In choosing Mary Jo White, a former prosecutor, to lead the Securities and Exchange Commission, President Obama seemed to signal a resolve to get tough on Wall Street. But the other section of Ms. White’s résumé â€" her years representing Wall Street names as a rainmaking partner at Debevoise & Plimpton â€" could prove troublesome. “How conflicted is Ms. White Let’s count the ways,†Andrew Ross Sorkin writes in his DealBook column. Her clients from finance have included JPMorgan Chase, the board of Morgan Stanley and Kenneth D. Lewis, a former Bank of America chief executive.
At the S.E.C., Ms. White may be required to recuse herself from certain important decisions. If that happens, â€it could raise the prospect of a 2-2 split along party lines among the other commissioners,†Peter J. Henning writes in the White Collar Watch column. “Currently, it’s a highly polarized group, so her recusal could effectively freeze the S.E.C. from moving on an issue.â€
As a prosecutor, Ms. White had a long record of going after terrorism and financial fraud. But at the S.E.C., she would have to avoid “even an appearance of impropriety arising from a business or personal relationship,†Mr. Henning writes. “Ms. White brings a wealth of experience to her new job, in part deftly navigating the revolving door between Wall Street and Washington. But in this new role, she’ll have to walk a fine line, more cautiously than even before.â€
FORMER JEFFERIES TRADER CHARGED WITH FRAUD  | Federal prosecutors on Monday charged Jesse C. Litvak, a former senior trader at the Jefferies Group, with defrauding clients and t! he government while selling them mortgage-backed securities after the financial crisis, DealBook’s Peter Lattman reports. The purported violations â€" cheating brokerage clients by misrepresenting prices â€" would not typically rise to the level of a federal criminal prosecution. But the government was a victim in this case, prosecutors said, because Mr. Litvak’s clients, including some of the world’s biggest investment firms, were managing money that was part of the Troubled Asset Relief Program, the $700 billion bailout fund. Mr. Lattman writes: “The case demonstrates the aggressive prosecutorial stance of the special inspector general for TARP, or Sigtarp, which led the investigation. The office, now led by Christy Romero, has been responsible for criminal cases filed against 121 individuals.†Mr. Litvak is accused is generating more than $2 million in revenue though the trades in question.
Separately, Treasury’s Sigtarp released a report on Monday showing that executives at bailed-out firms continued to receive generous government-approved compensation packages. The report “found that 68 out of 69 executives at Ally Financial, the American International Group and General Motors received annual compensation of $1 million or more, with the Treasury’s signoff,†Annie Lowrey writes in The New York Times.
IN ITALY, BANK SCANDAL BECOMES POLITICAL FODDER  | A scandal involving Monte dei Paschi di Siena, the old Italian bank, is reverberating through Italian politics and becoming an issue in the country’s national elections next month. The controversy centers on whether the bank hid losses it incurre! d after t! aking over the Italian bank Antonveneta in 2008 for 9 billion euros. “This is still a solid bank,†the chief executive, Fabrizio Viola, said on Monday. But the revelations in the unfolding scandal “have raised questions about the degree of scrutiny given Monte dei Paschi di Siena by Mario Draghi, who was still head of Italy’s central bank when the problems developed. Mr. Draghi, of course, is now president of the European Central Bank,†The New York Times writes. In addition, “the conservative former prime minister Silvio Berlusconi, who is trying to be a spoiler in next month’s elections, has been trying to lay blame for the scandal at the Democratic Party’s doorstep. Meanwhile, the current prime minister, Mario Monti, has had to defend his government’s decision to bail out the banks with loans granted last year.â€
While the sandal will probably not be enough to get Mr. Berlusconi back as prime minister, it could prevent the current prime minister “from running the country with a solid majority in both houses of Parliament,†Hugo Dixon of Reuters Breakingviews writes. “If so, fears about Italian political risk could return to haunt the markets.â€
ON THE AGENDA  | The CIT Group, Ford Motor and Pfizer report earnings on Tuesday morning, and Amazon reports results in the evening. With home prices showing signs of recovering, the Standard & Poor’s/Case-Shiller housing price index for November is out at 9 a.m. Data on consumer confidenc! e in Janu! ary is released at 10 a.m. David Sze, a partner at Greylock Partners, is on CNBC at 10:40 a.m. Maurice R. Greenberg, A.I.G.’s former chief, is on CNBC at 3:30 p.m.
HOSTESS NAMES MCKEE LEAD BIDDER FOR DRAKE’S BRAND  |Â
Continuing its dismantling plan, Hostess Brands chose McKee Foods, the maker of Little Debbie snacks, as the lead bidder for its Drake’s brand. McKee, the “stalking horse†bidder in a court-supervised auction set for March 15, has agreed to pay $27.5 million for the Drake’s brand, giving it the rights to sugary treats like Ring Dings, Yodels and Devil Dogs. Separately, Hostess said it had picked United States Bakery as the stalking-horse bidder for four of its bread products, including Sweetheart and Eddy’s.
Activist Investor Buys Stake in 3i Group  | The activist investor Edward J. Bramson has been buying shares in the British private equity firm 3i Group, according to a statement from the company. Mr. Bramson’s Sherborne Investors, which recently raised around $325 million, started buying shares in 3i in early January, and 3i believes he has sold the holding to Jefferies International. DealBook Â'
Buffett Said to Have Weighed Deal for NYSE Euronext  | Warren E. Buffett ultimately did not try to top IntercontinentalExchange’s $8.2 billion proposal. DealBook Â'
Yahoo’s Results Beat Expectations  | On Monday, Yahoo reported that revenue in the fourth quarter rose 1.6 percent, to $1.35 billion, exceeding analysts’ expectations. “Marissa Mayer, just by being Marissa Mayer, has done more to move Yahoo forward in her first six months as chief executive than any of her five predecessors did over as many years,†The New York Times writes. NEW YORK TIMES
Hess Weighs Sale of Terminal Network  | The Hess Corporation plans to sell 19 fuel terminals as part of a plan to refocus on higher-growth exploration and production. It also disclosed having received a letter from the hedge fund Elliott Management, which is seeking a big stake in Hess and a potential board fight. DealBook Â'
Dodgers to Start Regional Sports Network  |Â
NEW YORK TIMES MEDIA DECODER
Anglo American Announces $4 Billion Write-Down on Mining Project
REUTERS
Actian, a ‘Big Data’ Company, to Acquire Pervasive Software for $161.9 Million  |Â
REUTERS
Investors Warm to Bank Bonds  | “For the first time since 2007, dollar-denominated bonds issued by banks from around the world are on the verge of yielding less than those of industrial companies,†The Wall Street Journal writes. WALL STREET JOURNAL
Bank of America’s Chief Urges Employees to Focus on Customers  | Bank of America “must focus on improving customer service as it moves past its crisis-era problems, C.E.O. Brian Moynihan said in a letter sent to employees, signaling one of his strategies for boosting revenue at the bank,†Reuters reports. REUTERS
Indian Bank Looks to Raise $1 Billion in Share Sale  |Â
FINANCIAL TIMES
Private Equity Firms Take Control of Nine Entertainment  | Apollo Global Management and the Oaktree Capital Group won control of the Nine Entertainment Company, Australia’s second-most-watched television network, as a federal judge gave final approval to a reorganization plan, Bloomberg News reports. BLOOMBERG NEWS
Trian Said to Reduce Stake in State Street  | Trian Fund Management, the activist firm run by Nelson Peltz, has sold par of the stake in State Street that it disclosed in 2011, “at a per-share price far below what Mr. Peltz and the firm’s two other founding partners stated State Street would be worth if it followed their ‘action plan,’†The Wall Street Journal reports. WALL STREET JOURNAL
Hedge Funds Increase Holdings of Stocks in January  |Â
FINANCIAL TIMES
How Facebook Taught Its Computers to Communicate With People Â! | Before Facebook introduced a new search tool this month, “it assembled an eclectic team to scrutinize what users were searching for on the site â€" and how,†The New York Times reports. “The team included two linguists, a Ph.D. in psychology and statisticians, along with the usual cadre of programmers.†NEW YORK TIMES
Owners of Bausch & Lomb Said to Favor an I.P.O.  | The Wall Street Journal reports: “Bausch & Lomb Inc.’s private equity owners are leaning toward launching an initial public offering of shares in the eye-health company after possible buyers of the business balked at the asking price of at least $10 billion, according to people familiar with the matter.†WALL STREET JOURNAL
As Music Streaming Grows, Musicians Are Wary  | Music-streaming services like Spotify, Pandora and YouTube “have been largely welcomed by an industry still buffeted by piracy. But as the companies behind these digital services swell into multibillion-dollar enterprises, the relative trickle of money that has made its way to artists is causing anxiety at every level of the business,†The New York Times reports. NEW YORK TIMES
U.S. Said to Push for Criminial Charges for R.B.S.  | The Wall Street Journal reports: “U.S. authorities are pushing for a settlement of interest-rate-rigging allegations with Royal Bank of Scotland Group P.L.C. that would result in a unit of the big British bank pleading guilty to criminal charges in addition to paying a penalty, according to people briefed on the negotiations.†WALL STREET JOURNAL
R.B.S. Said to Be Cutting Bonuses in Advance of Libor Fine  | Bloomberg News reports that the Royal Bank of Scotland, Britain’s biggest publicly owned lender, “may reduce the bonus pool at its investment bank by more tha a third as it prepares to pay fines to U.S. and U.K. regulators for Libor manipulation, a person with knowledge of the plan said.†BLOOMBERG NEWS
Judge Authorizes I.R.S. to Demand Data From UBS Â |Â A judge said the Internal Revenue Service could demand information from UBS about the American clients of Wegelin & Company, the Swiss bank that pleaded guilty to tax law violations, Bloomberg News reports. BLOOMBERG NEWS
Media Companies Said to Have Been the Focus of Trading Inquiry  |Â
WALL STREET JOURNAL
Iceland Wins Major Case Involving Failed Bank  | Iceland won a landmark court case in Europe on Monday over its refusal to immediately cover the losses of British and Dutch depositors who lost money in Icesave, a failed Icelandic bank. DealBook Â'
Federal Reserve to Release ‘Stress Test’ Results Over 2 Days  | “By saying when and how it will disclose the results, the Fe is seeking to avoid a replay of the confusion that accompanied last year’s results, when some banks complained of miscommunication with the central bank,†The Wall Street Journal reports. WALL STREET JOURNAL
When Corruption Helps the Bottom Line  | A recent study found that the most corrupt countries like Venezuela are actually better for investors than moderately corrupt countries like Morocco or Mexico, writes Michael S. Pagano, a professor at the Villanova School of Business.
DealBook Â'
