Regulators in Washington have agreed in principle on a plan to rein in risky trading by banks overseas, after a messy split in the Commodity Futures Trading Commission, DealBook’s Ben Protess reports. The potential deal, subject to final approval by the agency, would be reached with hours to spare before a deadline on Friday, according to people briefed on the matter.
“The dispute traced largely to the agency’s Democratic chairman, Gary Gensler, and Mark Wetjen, a Democratic commissioner with an independent streak,†Mr. Protess writes. “But in recent days, they showed signs of progress. Mr. Gensler and Mr. Wetjen have been meeting in person throughout the week, the people briefed on the matter said, and had struck a preliminary deal by Wednesday. While both are likely to claim victory, the deal does not come without sacrifice for each side.â€
“The contours of the plan, the people briefed on the matter said, suggest that firms like Goldman Sachs International and Citigroup’s London branch will face a wave of new scrutiny, a sticking point for Mr. Gensler. In a move likely to appease Mr. Wetjen, Mr. Gensler is expected to phase in the cross-border oversight. And in a concession to Wall Street and foreign finance ministers, the plan would defer to European regulators if they ultimately agree to scrutinize banks in a way that is similar to the monitoring by the trading commission,†Mr. Protess writes. “The people briefed on the matter, who insisted on anonymity to discuss private negotiations, cautioned that the deal was not final.â€
S.E.C. LIFTS AN ADVERTISING BAN Â |Â
“Federal regulators on Wednesday lifted an 80-year-old ban on advertising by hedge funds, buyout firms and start-up companies seeking capital, a move that will fundamentally change the way that many issuers raise money in the private marketplace,†DealBook’s Peter Lattman reports. “The Securities and Exchange Commission voted to approve a rule that Congress included in last year’s Jumpstart Our Business Start-Ups Act, a law meant to help bolster small businesses and create jobs after the financial crisis.â€
“The move allows start-ups and small businesses to use advertising to raise money through private offerings. Hedge funds and buyout firms, whose investment vehicles fall under regulations for private offerings, will also be able to promote their products to the general public, though restrictions remain on who can invest in them. Some regulators, lawmakers and consumer protection groups faulted the S.E.C.’s decision. Luis A. Aguilar, the lone dissenter among the S.E.C.’s five commissioners, called the adoption of the rule reckless. He said it was being approved without appropriate investor safeguards and worried that it would lead to abuse.â€
SENATORS QUESTION CHINESE TAKEOVER OF SMITHFIELD  | Members of the Senate Agriculture Committee raised questions on Wednesday about the economic and national security implications of the takeover of Smithfield Foods, the nation’s largest pork producer, by Shuanghui International, a Chinese company. While the chief executive of Smithfield, C. Larry Pope, said the $4.7 billion acquisition would have “no impact on the U.S. food supply and, therefore, no impact on food security,†several senators said they feared that promises by Shuanghui would not be honored over the long term, Edward Wyatt reports in DealBook. That could result, they said, in China eventually exporting pork to the United States that did not meet American safety standards or taking away sales by American companies in other overseas markets, like Japan.
ON THE AGENDA Â |Â
Texas Industries reports earnings in the morning. Infosys reports earnings after the market closes. Barry Silbert, chief executive of SecondMarket, is on CNBC at 8:10 a.m. Marc Andreessen of Andreessen Horowitz, is on Bloomberg TV at 3 p.m.
A CONSPICUOUS ABSENCE IN SUN VALLEY  | Many prominent deal makers have descended on the Allen & Company media and technology conference in Sun Valley, Idaho. But one of the most-mentioned individuals is absent: Larry Page, the chief executive of Google. “The search giant is well represented by a number of senior executives, to be sure. Eric Schmidt, the company’s executive chairman, is here. So are Nikesh Arora, its chief business officer, and Salar Kamangar, the chief executive of its YouTube division,†DealBook’s Michael J. de la Merced writes. “But it’s Mr. Page, whom several attendees said they had been hoping to hear speak on Wednesday morning, whose name cropped up an awful lot. The chief executive has disclosed that he suffers from a chronic illness that affects his vocal cords and breathing.â€
Still, other chief executives were milling about. Leslie Moonves of CBS said that he was not looking to buy TV stations, but “If they fit, we would†take a look. Jeffrey L. Bewkes, chief of Time Warner, said he thought Aereo, a streaming TV service, is “irrelevant†and that the best buyer of Hulu is Hasbro.
Sprint Completes Its Deal With SoftBank  | Sprint said its deal to sell a controlling stake to SoftBank of Japan closed on Wednesday, after a drawn-out bidding process. Sprint is shedding “Nextel†from its corporate name, AllThingsD notes. ALLTHINGSD
Inside Lampert’s Sears  | Many of the troubles at Sears can be linked to an organizational model that Edward S. Lampert, the chairman, implemented five years ago, Mina Kimes writes in Bloomberg Businessweek. BLOOMBERG BUSINESSWEEK
Noble Group Said to Weigh Bid for Australian Miner  | The Noble Group is considering a bid for Western Desert Resources, “in what would be one of the biggest deals for an Australian iron-ore miner since prices weakened last year, according to people familiar with the matter,†The Wall Street Journal reports. WALL STREET JOURNAL
Icahn’s Latest Gamble at Dell: Appraisal Rights  | Carl C. Icahn’s call for shareholders to exercise their appraisal rights is in some ways a surprising shift, since he has pushed them to reject the takeover bid. But it may be a last-ditch effort to seek a higher payout even if the deal goes through. DealBook »
Tribune to Split Newspapers and TV  | The Tribune Company announced on Wednesday that it would spin off its newspapers and broadcasting properties into separate companies. DealBook »
Why Italy Could Be Fertile Ground for Deal Makers  | Italy’s shaky state should not be an insurmountable obstacle to foreign investment, Quentin Webb of Reuters Breakingviews writes. Foreign deal makers just need to find ways to coax Italy’s aging entrepreneur-owners to the table. REUTERS BREAKINGVIEWS
At Deutsche Bank, Loans That Are Less Than Transparent  | Deutsche Bank “made billions of dollars of loans to banks worldwide since 2008 and accounted for them in a way that obscured their continuing risk to investors,†Bloomberg News reports. BLOOMBERG NEWS
An Improvement in How Banks Are Perceived by Consumers  | Perceptions of Goldman Sachs, Bank of America, JPMorgan Chase and Morgan Stanley have improved in the first half of year compared with a year earlier, according to the YouGov BrandIndex. YOUGOV
Evercore to Start a Private Capital Advisory Business  | Evercore Partners, an investment banking advisory firm, said on Wednesday that it was starting a private capital advisory business and had hired two UBS bankers to lead it. DealBook »
Barclays Wins Dismissal of Lawsuit Over Sale of Securities  | A judge dismissed a lawsuit from the National Credit Union Administration, which regulates credit unions, over the sale of more than $555 million of mortgage-backed securities to two credit unions, Reuters reports. REUTERS
A Bleak Outlook for Private Equity in India  | Nikhil Raghavan, a principal at Bain Capital in Mumbai, predicted that private equity investments in India would probably fall this year because of a lack of opportunities, The Wall Street Journal writes. WALL STREET JOURNAL
Hedge Fund Glory Days May Be Over  | “After a decade as rock stars, hedge fund managers seem to be fading just as quickly as musicians do,†Sheelah Kolhatkar writes in the Bloomberg Businessweek cover story. BLOOMBERG BUSINESSWEEK
Adventures Abroad Could Hurt U.S. Companies  | It is astounding how little risk the markets are pricing into public companies that have poured shareholder money into emerging markets over the last several years through acquisitions and start-up projects, writes Carson C. Block, the director of research for the investment firm Muddy Waters. DealBook »
LightSquared to Go to Trial With Lenders  |Â
REUTERS
Royal Mail Employees to Get Free Shares in I.P.O.  | The British government’s plans to sell a majority stake in Royal Mail would be the biggest privatization in the country since the railroads 20 years ago. DealBook »
With a Silicon Valley Fortune, a Hunt for Political Office  | Sean Eldridge, the husband of the Facebook co-founder Chris Hughes, has relocated in a quest for a congressional seat in New York, The New York Times writes. “But his ambitions have puzzled some residents among the farmers, mill workers and small-business owners who populate this district, which rises through the Catskills and rolls north through cornfields and apple orchards to the Vermont border.†NEW YORK TIMES
At Fed, Diverging Debate on When to End Stimulus  | The New York Times reports: “The Federal Reserve chairman, Ben S. Bernanke, said on Wednesday that the Fed was likely to extend the centerpiece of its campaign to bolster the economy â€" keeping short-term interest rates close to zero â€" even as it prepares to wind down another key stimulus program that faces mounting internal opposition.†NEW YORK TIMES
Fed’s Easing of Stimulus Could Hamper European Recovery  | “Recent fears that the Federal Reserve could begin withdrawing its economic stimulus have prompted interest rates to rise around the world, putting business loans further out of reach for companies in Spain, Italy and France,†The New York Times writes. NEW YORK TIMES
Massachusetts Regulator Opens Inquiry Into Products Sold to Older Investors  | The top financial regulator in Massachusetts has asked 15 brokerage firms, including Merrill Lynch and LPL Financial, about the way they have marketed “high-risk, esoteric products†to older investors. DealBook »
The Consequences of Apple’s Loss on E-Books  | A federal judge on Wednesday ruled that Apple had violated antitrust law in conspiring with publishers to raise prices of e-books. “Although it appears unlikely that the ruling will have an immediate effect on the book-buying public, it could affect how Apple cuts deals with media companies that provide the music, books and movies that help make its iPhones and iPads compelling,†The New York Times reports. NEW YORK TIMES
What Is Bank Capital, Anyway? Â |Â Though capital is a centerpiece of Wall Street regulation, it resists a simple definition.
DealBook »
China’s Growth Woes Could Force Government Response  | The Chinese government’s response to weak economic data will be a test of the nation’s new leadership, Bill Bishop writes in the China Insider column. DealBook »
