Former Dewey Partners to Return Millions

Former partners at Dewey & LeBoeuf agreed on Thursday to return more than $60 million of their compensation to help pay the failed law firm's creditors.

The proposed settlement, reached nearly three months after the firm collapsed, would be the first substantial recovery by Dewey's creditors, which are owed more than $300 million. The deal is subject to approval by a bankruptcy judge.

“This is a key milestone we are pleased to have reached: an early settlement that can deliver meaningful recoveries to creditors and let former partners put this behind them,” Joff Mitchell, Dewey's chief restructuring officer and an executive at the advisory firm Zolfo Cooper, said in a statement.

Roughly half of Dewey's 672 former partners signed the settlement, which required them to return a portion of their pay from 2011 and 2012. The amount was based on a complex formula tied to their compensation, ranging from a minimum of $5,000 for retired partners to $3.5 mill ion for the firm's highest-paid lawyers.

By agreeing to the deal, the partners insulated themselves from future lawsuits related to the firm's collapse. Those who refused to sign on could still face legal claims from creditors, which range from large banks and bondholders to a car service company and an executive recruiter.

The team overseeing the firm's liquidation prohibited the former chairman, Steven H. Davis, from participating in the settlement. The Manhattan district attorney's office is investigating Mr. Davis for possible financial improprieties. He has denied any wrongdoing.
Dewey's demise this year sent shock waves through the legal industry.

Once one of the country's largest law firms, the New York-based Dewey employed more than 2,500 people at its peak, including roughly 1,400 lawyers in 26 offices worldwide. The firm came apart earlier this year after weak financial performance forced it to slash compensation, leading to a partner exodus. A major cause of Dewey's financial woes was the lavish multiyear, multimillion-dollar guarantees it extended to its partners.

The settlement agreement, devised by Mr. Mitchell and his team, is novel, legal experts say. It is believed to be the first large law firm bankruptcy in which a group of partners collectively agreed to return a portion of their salaries to pay off creditors.

Previous bankruptcies, including those involving the firms Coudert Brothers and Howrey, have devolved into protracted legal disputes between creditors and the firms' former partners.

While Thursday's settlement represented progress in Dewey's bankruptcy, not everything is resolved. A group of retired partners filed papers with the bankruptcy court on Thursday, requesting that an independent examiner look at the proposed settlement. Last week, another group of retired partners asked the judge to appoint an independent trustee to liquidate the firm.

Retired partners have bee n among the more vocal factions complaining about the settlement. They argue that the plan goes easy on Dewey's former leaders, who they believe should bear primary responsibility for the firm's demise.

The retirees say that the team of restructuring professionals winding down the firm are conflicted and beholden to Dewey's former executives, all of whom have landed at other large law firms and can reward the professionals with future business.

“We need an impartial person looking at this,” said Cameron F. MacRae III, a former Dewey partner who is now at Duane Morris. “Until now, the fox has been allowed to design the chicken coop, and this can't go on.”

The roughly $60 million recovered is two-thirds of the $90.4 million the estate is seeking from the partnership. Dewey's wind-down team had required minimum participation of $50 million before it would take the settlement to court for approval.

The firm's two highest paid partners were Berge S etrakian, a corporate dealmaker in New York, and Ralph Ferrara, a Washington-based securities litigator, whose 2011 and 2012 earnings were more than $12 million apiece. Each is having about $3.5 million recouped. It is unclear whether either of them agreed to the settlement.

On Thursday, a relatively junior partner said he had signed on to the settlement grudgingly, agreeing to return a low six-figure sum.

“I don't think I should have to pay anything back, because I wasn't part of the management that drove the firm into the ground,” said the partner, who requested anonymity because his new firm did not want him to speak publicly about Dewey. “But the deal gives me closure and allows me to move on.”

In addition to recouped compensation, there are two other big pools of money that the wind-down team wants to recover. The biggest is about $200 million in outstanding client bills, but the team expects to recover only a fraction of that amount

Anot her potential recovery source is $60 million to $70 million in collections from existing deals and cases that Dewey's former partners took with them to other law firms. Courts have ruled that these so-called unfinished-business claims are the property of Dewey, and not the partners' new firms.

Nearly all of Dewey's partners have joined other firms. Jeffrey Kessler, for example, a prominent sports lawyer who led Dewey's litigation department, moved to Winston & Strawn and took about 60 lawyers with him.

A version of this article appeared in print on 08/17/2012, on page B6 of the NewYork edition with the headline: Former Dewey Partners to Return Millions in Compensation to Pay Creditors.

Restoration Hardware Co-Chief Steps Down After an Inquiry

Gary Friedman, the chairman and co-chief executive of Restoration Hardware, has stepped down from his positions after an internal inquiry into an intimate relationship he had with a 26-year-old female employee, according to people involved in the matter.

The leadership change earlier this week comes at a significant moment for Restoration Hardware as it prepares for an initial public offering. Mr. Friedman, 54, often appears in the company's catalogs in jeans and a T-shirt and is considered the driving force behind the company's vision and aesthetic, which includes high-priced faux antique furniture and hardware accessories. Mr. Friedman started his career as a stock boy at the Gap in San Francisco and was plucked out of obscurity by Mickey Drexler, the merchant prince who built Gap and now runs J. Crew.

Mr. Friedman worked his way up at Gap and later became the president and chief operating officer of Williams-Sonoma. He joined Restoration Hardware in 2001 whe n it was near bankruptcy and is widely credited with turning it into one of the nation's most successful high-end furniture retailers.

Mr. Friedman was confronted this month with the findings of the investigation by the company's board, which had formed a special committee and hired the law firm Weil, Gotshal & Manges to conduct the inquiry. Mr. Friedman was found to have had an inappropriate relationship with a female employee, who has since left the company, these people said. These people spoke on the condition of anonymity because the company's internal investigation has not been made public.

The board of Restoration Hardware was alerted to the relationship by an ex-boyfriend of the employee, these people said. Mr. Friedman, who has been divorced for seven years, is still in a relationship with the former employee.

The board, which began the investigation almost immediately after being contacted, was concerned about the credibility of the allegations b ecause the ex-boyfriend had a criminal record and was aggressively pressing the accusations both inside and outside the company, these people said.

The employee told company investigators that the relationship with Mr. Friedman was consensual and ongoing, these people added, but the board was apparently concerned about the appearance of the relationship as its stock offering proceeded.

A spokesman for the company declined to comment. A spokesman for Mr. Friedman also declined to comment.

Mr. Friedman's resignation comes at a time when corporate boards are taking a harder line when questionable personal conduct by top executives has been brought to their attention. In April, Brian Dunn, the chief executive of Best Buy resigned after the company's board raised questions about an “inappropriate relationship” with a 29-year-old female employee.

Mark Hurd, the former chief executive of Hewlett-Packard lost his job in 2010 after it came to light that he once had a personal relationship with a female marketing contractor who had been an actress in risqué movies. H.P.'s directors said that Mr. Hurd had violated the company's code of conduct with misstatements on expense reports.

Thus far, Restoration Hardware has been publicly silent on the reasons for the chief executive change. This week, Restoration Hardware announced in a news release a “reorganization” of the company's management and named the company's co-chief executive Carlos Alberini, who joined the company two years ago from Guess, as sole chief executive.

The company also said Mr. Friedman, who is the company's largest individual shareholder, would be starting a new “incubator” company with ties to Restoration Hardware. It said he would be the nonexecutive chairman emeritus and continue in an “exclusive advisory role, serving as creator and curator for Restoration Hardware with a focus on strategy, creative, and design direction.”

Th e statement also said that Mr. Friedman's new business “will be created to develop new lines of business, including apparel, accessories, footwear and jewelry, many of which will be complementary to the company's new product development strategy.”

Restoration Hardware said that it was taking a minority interest in Mr. Friedman's new company and “will have the exclusive right to acquire each of the new businesses when they reach an appropriate level of maturity and profitability.”

People briefed on the board's deliberations said that the company wanted to maintain a relationship with Mr. Friedman because he was personally associated with the brand, but that it could not allow him to remain an officer ahead of the public offering.

Lawyers for Restoration Hardware were working on Thursday to update the company's filings with the Securities and Exchange Commission, these people said. Goldman Sachs and Bank of America were selected to underwrite the offe ring. It was unclear whether the company would be forced to disclose the reason for Mr. Friedman's new role or the findings of the special committee's inquiry.

Restoration Hardware is controlled by two private equity firms, Catterton Partners and Tower Three Partners. The company, which was once public, was bought by the firms and Mr. Friedman in 2008 for about $175 million.

At the time, the company spurned an offer from Sears. Today, Restoration Hardware's public offering is expected to value the company at up to $1 billion.

While Mr. Friedman may no longer be the chairman or co-chief executive, his picture and letter will appear in the company's newest catalogs in the fall.

A version of this article appeared in print on 08/17/2012, on page B1 of the NewYork edition with the headline: Restoration Hardware Co-Chief Steps Down After an Inquiry.

Deutsche Bank Executive Claims Abuse by Los Angeles Police

A Deutsche Bank media banker well known in Hollywood circles has claimed to have been abused by the Los Angeles Police Department, arguing that he was beaten during an altercation in May.

The executive, Brian Mulligan, has said that he has suffered a broken shoulder blade and numerous fractures after being detained by police in mid-May, according to news reports.

The police department has told news outlets that Mr. Mulligan, a former Hollywood executive turned investment banker, was showing erratic behavior on the night of May 15. Mr. Mulligan has claimed through a lawyer that he was illegally detained in a motel room by police officers who were trying to steal his money.

A spokesman for the Los Angeles Police Department told Bloomberg News this week that officers were responding to reports of a man trying to enter occupied cars in the city's Highland Park neighborhood, and more specifically at the drive-through of a Jack in the Box restaurant.

Acc ording to The Wall Street Journal, police determined that Mr. Mulligan wasn't under the influence of narcotics. Bloomberg reported that the banker told officers that he would be fine if he simply got some sleep. The responding officers noted that he was carrying an unusually large amount of money - reportedly some $5,000 in cash, which he said was customary on business trips.

Mr. Mulligan was subsequently detained after assuming a “fighting stance” and then charging police officers.

He has since filed a $50 million claim against the city, Bloomberg and The Journal reported, in what would be the first step toward a formal lawsuit.

The recent developments are an unusual mark on the record of Mr. Mulligan, a prominent banker charged with lining up financing for Hollywood movies. His previous jobs included serving as the chairman of Fox TV, a position he left in September 2001.

He was also formerly a co-chairman of Universal Pictures, according to a b iography on the Web site of the University of Southern California's Marshall School of Business.

In one of his most significant accomplishments as a media deal maker, Mr. Mulligan helped sell Seagram to Vivendi.

This post has been revised to reflect the following correction:

Correction: August 17, 2012

An earlier version of this article misstated the university affiliation of the Marshall School of Business. It is part of the University of Southern California, not the University of South Carolina.

Facebook Shares Hit New Low as Lockup Period Ends

The slide on Wall Street continued on Friday, as the company's shares reached new lows a day after early investors became eligible to sell their shares on the market. Shares closed down more than 4 percent, to $19.05, after reaching a low of $19.00 during the day - 50 percent lower than its original offering price of $38 in May.

The company's widely anticipated public debut seems to have been jinxed from the start, and for a variety of reasons, including technical problems on Nasdaq and slowing sales growth. Complicating its recovery is the prospect of about two billion shares that early investors and employees will be able to sell beginning this week and continuing through next May.

The first and smallest opening in that gate was Thursday, when about 271 million shares were eligible to be sold. The shares are held largely by early investors, like Accel Partners and Goldman Sachs. It is unclear whether they were sold Thursday; the transactions are likely to take some time.

But trading volume in the stock was high: 157 million shares, versus a 30-day average of 31 million.

Companies that go public typically compel insiders to hold on to their stock options for a period of time, to prevent the market from being swamped with surplus shares. The end of the lockup period, as it is known, can typically weigh on value. That is especially painful for Facebook at the moment, because its value has already fallen so precipitously and unexpectedly.

The largest tranche of shares are eligible to come on the market in November, so Facebook could face a deflated stock price for some time to come.

The lockup expiration adds pressure to acute difficulties already facing the company, which made its Wall Street debut with an eye-popping $100 billion valuation barely three months ago. The low stock price complicates Facebook's ability to attract and retain employees. Without prospects of the stock rising rapidly, prospective employees may choose to work at hot start-ups where they can foresee stock gains that would supplement their salary.  

For its stock price to go up, Facebook has to convince Wall Street analysts and investors that the personal data its 955 million users share about themselves can be better used to make money. Despite the fact that Facebook has information about a user's friends, habits and photos, advertisers are not convinced that Facebook ads are more effective than online ads appearing elsewhere.

So far, its revenue comes largely from advertising and from proceeds of virtual games that people pay to play on the Facebook platform. On both counts, Facebook has struggled, as the company reported slower sales in its earnings report in late July. Its users are increasingly logging in to their accounts on mobile devices, where Facebook has only recently - and cautiously - started selling advertisements. And its vital partner, the social games developer Zynga, has hit speed bumps of its own and its shares have plunged.

“All the lockup is doing is enabling people to sell,” said Richard Greenfield, a media analyst with BTIG, a brokerage firm. “The issue is still confidence in Facebook's transition from the PC to mobile.”

Mr. Greenfield was among those who advised against buying Facebook shares during its initial public offering. He still advises against it. Some investors are still smarting because many of Facebook's early big backers - including Accel Partners, one of its first venture capital investors - sold a hefty portion of their shares at the peak price in May. Mark Zuckerberg, a co-founder and chief executive, also sold a portion of his shares in the offering - to meet his tax bills, the company said. All told, early backers sold over $9 billion in shares, though they still own significant amounts.

Some of those early backers - though not Mr. Zuckerberg - were eligible to sell their shares starting Thursday.

Investors who remain confident in the company's future point out that it is still profitable, with a potential to become a lucrative advertising platform. Facebook is experimenting with new ways to make money, including creating new advertising tools and offering online gambling to its users in Britain.

This article has been revised to reflect the following correction:

Correction: August 16, 2012

An earlier version of this article, and its headline, incorrectly described the period in which insiders must hold their stock options in a newly public company. It is known as the lockup period, not the lockout period.

Trulia Files to Go Public

Trulia, the real estate search site, has filed to go public.

The company had confidentially filed a prospectus last month, according to several news reports at the time, under a provision of the JOBS Act, which was passed last spring. The new law allows companies with annual gross revenue of less than $1 billion to file registration statements with the Securities and Exchange Commission that do not have to be publicly disclosed until 21 days before the company's roadshow to sell the new shares. Trulia's prospectus became public on Friday.

The company said in its filing that it planned to raise $75 million in the stock offering, although that it is a figure used to calculate the registration fee.

The site offers free and subscription services on real estate listings and housing market information. Trulia said in its filing that it had 22 million monthly unique visitors as of June 30. It says it has more than 360,000 active real estate professionals - 21,5 44 of them paying subscribers For the six months that ended June 30, the company said it had revenue of $28.9 million and a net loss of $7.6 million.

Its main competitor, Zillow, went public in July 2011 at $20. On Thursday, Zillow's shares closed at $38.85.

Trulia's investors include Accel, Fayez Sarofim and Sequoia Capital. Based in San Francisco, Trulia says it will seek to list its shares on the New York Stock Exchange under the ticker “TRLA.”

JPMorgan Chase, Deutsche Bank, RBC Capital Markets, Needham & Company and William Blair are leading the underwriting of the I.P.O.

This post has been revised to reflect the following correction:

Correction: August 17, 2012

An earlier version of this article misstated the size of the planned offering. It is $75 million, not $475 million.

Finding the Facebook Magic

Want to better understand the crazy world of technology stocks? That requires having a grasp of something that can best be described as the curse of the ordinary.

That curse could mean that Facebook, which is already down by nearly 50 percent from its offering price to $19.05 on Friday, could drop even further.

It's all about valuations.

Most efforts to judge the right stock market value for a company rely on profit forecasts. But earnings at young technology companies are harder to predict than at businesses using traditional approaches to generate earnings in other industries.

In times of optimism, that knowledge dearth can actually work to the advantage of technology companies. Executives fill that emptiness with promises of paradigm-breaking ways of doing business, prompting Wall Street analysts to project amazing profits. Investors get excited and flock to their stock debuts. In short, it's all about being seen as extraordinary.

That magi c allowed Facebook to go public at a stock price that was an astronomical 100 times its earnings per share. Back in May, investors seemingly had little trouble believing that Facebook could entwine advertising into all interactions on its site and generate extraordinary revenue.

Indeed, each of the companies that have gone public in recent months has needed one main magical story. For Groupon, it was that the company had found a revolutionary marketing tool that was perfect for small businesses. The untapped market was theoretically huge.

But the nightmare begins when investors stop believing in that central story. Earnings don't have to be terrible, and they haven't been at the hardest hit firms - Facebook, Groupon and Zynga, the online game company. The earnings just have to contain a few clues that the dream won't be achieved.

Then, the transition from extraordinary to ordinary is brutal.

Groupon is down 75 percent from its initial public offering. The market now values it as if it were any old marketing company; its shares are trading at 12 times the earnings that analysts are projecting for 2013, according to data from Thomson Reuters.

This is a critical time for Facebook.

The faith level in the company is declining. Right now, Facebook is trading at 31 times the earnings that analysts are expecting for 2013. That's not too expensive, but it's far above Google's 2013 price-to-earnings ratio of 14 times.

One reason investors have fled the stock is that Facebook's second-quarter earnings showed few signs that it was close to achieving meteoric growth. “There have been almost no positive signals at Facebook in the past six months,” said Anup Srivastava, an assistant professor at the Kellogg School of Management at Northwestern University. He thinks Facebook shares should be worth about $12, based on his estimates of the company's future cash flows.

Such a fate may seem unthinkable, given how far the stock has already fallen. But Facebook may struggle to keep pace with Google, which, though it is a more mature Internet company, is still finding ways to grow fast. In its second quarter, the volume of “paid clicks” (the number of times users click on a link that generates revenue for Google) rose 42 percent from the year-earlier period. That's the fastest growth since 2007, according to analysts at Nomura. And despite its extraordinary growth, investors still give Google's shares only an ordinary valuation.

But there's still hope for Facebook.

Negativity can feed on itself in the stock market, and the over-optimism of the I.P.O. may simply have been replaced with rabid pessimism today. “As with most other young growth stocks, no one really knows Facebook's value,” said Aswath Damodaran, a professor of finance at the New York University Stern School of Business. “That means people can overreact in both directions.”

There are ways to ge t back into investors' good graces. One is for Facebook to be more convincing when explaining why it's special.

Since its own I.P.O., LinkedIn has kept investors enthralled. The company trades at 79 times projected 2013 earnings, a clear sign that the market believes the company has created a revolutionary space for companies to recruit.

Then there's Amazon.com, which is extraordinarily talented at projecting itself as extraordinary. Its shares trade at 100 times its projected 2013 earnings, even though it has reported what might look like disappointing earnings for several years. The dream is that Amazon is well on its way to dominating Internet commerce, and can look forward to prodigious profits.

Amazon.com also shows there's a way to get investors believing again. Its shares plunged amid fears that it could go bankrupt soon after the dot-com boom of the late 1990s, but in the last 10 years it has regained extraordinary status.

Facebook could use s ome of that Amazon magic.

New Hedge Funds Abound, Despite Tepid Industry Performance

It's been a rough couple of years to be a hedge fund. Weak performance, enhanced regulation and an aggressive crackdown on insider trading have cast a harsh spotlight on the industry.

Not that you'd know it by looking at the new crop of traders leaping into the profession. More new hedge funds started in the first quarter of this year than in any quarter since 2007, according to data from Hedge Fund Research.

There are many reasons for the surge. The industry, despite disappointing returns, remains a destination for large swaths of institutional money. Pension funds, endowments and wealthy families continue plowing billions into hedge funds every year, swelling overall industry assets to more than $2 trillion. With that kind of money, the economics are extremely attractive for upstarts who think they can raise big sums.

At the same time, talent is fleeing the big Wall Street banks. New regulations put into place after the financial crisis forced banks to close down their proprietary trading desks, leaving dozens of traders looking for their next act. Many of them decided to try their hands at starting hedge funds. New funds are also in vogue as investors tire of bigger, more established managers who have demonstrated lackluster performance.

But the success rate of new hedge funds is low. Those with ambitions to be the next Bridgewater Associates are plenty; those who succeed are rare.Though 304 funds were started in the first quarter of the year, 232 were liquidated in the same period. Most of them are anonymous funds, largely managing the money of friends and family.

The hedge fund industry “is like the restaurant business: everyone wants to start one but they aren't prepared for the high level of failure,” said Omeed Malik, head of the emerging manager program at Bank of America Merrill Lynch. “One thing the vast majority of the top emerging managers have in common is the three P's: pedigree, performance and product.”

Among the more prominent new funds created by well-known firms includes one from Renaissance Technologies, as AR magazine reported this week. But a number teams have left bigger hedge funds recently to start their own shops.

Some of these so-called spinoffs are seasoned industry veterans and are expected to attract real money. Others are newcomers who are starting with family cash and may need to prove their mettle quickly if they want to attract other investors.

SAC Capital, the behemoth hedge fund run by the billionaire Steven A. Cohen, has had two groups of veterans leave the firm recently. Such departures are typical for a firm the size of SAC, which has more than 100 portfolio managers, and numerous hedge fund managers can trace their lineage to SAC, a nearly 20-year-old shop based in Connecticut.

Among the new funds are Adams Hill Capital, started by Andrew Schwartz, who was a longtime portfolio manager at SAC, where he ran a hig hly successful equity fund focused on global resources. He will take with him two analysts and a trader, according to people familiar with the fund. Another SAC alumnus is also heading out with four analysts from his team. Jos Shaver, who arrived at SAC in 2008, is relaunching a hedge fund he ran before the financial crisis. He closed his fund down after complications with a service provider. At SAC, he has run a stock fund focused on global utilities and infrastructure.

John Lennon, 29, left JAT Capital, where he was a senior analyst, to start his own shop, Pleasant Lake Partners. He has hired a former Goldman Sachs partner, David Mastrocola, to be the firm's president.

Jeff Lignelli left Appaloosa Management, the hedge fund started by David Tepper, to start Incline Global Management this April. A former partner at Appaloosa, Mr. Lignelli has the rare stamp of approval from Mr. Tepper, who made an initial investment with his former employee. The firm now manages just over $100 million.

Even some less-seasoned financiers are trying their skills. Schuster Tanger, a scion of the Tanger family, which built substantial wealth running nationwide shopping outlet malls, is starting a fund at the age of 26. Mr. Tanger, a former Third Point analyst, will team up with Josh Packwood, a former associate at Citadel who was the first white valedictorian of the predominantly black Morehouse College. The new fund, Red Adler, was started with a $30 million initial investment from Mr. Tanger's family.

Business Day Live: Long-Term Jobless Regroup to Fight the Odds

For the long-term jobless, a struggle to beat the odds. | James B. Stewart discusses Facebook and the backlash against social media stocks.

Peregrine Founder Pleads Not Guilty

The former chief executive of the failed brokerage firm Peregrine Financial Group, who last month wrote a note admitting that he had committed a long-ranging investment fraud, pleaded not guilty on Friday to lying to federal regulators.

Federal prosecutors charged Russell Wasendorf Sr., the former head of Peregrine, with 31 counts of deceiving regulators about the value of his customers' accounts. If convicted, he would face a maximum prison sentence of 155 years.

Last month, police in Cedar Falls, Iowa, where Peregrine was based, found Mr. Wasendorf unconscious in his car after a suicide attempt. Alongside him was a note confessing to embezzling more than $100 million from clients and defrauding the firm's banks. The authorities arrested him, and regulators discovered a customer fund shortfall at Peregrine of at least $200 million.

As the government continues to examine Peregrine's collapse, prosecutors are expected to seek additional charges against Mr. Wasendorf. Even with his earlier admission of wrongdoing, a not-guilty plea is not unusual at this stage of the case. He can try to strike a plea agreement with prosecutors by helping with the investigation, including tracking down missing customer money.

During the 10-minute arraignment proceeding in Federal District Court in Cedar Rapids, Iowa, Mr. Wasendorf stood quietly as his lawyer, Jane Kelly, entered the plea. He was dressed in orange prison garb, his hands and legs shackled, according to Bloomberg News.

Ms. Kelly did not return a telephone call seeking comment.

The charges against Mr. Wasendorf came just months after MF Global, the now-defunct futures brokerage firm, could not locate more than $1 billion in client money. Together, the two collapses highlighted regulatory holes and insufficient financial protections in the futures industry, which largely consists of money management firms that trade contracts in commodities, currencies and interest rates.

“These have been huge blows to the industry and we're looking at a variety of solutions that will better protect customer funds,” said Walter Lukken, the president of the Futures Industry Association, a trade group. Mr. Wasendorf was a prominent figure in the futures business. He served on an advisory committee at the National Futures Association, one of the industry's primary regulators. His son, Russell Wasendorf Jr., served as the president of Peregrine, which also did business as PFGBest.

The elder Mr. Wasendorf also loomed large in Cedar Falls, a town with 40,000 people. An Iowa native, he moved his business from Chicago - the epicenter of the futures markets - to Cedar Falls and spent about $18 million on its new headquarters there.

Peregrine came undone last month after the National Futures Association instituted changes to its auditing process that allowed the regulator to get information about the firm's accounts directly from its banks . The association started putting the new system into effect on the morning that Mr. Wasendorf tried to kill himself.

In his confession note, Mr. Wasendorf said he acted alone. No other Peregrine executives have been charged in the case.

Baseball Hall of Fame Player Settles Insider Trading Case

On the standout Baltimore Orioles baseball teams of the late 1970s, Eddie Murray, the Hall of Fame first baseman, shared the infield with the all-star third baseman Doug DeCinces.

Federal regulators say that decades later, the two close friends shared something else: illegal stock tips.

Mr. Murray was charged on Friday by the Securities and Exchange Commission with insider trading ahead of a merger announcement after receiving advanced word of the deal from Mr. DeCinces.

The S.E.C. said that Mr. DeCinces had received the tip from James V. Mazzo, the former chairman and chief executive of Advanced Medical Optics, an eye care company that Abbott Laboratories acquired for nearly $3 billion in 2009.

Mr. Murray, 56, made about $235,000 in illegal gains by buying shares of Advanced Medical Optics ahead of the deal and then selling his stake after it was announced, the S.E.C. said. Without admitting or denying guilt, Mr. Murray agreed to settle the case by paying $358,000 in disgorged profits and penalties.

“It is truly disappointing when role models, particularly those who have achieved so much in their professional careers, give in to the temptation of easy money,” said Daniel M. Hawke, a senior S.E.C. enforcement lawyer.

Michael J. Proctor, a lawyer for Mr. Murray, said that his client “is an honorable and ethical man who is settling this to put the matter to rest and move on with life.”

The charges against Mr. Murray come a day after federal regulators charged another sports figure, the former University of Georgia football coach Jim Donnan, with running a Ponzi scheme that defrauded fellow coaches and his former players.

The latest cases add to the spate of lawsuits brought by the commission against athletes. Last December, the former Chicago Bears receiver Willie Gault was accused of artificially inflating the stock of a company he helped run. He has denied the claim.

The charges on Friday also add to the increasing number of insider trading cases brought over the last several years. Both the Justice Department and the commission have made rooting out illegal trading a priority. They have brought more than 100 cases against individuals since the financial crisis.

Mr. Mazzo, 55, ranks among the most prominent corporate managers charged with insider trading. Unlike Mr. Murray, Mr. Mazzo is fighting the charges. His stock tip allowed Mr. Murray, Mr. DeCinces and others to earn about $2.4 million in profits, the S.E.C. said.

“He flatly and unequivocally denies the S.E.C.'s allegations,” said Richard Marmaro, a lawyer for Mr. Mazzo. “Mr. Mazzo has a spotless reputation for professionalism, integrity and service to his community, built up over a career of 30 years. The notion that he would put all that at risk to give a single friend inside information is absurd.”

Earlier this year, Mr. Mazzo announced that he would retire at the en d of 2012 from Abbott, where he serves as a senior executive in the company's eye care unit. An Abbott spokesman said the charges were a personal matter for Mr. Mazzo and that he would remain an employee of the company until year-end.

The S.E.C.'s complaint details repeated contact and communication between Mr. Mazzo and Mr. DeCinces around the time of merger discussions between Advanced Medical Optics and Abbott. In one instance, just days before the merger announcement, the two were golfing at the same country club in Orange County, Calif., and there are records of two calls from Mr. DeCinces's mobile phone to Mr. Murray's.

The accusations against Mr. Murray and Mr. Mazzo represent the second round of charges related to the Advanced Medical Optics-Abbott combination. The commission brought its initial charges last year against Mr. DeCinces and three others. Mr. DeCinces, like his former teammate, also paid a large fine to settle the case against him.

Mr. Murray is one of only four Major League Baseball players to finish his career with at least 500 homers and 3,000 hits. Last Saturday, the Orioles unveiled a bronze sculpture of Mr. Murray at Camden Yards, the Baltimore stadium where the team plays.

Week in Review: Credit Cards and Corzine

We found that the abuses that bedeviled the foreclosure process are appearing in lawsuits to collect credit card debt. Meanwhile, no criminal case is likely in the $1 billion loss at Jon S. Corzine's MF Global.

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

Best Buy Founder Nudges Company's Board to Consider Takeover | “You should know that I am not going away,” Richard M. Schulze wrote in a letter reaffirming his commitment to buy the company for as much as $8.8 billion. DealBook '

Private Equity Firm Continues Its Busy Summer for Deals | The Carlyle Group “has struck 19 deals worth nearly $14.1 billion over the last 12 months and currently tops the Thomson Reuters rankings,” Michael J. de la Merced reported. DealBook '

Heineken Faces Challenge for Asian Brewer | Thai Beverage increased its stake in Fraser & Neave, the Singapore-based conglomerate that had agreed to a $4.1 billion sale, Mark Scott reported. Deal Book '

Swiss Bank Julius Baer to Buy Bank of America Unit | The $882 million deal is the latest consolidation in the private banking industry, as firms look to gain access to the new markets of emerging economies, Mr. Scott reported. DealBook '

Risk Builds as Junk Bonds Boom | “Demand is insatiable, even as analysts warn that the market has become overheated and is ripe for a fall,” Peter Lattman reported. DealBook '

DealBook Column: Everything Wall St. Should Know About Ryan | What does Mitt Romney's new running mate think about Wall Street? Andrew Ross Sorkin says that his views may surprise you. DealBook '

“We should make sure you can't get too big where you're going to become too big to fail and trigger a bailout,” Mr. Ryan said during a meeting with constituents in May in Wisconsin.

For Deal Makers, Incubator Offers an Alternative to Wall St. | “Jolyne Caruso, experienced on Wall Street, took a page from the tech playbook to help seasoned financiers run their own firms,” Adriana Gardella reported. DealBook '

Deal Professor: Finding Silicon Valley's Next Big Thing in the Ordinary | Steven M. Davidoff says that “Square's tie-up with Starbucks may be this year's most important venture capital deal.” DealBook '

The future of venture capital and Silicon Valley may be more like Edison's laboratory, looking for the innovation in ordinary tasks and doing so based on leveraging pre-existing ideas and products.

Restoration Hardware Co-Chief Steps Down After an Inquiry | Gary Friedman was confronted with the findings an investigation into an intimate relationship he had with a 26-year-old female employee, Mr. Sorkin reported. DealBook '

Hall of Fame College Coach Is Accused in Ponzi Scheme | Jim Donnan is accused of working with an Ohio businessman to cheat fellow coaches and his former players out of $80 million, Mr. Lattman re ported. DealBook '

Former Dewey Partners to Return Millions in Compensation to Pay Creditors | The proposed settlement is for more than $60 million. Creditors are owed more than $300 million, Mr. Lattman reported. DealBook '

No Criminal Case Is Likely in Loss at Corzine Firm | Investigators are concluding that chaos and porous risk controls at the firm, rather than fraud, allowed the money to disappear, Azam Ahmed and Ben Protess reported. DealBook '

Wells Fargo Settles a Securities Case | The bank paid $6.5 million to settle accusations that it sold troubled mortgage investments without disclosing the risks, Mr. Protess reported. Wells Fargo earned $16 billion last year. DealBook '

Peregrine Chief Is Indicted in Brokerage Fraud Case | “The move is the latest development in what prosecutors say was a long-ranging fraud” for Russell R. Wasendorf Sr., Mr. Lattman reported. DealBook '

Problems Riddle Moves to Collect Credit Card Debt | Companie s are going to court to recoup bad loans. But many of the lawsuits rely on erroneous documents, incomplete records and generic testimony, Jessica Silver-Greenberg reported. DealBook '

Libor Case Energizes a Wall Street Watchdog | The Barclays case has now thrust Gary Gensler - and his once-obscure Commodity Futures Trading Commission - into the spotlight, Mr. Protess reported. DealBook '

Heineken Clinches Deal for Asia Pacific Breweries With $4.5 Billion Offer

Heineken claimed victory in its fight to gain control of Asia Pacific Breweries on Friday, announcing a sweetened deal to buy the rights to the beer maker held by Fraser & Neave for about $4.5 billion.

Under the terms of the new agreement, Heineken will pay about $42.28 a share for Fraser & Neave's 39.7 percent stake in Asia Pacific. It will also pay about $130 million for certain other assets held by Fraser & Neave.

All told, the new offer is worth nearly 10 percent more than Heineken's initial offer, which was unveiled on July 20.

Through the agreement, which is still pending shareholder approval, Heineken will own 81.6 percent of Asia Pacific. The international brewer would then move to buy out the remaining shareholders, spending an estimated $2 billion.

“I am pleased that F&N's Board has agreed that our increased offer, which is now final, represents excellent value for F&N and APB shareholders,” Jean-François van Boxmeer, Heineken's chair man and chief executive, said in a statement.

The acquisition will give Heineken a stronger base from which to bolster its Asian operations, as Western brewers look to emerging markets to compensate for flat sales elsewhere.

Analysts had said that a higher bid from Heineken was in the offing, especially after Thai Beverage announced this week that it had added to its stake in Fraser & Neave, giving it a potentially bigger say in the terms of a revised deal.

Heineken said that it planned to pay for the deal through cash on hand, an existing revolving credit facility and new financing lined up by its banks, Credit Suisse and Citigroup. The company said that it planned to cut its net debt to below 2.5 times its earnings within 24 months of closing the transaction.

As part of the deal, Fraser & Neave cannot solicit or hold talks with alternative bidders for its Asia Pacific stake. Should its shareholders reject Heineken's offer at the conglomerate's annua l meeting, it must pay the brewer a break-up fee of about $45 million.

In Report, British Officials Question Testimony of Barclays Chief

LONDON - In a report released early Saturday in London, British politicians said the former Barclays chief Robert E. Diamond Jr. had not provided lawmakers a full account of the actions inside the bank during recent hearings into the rate-rigging scandal.

The report also challenges some of Mr. Diamond's assertions about the bank's relationship with regulators. It also questioned the top leadership at the bank and the candor of Mr. Diamond's testimony.

“Mr. Diamond's evidence, at times highly selective, fell well short of the standard that Parliament expects,” Andrew Tyrie, the British politician who led the recent hearings, said in a separate statement.

Documents released by local authorities show that officials had questioned the culture at the top of the British bank as far back as 2010, though Mr. Diamond had said regulators were happy with the firm's leadership.

The doubts about Mr. Diamond's testimony come after several of Barclays' senior executives, including its chairman, resigned last month. The firm agreed to a $450 million settlement with American and

British authorities over the manipulation of the London interbank offered rate, or Libor, one of the world's most important benchmark rates.

British lawmakers had called several of the firm's executives and the country's leading regulatory authorities to testify before Parliament's Treasury Select Committee, which had been investigating the Libor scandal at Barclays.

The lawmakers' latest report criticized Mr. Diamond's recollection of concerns that regulators had raised when he was appointed chief executive, as well as issues with the culture at the British bank.

Also in his testimony, Mr. Diamond had said British authorities were pleased with his relationship with the Financial Services Authority, the country's regulator. The regulators, however, testified that they had challenged the firm's attitude toward risk and had called on M r. Diamond to distance himself from colleagues in Barclays' investment banking unit. In the latest report, it appears that lawmakers mostly sided with the authorities.

“It seems to us inconceivable that Mr. Diamond could have believed that the F.S.A. was satisfied with the tone at the top of Barclays,” the report said.

Mr. Diamond issued a sharply worded rebuke of the report.

“I am disappointed by, and strongly disagree with, several statements by the Treasury Select Committee,” Mr. Diamond said in a statement on Saturday. “There is little dispute that Barclays was both aggressive in its investigation of this matter and engaged in its cooperation with the appropriate authorities.”

The latest report also questioned the importance of a conversation that Mr. Diamond held with Paul Tucker, the deputy governor of the Bank of England, in 2008.

The discussion focused on the firm's Libor submissions, and led to Jerry del Missier, a senior Ba rclays official, to ask some of the firm's employees to alter their Libor rates. Mr. del Missier said he believed that he was acting on instructions from British government officials, though Mr. Tucker dismisses that contention.

Lawmakers said that Barclays' employees had been manipulating rate submissions since 2007, and that Mr. del Missier's ability to alter submissions showed a lack of regulatory compliance.

“It remains possible that the entire Tucker-Diamond dialogue may have been a smokescreen put up to distract our attention,” the report said. Poor judgment by the firm's board led to a lack of controls, which could have stopped the rate manipulation from taking place, according to the report.

A Barclays spokesman said that the bank did not agree with all the report's findings but was conducting an independent review of its business practices.

The report also highlighted failures by the Financial Services Authority to address the manipulatio n of Libor.

Concerns that firms were altering their Libor submissions were first brought to the attention of authorities in late 2007, according to regulatory filings. But British officials joined their American counterparts in investigating the abuses only in early 2010.

Adair Turner, chairman of the authority, told British lawmakers last month that regulators had not perceived Libor to be a major area of risk during the recent financial crisis.

“The manipulation was spotted neither by the F.S.A. nor the Bank of England at the time,” Mr. Tyrie said. “That doesn't look good.”

The British government is reviewing how Libor will be set in the future. The inquiry may lead to greater regulatory oversight of the rate, while lawmakers are considering new laws that would make the manipulation of benchmark rates a criminal offense.

American and international authorities also continue to examine the actions of other global financial institutions, including Citigroup and HSBC. New York and Connecticut state regulators announced on Wednesday that they were widening their own rate-rigging investigations.

Liberty Media Close to Sirius XM Takeover

John C. Malone's appeared to be close to victory on Friday in its continuing, and often sharp-elbowed, battle to take over Sirius XM Radio.

Liberty said it planned to increase its stake in Sirius to more than 50 percent, from its current 48 percent, which would give Mr. Malone's company definitive control of the satellite radio service. In a request filed Friday with the , Liberty asked the government to approve its takeover.

Liberty says it will “have purchased sufficient shares of Sirius's common stock and will convert its preferred shares” so that it can take over Sirius “within 60 days of commission consent.”

In a filing with the Securities and Exchange Commission, Sirius said it would “cooperate fully” with the F.C.C. in its review of Liberty's takeover application.

That represents a sharp turnaround for Sirius, which just a couple of months ago was much less cooperative. The company had urged the F.C.C. to reject a May 31 application by Liberty to approve a takeover. In that filing, Sirius said Liberty's proposal offered “nothing more than a refined menu of options for how Liberty Media might assume control of Sirius,” and did not outline specific details.

Last week, Liberty said it planned to spin off its pay-television channel Starz into a separate company, a move that is expected to free up the cash Liberty needs to complete its purchase of Sirius shares.

Liberty first invested in Sirius in 2009 when it gave the financially troubled company a much-needed multimillion-dollar loan in exchange for a 40 percent stake. The rescue package proved a boon to Liberty (the loans were repaid and the stake is now valued at roughly $5 billion), but a slippery slope for Sirius since it eventually led to Liberty's attempt to own the company outright.

The corporate saga has pitted two of the media industry's biggest personalities against each other - Mr. Malone, who has orchestrated some of the most storied corporate takeovers from his Colorado ranch, and Mel Karmazin, the chief executive of Sirius and formerly an executive with CBS and Viacom.

“I would prefer not to lose Mel, but he's gone public and said he won't work for me, so what am I supposed to do?” Mr. Malone told reporters last month at a media conference in Sun Valley, Idaho.

Mr. Malone also said Gregory B. Maffei, Liberty Media's chief executive, who is largely credited as the architect of the Sirius takeover, would not run Sirius. “Greg's not an operating manager,” Mr. Malone said.