The Securities and Exchange Commission has signaled that it was now taking a harder line on securities settlements, as it extracted its first admission of wrongdoing under a new policy, DealBook’s Alexandra Stevenson reports. The S.E.C. said on Monday that the hedge fund manager Philip A. Falcone had agreed to admit wrongdoing and to be barred from the securities industry for at least five years to settle accusations of market manipulation. He and his fund, Harbinger Capital Partners, must also pay more than $18 million.
The deal comes after the S.E.C. had, in a rare move, overruled its own enforcement staff to reject a previous settlement with the hedge fund manager. The original agreement, which had called for a two-year ban from raising new capital and no admission of wrongdoing, “had irritated the S.E.C.’s new chairwoman, Mary Jo White, people briefed on the matter said, and frustrated many others within the agency who saw that deal as too lax,†Ms. Stevenson reports.
The new terms reflect a change that Ms. White outlined this year, aiming to overturn a longstanding policy of allowing parties to settle without admitting or denying wrongdoing. Monday’s agreement sets a potential precedent for the S.E.C.
HIRING THE WELL-CONNECTED ISN’T ALWAYS SCANDALOUS  | An investigation by the Securities and Exchange Commission into whether JPMorgan Chase had hired the children of powerful Chinese officials to help the bank win business “is sending shudders through Wall Street,†Andrew Ross Sorkin writes in the DealBook column.
“If JPMorgan Chase is found to have violated the Foreign Corrupt Practices Act by hiring the children of the elite, then the entire financial services industry is probably in a heap of trouble. Virtually every firm has sought to hire the best-connected executives in China and, more often than not, they are the ‘princelings,’ the offspring of the ruling elite.â€
Hiring the children of powerful executives “is hardly just the province of banks doing business in China: it has been a time-tested practice here in the United States.â€
OBAMA URGES ACTION ON BANK RULES Â |Â President Obama urged the top financial regulators on Monday to move faster in implementing new rules for Wall Street, telling them in a private meeting that they must work to prevent a repeat of the financial crisis, Michael D. Shear and Peter Eavis report in The New York Times.
“Aides said Mr. Obama also told the regulators that the United States needed a more simplified and certain system of financing housing,†The Times writes. “Administration officials and some lawmakers have expressed frustration that critical parts of Mr. Obama’s overhaul of the financial system, which was voted into law three years ago and is known as the Dodd-Frank Act, remain unenforced as an alphabet soup of federal agencies wrangle over how to adopt it.â€
ON THE AGENDA Â |Â
J.C. Penney, the embattled retailer, reports earnings before the market opens. Best Buy, Saks and Barnes & Noble also report results this morning. Terrence A. Duffy, president and executive chairman of the CME Group, is on CNBC at 4 p.m. Chad Hurley, co-founder of YouTube, is on Bloomberg TV at 6 p.m.
BANKS FALL SHORT IN STRESS TESTS, FED SAYS  | Most big banks appear to have been easily passing the annual “health checkups†they have had to undergo since the financial crisis, DealBook’s Peter Eavis writes. But on Monday, the Federal Reserve identified some shortcomings in the banks’ responses to the checkups, known as stress tests.
“Despite the severity of the recent housing crisis, the Fed said some banks were not taking into account the possibility of falling house prices when valuing certain mortgage-related assets for the tests,†Mr. Eavis writes. “In other cases, banks assumed they would be strong enough to take business away from competitors in times of stress.â€
Blackstone to Sell Stake in Broadgate for $2.7 Billion  | The Blackstone Group agreed to sell its 50 percent stake in the Broadgate office complex in London for more than £1.7 billion, Bloomberg News reports, citing two unidentified people with knowledge of the deal. BLOOMBERG NEWS
Mitchell International Attracts Private Equity Bids  | K.K.R. and Warburg Pincus are among the private equity firms in the auction for Mitchell International, a technology company catering to the insurance industry that could sell for up to $1.5 billion, Reuters reports, citing four unidentified people familiar with the matter. REUTERS
How a Judge’s Ruling Ends a Legal Threat to the Dell Buyout  | Carl C. Icahn once threatened “years of litigation†over the Dell buyout, but a judge’s statements on Friday are a vindication for the Dell board and the procedures it put in place, Steven M. Davidoff writes in the Deal Professor column. Deal Professor »
A Trophy Owner Also Familiar With Turmoil  | While Jeffrey Bezos’s purchase of The Washington Post may be the product of trophy hunting, he has demonstrated the skills needed to navigate tumultuous environments, Victor Fleischer writes in the Standard Deduction column. DealBook »
Statoil Sells North Sea Assets to Austrian Rival  | Statoil, Norway’s state-controlled oil company, said on Monday that it would sell a package of North Sea assets to OMV, a smaller Austrian producer, for $2.65 billion. DealBook »
CVC Capital Buys Online Payment Company  | The acquisition of the Skrill Group, which serves about 35 million account holders worldwide, is the third deal in a week for CVC Capital Partners. DealBook »
Glencore Takes $7.7 Billion Write-Down on Xstrata Assets  | The announcement came as Glencore Xstrata reported that its profit in the first half of the year fell 39 percent from the period a year earlier. BLOOMBERG NEWS
Bank of America Intern Dies at 21 Â |Â Bank of America said an intern in London, Moritz Erhardt, died on Aug. 15, Bloomberg News reports. The Metropolitan Police in London said the death was being treated as nonsuspicious, according to Bloomberg. BLOOMBERG NEWS
Moody’s U-Turn on Hybrid Bonds  | It is another reason for companies to issue either debt or equity, or a mix of each, but not something pretending to be the best of both, writes Neil Unmack of Reuters Breakingviews. REUTERS BREAKINGVIEWS
Perella Weinberg Said to Raise $225 Million for Fund  | Perella Weinberg Partners is still in the process of raising a growth-equity fund that has a target of $400 million, Fortune reports. FORTUNE
Former C.E.O. of Willis Group Joins K.K.R. as Senior Adviser  | Kohlberg Kravis Roberts hired Joseph J. Plumeri, a former chairman and chief executive of the Willis Group, as a senior adviser, adding another veteran corporate boss to its roster. DealBook »
Blackstone Said to Seek $5 Billion for European Fund  | The real estate arm of the Blackstone Group is looking to raise up to $5 billion for a new fund focused on Europe, Reuters reports, citing an unidentified person familiar with the matter. REUTERS
How Blackstone Salvaged the Hilton Deal  | “For a period Hilton looked like it was on death’s door,†Guy Metcalfe, a real estate banker at Morgan Stanley, told The Financial Times. FINANCIAL TIMES
Bass Bets on a Recovery for J.C. Penney  | The hedge fund manager J. Kyle Bass has been buying secured loans of J.C. Penney over the last two weeks, Bloomberg News reports, citing an unidentified person familiar with the matter. BLOOMBERG NEWS
Facing Activist Investors, Firms Trade Board Seats  | Moves by Office Depot highlight a new tactic for companies dealing with activist investors, The Wall Street Journal writes. WALL STREET JOURNAL
Re/Max Files for I.P.O. as Housing Market Continues Upswing  | Re/Max Holdings, one of the country’s biggest real estate brokerages, filed to go public on Monday, preparing to follow its rival Realogy Holdings onto the public markets. DealBook » | DealBook: To Cover New York, Zillow Buys a Rival Site
Brazilian Airline Shelves I.P.O.  | The Brazilian airline Azul Linhas Aéreas Brasileiras said it gave up plans to go public because of adverse market conditions. REUTERS
GoDaddy Buys a Start-Up, Locu, for $70 Million  | Locu, which is based in San Francisco but was founded out of M.I.T., helps local merchants be discovered online. The deal was worth $70 million in cash and stock, AllThingsD reports, citing unidentified people close to the situation. ALLTHINGSD
Former Enron Prosecutor Expected to Be Named to Justice Dept. Post  | The Justice Department is expected to name Leslie R. Caldwell, former lead prosecutor in the Enron case, as the next head of its criminal division. DealBook »
Oversight Board Faults Broker-Dealer Audits  | The Public Company Accounting Oversight Board found deficiencies in some audits of brokerage firms. DealBook »
Fannie and Freddie May Be Masking Losses, Watchdog Says  | The inspector general of the Federal Housing Finance Agency said in a report on Monday that Fannie Mae and Freddie Mac were possibly masking billions of dollars in losses because of delinquent loans on their books, Reuters reports. REUTERS
End of the Options Backdating Era  | The string of options-backdating cases showed how difficult it was to prosecute senior executives for corporate misconduct involving arcane accounting issues, Peter J. Henning writes in the White Collar Watch column. White Collar Watch »
Trading Ban for Chinese Firm  | Chinese regulators have banned Everbright Securities from proprietary trading for three months, Bloomberg News reports. The move comes after erroneous orders placed by the firm caused wild swings on the Shanghai stock market on Friday. BLOOMBERG NEWS
