EASY ‘A’ ON BANK STRESS TESTS  | Federal regulators found that banks, four years after the financial crisis, are better prepared to weather future financial shocks, according to the results of the so-called stress tests that the Federal Reserve released on Thursday. But the big question raised by some analysts was whether the Fed was too lenient in the tests, which now pave the way for the healthiest institutions to return money to shareholders, DealBook’s Peter Eavis and Ben Protess write.
The tests, some argue, underestimate potential losses and what might happen if major financial firms collapsed. “The stress tests were just not very stressful,†said Rebel A. Cole, a professor of finance at DePaul University. Still, the stress tests “are a tool to gauge th resiliency of the financial sector,†a Federal Reserve governor, Daniel K. Tarullo, said in a statement.
Some of the successes were a bit unexpected. Just a year after poor performance in the tests thwarted its plans, Citigroup did better than its rivals this year. And the bank didn’t wait long to celebrate, announcing that it hoped to carry out $1.2 billion in stock buybacks through the first quarter of 2014. Other banks, like Ally Financial, didn’t do as well. Morgan Stanley and JPMorgan Chase had some of the lowest capital results among the Wall Street firms. It turned out that Goldman Sachs would take $25 billion in trading losses under the test.
“In another sign of friction, the banks had to run the same test as the Fed â€" and in some cases produced rosier results,†Mr. Eavis and Mr. Protess write. “Wells Fargo reported a projected 9.2 percent Ti! er 1 common ratio, the primary measure of financial strength tracked by regulators, by the end of 2014. That was far higher than the 7 percent calculated by the Fed.â€
ICAHN’S CHALLENGE TO DELL DEAL  | Dell’s directors face an increasing challenge as they prepare to defend the proposed buyout of the computer maker, DealBook’s Michael J. de la Merced writes. Carl C. Icahn, recently joining the fray, is pushing for a special dividend for investors of $9 a share, echoing similar plans by Southeastern Asset Management, another investor opposed to the current deal. Directors can begin pushing back on March 22, the end of the period when bankers for a special committee of Dell’s board were meant to seek alternatives to the going-private plan by Michael S. Dell, the founder, and the privte equity firm Silver Lake.
If Dell rejects Mr. Icahn’s plan, the billionaire said he would legally challenge the company’s board, including nominating his own group of directors. “We anticipate years of litigation will follow challenging the transaction and the actions of those directors that participated in it,†Mr. Icahn wrote in a letter sent to the special committee. He is demanding that Dell borrow $8.25 billion to help finance the proposed dividend. “We see no reason that the future value of Dell should not accrue to all the existing Dell shareholders â€" not just Michael Dell,†he said in the letter.
But Mr. Icahn’s pronouncements may amount to a game of chicken, Steven M. Davidoff writes in the Deal Professor column. “In the end, Mr. Icahn probably does not w! ant to ru! n the company, and Mr. Dell does not want that either. Ultimately, Mr. Icahn - with his announcement - is just pressuring the board to sweeten the deal for shareholders. This is all about bobbing and weaving, and that is what Mr. Icahn is doing with his proposals.â€
PANDORA CHIEF TO STEP DOWN Â |Â Joseph J. Kennedy, who has been the chief executive of Pandora Media since 2004, said on Thursday that he would be leaving the Internet radio company. The announcement came as Pandora reported growth and better-than-expected earnings, Ben Sisario reports in the Media Decoder blog. Mr. Kennedy informed the board of his decision on Tuesday and, in the earnings call on Thursday, gave no reason other than hinting at the toll of running the company for nearly a decade. He plans to remain in place until a sccessor is found.
“As I approach the start of my 10th year,†Mr. Kennedy said, “my head is telling me it’s time to get to a recharging station sooner rather than later.â€
“Mr. Kennedy’s tenure illustrates how much Pandora â€" and streaming music in general â€" has changed,†Mr. Sisario writes. “Pandora dominates the Internet radio market, and has begun to challenge terrestrial radio stations for advertising. But its financial results, released after the close of trading on Thursday, show the challenges the company faces.â€
ON THE AGENDA  | The South by Southwest festival, where in years past new technology products have been introduced, gets going in Austin. The unemployment report for February is out at 8:30 a.m. Jan Hatzius, Goldman Sachs’s chief economist, is on CNBC at 10:30 a.m.
WHITE-COLLAR DEFENSE BAR GOES TO VEGAS  | “This week more than 1,200 lawyers from across the country convened at the Cosmopolitan Hotel in Las Vegas for the American Bar Association’s three-day White Collar Crime National Institute,†DealBook’s Peter Lattman writes. “Numerous federal prosecutors and securities regulators attended this year’s event, including Robert S. Khuzami, the outgoing director of enforcement at the Securities and Exchange Commission, who spoke at a session on insider trading. While the lawyers were ostensibly there to attend panels and discussion groups on hot topics in white-collar litigation, the event is largely a schmooze-fest.â€
“Over the last 20 years there has been an explosion in white-collar criminal defense work at the country’s largest law firms. Representing businessmen and political officials in hot water was once considered déclassé, but today every large corporate law firm has a substantial practice focused on the lucrative work.â€
With Spinoff, Time Warner’s Evolution Is Complete  | “The sprawling media conglomerate that Steven J. Ross joined together, Jeffrey L. Bewkes has put asunder,†The New York Times’s Amy Chozick writes.
NEW YORK TIMES
A Grand Histor! y of Merg! ers, Told in Magazines  | From a single magazine, Time, a giant media conglomerate was built. With the planned spinoff, the dismantling of the empire is now nearly complete, Jeffrey Goldfarb of Reuters Breakingviews writes.
REUTERS BREAKINGVIEWS
AOL’s Chief Muses About Time Inc.  | Asked whether he would consider buying Time Warner’s magazine division, Tim Armstrong, the chief executive of AOL, said it would not be realistic. But he continued, “if I had my private druthers, probably, yes.â€
FORBES
Sycamore Partners to Buy Ho Topic for $600 Million  | Hot Topic, the clothing retailer that’s a mainstay of teenage mall shoppers, agreed to sell itself to Sycamore Partners, the owner of Talbots, for $600 million.
DealBook »
Behind Disney’s Deal for Lucasfilm  | In its cover story this week, Bloomberg Businessweek goes inside Disney’s $4 billion acquisition of Lucasfilm, the company behind the “Star Wars†films: “How would Disney assess the value of an imaginary galaxy What, for example, was its populationâ€
BLOOMBERG BUSINESSWEEK
In Los ! Angeles, ! a Proposed Art Museum Tie-Up  | The Los Angeles Times reports: “The Los Angeles County Museum of Art has made a formal proposal to acquire the Museum of Contemporary Art in Los Angeles, which has been struggling with financial troubles and staff and board defections.â€
LOS ANGELES TIMES
Goldman to Skip a Year to Name Managing Directors  | Goldman plans to name its managing directors â€" a senior rank just below the partner level â€" every two years, instead of annually, the firm told employees in a memorandum reviewed by DealBook.
DealBook »
After a Banner Year for Mortgage Investors, a Note of Caution  | In one example, the Brazilian investment bank BTG Pactual told investors it was closing a mortgage hedge fund to new investors because of diminished opportunities, Reuters reports.
REUTERS
Barclays Chief Is Said to Expect 28% Staff Reduction Over 10 Years  |Â
BLOOMBERG NEWS
Perella Weinberg! Said to ! Seek Investment Fund  | Fortune reports: “Boutique investment bank Perella Weinberg Partners is looking to raise $400 million for a new fund focused on growth equity investment opportunities.â€
FORTUNE
K.K.R. Said to Reach Deal for Gardner Denver  | K.K.R. is paying $76 a share for Gardner Denver, a maker of industrial pumps, with an announcement expected as soon as Friday, The Wall Street Journal reports, citing an unidentified person familiar with the matter. Gardner Denver is valued at about $3.74 billion in the deal.
WALL STREET JOURNAL
Flowers Turns to Home Mortgage Lending in Britain  | The private equity investor J. Christopher Flowers has set up a lender offering “private equity-style terms, allowing homeowners to forgo monthly payments in exchange for sharing the profits when their home is sold,†Bloomberg News writes.
BLOOMBERG NEWS
TPG Takes a Different Approach to Real Estate  | “Instead of raising a dedicated real estate fund like many of its big private-equity rivals, TPG has been investing in property with money from its global buyout fund and striking alliances with pensions a! nd real e! state operating companies,†Bloomberg News writes.
BLOOMBERG NEWS
Secretive Financier Opines on Argentina’s Debt Mess  | David Martinez, managing director of Fintech Advisory Limited, which holds Argentine bonds, writes in an opinion essay in The Financial Times that a legal battle over Argentina’s debt “could make future sovereign restructurings impossible, setting a dangerous precedent for the world’s financial system.â€
FINANCIAL TIMES
REUTERS
Icahn Increases Herbalife Stake to Over 15% Â |Â
DOW JONES
British Insurer Sets Price Range for I.P.O. Â |Â The British insurance firm esure has set the price range for its pending ini! tial publ! ic offering that could value the company at up to $2 billion.
DEALBOOK
Chrysler Said to Contact Banks About I.P.O.  | “Chrysler has asked banks to pitch next month for a mandate to run a potential public listing of its shares, four people familiar with the matter said,†as Fiat, its parent, discusses another possible deal, Reuters reports.
REUTERS
China Everbright Looks to Raise $1.5 Billion in I.P.O. Â |Â
WALL STREET JOURNAL
Facebook Reveals Its New Look  | The new design of the Facebook News Feed, with bigger photos and links, represents the social network’s effort “to tame the blizzard of information that has turned off many users and discouraged some advertisers,†The New York Times’s Somini Sengupta writes.
NEW YORK TIMES
In Silicon Valley, a New Type of Investor  | Hedge funds, private equity firms and other asset management firms are getting in on ! the start! -up game, The Wall Street Journal writes.
WALL STREET JOURNAL
Bailout Official at the Treasury to Leave Post  | Matt Pendo, the chief investment officer of the bailout program, is stepping down on Friday. He will be succeeded by Charmian Uy, who joined the department last summer.
DealBook »
Warren Pushes Bank Regulators on Money Laundering  | Senator Elizabeth Warren pressed financial reguators repeatedly on Thursday to find out why more aggressive action wasn’t taken against HSBC in a money laundering investigation.
DealBook »
To Place Graduates, Law Schools Are Opening Firms  | Law schools are creating their own law firms to try to address the glut of heavily indebted graduates with no clients while serving Americans unable to afford a lawyer, Ethan Bronner reports in The New York Times.
NEW YORK TIMES
Auditor’s Procedures Are Criticized by Regulator  | The New York Times reports: “The regulator for American a! uditing f! irms said on Thursday that it had found serious problems with procedures at PricewaterhouseCoopers and that the firm had failed to remedy them.â€
NEW YORK TIMES
In Breakup of MBIA, Regulators Get Latitude  | To illustrate a case that was decided this week, it may be helpful to consider a hypothetical insurance company facing losses because of Hurricane Sandy, Floyd Norris, a columnist for The New York Times, writes.
NEW YORK TIMES
European Central Bank Keeps Rate Unchanged  | The New York Timesreports: “The president of the European Central Bank on Thursday played down risks reverberating from his native Italy, evading questions about what policy makers might do if the country’s chaotic politics become a threat to euro zone stability.â€
NEW YORK TIMES
