Mortgage Task Force Targets JPMorgan

Mortgage Task Force Targets JPMorgan  |  Those financial crisis deals just keep coming back to haunt banks. Last week, Bank of America settled a lawsuit over its acquisition of Merrill Lynch. Now, JPMorgan Chase is facing fresh claims related to Bear Stearns.

The federal task force formed to investigate mortgage fraud has sued Bear Stearns and its lending unit, EMC Mortgage, the first case brought by the federal group, The New York Times reports. The civil lawsuit, according to The Times, cites “a broad pattern of misconduct in the packaging and sale of mortgage securities during the housing boom.”

The accusations are hardly new. A JPMorgan spokesman, Joseph Evangelisti, called them “recycled claims.” But others, like Gerald H. Silk, a lawyer at Bernstein Litowitz Berger & Grossmann, welcomed the lawsuit. “The government's action represents a comp lete validation of the cases brought by investors,” Mr. Silk said.

The government announced the resolution of another case on Monday: American Express agreed to refund $85 million to about 250,000 customers to settle accusations that it violated federal law in its marketing, billing and debt collection, The New York Times reports. The settlement is another milestone for the new Consumer Financial Protection Bureau, which recently reached a similar pact with Discover Financial Services, and also took action against Capital One over the summer.

 

Too Much Dry Powder  |  You can have too much money, at least if you are a private equity firm. The industry is sitting on a collective $1 trillion - money that investors may demand back if it's not used soon, writes Andrew Ross Sorkin in the DealBook column. The so-called dry powder could signal a surge of deal-making, if firms can find the right prey. Mr. Sorkin writes: “Some private equity firms have put the word out to Wall Street banks that they want to go ‘elephant hunting' - seeking big deals worth as much as $10 billion - and are willing to pay a special bounty for bringing them acquisition targets.” Of course, it could also signal a spate of bad deal-making as firms chase acquisitions.

Still, the industry keeps trying to drum up more money. Private equity firms amassed more than $64 billion from investors in the third quarter, 10 percent more than in the period a year earlier, Reuters reports, citing data from the research firm Preqin.

 

High-Frequency Trading Under a Microscope  |  How can we prevent blowups when high-speed traders rule the stock market? The Securities and Exchange Commission will discuss the issue at a conference on Tuesday in Washington. Among the panelists is C hris Isaacson, chief operating officer of BATS Global Markets. Though many are pushing for new rules for high-frequency trading, there is little agreement on what exactly those rules should be. The author Roger Lowenstein proposes in a column in The New York Times that “intraday trades should be taxed at 50 percent. And ‘investments' that mature in 60 seconds should be regarded as, in effect, electronic errors - with any profit going to the government.”

 

On the Agenda  |  Day two of the Value Investing Congress features David Einhorn at 10:30 a.m. At past conferences, Mr. Einhorn, the Greenlight Capital president, has showcased short-selling ideas, which have been known to move stocks. The subject of a recent New Yorker article, Leon Cooperman of Omega Advisors, is on CNBC at 12:30 p.m. Larry Ellison, the Oracle chief executive, is on CNBC at 4:05.

Lawyers for Kazu o Okada, the ousted shareholder of Wynn Resorts, are appearing in a Nevada court on Tuesday to try to overturn the forced redemption of Mr. Okada's stake.

 

Bain Capital's Offshore Havens  |  They are the gifts that keep on giving. Bain Capital's offshore arrangements - which are “woven” into the fabric of the private equity firm's deal-making - not only limited Mitt Romney's tax bill, they also increased his income, according to The New York Times: “Some of the offshore entities enabled Bain-owned companies to sidestep certain taxes, increasing returns for Mr. Romney and other investors. Others helped Bain attract foreign investors and nonprofit institutions by insulating them from taxes, again augmenting Mr. Romney's bottom line, since he shared in management fees based on the size of each Bain fund.”

 

Law Firms Woo Start-Up Clients  |  Wilson Sonsini Goodrich & Rosati, the half-century-old law firm, is trying to be hip and cool. The firm's new office in San Francisco has the look and feel of a start-up, part of a broader strategy to attract young technology companies to its fold, writes DealBook's Evelyn M. Rusli. Wilson Sonsini and its rivals are “offering free services, cozying up to incubators and writing blogs” in an effort to secure business that could pay off big down the road.

 

Merrill Looking to Pounce on Morgan Stanley  |  Bank of America's Merrill Lynch unit is looking to poach brokers from the newly rebranded Morgan Stanley Wealth Management, The Wall Street Journal reports. The most sought-after financial advisers could make at least $1.5 million upfront plus deferred compensation for jumping ship, according to The Journal, which cites unidentified people familiar with Merrill's recruiting. Merrill Lynch, the newspaper says, is “pushing to capitalize on technological and reputational blows at Morgan Stanley.”

 

 

 

Mergers & Acquisitions '

Washington Post Company Acquires Health Care Provider  |  The company run by Donald E. Graham agreed to buy a majority stake in Celtic Healthcare. WASHINGTON POST

 

3M to Buy Ceradyne for $860 Million  |  Ceradyne shareholders will receive $35 a share in cash through a tender offer that is expected to begin within the next two weeks, a 43 percent premium to the ceramics maker's closing price on Friday. DealBook '

 

Qantas to Buy Air Freight Company  |  The Australian airline Qantas agreed to buy 100 percent of Australian Air Express, Reuters reports. REUTERS

 

Glencore Buys Stake in Russian Port  | 
REUTERS

 

INVESTMENT BANKING '

Moody's Says Tests Understate Needs of Spanish Banks  |  The credit rating agency Moody's said Spanish banks could require up to $135 billion in additional capital, almost twice the government's recent estimate. BLOOMBERG NEWS

 

Barclay s Adds 2 New Members to Executive Committee  |  The British bank has added two new members to its executive committee as it continues to reshape itself in the wake of a rate-rigging scandal. DealBook '

 

The J. Aron Takeover of Goldman Sachs  |  When Goldman Sachs bought the commodities broker J. Aron & Company in 1981, the cultures clashed, but now J. Aron alumni control the elevator to the executive suite. DealBook '

 

The Bullish Case for Goldman Sachs  |  Shares of Goldman Sachs rose as much as 4 percent in trading on Monday morning, as investors considered a bullish argument for the firm that appeared in Barron's this weekend. DealBook '

 

What's It Like to Run Goldman Sachs?  |  In some ways, it's less challenging than running a small business, said the firm's Lloyd C. Blankfein. “As I'm listening to the entrepreneurs, I'm thinking, ‘Gosh, could I do that?'” Mr. Blankfein said at an event in Long Beach, Calif., to honor graduates of Goldman's small-business program. BLOOMBERG NEWS

 

Low Volume Expected to Weigh on Equity Trading Revenue  |  According to an estimate by a JPMorgan Chase analyst, the volume of equity trading in the third quarter probably fell 14 percent compared with the period a year earlier. BLOOMBERG NEWS

 

Asian Investment Banks Feel a Lack of I.P.O.'s  |  An increase in other lines of business, like mergers and acquisitions and debt sales, has not offset the decline in I.P.O.'s in Hong Kong, The Wall Street Journal writes. WALL STREET JOURNAL

 

PRIVATE EQUITY '

Would an Obama Presidency Be Better for Private Equity?  |  Fortune's Dan Primack writes that if Mitt Romney became president, “the appearance of conflicts could prompt regulators to unfurl new, largely artificial red tape.” FORTUNE

 

Benefits of Diversity in Private Equity  |  Bloomberg News reports: “Private equity firms that are diverse or minority-owned achieved higher gains than the broader industry, according to a report today by t he National Association of Investment Companies.” BLOOMBERG NEWS

 

Carlyle's Brazil Strategy Centers on Consumer Goods  |  Fernando Borges, the head of the Carlyle Group's South American team, told Bloomberg News: “Our focus will keep being companies related to consumption, rising income and the growing middle class.” BLOOMBERG NEWS

 

HEDGE FUNDS '

Elliott's Campaign Against BMC Advances as Company Explores a Sale  |  Elliott Management has made strides in its latest activist campaign against a technology company, as BMC Software has retained Bank of America Merrill Lynch to explore a potential sale of itself, a person briefed on the matter told DealBook on Monday . DealBook '

 

How Institutional Money Changed Hedge Funds  |  Money from the “kind of staid institutions that hedgies once tried to be an alternative to” now represents the majority of the hedge fund industry's capital, leading some hedge funds to scale back risk-taking, The Wall Street Journal writes. WALL STREET JOURNAL

 

Ackman Steps Up Pressure on General Growth  |  William Ackman, the hedge fund manager, reiterated on Monday his position that General Growth Properties, a Chicago-based mall operator, should consider selling itself to the Simon Property Group. DealBook '

 

Jana Partners Takes Aim at Fertilizer Company < span class="divider"> |  Speaking at a conference in New York, Barry Rosenstein of Jana Partners urged Agrium, a Canadian fertilizer company, to spin off its retail business, The Wall Street Journal reports. WALL STREET JOURNAL

 

Hedge Fund Manager Criticizes Splunk  |  Shares of Splunk, a data analytics company, fell on Monday as a hedge fund manager, Zack Buckley, made a case for betting against the stock, Reuters reports. REUTERS

 

I.P.O./OFFERINGS '

CVR Energy Looks to Raise $300 Million  |  The oil refiner CVR Energy, controlled by Carl C. Icahn, is forming a master limited partnership for certain assets after it failed to find a buyer, Bloomberg Ne ws reports. BLOOMBERG NEWS

 

Facebook Lets Advertisers Target Users  |  The Wall Street Journal reports: “To amp up the effectiveness of its ads, Facebook in recent months has begun allowing marketers to target ads at users based on the e-mail address and phone number they list on their profiles, or based on their surfing habits on other sites. It has also started selling ads that follow Facebook members beyond the confines of the social network.” WALL STREET JOURNAL

 

Workday Sets Price Range for I.P.O.  |  Workday, a provider of cloud-based applications for human resources, said on Monday that it would seek to price its initial public offering at $21 to $24 a share. DealBook '

 

Investors Take a Shine to Enterprise Technology  |  The performance of I.P.O.'s like Palo Alto Networks and ServiceNow bodes well for Workday, The Wall Street Journal's Heard on the Street column writes. WALL STREET JOURNAL

 

VENTURE CAPITAL '

A Tepid Quarter for Venture-Backed I.P.O.'s  | 
WALL STREET JOURNAL

 

Square Acquires a Design Agency  |  The mobile payments company Square has picked up the design agency 80/20, and “an office in SoHo,” according to Jack Dorsey, Square's founder. 8020

 

LEGAL/REGULATORY '

Whistle-Blower Lawyers Throw Support Behind Obama  |  Lawyers who represent whistle-blowers have made millions as the Obama administration cracks down on corporate fraud. Those who specialize in filing fraud claims with the federal government on behalf of clients with evidence of wrongdoing have raised more than $3 million for President Obama's re-election campaign, Eric Lipton writes in The New York Times. DealBook '

 

In Goldman Programmer Case, a Way Around Double Jeopardy  |  There is a significant loophole in the double jeopardy clause - known as the “dual sovereignty” doctrine - that permits different governments to pursue the same case, Peter J. Henning writes in the White Collar Watch column. DealBook '

 

Foreign Corruption Offers Big Business for Law Firms  | 
WALL STREET JOURNAL

 

More Charges for Former Madoff Employees  |  According to the expanded charges, Bernard L. Madoff's conspiracy to defraud investors started about two decades earlier than previously alleged, Reuters reports. REUTERS

 

SAC Manager Said to Be Placed on Leave  |  Michael Steinberg, whose name recently emerged as an unindicted co-conspirator in the government's insider trading case against SAC Capital, is now on paid leave, The Wall Street Journal reports, citing an unidentified person familiar with the matter. WALL STREET JOURNAL

 

When ‘Expert Advice' Can Lead to Legal Trouble  |  “The lawyers have signed off on the deal” or “the accountants are supporting our tax position” may seem like a reasonable defense, but it must accurately reflect professional advice that directors can rely on in good faith, writes Michael W. Peregrine, a partner at the law firm McDermott Will & Emery. DealBook '

 

Dynegy Emerges From Bankruptcy  |  The energy company Dynegy said on Monday that it had exited Chapter 11, with plans to list on the New York Stock Exchange on Wednesday. REUTERS

 

Volcker to Appear Before British Bank Investigators  |  Andrew Tyrie, chairman of Britain's Commission of Banking Standards, says in a column in The Financial Times that Paul A. Volcker is set to speak before the panel on Oct. 17. FINANCIAL TIMES

 

Former IndyMac Chief Settles S.E.C. Case  |  Michael Perry, a former head of the failed mortgage lender IndyMac Bancorp, is paying $80,000 to resolve accusations that he misrepresented the company's financial condition, The Wall Street Journal reports. WALL STREET JOURNAL