A grand jury voted this week to approve an indictment against SAC Capital Advisors, the hedge fund owned by Steven A. Cohen, and authorities were expected to announce the case as soon as Thursday, DealBook’s Ben Protess and Peter Lattman report. The action caps a lengthy insider-trading investigation of SAC that intensified in recent months. Criminal charges might devastate SAC if the banks that trade with it and finance its operations abandon the hedge fund.
Already, after a string of guilty pleas by former SAC employees and a series of civil actions by the S.E.C., investors have removed about $5 billion of $6 billion in outside money from the firm. The exodus could accelerate when the government levels charges. “The indictment, according to the people briefed on the matter, will charge the fund with carrying out a broad conspiracy to commit securities fraud, citing several instances of insider trading,†DealBook writes. “Underpinning the charge, the people say, is the theory of corporate criminal liability, which allows the government to attribute certain criminal acts of employees to a company itself.â€
SAC is putting on a brave face. “The firm will operate normally and we have every expectation that will be the case going forward,†it said in a memo to employees on Wednesday.
If SAC goes the way of Arthur Andersen, the accounting firm that was destroyed by an indictment, there will be one primary difference, Floyd Norris writes in DealBook. Government officials came to regret forcing Arthur Andersen, the auditor of Enron, out of business. With SAC, that appears to be the government’s goal.
DELL FOUNDER RAISES BID, WITH CONDITIONS  | The founder of Dell is seeking a surer path to victory for his takeover effort, offering a small increase in price in exchange for more certainty in the shareholder vote, DealBook’s Michael J. de la Merced writes. “But it was not clear that the new bid by Michael S. Dell, the founder, would succeed, with a special committee of Dell’s board hoping to squeeze a few more cents a share out of him.â€
Mr. Dell and his partner, the investment firm Silver Lake, offered to raise their per-share offer 10 cents, to $13.75, for a total value of $24.6 billion. In return, the two demanded that Dell drop a rule that shares not cast either for or against the deal be counted as “no†votes. That would help the bid succeed against the challenge from recalcitrant shareholders led by Carl C. Icahn. “The special committee did not indicate which way it would lean, but a person close to the committee who spoke anonymously because the matter was confidential said that it hoped to see an offer of at least $14 a share before it agreed to changes in the voting procedure,†Mr. de la Merced writes.
The voting provisions could have “big consequences,†Steven M. Davidoff writes in the Deal Professor column. “First, it means that the approval for Mr. Dell’s bid will be easier. And it is also a signal that the vote is close enough that this small change will make a difference. Second, it affects how this buyout will be reviewed under Delaware law.â€
In the back-and-forth over Dell, “the company considered but rejected as too risky a novel strategy that tweaks the now-curbed practice of corporations moving overseas to take advantage of lower taxes,†Lynnley Browning writes in DealBook. “The strategy, drafted by JPMorgan Chase and disclosed in Dell’s regulatory filings in recent months, proposed a fresh twist on that practice, which has largely been banned by the Internal Revenue Service.â€
ON THE AGENDA Â |Â Lazard and General Motors report earnings before the market opens. Amazon.com and Starbucks report earnings after the close. Data on durable goods orders in June is out at 8:30 a.m. Ralph L. Schlosstein, chief executive of Evercore Partners, is on Bloomberg TV at 7 a.m.
TOURRE AND S.E.C. LAWYER SPAR OVER E-MAIL  | The Securities and Exchange Commission on Wednesday finally got its chance to attack the credibility of Fabrice P. Tourre, a former Goldman Sachs trader, in front of a jury. Over the course of two hours, the S.E.C. lawyer, Matthew T. Martens, and Mr. Tourre, who has been accused of participating in a scheme to defraud investors, verbally sparred over what Mr. Tourre knew about a 2007 trade he helped structure, DealBook’s Susanne Craig reports.
“So the statement was false,†Mr. Martens asked just minutes after Mr. Tourre took the stand, challenging him over an e-mail he had written. “It was not accurate,†Mr. Tourre responded, frustration rising in his voice. “Is there a difference between something being inaccurate or false?†Mr. Martens shot back. “There is,†Mr. Tourre said.
Hulu Said to End Talks With Time Warner Cable  | The owners of Hulu had been discussing the sale of a 25 percent stake to Time Warner Cable, but the parties failed to agree on a price, Reuters reports, citing two unidentified people with knowledge of the negotiations. REUTERS
Hanes to Buy Maidenform for $575 Million  | Among the expected benefits of the deal, Maidenform’s average-figure bra line would complement Hanes’s full-figure bra business, Hanes said. DealBook »
Price of KPN Deal Said to Be Sticking Point for Slim  | Carlos Slim Helú, the billionaire who controls a nearly 30 percent stake in KPN through América Móvil, has said he believes the offer from Telefónica to buy KPN’s German unit is too low, according to The Financial Times. FINANCIAL TIMES
Etisalat Said to Hire Goldman to Advise on Bid for Rival  | Etisalat, a wireless carrier in the United Arab Emirates, is considering a bid for Warid Telecom of Pakistan, Reuters reports, citing two unidentified people aware of the matter. REUTERS
Officials Extend Timeline for Review of Smithfield Sale  | The government review of the sale of Smithfield Foods to Shuanghui International Holdings of China has been extended by 45 days, Reuters reports. REUTERS
Owner of Carl’s Jr. Said to Consider a Sale  |Â
REUTERS
Credit Suisse Reports Profit Rise  | Credit Suisse is joining Goldman Sachs and other Wall Street rivals in reporting improved results for the second quarter, helped by an increase in client activity in sales and trading and investment banking. DealBook »
Bank of America Adds 2 Directors  | Clayton Rose, a Harvard Business School professor who formerly was at JPMorgan Chase, and Pierre de Weck, a former Deutsche Bank executive, have joined the board, bringing it to 15 members.
REUTERS
Blankfein Said to Meet With Chairman of Chinese Bank  | Lloyd C. Blankfein, the chief executive and chairman of Goldman Sachs, met with Jiang Jianqing, the chairman of the Industrial and Commercial Bank of China, during a visit to the country, Shanghai Securities News reported, according to Bloomberg News. BLOOMBERG NEWS
Goldman Lawyer Named Co-Chairman of Fried Frank  | David Greenwald, a deputy general counsel at Goldman Sachs, is joining the law firm Fried, Frank, Harris, Shriver & Jacobson to be co-chairman until March 2015, when he will take over as sole chairman, New York Law Journal reports. NEW YORK LAW JOURNAL
Lloyds Bank Said to Consider Selling Australian Business  | The British lender Lloyds Banking Group “is studying a sale of its unprofitable Australian business, two people with knowledge of the matter said,†Bloomberg News reports. BLOOMBERG NEWS
Cooling on Bonds, Investors Turn to Cash  | Investors are still hesitant to plunge into stocks, The Wall Street Journal writes. WALL STREET JOURNAL
Woes Pile Up For Private Equity Firms in India  | A drop in the rupee is the latest challenge for foreign private equity firms in India, The Wall Street Journal writes. WALL STREET JOURNAL
Mortgage Insurer Is a Boon for Paulson  | John A. Paulson’s firm is among the largest shareholders of the Radian Group, a mortgage insurer that has experienced a significant rebound in recent months, Bloomberg News reports. BLOOMBERG NEWS
Facebook Reports a Surge in Mobile Advertising  | Facebook said on Wednesday that mobile advertising had increased from virtually nothing a year ago to 41 percent of its total ad revenue of $1.6 billion in the second quarter, The New York Times reports. NEW YORK TIMES
A Dance Music I.P.O. That’s a Little Off Key  | A planned $175 million public offering of SFX Entertainment seeks to take advantage of the popularity of electronic dance music, but the numbers behind the scenes should give investors pause, Rob Cox of Reuters Breakingviews writes. REUTERS BREAKINGVIEWS
WCI Communities Said to Price I.P.O. at Low End of Range  | WCI Communities, a home builder, priced shares at $15 each, the bottom of its expected range, to raise $102.3 million, The Wall Street Journal reports. The company had already reduced its expected price range. WALL STREET JOURNAL
Service for Media Publishers Attracts $35.8 Million  | Mediaspectrum, a company based in Boston whose software service aims to help big media publishers manage advertising and other content, raised a financing round led by Insight Venture Partners, TechCrunch reports. TECHCRUNCH
Greylock Adds a Partner From Within  | The venture capital firm Greylock Partners announced that Josh Elman, a former Twitter and Facebook employee who joined the firm almost two years ago, was promoted to partner, AllThingsD reports. ALLTHINGSD
3 Former UBS Bankers Sentenced in Bid-Rigging Case  | The sentences for deceiving cities and towns by rigging bids to invest municipal bond proceeds, were a fraction of what prosecutors had sought, Reuters writes. REUTERS
Mortgage Program Is Troubled by Defaults  | The New York Times reports: “Banks and other mortgage servicers have accepted $815 million in taxpayer-funded incentives for helping homeowners who have since redefaulted on their home loans, a watchdog for the Treasury Department’s Troubled Asset Relief Program, or TARP, reported on Wednesday.†NEW YORK TIMES
Harrisburg Aims to Restructure Debts Without Bankruptcy Filing  | “Less than a week after Detroit filed its $18 billion federal bankruptcy case, the capital of Pennsylvania said it had found a way to restructure crushing debts without a costly and contentious trip to bankruptcy court,†The New York Times writes. NEW YORK TIMES
Justice Department Said to Examine Metals Warehousing  | The agency has begun a preliminary inquiry into metals warehousing, which is also drawing scrutiny from federal regulators, Reuters reports. REUTERS
Chief of GlaxoSmithKline Addresses China Inquiry  |Â
NEW YORK TIMES
