JPMORGAN SETTLEMENT OFFERS LOOK INTO MORTGAGE MACHINE  | The record $13 billion settlement between JPMorgan Chase and the Justice Department on Tuesday wraps up a series of state and federal investigations that offer a rare glimpse into Wall Street’s mortgage machine before the financial crisis, Jessica Silver-Greenberg and Ben Protess report in DealBook.
At the heart of the civil settlement is a statement of facts negotiated with the government that provides details into how JPMorgan assembled mortgage securities sold from 2005 through 2008. While the bank did not admit violating the law, its approval of the statement was a critical concession made in order to strike a deal. The statement shows, for example, that as JPMorgan packaged the residential mortgages into complex securities, the bank promised to alert investors to any flaws that might raise questions about the loans. And yet, investors were kept in the dark, the government’s statement found.
The deal with JPMorgan, eclipsing other Wall Street settlements, is the largest sum a single company has ever paid to the government. The negotiations that led to the deal underscore a broader strategy shift at the Justice Department, where prosecutors are seeking to hit Wall Street where it hurts most: the bottom line, Mr. Protess and Ms. Silver-Greenberg report. Justice Department officials have signaled to the nation’s biggest banks that the billion-dollar mark is now a floor rather than a ceiling.
When Jamie Dimon, JPMorgan’s chief executive, sought a face-to-face meeting with Tony West, a top Justice Department official with close ties to President Obama, Mr. West agreed to a meeting only if the bank came with a more generous offer than the $3 billion it had proposed to settle a narrow window of cases, Mr. Protess and Ms. Silver-Greenberg report. “We don’t want you to waste your time and we don’t want to waste the attorney general’s time,†Mr. West told the bank chief, according to people in the room. Mr. Dimon agreed to raise his offer.
AS TRIAL BEGINS, ONE INSIDER STANDS OUT Â |Â
From his cubicle at Dell’s headquarters in Round Rock, Tex., Rob Ray shared insights about the computer maker that led to criminal insider trading charges against eight individuals, as well as an indictment of SAC Capital Advisors, the hedge fund run by Steven A. Cohen. Yet the authorities have not accused Mr. Ray of any wrongdoing, Peter Lattman and Ben Protess report in DealBook. “Mr. Ray, whose given name is Chandradip, is not cooperating with the government. Today, he works at Pepsico in investor relations, the same job he had at Dell.â€
“The disparate fates â€" prosecutors have charged the traders who profited from Mr. Ray’s information, but not Mr. Ray himself â€" signify a rare and curious loose end in the government’s otherwise unyielding insider trading crackdown. An examination of Mr. Ray’s role in the investigation, based on a review of court documents and public records as well as interviews with people involved in the matter, raises questions about the prosecution’s strategy in the Dell case and in the broader inquiry.â€
The questions loom as the criminal trial of the former SAC trader Michael S. Steinberg began Tuesday in Federal District Court in Manhattan. Mr. Steinberg, SAC’s most senior employee to be charged with insider trading, is one of the eight individuals charged on the Dell trades; the others have either pleaded guilty or have been convicted at trial. Dressed conservatively in a slightly wrinkled gray suit, white shirt and blue tie, the 41-year-old Mr. Steinberg appeared confident as he stood at the defense table on Tuesday, as jury selection began, DealBook’s Alexandra Stevenson reports.
A MUNICIPAL BANKRUPTCY MAY CREATE A TEMPLATE  | “Jefferson County, Ala., which just became the first municipality to tap the public bond markets while bankrupt, will go to court on Wednesday to seek approval for its plan to exit bankruptcy by the end of this year,†Mary Williams Walsh reports in DealBook. “But there is a catch: Even if Jefferson County does emerge from bankruptcy soon, it will not fully sever its ties to the Federal Bankruptcy Court in Birmingham for 40 more years.
“The county’s unusual exit plan, which could offer a possible template for other bankrupt municipalities, calls for the court to retain jurisdiction for the life of $1.8 billion in sewer-revenue debt that it sold over the last few days. If the county falters at some point, even decades from now, the bankruptcy court is supposed to have the power to enforce rate increases to produce the cash needed to pay back the $1.8 billion on schedule, with interest.â€
ON THE AGENDA  | The Consumer Price Index for October is released at 8:30 a.m. Data on retail sales in October is out at 8:30 a.m. Data on existing home sales in October is released at 10 a.m. The Federal Reserve’s policy making committee releases minutes of its recent meeting at 2 p.m.
J.C. Penney and Lowe’s report earnings before the market opens, while Green Mountain Coffee Roasters reports earnings this evening. Michael S. Dell is on CNBC at 7 a.m. Henry Kravis and George Roberts, co-founders of K.K.R., are on Bloomberg TV at 10 a.m.
DEVON SAID TO BE NEAR $6 BILLION DEAL Â |Â
“Devon Energy is near a deal to buy GeoSouthern Energy, a privately held oil and gas driller, for about $6 billion, people briefed on the matter said on Tuesday,†DealBook’s Michael J. de la Merced reports. “A deal could be announced as soon as this week, one of these people said. The deal, if completed, comes as companies are seeking to shore up their positions in shale formations rich in oil. But the industry has had few mega deals this year, with energy companies instead focusing on selling off nonessential assets.â€
Yahoo Plans to Return More Cash to Shareholders  | Yahoo increased its share buyback plan by $5 billion and also said it would sell $1 billion in convertible debt maturing in 2018.
BLOOMBERG NEWS
Jostens Agrees to Buy Rival in Commemorative Paraphernalia  | American Achievement, which sells its products under brands like Balfour, ArtCarved and Keepsake, is being sold by the private equity firm Fenway Partners.
DealBook »
Nokia Shareholders Vote to Sell Cellphone Unit to Microsoft  | Shareholders took a major step on Tuesday to reshape Nokia, voting overwhelmingly in favor of selling the Finnish company’s handset business for $7.2 billion, reports Mark Scott for The New York Times.
DealBook »
Emotion at Final Shareholder Meeting for Microsoft’s Chief  | Steven A. Ballmer, the departing chief executive of Microsoft, kept his composure during a speech at the company‘s annual shareholder meeting on Tuesday. But the usually stoic chairman, Bill Gates, choked up.
NEW YORK TIMES BITS
An Odd Spinoff by Royal DSM Â |Â The benefits of a $2.6 billion tie-up with a private equity firm are hard to fathom, Neil Unmack of Reuters Breakingviews writes.
REUTERS BREAKINGVIEWS
Deutsche Telekom Is Said to Be Near Sale of Scout24 Stake  | Reuters reports: “Deutsche Telekom is close to selling a 70 percent stake in its classified advertising business, Scout24, to private equity firm Hellman & Friedman for 1.4 billion euros ($1.89 billion), two people familiar with the talks said on Wednesday.â€
REUTERS
New Mountain Is Said to Seek Buyer for Inmar  | Reuters reports: “Private equity firm New Mountain Capital LLC is exploring a sale of Inmar Inc., a provider of coupon processing and logistics services to companies, seeking more than $600 million, according to three people familiar with the matter.â€
REUTERS
Your New Landlord From Wall Street â€" or Australia  | An investment fund from Australia has purchased more than 538 homes, townhouses and brownstones from Jersey City to Queens and Brooklyn â€" a microcosm of a much bigger trend sweeping the country, Julie Creswell reports in The New York Times.
NEW YORK TIMES
In New Push, Obama Reaches Out to Chief Executives  | “After years of a fractured relationship and fitful efforts to mend ties, Obama has had no fewer than five meetings and a conference call with C.E.O.’s since the start of October, according to an administration official,†Bloomberg News reports. “Among the C.E.O.’s who have met with him are Lloyd Blankfein of Goldman Sachs and Stephen Schwarzman of Blackstone Group.â€
BLOOMBERG NEWS
Nobel Laureates Sparring on Financial Markets  | “Robert Shiller and Eugene Fama, sharing a stage for the first time since it was announced last month that they would share the 2013 Nobel Memorial Prize in Economic Science, sparred with languorous familiarity Tuesday about the efficiency of financial markets,†the Economix blog writes.
NEW YORK TIMES ECONOMIX
Roark Capital to Buy CKE Restaurants From Apollo  | The private equity firm Roark Capital Group has agreed to buy the restaurant company CKE, the parent of the Hardees and Carl’s Jr. chains, from Apollo Global Management. Reuters reports that the deal values CKE between $1.65 billion to $1.75 billion.
REUTERS
At Man Group, Floor Space Shrinks Along With Assets  | The Financial Times reports: “Man Group employees are feeling the squeeze at the struggling hedge fund, with staff at its London headquarters being shunted into just one-and-a-half floors of the nine-story building it opened to great fanfare in 2011.â€
FINANCIAL TIMES
One Hedge Fund Is Looking Forward to Stricter Rules  | Reuters reports: “Colin Teichholtz, co-head of fixed income trading at $14 billion Pine River Capital Management, said the hedge fund firm will benefit from new Wall Street regulations as investment banks pull out of markets it likes to trade in.â€
REUTERS
After Fires, Safety Agency Opens Inquiry Into Tesla Sedan  | “A federal safety investigation of the Tesla Motors electric Model S sedan announced on Tuesday comes at a critical juncture for the car and the company,†The New York Times reports. “For the first time, regulators are examining whether the design of the high-end vehicle and its advanced lithium-ion battery pack are defective and the cause of two battery fires.â€
NEW YORK TIMES
GlaxoSmithKline Completes Sale of Aspen Pharmacare Shares  | The sale of shares in the South African drug maker Aspen raised gross proceeds of $694 million.
REUTERS
Draper, Veteran Venture Capitalist, Is Said to Be Leaving Firm  | Timothy Draper “will no longer be an investment partner with Draper Fisher Jurvetson, the Silicon Valley venture capital firm he founded in 1985,†Fortune’s Dan Primack reports. Mr. Draper is going to focus on Draper University, his new entrepreneurship education program.
FORTUNE
Baucus Corporate Tax Proposal Takes Aim at Merger ‘Inversions’  | A proposed overhaul of the corporate tax code, put forward by Senator Max Baucus, Democrat of Montana, includes a number of provisions that would make mergers intended to seek tax relief abroad less attractive.
DealBook »
S.E.C. Official Charged With Making False Statements  | Steven Gilchrist, a compliance examiner in the New York office of the Securities and Exchange Commission, was charged by federal prosecutors with making false statements about stock holdings that he wasn’t allowed to own under ethics rules.
DealBook »
Trader in Apple Stock Sentenced to 30 Months in Prison  | A former trader at Rochdale Securities was sentenced to two and a half years in prison on Tuesday for an unauthorized purchase of about $1 billion in Apple stock, Reuters reports.
REUTERS
Bernanke Says Economy Is Gaining Strength  | The New York Times writes: “A few months of scrambled economic data have not altered the Federal Reserve’s basic view that the American economy is gaining strength, nor its intention to start pulling back soon from its stimulus campaign, the Fed’s chairman, Ben S. Bernanke, said Tuesday evening.â€
NEW YORK TIMES
