In Documents, Private Equity Firms Are Depicted as Colluding

WASHINGTON - In court documents that lawyers for sought to keep secret, the company and other leading firms are depicted as unofficial partners in a bid-rigging conspiracy aimed at holding down the prices of businesses they were seeking to buy.

In Bain's biggest acquisition, the $32.1 billion purchase of the hospital giant HCA in 2006, competitors agreed privately to “stand down” and not bid on the company as part of an understanding with Bain to divvy up companies targeted for leveraged buyouts, according to internal e-mails.

The documents have become part of a lawsuit in Federal District Court in Boston brought against Bain and other firms by shareholders who say the firms' bid-rigging artificially deflated the sales price of more than two dozen companies and cost them billions of dollars.

Bain, founded by the Republican presidential nominee , is a defendant in the lawsuit, which also names 's private equity arm and , the firm run by the investor Stephen A. Schwarzman.

The New York Times brought a motion last month to make public the most recent allegations in the case, which were filed under court seal. In response, lawyers for Bain and the other defendants filed a heavily blacked-out version of a 217-page complaint that details evidence compiled to date in the case.

The corporate takeovers at issue in the lawsuit include the acquisition of prominent companies like Neiman Marcus, Toys “R” Us, Michaels Stores, Univision and the Loews and AMC movie chains, and they date from 2003 to 2007. The class-action shareholders' lawsuit, which was first filed in 2007, has grown since then after a series of court rulings.

Mr. Romney is not mentioned in the publicly released portion of the documents, and lawyers for Bain said in opposing The Times's motion to unseal the entire filing that he “could not have been involved in the deals at issue here” because he had already left Bain by the time the first deal was finalized.

Lawyers for Bain and the other equity firms said in their court filing opposing The Times's motion that the documents include confidential company information that would inevitably become “washed into the spin of the campaign news cycle” because of Mr. Romney's presidential run.

“This case has nothing to do with Mitt Romney or the presidential election,” the lawyers wrote in arguing to keep some of the records private. “The election should not serve as an excuse to allow the press to get at confidential documents and upend competitive sensitivities.”

Michele Davis, a spokeswoman for the Romney campaign, said on Tuesday that the accusations regarding the takeovers are “not related” to Mr. Romney. “All of these things are long after he left Bain,” she said.

Mr. Romney and his advisers say that he has played no “active role” in the company since 1999, when he took a leave from the firm to run the Winter Olympics in Salt Lake City.

But he did not complete a retirement deal with Bain until 2001, and his name appeared on dozens of corporate documents in that time period. Moreover, he has continued to receive profits from the firm as a retired partner and has maintained holdings in some of its investment funds.

Bain Capital has become a central focus of the campaign for both Mr. Romney and President Obama. Mr. Romney has frequently cited his success at the firm in presenting himself as a proven businessman who can turn around the lagging economy. But Mr. Obama has attacked Bain for its takeovers of companies that then laid off workers, sent jobs overseas or declared bankruptcy after they were acquired.

Documents filed in the lawsuit this week show that many of Bain's takeovers last decade did exceedingly well for the company - a result, the lawsuit charges, of buying the businesses at deflated prices because of collusion with other equity firms. Plaintiffs in the case are former shareholders of the acquired companies.

The case centers on the “club deals” that became popular during the leveraged buyout boom of 2003 to 2007, a period that the complaint calls the “Conspiratorial Era.” It claims there was a complex web of collusive arrangements involving 11 of the world's largest buyout firms on 19 deals.

Seeking Critical Mass of Gender Equality in the Boardroom

There's a remarkable lack of women in corporate boardrooms around the world. The European Union is considering a remedy that would require that 40 percent of a company's directors be women. This may be a milestone for gender equality, but the question is, will it make any difference in how companies are run?

The number of women directors remains stubbornly low. According to Catalyst, a nonprofit organization devoted to furthering women in business, American companies have the fourth-highest average of women directors in the world. The average board of a Fortune 500 company in the United States is 16 percent women.

Among other Western countries, Catalyst finds that Britain is at 15 percent, Germany is at 11.2 percent, and Japan is near the bottom at less than 1 percent. Nordic countries occupy the top three positions, with Norway being the world leader. Norway's boards on average are 40.1 percent women.

That Norway is the leader is no coincidence. The coun try passed a law in 2003 to ensure that 40 percent of directors for all public companies were women. The proposed European Union law is likely to be based on the Norwegian one, and the idea behind both is simple: to take away any excuse for a company to avoid gender equality.

The principles behind these laws are social and economic. The social element is based on the idea that the lack of women on boards is not a result of competency issues, but the clubby nature of these institutions. Lacking the ties to the men already on these boards, women are unjustly denied the opportunity to serve.

But there is also an economic argument that is sometimes made to support the role of women on boards. The claim is that boards with women become better decision makers, increase companies' profits and lead them to be more humanely run.

These assertions are based on research that in general makes the unsurprising conclusion that men and women are different, something some o f us may have read about in “Men Are From Mars, Women Are From Venus.” That book was about love and relationships, but studies have found that women in the boardroom have different values, make decisions differently and engender a more cooperative atmosphere.

There's even an Israeli study that finds that the more girls in a school class, the better both boys and girls do on test-taking, and another one that finds that orchestras with a greater representation of women have improved organizational performance in the long run, at least as perceived by the players. That women can have a positive effect on men is something that anyone observing a third-grade class could agree on, and perhaps surprisingly, it seems to work in the boardroom.

That men and women are different may be true, but this still doesn't mean that the more women there are, the better the company's profits. In two studies of the Norwegian experiment thus far, neither were supportive of the role of women on boards. One study found that Norwegian firms declined in value, while the other found a decrease in profitability.

A few commentators explained the findings by noting that the mass appointment of Norwegian women at once led to younger and more inexperienced boards. The question remains, what happens when there is an equal weighting of women and experience?

The couple dozen general studies on the role of gender in the boardroom are more mixed. They come to differing conclusions, some finding women to be a benefit, others a negative, only creating more uncertainty over the issue.

Because of this, the focus these days is on whether several women make a difference rather than having a token woman director. In this area, there is more support that women do have an effect.

One study found that in German companies with a board composition that was greater than 40 percent women, firm performance was positive.

Another recent study, by Miriam Schwartz-Ziv of Israeli, found that boards with three women directors or greater were “approximately twice as likely both to request further information and to take an initiative” and have better performance.

While these studies are promising for advocates of women on boards, the bottom line is that the effect of women directors has yet to be established. Whether they add value just by their presence is undetermined because the number of women on boards remains low. The true test will be when there are a number of companies with boards comprising 50 percent or more women that can be compared against those with less. We're not there yet.

The European Union is seeking to fulfill this goal. According to reports, the European Union justice commissioner is keen to introduce its law in the coming months. France and Italy are instituting quotas at the 20 percent level, and India recently required certain public companies to have at least one woman director. But pass age of the European Union law is not certain. Britain has already issued a letter protesting the effort, asserting that voluntary measures should be given time.

As for the United States, we're clearly not there yet. Even talking about gender stereotypes makes many uneasy because it paints women and men with a uniform brush and doesn't recognize that women and men are different depending on their individual qualities. And there is little likelihood of a quota system being enacted anytime soon.

Gender equality is one goal, but those who think that the number of women directors will reach a critical mass and change the way boards are governed are likely to be disappointed.

Even if it is true that women are different, the way boards are run in the United States may make these differences meaningless.

Boards are inherently behind the curve in decision-making and monitoring the all-powerful chief executive, something we saw in the years leading up to the fi nancial crisis when boards failed to monitor their companies' risky financial bets.

In addition, American directors largely come from the same class and business background, meaning these people can lull themselves into groupthink where diverse views are muted.

Even if more women directors are added, they are likely to come from this same background and class as their male counterparts. And these dynamics will mean that when women join boards, they're more likely than not to act just as the men already there.

So if we are really serious about changing boards, we need to not only add new voices to the board, but find a way for the board itself to change.

Steven M. Davidoff, writing as The Deal Professor, is a commentator for DealBook on the world of mergers and acquisitions.

M.&A. Lawyer Joins Communications Firm

Charles Nathan, a former co-chairman of the global mergers and acquisitions practice at the law firm Latham & Watkins, has joined the communications advisory firm RLM Finsbury as a partner. Stephen Labaton, a former New York Times reporter, is also joining the firm as a partner.

Treasury Sells Additional $2.7 Billion Worth of A.I.G. Shares

Apparently, $18 billion worth of American International Group shares weren't enough for investors.

The Treasury Department said on Tuesday that it had sold an additional $2.7 billion worth of its holdings in the bailed-out insurance giant, as underwriters for the offering exercised what's known as an over-allotment option to meet higher-than-expected demand.

At $20.7 billion, the offering is the single-biggest sale of Treasury's holdings in A.I.G. to date, marking the biggest shedding of its stake to date.

The banks running the stock sale priced the shares on Monday night at $32.50, which is above the $28.73 that the government says is its break-even price on its investment.

The expanded offering means that the federal government's stake in A.I.G. has now fallen to about 15.9 percent, down from 53 percent before the stock sale. As recently as April of 2011, the Treasury Department held a 92 percent stake in the financial firm.

Treasury added i n a statement that it and the Federal Reserve Bank of New York have recovered about $197.4 billion from their collective rescue of A.I.G. during the depths of the 2008 financial crisis, pulling in more than the $182 billion that the government had made available for the bailout. But that calculation includes the cancellation of roughly $50 billion in potential aid that was never doled out.

Investors appeared little moved by the news of the offering's terms on Tuesday. Shares in A.I.G. were nearly flat in late trading, at $33.31, though they had fallen 2 percent on Monday in anticipation of the Treasury Department's forthcoming sale.

Wall Street Sits Courtside for a Marathon Match

John Paulson, the billionaire hedge fund manager, will be forever known on Wall Street as the man who made nearly billions shorting subprime mortgages. But on Monday night at the United States Open men's singles final, DealBook witnessed Mr. Paulson do something that, while not nearly as remunerative, was almost as impressive: He turned his necktie into an ascot.

More later on the MacGyver-esque maneuver of Mr. Paulson, who was among the lucky spectators in attendance for Andy Murray's five-hour victory over Novak Djokovic. Mr. Paulson might have been the richest person in the crowd, but he wasn't the most famous. The Moet & Chandon luxury suite bubbled with Hollywood heavies, including Jon Hamm of “Mad Men” and Andrew Garfield of “The Amazing Spider-Man.” Sitting in the choice seats of the President's Box as invited guests of the United States Tennis Association were Sean Connery and Kevin Spacey.

There were also a number of money men seated courtside. Howard Lutnick, the chief executive of Cantor Fitzgerald, was there with his son, seated with Mr. Connery and Mr. Spacey. The match came on the eve of the 11th anniversary of the Sept. 11 terrorist attacks. Cantor lost 658 of his employees, including Mr. Lutnick's younger brother, Gary. Howard Lutnick was not in his office that morning because he was taking his son to kindergarten.

Also in the audience was Gregory K. Palm, the longtime general counsel of Goldman Sachs. Mr. Palm was seated in the second row at center court. He could be seen frequently taking photos or recording the match with his smartphone. But it appeared that Mr. Palm, regrettably, left the match before its conclusion.

Mr. Paulson, a longtime tennis fan, did stay until the end. He was also seated in the second row, near the baseline. As the match wore on into the night, the temperatures dropped into the 50s and spectators grappled with how to stay warm.

Jason Gay of The Wall Street Jour nal wrote on Twitter that the chill had led “to a crazy, rack-clearing rush at Ralph Lauren store. It's like Cormac McCarthy‘s “The Road”… on Nantucket.” Mr. Connery, along with others in the President's Box, wrapped themselves in fuzzy blankets.

It's chilly at US Open, leading to crazy, rack-clearing rush at Ralph Lauren store. It's like Cormac McCarthy's “The Road”… on Nantucket.

- Jason Gay (@jasonWSJ) September 10, 2012

But Mr. Paulson, unable to avail himself of the U.S.T.A.-issued blanket and possibly reluctant to spend money on a Polo fleece, chose a different approach. Early in the fifth set, Mr. Paulson removed his tie and unbuttoned the top button of his shirt. He then wrapped the tie around his neck and transformed it into an ascot, providing additional warmth for the duration of the match.

Dimon Defends Big Banks

Jamie Dimon, the outspoken chief executive of JPMorgan Chase, sat down on Tuesday for what banking analysts called a “fire-side chat” during the Barclays 2012 Global Financial Services Conference.

Known for his hands-on management style and confident swagger, Mr. Dimon has been navigating the fallout from a rare misstep in his career after JPMorgan announced a multi-billion loss on a complex credit bet at its chief investment office unit.

During a question-and-answer session with Jason Goldberg, a Barclays analyst, Mr. Dimon responded to questions ranging from his stance on the mounting turmoil in Europe to regulatory changes, in particular the Volcker Rule, which restricts banks from trading with their own money.

Mr. Dimon has long been a vocal opposition of some of the regulation being hammered out in Washington although some lawmakers in Washington have seized on the trading losses to push their case for a stronger oversight of the banks.

Mr. Goldberg started by asking Mr. Dimon about the rationale behind shaking up the upper echelons of JPMorgan's executive suite in July.

“It had nothing to do with the chief investment office,” Mr. Dimon said.

He said that “there is nothing mystical, folks” because the moves enabled greater cross-selling. “Cross-selling is a big deal and we do an exceptionally good job. If you reimagine the business from the bottom up, it's a consumer business.”

Part of his management decisions, which elevated a stable of younger executives, was part of trying to “make sure we have a generation trained for other big jobs in the company,” he said.

Tackling the issue of whether the big banks should be broken up, Mr. Goldberg asked Mr. Dimon about recent calls to break up the major banks. Sanford I. Weill, the former chief executive of Citigroup and once Mr. Dimon's boss, rocked Wall Street when he suggested in July that the big banks should be broken up.

“There are huge benefits to size,” Mr. Dimon said. He noted that JPMorgan's size allowed it to be “a port in the storm” during the market turmoil of 2008. “Big banks have a function in society.”

The United States, he added, has the “best, widest deepest and most transparent capital markets in the world.” Cautioning against needless reform, Mr. Dimon said, “Let's make sure we keep that before we do a bunch of stupid stuff that destroys that.“

Mr. Goldberg asked whether the bank would buy back stock.

“The buybacks could start sometime in the first quarter of next year,” the bank chieftain said. “I would buy back our stock all day.” Warning that capital requirements set by the Fed are too high, he said, “Banks by 2014 will have their capital cups running over.”

When asked about Europe, the JPMorgan chief said that JPMorgan would survive even the worst-case scenario in Europe.

On the impact of the Volcker Rule, Mr. Dimon emphasized that the bank was going to “wait and see.” He said that it's important that the rules don't undercut American banks' ability to compete abroad by applying solely to United States banks.

“If the American law applies overseas to us but not to them, we can lose all the business,” he said.

Mr. Goldberg asked about the results of the independent review of the chief investment office, the unit at the center of the botched trade. The review is currently under way.

Mr. Dimon largely reiterated what he has said before, reminding the audience that the risk has been reduced and that the bank still earned $5 billion in the second quarter.

Business Day Live: In Standoff, Latest Sign of Unions Under Siege

What the teachers' strike in Chicago means for organized labor. | Morgan Stanley's showdown with Citigroup over a brokerage.

Too Much Protection for Derivatives in Bankruptcy

I have written before about my opinions regarding the “safe harbors” in the bankruptcy code. These are the provisions that exempt derivatives and repo contracts from the automatic stay, the prohibition on termination of contracts with the debtor, the prohibition on constructively fraudulent transfers and the prohibition on obtaining preferential treatment on the eve of bankruptcy.

In general, I think the current safe harbors are too broad and amount to little more than a subsidy to the derivatives industry. Similar provisions protect “securities contracts,” and open up the argument that any transaction that occurs in the general vicinity of a broker-dealer is immune from the normal rules of bankruptcy.

Maybe Congress wants to subsidize the industry, but it probably should stop pretending that these provisions are vital to protect mom, apple pie and the American economy from systemic risk. You could do that with narrower provisions, as I have shown.

My latest concern with regard to the safe harbors is not so much the statutory provisions, but the role that courts have come to play in expanding the provisions beyond their already broad statutory language.

These sorts of expansions come in two forms. First, there is the expansion that comes from seeming inattention. A recent example can be found in Judge Jed S. Rakoff's opinion dismissing virtually all of the Madoff trustee's preference and fraudulent transfer claims against the owners of the New York Mets.

The judge assumes the applicability of the safe harbor provisions with little analysis. The apparent basis of the ruling was Bernard L. Madoff's registration as a stockbroker. But the bankruptcy code does not define stockbrokers by registration, instead referring to stockbrokers as persons “engaged in the business of effecting transactions in securities.”

One might wonder whether Mr. Madoff actually qualified under that test, but the opinion d oes not discuss it and simply presumes the answer.

Then there is the expansion that comes from an effort to embrace the apparent aims of Congress and run with it.

Kind of like a young person who is a bit too eager to please, these courts find a Congressional intention and take it to places even Congress might not have wanted to go.

A nice example of the latter is a recent decision by the United States Court of Appeals for the Fifth Circuit in Lightfoot v. MXEnergy Electric Inc. The court ruled that a requirements contract for the delivery of electricity was a protected “forward contract” under the bankruptcy code. Yet the contract did not specify any quantity or a delivery date.

Instead, the putative contract provided that the debtor's “full electricity requirements” would be met and the debtor would be charged based on metered usage. If that is a forward contract, any contract involving a commodity (itself a rather vague term, since its incl udes “or any similar good, article, service, right, or interest which is presently or in the future becomes the subject of dealing in the forward contract trade”) that does not provide for immediate performance upon execution becomes a forward contract, and thus is not subject to the normal rules of bankruptcy.

The Fifth Circuit acknowledged this risk, but basically said it was bound by terms that Congress had given it. A court acting like a robot is cute, but it is a basic rule of interpretation that you define provisions in the context in which they are used.

Practically every corporate finance text you look at defines a forward contract as an agreement between two people for the delivery of an asset at a negotiated price on a set date in the future.

The Fifth Circuit Court's certainty that Congress wanted Section 101(25)(A) of the bankruptcy code to change that normal understanding seems like more than a bit of a stretch.

Stephen J. Lubben holds the Harvey Washington Wiley chair in corporate governance and business ethics at the Seton Hall University School of Law and is an expert on bankruptcy.

Morgan Stanley Smith Barney Is Valued at $13.5 Billion

An independent appraiser has set the value of Morgan Stanley Smith Barney at $13.5 billion, setting the stage for Morgan Stanley to buy full control of the retail brokerage giant from its partner in the venture, Citigroup.

The valuation, which was set by the investment bank Perella Weinberg Partners, is a victory for Morgan Stanley, which had previously assessed the value of the enterprise at $9 billion. Citigroup has said that the value of the brokerage was closer to $23 billion.

With the agreement, Morgan Stanley will buy out Citigroup's remaining 14 percent stake.

“This mutually beneficial agreement gives both parties certainty and transparency on price and timing, and is a significant milestone for Morgan Stanley in the implementation of our strategy,” James P. Gorman, Morgan Stanley's chairman and chief executive, said in a statement.

Vikram Pandit, Citigroup's chief executive, said: “As we have shown, the more we put the past behind us, the more we can focus on our future, which is in the core businesses in Citicorp.”

Occupy Hong Kong Protesters Are Removed

HONG KONG - At least one protester was detained and an HSBC guard was hospitalized on Tuesday as bailiffs and police over six hours evicted Occupy Hong Kong demonstrators from the street-level plaza underneath the Asia headquarters of HSBC, where they had camped for nearly a year.

By about 4:15, bailiffs had whittled down the encampment to nine people on two sofas, all encircled by  more than two dozen bailiffs with linked hands. By 4:30, all that remained was a single cream-colored couch, some black cushions and three protesters.

And about 10 minutes later, all that remained were some cleaners sweeping up debris from the site.

As officers dismantled the last of the demonstration, a protester with a megaphone vowed, ‘‘We'll die before we leave!''

The protesters also yelled taunts at the bailiffs. Referring to HSBC management in the building above, they cried, ‘‘You're being used by the men upstairs.''

The last demonstrators linked arms and sang the Communist Internationale in Chinese. They mostly refused interviews, maintaining silence when asked about their objectives.

A bailiff first approached the demonstrators at 11 a.m. and gave what he said was the second of three warnings for them to leave. Hong Kong laws require bailiffs to give three warnings before removing people or possessions pursuant to a court order.

He gave the third warning several minutes later, but the demonstrators remained seated.

The police took action 36 hours after the polls closed in the Hong Kong legislative elections; the local government had been wary of clearing the plaza during the election campaign.

Questions of , an important issue for the Occupy movement, had been important during the campaign, although the dominant issue was a local government plan to introduce patriotic education in the schools. That initiative drew tens of thousands of protesters into the streets and the government ended up retreating on Saturday evening from a mandatory deadline of 2015 for the plan.

One young man who argued vigorously with bailiffs was encircled by police officers at 10:45 a.m. and pulled away around a corner. He walked slowly in a circle of police officers, who were holding his wrists but did not immediately handcuff him.

About a half hour later, bailiffs carried away another screaming protester, as the remaining demonstrators beat a rapid tempo on four drums and remained seated. A third demonstrator, a woman, was pulled away by bailiffs at 11:20. She was taken to the edge of a nearby road, where the other two demonstrators were being watched by police, who formed a line to prevent the them from reentering the plaza but did not try to further restrain them.

In Hong Kong, bailiffs are court officers who serve legal documents and enforce court decisions.

About a dozen protesters shouted angrily at police.

“It's illegal to detain him,” one of them yelled.

The remaining protesters then retreated to the middle of their tents, sat down and began talking quietly among themselves as police watched.

The bailiffs paused and consulted among themselves at 11:30 when one of the remaining demonstrators used a portable megaphone to argue that the bailiffs had violated a local regulation, often followed in the eviction of apartment tenants who do not pay rent, that a visible notice of eviction must be posted in advance.

But a few minutes later, the bailiffs began carrying away a large chair and blankets from the sit-in, drawing outraged cries from the demonstrators.

By 11:45, bailiffs were leaving the remaining demonstrators in a seated group while they took a formal inventory of the tents, chairs and other possessions, then turned them over to workers in blue T-shirts, who carried them away.

A few homeless and mentally ill people have joined the protesters in recent months, but they were not in evidence on Tuesday. The dozen or so demonstrators - more than the half-dozen who appeared to have been living at the site during the summer - are all young men and women and spoke to each other in Cantonese, the local dialect.

Morning Take-Out

TOP STORIES

Plot Twist in the A.I.G. Bailout: It Actually Worked  |  Two years ago, Neil Barofsky, then the special inspector general for the Troubled Asset Relief Program, complained that the Treasury Department was fudging its math about its investment in the American International Group, Andrew Ross Sorkin writes in the DealBook column.

Fast forward to this week. The Treasury Department announced it planned to sell $18 billion of its A.I.G. stake, putting it on a path to actually turn a profit. It was a remarkable feat and one that nobody - including Treasury Secretary Timothy F. Geithner - anticipated four years ago at the peak of the crisis during the $180 billion bailout of the company.

Critics of the A.I.G. bailout - it was the most loathed of the rescues and a centerpiece of the Occupy Wall Street movement - had insisted it was going to be a huge black hole. Mr. Barofsky, who recently wrote a scathing book about the Treasury Department called “Bailout,” refused to admit defeat, saying, “I was right then and I am right now.”
DealBook '

Bets on European Bonds Paying Off for Funds  |  When fear gripped the European markets in April, the money manager Robert Tipp decided to bu y more Portuguese government bonds. He figured that European officials wouldn't let the country turn into another Greece.

“They wanted to have some success stories, and Portugal was one they wanted to keep in,” said Mr. Tipp, who runs the Prudential Global Total Return Fund.

Such contrarian bets are looking pretty smart right now. Last week, the European Central Bank pledged to buy huge amounts of the region's sovereign debt, potentially putting a floor under the prices of Italian, Portuguese, Spanish and Irish bonds. But bond funds may have to brace for a bumpy ride. Despite the progress, uncertainty looms.
DealBook '

DEAL NOTES

Protesters in Hong Kong Forcibly Removed  |  Bailiffs and police in Hong Kong exercised a court order to evict demonstrators with the Occupy movemen t, who had been camped for nearly a year by the Asia headquarters of HSBC, The New York Times reports.
NEW YORK TIMES

The iPhone Stimulus Plan  |  Michael Feroli, the chief United States economist at JPMorgan Chase, estimated in a research note that the upcoming release of the next iPhone could add one-quarter to one-half of a percentage point to the annualized growth rate of America's gross domestic product next quarter.
NEW YORK TIMES ECONOMIX

Japan Banking Regulator Dead at 73  |  Tadahiro Matsushita, the Japanese financial services minister who had overseen a crackdown on insider trading, was found dead in his home in Tokyo, in what authorities said was a suicide, Bloomberg News reports.
BLOOMBERG NEWS

Mergers & Acquisitions '

Qatar Holding Makes Glencore Wait on Revised Xstrata Bid  |  The sovereign wealth fund Qatar Holding says it has yet to decide whether to support Glencore International's increased all-share offer for the mining giant Xstrata.
DealBook '

Tony Blair, Deal Maker  |  Reuters reports: “If Tony Blair's cameo proves to be a deciding factor in winning support from Qatar for a Swiss commodity trader's $36 billion bid for a giant mining firm, the former British prime minister could become a sought-after fixer in global finance.”
REUTERS

Lazard Acquires an Australian Advisory Firm  |  Lazard's Australian unit said it acquired O'Sullivan Partners, an independent advisory firm based in Sydney, as it looks to expand its investment banking business, Reuters reports.
REUTERS

Thai Beverage Considers Bidding for Singapore Brewery  |  After unsuccessfully vying with Heineken for a stake in Asia Pacific Breweries, Thai Beverage is now in talks with an unidentified partner to explore making an offer for Fraser and Neave, the Singapore conglomerate that is selling the Asia Pacific Breweries stake, Reuters reports.
REUTERS

A.I.A. Group Said to Lead Bidding for ING Unit  |  The Asian insurer A.I.A. is the leading bidder for the Malaysian and Thai insurance o perations of ING, Reuters reports, citing unidentified people with knowledge of the matter.
REUTERS

INVESTMENT BANKING '

Deutsche Bank Chiefs Outline Overhaul  |  At a presentation, Jürgen Fitschen and Anshu Jain described Deutsche Bank's shortcomings and promised to take remedial steps like delaying bonuses for top managers.
DealBook '

Legg Mason C.E.O. to Step Down  |  Mark R. Fetting, the chairman and chief executive of the asset management firm Legg Mason, is stepping down on Oct. 1, the company said. The lead independent director, W. Allen Reed, is becoming the nonexecutive chairman, and the head of global distribution, Joseph A. Sullivan, will be the interi m chief executive, MarketWatch reports.
MARKETWATCH

Goldman Loses Its Fee in Energy Deal  |  As part of a $110 million settlement between Kinder Morgan and shareholders of the El Paso Corporation, Goldman Sachs is not being paid a $20 million it was supposed to earn for advising El Paso in the tie-up between the energy companies. A judge said Goldman failed to properly identify and address alleged conflicts.
REUTERS  |  WALL STREET JOURNAL

For a Goldman Executive, More Real Estate Dealings  |  According to people familiar with his plans, J. Michael Evans, a Goldman Sachs vice chairman, will list his Upper West Side condominium for $26 million. He has also put up for sale another apartment that he owns in the building and has recently purchased a $27 million Fifth Avenue apartment.
DealBook '

Goldman Analysts Say Banks Face Lasting Problems  |  In a research report that appeared to contrast with something Goldman Sachs's chief executive said last November, Goldman analysts said that new regulations posed “structural” challenges to the financial industry, Bloomberg News reports.
BLOOMBERG NEWS

Banks in the Business of Transforming Collateral  |  To help clients comply with rules requiring them to post higher-quality collateral, banks including JPMorgan Chase and Bank of America “plan to let customers swap lower-rated securities that don't meet standards in return for a lo an of Treasuries or similar holdings that do qualify,” Bloomberg News reports.
BLOOMBERG NEWS

Scandal Followed a Struggle Over Control of Libor  |  The Wall Street Journal reports: “Four years before a scandal erupted over banks' attempts to manipulate an important interest rate, the head of a private association of giant banks suggested that perhaps the group shouldn't be responsible for what had come to be known as ‘the world's most important number.'”
WALL STREET JOURNAL

Insurer Fears the Fallout of Libor Scandal  |  Richard Ward, the chief executive of Lloyd's, the British insurer, said the rate-manipulation scandal and the money laundering scandals do not “help restore the image of financial services in t he eyes of the public, the politicians and regulators,” Reuters reports.
REUTERS

Barclays to Set Goal for Profitability  |  The new chief executive of Barclays said he would announce a profitability target in the first quarter of next year, Bloomberg News reports.
BLOOMBERG NEWS

Bank of America Shakes Up Research Department  |  Bank of America is replacing its head of equities strategy in Europe, and it is promoting its former equity strategy chief to be its chief investment strategist, Bloomberg News reports, citing unidentified people with direct knowledge of the moves.
BLOOMBERG NEWS

Canadian Banks Grow as Rivals Shrink  |  The eight publicly traded Canadian banks added 8,512 full-time employees in the three months that ended July 31, while their rivals in the United States have been trimming payrolls, Bloomberg News reports.
BLOOMBERG NEWS

PRIVATE EQUITY '

How ‘Rough-and-Tumble' Was Bain Capital?  |  When Mitt Romney led Bain Capital in the 1990s, the private equity firm would sometimes use middlemen to find companies that were in relatively strong shape and could yield quick profits, reports Jesse Eisinger in ProPublica. But these finders sometimes sued over their fees, “raising questions of how rough-and-tumble the company could be,” Mr. Eisinger writes.
PROPUBLICA

Fix Car ried Interest, Not Capital Gains  |  Bruce Bartlett, writing on the Economix blog, says there are “three big problems” with taxing capital gains at the same rate as ordinary income. But when it comes to carried interest in private equity, he says, those earnings should be treated as ordinary income.
NEW YORK TIMES ECONOMIX

Ancestry.com Said to Be in Talks With Buyout Firms  |  Hellman & Friedman, Permira Advisers and TPG Capital are bidding for Ancestry.com, which is seeking an offer of at least $1.5 billion, Reuters reports, citing three unidentified people familiar with the matter.
REUTERS

GoDaddy Experiences Glitches  |  GoDaddy, the Web site registration company owned by K. K.R., Silver Lake and TCV, said it was having trouble with its site on Monday, and a hacker claimed responsibility.
NEW YORK TIMES BITS  |  WALL STREET JOURNAL

Apollo Executive on the Benefits of Size  |  James Zelter, the head of the credit markets group at Apollo Global Management, told The Wall Street Journal that in a challenging market, “size can be a decided advantage in some asset classes such as senior secured loans and non-performing loans.”
WALL STREET JOURNAL

HEDGE FUNDS '

Brevan Howard Said to Profit on ‘London Whale'  |  The European hedge fund Brevan Howard logged a gain of 9.46 pe rcent this year through August 31 in one of its funds after purchasing credit default swaps from JPMorgan Chase, CNBC reports, citing an unidentified investor briefed on the matter.
CNBC

Ackman Meets Resistance From Board of General Growth  |  William A. Ackman of Pershing Square Capital Management, who controls 10.5 percent of General Growth Properties, had urged the real estate firm to consider selling itself, but the board on Monday said it would continue “to execute on its well-conceived business plan,” Reuters reports.
REUTERS

Navistar Expresses Displeasure With Icahn  |  A public spat between Carl C. Icahn and the truck maker Navistar escalated when the company accused the investor of engaging in “threats, a ttacks and disruptions,” Reuters reports.
REUTERS

I.P.O./OFFERINGS '

Ben Horowitz Commiserates With Facebook  |  Speaking at the TechCrunch: Disrupt conference in San Francisco on Monday, the prominent venture capitalist Ben Horowitz said he could relate to Facebook's problematic I.P.O., AllThingsD reports. When his company LoudCloud had its debut, Mr. Horowitz said, “it wasn't the most opportune time for the company to take it public.”
ALLTHINGSD

Mark Zuckerberg to Break His Silence  |  Facebook's chief executive is scheduled to speak at the TechCrunch conference in San Francisco on Tuesday, his first public comments since his company's I.P.O.
USA TODAY

Why Facebook Is Paying the Tax Tab on Employee Compensation  |  Facebook's restricted stock program was a clever solution to the problem of keeping the company private under securities laws, but it left its employees with a tax problem, writes Victor Fleischer in the Standard Deduction column.
DealBook '

VENTURE CAPITAL '

Protege of Peter Thiel Makes Software for the Wealthy  |  Joe Lonsdale, an entrepreneur who worked with Peter Thiel at the hedge fund Clarium Capital, now works on his start-up, Addepar, which “aims to apply Silicon Valley smarts to the increasing complexities faced by the super-rich in tracking, analyzing, transferring, and reporting their fina nces,” Fortune reports.
FORTUNE

Data Storage Company Attracts $40.7 Million  |  Nimble Storage, which makes data storage systems for businesses, raised a financing round led by Sequoia Capital and Accel Partners, two existing investors, TechCrunch reports.
TECHCRUNCH

Is Y Combinator Too Big?  |  Reid Hoffman, the entrepreneur and venture capitalist, said the start-up incubator Y Combinator was “definitely seeing some stress signs from size, like them knowing all of the class in depth and being able to provide the right level of help,” TechCrunch reports.
TECHCRUNCH

LEGAL/REGULATORY '

< span class="title">BlackRock Fined $15.2 Million by British Regulator  |  The Financial Services Authority of Britain has fined BlackRock for failing to follow rules governing the protection of its clients' money.
DealBook '

With Gensler in Hospital, Agency Scraps Vote  |  Gary Gensler, who is overhauling an array of financial rules as head of the Commodity Futures Trading Commission, cracked several ribs on Sunday when he fell at his Maryland home.
DealBook '

Geithner Holds His Own on Triathlon Front  |  Timothy F. Geithner is well known as being something of a fitness nut. And on Sunday, the Treasury secretary showed off his athletic abilities with a highly respectable finish of a tri athlon held in the nation's capital.
DealBook '

Can the S.E.C. Win an Insider Case the Old-Fashioned Way?  |  A recent appeals court decision may result in a test of whether the S.E.C. can win an insider trading verdict by putting on a circumstantial case built around a well-timed trade and contacts with an insider, Peter J. Henning writes in the White Collar Watch column.
DealBook '

Low Interest Rates Squeeze Savers  |  But governments are benefiting from the cheap money. Neal Soss, chief economist at Credit Suisse, told The New York Times: “I have a syllogism for you: The government makes the rules. The government needs the money. So why should it surprise if the rules encourage you to lend the government money?”
NEW YORK TIMES

BNY Mellon Loses Bid to Dismiss Lawsuit Over Lehman Losses  |  Bank of New York Mellon still must face a lawsuit alleging that it mishandled pension funds' investments in Lehman Brothers, but it did persuade a judge to narrow the claims, Bloomberg News reports.
BLOOMBERG NEWS

Dutch Politicians See Eye-to-Eye on Bank Regulation  |  Bloomberg News reports: “Dutch politicians, clashing over the future of the euro area and austerity measures before tomorrow's parliamentary elections, agree on one thing: toughening rules on banks.”
BLOOMBERG NEWS

Morning Take-Out

TOP STORIES

Plot Twist in the A.I.G. Bailout: It Actually Worked  |  Two years ago, Neil Barofsky, then the special inspector general for the Troubled Asset Relief Program, complained that the Treasury Department was fudging its math about its investment in the American International Group, Andrew Ross Sorkin writes in the DealBook column.

Fast forward to this week. The Treasury Department announced it planned to sell $18 billion of its A.I.G. stake, putting it on a path to actually turn a profit. It was a remarkable feat and one that nobody - including Treasury Secretary Timothy F. Geithner - anticipated four years ago at the peak of the crisis during the $180 billion bailout of the company.

Critics of the A.I.G. bailout - it was the most loathed of the rescues and a centerpiece of the Occupy Wall Street movement - had insisted it was going to be a huge black hole. Mr. Barofsky, who recently wrote a scathing book about the Treasury Department called “Bailout,” refused to admit defeat, saying, “I was right then and I am right now.”
DealBook '

Bets on European Bonds Paying Off for Funds  |  When fear gripped the European markets in April, the money manager Robert Tipp decided to bu y more Portuguese government bonds. He figured that European officials wouldn't let the country turn into another Greece.

“They wanted to have some success stories, and Portugal was one they wanted to keep in,” said Mr. Tipp, who runs the Prudential Global Total Return Fund.

Such contrarian bets are looking pretty smart right now. Last week, the European Central Bank pledged to buy huge amounts of the region's sovereign debt, potentially putting a floor under the prices of Italian, Portuguese, Spanish and Irish bonds. But bond funds may have to brace for a bumpy ride. Despite the progress, uncertainty looms.
DealBook '

DEAL NOTES

Protesters in Hong Kong Forcibly Removed  |  Bailiffs and police in Hong Kong exercised a court order to evict demonstrators with the Occupy movemen t, who had been camped for nearly a year by the Asia headquarters of HSBC, The New York Times reports.
NEW YORK TIMES

The iPhone Stimulus Plan  |  Michael Feroli, the chief United States economist at JPMorgan Chase, estimated in a research note that the upcoming release of the next iPhone could add one-quarter to one-half of a percentage point to the annualized growth rate of America's gross domestic product next quarter.
NEW YORK TIMES ECONOMIX

Japan Banking Regulator Dead at 73  |  Tadahiro Matsushita, the Japanese financial services minister who had overseen a crackdown on insider trading, was found dead in his home in Tokyo, in what authorities said was a suicide, Bloomberg News reports.
BLOOMBERG NEWS

Mergers & Acquisitions '

Qatar Holding Makes Glencore Wait on Revised Xstrata Bid  |  The sovereign wealth fund Qatar Holding says it has yet to decide whether to support Glencore International's increased all-share offer for the mining giant Xstrata.
DealBook '

Tony Blair, Deal Maker  |  Reuters reports: “If Tony Blair's cameo proves to be a deciding factor in winning support from Qatar for a Swiss commodity trader's $36 billion bid for a giant mining firm, the former British prime minister could become a sought-after fixer in global finance.”
REUTERS

Lazard Acquires an Australian Advisory Firm  |  Lazard's Australian unit said it acquired O'Sullivan Partners, an independent advisory firm based in Sydney, as it looks to expand its investment banking business, Reuters reports.
REUTERS

Thai Beverage Considers Bidding for Singapore Brewery  |  After unsuccessfully vying with Heineken for a stake in Asia Pacific Breweries, Thai Beverage is now in talks with an unidentified partner to explore making an offer for Fraser and Neave, the Singapore conglomerate that is selling the Asia Pacific Breweries stake, Reuters reports.
REUTERS

A.I.A. Group Said to Lead Bidding for ING Unit  |  The Asian insurer A.I.A. is the leading bidder for the Malaysian and Thai insurance o perations of ING, Reuters reports, citing unidentified people with knowledge of the matter.
REUTERS

INVESTMENT BANKING '

Deutsche Bank Chiefs Outline Overhaul  |  At a presentation, Jürgen Fitschen and Anshu Jain described Deutsche Bank's shortcomings and promised to take remedial steps like delaying bonuses for top managers.
DealBook '

Legg Mason C.E.O. to Step Down  |  Mark R. Fetting, the chairman and chief executive of the asset management firm Legg Mason, is stepping down on Oct. 1, the company said. The lead independent director, W. Allen Reed, is becoming the nonexecutive chairman, and the head of global distribution, Joseph A. Sullivan, will be the interi m chief executive, MarketWatch reports.
MARKETWATCH

Goldman Loses Its Fee in Energy Deal  |  As part of a $110 million settlement between Kinder Morgan and shareholders of the El Paso Corporation, Goldman Sachs is not being paid a $20 million it was supposed to earn for advising El Paso in the tie-up between the energy companies. A judge said Goldman failed to properly identify and address alleged conflicts.
REUTERS  |  WALL STREET JOURNAL

For a Goldman Executive, More Real Estate Dealings  |  According to people familiar with his plans, J. Michael Evans, a Goldman Sachs vice chairman, will list his Upper West Side condominium for $26 million. He has also put up for sale another apartment that he owns in the building and has recently purchased a $27 million Fifth Avenue apartment.
DealBook '

Goldman Analysts Say Banks Face Lasting Problems  |  In a research report that appeared to contrast with something Goldman Sachs's chief executive said last November, Goldman analysts said that new regulations posed “structural” challenges to the financial industry, Bloomberg News reports.
BLOOMBERG NEWS

Banks in the Business of Transforming Collateral  |  To help clients comply with rules requiring them to post higher-quality collateral, banks including JPMorgan Chase and Bank of America “plan to let customers swap lower-rated securities that don't meet standards in return for a lo an of Treasuries or similar holdings that do qualify,” Bloomberg News reports.
BLOOMBERG NEWS

Scandal Followed a Struggle Over Control of Libor  |  The Wall Street Journal reports: “Four years before a scandal erupted over banks' attempts to manipulate an important interest rate, the head of a private association of giant banks suggested that perhaps the group shouldn't be responsible for what had come to be known as ‘the world's most important number.'”
WALL STREET JOURNAL

Insurer Fears the Fallout of Libor Scandal  |  Richard Ward, the chief executive of Lloyd's, the British insurer, said the rate-manipulation scandal and the money laundering scandals do not “help restore the image of financial services in t he eyes of the public, the politicians and regulators,” Reuters reports.
REUTERS

Barclays to Set Goal for Profitability  |  The new chief executive of Barclays said he would announce a profitability target in the first quarter of next year, Bloomberg News reports.
BLOOMBERG NEWS

Bank of America Shakes Up Research Department  |  Bank of America is replacing its head of equities strategy in Europe, and it is promoting its former equity strategy chief to be its chief investment strategist, Bloomberg News reports, citing unidentified people with direct knowledge of the moves.
BLOOMBERG NEWS

Canadian Banks Grow as Rivals Shrink  |  The eight publicly traded Canadian banks added 8,512 full-time employees in the three months that ended July 31, while their rivals in the United States have been trimming payrolls, Bloomberg News reports.
BLOOMBERG NEWS

PRIVATE EQUITY '

How ‘Rough-and-Tumble' Was Bain Capital?  |  When Mitt Romney led Bain Capital in the 1990s, the private equity firm would sometimes use middlemen to find companies that were in relatively strong shape and could yield quick profits, reports Jesse Eisinger in ProPublica. But these finders sometimes sued over their fees, “raising questions of how rough-and-tumble the company could be,” Mr. Eisinger writes.
PROPUBLICA

Fix Car ried Interest, Not Capital Gains  |  Bruce Bartlett, writing on the Economix blog, says there are “three big problems” with taxing capital gains at the same rate as ordinary income. But when it comes to carried interest in private equity, he says, those earnings should be treated as ordinary income.
NEW YORK TIMES ECONOMIX

Ancestry.com Said to Be in Talks With Buyout Firms  |  Hellman & Friedman, Permira Advisers and TPG Capital are bidding for Ancestry.com, which is seeking an offer of at least $1.5 billion, Reuters reports, citing three unidentified people familiar with the matter.
REUTERS

GoDaddy Experiences Glitches  |  GoDaddy, the Web site registration company owned by K. K.R., Silver Lake and TCV, said it was having trouble with its site on Monday, and a hacker claimed responsibility.
NEW YORK TIMES BITS  |  WALL STREET JOURNAL

Apollo Executive on the Benefits of Size  |  James Zelter, the head of the credit markets group at Apollo Global Management, told The Wall Street Journal that in a challenging market, “size can be a decided advantage in some asset classes such as senior secured loans and non-performing loans.”
WALL STREET JOURNAL

HEDGE FUNDS '

Brevan Howard Said to Profit on ‘London Whale'  |  The European hedge fund Brevan Howard logged a gain of 9.46 pe rcent this year through August 31 in one of its funds after purchasing credit default swaps from JPMorgan Chase, CNBC reports, citing an unidentified investor briefed on the matter.
CNBC

Ackman Meets Resistance From Board of General Growth  |  William A. Ackman of Pershing Square Capital Management, who controls 10.5 percent of General Growth Properties, had urged the real estate firm to consider selling itself, but the board on Monday said it would continue “to execute on its well-conceived business plan,” Reuters reports.
REUTERS

Navistar Expresses Displeasure With Icahn  |  A public spat between Carl C. Icahn and the truck maker Navistar escalated when the company accused the investor of engaging in “threats, a ttacks and disruptions,” Reuters reports.
REUTERS

I.P.O./OFFERINGS '

Ben Horowitz Commiserates With Facebook  |  Speaking at the TechCrunch: Disrupt conference in San Francisco on Monday, the prominent venture capitalist Ben Horowitz said he could relate to Facebook's problematic I.P.O., AllThingsD reports. When his company LoudCloud had its debut, Mr. Horowitz said, “it wasn't the most opportune time for the company to take it public.”
ALLTHINGSD

Mark Zuckerberg to Break His Silence  |  Facebook's chief executive is scheduled to speak at the TechCrunch conference in San Francisco on Tuesday, his first public comments since his company's I.P.O.
USA TODAY

Why Facebook Is Paying the Tax Tab on Employee Compensation  |  Facebook's restricted stock program was a clever solution to the problem of keeping the company private under securities laws, but it left its employees with a tax problem, writes Victor Fleischer in the Standard Deduction column.
DealBook '

VENTURE CAPITAL '

Protege of Peter Thiel Makes Software for the Wealthy  |  Joe Lonsdale, an entrepreneur who worked with Peter Thiel at the hedge fund Clarium Capital, now works on his start-up, Addepar, which “aims to apply Silicon Valley smarts to the increasing complexities faced by the super-rich in tracking, analyzing, transferring, and reporting their fina nces,” Fortune reports.
FORTUNE

Data Storage Company Attracts $40.7 Million  |  Nimble Storage, which makes data storage systems for businesses, raised a financing round led by Sequoia Capital and Accel Partners, two existing investors, TechCrunch reports.
TECHCRUNCH

Is Y Combinator Too Big?  |  Reid Hoffman, the entrepreneur and venture capitalist, said the start-up incubator Y Combinator was “definitely seeing some stress signs from size, like them knowing all of the class in depth and being able to provide the right level of help,” TechCrunch reports.
TECHCRUNCH

LEGAL/REGULATORY '

< span class="title">BlackRock Fined $15.2 Million by British Regulator  |  The Financial Services Authority of Britain has fined BlackRock for failing to follow rules governing the protection of its clients' money.
DealBook '

With Gensler in Hospital, Agency Scraps Vote  |  Gary Gensler, who is overhauling an array of financial rules as head of the Commodity Futures Trading Commission, cracked several ribs on Sunday when he fell at his Maryland home.
DealBook '

Geithner Holds His Own on Triathlon Front  |  Timothy F. Geithner is well known as being something of a fitness nut. And on Sunday, the Treasury secretary showed off his athletic abilities with a highly respectable finish of a tri athlon held in the nation's capital.
DealBook '

Can the S.E.C. Win an Insider Case the Old-Fashioned Way?  |  A recent appeals court decision may result in a test of whether the S.E.C. can win an insider trading verdict by putting on a circumstantial case built around a well-timed trade and contacts with an insider, Peter J. Henning writes in the White Collar Watch column.
DealBook '

Low Interest Rates Squeeze Savers  |  But governments are benefiting from the cheap money. Neal Soss, chief economist at Credit Suisse, told The New York Times: “I have a syllogism for you: The government makes the rules. The government needs the money. So why should it surprise if the rules encourage you to lend the government money?”
NEW YORK TIMES

BNY Mellon Loses Bid to Dismiss Lawsuit Over Lehman Losses  |  Bank of New York Mellon still must face a lawsuit alleging that it mishandled pension funds' investments in Lehman Brothers, but it did persuade a judge to narrow the claims, Bloomberg News reports.
BLOOMBERG NEWS

Dutch Politicians See Eye-to-Eye on Bank Regulation  |  Bloomberg News reports: “Dutch politicians, clashing over the future of the euro area and austerity measures before tomorrow's parliamentary elections, agree on one thing: toughening rules on banks.”
BLOOMBERG NEWS

Legg Mason to Replace C.E.O.

The asset management firm Legg Mason said it would search for a new leader after its chairman and chief executive, Mark R. Fetting, decided to step down amid struggles to turn around performance and retain client money.

“The opportunity to lead Legg Mason through a crucial period of its history has been both challenging and fulfilling,” Mr. Fetting said in a statement on Tuesday. “Now is the right time for new leadership to take the baton and continue to move the Company forward into its next phase of growth and development.”

The firm, which manages about $636 billion, said a current director, W. Allen Reed, will become nonexecutive chairman and Joseph A. Sullivan, its global head of distribution, will serve as interim chief as the company searches for a replacement.

Legg Mason's clients have steadily withdrawn their money from the firm since the financial crisis, and assets have failed to recover in a meaningful way. In late 2007, the firm's asse ts under management broke the trillion dollar mark, placing it in an elite club of managers. But a tough 2008 pummeled assets as well as the firm's stock price. Now, shares trade at about $25, a quarter of where they were in early 2007.

The company said Tuesday that Mr. Fetting would remain with the company through the year as a consultant.

Legg Mason to Replace C.E.O.

The asset management firm Legg Mason said it would search for a new leader after its chairman and chief executive, Mark R. Fetting, decided to step down amid struggles to turn around performance and retain client money.

“The opportunity to lead Legg Mason through a crucial period of its history has been both challenging and fulfilling,” Mr. Fetting said in a statement on Tuesday. “Now is the right time for new leadership to take the baton and continue to move the Company forward into its next phase of growth and development.”

The firm, which manages about $636 billion, said a current director, W. Allen Reed, will become nonexecutive chairman and Joseph A. Sullivan, its global head of distribution, will serve as interim chief as the company searches for a replacement.

Legg Mason's clients have steadily withdrawn their money from the firm since the financial crisis, and assets have failed to recover in a meaningful way. In late 2007, the firm's asse ts under management broke the trillion dollar mark, placing it in an elite club of managers. But a tough 2008 pummeled assets as well as the firm's stock price. Now, shares trade at about $25, a quarter of where they were in early 2007.

The company said Tuesday that Mr. Fetting would remain with the company through the year as a consultant.

Deutsche Bank Chiefs Outline Overhaul

FRANKFURT - The new chief executives of Deutsche Bank acknowledged Tuesday that the bank suffered from relatively weak capital reserves, excessive dependence on investment banking and a tarnished reputation, and announced an overhaul designed to address these flaws.

Three months after taking over from longtime chief executive Josef Ackermann, Jürgen Fitschen and Anshu Jain, who are sharing the top job, moved to put their mark on Germany's largest bank. They presented an unusually frank assessment of Deutsche Bank's shortcomings and promised to take remedial measures that will include delaying bonuses for top managers.

“Tremendous mistakes have been made,” Mr. Jain said at a news conference. “We can see times have changed and we need to change and change rapidly.”

His statement came a day before the European Commission is scheduled to present a proposal for a banking union that will shift supervision of institutions like Deutsche Bank from German regulators to the European Central Bank. The plan presented by Mr. Jain and Mr. Fitschen on Tuesday was partly a response to the pressure banks feel from tougher regulations, as well as investigations into allegations of manipulation of money-market rates and other wrongdoing.

Mr. Jain and Mr. Fitschen vowed to push through a change in Deutsche Bank culture that will include tougher sanctions for wrongdoing. “We're in an industry where a small group of people can do irreparable damage,” Mr. Jain said. “We will not stand by and let that happen.”

Deutsche Bank is among the banks accused of manipulating the London Interbank Offered Rate, which is used to set rates on trillions of dollars of financial contracts. Mr. Jain said that the bank is taking the inquiry into Libor fixing “very seriously,” but repeated previous assertions that any wrongdoing was the work of a small group of people and that no members of the management board are implicated.

Mr . Jain, former chief of Deutsche Bank's investment bank, said that the business is simply not as profitable as it once was and that highly paid employees will have to accept more modest compensation. The top 150 managers will receive no bonuses at all for five years, he said, to encourage them to avoid taking excessive risks in the name of short-term gains. They would lose their bonuses if profits fall or they commit wrongdoing.

Addressing a common criticism of the bank, Mr. Jain said that Deutsche Bank's capital reserves, while within regulatory limits, are lower than competitors. He vowed to raise the buffers to the same level as rivals by early next year and significantly higher by 2015.

The banking industry has shrunk since the beginning of the financial crisis and will shrink further, Mr. Fitschen said, requiring the bank to cut costs and reduce the amount of money that it has at risk. The bank had previously announced elimination of 900 jobs, mostly in inve stment banking. On Tuesday, the bank said it would set up a unit for “non-core assets” that will be sold.

Mr. Jain said that, while he is convinced the euro will survive, the economy in the euro zone is likely to grow slowly in the next several years. The bank will seek growth in Asia and the United States, he said.

“We can't deny that in the course of the crisis margins have fallen and funding has become more expensive,” Mr. Fitschen said. “That demands answers on our part that sometimes will be painful.”

BlackRock Fined $15.2 Million by British Regulator

LONDON â€" British authorities have fined the giant money manager BlackRock £9.5 million for failing to protect some of its clients' money.

The fine, the equivalent of $15.2 million, is the second-largest ever levied by the Financial Services Authority in such a case.

JPMorgan Chase was fined £33.5 million in 2010 for not separating client money from the bank's own accounts.

The actions against BlackRock relate to failures by the firm to obtain letters from third-party banks that held money belonging to BlackRock's clients.

Under British law, firms must receive written assurances from other financial institutions that client money is clearly identifiable and protected if banks go bankrupt.

The error occurred after BlackRock acquired BIM, which previously was named Merrill Lynch Investment Managers, in 2006. None of BlackRock's clients lost money because of the failure, the authority said.

“This is not the first time we have seen the impact on client money overlooked as part of a reorganization,” Tracey McDermott, director of enforcement and financial crime at the Financial Services Authority, said in a statement. “The fine imposed today should remind all firms of the critical importance we place on ensuring proper protection of client money at all times.”

BlackRock, which cooperated with the Financial Services Authority, apologized for the error, adding that it had taken steps to improve protections for client money.

“We regret this instance where our U.K. procedures regarding money market deposits for a number of our clients were not consistent with applicable standards,” the company said in a statement.

Qatar Makes Glencore Wait on Revised Xstrata Bid

LONDON - Glencore, the world's biggest commodities trader, will have to wait a little longer to see whether its increased all-share offer for the mining giant Xstrata will be backed by Xstrata's largest shareholder.

Qatar Holding, which owns a 12 percent stake in Xstrata, said on Tuesday that it had yet to decide to support Glencore's revised offer for the mining company. The commodities trader has increased its bid to 3.05 of its own shares for each share in Xstrata.

Qatar Holding, the sovereign wealth fund for the Middle Eastern country, had called on Glencore to improve its initial 2.8 share exchange for each of Xstrata's shares, and galvanized support from other investors, including the activist hedge fund Knight Vinke, to reject the bid.

The shareholder unrest has forced Glencore to revise its proposed merger plans with Xstrata, though Glencore also demanded that its chief executive, Ivan Glasenberg, take over as head of the combined company earlier than had been initially planned.

Responding to the increased all-share offer, Qatar Holding said on Tuesday that it had not yet decided to support the deal, which must be supported by at least 75 percent of Xstrata's shareholders.

Qatar Holding ‘‘has made no decision yet as to whether or not it would accept the revised proposal,'' the company said in a statement.

The sovereign wealth fund, which has aggressively increased its stake in Xstrata over the summer, said it would review the proposed management changes and take into consideration the views of Xstrata's board before deciding on its position.

On Monday, Xstrata's board said it would review Glencore's new proposal and decide by Sept. 24 whether to put the revised offer to its shareholders, though an announcement could come earlier.

To ease potential shareholder opposition, Glencore has said that it will continue to pursue the deal as a merger, instead of an outright takeover.

Und er British law, a takeover would only require the support of 50 percent of Xstrata shareholders, and Glencore, which owns 34 percent of the mining company, would be able to use its owns shares, reducing the influence of Qatar.

In early morning trading in London, shares in Xstrata had fallen 1.6 percent, while stock in Glencore dropped 1.4 percent.