JPMorgan Chase is using its checkbook to try to mend frayed relationships with the government, Jessica Silver-Greenberg and Ben Protess report in DealBook. But the new and conciliatory approach is yielding mixed results. “Government officials, stung by the bank’s past displays of hubris, may drive up the price of settlements or resist the overtures altogether.â€
On Tuesday, JPMorgan struck a $410 million settlement with the nation’s top energy regulator, which had accused the bank of devising “manipulative schemes†to transform “money-losing power plants into powerful profit centers.†It was a record fine for the Federal Energy Regulatory Commission. JPMorgan is bracing for an even larger penalty related to shoddy mortgage securities it sold to the government, DealBook reports.
“The bank’s new approach comes down, at least in part, to dollars and cents. While the settlements are expensive, they pale in comparison to the sort of legal bills that come with long â€" and embarrassing â€" legal battles. The conciliatory tack also reflects a growing recognition among bank executives that JPMorgan was swiftly losing credibility in Washington. At least eight federal agencies are investigating the bank, and some regulators have portrayed JPMorgan as something of a bully.â€
FEWER BARBARIANS AT THE GATE  | “The hostile takeover is on life support, if it’s not dead altogether,†Steven M. Davidoff writes in the Deal Professor column. “This year, there have been a grand total of three hostile offers, according to FactSet MergerMetrics. Two of the three were for small companies worth less $25 million. Last year, there were only 12 hostile bids, FactSet reported. These days, the directors of the 5,000 or so public companies have a better chance of being hurt in a car accident than by a hostile bidder.â€
So how has the market changed since the 1980s, when corporate raiders bestrode the landscape? “Simply put, the forces on companies to perform better appear to have worked, leaving fewer undervalued targets for hostile bidders,†Mr. Davidoff writes. “Hostile takeovers have also become riskier. Not only boards, but shareholders at target companies are much more willing to say no if they feel a bid is underpriced.†Still, this development raises a new concern: that the disciplining effect of a hostile takeover threat will disappear.
TOURRE CASE GOES TO JURY Â |Â
Lawyers for the Securities and Exchange Commission and for Fabrice P. Tourre, the former Goldman Sachs trader, have made their last attempts to influence a nine-member jury, which is set to receive instructions from the judge on Wednesday. Mr. Tourre “was either a greedy scheming liar or a bright young executive just trying to do his job, according to dueling portraits presented during closing arguments Tuesday,†Susanne Craig and Michael J. de la Merced write in DealBook.
Matthew Martens, the S.E.C.’s lead lawyer, was the first to present his closing remarks and had the last word with jurors. “When it came to lies from the witness stand, Mr. Tourre took the cake,†he told jurors. Sean Coffey, a lawyer for Mr. Tourre, accused the S.E.C. of peddling “half truths†and “deceit.†He said, “The idea that Fabrice Tourre, a 28-year-old vice president, was conjuring up a $1 billion fraud, or conspiring with others, is just not supported by the evidence.â€
ON THE AGENDA Â |Â
An estimate of gross domestic product in the second quarter is released at 8:30 a.m. The Federal Reserve’s policy making committee makes an announcement at 2 p.m. Hess and Hyatt Hotels report earnings before the market opens. MetLife and Yelp report earnings this evening. Jan Hatzius, Goldman Sachs’s chief economist, is on Bloomberg TV at 11:30 a.m.
BLACKLISTED FROM THE FINANCIAL SYSTEM  | “Mistakes like a bounced check or a small overdraft have effectively blacklisted more than a million low-income Americans from the mainstream financial system for as long as seven years as a result of little-known private databases that are used by the nation’s major banks,†Jessica Silver-Greenberg reports in DealBook. “The problem is contributing to the growth of the roughly 10 million households in the United States that lack a banking account, a basic requirement of modern economic life.â€
“Unlike traditional credit reporting databases, which provide portraits of outstanding debt and payment histories, these are records of transgressions in banking products. Institutions like Bank of America, Citibank and Wells Fargo say that tapping into the vast repositories of information helps them weed out risky customers and combat fraud â€" a mounting threat for banks. But consumer advocates and state authorities say the use of the databases disproportionately affects lower-income Americans, who tend to live paycheck to paycheck, making them more likely to incur negative marks after relatively minor banking missteps like overdrawing accounts, amassing fees or bouncing checks.â€
Schneider Electric to Buy Invensys for $5.2 Billion  | Schneider Electric of France has agreed to buy the British engineering company Invensys in a cash-and-stock deal worth £3.4 billion, or $5.2 billion. DealBook »
Accenture Said to Be in Talks to Buy Booz & Company  | The consulting firm Accenture “is in talks to acquire†Booz & Company, The Wall Street Journal reports, citing unidentified people familiar with the matter. (Booz & Company was once part of Booz Allen Hamilton, but the two companies are not connected today.) WALL STREET JOURNAL
Chairman of Spirit Airlines Said to Be in Talks to Buy Rival Airline  | Bill Franke, who is expected to resign as chairman of Spirit Airlines next month, is in talks through his investment firm to buy Frontier Airlines, The Wall Street Journal reports, citing an unidentified person familiar with the situation. WALL STREET JOURNAL
Baidu Raises $1 Billion in Sale of Bonds  | Baidu, China’s largest search engine company, raised the money to help pay for its recent acquisition of a Chinese app store operator, The Wall Street Journal reports. WALL STREET JOURNAL
European Aerospace Giant Changes Name to Airbus  | The company formerly known as EADS said it would reorganize in three divisions and be renamed the Airbus Group, Reuters reports. REUTERS
A Plan to Enliven Paris’s Financial District  | A sprawling array of office buildings known as La Défense was envisioned as Paris’s answer to Lower Manhattan or the City of London, but it often seems more like the isolated end of a spoke that highlights a flaw in urban planning. NEW YORK TIMES
BNP Paribas’s Earnings Fall 5%  | BNP Paribas, France’s largest bank, said its second-quarter profit fell 5 percent, to $2.33 billion, as it made additional provisions to cover potential losses in the face of a struggling European economy. DealBook »
Donald J. Mulvihill of Goldman Sachs Has Died  | Mr. Mulvihill, a Goldman Sachs managing director who started the bank’s asset management business in Japan, has died at 56, according to Bloomberg News. BLOOMBERG NEWS
Blackstone and Deutsche Bank Said to Weigh Selling Bonds Tied to Homes  | Bloomberg News reports: “Blackstone Group L.P., the private-equity firm that spent $5 billion buying more than 30,000 houses to rent them out, is working with Deutsche Bank AG as it considers creating securities tied to about 1,500 of such properties, according to a person with knowledge of the matter.†BLOOMBERG NEWS  | WALL STREET JOURNAL
SAC Reinsurance Arm Placed on Review by A.M. Best  | Reuters reports: “Insurance rating group A.M. Best said on Tuesday that it is placing SAC Re, the reinsurance arm linked to hedge fund SAC Capital Advisors, on review with negative implications less than a week after the fund was hit with criminal insider trading charges.†REUTERS
K.K.R. Said to Consider Bidding for Hong Kong Supermarket Chain  | The private equity firm K.K.R. “is evaluating a bid for billionaire Li Ka-shing’s ParknShop supermarket chain, said two people with knowledge of the matter,†Bloomberg News reports. BLOOMBERG NEWS
Ackman Announces a Stake in Air Products and Chemicals  | William A. Ackman’s firm Pershing Square Capital Management has amassed a 9.8 percent stake, valued at about $2.2 billion, in the industrial gas company Air Products and Chemicals.
CNBC
Losing Money on Herbalife, Ackman Is Defiant  | William A. Ackman, whose hedge fund has lost more than $200 million on its short position on Herbalife, continues to assert that the company is an illegal pyramid scheme. DealBook »
Former Credit Trader at Mizuho Financial Plans New Hedge Fund  |Â
BLOOMBERG NEWS
A Hint of Twitter’s I.P.O. Plans  | Twitter posted a notice that it was looking to hire a financial reporting manager whose duties would include writing an S-1 document, the filing used to indicate plans to go public. The notice was later taken down. QUARTZ  | USA TODAY
Why an Alibaba I.P.O. Is Both Promise and Problem for Yahoo  | Yahoo does have some influence, John Foley of Reuters Breakingviews notes. It has a representative on Alibaba’s board and the right to appoint an investment bank to help run any offering process. REUTERS BREAKINGVIEWS
Uber Says It Is Raising New Money  | Uber, the start-up that let users summon cars with an app, said it is seeking “hundreds of millions†of dollars in a new financing round, according to Bloomberg News. “There are discussions under way, we’re raising right now,†said Travis Kalanick, the chief executive. BLOOMBERG NEWS
Ex-Stock Analyst Charged With Insider Trading in Case Tied to SAC Indictment  | A former technology analyst at the research firm Collins Stewart was charged with leaking secret information to at least two different hedge funds, including SAC Capital Advisors. DealBook »
Lawyer Who Beat Chevron Faces Trial of His Own  | “Steven R. Donziger â€" environmental hero or charlatan, depending on whom you talk to â€" is one of the toughest lawyers around, or slightly crazy,†The New York Times writes. “Possibly both.†NEW YORK TIMES
Predicting What the Fed Will Say  | Reuters writes: “The Federal Reserve likely will decide at the end of a policy meeting on Wednesday to continue buying bonds at an $85 billion monthly pace, but it could alter an accompanying statement to spell out the possibility of scaling back purchases later this year.†REUTERS
