CERBERUS TO SELL STAKE IN GUNMAKER  | The private equity firm Cerberus Capital Management said on Tuesday that it would immediately sell its controlling stake in the Freedom Group, the company that makes the rifle that was used to kill 20 schoolchildren in Newtown, Conn., on Friday. “It is apparent that the Sandy Hook tragedy was a watershed event that has raised the national debate on gun control to an unprecedented level,†Cerberus said in a statement.
The move follows pressure from the California State Teachers' Retirement System, which said on Monday that it was reviewing its investment in Cerberus's funds. Cerberus said on Tuesday that the decision to sell its stake “allows us to meet our obligations to the investors whose interests we are entrusted to protect without being drawn into the national debate that is more properly pursued by those with the formal charter and public responsibility to do so.†Cerberus plans to retain a financial adviser to sell its stake and then return the capital to investors.
A number of big gun companies are backed by Wall Street firms, which have a fiduciary duty to maximize investor returns, Andrew Ross Sorkin wrote in the DealBook column before Cerberus's announcement. “Perhaps it should not be a surprise, but Wall Street will hardly take a leadership position in the conversation about gun control.†By selling its stake in Freedom, Cerberus may be able to sidestep the gun control debate and avoid unw anted publicity.
Eliot Spitzer, the former governor of New York and the former New York State attorney general, also put pressure on Cerberus on Monday. “Every student at a university should ask the university if it is invested in Cerberus,†Mr. Spitzer wrote in Slate. “Every member of a union should ask their pension-fund managers if they are invested. Information is the key first step. From there, action will quickly follow.â€
MORGAN STANLEY FINED OVER FACEBOOK I.P.O. Â |Â Morgan Stanley is paying a $5 million fine for its role in Facebook's market debut, in the first major regulatory action related to the social network's I.P.O. The firm was accused by Massachusetts's top financial authority of improperly influencing the offering .
The regulator's claims center on a senior Morgan Stanley banker, Michael Grimes, who isn't named in the consent order, DealBook's Susanne Craig and Ben Protess report. William F. Galvin, the secretary of the commonwealth of Massachusetts, asserts that the senior banker coached Facebook on how to share information with stock analysts, potentially violating the regulatory settlement on stock research that Wall Street firms signed in 2003. Mr. Galvin says those actions hurt ordinary investors who didn't have access to the same research. “The broader message here is, we are going to use any means possible to enforce the strict code in place about giving out information,†Mr. Galvin told DealBook.
The Morgan Stanley banker was portrayed by Mr. Galvin was being personally involved in crucial elements of Facebook's communication with inves tors. When a Facebook executive called analysts after the company filed an amended prospectus that detailed a slowdown in revenue, “Morgan Stanley's senior investment banker did everything but make the phone calls himself,†the regulator said. “He not only rehearsed with Facebook's treasurer who placed the calls to the research analysts, but he also drafted the majority of the script Facebook's treasurer utilized.†Morgan Stanley neither admitted nor denied the accusations, and Mr. Grimes has not personally been accused of wrongdoing.
2 MORE CONVICTIONS IN INSIDER TRADING CRACKDOWN Â |Â Two former hedge fund managers, Anthony Chiasson, a co-founder of Level Global Investors, and Todd Newman, a former portfolio manager at Diamondback Capital Management, were found guilty on Monday of fraud and conspiracy, the latest convictions in the government's campaign to root out insider trading. Juries in Federal District Court in Manhattan have now convicted all 11 insider-trading defendants who have taken their cases to trial since 2009. Of the 72 people charged with insider trading crimes, the United States attorney's office in Manhattan has secured 71 guilty pleas or convictions.
Preet Bharara, the United States attorney in Manhattan, said Mr. Newman and Mr. Chiasson “join the ranks of high-level investment fund managers who are being made to answer for their extraordinarily bad risk-reward analysis about what is right and what is wrong.†The firms where they worked were founded by former employees of SAC Capital Advisors, the hedge fund whose boss, Steven A. Cohen, has become a focus of the government's inquiry. The two defendants sat stone-faced as the jury foreman announced the guilty verdict on Monday. Their sentenci ng is set for April 19.
FOR BANKS, A SHIELD FROM HOMEOWNER LAWSUITS  | DealBook's Peter Eavis writes: “As regulators complete new mortgage rules, banks are about to get a significant advantage: protection against homeowner lawsuits. The rules are meant to help bolster the housing market. By shielding banks from potential litigation, policy makers contend that the industry will have a powerful incentive to make higher quality home loans.†But the fear is that borrowers are losing an important safeguard. “A lot of bad things are done in the name of expanding access to credit, as we found out,†said Sheila C. Bair, former chairwoman of the Federal Deposit Insurance Corporation and now a senior adviser to the Pew Charitable Trusts.
ON THE AGENDA  | A Senate Banking subcommittee holds a hearing on computerized trading at 9:30 a.m., asking, “What should the rules of the road be?†The Jefferies Group reports earnings before the market opens, and Oracle announces results this evening. John Mack, Morgan Stanley's former leader, is on CNBC at 8 a.m. Jeffrey Gundlach of Doubleline Capital is on Bloomberg TV at 11 a.m. The billionaire financier Kenneth Langone is on CNBC at at 4:30 p.m.
WAL-MART'S AGGRESSIVE BRIBERY IN MEXICO  | Wal-Mart shut down an internal investigation into bribery at its Mexican subsidiary, but The New York Times “has now picked up where Wal-Mart's internal investigation was cu t off.†In the latest installment in a series, The Times “reveals that Wal-Mart de Mexico was not the reluctant victim of a corrupt culture that insisted on bribes as the cost of doing business. Nor did it pay bribes merely to speed up routine approvals. Rather, Wal-Mart de Mexico was an aggressive and creative corrupter, offering large payoffs to get what the law otherwise prohibited. It used bribes to subvert democratic governance - public votes, open debates, transparent procedures. It used bribes to circumvent regulatory safeguards that protect Mexican citizens from unsafe construction. It used bribes to outflank rivals.â€
Nielsen to Buy Arbitron for $1.26 Billion  | Nielsen Holdings has reached a deal to acquire Arbitron, the radio ratings company, for $1.26 billion.
DealBook '
G.E. Said to Be Close to Buying Avio for $4 Billion  | G.E.'s deal to buy the Italian aerospace company Avio from its owner, the British private equity firm Cinven, for $4 billion is expected to come together this week.
DealBook '
American Railcar Offers to Buy Rival for $20 a Share  | American Railcar Industries, which is controlled by Carl C. Icahn, mad e an offer that valued its rival Greenbrier at about $543 million, Reuters reports.
REUTERS
A.I.G. Raises $6.45 Billion From Sale of A.I.A. Stake  | A.I.G. priced shares in the offering in the top half of its expected range, Bloomberg News reports.
BLOOMBERG NEWS
Russian Mining Executive Receives $100 Million Payout  | Vladimir Strzhalkovsky, a mining executive and former K.G.B. agent, received $100 million for stepping down as chief executive of the Norilsk Nickel mining company, the largest golden para chute payout in Russian history, The New York Times reports.
NEW YORK TIMES
U.P.S. Said to Offer More Concessions for TNT Deal  |Â
REUTERS
Slim's Troubled Bets on European Telecoms  |Â
BLOOMBERG NEWS
Joh. A. Benckiser to Buy Caribou Coffee for $340 Million  | Benckiser agreed on Monday to buy the Caribou Coffee Company for about $340 million, only five months ago after announcing a nearly $1 billion deal for Peet's Coffee & Tea.
DealBook '
Still No Decision on Deal for Knight Capital  | The board of the Knight Capital Group “ended a day-long meeting Monday without a decision on the company's future, amid expectations that a bidding war between the brokerage's two suitors could still escalate, according to people involved in the talks,†The Wall Street Journal reports.
WALL STREET JOURNAL
Pressure Mounts on Deutsche Bank's Co-C.E.O.  | The Wall Street Journal reports that Jürgen Fitschen, a co-chief executive of Deutsche Bank, “already the subject of a German tax-fraud probe, has come under further pressure after political leaders accused him of trying to influence the investigation by calling a senior German politician to protest a police raid on the bank's headquarters last week.â€
WALL STREET JOURNAL
Treasury Said to Aim to Sell Bulk of TARP Holdings in 2013 Â |Â
WALL STREET JOURNAL
Credit Suisse Said to Be Reducing Investment Bank in Dubai  | Credit Suisse is cutting positions in Dubai and shifting the regional headquarters of its investment bank to Qatar, Bloomberg News reports, citing an unidentified person familiar with the matter.
BLOOMBERG NEWS
Whalen, Outspoken Bank Analyst, Takes a New Role  | Christopher Whalen, most recently of Tangent Capital Partners, is set to lead the investment banking business of Carrington Investment Services.
NEWS RELEASE
Private Equity Firms to Seek Dismissal of Bid-Rigging Lawsuit  | Bain Capital, Goldman Sachs, the Blackstone Group, the Carlyle Group and others are scheduled to “defend what they call legitimate private-equity practices against investor claims that buyout firms and their bankers colluded to rig bids on takeovers,†Bloomberg News reports.
BLOOMBERG NEWS
Investment Firms Buy Delinquent Mortgages at a Discou nt  | Investors including Selene Investment Partners and a firm backed by the Blackstone Group bought delinquent home loans being sold by the Federal Housing Administration, paying cents on the dollar, Bloomberg News reports.
BLOOMBERG NEWS
Elliott Bids $2.3 Billion for Compuware  | On Monday, the hedge fund offered to buy Compuware, a business software maker, for about $2.3 billion, repeating a tactic that prompted the sale of Novell in late 2010.
DealBook '
Vitro Looks to Recover $1.59 Billion From Hedge Funds  | Reuters reports: “Mexican glass maker Vitro said on Monday it had begun a legal process to recover up to $1.59 billion in damages from hedge funds who sued the company in Mexico but lost on appeal.â€
REUTERS
How Instagram Plans to Make Money  | An updated version of Instagram's privacy policy and terms of service offers clues as to how Facebook will use the photo-sharing company to deploy advertisements, the Bits blog writes.
NEW YORK TIMES BITS
I.P.O. Is an Option for Maker of Greek Yogurt  | Reuters reports: “Chobani Inc, the private firm behind the top-selling Greek-style yogurt in the United States, does not want to sell itself to a large company, but it has not ruled out an eventual public offering, or new yogurts with herb flavors.â€
REUTERS
Twitter Partners With Nielson to Measure Discussion Online  | The two companies are creating the “Nielsen Twitter TV Rating,†to measure the amount of online buzz created by TV shows.
BLOOMBERG NEWS
Apple Said to Be in Talks With Foursquare Over Data Sharing  | Apple is looking to integrate data from Foursquare into its maps app, The Wall Street Journal reports, citing unidentified people familiar with the talks.
WALL STREET JOURNAL
Thiel Bets on Harnessing Tornado Power  |Â
GIGAOM
Approaching a Deal in Fiscal Talks  | The New York Times reports: “President Obama delivered to Speaker John A. Boehner a new offer on Monday to resolve the pending fiscal crisis, a deal that would raise revenues by $1.2 trillion over the next decade but keep in place the Bush-era tax rates for any household with earnings below $400,000.â€
NEW YORK TIMES
In a Rare Move, a Cravath Partner Leaves for Another Firm  | The law firm Kirkland & Ellis announced on Monday that Sarkis Jebejian had left Cravath, Swaine & Moore to join its New York office.
DealBook '
Changing China's Growth Model  | After the Central Economic Work Conference, some argue that China is sending a strong signal on economic reforms, but not everyone is convinced, Bill Bishop writes in the China Insider column.
DealBook '
Voluntary Disclosure on Corporate Political Spending Is Not Enough  | Mandatory rules are necessary to address gaps and loopholes that exist in vol untary disclosure policies, Lucian A. Bebchuk, a Harvard Law School professor, and Robert Jackson Jr., a Columbia Law School professor, write.
DealBook '
Companies Spend Their Money on Buybacks  | Flush with cash, American companies “bought back $274 billion more shares than they issued in the year through September, according to Ed Yardeni, president of investment advisory firm Yardeni Research,†The Wall Street Journal reports.
WALL STREET JOURNAL
