Morning Agenda: Dueling Portraits of SAC Trader

DUELING PORTRAITS OF SAC TRADER  | 
According to his lawyer, Michael S. Steinberg is “successful, steady, serious.” According to federal prosecutors, Mr. Steinberg, the most senior employee at SAC Capital Advisors to be charged with insider trading, tapped into a corrupt insider trading conspiracy to make “big money” for himself. He also, prosecutors claim, pushed a lower-level employee at SAC to provide “edgy” and illegal information about technology companies, Alexandra Stevenson and Ben Protess report in DealBook.

Those dueling portrayals emerged on Wednesday from opening arguments in Mr. Steinberg’s criminal insider trading trial at Federal District Court in Lower Manhattan. Mr. Steinberg, the first SAC employee to stand trial in the government’s decade-long investigation of SAC Capital, went on trial two weeks after the hedge fund agreed to pay $1.2 billion and plead guilty to five counts of insider trading violations. Authorities say the trial will illuminate the culture at SAC that opened it to such scrutiny.

The assistant United States attorney, Antonia M. Apps, said in her opening argument that the evidence would provide a “unique window” into the world of insider trading and the “secret pipeline” that Mr. Steinberg had into certain companies. Mr. Steinberg’s lawyer, Barry H. Berke, sought to distance Mr. Steinberg from the sharp-elbowed world of Wall Street, emphasizing how SAC managed millions of dollars on behalf of pension funds and universities.

“The government’s proof hinges largely on the testimony of a cooperating witness that Mr. Steinberg understood he received tainted information from a source who should not have been revealing it. In this case, the star witness will be Jon Horvath, a former SAC analyst who pleaded guilty in 2012 to insider trading charges,” Peter J. Henning writes in the White Collar Watch column.

EX-U.S. ATTORNEY TO JOIN DAVIS POLK  | 

Neil H. MacBride, the former United States attorney in Alexandria, Va., is joining Davis Polk & Wardwell as a partner, the firm is expected to announce on Thursday, in the latest example of a government prosecutor jumping to a high-paying law firm, DealBook’s Peter Lattman reports. Mr. MacBride will start in Davis Polk’s white-collar criminal defense practice early next year after four years in one of the country’s most prominent federal prosecutor’s offices, where his cases included the criminal charges against Edward J. Snowden.

“We have been looking for a senior ex-prosecutor, and Neil is a great fit both professionally and personally,” the managing partner of Davis Polk, Thomas J. Reid, said in an interview. “Neil can provide the best risk advice to our clients on both regulatory and white-collar matters.”

TRACKING JPMORGAN’S $13 BILLION  |  Fannie Mae and Freddie Mac, federal taxpayers, state pension funds, credit unions and homeowners â€" some of the biggest losers in the 2008 financial crisis â€" ended up on the receiving end of JPMorgan Chase’s record $13 billion settlement, which was struck over the bank’s sale of troubled mortgage securities to investors in the run up to the crisis, Ben Protess and Jessica Silver-Greenberg report in DealBook.

Of the $13 billion, the only fine in the case came from federal prosecutors in Sacramento, who extracted a $2 billion penalty â€" called “the largest recovery ever in a case handled” by the office. “No, prosecutors cannot pocket the cash to purchase a life-size gold statue of Jamie Dimon. Instead, JPMorgan must wire the $2 billion to the Justice Department, which will then deposit the money into a fund at the United States Treasury,” Mr. Protess and Ms. Silver-Greenberg write. “The next chunk of cash, roughly $7 billion, will flow to a range of government authorities, some more obscure than others.”

The watchword in the settlement is “accountability,” Peter J. Henning writes in the White Collar Watch column. “The question is, accountable to whom, and for what? The case does not involve a criminal charge against JPMorgan that would typically be resolved through a deferred prosecution agreement requiring a company to affirm that its conduct was illegal.”

ON THE AGENDA  |  The Producer Price Index for October is out at 8:30 a.m. Eastern time. Target reports earnings before the market opens, while Berry Plastics and Pandora Media announce results after the market closes. The hedge fund titan David Einhorn appears on CNBC at 12:15 p.m.

A MYSTERY MAN PICKED TO REGULATE DERIVATIVES  |  “President Obama has nominated Timothy G. Massad to head the Commodity Futures Trading Commission. If you thought, ‘who?’ â€" well, that may be the point,” Jesse Eisinger of ProPublica writes in his column, The Trade. “It’s difficult to escape the suspicion that his nomination is an effort to send a once-obscure agency back to obscurity. In choosing a cautious lawyer like Mr. Massad, an assistant secretary at the Treasury Department, the Obama administration seems to be tacitly renouncing the era of the outgoing head of the agency, Gary S. Gensler,” who was “a spine-stiffener among regulators who mostly went invertebrate.”

“Even friends of his whom I spoke with don’t know his views on regulation of derivatives, the signature issue facing the trading commission as it puts Dodd-Frank rules into effect,” Mr. Eisinger writes.

Mergers & Acquisitions »

Devon Clinches Deal for GeoSouthern Assets  |  Buying GeoSouthern’s holdings in the Eagle Ford shale formation in southern Texas will bolster Devon’s position in one of the most popular oil fields in recent years.
DealBook »

Men’s Wearhouse Investor Continues to Push for Deal With Jos. A. Bank  |  Eminence Capital unveiled a presentation trumpeting the benefits of a merger of the men’s suit retailers and pressed for a special meeting of its fellow investors.
DealBook »

Tribune Company to Lay Off Newspaper Employees  |  The New York Times reports: “The Tribune Company, owner of The Chicago Tribune and The Los Angeles Times, will lay off 700 employees at those newspapers and the six others it owns, it said in memos to the staff on Wednesday.”
NEW YORK TIMES

Mobius Says Fund Has Sold Stake in TNK-BP  |  Reuters reports: “Veteran emerging markets investor Mark Mobius said on Thursday he had sold his fund’s stake in Russia’s TNK-BP Holding, walking away from his attempt to get a better buyout deal from the firm’s new owner, Rosneft.”
REUTERS

INVESTMENT BANKING »

Credit Suisse to Wall Off Swiss Banking Business  |  The move, known as “ring fencing,” is designed to protect the Zurich bank’s retail customers and shield the overall bank from another financial crisis.
DealBook »

Russia Revokes License of Bank With Ties to Putin  |  The New York Times reports: “Russia’s central bank on Wednesday revoked the license of a midsize Russian bank, Master Bank, and accused its management of siphoning off assets in insider deals, in one of the larger bank failures here in recent years.”
NEW YORK TIMES

Goldman Stung by Currency Bets in Third Quarter  |  Goldman Sachs “lost more than $1 billion on currency trades during the third quarter, recent regulatory filings show, offering some insight into why the firm, considered one of Wall Street’s most savvy traders, reported its worst quarter in a key trading unit since the financial crisis,” Reuters reports.
REUTERS

Wall Street Could Benefit From Tax Proposal  |  A proposal by Senator Max Baucus to revise international tax rules would help financial services firms that tend to have high effective tax rates, Victor Fleischer writes in the Standard Deduction column.
DealBook »

PRIVATE EQUITY »

Santander in Talks to Sell Unit to Apollo  |  The Spanish bank Santander “is nearing a deal to sell its property management unit Altamira Real Estate to U.S. private equity group Apollo Global Management, two sources familiar with the situation said on Thursday,” Reuters reports.
REUTERS

Bain Capital Is Said to End Buyout Talks With TI Automotive  |  Reuters reports: “Private equity firm Bain Capital LLC has ended advanced talks with auto parts supplier TI Automotive Ltd over a possible buyout after failing to meet TI’s price expectations of close to $2 billion, according to people familiar with the matter.”
REUTERS

From Carlyle, a Primer on a Structured Financial Product  |  Linda Pace, the head of United States structured credit at the Carlyle Group, is featured on a podcast titled “Everything You Always Wanted to Know about C.L.O.’s,” or collateralized loan obligations.
CARLYLE GROUP

Career Advice From an Investor in Real Estate  |  In a video with PrivcapRE, Marjorie Tsang, who leads the New York State Common Retirement Fund, says she is a champion of emerging managers and offers advice to a younger generation.
PRIVCAPRE

HEDGE FUNDS »

Penney Reports Losses, but Shares Jump Higher  |  “J. C. Penney may have reported a bigger-than-expected loss on Wednesday, but investors say they are seeing signs that the retailer’s business is improving,” Michael J. de la Merced reports in The New York Times.
NEW YORK TIMES

Eton Park, Having a Strong Year, Plans to Cut Fees  |  Reuters reports: “Eton Park, one of the year’s best-performing hedge funds, plans to lower management fees and create a more liquid share class, in a rare change at a fund so popular at its launch that it was able to impose some of the toughest investment conditions in the industry.”
REUTERS

I.P.O./OFFERINGS »

Chrysler Adds Underwriters to I.P.O.  |  Barclays, Goldman Sachs, Morgan Stanley and UBS were added as bookrunners of Chrysler’s initial public offering, which is being led by JPMorgan Chase and Bank of America Merrill Lynch, Reuters reports, adding that the deal could happen as soon as early December.
REUTERS

For Blackstone, a Successful Hilton I.P.O. Would Be a Landmark  |  When the Blackstone Group bought Hilton Worldwide in 2007, the deal was criticized for loading up the company with debt. But now, “people familiar with the company say Blackstone has doubled its initial $6 billion equity investment from its real estate and private equity funds,” The Financial Times reports.
FINANCIAL TIMES

VENTURE CAPITAL »

Snapchat Chief Reveals Detail About App’s Usage  |  At a closed-door Goldman Sachs conference, Evan Spiegel, the chief executive of Snapchat, said that roughly 70 percent of the app’s users are women, The Wall Street Journal reports.
WALL STREET JOURNAL

Broadcasters’ Fight Against Aereo Doesn’t Serve Their Interests  |  Too often, media content producers seem to fear technological shifts that ultimately help them grow, Jeffrey Goldfarb of Reuters Breakingviews writes.
REUTERS BREAKINGVIEWS

LEGAL/REGULATORY »

Fed Seeks Other Ways to Aid Economy  |  “Federal Reserve officials, many of them reluctant to continue the Fed’s economic stimulus campaign in its current form, wrestled at their most recent meeting with other ways of supporting an economy that still needs help,” The New York Times writes.
NEW YORK TIMES

E.C.B. Nominates New Banking Regulator  |  The governing council of the European Central Bank nominated Danièle Nouy to lead a new agency that will act as a central overseer over banking regulations across the euro zone.
DealBook »

The Ramifications of JPMorgan’s Settlement  |  “In all, the settlement is surely more than JPMorgan ever wanted to pay. Just as surely, it puts other banks on notice,” the editorial board of The New York Times writes.
NEW YORK TIMES

Shareholders Press AT&T and Verizon to Detail Roles in U.S. Surveillance  |  The New York Times reports: “Shareholders are putting AT&T and Verizon Wireless on notice: Tell the public more about the companies’ role in government surveillance efforts or risk a ding to the bottom line.”
NEW YORK TIMES

British Regulators Said to Be Reviewing Gold Benchmarks  |  The review by Britain’s Financial Conduct Authority is the latest area of focus by regulators on whether traders manipulated a variety of financial benchmarks.
DealBook »