Federal prosecutors have begun talks with the hedge fund SAC Capital Advisors to settle criminal insider trading charges against the firm, DealBook’s Peter Lattman reports. The settlement talks are at an early stage, and the two sides are far from any agreement, people briefed on the case said. The government is seeking a guilty plea from SAC and a financial penalty of as much as $2 billion, they said.
Steven A. Cohen, the owner of SAC, also faces a civil action filed by regulators that could result in his being barred from the securities industry. Mr. Cohen’s lawyers would probably seek to resolve both cases simultaneously, Mr. Lattman reports. “Many expected that SAC would not be able to survive the criminal charge, which the United States attorney’s office in Manhattan brought against the firm in July. Yet SAC has withstood the indictment largely because Wall Street banks, like JPMorgan Chase and Goldman Sachs, have continued to trade with the firm and provide financing for its operations.â€
“In trying to reach a settlement, Mr. Cohen wants to save his once-celebrated hedge fund, which has been brought low by a raft of criminal charges against former employees. Though SAC has said it has never encouraged or tolerated insider trading, it would have difficulty exonerating itself at trial, legal specialists have said.â€
Settlement talks continue as two former SAC portfolio managers prepare for separate criminal trials. On Tuesday, one of those trials, the insider trading case against Mathew Martoma, was delayed for two months.
ALIBABA MOVES TOWARD NEW YORK I.P.O.  | The Chinese Internet giant Alibaba has ended talks with the Hong Kong stock exchange over an initial public offering and is now moving forward with plans to list its shares in New York, Neil Gough reports in DealBook. Alibaba’s “dialogue with Hong Kong†has “come to the end,†a person close to the company said on Wednesday. The company is “now turning to the U.S. to start the listing process,†the person said.
In talks over the planned I.P.O. â€" which would be a large prize for any stock exchange â€" Alibaba had proposed a corporate structure similar to what Google, Facebook and other United States companies have, allowing a core group of 28 Alibaba executives to keep control of the company after the I.P.O. But the Hong Kong stock exchange does not allow dual classes of stock and other types of mechanisms to preserve corporate control, Steven M. Davidoff wrote in the Deal Professor column on Tuesday evening. Hong Kong apparently declined to make an exception in Alibaba’s case.
“Despite persistent complaints that Washington regulations hamstring companies that want to go public â€" witness the push for last year’s Jump-Start Our Business Startups Act, or JOBS Act â€" in this case, the United States has become the place to avoid more stringent regulation,†Mr. Davidoff writes. The talks with Alibaba had put the Hong Kong stock exchange in a pickle: the offering is expected to raise as much as $15 billion, creating a public company with a $70 billion market value, making it a must-get for the exchange.
ON THE AGENDA Â |Â Data on new home sales in August is released at 10 a.m. Eric Schmidt, the executive chairman of Google, is on CNBC at 4 p.m. A Senate Banking subcommittee holds a hearing at 2:30 p.m. on improving market access for financial services in India.
JPMORGAN MAY SETTLE WITH GROUP OF AGENCIES  | “JPMorgan Chase, seeking to avert a wave of litigation from the government, is negotiating a multibillion-dollar settlement with state and federal agencies over the bank’s sale of troubled mortgage securities to investors in the run-up to the financial crisis,†Jessica Silver-Greenberg and Ben Protess report in DealBook.
“During settlement talks this week, proposals emerged that would require JPMorgan to pay anywhere from $3 billion to about $7 billion, people briefed on the negotiations said. The settlement, the people said, might also require JPMorgan to provide some financial relief for struggling homeowners. Although the ultimate amount is still in flux, it is clear that any deal would dwarf the size of other settlements the bank has reached to resolve separate regulatory issues.â€
Fiat’s Chief Rolls the Dice With a Public Offering  | Sergio Marchionne, who impressed the automotive world by resurrecting Chrysler from bankruptcy and driving it toward a merger with Fiat, yielded to pressure from the United Automobile Workers retiree health care trust by filing for an I.P.O. “Now Mr. Marchionne is gambling that the open market will set a price for Chrysler’s shares that will prompt the U.A.W. trust to turn back to Fiat for a better deal,†Bill Vlasic writes in The New York Times. NEW YORK TIMES
New York Life Agrees to Buy Dexia Unit  | The insurer New York Life agreed to buy Dexia Asset Management for 380 million euros ($512 million), as it expands into the money management business, Bloomberg News reports. BLOOMBERG NEWS
M.&A. Diplomacy in Tech Deal  | Applied Materials heeded local sensitivities and ceded governance duties in the proposed acquisition of its Japanese rival, while most of the financial benefits will accrue to its own shareholders, Robert Cyran of Reuters Breakingviews writes. REUTERS BREAKINGVIEWS
Raising Its Stake in Telecom Italia, Telefónica Eyes Latin America  | The Spanish telecommunications giant Telefónica agreed to raise its stake in the struggling Telecom Italia to 66 percent through a $437 million share issue in an attempt to gain greater control of the Italian operator’s assets in Latin American markets. DealBook »
BlackBerry Executives Sold Stock Amid Bad News  | “Top BlackBerry executives sold small blocks of the company’s stock on the day that the smartphone maker warned of a huge quarterly operating loss and massive job cuts, according to Canadian regulatory filings,†Reuters reports, noting that there is no evidence of wrongdoing by the executives. REUTERS
A.I.G.’s Chief Backs Off Comments Over Bonuses  | After telling The Wall Street Journal that the uproar over bonuses at the American International Group was similar to racial crimes in the South, Robert H. Benmosche, the chief executive of A.I.G., said in a statement that he had made “a poor choice of words. I never meant to offend anyone by it.†His original comments were condemned by Benjamin M. Lawsky, New York’s superintendent of financial services. WALL STREET JOURNAL
When Leaning In Isn’t Enough  | “The policies that will most help improve the lot of women in the workplace may be focused not on women but on families and, specifically, on men,†Eduardo Porter writes in the Economic Scene column in The New York Times. NEW YORK TIMES
Housing Recovery, for Now, Is on Track  | “The housing market, one of the main drivers of the economic recovery, continues to gain strength despite the drag of rising mortgage rates and other economic headwinds, but some analysts are worried that it may slow in the months ahead,†The New York Times writes. NEW YORK TIMES
A Wager on Home Prices Is Poised to Pay Off  | The Essent Group, a Bermuda-based mortgage insurer that raised $500 million from investors including Goldman Sachs and George Soros in 2009, “filed last week to sell shares in the first initial public offering of a home-loan guarantor in almost two decades,†Bloomberg News reports. BLOOMBERG NEWS
Private Equity Sees a Bright Future in Africa  | “Africa’s rapid economic growth has lured top American private equity firms to invest in recent years, including the Carlyle Group, Blackstone, K.K.R. and PineBridge Investments. While the continent represents a sliver of their overall investments, there’s likely much more to come,†CNBC reports. CNBC
A Hedge Fund Manager Who Doesn’t Mind a Losing Bet  | Mark Spitznagel, the founder of Universa Capital, believes the stock market is going to fall by at least 40 percent in one great market “purge.†Until then, he is paying for the option to short the market at just that point, losing money each time he does. DealBook »
Paulson Bets on Puerto Rico  | The hedge fund run by John A. Paulson bought an 80 percent stake in a resort complex near San Juan, betting that tax changes would attract wealthy financiers to the island, The Financial Times reports. FINANCIAL TIMES
How Twitter Cleaned Up Before an I.P.O.  | “Like the service, the aim was to make the Twitter I.P.O. as simple as possible,†one unidentified person familiar with the situation told Kara Swisher of AllThingsD. “While everyone wants to compare it to trying to avoid the circus around the Facebook I.P.O., it’s really less anti-Facebook than anti-old-Twitter.†ALLTHINGSD
Riverstone Holdings Plans $2.4 Billion I.P.O.  | Riverstone Holdings, a private equity fund, is planning an initial public offering in London of a new investment company called Riverstone Energy, aiming to raise up to $2.4 billion. DealBook »
Prosper Raises $25 Million in New Round, Adding BlackRock as a Backer  | The new round of financing disclosed on Tuesday by Prosper Marketplace reflects the continued interest from Wall Street and the venture capital community in peer-to-peer lending. DealBook »
Criminal Charges Expected for ICAP Staff Over Libor  | Federal prosecutors are expected to announce criminal charges against former or current employees of the British brokerage firm ICAP over the rigging of benchmark rates, The Wall Street Journal reports, citing unidentified people familiar with the plans. The announcement is expected to coincide with civil settlements from American and British authorities. WALL STREET JOURNAL
A Call for New Laws in New York to Fight High-Tech Crime  | A task force made proposals, including strengthening the laws against identity theft and the theft of computer code, in a report unveiled by the Manhattan district attorney, Cyrus R. Vance Jr. DEALBOOK
New York Still Investigating Trading on Early Access  | Eric T. Schneiderman, New York’s attorney general, said on Tuesday that his office was still scrutinizing high-speed trading based on early looks at sensitive data. DealBook »
Sweden Sells Remaining Stake in Nordea  | Sweden sold its remaining 7 percent stake in the big bank Nordea, raising about $3.4 billion, Reuters reports. REUTERS
Bharara Acknowledges That Budget Issues Are Straining His Office  | As lawmakers in Washington wrangle over financing the federal government, Preet Bharara, the United States attorney in Manhattan, said at a conference that budget constraints had severely limited his ability to hire lawyers. DealBook »
The Bankruptcy Question for BlackBerry  | Bankruptcy could eventually become an option for BlackBerry, though it has not signaled yet that it is under consideration, Stephen J. Lubben writes in the In Debt column. The Canadian version differs from Chapter 11. DEALBOOK
