Apple Rolls Out a Cleaner iTunes

November 30, 2012, 7:14 pm

Well, it finally happened: Apple got around to fixing iTunes.

Over the years, that program had become more and more cluttered as Apple saddled it with more and more burdens. In the beginning (2001), it was meant to be nothing more than a jukebox program. Then it became the loading dock for the iPod. Then it was the front end for the iTunes Music Store online. Then it was asked to manage TV shows and movies. Then podcasts. Then e-books. Then it became the syncing headquarters for iPhones and iPads. Then it was supposed to manage apps. Then it was the front end for Ping, Apple's flopped music-discussion service.

Eventually, it became a sluggish, cluttered, spreadsheety hangnail on our digital lives.

On Friday, Apple introduced the free iTunes 11 for download (Mac and Windows). It's still the front end for mus ic, videos and iGadgets, and its features and personality are much the same. But the design has been overhauled - deeply, controversially, but, in general, successfully.

You'll probably notice the declutterization first, what Apple calls “edge-to-edge” design. There's nothing on the right, left or bottom borders: the entire window is filled with album covers, or song lists, or whatever view you've selected in the bar across the top.

You can restore the left-side list of sources and the bottom-edge status bar if you miss them. But the proposed setup works fine: You choose the file type from the top-left pop-up menu (Music, Movies, TV Shows, Books, Podcasts, Apps), then click a category button across the top to change the display (like Songs, Albums or Artists.).

Each of those criteria (Songs, Albums…) has its own layout now. The Album view is especially cool. You see a grid of your album covers; when you click one, an information strip appears beneath, listing the songs. The strip is color-coded to the dominant color of the album cover itself. Slick.

Little buttons with “>” on them appear on just about everything; each produces a pop-up menu of options for that song, album or video (Add to Playlist, for example, or Show in iTunes Store).

A great new feature called Up Next is a list of songs that iTunes intends to play next - because they're in a playlist you made, or they're part of an album, or iTunes's Genius feature is lining them up like a robot D.J., or just because you feel like building an on-the-fly playlist. You can delete the ones you don't want to play, drag new songs into the lineup or reorder the songs that are there.

You can now redeem iTunes gift cards without having to type in that 723-digit code number. Just hold the bar code up to your computer's Webcam; iTunes does the rest.

Apple also fixed some of the dumber design elements that have always plagued iTunes. For years, the store was represented only as one item in the left-side list, lost among less important entries like Radio and Podcasts. Now a single button in the upper-right corner switches between iTunes's two personalities: Store (meaning Apple's stuff) and Library (meaning your stuff).

And you know those three round buttons in the upper-left corner of the window? They're supposed to mean Close, Minimize and Maximize. But the green one, for years, didn't maximize the window - it shrank the window to a miniplayer, in frustrating violation of Apple's own design guidelines.

Not anymore. Now the green button does what it's supposed to - makes iTunes fill your screen - and a new Miniplayer button opens a new, better floating Miniplayer window.

The miniplayer offers far more power now. You can search your entire library, switch to a different song or playlist and manipulate the Up Next list, without ever having to jump back to the full iTunes window. At last, you can park t he miniplayer in a corner of your screen as you do other work, while still flinging new songs into the lineup.

Unfortunately, Apple hasn't fixed the Search box. As before, you can't specify in advance what you're looking for: an app, a song, a TV show, a book. Whatever you type into the Search box finds everything that matches, and you can't filter it until after you search. It feels like a two-step process when one should do.

And then, of course, there's the eternal question: “Is iTunes doing too much?”

Sometimes, there's synergy. Sometimes, it seems to make sense that the jukebox, video, store and iGadget-loading features are all mashed into a single program - but not always. Sometimes, you feel like you're using separate, grafted-together programs.

In many ways, iTunes 11 is a classic Apple move. It replaces something you knew with something that Apple considers better - with little regard to the time it will take you to learn where everything went. Online, there's already a lot of “Noooo! They eliminated feature X!” - when feature X has just been moved or demoted.

iTunes 11 is, on the whole, better than what came before it - if only because it's faster, far less cluttered and laid out more sensibly. Yes, change always ruffles people's feathers - you could argue that Apple's specialty is feather-ruffling - but this time, at least, the overall direction is up.

Hedge Funds, Expecting a Bigger Buyback, Snap Up Greek Debt

LONDON - It is looking less likely that the Greeks can do a debt buyback on the cheap.

As Greece and its financial advisers race to set the terms for a crucial buyback of the country's deeply discounted bonds, opportunistic hedge funds are adding to their positions on the expectation that the government and its creditors will ultimately have to meet their price demand.

Hedge funds are holding firm on their stance that they will not sell for any price below 35 cents on the euro - a significant premium to today's average price of around 30 cents.

Traders say that the once trade-by-appointment market for Greek bonds has become quite robust, with as much as a billion dollars a day exchanging hands.

By Monday, Greece is expected to make clear to investors what price it will pay to get a deal done as the country tries to pay down its debt pile that tops 340 billion euros.

European officials and the International Monetary Fund have indicated that th e buyback, which aims to reduce the country's debt load by as much as 30 to 40 billion euros in order to meet future debt sustainability targets, must be completed by Dec. 13.

If the deal fails, the International Monetary Fund is unlikely to sign off on last week's debt agreement, raising the possibility that other European countries might follow suit. That would result in a bankruptcy for Greece.

Until recently, the view in Europe was that Greece, backed by a 10 billion euro loan from Europe - would be able to retire a healthy chunk of its debt by offering a close to market price of below 30 cents and then threatening to make use of collective action clauses to force holdouts to accept the offered price.

But the I.M.F.'s insistence that a buyback must take place before it signs off on new loans has emboldened hedge funds to buy more bonds in the view that Greece's creditors will not risk blowing up this week's carefully constructed deal if it means lending Greece additional funds to complete a buyback at a higher price.

Asked if there was any chance that the government would present a price below 30 cents, a person advising Greece on the deal said no.

Big macro funds such as Third Point and Brevin Howard in recent months have accumulated very large Greek bond positions expecting to be offered more on the buyback. At a price of 35 cents, some hedge funds that have scooped up debt at around 15 cents would more than double their money.

Traders say that even now, Greek bonds are attracting new buyers who are certain that they will be able to sell out of their positions at 32 cents and above.

But the question remains: will Germany sign off on additional loans that will lock in higher killings for hedge funds, even if the end result is reduced debt for Greece.

“Germany may accept a price of 35 cents,” said one Athens-based investment adviser at the center of many of these dealings. “But anything over 35 cents - no way.”

Week in Review: Portraits of a Hedge Fund Titan

Even before Steven A. Cohen's very bad week, the media narrative surrounding the hedge fund billionaire was well known: an intimidating temper that has mellowed with age, a bad back enflamed by the same, a hedge fund with a track record better than the Yankees and partial ownership of a baseball team whose standing is decidedly less stellar. This week, we review the highlights.

Like many billionaires Mr. Cohen, who has not been accused of any wrongdoing, shuns the media spotlight, but that hasn't stopped journalists and colleagues from painting colorful portraits that compare him to characters from Henry Melville and Miguel de Cervantes.

“It's a Darwinian and pressure-packed culture with ridiculous amounts of money at stake,” a former employee of SAC Capital told DealBook last year.

The closest Mr. Cohen has gotten to a media grilling recently was a sit-down with Paul Tudor Jones, another hedge fund manager, at a Wall Street-sponsored conference. Mr. Cohen is “almost as secretive as Howard Hughes,” one source told Businessweek in 2003. The comparison has stuck with the money manager despite his prominent forays into worlds of art, sports and politics.

In 2006, his hedge fund was focus of a widely criticized “60 Minutes” report on short sellers. His ex-wife, Patricia Cohen, told New York magazine that the television report was the impetus for her lawsuit over money involved in their 1990 divorce. The suit was later dismissed.

As the charges against former traders at his $14 billion hedge fund mounted, Mr. Cohen gave a rare interview in 2010 to Vanity Fair, saying that “in some respects I feel like Don Quixote fighting windmills.”

Or perhaps Mr. Cohen is, as Reuters described last year, the Feds' Moby Dick, an allegory that would make Robert S. Mueller, director of the Federal Bureau of Investigation, a modern-day empty-handed Captain Ahab.

In the end, the high-minded literary reference s may not capture Mr. Cohen's story as well as a man who inspired Bruce Springsteen, New Jersey's true poet laureate. It could be that Preet Bharara, the United States attorney in Manhattan, could write the hedge fund titan's final chapter.

A look back on our reporting of the past week's highs and lows in finance.

Two Firms Make Offers for Knight | Getco and Virtu Capital are said to be keenly interested in Knight's market-making trading operations, though they may sell less desirable parts of the company, Michael J. de la Merced and Nathaniel Popper reported. DealBook '

ConAgra to Buy Ralcorp, Solidifying Market Share | ConAgra is betting that private-label goods - made for bakeries, grocery chains and other customers - will be a higher source of growth worldwide, Mr. de la Merced and Stephanie Strom reported. DealBook '

Lehman Sells Property Firm in a Deal Worth $6.5 Billion | The deal that helped sink Lehman Brothers will play an important role in paying off the failed investment bank's creditors, Mr. de la Merced reported. DealBook '

MegaFon Raises $1.7 Billion in I.P.O., but Shares Fall | “The new listing, which is the largest Russian I.P.O. since the aluminum maker Rusal raised $2.2 billion in 2010, comes at a difficult time for European financial markets,” Andrew E. Kramer and Mark Scott reported. DealBook '

A Long-Term Vision | His stakes, once worth as much as $1.3 billion, are now valued at roughly $378 million, but Vinod Khosla seems unwavering in his commitment to the clean energy industry, Randall Smith reported. DealBook '

S.E.C. Weighs Suing SAC Capital | Steven A. Cohen is defending his $14 billion hedge fund against an intensifying government investigation into insider trading, Peter Lattman reported. DealBook '

• SAC Capital to Try to Reassure Investors | Only 40 percent of the money managed by the hedge fund comes from outside clients. DealBook '
• Former Analyst Is Freed on Bail in an Insider Case | Mathew Martoma appeared in Federal District Court in Manhattan to face the charges against him. DealBook '
• DealBook Column: Knowledge Is Money, but the Peril Is Obvious | Andrew Ross Sorkin examines “a business model that some said was tailor-made to foster insider trading on Wall Street.” DealBook '
• New Breed of SAC Capital Hire Is at Center of Insider Trading | Former employees of Mr. Cohen said that the case against Mr. Martoma highlighted SAC's high-stress, pressure-packed culture. DealBook '

As Official Drops Outs, Race Shifts for S.E.C. | With Mary J. Miller, a senior Treasury Department official, withdrawing, Sallie L. Krawcheck, a longtime Wall Street executive, has emerged as a potential front-runner, Ben Protess and Susanne Craig reported. DealBook '

• Rebuilding Wall St.'s Watchdog | Mary L. Schapiro “leaves behind a stronger S.E.C., an overhaul characterized by her attention to detail and meticulous preparation.” DealBook '

The Trade: Fledgling Monitor for Wall St. Risks an Early Compromise | Jesse Eisinger of ProPublica says that the Office of Financial Research “is looking as if it will be a tool of the financial services industry, instead of a check on it.” DealBook '

Deal Professor: In Battle With Hedge Funds, a Small Victory for Argentina | Steven M. Davidoff says that a stay of a federal judge's order on debt payment may provide an opportunity for Argentina's lawyers to raise questions that an appeals court may not have fully considered before. DealBook '

Autonomy's Ex-Chief Calls on H.P. to Defend Claims | “In the fight between Hewlett-Packard and the founder of its Autonomy unit, the gloves are well and truly off,” Mr. de la Merced reported. DealBook '

News Analysis: A Tax Break Once Sacred Is Now Seen as Vulnerable | “As President Obama and Congress try to hash out a deal to reduce the budget deficit, th e mortgage interest deduction will likely be part of the discussion,” Peter Eavis reported. DealBook '

Cravath Sets the Tone for Law Firm Bonuses | “Cravath kicked off bonus season by announcing year-end bonuses that were substantially higher than they had been the previous two years,” Mr. Lattman reported. DealBook '

Intrade Bars U.S. Bettors After Regulatory Action | The Commodity Futures Trading Commission took aim at the Dublin company and an affiliate in a civil complaint filed in federal court in Washington, Mr. Protess reported. DealBook '

UBS Fined $47.6 Billion in Rogue Trading Scandal | Britain's Financial Services Authority fined UBS £29.7 million for failing to prevent a $2.3 billion loss caused by a former trader, Mark Scott reported. DealBook '

WEEK IN VERSE: ‘I Don't Know, Krawcheck, It Sounded a Little Pitchy, Dawg.' DealBook commenters are tough judges. They've reacted to the candidat es to lead the S.E.C. as if they were watching a bad audition on American Idol.

H.P.'s Blunder for the Record Books

The dubious title of worst corporate deal ever had seemed to be held in perpetuity by AOL's acquisition of Time Warner in 2000, a deal that came to define the folly of the Internet bubble. It destroyed shareholder value, ended careers and nearly capsized the surviving AOL Time Warner.

After the Autonomy deal was announced, Ray Lane, Hewlett-Packard's chairman, heard from disgruntled shareholders.

The deal was considered so bad, and such an object lesson for a generation of deal makers and corporate executives, that it seemed likely never to be repeated, rivaled or surpassed.

Until now.

Hewlett-Packard's acquisition last year of the British software maker Autonomy for $11.1 billion “may be worse than Time Warner,” Toni Sacconaghi, the respected technology analyst at Sanford C. Bernstein, told me, a view that was echoed this week by several H.P. analysts, rivals and disgruntled investors.

Last week, H.P. stunned investors still reeling from more than a year of management upheavals, corporate blunders and disappointing earnings when it said it was writing down $8.8 billion of its acquisition of Autonomy, in effect admitting that it had overpaid by an astonishing 79 percent.

And it attributed more than $5 billion of the write-off to what it called a “willful effort on behalf of certain former Autonomy employees to inflate the underlying financial metrics of the company in order to mislead investors and potential buyers,” adding, “These misrepresentations and lack of disclosure severely impacted H.P. management's ability to fairly value Autonomy at the time of the deal.”

H.P. has declined to document the basis for its charges, saying it has turned the results of its internal investigation over to the Securities and Exchange Commission and Britain's Serious Fraud Office “for civil and criminal investigation.” In an unusually aggressive public relations counterattack, Autonomy's founder, Michael Lynch, a Cambridge-educated Ph.D., has denied the charges and accused Hewlett-Packard of mismanaging the acquisition. H.P. asked Mr. Lynch to step aside last May after Autonomy's results fell far short of expectations.

But others say the issue of fraud, while it may offer a face-saving excuse for at least some of H.P.'s huge write-down, shouldn't obscure the fact the deal was wildly overpriced from the outset, that at least some people at Hewlett-Packard recognized that, and that H.P.'s chairman, Ray Lane, and the board that approved the deal should be held accountable.

A Hewlett-Packard spokesman said in a statement: “H.P.'s board of directors, like H.P. management and deal team, had no reason to believe that Autonomy's audited financial statements were inaccurate and that its financial performance was materially overstated. It goes without saying that they are disappointed that much of the information they relied upon appears to have been manipulated or inaccurate.”

It's true that H.P. directors and management can't be blamed for a fraud that eluded teams of bankers and accountants, if that's what it turns out to be. But the huge write-down and the disappointing results at Autonomy, combined with other missteps, have contributed to the widespread perception that H.P., once one of the country's most admired companies, has lost its way.

Hewlett-Packard announced the acquisition of Autonomy, which focuses on so-called intelligent search and data analysis, on Aug. 18, 2011, along with its decision to abandon its tablet computer and consider getting out of the personal computer business. H.P. didn't stress the price - $11.1 billion, or an eye-popping multiple of 12.6 times Autonomy's 2010 revenue - but focused on Autonomy's potential to transform H.P. from a low-margin producer of printers, PCs and other hardware into a high-margin, cutting-edge software company. “Together with Autonomy we plan to reinvent how both structured and unstructured data is processed, analyzed, optimized, automated and protected,” Léo Apotheker, H.P.'s chief executive at the time, proclaimed.

Autonomy had already been shopped by investment bankers by the time H.P. took the bait. The pitch book was prepared by Qatalyst Partners, founded by Frank Quattrone, the Silicon Valley investment banker whose 2004 conviction on witness tampering and obstruction of justice was reversed on appeal. Qatalyst projected double-digit revenue and earnings growth in both 2011 and 2012, and suggested a visionary future of great opportunities: “The secular migration towards unstructured data has created a large and meaningful addressable opportunity in managing, regulating and monetizing the use of information.”

Berkshire Moves Into Spain With CaixaBank Reinsurance Deal

Warren E. Buffett has generally shied away from dipping his toe into southern Europe. But Mr. Buffett is nothing if not full of surprises.

His investment firm, Berkshire Hathaway, agreed on Friday to pay $780.8 million to claim the future cash flows of a life insurance portfolio held by CaixaBank, a major Spanish lender.

CaixaBank, which will continue to service the portfolio, will claim a pretax profit of about $680 million.

With the reinsurance deal, Mr. Buffett and his sizable insurance team are betting that at least one Spanish firm is in good financial shape, even as its home country remains on shakier economic ground.

He has repeatedly offered a dour assessment of Europe since the onset of its sovereign debt crisis, calling it a serious problem with few obvious solutions.

“I don't know how it plays out in Europe,” Mr. Buffett said at Berkshire's annual investor conference earlier this year. Referring to the European Central Bank, he added, “We have seen the E.C.B. here recently give $1 trillion to banks which are loaded with sovereign debt, which really is questionable in many cases.”

And he said during a visit to Japan two weeks ago that had no idea how the crisis would be resolved.

That said, Mr. Buffett said during the same meeting that he still saw plenty of opportunities to invest in Europe - outside of debt. “There are stocks I like and wonderful businesses,” he said, according to Reuters.

And the arm of Berkshire that is behind the CaixaBank deal, its big reinsurance division, has repeatedly demonstrated a greater appetite for risk than the rest of the company.

Many firms, including the American International Group and Lloyds, have struck agreements with Berkshire to help clean up their balance sheets. CaixaBank, for example, will be able to use the proceeds from the deal to meet new banking rules that require it to hold more capital.

Mr. Buffett and his top insurance lieutenant, Ajit Jain, agree to take on such potentially risky transactions because they provide additional assets to bulk up Berkshire's “float,” or insurance premiums that haven't been paid out yet. While the company may eventually need to pay out on insurance claims, it is betting that it will have made far more money by investing them elsewhere first.

Mark Scott contributed reporting.

Duke Energy\'s Latest C.E.O. Drama

Duke Energy faces even more management upheaval.

As part of a wide-ranging settlement with regulators in North Carolina, James E. Rogers, the company's chairman and chief executive, will retire at the end of 2013.

The settlement relates to the boardroom drama that elevated Mr. Rogers to the role in the first place.

Following the utility's merger with Progress Energy, William D. Johnson, the chief executive of Progress, was to run the combined company. But hours after the $32 billion deal was completed on July 2, the board pushed Mr. Johnson out and brought back Mr. Rogers. The coup set off loud protests in North Carolina, where both Duke and Progress were based, and state inquiries over whether regulators were misled.

Duke's board defended its actions, saying simply that it had lost confidence in Mr. Johnson's ability to lead the company and that the board alone had sole authority over this decision. Mr. Johnson, who was hired this month to run the Tennessee Valley Authority, said he was a scapegoat for Duke's board as its desire to complete the merger waned.

The combined Duke has more than seven million customers in its regulated businesses across six states in the Midwest and Southeast. The company is readying two large rates cases before the North Carolina utilities commission. The uncertainty over this investigation and its relationship with regulators has weighed on the company's stock, which was off about 10 percent from its summer high but up nearly 2 percent in trading on Friday morning.

As part of the settlement, Duke, which is based in Charlotte, will be required to keep at least 1,000 jobs in Raleigh for at least five years, rehire one of Mr. Johnson's former top assistants for two years and replace Marc Manly, one of Mr. Rogers's top lieutenants, as general counsel. The settlement also spells out the manner in which Duke's board will search for a replacement for Mr. Rogers, one of the nation's longest-serving utility executives.

While the settlement says that Duke's agreement isn't an admission of unlawful or improper action, it does require the company to issue a statement that says its activities have “fallen short” of the commission's expectations. The settlement must be approved by the full commission, which meets Monday and is expected to sign off on the deal.

SAC Chief Gave Testimony

SAC CHIEF'S TESTIMONY  |  The hedge fund manager Steven A. Cohen has offered little public explanation of the stock trades that are the focus of an intensifying government investigation. But Mr. Cohen, the head of SAC Capital Advisors, gave testimony to the Securities and Exchange Commission on the matter, which involves allegations of insider trading by a former portfolio manager.

Mr. Cohen said that his hedge fund sold the stocks in question after a portfolio manager said he was “no longer comfortable” with the position, The Financial Times reports, citing unidentified people familiar with the testimony. Any details of the conversation between Mr. Cohen and the manager, Mathew Martoma, are likely to feature prominently in the coming court action. The criminal case against Mr. Martoma is the first time the government has linked M r. Cohen to questionable trades. The hedge fund was also warned by the S.E.C. that it might be the target of a civil fraud lawsuit.

The firm held a call with employees on Thursday after the market closed, reassuring them that Mr. Cohen had no plans to retire, CNBC's Kate Kelly reported. That followed a conference call with investors on Wednesday, in which executives tried to allay concerns. Six former employees of SAC have now been linked to insider trading by the government, and three have been convicted. Still, investors stuck with the firm, adding as much as $1.6 billion in new capital to the flagship funds between 2010 and 2011, according to Absolute Return.

KHOSLA KEEPS A BULLISH BET ON CLEAN TECH  |  A cyclical downdraft in the clean energy sector has not discouraged one prominent investor, Vinod Khosla, from committing more money to his bets, Randall Smith reports for Dea lBook. Mr. Khosla, the founder of Khosla Ventures, once controlled stakes worth as much as $1.3 billion in biofuel companies, but at least on paper, that value has dwindled to roughly $378 million, Mr. Smith reports. To one of his supporters, Andy Bechtolsheim, who co-founded Sun Microsystems with Mr. Khosla 30 years ago, Mr. Khosla is “a visionary who likes to make big bets on ideas that can really change the world.” Still, as Pavel Molchanov, an analyst at Raymond James & Associates, notes, “The whole clean tech sector has been out of favor.” Mr. Smith writes: “Despite the crosscurrents, Mr. Khosla seems unwavering in his commitment.”

ON THE AGENDA  |  Mario Draghi, president of the European Central Bank, and Christine Lagarde, managing director of the International Monetary Fund, join the finance ministers of Italy and France at a conference in Pari s. Michael Milken, chairman of the Milken Institute, is on Bloomberg TV at 1:30 p.m. Gene Sperling, director of President Obama's National Economic Council, is on Bloomberg TV at 9 p.m. Data on personal income and outlays for October is released at 8:30 a.m.

RIFTS IN THE BUSINESS LOBBY  |  The United States Chamber of Commerce, the powerful industry group, is trying to retain its “influence and swagger” after a string of political losses, and as another group, the Campaign to Fix the Debt, raises its profile, The New York Times reports. As President Obama and Congress negotiate over the “fiscal cliff,” the Chamber of Commerce is pushing for a deal without tax increases, while some prominent chief executives are acknowledging that taxes might have to be raised. “Many business leaders are looking to the chamber as a bulwark against the White House's push for higher taxes, but it is unclear if the century-old association has the clout it once did,” The Times writes.

For the business leaders who comprise Fix the Debt, the group offers more than access to political power. It's also an extended networking session, an “elite hobnobber's paradise,” New York magazine's Kevin Roose reports, quoting one unidentified member as saying, “We have these great dinners.”

WHEN DIRECTORS ELECT THEMSELVES  |  As Orient-Express Hotels considers an unsolicited takeover offer from the Indian Hotels Company, a subsidiary of the Tata Group, its board of directors is in a strong position, Steven M. Davidoff writes in the Deal Professor column. That's because the directors can elect themselves, “a unique characteristic among companies worldwide. Shareholders have no real say in the selection of Orient-Express's directors.” Mr. Davidoff explains: “Orient-Express's shares are divided into Class A and Class B shares, with the Class B shares controlling 64 percent of the votes. Who owns the Class B shares? It is actually Orient-Express itself.” This feature of Orient-Express, which is based in Bermuda, “wouldn't be allowed under Delaware law,” Mr. Davidoff says. “This wouldn't be so bad, except Orient-Express has a history of poor performance.”

Mergers & Acquisitions '

U.P.S. Offers Concessions to Secure TNT Express Takeover  |  United Parcel Service has submitted concessions to European antitrust authorities as it seeks regulatory approval for its proposed $6.8 billion takeover of the Dutch shipping company TNT Express.
DealBook '

Duke's Chief to Retir e as Part of Settlement Deal  |  Jim Rogers, the chief executive of Duke Energy, “is retiring, and the power company's board will be overhauled, in a sweeping settlement with North Carolina regulators over a controversial boardroom coup last summer,” The Wall Street Journal reports.
WALL STREET JOURNAL

R.B.S.'s Deal to Sell Indian Operations Falls Through  |  The Royal Bank of Scotland had agreed to sell its retail and commercial banking operations in India to HSBC, but the deal collapsed on Friday, and R.B.S. said it would now wind down the business, Reuters reports.
REUTERS

Wonga, British Lender, Said to Be in Talks to Acquire U.S. Firm  |  Wonga.com, a British company that pr ovides loans online, “is in discussions to acquire U.S. small business lender On Deck Capital Inc. as it looks to expand into North America, according to a person familiar with the situation,” Bloomberg News reports.
BLOOMBERG NEWS

2 Bidders Said to Vie for Dean Foods Unit  |  Michael Foods and Saputo of Canada are each looking to buy the Morningstar dairy division of Dean Foods, “in a deal that could fetch between $1 billion and $1.5 billion,” Reuters reports, citing unidentified people familiar with the matter.
REUTERS

Icahn Urges Oshkosh Shareholders to Accept Offer  | 
REUTERS

INVESTMENT BANKING '

Financial Sector Leads a Rise in Corporate Profits  |  United States corporate profits reached a record high in the third quarter, and “all of the growth in domestic corporate profits was accounted for by the financial sector,” the Economix blog writes.
NEW YORK TIMES ECONOMIX

Berkshire in Reinsurance Deal With CaixaBank  |  Berkshire Hathaway agreed to pay the Spanish lender CaixaBank $778.7 million for future cash flow from a life insurance portfolio, “a rare dip into a fiscally stressed euro-zone country” for Warren E. Buffett's company, The Wall Street Journal reports.
WALL STREET JOURNAL

Morgan Stanley's Chief Laments Wall Street Scandals  |  James P. Gorman said at a conference on Thursday that Wall Street's reputation was “in the doghouse,” in part because of trading scandals like the one at UBS, Bloomberg News reports.
BLOOMBERG NEWS

At Citigroup, Lower Bonuses and More Job Cuts  |  Bloomberg News reports that Citigroup's “trading and investment-banking division plans to eliminate 150 more jobs while shrinking bonuses by as much as 10 percent, extending the toll of Wall Street's revenue slump, two people with direct knowledge of the decisions said.”
BLOOMBERG NEWS

Citigroup Hires Head of Financial Institutions Group for Singapore  | 
WALL STREET JOURNAL

British Banks May Be Undercapitalized, Bank of England Governor Warns  |  Britain's banks need more capital to protect against the fallout from the euro zone crisis, the rate-manipulation investigations and other potential costs, according to a report from the Bank of England. The health of Britain's major financial institutions is probably overstated because possible future losses and costs related to bad loans may be larger than expected, Julia Werdigier reports in The New York Times.
DealBook '

PRIVATE EQUITY '

S.E.C. Accuses Private Equity Manager of Misleading Investors  |  Bloomberg News reports that the “Securities and Exchange Commission sued Resources Planning Group, a Chicago-based investment adviser, and one of its owners, over cl aims they raised money for a failing private equity fund to pay off existing clients.”
BLOOMBERG NEWS

Cerberus's Talks With Supervalu Said to Hit a Snag  |  Bloomberg News reports that Cerberus Capital Management's talks to acquire Supervalu have “stalled because the private equity firm has had trouble obtaining the funds for a leveraged buyout, said people familiar with the matter,” Bloomberg News reports.
BLOOMBERG NEWS

HEDGE FUNDS '

Muddy Waters Offers to Pay for Olam Debt Rating  |  The short-seller introduced an unusual twist in its battle against the Singapore commodity company: an offer to pay for the company to get its debt rated by Standard & Poor 's.
DealBook '

In Battle With Hedge Funds, a Small Victory for Argentina  |  A stay of a federal judge's order on debt payment may provide an opportunity for Argentina's lawyers to raise questions that an appeals court may not have fully considered before, Steven M. Davidoff writes in the Deal Professor column.
DealBook '

I.P.O./OFFERINGS '

China Insurer Raises $3.1 Billion in I.P.O.  |  The deal ranks as Hong Kong's biggest of the year, but more than half of the shares sold by the People's Insurance Company (Group) of China went to 18 so-called cornerstone investors, many of them state-owned companies.
DealBook '

Status Quo at Groupon as Board Stands by Chief  |  A Groupon spokesman, Paul Taaffe, said that the board and the management team are “aligned.” For now, it appears Mr. Mason isn't going anywhere.
DealBook '

VENTURE CAPITAL '

Thiel Invests in Accounting Software Company  |  Peter Thiel, the PayPal co-founder, joined other investors in committing $49 million to Xero, which makes online accounting software for small businesses, TechCrunch reports.
TECHCRUNCH

LEGAL/REGULATORY '

Judge Gives Final Approval to Hostess Wind-Down Plan  |  A bankruptcy judge signs off on a liquidation plan that includes paying out up to $1.8 million in bonuses to executives. In addition, advisers to company say they are in active talks with about 110 suitors.
DealBook '

Barclays to Contest Energy Market Manipulation Case  |  Barclays said Thursday that it would fight charges filed by the Federal Energy Regulatory Commission over claims that it manipulated rates in California's energy markets.
DealBook '

Journalist Implicated in Insider Trading Case  |  Michael Baron, sen ior editor for TheStreet.com, is described in a criminal complaint as being connected to an insider trading ring, The Wall Street Journal reports.
WALL STREET JOURNAL

How Auditors Clashed in H.P.'s Autonomy Deal  |  The New York Times columnist Floyd Norris writes that in H.P.'s disastrous Autonomy deal, there is an answer to the question “Where were the auditors?” He writes: “They were everywhere.”
NEW YORK TIMES

George C. Kern Jr., Innovative M.&A. Lawyer, Dies at 86  |  The founder of the mergers and acquisitions practice at Sullivan & Cromwell in the late 1970s, Mr. Kern “played a major role in the corporate takeover battles of the 1980s,” The New York Times writes.
NEW YORK TIMES

A Warning to Life Insurers on Reserve Risk  |  The New York Times reports: “After more than a year studying a surge of intricate financial deals in the life insurance industry, regulators said Thursday that they had found transactions that could ‘give the industry a black eye,' but could not agree on what to do about them.”
NEW YORK TIMES

Strauss-Kahn Said to Reach Settlement Deal With Hotel Housekeeper  |  The New York Times reports: “Dominique Strauss-Kahn and the hotel housekeeper who accused him of sexually assaulting her last year have quietly reached an agreement to settle a lawsuit she brought against him stemming from the case, which made international headlines, people with knowledge of the matter said Thursday.”
NEW YORK TIMES

U.P.S. Offers Concessions to Secure TNT Express Takeover

LONDON - United Parcel Service said on Friday that it had submitted concessions to European antitrust authorities as it continues to seek regulatory approval for its proposed takeover of the Dutch shipping company TNT Express.

U.P.S. said the remedies would include the sale of certain business units and the granting of access to some of its airline network to rivals. The company, based in Atlanta, Georgia, did not provide specifics on which of its operations would be sold.

European antitrust authorities had raised concerns that the proposed 5.2 billion euro, or $6.8 billion, takeover of TNT Express would significantly reduce competition in the Continent's package delivery sector.

Joaquín Almunia, the European competition commissioner, had called on U.P.S. to offer significant concessions to gain regulatory approval for the takeover.

‘‘The proposed remedies aim to address the European Commission's concerns regarding the competitive effects of t he intended merger on the international express small package market in Europe,'' U.P.S. said in a statement on Friday.

The U.S. company added that the concessions would not change the terms of its offer for TNT Express.

As part of the concessions, the deadline for European regulators to rule on the takeover also has been extended until Feb. 5.

The ongoing antitrust concerns have weighed on the deal since it was first announced in March. Stock in TNT Express is currently trading at a 20.5 percent discount to U.P.S.'s offer of 9.50 euros-a-share, though TNT's share price has risen around 41 percent over the last 12 months.

TNT Express announced earlier in November that it would sell its airline operations to win antitrust approval for the deal with U.P.S.

ASL Aviation, which already owns 90 aircraft used for freight and passenger services, had agreed to buy Group TNT Airways and Pan Air Lineas Areas, which are both owned by TNT. The sale, whose f inancial terms were not disclosed, is dependent on U.P.S.'s successful take over of TNT Express.

If U.P.S. succeeds in its multibillion-dollar offer, the deal would be largest acquisition in the 105-year history of the American company, whose biggest purchase to date was its $1.2 billion takeover of Overnite Corp, in 2005, according to data from Capital IQ.

China Insurer P.I.C.C. Raises $3.1 Billion in I.P.O.

HONG KONGâ€"Hong Kong's market for new stock listings, which has been moribund for months, is showing new signs of life thanks to a small circle of very big investors.

On Friday, one of China's biggest state-owned insurers raised 24 billion Hong Kong dollars, or $3.1 billion, in the city's largest initial public offering of the year after the company priced its shares near the bottom of their previously indicated price range.

P.I.C.C. is the biggest player in China's fragmented market for property and casualty insurance. The company sold 6.9 billion shares that were priced Friday at 3.48 Hong Kong dollars, or $0.45, apiece, according to two people with direct knowledge of the deal. That was at the lower end of the range of 3.42 to 4.03 dollars per share that the company had sought. The I.P.O would have raised as much as $3.6 billion at the top end of the range.

But more than half of the shares sold by the People's Insurance Company (Group) of China, or P. I.C.C., founded in October 1949 as the Communist Party came to power, went to 18 so-called cornerstone investors. Those are large companies and funds that commit to buying a big chunk of the offered stock and agree not to sell their holdings for a fixed period, in this case six months. Companies and their bankers see this as a way to shore up support for new listings among institutional investors and the general public.

P.I.C.C.'s cornerstone investors together bought shares worth $1.82 billion and accounting for an exceptionally high 59 percent of the total. These buyers included foreign peers like American International Group, the European reinsurer Scor SE, Tokio Marine of Japan and Ingosstrakh Insurance of Russia.

But Chinese state-owned companies also played a crucial role in lending support, with eight buying $845 million worth of shares, for 46 percent of the cornerstone allocation. Among the government-owned buyers were China's biggest electricity grid op erator, a machinery manufacturer, an aerospace company and even a domestic rival, China Life Insurance, the country's biggest insurer with assets of more than 1 trillion renminbi, or $160 billion.

The heavy reliance on cornerstone investors in the P.I.C.C. deal represents a rising trend in Asian listings that is most pronounced in Hong Kong. Of share sales worth $1 billion or more so far this year, cornerstone investors in Hong Kong have taken up an average of 49 percent of the total deal value. That compares with 22 percent of such deals last year, and between 10 percent and 18 percent of such deals from 2007 to 2010, according to figures from the data provider Dealogic.

The increasing preference for precommitted investment has helped a number of deals get through despite difficult markets. Including the P.I.C.C. offering, there have been 47 new share sales in Hong Kong in the first 11 months of the year that have raised $9.9 billion. That value is down 63 perce nt from the same period a year earlier, when $26.9 billion was raised via 70 deals.

Still, in a sign that I.P.O. interest might be heating up, the retail portion of the insurer's offering saw strong demand. Applications for shares by the general public exceeded the amount of shares available to them by 17.5 times, according to one of the sources familiar with the deal. That led to a so-called clawback, which increased the retail portion of the I.P.O. to 7.5 percent of the shares being sold, up from the standard 5 percent.

No fewer than 17 banks acted as underwriters on the deal, which was led by Goldman Sachs, Deutsche Bank, Credit Suisse, China International Capital Corp. and HSBC as the global coordinators.

Muddy Waters Offers to Pay for Olam Debt Rating

HONG KONGâ€"Short-sellers have a number of tools at their disposal when seeking to profit from a drop in a target company's share price.

But Friday, Muddy Waters Research, the short-seller founded by Carson C. Block, introduced an unusual twist in its battle against the Singapore agricultural commodity company Olam International: an offer to pay for Olam to get its debt rated by Standard & Poor's.

‘‘We hereby make a bona fide offer to pay for Olam to have one of its public debt issues rated by S.&P.,'' Muddy Waters said in a statement published on its Web site and circulated via e-mail.

The latest volley from Muddy Waters, the short-seller based in the United States and Hong Kong, followed another week of testy exchanges between Muddy Waters and Olam.

The war of words started Nov. 19, when Mr. Block, in a speech in London, questioned Olam's accounting and the sustainability of its debt load. Olam responded by temporarily haltin g trading in its shares and filing a defamation lawsuit in Singapore High Court against Muddy Waters and Mr. Block.

Last Monday, the short-seller published a 135-page report that likened Olam to Enron, a U.S. company that went bankrupt in 2001, saying the Singapore company was ‘‘likely to fail'' and questioning the bookkeeping on its acquisition of a flour milling business in Nigeria, among other issues.

Two days later, Olam responded with a 45-page report of its own that dismissed the findings of Muddy Waters as ‘‘false and misleading.'' Olam said it faced no risk of insolvency and elaborated at length on the valuation and performance of its many trading and operating businesses around the world. It said the short-seller was attempting to ‘‘distract and create panic'' among its shareholders and bondholders, something it called ‘‘a strategy of shouting fire in a crowded room.''

In its statement Friday, Muddy Waters said Olam's allegations were defamatory. ‘‘The shares we have shorted are a fraction of the number of shares short,'' the statement said. ‘‘We are not working in concert with a group of hedge funds to try to drive the stock price down.''

Muddy Waters added that its offer to pay for the debt rating would expire next Wednesday.

Representatives for Olam did not immediately respond Friday to requests for comment.

Despite Setbacks, Investor Is Bullish on Clean Technology

Vinod Khosla crowed about the clean energy industry last year. Three of the biofuel start-ups in his venture capital portfolio had just gone public, and the stocks had risen considerably after their debuts. “I challenge anybody to claim that clean tech done right is a disaster,” Mr. Khosla said at a conference, rebuffing recent criticism. “We've generated more profits there than anybody has.”

Since then, Mr. Khosla, the founder of Khosla Ventures, has watched much of those paper gains evaporate. As the clean energy industry broadly has taken a hit, shares of the biofuel companies - Amyris, Gevo and KiOR - have slumped 70 percent to 90 percent from their peaks. His stakes, once worth as much as $1.3 billion, are currently valued at roughly $378 million.

The billionaire investor has been caught in the cyclical downdraft.

The public stocks of solar, wind and biofuel companies are suffering amid industrywide pressures. The price of natural gas remains low. Europe has pulled back on incentives. American subsidies are in question after the bankruptcy of the solar panel maker Solyndra. And China is providing formidable low-cost competition.

“The whole clean tech sector has been out of favor,” said Pavel Molchanov, an analyst at Raymond James & Associates, a brokerage firm. “I'd be hard pressed to name one trading above its I.P.O. price.”

Despite the crosscurrents, Mr. Khosla seems unwavering in his commitment. He is pouring money into start-ups. Khosla Ventures recently invested more in LightSail Energy, a three-year-old start-up working to develop low-cost energy storage. He is also sticking with his public companies. His firm, for example, still owns 54 percent of KiOR.

“He's a visionary who likes to make big bets on ideas that can really change the world,” said Andy Bechtolsheim, who co-founded Sun Microsystems with Mr. Khosla 30 years ago and shares a house with him at Big Sur on the Califo rnia coast. “I would think he's made a larger personal bet on green tech than anybody else.”

While the public markets are raising short-term doubts, the long-term investment thinking remains unchanged. Governments around the globe are pushing to find alternative sources of energy in an effort to reduce their dependence on fossil fuels that may hurt the environment. In a television interview in 2007, Mr. Khosla said “mainstream solutions” could replace up to 80 percent of oil-based power. Without them, he said, “this planet is history the way we know it today.” After Hurricane Sandy, the subject of global warming - and changing climate conditions - has again come to the forefront.

In a recent blog post on the Forbes Web site, Mr. Khosla acknowledged the shift in market sentiment. “Clean tech went through a time when it was in vogue and now it is not,” he wrote. “The financing environment for clean tech companies is tough today,” he added. But h e said he still expected “to do better than industry averages by keeping our losing companies to a minority.”

Since founding his venture capital firm in 2004, Mr. Khosla has become one of the most vocal advocates for clean tech innovation, buying stakes in about 60 industry start-ups. Ausra, a solar thermal start-up that had drawn $130 million in venture backing, was sold in 2010 to the French nuclear plant builder Areva for about $250 million, according to one industry estimate. And SeaMicro, a low-power server maker, was bought this year by Advanced Micro Devices for $334 million, more than five times the amount invested by its venture backers, according to a SeaMicro co-founder, Andrew Feldman.

It's unclear how the broader clean tech portfolio has performed at Khosla Ventures. Mr. Khosla declined to disclose the firm's returns or to comment for the article.

But one of his funds, which raised $1 billion to invest in clean tech and other start-ups, is up 30 percent since inception in 2009, according to filings by the California Public Employees' Retirement System, the largest state pension. In his Forbes blog post, Mr. Khosla said a recent fund, which raised $1.05 billion in October 2011, was “oversubscribed,” and his firm's broader performance since 2006 had “well exceeded typical venture funds.” In that period, venture funds over all have returned 7.25 percent annually after fees, according to industry data.

Mr. Khosla's commitment is an outgrowth of his three decades at the cutting edge of technology.

A native of India, Mr. Khosla, 57, earned a master's degree in biomedical engineering from Carnegie Mellon and an M.B.A. from Stanford in 1980. After starting the design automation company Daisy Systems in 1982, he co-founded Sun Microsystems, then a growing technology company.

At Sun, he supplied drive and vision. But Mr. Khosla, who is known for his blunt talk and intense manner, was replaced a s chief executive two years later and left the company shortly thereafter.

In 1986, he joined the venture capital firm Kleiner Perkins Caufield & Byers. Over the next two decades, Mr. Khosla scored sizable returns betting on the growth of fiber optic networks. Two companies, Cerent and Siara Systems, were sold for a combined $15 billion-plus at the height of the late-1990s dot-com bubble.

Mr. Khosla had been looking into alternative fuel technologies at Kleiner Perkins when a business plan for an ethanol start-up crossed his desk in 2003. The plan “sat on a corner of my desk for nearly 18 months while I read everything I could about petroleum and its alternatives,” he later wrote in an article for Wired magazine in 2006.

When he branched out on his own in 2004, Mr. Khosla invested millions in the ethanol start-up, Celunol. He soon established himself as a top venture capitalist in clean tech, attracting prominent outside investors like Microsoft's found er, Bill Gates. Former Prime Minister Tony Blair of Britain joined the firm as a senior adviser.

Over the years, Mr. Khosla has experienced his share of blowups.

In September 2011, Khosla-backed Range Fuels, a wood-chips-to-ethanol company, went bankrupt after receiving a $44 million grant from the Department of Energy and $33 million under a Department of Agriculture loan guarantee. When The Wall Street Journal editorial page criticized Range Fuels as an “exercise in corporate welfare,” Mr. Khosla lashed back, saying the authors inhabited an “ivory tower” that is “full of people who don't understand technology.”

Sometimes, Mr. Khosla's companies had to pivot from their original plans and focus on new markets. For example, Calera was founded in 2007 with plans to use power plant exhaust to make cement. Mr. Khosla called its technology “game changing” in 2008.

But the company encountered some setbacks. It postponed plans for commercial- scale production in 2010 pending further research and later cut its 145-employee work force by two-thirds. Since then, Calera has broadened its focus, developing other products like fillers for paper and plastics.

Like many venture capital investors, Mr. Khosla will risk a few strikeouts for the chance to hit home runs. “My willingness to fail is what gives me the ability to succeed,” the investor has said frequently.

The odds can be especially brutal in clean technology. The projects are often capital-intensive - like $200 million or more for a biofuels plant - and they can take years to pay out, said Sam Shelton, a research engineer at Georgia Tech. By comparison, social media start-ups often require little upfront money and few employees. “The economics are totally different,” Mr. Shelton said.

In part, Mr. Khosla aims to take stakes when the companies are still getting off the ground, rather than waiting until they're more mature and more expens ive. He first bought a stake in KiOR, which aims to convert wood chips to gas and diesel fuel, in 2007. The company is now completing the first of five planned plants in Mississippi with the help of a $75 million interest-free loan from the state.

Mr. Khosla is “always thinking at a very high level about the potential of an idea,” KiOR's chief executive, Fred Cannon, said. “He has a very good feel for when to step on the gas.”

After jumping in early, Mr. Khosla appears willing to ride out the swings, in both directions. Over the years, public filings indicate he has plowed roughly $80 million into KiOR, amassing a 54 percent stake in the company. Although the stock is off its peak levels and I.P.O. investors are still underwater, his holdings are worth $356 million - a fourfold gain.

Barclays to Contest Energy Market Manipulation Case

Barclays on Thursday vowed to fight a proposed $470 million fine from American regulators who accused the British bank of manipulating rates in California's energy markets.

The issue stems from late October, when the Federal Energy Regulatory Commission threatened to seek a $435 million penalty and disgorgement of an additional $35 million from Barclays over trades it made on energy prices. The potential penalty, part of a broader crackdown that includes recent cases against JPMorgan Chase and Deutsche Bank, would be the regulator's largest fine ever.

But in a regulatory filing on Thursday, Barclays indicated that it would seek a Federal District Court hearing if the commission moved forward with the sanction. Barclays, which plans to challenge the agency's analysis of the questionable trading, said that it would fight the case in court rather than accept the fine or seek an administrative hearing.

In its initial order against the bank, the commission sa id Barclays employees had made trades that were designed to skew the prices for electricity in what the industry calls the “physical” market. Through complex calculations and citing vulgar internal e-mails, the agency argued that the bank booked gains in financial bets that were greater than losses on the physical trades. The trades, according to the order, resulted in a loss of $4 million over the period while allowing the bank to record gains of $35 million on the financial contracts.

At the time of the filing, Barclays issued a statement challenging the commission's allegations, saying the bank's “trading was legitimate and aboveboard” and said it intended to “vigorously defend this matter.”

The commission did not immediately comment.

Status Quo at Groupon as Board Stands by Chief

You may have noticed a certain frenzy around Groupon in recent days, as speculation swirled about the fate of the daily deals pioneer's chief executive, Andrew Mason. More specifically, that the company's board would discuss at a meeting on Thursday whether he should remain in his post.

Well, here's what happened at that regularly scheduled meeting: not much.

A Groupon spokesman, Paul Taaffe, told DealBook on Thursday afternoon that the board and the management team are “aligned.” For now, it appears, Mr. Mason isn't going anywhere.

He added: “The board and management are focused on the performance of the company, and they are all working with their heads down to achieve their objectives.”

That doesn't mean that everything is well at Groupon, once lauded as one of the fastest-growing members of the new generation of Internet companies. Its shares have fallen 83 percent in the year and change that it has been publicly traded.

And questi ons still swirl about the long-term viability of the daily deals business. Groupon's closest competitor, LivingSocial, announced on Thursday that it would cut 400 jobs, or about 10 percent of its work force.

Mr. Mason seems to be aware of the depths of the problems he faces.

“When your stock is down 80 percent, your board is going to ask if you're doing the right things,” he said at Business Insider's Ignition conference on Wednesday.

But while he hopes to stay in his job, as a co-founder and a large shareholder of the company, he hinted that he would step aside if that step were deemed necessary.

“I want what's best for Groupon,” he said.

At Orient-Express, the Board Holds All the Cards

Orient-Express Hotels, the Bermuda-based owner of luxury hotels, has received an unsolicited offer to be acquired by the Indian Hotels Company, a subsidiary of the Tata Group. In surveying the potential battle for control, I am certain of only one thing: It's good to be a director of Orient-Express â€" and it's likely to stay that way.

It's not because Orient-Express's chairman gets to stay at the hotels for free, or that other directors get a 75 percent discount. Or that these directors have largely served without consequence despite Orient-Express's poor performance.

Rather, it is because these directors can elect themselves, a unique characteristic among companies worldwide. Shareholders have no real say in the selection of Orient-Express's directors.

Orient-Express's shares are divided into Class A and Class B shares, with the Class B shares controlling 64 percent of the votes. Who owns the Class B shares? It is actually Orient-Express itself. Th e shares are owned by a company subsidiary and voted by the four directors of the subsidiary, two of whom are also directors of Orient-Express.

The reason this structure exists is because of a unique Bermuda law. In 2000, Orient-Express was slowly spun out of Sea Containers, a now-defunct shipping company. Sea Containers gradually sold off its shares.

But the executives of the shipping company apparently wanted to ensure that even if Sea Containers' stake went below 50 percent, the company would be safe from a hostile bid. They accomplished this by placing majority voting control with this subsidiary. And because two of the four directors on this subsidiary are also directors of Orient-Express, they are necessary for any action with respect to these shares. The other two directors, by the way, are lawyers at Orient-Express's law firm, Appleby Global.

It's a structure that wouldn't be allowed under Delaware law, but one that effectively gives the directors control over the company. This wouldn't be so bad, except Orient-Express has a history of poor performance.

In 2007, the Jumeirah Group of Dubai made a $60-a-share bid for the company. Indian Hotels also expressed interest.

Both bids were vigorously rebuffed by the chief executive at the time, Paul White, and his board. Orient-Express's strategy was clear. Because it controlled the shares, it didn't even need to engage with these bidders. At that time, Taj Hotels, the Tata subsidiary with an interest in Orient-Express, wrote that “the Taj Hotels and Dubai Holdings, the two largest public shareholders of OEH, have been unable to enter into any meaningful dialogue with the OEH Board.”

By 2008, Orient-Express was still under siege, this time by two hedge funds, D.E. Shaw and CR Intrinsic, a division of Steven A. Cohen's SAC Capital. The two funds proposed at an October 2008 shareholder meeting that the Class B shares be treated as treasury shares with no v oting rights. The proposal was defeated with the company's Class B shares voting against it, despite the approval of over 90 percent of the Class A shares.

The funds then sued in a Bermuda court to have the structure ruled invalid. But in a June 1, 2010, decision the Bermuda court upheld this structure under Bermuda law. Basically, the court stated that the petitioners could not challenge the voting structure as “per se” illegal under Bermuda law without a showing that the directors were acting against the company's best interest.

Orient-Express's directors have continued to do a less-than-stellar job. The company's stock has plummeted almost 85 percent from its high, and in November 2008, Orient-Express undertook a $55 million dilutive capital raise.

In July 2011, Mr. White resigned. Since that time, the company has been largely rudderless. The board chairman, J. Robert Lovejoy, took over for a time. In May, Philip Mengel, another director, was named the interim head.

In October, the Tata Group, which owns 7.63 percent of Orient-Express, made another offer to acquire the company. With the stock at $9 a share, the $60-a-share offer of a few years ago was now an impossible dream. Tata and its co-bidders are offering $12.43 a share, a roughly 45 percent premium. Notably, Mr. White has re-emerged as part of the bidding group.

Orient-Express has responded with a two-pronged strategy. First, it has made the usual complaint that Tata's bid is severely underpriced, an effort to acquire the company at a low point in the economic cycle. When rejecting Tata's offer, Orient-Express's board stated that “the current macroeconomic environment, conditions in the luxury hotel business and factors unique to Orient-Express would make this a highly disadvantageous time to sell the company to realize its true value.”

Second, Orient-Express has finally hired a permanent chief, John M. Scott III, who did a decent tur naround job at Rosewood Hotels Resorts, a group of 17 ultra-luxury hotels, eventually selling the company in 2011 for $229.5 million. There has also been some turnover at the board, with four new directors added in the last few years.

But Orient-Express is once again refusing to meet with Tata to discuss this offer. In doing so, it would seem the Orient-Express board is unwilling to sell at any price.

Still, Tata's bid is merely the opening price. A report by a Citigroup analyst puts the share price north of $15, while one from Barclays gives a higher estimate at $18 a share.

The Barclays valuation analysis is done on a per-key or price-per-room basis and seems to be in the ballpark. Barclays assigns Orient-Express's two premium hotels, the Cipriani and Splendido, a $3 million per-key valuation. That amounts to a total of roughly $285 million and $240 million, respectively. This appears comparable with the recent offer of $2.4 million per room made on the Four Seasons in New York.

There may be a Russian oligarch willing to pay more, and that is what Orient-Express will argue. But it is hard to see how value can go much higher without a change in the direction of Orient-Express.

Orient-Express seems to be putting all their valuation eggs in the basket of one chief executive, a man who has done well with a small private company. It may well be that Mr. Scott can create value beyond what these hotels are worth through branding and expansion.

But this is a risky bet, and one that shareholders do not seem to want to take. Who can blame them, given past performance?

Of course, none of this really matters, because the directors hold all the cards. Tata could sue to challenge this share structure again, arguing that the directors are breaching their fiduciary duties by keeping themselves in office despite a fairly priced offer. But the directors could simply say they need yet more time to allow this chief ex ecutive to implement his plan, whatever it may be.

Dual-class share structures are not uncommon. But there are none that I know of where directors rather than shareholders can vote their stock. Shareholders have the duty only to themselves in deciding not to sell. But directors have duties to all shareholders, and this would be the basis of such a challenge.

Still, don't count on a lawsuit. Tata seems intent on appearing friendly. And such a suit has only a small likelihood of success because the board will again hide behind its new chief executive and his plans. While it's easy to point fingers at the board here, the shareholders also need to take some of the blame for buying into this structure while knowing about this problem.

Whatever your conclusion, the directors appear poised to wait it out, perhaps in the Cipriani, where I hear the cocktails are quite nice. And there is really nothing to stop these board members from doing so, given their position and stated beliefs.

Laptop Buyers Should Pay Some Attention to the Chromebook

November 29, 2012, 2:22 pm

There seem to be a trillion variations on tablet/laptops these days. There are laptops with keyboards that slide, with screens that flip, with hinges that bend backward. I have a strong feeling most of them will wind up in the junk drawers of history.

But one of them is eminently successful, and it's not getting enough attention: Google's new Chromebook.

The Chromebook laptop concept has been kicking around for years now - handed out as loaners on Virgin flights, sent to reviewers as prototypes - but the 2012 version should make a lot of sense to a lot of people. Simply put, it's a great second computer for $250.

The laptop's shell is plastic, but it performs an excellent impersonation of silver brushed aluminum. It feels really, really good. The Samsung logo is the only thing on the top. The Chromebook is very light - 2.4 pounds - and its extremely clean, satisfying keyboard is carefully modeled on the MacBook Air's. The keys are black with white lettering, and they poke up through holes in the “deck.” The trackpad works perfectly.

There are HDMI, USB 2.0 and USB 3.0 jacks - on the back, alas - and a memory-card slot on the side for transferring camera photos. And a headphone jack. (For $330, you can get a version that gets online over the cellular data networks.) The 11.6-inch screen isn't glossy, which is good, but it's a little washed out. It has Bluetooth and Wi-Fi. Google claims 6.5 hours for the battery, and that seems about right.

The Chromebook concept takes some getting used to: It's exclusively for online activities. Web, e-mail, YouTube, and apps like Google Drive (free, online word processor, spreadsheet and slide show programs). The laptop has no moving parts: no fan, no DVD drive, not even a hard drive. It's silent and fast, as long as you don't try to do two things at once (video playback and music playback, for example).

And it comes with very little storage; you're supposed to keep your files online. Google starts you off with 100 gigabytes of storage for two years; after that, you have to pay for more storage (although you get to keep whatever you've already used, no charge).

There are all kinds of payoffs to this approach. The laptop turns on instantly. The operating system is updated automatically every six weeks or so. It has “insane levels” of security, according to Google.

Google also gives you 12 free passes for Gogo, the service that gives you Wi-Fi on plane flights, so you can keep working in the air. If you use Chrome on your real computer, and you sign in with your Google account, your bookmarks and online files synchronize across all your machines.

The Chromebook runs something Google calls the Chrome OS - it's not the Mac, it's not Windows. It doesn't run “real” softwa re like Photoshop, iTunes, Spotify, Pandora, Skype, and so on. It's basically just a Web browser, although it does offer accounts to help keep family members' stuff separate.

Now, if this laptop cost $450 (like the last Chromebook), it would appear to be laughably limited. You'd mock the screen and the speed (it has an ARM chip inside, not Intel inside). You'd scoff at the lightweight plastic.

But $250 changes everything. A price of $250 means you don't spend hours online comparing models. A price of $250 means half the price of an iPad, even less than an iPad Mini or an iPod Touch. And you're getting a laptop.

(There's an even less expensive Chromebook from Acer - $200 - although reviewers seem to find it somewhat cheap-feeling.)

For so many things people do with their computers (and tablets) these days, the Chromebook makes eminent sense. Flash videos play. Netflix movies play. Office documents open. In other words, Google is correct when it asserts that the Chromebook is perfect for schools, second computers in homes and businesses who deploy hundreds of machines.

It's also a perfect computer for the technophobic. It's very hard to get lost in an operating system that basically has no features.

It's been a long, patient slot for Google to get here, but with year after year of careful tweaks and improvements - and a jaw-dropping $250 price - the Chromebook is finally ready for prime time.

Interest in Hostess\' Brands Coming in \'Fast and Furious,\' Adviser Says

A little over a week after Hostess Brands formally announced its plans to wind itself down, the bankrupt maker of Twinkies and Devil Dogs is dealing with more interest from potential buyers than it can handle.

Advisers to the Hostess are in active talks with about 110 suitors, ranging from regional bakeries up to national supermarket chains, an investment banker for the company said in federal bankruptcy court for the Southern District of New York on Thursday. In perhaps a more reassuring sign, many of these suitors appear ready to spend big amounts of money.

Since Hostess won interim approval from a judge to begin selling off its stable of junk-food brands, the company has been bombarded by a flurry of calls.

“To be honest, it's been so fast and furious that we haven't had time to make all the outbound calls we've wanted to,” the banker, Joshua Scherer of Perella Weinberg Partners, testified.

At least a half-dozen potential buyers have retained what Mr. Scherer described as “large bank advisers,” a promising sign that they are preparing to spend “substantial sums” of money.

Among those that have expressed interest are 25 regional bakeries, five national supermarket chains and at least two overseas companies interested in securing distribution rights to Hostess products in India and other countries, he added.

Some potential buyers were touring Hostess facilities on Thursday, Mr. Scherer added.

Hostess is seeking final approval of its liquidation plan, which would see off Ding Dongs, Ho Hos and Drake's coffee cakes to new homes. Some interested buyers, such as the investment firm Sun Capital Partners and the company that owns Pabst Blue Ribbon beer, have publicly disclosed their desire for parts of the business - including in some cases all of Hostess.

Sales of the company's brands could exceed $1 billion, Mr. Scherer said. He added that he expected initial bids to come in by early to mid December. A so-called “stalking-horse bidder,” which would set the floor for an auction, would likely be picked by mid-January.

In Battle With Hedge Funds, a Small Victory for Argentina

A decade-long quest by hedge funds led by Elliott Management and Aurelius Capital Management to force Argentina to pay up on the country's defaulted debt is going to last a bit longer.

On Wednesday, the United States Court of Appeals for the Second Circuit issued a stay of a lower court's order that would have required Argentina to set aside $1.33 billion to pay holders of its old, defaulted debt if and when it made any payments on its new debt.

It's a minor victory for Argentina, but in this case it may have a ancillary effect, signaling a reversal of fortune for the country.

To understand the implications of the judicial order, a bit of history is needed.

This litigation arises out of Argentina's default on $80 billion worth of sovereign bonds in 2001. In 2005 and 2010, Argentina subsequently pushed the holders of this debt to exchange the old bonds for new ones at 25 to 29 cents on the dollar. The stick here was Argentina's steadfast refusal to pay any amount on the old bonds. Since that time, the remaining holders of the old bonds, including Elliott and Aurelius, have been enmeshed in worldwide litigation against Argentina to force it to pay.

In October, the appeals court handed the two hedge funds a stunning victory. The court ruled that the “pari passu” clause in the bond indenture for Argentina's old debt required the country to make payments on its old debt any time it made a payment on its new debt. Pari passu is a Latin phrase meaning, roughly, “on equal footing.”

The court also held that, given Argentina's continued refusal to pay this old debt, the Foreign Sovereign Immunities Act of 1976, which prevents courts from attaching the property of sovereigns, did not prohibit a federal court from ordering Argentina to comply with the pari passu clause by issuing an injunction to such effect.

The appeals court did not hand a complete victory to the hedge funds. It remanded the case to J udge Thomas P. Griesa, the lower court judge hearing the case, to decide two issues: whether the injunction requiring Argentina to make payments on the old bonds applied to third parties, and how much Argentina would be required to pay to holders of the old bonds if it made payments to holders of the new ones.

It appears Judge Griesa had clearly grown tired of Argentina's intransigence. At a hearing earlier in November, he handed full victory to the plaintiffs. He ruled that Argentina must set aside the full $1.33 billion it owed to the plaintiffs if and when Argentina made a $3 billion payment due on Dec. 15 to holders of the new bonds.

Argentina, as a sovereign, could ignore this order, but Judge Griesa put teeth in it by applying it to third parties. He ordered the bond indenture trustee as well as the clearing systems that transmit money for Argentina to comply with this order.

The judge's actions were particularly aggressive for two reasons. First, Art icle 4-A of New York's Uniform Commercial Code provides a safe harbor for third parties from this type of injunction, the purpose of which is to ensure that only Argentina's banks are drawn into these disputes. Argentina has argued that the bond indenture trustee is not its bank and so immune from the injunction. Argentina also argues that payment system operators are immune under long-settled New York law.

Judge Griesa additionally ordered the $1.33 billion due and owing to holders of the old bonds to be paid all at once instead of pro rata over time as holders of the new bonds are paid. The judge made the order effective immediately, refusing to stay his order until it had been fully considered by the appellate court. Argentina's response was to appeal to the Second Circuit and request an emergency stay.

On Wednesday, the appeals court stayed the implementation of Judge Griesa's order, and it set up a briefing schedule for the case, to be heard on Feb. 27 by th e same judges who previously ruled against Argentina.

At first blush, this is not much of a victory for Argentina. Given what is at stake, it is no surprise that the appeals court would call a break to the confrontation to review Judge Griesa's order.

The same judges who previously ruled against Argentina will now revisit the case. Argentina has already filed a motion asking the entire Second Circuit to rehear the prior decision of these judges. That motion will probably remain in limbo while Judge Griesa's order is reviewed.

While on its face the stay is a small matter, the question now is whether it can provide a bigger opening for Argentina.

Judge Griesa's order is going to require the Second Circuit to grapple with questions about the scope of the court's authority that it may not have fully considered earlier. The United States government, third-party financial institutions affected by the judgment and even the holders of new bonds have been ene rgized by the prior ruling.

The appeals court has set a Jan. 4 deadline for the interested third parties to submit their views. Expect all of these parties to now enter the fray with briefs in support of Argentina, with many arguing that applying this injunction to third parties would upset the orderly flow of payments in many other instances.

This will require the appellate court to decide whether this injunction should apply to third parties, an issue the judges already seemed to be uneasy with in their prior opinion.

And if the judges do find that the injunction issued by the lower court should not apply to third parties, then the Second Circuit is going to have to again confront the basic question of what it is trying to do against Argentina.

The Foreign Sovereign Immunities Act of 1976 prohibits a court from legally attaching sovereign property unless It is used in commercial activity. The act has been used to prevent lawsuits against scores of countries. And even though Argentina submitted to the jurisdiction of the New York courts, it did so after passage of this act, so clearly the parties knew that these limits existed.

If the Second Circuit is unwilling to apply the injunction to third parties, then it may be required to determine how the lower court's order is not really just a legal attempt to attach Argentine property â€" a tactic that could be used against any other sovereign, something the Foreign Sovereign Immunities Act appears to prohibit.

It remains to be seen whether the Second Circuit will bite at these arguments â€" some of which it has already rejected. But expect Argentina and its allies, including the United States government, to press the court hard as they attempt to turn the February hearing into a reconsideration of the entire case.

The plaintiffs will no doubt continue to argue forcefully that Argentina is unique because of its egregious behavior and that the actions of th e three judges will not have a wider effect on the financial system. They are also likely to argue that the lower court's order is not an attachment, because Argentina can simply ignore it and refuse to pay on the new and old bonds.

The question now is whether the hedge funds can keep the court focused on the narrow issue of Argentina and the morality of its nonpayment of debt, or whether wider legal issues push the Second Circuit to reconsider the case. And that is what is really at stake in this February hearing.

British Banks May Be Undercapitalized, Bank of England Governor Warns

LONDON - Britain's banks need more capital to protect them against fallout from the crisis in the euro zone, the Libor litigation and other potential costs, the Bank of England warned Thursday.

Current capital ratios at major U.K. banks - a measure of the banks' ability to withstand financial shocks - are probably overstated because possible future losses and costs of bad loans or other past business decisions might be bigger than expected, the British central bank said in its latest report on financial stability.

It also said that banks should be more transparent in communicating their credit buffers and look more prudently at risks to their financial soundness.

“We need to ensure that reported capital ratios do in fact provide an accurate picture of banks' health,” Mervyn A. King, governor of the Bank of England, said in a press briefing as he presented the report. “At present there are good reasons to think that they do not.”

Capital ratios of Britain's four biggest banks - Barclays, Royal Bank of Scotland, Lloyds Banking Group and HSBC - could be overstated by between £5 billion, or $8 billion, and £35 billion, according to a hypothetical example in the report. That means that the banks would, under certain scenarios which the central bank did not disclose, need to raise an additional £5 billion to £35 billion.

The central bank declined to give a more concrete figure on how much it thinks the banks should raise. Mr. King, whose term as governor ends next summer, has previously suggested that banks should cut bonuses and use the money to expand capital buffers instead. He has repeatedly warned during his tenure that banks' capital cushions were too thin.

Mr. King said Thursday that banks would not have to turn to taxpayers for more capital. Initiatives by the Treasury and the Bank of England, including cheaper funding for banks if they commit to increase lending, have been helping banks to access funds.

The Bank of England called on the Financial Services Authority, Britain's financial regulator, to talk to the banks and encourage a more realistic valuation of their assets, future costs and risks.

The F.S.A. should sit down with the banks and say, “Look, I think you should look more prudently” at the credit levels, Mr. King said.

Mr. King did not suggest that banks were dishonest in booking provisions or taking into account future possible losses, but that reporting standards did not require them to be more vigilant and therefore many banks are unwilling to be more prudent about possible future losses.

The additional capital is needed because even though the sentiment in financial markets “improved a little,” global growth remains weak and “significant adjustments” on debt in the euro zone are still expected, Mr. King said.

Lloyds, Barclays and R.B.S. have had to recently increase the amount they set aside to compensate customers who were inappropriately sold some payment insurance, sparking concerns among investors that such provisions could rise further.

It is also not yet clear how much banks may have to pay in penalties as a result of the ongoing investigations into the rigging of the London interbank offered rate, or Libor.

Higher capital levels should help banks to regain investor confidence and as a result make it easier and cheaper for them to raise money in the financial markets, Mr. King said. “Our aim must be to get to a point where private investors again have confidence in banks and banks themselves have the confidence to lend,” he said.

A version of this article appeared in print on November 30, 2012, in The International Herald Tribune.

Regulator Warns SAC Capital

The once-reclusive Steven A. Cohen has found himself thrust into the very public role of defending SAC Capital Advisors, his $14 billion hedge fund, against an intensifying government investigation.

Regulators warned SAC that they were preparing to file a civil fraud lawsuit against the hedge fund, after years of investigating insider trading. The warning from the Securities and Exchange Commission, in the form of a so-called Wells notice, stems from a criminal insider trading case brought last week against a former SAC employee, and is “the boldest regulatory shot yet across SAC's bow,” DealBook's Peter Lattman reports.

Clients learned the latest news during a conference call on Wednesday, when Mr. Cohen was in the unusual position of having to shore up investor support. “We take these matters very seriously, and I am confident that I acted appropriately,” said Mr. Cohen, who has not been accused of wrong doing. The case against the former employee, Mathew Martoma, is the first time the government has linked Mr. Cohen to questionable trades.

Mr. Lattman reports: “A person briefed on the investigation said that an additional action against SAC, or even Mr. Cohen, could involve accusations of fraud based on the so-called controlled-liability theory, meaning that it was in ‘control' of Mr. Martoma when he engaged in insider trading.” SAC could survive possible penalties from an S.E.C. lawsuit, Mr. Lattman notes, but “the blow to its reputation could cause some investors to flee and prompt some banks to avoid doing business with it.”

The government has an additional trader in its sights, whom Bloomberg News identifies as Phillipp Villhauer. He has not been accused of wrongdoing, but is featured anonymously in the complaints against SAC filed last week, Bloomberg News reports. As the case unfolds, William D. Cohan of Bloomberg Businessweek is taking a skeptic al stance. He writes: “It's worth asking whether relentlessly hunting insider-trading suspects like Cohen is a wise use of the government's resources - especially considering that the people responsible for the worst financial crisis since the Great Depression continue to get off scot-free.”

 

RACE TO LEAD S.E.C. SHIFTS  |  The field of potential candidates to lead the Securities and Exchange Commission has shifted, as Mary J. Miller, a senior Treasury Department official, has removed her name from consideration, DealBook reports. That makes Sallie L. Krawcheck, a longtime Wall Street executive, a potential front-runner. Ms. Krawcheck has emerged as a consumer advocate since leaving Bank of America last year, but she lacks government experience and may be seen as too close to the financial industry. Simon Johnson, a professor at the M.I.T. Sloan School of Management, raises concerns about Ms. Krawcheck in a post on the Economix blog. The agency's next leader, expected to be named next year, would take over from Elisse B. Walter, who was chosen to succeed Mary L. Schapiro.

 

TOO MANY FRIENDLY FACES IN WASHINGTON?  |  The Office of Financial Research, a wonky agency created by the Dodd-Frank Act to monitor risks to the financial system, “is looking as if it will be a tool of the financial services industry, instead of a check on it,” Jesse Eisinger writes in his column, The Trade. The agency, which has been slow to get off the ground, announced its advisory committee this month. Mr. Eisinger writes: “By my count, 19 of the 30 committee members work directly in financial services or for private sector entities that are dependent on the industry. There are academics, but many of them have lucrative ties to the financial services industry.” Th e Treasury Department, which houses the fledgling agency, takes a different view. “We were looking for people with a range of perspectives who understand keenly the systemic risks in the financial system,” said Neal S. Wolin, the Treasury deputy secretary.

 

ON THE AGENDA  |  Two House Financial Services subcommittees are holding a joint hearing at 10 a.m. on the effect of proposed rules to comply with the international Basel standards on capital. Another House Financial Services subcommittee is conducting a hearing at 2 p.m. called “The Future of Money: Dollars and Sense.” Barnes & Noble and Tiffany & Company report earnings before the opening bell. A revised estimate of gross domestic product in the third quarter is released at 8:30 a.m. Jeff Jordan, a general partner of Andreessen Horowitz, is on CNBC at 1:30 p.m. Janice Fukakusa, the chief financial officer and chi ef administrative officer of the Royal Bank of Canada, is on Bloomberg TV at 2:10 p.m. Antoine Drean, the chief executive of Palico, an online marketplace for private equity, is on Bloomberg TV at 5:10 p.m.

 

C.E.O.'S DESCEND ON WHITE HOUSE  |  President Obama has had a complicated relationship with the business world, to say the least. But chief executives who met with Mr. Obama on Wednesday came away sounding supportive of the president's approach to the fiscal negotiations in Washington. Lloyd C. Blankfein of Goldman Sachs said on CNBC that the president's plan was “very credible.” He added, “I would say that an agreement was reachable.” Mr. Blankfein and others said that tax increases would probably be part of a deal to avoid the so-called fiscal cliff.

Another financial chief, Larry Fink of BlackRock, has also been active in Washington as he considers his nex t job. Mr. Fink “has made little secret of his wish to join a second-term Obama administration as Treasury secretary,” succeeding Timothy F. Geithner, The Financial Times writes. Mr. Fink and Mr. Geithner are friends, according to the newspaper, which reports: “In wishful moments, Mr. Fink may hope that some day, after he has left the Treasury, Mr. Geithner would consider joining BlackRock. But Mr. Fink appreciates that any conversation with Mr. Geithner about this while he is in his current position would be inappropriate.”

 

 

 

Mergers & Acquisitions '

Siemens to Buy Rail Business for $2.9 Billion  |  Siemens, Germany's largest diversified industrial group, has agreed to buy the rail signaling business of the British company Invensys for $2.9 billion. DealBook '

 

Two Firms Make Offers For Knight  |  Two firms have offered to buy the Knight Capital Group, a financial services firm that had a $440 million trading loss in August because of a technology error. DealBook '

 

United's Integration With Continental Is Still Troubled  |  Two years after merging with Continental Airlines, United still deals with “myriad problems” in combining the airlines, leading to “hobbled operations, angry passengers and soured relations with employees,” The New York Times reports. NEW YORK TIMES

 

Vivendi Said to Field Offers for Brazilian Unit  |  Reuters re ports that Vivendi “is examining four nonbinding offers above 6 billion euros ($7.75 billion) for its Brazilian broadband company GVT SA, according to a source familiar with the situation.” REUTERS

 

NCR to Buy Retalix for $650 Million  |  NCR agreed on Wednesday to buy Retalix, a maker of software for cash registers and other retail sales equipment, for about $650 million. DealBook '

 

INVESTMENT BANKING '

Spanish Banks Accept Cuts in Order to Receive Funds  |  The New York Times reports: “The European Commission on Wednesday approved a payment of 37 billion euros, or $48 billion, from the euro zone bailout fund to four Spanish banks on the condition that they lay off thousands of employees and close offices. The most significant cuts will be made by Bankia.” NEW YORK TIMES

 

Wells Fargo Says Regulators Have Dropped Mortgage Investigation  |  The bank said in a filing that the Securities and Exchange Commission had closed an investigation into the sale of certain mortgage-backed securities, Reuters reports. REUTERS

 

Wells Fargo Names Ex-Partner of PricewaterhouseCoopers to Board  | 
REUTERS

 

Citigroup's Chairman Acquires $1 Million of Stock  | 
BLOOMBERG NEWS

 

< p>Goldman's Blankfein Exercises Stock Options  | 
REUTERS

 

PRIVATE EQUITY '

Aston Martin in Talks to Secure Financing  |  Bloomberg News reports: “Aston Martin, the British luxury-car maker controlled by Investment Dar Co., is in ‘advanced' talks to sell new shares to investors to boost funding for future development.” BLOOMBERG NEWS

 

Buyout Firms Circle Gardner Denver  |  Advent International, K.K.R. and a partnership of TPG Capital and Onex are in a second round of bidding for Gardner Denver, a machinery maker that is also being pursued by a rival, Reuters reports. REUTERS

 

HEDGE FUNDS '

Argentina Wins More Time to Pay Bondholders  |  The beleaguered government of Argentina secured more time to pay holders of defaulted bonds, after a United States court had ruled the government would have to make the payments when it paid other bondholders this month, Bloomberg News reports. The latest development is considered a setback for Elliott Management and other hedge funds. BLOOMBERG NEWS

 

Activist Fund Buys Into Timken  |  Relational Investors has built up a stake of almost 6 percent in Timken, a company that makes bearings and transmission parts, and plans to push for a breakup, The Wall Street Journal reports. WALL STREET JOURNAL

 

I.P.O./OFFERINGS '

Old Mutual Expected to Take U.S. Unit Public  |  Analysts expect the British insurer Old Mutual to plan an I.P.O. for its United States money management unit, Reuters reports. REUTERS

 

VENTURE CAPITAL '

Political Gulf Between Wall Street and Silicon Valley  |  “Since Democrats had the support of 80 percent or 90 percent of the best and brightest minds in the information technology field, it shouldn't be surprising that Mr. Obama's information technology infrastructure was viewed as state-of-the-art exemplary,” Nate Silver writes in the FiveThirtyEight blog. NEW YORK TIMES

 

Genealogy Site Attracts $25 Million  |  MyHeritage, a genealogy company based in Israel, raised $25 million and also acquired a rival, Geni.com, TechCrunch reports. TECHCRUNCH

 

LEGAL/REGULATORY '

Regulators Approve Rule on Derivatives  |  The Commodity Futures Trading Commission said it had voted to complete the final determinations for a rule requiring big firms to guarantee certain derivatives trades at clearinghouses, Bloomberg News reports. BLOOMBERG NEWS

 

Volcker Rule Expected to Be Completed Next Year  |  Regulators had aimed to finish the Volcker Rule by the end of this year, but officials are now indicating that the regulation probably will not be completed until the first quarter of 2013, according to CNBC. CNBC

 

Fed Expected to Continue Buying Bonds In 2013  |  The Wall Street Journal reports: “Three months after launching an aggressive push to restart the lumbering U.S. economy, Federal Reserve officials are nearing a decision to continue those efforts into 2013 as the U.S. faces threats from the fiscal cliff at home and fragile economies elsewhere in the world.” WALL STREET JOURNAL

 

Former Baseball Star Charged With Securities Fraud  |  Reuters reports: “Former Baltimore Orioles third baseman Doug DeCinces has been indicted by a federal grand jury for insider trading, the Justice Departme nt said on Wednesday.” REUTERS

 

Conservative Lawmaker to Lead House Financial Panel  |  Jeb Hensarling, a Texas Republican who supports abolishing Fannie Mae and Freddie Mac, was named the next chairman of the House Financial Services Committee. WALL STREET JOURNAL

 

In Defense of a Law School Education  |  Law schools have been a target of criticism recently, taking fire for high tuition and a bleak outlook for jobs. But Lawrence E. Mitchell, the dean of Case Western Reserve University's law school, writes in an Op-Ed essay in The New York Times: “The hysteria has masked some important realities and created an environment in which some of the brightest potential lawyers are, largely irrationally, forgoing the possibility of a rich, rewarding and, yes, profitable, career.” NEW YORK TIMES

 

Greece Agrees to Borrow to Buy Back Debt  |  The New York Times reports: “With Greece's coffers nearly empty, the government said Wednesday that it would have to borrow 10 billion to 14 billion euros to pay for a debt buyback that its international creditors have demanded in exchange for releasing more bailout money to the troubled country.” NEW YORK TIMES

 

H.P. Shareholders Sue Audit Firms Over Autonomy Deal  |  Deloitte and KPMG were named in a new lawsuit. REUTERS

 

Jerry Finkelstein, New York Power Broker, Dies at 96  |  Jerry Finkelstein, who made a fortune in business, real estate and newspapers, including The New York Law Journal and The Hill, and for many years was a self-styled Democratic power broker in New York, died on Wednesday at his home in Manhattan, Robert D. McFadden reports in The New York Times. DealBook '

 

Bondholders of AMR Push for New Board  |  Reuters reports: “A group of some of bankrupt American Airlines' most significant bondholders said it will not support a stand-alone restructuring unless a new board is brought in, a move that may increase hurdles for Chief Executive Tom Horton and his team.” REUTERS

 

SNC-Lavalin the Focus of Fraud Case in Canada  |  The New York Times report s: “SNC-Lavalin, a Canadian engineering firm already under investigation in three countries for its dealings in Libya, became the focus of domestic corruption allegations on Wednesday after the arrest of its former chief executive.” NEW YORK TIMES