The global investigation into interest-rate manipulation has emboldened prosecutors to crack down on banks, and the settlement with the Royal Bank of Scotland on Wednesday underscored that strategy. “I want financial institutions to know that this department will absolutely hold them to account,†said Lanny Breuer, head of the Justice Department’s criminal division. As part of the $612 million deal that American and British authorities reached with R.B.S., the bank’s Japanese unit was required to plead guilty to criminal wrongdoing, echoing an earlier action taken against a subsidiary of UBS. “These cases represent the first units of a big bank to agree to criminal charges in more than a decade,†DealBook’s Mark Scott and Ben Protess write.
An American institution could be among the next to settle rate-rigging claims. “Citigroup and JPMorgan Chase are under investigation by the Commodity Futures Trading Commission, the American regulator leading the case, though actions are not imminent,†Mr. Scott and Mr. Protess report. “Deutsche Bank, which set aside an undisclosed amount to cover potential penalties and suspended five employees tied to the case, is expected to settle with authorities in late 2013, several people briefed on the matter said. But the timetable could shift. The bank is not in formal settlement talks and is not prepared to resolve the case, the people said.â€
“A person involved in the investigation indicated that the first banks to settle were among the worst actors in the rate case. But they also received a ‘discount’ for their eager cooperation, according to people with knowledge of the matter.†Mr. Breuer said: “Our investigation is far from finished.â€
The cases announced so far give other banks some idea of what to expect. Three questio! ns come into play, Peter J. Henning writes in the White Collar Watch column: how much it will cost, whether a guilty plea will be required and whether embarrassing e-mails will be released. “All these issues will mean that governments and regulators will have the upper hand when negotiating settlements with banks in cases involving Libor manipulation,†he writes.
The winners in all this may be the lawyers and other advisers. Julia Werdigier writes: “Bills from law firms are piling up at the major banks as they need extra advice to fend off lawsuits. Hordes of advisers, including consulting and accounting firms, take over desks at their banking clients to find better ways to oversee employees. And public relations firms are being paid to stand by in case another scandl erupts that further tarnishes the industry’s reputation.†In the R.B.S. case, the British government was pitted against itself, as the government still owns an 82 percent stake as a result of a bailout. As with past cases, this one included a trove of colorful e-mails.
E-MAILS SHOW FLAWS IN JPMORGAN’S MORTGAGE DEALS  |Â
“When an outside analysis uncovered serious flaws with thousands of home loans, JPMorgan Chase executives found an easy fix,†Jessica Silver-Greenberg reports in DealBook. “Rather than disclosing the full extent of problems like fraudulent home appraisals and overextended borrowers, the b! ank adjus! ted the critical reviews, according to documents filed early Tuesday in federal court in Manhattan. As a result, the mortgages, which JPMorgan bundled into complex securities, appeared healthier, making the deals more appealing to investors.â€
“The trove of internal e-mails and employee interviews, filed as part of a lawsuit by one of the investors in the securities, offers a fresh glimpse into Wall Street’s mortgage machine, which churned out billions of dollars of securities that later imploded. The documents reveal that JPMorgan, as well as two firms the bank acquired during the credit crisis, Washington Mutual and Bear Stearns, flouted quality controls and ignored problems, sometimes hiding them entirely, in a quest for profit.â€
CREDIT SUISSE SWINGS TO PROFIT Â |Â
Credit Suisse on Thursday announced fourth-quarter net income of 397 million Swiss francs ($436 million); it posted a loss of 637 milion francs in the period a year earlier. The Swiss bank also said it would increase its cost-cutting target by 400 million francs, to 4.4 billion francs, by the end of 2015. Julia Werdigier writes: “While UBS’s shares jumped after it said in October it would cut 10,000 jobs to streamline the business, Credit Suisse investors were far less impressed with changes the bank announced in November.†Brady W. Dougan, the bank’s chief executive, said in a statement on Thursday that profitability was “further benefiting from the strategic measures.â€
ON THE AGENDA  | K.K.R. reports earnings on Thursday morning, as does Sprint Nextel. LinkedIn announces results in the evening. The European Central Bank and the Bank of England issue decisions about intere! st rates.! Mark Carney, the Bank of Canada governor who is set to succeed Mervyn A. King as head of the Bank of England, is taking questions from British lawmakers at a committee hearing. Data on consumer credit for December is out at 3 p.m. The analyst Meredith Whitney is on Bloomberg TV at 7:30 a.m. Robert Rubin is on CNBC at 8 a.m. Sallie Krawcheck, former head of Bank of America’s wealth management division, is on CNBC at 5 p.m.
IN EUROPE, ANOTHER BIG BUYOUT IN THE WORKS  | With the financial world still digesting news of the $24.4 billion deal for Dell, a report comes of another big buyout possibly taking shape in Europe. Private equity firms are in “accelerated talks†with lenders over possible $15.7 billion bids for EE, the telecommunications company formerly know as Everything Everywhere, in what would be Europe’s largest private equity-backed takeover since the financial crisis, The Financial Times reports, citing unidentified people with knowledge of the talks. “A group formed by Apax and K.K.R. and another led by Blackstone and CVC Capital Partners are working on competing offers, these people said.†The groups are said to be considering bids using about $4.7 billion of equity, and are looking to secure about $11 billion of debt financing, the newspaper reports.
How the Dell Deal Is Being Financed  | A filing on Wednesday gave more detail on the planned ! $24.4 bil! lion buyout of Dell, including that Michael S. Dell and his investment firm were contributing $750 million in cash. REUTERS
Dell Directors Sued Over Buyout  | Michael S. Dell and other directors “were sued by an investor over claims the computer maker’s board is shortchanging shareholders†in the buyout deal, Bloomberg News reports. BLOOMBERG NEWS
Cantor Fitzgerald Said to Be in Talks to Buy Broker  | The Financial Times reports that Cantor Fitzgerald isin “late-stage talks†to acquire Seymour Pierce, one of London’s oldest stockbrokers. FINANCIAL TIMES
American Airlines Deal Approaches Finish Line  | AMR, the parent of American Airlines, and US Airways “are hashing out the last major details of a merger agreement that would create the world’s largest airline and are racing to finalize a deal, said people close to the discussions,†The Wall Street Journal reports. WALL STREET JOURNAL
Liberty’s Bid for Virgin Media Pushes the Envelope on Debt  | Liberty Global’s $23 billion offer for Virgin Media has most of th! e hallmar! ks of the precrisis boom, Christopher Hughes of Reuters Breakingviews writes. DealBook Â'
Ireland to Liquidate Anglo Irish Bank  | The Irish government has passed emergency legislation to liquidate Anglo Irish Bank, one of the country’s largest, as part of a plan to restructure debt payments. DealBook Â'
Former Top Media Banker Sues Los Angeles and 2 Police Officers  | A former top Deutsche Bank deal maker sued the cit of Los Angeles and two of its police officers on Wednesday, accusing the men of beating him and smearing his reputation in a widely publicized arrest last year. DealBook Â'
Barclays Said to Be Cutting Jobs in New York  | Barclays “dismissed trading-division employees this week as it notified regulators its investment bank is cutting 275 jobs in New York City,†Bloomberg News reports. BLOOMBERG NEWS
JPMorgan Becomes Top Bank by Market Value  | JPMorgan Chase overtook Wells Fargo this week as its stock price rose. BLOOMBERG NEWS
What It Takes to Get an Internship on Wall Street  | “The increasing battle for internships has also upped the amount of sector-specific knowledge would-be interns are expected to have,†and “the prep process has become a cottage industry,†New York magazine’s Kevin Roose says. NEW YORK
Former Bank of America Chief Sells Home  | Kenneth D. Lewis, who led Bank of America during the financial crisis, has sold his home in Charlotte, N.C., for $3.15 million, The Charlotte Business Journal reports. CHARLOTTE BUSINESS JOURNAL
Japanese Banks Flock to Solar Power Projects  |Â
BLOOMBERG NEWS
Blackstone to Buy Stake in Shopping Centers  | The Blackstone Group agreed to buy a majority stake in 40 shopping centers in the United States in a deal worth about $1.1 billion, Bloomberg News reports. ! BLOOMBERG! NEWS
Blackstone in Deal for Indian Business Park  |Â
REUTERS
Tilson Shifts Strategy After Rough Year  | The hedge fund manager Whitney Tilson said in a letter to investors that he would move toward more long bets on stocks, after losing 1.7 percent last year, CNBC reports. “The amount of time I spent on shorts impacted my ability to find great longs,†he said. CNBC
Herbalife Releases More Information About Distributors  | With its business model under scrutiny, Herbalife said on Wednesday “that 88 percent of its distributors received no payments in 2012, including 71 percent who did not recruit any other distributors,†Reuters reports. REUTERS
Evertec, Backed by Apollo, Files for I.P.O. Â |Â Evertec, a payment processor backed by Apollo Global Management, is looking to raise up to $100 million in an I.P.O., Reuters reports. REUTERS
A Guide to Staying Private on the New Facebook  | Somini Sengupta of The New York Times offers four simple questions to help users of Facebook protect their privacy in light of new settings. NEW YORK TIMES
Google to Acquire Marketing Services Firm for $125 Million  | Google agreed to buy Channel Intelligence, which works with the search giant’s shopping division, for $125 million in cash. NEWS RELEASE
Venture Capitalist Discusses Market for Enterprise Software  | Peter Levine, a partner at Andreessen Horowitz, tells AllThingsD: “There’s an awakening up and down the stack for new products that are going to service the enterprise.†ALLTHINGSD
Cravath Hires 2nd Official From Obama Administration  | In hiring David J. Kappos, the departing director of the patent office, Cravath, Swaine & Moore signaled the importance of government policy to powerful law firms! . DealBook Â'
Prosecutors Said to Focus on SAC Capital Manager  | Reuters reports: “U.S. prosecutors are nearing a decision on whether to pursue criminal charges against SAC Capital Advisors portfolio manager Michael Steinberg related to an insider trading investigation involving shares of Dell Inc , according to two people familiar with the matter.†REUTERS
Geithner to Join Council on Foreign Relations  | Timothy F. Geithner, who stepped down as Treasury secretary last month, is joining the Council on Foreign Relations as a distinguished fellow. He is alsoplanning to write a book and will begin meeting with publishers shortly, Annie Lowrey reports in the Caucus blog. DealBook Â'
Time to Revive the Financial Transaction Tax  | A financial transactions tax would take a 3-cent nip out of every $100 traded, and raise billions. The burden of proof is on opponents to explain how so slender a tax could harm the capital markets, Jesse Eisinger writes in The Trade. The Trade Â'
Former Analyst in S.&P. Case Is Identified  | Bloomberg News reports that a man called “Executive H†in the government’s lawsuit against Sta! ndard & P! oor’s is Frank Raiter, a former managing director who now lives on a farm in Virginia. BLOOMBERG NEWS
California’s Wealthy Are Tested by Higher Taxes  | “With the new year, big earners are confronting a 51.9 percent federal-state income tax hit on earnings over $1 million, the result of a confluence of new tax-the-rich levies imposed by California and Congress in the closing days of 2012. That is officially the highest in the nation,†The New York Times reports. NEW YORK TIMES
