Stake in A.I.G.  |  The Treasury Department said it planned to raise $5 billion from a sale of shares of A.I.G. that would cut the government's stake to 55 percent from 61 percent, Reuters reports.
REUTERS

Insider Trading Case Reveals a Dubious Scheme  |  According to a complaint filed by the Securities and Exchange Commission, an employee of Bristol-Myers Squibb did little to cover his tracks when he engaged in an insider trading scheme that generated over $300,000 in profits, Peter J. Henning writes in the White Collar Watch column.
DealBook '

Study Questions How a Revolving Door Hurts Regulation  |  The New York Times reports, “a group of accounting profess ors has produced a study showing that the revolving door actually toughens enforcement results at the Securities and Exchange Commission - the opposite of what government critics have long maintained.”
NEW YORK TIMES

Municipal Issuers Could Use Police Protection  |  Gretchen Morgenson writes in her column in The New York Times that the Securities and Exchange Commission may have protected municipal bond investors from deceptive practices, but “it has been less inclined to take action on behalf of issuers against financial firms that underwrite these bonds.”
NEW YORK TIMES

Few Luxury Toys for Peregrine Chief  |  Russell Wasendorf Sr., who confessed last month to stealing more than $100 million from customers of the Peregrine Financial Group, was not prone to ostentatious spending, suggesting that “recouping money for Peregrine's former clients will not be easy,” Reuters reports.
REUTERS