Wiretap Under Scrutiny

WIRETAP UNDER SCRUTINY  |  Wiretaps are the government's new best friend for going after insider trading. That was apparent in the case against Rajat K. Gupta, a former Goldman Sachs director convicted of leaking boardroom secrets, who is set to be sentenced at 2 on Wednesday afternoon.

But that technique will be challenged on Thursday. Lawyers for the convicted insider trader Raj Rajaratnam plan to argue that the government misled the judge who authorized the wiretap that ultimately landed the hedge fund manager behind bars, DealBook's Peter Lattman reports. While a ruling in Mr. Rajaratnam's favor is “considered a long shot,” Mr. Lattman writes, it would reverberate through a number of other cases and affect the government's ability to police insider trading.

Jérôme Kerviel, a former trader at Société Générale, failed to avoid prison for coverin g up rogue trading when a judge ruled on his appeal on Wednesday. Mr. Kerviel has to spend three years in prison and repay his former employer 4.9 billion euros.

 

FACEBOOK'S REVENUE BEATS FORECASTS  |  Facebook got an unusually warm reception from Wall Street on Tuesday. The social network reported third-quarter revenue that slightly exceeded expectations, even as it posted a net loss of $59 million, and its stock price rose more than 8 percent in after-hours trading. Investors were apparently reassured by the news that 14 percent of Facebook's advertising revenue came from mobile devices. “I want to dispel this myth that Facebook can't make money on mobile,” said Mark Zuckerberg, the chief executive. The Wall Street Journal's Heard on the Street column writes that, for Facebook, “mobile suddenly looks like less of a challenge and more of an opportunity - as long as the company doesn't frustrate its users.”

But the buzz around Zynga, a company closely tied to Facebook, was gloomier. Zynga's chief executive announced on Tuesday that the company was laying off about 5 percent of its work force and shutting down 13 of its games. Zynga reports earnings after the market closes on Wednesday, and expectations are low. Shares rose in after-hours trading but were down about 75 percent from the offering price last winter.

 

WAR OF THE PHONE COMPANIES  | 
AT&T's failed attempt to acquire T-Mobile USA sent a message to the industry that “unless you acted soon to get bigger, you were not likely to be in the cellphone business for long,” Steven M. Davidoff writes in the Deal Professor column. The smaller competitors of AT&T and Verizon - Sprint Nextel and T-Mobile, and Leap Wireless and Metro PCS - began scrambling to make deals. Mr. Davi doff writes:

“We've seen this story before - in the battle over RJR Nabisco that was made famous by ‘Barbarians at the Gate' and in deal-making frenzy during the dot-com boom. When faced with a changing competitive landscape, executives spend billions because they believe they have no other choice. The cost to the company - and to shareholders - can be immense. In this world, executive hubris tends to dominate as overconfidence and the need to be the biggest on the block cloud reason.”

 

ON THE AGENDA  | 
Data on new home sales in September is coming at 10 a.m. The Federal Reserve's policy-making committee releases a statement at 2:15 p.m. after a two-day meeting. Warren E. Buffett is on CNBC at 7 a.m. After his appearance on CNBC on Tuesday, Greg Smith will be on Bloomberg TV at 11 a.m. to talk about his book on Goldman Sachs. Sheila C. Bair, former chairwoma n of the Federal Deposit Insurance Corporation, is on CNBC at 3:10 p.m. AT&T, Delta and Nasdaq report earnings before the opening bell.

 

A $100 MILLION THANK-YOU TO CENTRAL PARK  |  The hedge fund manager John A. Paulson put a price on his affection for Central Park on Tuesday when he gave $100 million to the Central Park Conservancy. His fondness for the park stretches back to the days when he “hung out at the fountain as a teenager, beneath the bronze statue Angel of the Waters, which was then scrawled with graffiti and bone dry,” The New York Times writes. At a press event on Tuesday, Mr. Paulson avoided talking about his business dealings and instead mused on the park, declaring that it was “very peaceful when it snows. But you have to wear the right shoes.” DealBook's Michael J. de la Merced notes that Mr. Paulson is not the first big-name financier to be entrance d by the park's charms.

 

 

 

Mergers & Acquisitions '

KDDI and Sumitomo in Joint Bid for Japanese Cable Firm  |  The Japanese companies KDDI Corporation and Sumitomo Corporation have offered to pay $2.7 billion for the piece of a domestic cable operator, Jupiter Telecommunications, they do not already own. DealBook '

 

Ally's Sale of Canadian Arm Aims to Repay Bailout  |  Ally Financial took its biggest step yet to slim down while raising money to repay its $17.2 billion taxpayer-financed bailout after it agreed to sell its Canadian operations to the Royal Bank of Canada for about $4.1 billion. DealBook '

 

Target to Sell $5.9 Billion Credit Card Portfolio to TD Bank  |  The Target Corporation said on Tuesday that it planned to sell a $5.9 billion portfolio of credit card receivables to TD Bank. DealBook '

 

Europe Delays Vote on Corporate Quota for Women  |  A European Union official delayed action on a plan that would have required public companies to fill at least 40 percent of board seats with women, The Financial Times reports.
FINANCIAL TIMES

 

Sirius Chief to Step Down  |  The chief executive of Sirius XM Radio, Mel Karmazin, plans to step down on Feb. 1, as Liberty Media moves closer to a takeover of Sirius, the Me dia Decoder blog reports. NEW YORK TIMES MEDIA DECODER

 

Moody's Puts TNK-BP and Rosneft on Review for Downgrade  | 
DOW JONES

 

Germany's Plan for Aerospace Giant  |  Reuters reports: “Germany plans to quickly purchase a stake in EADS to preserve its influence over the aerospace group, fearing that Daimler could unload shares it holds in the company on the open market, a document obtained by Reuters showed.” REUTERS

 

INVESTMENT BANKING '

Wall Street Ponders a Romney Presidency  |  Some speakers at the annual meeting of the Securi ties Industry and Financial Markets Association, Wall Street's chief lobbying group, were eager to feed hopes that Mitt Romney would win the election. DealBook '

 

Exchanges Look to Alter Trading Tools  |  NYSE Euronext and Nasdaq are facing criticism that certain tools could unfairly benefit high-speed traders or pose risks to the market, The Wall Street Journal writes. WALL STREET JOURNAL

 

Gloom Descends on Corporate America  |  Stocks fell on Tuesday as some big companies reported disappointing results. NEW YORK TIMES

 

UBS to Cut More Investment Banking Jobs  |  The Wall Street Journ al reports that a new round of cuts at the Swiss bank “could run into the thousands.”
WALL STREET JOURNAL

 

Asian Investment Banks Quietly Shed Clients  | 
REUTERS

 

Wells Fargo Authorizes More Share Buybacks  | 
REUTERS

 

PRIVATE EQUITY '

Providence Equity's Richardson to Assume Senior Adviser Role  |  Julie G. Richardson, a managing director at Providence Equity Partners and one of the most prominent female private equity executives, has reduced her responsibilities by becoming a senior adviser. DealBook '

 

Blackstone Said to Plan to Buy Stakes in Fund Managers  |  The private equity firm Blackstone Group is getting ready to start a new fund to buy equity stakes in hedge fund managers from other firms that hold them, Reuters reports, citing an unidentified person familiar with the plans. REUTERS

 

Buyout Firms Circle Dental Services Company  |  K.K.R., Apax Partners and Madison Dearborn Partners are bidding for Heartland Dental Care, which could be valued at about $1.3 billion, Reuters reports, citing unidentified people familiar with the matter. REUTERS

 

Heelys Is Sold to Private Equity Firm  |  Ever green Group Ventures is buying the operating assets of Heelys, the company that makes children's shoes with wheels, for $13.9 million in cash, Reuters reports. Heelys is then being liquidated. REUTERS

 

HEDGE FUNDS '

The Hedge Fund All-Stars  |  Appaloosa Management, Lone Pine Capital, Pine River Capital Management, Tilden Park and the Barnegat Fund are among the small group of hedge funds that have defied the industry's broad slump this year, The Wall Street Journal writes. WALL STREET JOURNAL

 

Judge Approves Bonuses for LightSquared Executives  | 
WALL STREET JOURNAL

 

Former Citadel Manager to Start New Fund  | 
BLOOMBERG NEWS

 

I.P.O./OFFERINGS '

Netflix Results Fall Short of Expectations  |  The company said the number of subscribers to its streaming service reached 25.1 million in the third quarter, up from the quarter a year earlier but weaker than expected. NEW YORK TIMES MEDIA DECODER

 

Manchester United Not for Sale  |  The English soccer club Manchester United, which went public on the New York Stock Exchange in August, is not for sale even though overtures have been made, said the vice chairman of the club, Ed Woodward, according to The Guardian. GUARDIAN

 

VENTURE CAPITAL '

Yelp Buys a European Competitor  |  Yelp is paying $50 million for Qype, a venture-capital-backed company that was seen as its biggest rival in Europe. TECHCRUNCH  |  ALLTHINGSD

 

Debit Card Company Attracts $3.2 Million  |  PEX Card, a company that provides debit cards to businesses, said on Tuesday that it had raised a round of financing led by iNovia Capital and Bluff Point Associates. NEWS RELEASE

 

LEGAL/REGULATORY '

One Year After MF Global, New Protections for Customer M oney  |  The Commodity Futures Trading Commission will propose protections aimed at closing loopholes, bolstering internal controls and requiring firms to provide more disclosures. DealBook '

 

Lawyers for Corzine Seek Dismissal of MF Global Fraud Suit  | 
WALL STREET JOURNAL

 

Royal Bank of Scotland Settles Nevada Case Over Mortgages  |  The New York Times reports: “The Royal Bank of Scotland agreed to pay $42.5 million late Tuesday in a settlement with the Nevada attorney general that ends an 18-month investigation into the deep ties between the bank and two mortgage lenders during the housing boom.” NEW YORK TIMES

 

Debt Collectors to Be Federally Supervised  |  The Consumer Financial Protection Bureau begins overseeing debt collection agencies on Jan. 2, The New York Times reports. NEW YORK TIMES

 

Google's Earnings Incident Shines Light on a Stealth Industry  |  Since earnings information is crucial these days, the accidental release of Google's earnings report last week by an outside filing firm raises questions about whether more companies should move the filings process in-house. DealBook '

 

S.E.C. Said to Investigate Pandit's Departure From Citigroup  | 
FOX BUSINESS

 

< p>Should the Fed Buy Municipal Bonds?  |  Three professors at Stanford Law School write in an opinion piece in The New York Times that “maybe it's time for a QE-Muni.” NEW YORK TIMES