Morning Take-Out

TOP STORIES

Trial to Begin for Former UBS Trader Accused of Hiding Huge Loss  |  UBS will face the harsh glare of the spotlight again on Friday, as opening arguments begin in the trial of a former trader accused of hiding a multibillion-dollar loss at the investment bank.

Kweku M. Adoboli, 32, the former trader, faces charges of false accounting and fraud in connection with a $2.3 billion loss at the bank. He has pleaded not guilty.

“As uncomfortable as the entire trial will be for UBS, it will show us what the consequences are when misconduct occurs or when individuals do not take their responsibilities seriously,” the bank's chief executive, Sergio P. Ermotti, said in an internal memo made public by the firm.

UBS, which has struggled to regain its footing since the financial crisis, has been plagued by a number of scandals i n recent years.
DealBook '

A Tax Tactic That's Open to Question  |  Leaders of private equity firms use of carried interest to lower tax bills. While that maneuver has raised eyebrows, it is perfectly legal. However, there is a related tactic to avoid taxes that is used by some private equity firms, including Bain Capital, whose legality is less clear, Floyd Norris writes in The New York Times.

“It concerns the management fees that sponsors of private equity funds, such as Bain Capital, are paid. Those fees are separate from the fund profits that the managers are able to treat as carried interest.”

“Instead of paying o rdinary income taxes on those fees, the partners and employees of the fund sponsors pay taxes at much lower capital gains rates. In fact, they do even better than that. In some cases, they defer paying those capital gains taxes for years, itself a substantial benefit,” he says. Some legal scholars say such a move is “not justified, and some private equity firms have not chosen to use it,” he says.

High & Low Finance '

DEAL NOTES

A Sigh of Relief in Europe  |  A court decision in Germany and a Dutch election this week, when combined with the European Central Bank's decision to buy bonds, gave the feeling that “perhaps the worst is over in the euro crisis, at least for now,” The New York Times reports.
NEW YORK TIMES

David Swensen of Yale Said to Have Cancer  |  Students of David Swensen, Yale University's chief investment officer, told The Yale Daily News they had learned that their professor had received a diagnosis of cancer. Over a 27-year career at Yale, Mr. Swensen has overseen the growth of the endowment to $19 billion from about $1 billion.
The Yale Daily News

Mergers & Acquisitions '

Merger of European Aerospace Giants Sparks Concern  |  While many analysts acknowledged the competitive advantages that could come from a tie-up between EADS and BAE, many also worried that the proposed ownership structure could be too complex, The New York Times reports.
New York Times

Sony Said to Be in Final Talks Over Olympus Investment  |  Sony is preparing to invest 50 billion yen ($646 million) in Olympus, and an agreement is expected by the end of this month, a Japanese broadcaster reported, according to Reuters.
REUTERS

BuzzFeed Acquires a Data Company  |  The social news site made its first acquisition, buying Kingfish Labs, which analyzes social data, Business Insider reports.
BUSINESS INSIDER

Soros Said to Seek Sale of Lender  |  Bloomberg News reports: “Billionaire George Soros is seeking a buyer for his asset-based lending company, whose borrowers include American Apparel, said two people with knowledge of the matter.”
BLOOMBERG

Xstrata Board Expected to Support Glencore Bid  |  The board of the mining company may recommend Glencore's revised offer to shareholders as early as next week, Reuters reports, citing unidentified people close to the deal. The recommendation may come with qualifications.
REUTERS

INVESTMENT BANKING '

A Warning on Bank Complexity, From Someone Who Would Know  |  Sallie L. Krawcheck, a former Bank of America and Citigroup executive, discussed her concerns about the complexity of financial behemoths at a conference. “It makes you weep blood out of your eyes,” she said.
DealBook '

Goldman Scales Back Entry-Level Program  |  The Wall Street Journal reports that Goldman Sachs “is doing away with two-year contracts for most analysts hired out of college, according to communications reviewed by The Wall Street Journal and confirmed by a Goldman spokesman. Analysts also won't get bonuses for completing the program, which has been around for a quarter of a century and has been viewed as a meal ticket to a lucrative Wall Street career.”
WALL STREET JOURNAL

JPMorgan Gains Back Market Value  |  JPMorgan's stock rose to erase the losses that came after the bank disclosed a huge trading loss earlier this year.
BLOOMBERG

Nomura Names Co-Heads of Equities  |  Nomura named Samir Patel and Michael Rietbrock to replace Ciaran O'Kelly, who is departing as the Japanese firm overhauls its international business, Bloomberg News reports.
BLOOMBERG

Myanmar Gets Debit Cards  |  The country's central bank, in cooperation with 17 banks, is giving customers the chance to use plastic for the first time, Reuters reports.
REUTERS

PRIVATE EQUITY '

Secondary Buyouts Drive a Deal Boom  |  The Wall Street Journal reports: “Private-equity firms are buying and selling companies more this year than in any of the last five thanks largely to one industry: their own. Some $28 billion in U.S. deals between private-equity shops have been announced this year, more than double the amount for all of last year and on pace to be the most since 2007's $51.1 billion, according to Dealogic.”
WALL STREET JOURNAL

Buyout Firms Said to Eye Staples  |  Fortune reports: “Several private equity firms are considering a buyout offer for Staples Inc., Fortune has learned. Among them is Bain Capital, which famously helped launch the office superstore 26 years ago.”
FORTUNE

Carlyle Buys Controlling Stake in Brazilian Furniture Retailer  |  The Carlyle Group said Thursday that it had acquired a 60 percent stake in Tok & Stok, a Brazilian furniture company, in a move that positions it to take advantage of the country's consumer retail market.
DealBook '

Deadline Extended for Carlyle to Bid on British Company  |  The British defense equipment maker Chemring said a deadline had been extended to Oct. 12 for Carlyle to make an offer, Reuters reports.
REUTERS

Morgan Stanley Fund Said to Be in Talks for Russian Mall  |  Reuters reports: “Morgan Stanley's real estate fund is in talks to buy a Moscow shopping center for between $1.1 billion and $1.2 billion from Capital Partners, three industry sources told Reuters on Thursday.”
REUTERS

Campbell May Find a Deal From Private Equity  |  Campbell Soup said it was planning acquisitions to expand its baking and snack division overseas, and with private equity firms having bought up snack companies in recent years, “some would be only too happy to sell to a large strategic acquirer like Campbell's,” The Wall Street Journal's Private Equity Beat writes.
WALL STREET JOURNAL

HEDGE FUNDS '

Stock Market Lifts Hedge Funds in August  |  A month of relatively low volatility helped hedge funds log gains, Reuters reports.
REUTERS

Boston Hedge Fund Raises $2.9 Billion  |  Abrams Capital Management, a firm founded by a former Baupost Group employee, raised a new fund, The Boston Globe reports.
BOSTON GLOBE

Hedge Funds Focused on India Go Negative  |  Once considered lucrative, India-focused hedge funds have posted negative returns of 0.9 percent so far this year, The Hindu Business Line reports.
HINDU BUSINESS LINE

I.P.O./OFFERINGS '

R.B.S. Announces Plans to Take Insurance Unit Public  |  The Royal Bank of Scotland said it would go ahead with an I.P.O. of its Direct Line insurance business on the London Stock Exchange.
REUTERS

Zynga Hires Executive for Online Gambling  |  Zynga hired a former online gambling executive, Maytal Olsha, to be its chief operating officer of new markets, as the social games company plan s to offer gambling with real money next year, Bloomberg News reports.
BLOOMBERG

Indian Mobile Company to Pitch Investors on I.P.O.  |  Bharti Infratel, the mobile tower division of the Indian phone company Bharti Airtel, plans to start a premarketing process on Monday for a $1 billion I.P.O., The Wall Street Journal reports, citing an unidentified person with direct knowledge of the matter.
WALL STREET JOURNAL

VENTURE CAPITAL '

A Billionaire With Other-Wordly Ambitions  |  Elon Musk, the billionaire behind Tesla Motors and SpaceX, has been described by friends as “as Steve Jobs, John D. Rockefeller, and Howard Hughes rolled into one,” Bloomberg Businessweek writes. The investor Peter Thiel, who co-founded PayPal with Mr. Musk, said Mr. Musk is “a throwback to when people were doing less incrementalist things.”
BLOOMBERG BUSINESSWEEK

Twitter to Surrender Users' Tweets  |  Twitter was ordered by a judge to hand over tweets from an Occupy Wall Street protester, and after months of fighting the subpoena, the company now plans to comply, the protester's lawyer said, according to Reuters.
REUTERS

Lerer Ventures Looks to Raise $30 Million  |  The New York venture capital firm is raising its third fund, according to regulatory filings, TechCrunch reports.
TECHCRUNCH

New Venture Partner s Aims to Raise $150 Million Fund  |  The effort comes after one of the firm's partners, David Tennenhouse, has left to join Microsoft, The Wall Street Journal's VentureWire reports.
WALL STREET JOURNAL

LEGAL/REGULATORY '

4 Years After Lehman's Demise, Regulators Debate Overhaul  |  Mark Wetjen, a Democratic member of the Commodity Futures Trading Commission, told an industry group that the agency was debating how to crack down on foreign derivatives trading.
DealBook '

Trades After Crisis-Era Meeting Said to Be Scrutinized  |  The Wall Street Journal reports: “U.S. securities regulators are investigating possible insider tr ading by Wall Street executives who attended a private meeting with then Treasury Secretary Henry Paulson in 2008, according to people familiar with the probe.”
WALL STREET JOURNAL

Fed Ties Aid to Economic Recovery  |  The New York Times reports: “The Federal Reserve opened a new chapter Thursday in its efforts to stimulate the economy, saying that it intends to buy large quantities of mortgage bonds, and potentially other assets, until the job market improves substantially. This is the first time that the Fed has tied the duration of an aid program to its economic objectives.”
NEW YORK TIMES

Decisive Action From the Fed  |  The New York Times editorial board writes: “If the economy falters from here on out, it will be difficult to blame the Federal Reserve.”
NEW YORK TIMES

Regulatory Panel Is Faulted  |  The Government Accountability Office found that a new regulatory panel, the Financial Stability Oversight Council, which was created under Dodd-Frank, was lacking in transparency and accountability, raising questions about its effectiveness, The Wall Street Journal reports.
WALL STREET JOURNAL

Stanford Executive Gets 3 Years in Prison  |  Laura Pendergest-Holt, the former chief investment officer of the Stanford Financial Group, was sentenced to three years in prison for her role in R. Allen Stanford's Ponzi scheme, The Associated Press reports. She had struck a plea agreement with prosecutors.
ASSOCIATED PRESS