The Latest Headache at Barclays

THE LATEST HEADACHE AT BARCLAYS  |  The legal battles just won't go away at the British bank Barclays. Just months after reaching a settlement in a case that involved rigging a key benchmark interest rate, the bank now faces accusations that it manipulated California energy markets. Federal regulators are seeking $469.9 million in penalties from the bank, and $18 million from four former traders.

Regulators, relying on e-mail evidence, claim that four traders at Barclays manipulated energy prices to profit on swap contracts. One trader said a particular strategy was “fun,” while another said he was “trying to drive price” in his swap bet, according to messages cited by Reuters. Barclays, which has 30 days to officially respond to the regulators, said it disagreed with the claims and that its “trading was legitimate and in compliance with applicable law .” The bank disclosed on Wednesday that it also faced an investigation into its capital-raising efforts during the financial crisis.

Another British bank, the Lloyds Banking Group, is also dealing with legal woes. Lloyds said on Thursday that it had set aside an additional $1.6 billion for clients who were sold payment protection insurance inappropriately. That provision helped push the bank to a net loss in the third quarter.

 

JPMORGAN TAKES ACTION OVER LOSS  |  JPMorgan Chase is going after the boss of the trader known as the London Whale. The bank is suing Javier Martin-Artajo, a former executive who supervised Bruno Iksil, the trader who built up the position that resulted in a $6.2 billion loss. While the details of the claims were not disclosed, an internal investigation conducted by JPMorgan found that some traders in Mr. Martin-Artajo's division might have imp roperly valued their positions. “Some phone recordings suggest that Mr. Martin-Artajo encouraged Mr. Iksil to value troubled positions favorably, according to people with knowledge of the investigation,” Jessica Silver-Greenberg writes in The New York Times.

 

HAUNTED BY MF GLOBAL  |  A year after MF Global collapsed, federal authorities “have all but cleared” executives of the brokerage firm of criminal wrongdoing, DealBook's Ben Protess reports. “The government has yet to usher in a wider overhaul of futures trading rules, save for certain piecemeal policy changes. And the profit-making exchanges that rely on brokerage firms for business still police the futures industry, presenting potential conflicts of interest.” The debacle may be fading from Wall Street's memory, but it has left customers shaken. “The general tenor is fear,” said James L. Koutoulas, chief executive of a hedge fund client of MF Global and the leader of a group of customers trying to get their money back. With customers still owed millions of dollars, Mr. Protess writes, some traders are simply sitting on the sidelines.

 

ON THE AGENDA  |  Restoration Hardware is expected to price its I.P.O. on Thursday evening and is looking to raise as much as $123.9 million. ExxonMobil reports earnings before the opening bell, while A.I.G. and Starbucks announce results after the market closes. The ADP employment report comes out at 8:30 a.m., and the ISM manufacturing survey for October and construction spending for September are both out at 10 a.m. Get ready for a politically significant unemployment report on Friday. Mary Meeker of Kleiner Perkins Caufield & Byers is on CNBC at 7:40 a.m. on Thursday. Robert H. Benmosche, the chief executive of A.I.G., is on CNBC at 4:30 p.m . The Women's Alternative Investment Summit, which features speakers from private equity, venture capital and other industries, is scheduled to start Thursday at the Pierre hotel in New York.

 

A MOSTLY SMOOTH TRADING DAY  |  Sometimes no news is good news. The major American exchanges had a largely uneventful day of trading on Wednesday after being shut down for two days because of Hurricane Sandy. “But getting to the relative calm of Wednesday's open took significant work,” DealBook's Michael J. de la Merced writes. There was one notable hitch. The Knight Capital Group, which had a disastrous trading debacle in August, “suffered a power disruption at its headquarters in Jersey City on Wednesday and told clients to route their orders elsewhere.”

 

 

 

Mergers & Acquisitions '

Netflix Shares Surge as Icahn Takes Stake  |  Carl C. Icahn announced on Wednesday that his hedge fund, Icahn Capital, had acquired a stake of about 10 percent in Netflix. DealBook '

 

Micron Moves Closer to Taking Over Elpida  |  A Tokyo court approved the agreement by Micron Technology to acquire the chip maker Elpida, Reuters reports. REUTERS

 

Glencore Said to Offer to End Zinc Deal  |  Glencore offered to end an agreement with Nyrstar as a concession to help it secure approval for its takeover of Xstrata, Reuters reports, citing an unidentified person familiar with the matter. REUTERS

 

Potash Confirms Deal Talks with Israel Chemicals  |  The Potash Corporation of Saskatchewan confirmed on Wednesday that it had approached the government of Israel about increasing its stake in Israel Chemicals, another fertilizer maker. DealBook '

 

INVESTMENT BANKING '

Wells Fargo Builds Up Investment Bank  |  The bank is expanding in a business where rivals are cutting back, Reuters writes. REUTERS

 

Will the Top Talent Abandon Banking?  |  The best and brightest students are still attracted to the banking industry, but “with every new retrenchment, pe rceptions are changing,” Gillian Tett writes in a column in The Financial Times. FINANCIAL TIMES

 

Credit Suisse Raises $420 Million for Fund Focused on Mexico  | 
BLOOMBERG NEWS

 

Morgan Stanley Hires Financial Advisers From Rivals  |  Two brokers joined Morgan Stanley Wealth Management from Wells Fargo Advisors this month, and one joined from Raymond James, The Wall Street Journal reports. WALL STREET JOURNAL

 

Morgan Stanley Adviser Joins Wedbush Securities  | 
WALL STREET JOURNAL

 

PRIVATE EQUITY '

New Mountain Capital Said to Approach Deal for JDA Software  |  JDA Software could be valued at about $1.9 billion, The Wall Street Journal reports. WALL STREET JOURNAL

 

Chinese Fund Said to Buy Stake in Heathrow Airport  |  A subsidiary of the China Investment Corporation is taking a 10 percent stake in the British airport, according to Chinese state media. REUTERS

 

3 Buyout Firms Said to Vie for Intertrust  |  The Blackstone Group, Cinven and Pamplona Capital Management are “preparing to submit second round bids” for the Intertrust Group, a Dutch company that provides trust and corporate services, Reuter s reports. REUTERS

 

German Broadcaster Said to Choose Bidders for Unit  |  Providence Equity Partners, Nordic Capital and Discovery Communications are advancing to the next round of bidding for the Scandinavian businesses of ProSieben, Bloomberg News reports. BLOOMBERG NEWS

 

HEDGE FUNDS '

Bets on Lehman Brothers Claims Are Expected to Pay Off  |  Hedge funds that have been buying Lehman Brothers bankruptcy claims are now expected to be “paid at least the full amount of their claims, and possibly more,” FINalternatives reports. FINALTERNATIVES

 

Falklands Oil Explorers Att ract Hedge Funds  |  Lansdowne Partners, Odey Asset Management and Blackfish Capital are betting that oil exploration companies operating off the Falklands “will ignore the threats made by Argentina to disrupt the activity,” Reuters reports. REUTERS

 

I.P.O./OFFERINGS '

Facebook Stock Falls After Employees Can Sell  |  The company's stock fell 3.8 percent on Wednesday, the first trading day after a lockup expired. NEW YORK TIMES BITS

 

Global Logistic Looks to Raise $2.6 Billion in Japan Offering  |  Global Logistic Properties is planning to sell shares in its Japanese warehouses, Bloomberg News reports. BLOOMBERG NEWS

 

VENTURE CAPITAL '

New York Start-Ups Share Offices After Storm  |  As large parts of Manhattan are still without power, some entrepreneurs and engineers are “camping out in one another's apartments and offices in an attempt to still get a day's work done,” the Bits blog writes. NEW YORK TIMES BITS

 

Corporations Turn to Venture Capital Investing  |  Google isn't the only big company that is building up its venture capital arm. According to the Boston Consulting Group, venture capital investing “appears well on its way to establishing a firm foothold in the corporate world,” The Wall Street Journal reports. WALL STREET JOURNAL

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LEGAL/REGULATORY '

Senior Justice Department Lawyer Returns to Jenner & Block  |  Thomas J. Perrelli, a former United States associate attorney general, is rejoining the law firm Jenner & Block, the latest in a string of senior Justice Department lawyers to leave government for private practice. DealBook '

 

After Bailout, Giants Allowed to Dominate the Mortgage Business  |  Wells Fargo and JPMorgan Chase gobbled up small and weak competitors in the mortgage business, and now their biggest threats, Citigroup and Bank of America, are pulling out, Jesse Eisinger writes in his column, The Trade. The Trade '

 

The Winners and Losers Under Romney's Tax Plan  |  Those who enjoy lower rates but do not take a lot of deductions would benefit under the Romney plan, as their tax burden would shift onto heavy users of deductions, writes Victor Fleischer in the Standard Deduction column. DealBook '

 

Short-Selling Rules in Europe Cause Confusion  |  The Financial Times reports: “Late and complex guidance from regulators has left the markets unprepared and confused ahead of today's imposition of the first pan-E.U. rules on short-selling, according to brokers, traders and investors.” FINANCIAL TIMES