Former SAC Trader to Appear in Court

Mathew Martoma, the latest alumnus of SAC Capital Advisors to be accused of breaking the law, is set to appear in Federal District Court in Manhattan on Monday morning. The insider trading case against him “represents a watershed moment” in the government's investigation of SAC Capital, as it links the hedge fund's founder, Steven A. Cohen, to trading activity the government says was illegal, DealBook's Peter Lattman reports.

The case against Mr. Martoma, according to former employees of the hedge fund, “highlighted SAC's high-stress, pressure-packed culture,” where employees tried to gather as much information as possible about publicly traded companies. Mr. Martoma, “brainy and unassuming,” with a Stanford business degree, was hired for a new research unit that would help the hedge fund gain an edge.

Mr. Lattman writes: “Mr. Martoma is charged with corrupting a doctor who had access to secret drug data, then using that information to gain profits and avert losses totaling $276 million. Mr. Martoma closely collaborated with Mr. Cohen on the questionable trades, prosecutors contend.”

 

IN CHINA, LOBBYING EFFORT LED TO A WINDFALL  |  The family of China's prime minister, Wen Jiabao, grew wealthy during his leadership, but the greatest source of wealth came after Ping An Insurance, a financial services giant, mounted a successful lobbying effort, David Barboza reports in The New York Times. Back in 1999, when the insurer was struggling, its chairman made direct appeals to Mr. Wen that it be exempted from a rule that would require it to break up. After the insurer was granted a waiver, relatives of Mr. Wen made an investment in Ping An through another company, Mr. Barboza reports. “By June 2004, the shares held by the Wen relatives had already quadrupled in value, even be fore the company was listed on the Hong Kong Stock Exchange.” By 2007, the initial $65 million investment had grown to $3.7 billion.

 

UBS FINED $47.5 MILLION  |  UBS's $2.3 billion trading loss has led to a fine of £29.7 million on the bank. The penalty was among the largest ever issued by Britain's Financial Services Authority, DealBook's Mark Scott reports. The regulator found that UBS failed to prevent the loss by a former trader, Kweku M. Adoboli, who received a seven-year jail sentence last week.

 

QATAR FUND SELLS BARCLAYS WARRANTS  |  DealBook's Mark Scott reports: “The sovereign wealth fund Qatar Holding said on Monday that it had sold its remaining warrants in Barclays in a deal that has led to a $1.2 billion share sale in the British bank. Qatar Holding had ac quired the warrants, which are financial instruments that can be exchanged for stock, during the financial crisis. Barclays raised £7 billion ($10.5 billion) in 2008 from new investors.”

Some big investors of Barclays are pushing for a major restructuring, according to The Financial Times. In recent meetings, “at least three of the 30 biggest shareholders” have told executives including Antony P. Jenkins, the chief, that Barclays should consider following the lead of UBS, which announced plans to scale back its fixed-income business. Popular proposals include closing the equities business or spinning off the investment bank, according to the newspaper, which quotes one unidentified bank insider as saying that the “20 percent pop in the UBS share price has got investors' juices flowing.”

 

BAXTER INTERNATIONAL LOOKS TO BUY GAMBRO  |  Baxter International is in talks to buy Gambro of Sweden for about $4 billion, with a possible deal at least two weeks away, people briefed on the matter told DealBook on Friday. “A deal for Gambro would help bolster Baxter's lineup of dialysis products. The Swedish company focuses on equipment that is used in hospitals and other medical facilities.” And a takeover would be the biggest deal ever for Baxter, which is based in Deerfield, Ill.

 

ON THE AGENDA  |  In Europe, finance ministers are meeting to discuss releasing the latest package of aid to Greece. The Dallas Fed releases its survey of manufacturers for November at 10:30 a.m. Peter Fisher, BlackRock's global head of fixed income, is on CNBC at 7 p.m.

 

BUFFETT'S PLEA FOR HIGHER TAXES  |  Writing in an Op-Ed essay in The New York Times, Warr en E. Buffett challenges the idea that higher tax rates discourage investment. In the days when tax rates were higher, he says, “never did anyone mention taxes as a reason to forgo an investment opportunity that I offered.” He continues: “So let's forget about the rich and ultrarich going on strike and stuffing their ample funds under their mattresses if - gasp - capital gains rates and ordinary income rates are increased. The ultrarich, including me, will forever pursue investment opportunities.”

Mr. Buffett offers policy proposals: “I support President Obama's proposal to eliminate the Bush tax cuts for high-income taxpayers. However, I prefer a cutoff point somewhat above $250,000 - maybe $500,000 or so. Additionally, we need Congress, right now, to enact a minimum tax on high incomes. I would suggest 30 percent of taxable income between $1 million and $10 million, and 35 percent on amounts above that.”

 

 

 

Mergers & Acquisitions '

Knight Capital Said to Consider Selling Unit  |  The Knight Capital Group “is in talks about possibly selling” its market-making unit, its most profitable business, The Wall Street Journal reports, citing unidentified people briefed on the talks. WALL STREET JOURNAL

 

Flowers Foods Signals a Possible Bid for Hostess Assets  |  Flowers Foods has not said it intends to acquire assets of Hostess Brands, but the company “said last week that it had renegotiated lending terms that could allow it to tap additional cash, a signal that it could be gearing up to make a bid,” The Wall Street Journal writes. WALL STREET JOURNAL

< /div>

 

L'Oreal Said to Be Buying Urban Decay Cosmetics  |  According to The Wall Street Journal, L'Oréal is paying “between $300 million and $400 million” for Urban Decay Cosmetics, which is owned by the private equity firm Castanea Partners. WALL STREET JOURNAL

 

K.K.R. to Buy Alliant Insurance From Blackstone  |  The deal will transfer ownership of Alliant, an insurance brokerage, for the second time in five years. DealBook '

 

Rival Bid for Stake in Aston Martin  |  Reuters reports: “Aston Martin stands at the center of an international takeover battle after Indian motors group Mahindra trumped an Italian bid for half o f the British luxury car maker.” REUTERS

 

GlaxoSmithKline to Raise Stake in Indian Unit  |  GlaxoSmithKline plans to raise its stake in its Indian consumer products unit to up to 75 percent, from 43.2 percent, in a roughly $940 million deal, Reuters reports. REUTERS

 

INVESTMENT BANKING '

Goldman Sachs Sits Out Business in Southern Europe  |  Goldman Sachs “turned down roles in offerings by banks in Spain and Italy this year, the only top U.S. securities firm not to take part in the fund-raisings by southern European lenders as the region's debt crisis stretches to a fourth year,” Bloomberg News reports. BLOOMBERG NEWS

 

BlackRock Prepares to Enter Infrastructure Debt Market  | 
FINANCIAL TIMES

 

Banks Pay Up for Lending Talent  |  Commercial bankers in towns and cities across the country are commanding pay raises, as “competition to make loans to healthy small and midsize companies is fierce,” The Wall Street Journal reports. WALL STREET JOURNAL

 

PRIVATE EQUITY '

Private Equity Managers Prepare for Higher Taxes  |  With the prospect of higher taxes looming, private equity managers are “accelerating gains and shifting what they transfer to trusts,” Bloomberg News reports. BLOOMBERG NEWS

 

Buyout Firms Find Bargains in Ireland  | 
FINANCIAL TIMES

 

HEDGE FUNDS '

Argentina to Appeal Order That It Pay Bondholders  |  The Financial Times reports: “With a December 15 deadline looming, Argentina will appeal on Monday for U.S. judges to suspend an order for it to pay $1.3 billion to holders of defaulted debt.” FINANCIAL TIMES

 

New Platforms Allow Investors to Trade Hedge Fund Stakes  |  Brokers like Tullett Prebon and Wake2o are helping investors circumvent hedge fund lockup periods, The Financial Times reports. FINANCIAL TIMES

 

I.P.O./OFFERINGS '

At Groupon, a ‘Hedge Fund Party'  |  Groupon's shares rose last week after the disclosure that Tiger Global Management had bought a significant stake. For the daily deal company, “the best medicine right now seems to be a little confidence from a rich guy,” Kara Swisher writes in AllThingsD. ALLTHINGSD

 

I.P.O. Calendar for December Is Looking Empty  |  With no I.P.O.'s scheduled in the United States in the next two weeks, it looks like “it's going to be well into December before we see the next deal,” Scott Sweet, senior managing partner at IPO Boutique, told The Wall Street Journal. WALL STREET JOURNA L

 

VENTURE CAPITAL '

India's ‘Sand Hill Road' for Health Care  |  MedTech Row in New Delhi has become a hub for entrepreneurs and venture capitalists “focused on developing technology to provide better health care to poor people and those with limited access to medical services, while, for the most part, making a profit at the same time,” the India Ink blog reports. NEW YORK TIMES INDIA INK

 

An E-Commerce Entrepreneur Harnesses Star Power  |  Brian Lee, a lawyer turned entrepreneur, “uses celebrities' social media connections with fans, coupled with recent innovations in e-commerce, to sell things in ways that were not possible just a few years ago,” The New York Times reports. NEW YORK TIMES

 

Lab at M.I.T. Spawns Companies by the Dozens  |  Since the 1980s, the Langer Lab at the Massachusetts Institute of Technology “has spun out companies whose products treat cancer, diabetes, heart disease and schizophrenia, among other diseases, and even thicken hair,” The New York Times reports. NEW YORK TIMES

 

G.E. Looks to Heavy Industry for Innovation  |  General Electric is making a “big bet on what it calls the ‘industrial Internet,' bringing digital intelligence to the physical world of industry as never before,” The New York Times reports. NEW YORK TIMES

 

LEGAL/REGULATORY '

Autonomy's Founder Challenges H.P.'s Claims  |  Mike Lynch has found himself having to defend Autonomy, the company he founded and sold to Hewlett-Packard, against H.P.'s claims of accounting improprieties. The New York Times writes that H.P. “has attacked a man who may be Britain's most notable and contentious technology executive, and one of Europe's biggest self-made successes.” NEW YORK TIMES

 

ING Repays $1.45 Billion of Government Bailout  |  The ING Group said on Monday that it had repaid 1.13 billion euros ($1.45 billion) to the Dutch government as part of its effort to return a bailout worth $12.7 billion, plus interest, that the firm received during the financial crisis. DealBook '

 

The Case for Warren on the Senate Banking Committee  |  The New York Times editorial board says it “should be a no-brainer” to send Elizabeth Warren to the Senate banking committee. NEW YORK TIMES

 

I.R.S. Raises Concerns With a Tax Deal  |  The Internal Revenue Service issued a skeptical opinion about a tax deal by a company that, though it was not identified by name, was clearly Fairfax Financial Holdings of Toronto, Gretchen Morgenson writes in The New York Times. NEW YORK TIMES

 

The President's Internal Debate  |  N. Gregory Mankiw, a professor of economics at Harvard who advised Mitt Romney in the presidential campaign, imagines two sides of President Obama deb ating over taxes and “struggling for control of the president's soul.” NEW YORK TIMES