Occupy Wall Street: a Frenzy That Fizzled

It will be an asterisk in the history books, if it gets a mention at all.

A year ago this week, the Occupy Wall Street movement got under way in Zuccotti Park in Lower Manhattan. The loose group of protesters, frustrated by the economic downturn, sought to blame Wall Street and corporate America for many of the nation's ills.

While the movement's first days did not receive much news coverage, it soon turned into a media frenzy, with some columnists comparing its importance to that of the Arab Spring, which led to the overthrow of leaders in several Middle Eastern and African countries, spurred by social media. Images of the Wall Street protesters getting arrested were looped on news channels and featured on the covers of newspapers. Big banks - and the famous Charging Bull statue that is an icon of Wall Street - were fortified with barricades. By the end of the year, Time magazine had named the protester its Person of the Year, perhaps rightly given the revolut ions taking place around the world, but the magazine also lumped Occupy Wall Street in among the many meaningful movements taking place.

But now, 12 months later, it can and should be said that Occupy Wall Street was - perhaps this is going to sound indelicate - a fad.

That is not to say that Occupy Wall Street had no impact. It created an important national conversation about economic inequality and upward mobility. The chant, “We are the 99 percent,” has become part of the lexicon. Its message has subtly been woven throughout the Obama administration's re-election campaign, in the Democrats' position on everything from taxes on the highest earners to the soaring levels of student debt.

But consider this: Has the debate over breaking up the banks that were too big to fail, save for a change of heart by the former chairman of Citigroup, Sanford I. Weill, really changed or picked up steam as a result of Occupy Wall Street? No. Have any new regulations fo r banks or businesses been enacted as a result of Occupy Wall Street? No. Has there been any new meaningful push to put Wall Street executives behind bars as a result of Occupy Wall Street? No.

And even on the issues of economic inequality and upward mobility - perhaps Occupy Wall Street's strongest themes - has the movement changed the debate over executive compensation or education reform? It is not even a close call.

Is there still anger and angst over the horrible unemployment problem in the United States? Absolutely. But that sentiment, and whatever conversation has emerged as result, was going to happen with or without Occupy Wall Street.

The Wall Street banks themselves hardly felt the pinch of the protesters, beyond considering them a nuisance and an additional security cost. Despite campaigns for customers to move money to smaller, community banks, few customers did.

The biggest victory, perhaps, that the movement can claim was a decision by Bank of America and other big banks to scrap plans to charge additional fees for use of debit cards. The protesters also brought awareness to banks' foreclosure practices, and even successfully petitioned to keep some struggling borrowers in their homes.

Back in the fall of 2011, questioning anything about the movement was not too popular. Doing so was an invitation for withering ridicule. (I experienced it firsthand after I filed what I thought was a relatively respectful column about the protests from Zuccotti Park.)

The problem with the movement, as many other columnists have pointed out before, was that its mission was always intentionally vague. It was deliberately leaderless. It never sought to become a political party or even a label like the Tea Party.

By the second or third time I went down to Zuccotti Park it became clear to me that Occupy Wall Street, which began with a small band of passionate intellectuals, had been hijacked by misfits and vaga bonds looking for food and shelter.

Given the way the organization - if it can be called that - was purposely open to taking all comers, the assembly lost its sense of purpose as various intramural squabbles emerged about the group's end game.

I vividly remember watching one protester with a sign that read “Google = Jewish Billionaires.” Another protester ran over and ripped up the poster. The messages had become decidedly too mixed.

Eliot L. Spitzer, the former New York governor and former attorney general who has been a longtime supporter of Occupy Wall Street, recently reflected on the legacy of the movement.

“They are redefining and rebalancing our political discourse,” he wrote in Slate. “To all those who are dissatisfied because the Occupy movement did not grow into the complete political theory or social agenda that some wished, I say: Give credit where credit is due.”

Fair enough. But even Mr. Spitzer questioned, “We do hav e to ask, ‘Now what?' ”

Deferred Prosecution Agreements and Cookie-Cutter Justice

Lanny A. Breuer, the head of the Justice Department's Criminal Division, last week spoke to the New York City Bar Association, extolling the virtues of deferred and nonprosecution agreements as the new standard for how the Justice Department deals with criminal conduct by corporations.

It is not just corporate investigations that are being concluded with these agreements. They have been used recently with individuals to resolve investigations, like the recent agreement with the cyclist Floyd Landis over possible fraud charges. The Securities and Exchange Commission has also embraced them as a means to wrap up civil securities fraud cases.

But are these agreements all they are cracked up to be as an enforcement tool? Or do they let corporations off too easily? Like anything in the world of white-collar crime, there are good reasons to use them, but questions remain about whether they should be the norm for policing corporate misconduct.

Deferred and nonp rosecution agreements are contracts with the government in which a company (or individual) undertakes specified actions in exchange for charges being dismissed or not filed altogether. The terms usually require payment of a fine, continued cooperation with any investigations or trials and a commitment to enhance internal controls. If the agreement is breached, the agreement typically permits prosecutors to restart the case and use any admissions by the company in the a subsequent proceeding.

A significant advantage to these agreements is that there is no judicial involvement, so the Justice Department does not have to worry about a judge second-guessing its terms or questioning the fairness of the resolution.

Mr. Breuer stated that the growing use of these agreements had meant “unequivocally, far greater accountability for corporate wrongdoing â€" and a sea change in corporate compliance efforts.” He pointed to the recent agreement with Barclays over manip ulation of the London interbank offered rate, or Libor, as an example of how companies pay a heavy price when the settle, citing the replacement of the bank's top management.

But a close look at the Barclays settlement does not show the Justice Department being as tough as advertised. The only discussion of the involvement of senior managers is buried in the press release with a bland reference that “members of Barclays management directed that Barclays's Dollar Libor submissions be lowered.”

There was no specific mention of the former chief executive, Robert E. Diamond Jr., or the chief operating officer, Jerry del Missier, who lost their positions only after significant pressure from the British Parliament, not the Justice Department.

The promised accountability from the agreements does not always mean companies will be completely reformed. James B. Stewart of The New York Times, in a column in July, discussed multiple settlements by the Swiss bank UBS with the government for violations, including receiving immunity in the Libor investigation, which seem “to have had scant, if any, deterrent effect.”

Deferring charges is nothing new in the criminal justice system. Many drug- and alcohol-related prosecutions of first-time offenders permit the dismissal of a case when the person completes treatment. The juvenile justice system often uses diversion programs to allow offenders to avoid punishment through education and counseling.

The pivotal event in the rise of deferred and nonprosecution agreements in the corporate context was the demise of accounting firm Arthur Andersen, whose conviction for obstruction of justice in 2002 was later reversed by the Supreme Court. Thousands of employees lost their jobs because of conduct in firm's Houston office related to its auditing work on behalf of Enron.

Mr. Breuer acknowledged that he had heard, and responded to, companies bemoaning the potential effects of a criminal prosecution on innocent employees and financial markets â€" the specter of Arthur Andersen. He frankly acknowledged that “Sometimes â€" though, let me stress, not always â€" these presentations are compelling.”

Companies facing potential criminal charges know they need to argue that a criminal conviction would be just this side of Armageddon, making sure to highlight the threat of lost jobs and economic turmoil to persuade prosecutors to give a deferred or nonprosecution agreement.

And those arguments certainly seem to work for publicly traded companies. This year, there have been 20 deferred and nonprosecution agreements so far, and over 150 since 2007.

Mr. Breuer is certainly right when he points out that criminal charges are not a very useful means of regulating corporations, so that prosecutors “sometimes had to use a sledgehammer to crack a nut. More often, they just walked away.”

Deferred and nonprosecution agreements al low for a more nuanced approach that extracts a penalty and imposes conditions on a company that are similar to the punishment it would receive from a conviction, but without all of the collateral consequences.

But use of the “sledgehammer” seems to have largely disappeared, so that a full-scale prosecution of a large corporation is at best a rarity. The banks caught up in the Libor investigation can certainly expect to settle with the Justice Department and other regulators, using the Barclays agreement as the template for resolving the case.

It seems as if we are coming perilously close to cookie-cutter justice in corporate criminal investigations. Everyone by now knows the drill: turn over the results of an internal investigation, highlight how damaging a conviction would be and then offer to pay the fine and put in place an enhanced compliance program. The press release almost writes itself, but it is the rare case in which senior management pays any p rice.

Deferred and nonprosecution agreements are here to stay because they give the Justice Department a means to police corporations while mitigating the full impact of the criminal law. They occupy a middle ground between the sledgehammer of criminal charges and giving a company a free pass. Whether they are the unalloyed good that Mr. Breuer portrayed them as is another question.

Examining the Ubiquity of Private Equity

Jason Kelly, as a reporter at Bloomberg News, has been chronicling the moves of the world's largest buyout shops and their billionaire founders long before the private equity industry became a political football.

On Sept. 11, Mr. Kelly's book, “The New Tycoons: Inside the Trillion Dollar Private Equity Industry That Owns Everything,” was published by John Wiley & Sons. He spoke with DealBook last week about the book and the legacy of private equity. The interview has been condensed and edited.

At the beginning of the “The New Tycoons,” you describe a moment when you realized that private equity might be relevant to a broader audience, and not to just financial-journalist nerds like us.

I was at Legoland with my kids and realized that Blackstone owned it. The night before we had stayed at a Hilton hotel, which Blackstone also owns. We were driving around in a rental car from Hertz, another private equity-owned business. Even for someone who spen ds more time than I care to admit thinking about private equity, I hadn't realized the extent to which these firms were embedded in our day-to-day lives.

It's quite a coincidence that your book has come out at a time when private equity is in the spotlight.

It is. Neither Bain nor [Mitt] Romney is prominently featured in the book, although the Romney candidacy is why a lot of these guys and their business practices have been brought to the fore, like the issues surrounding their taxes and job creation or destruction. But the point of this book was not to be about Romney or about private equity in politics. It is really meant to illustrate and explain both the depth and breadth of the industry, its ubiquity, and some explanation of what these guys actually do.

I think that you should have considered putting Mr. Romney in your acknowledgments because surely his campaign will help you sell more than a few copies of this book.

That's probably true. I guess that I am indebted to him.

You began covering private equity just as the leverage buyout boom was cresting. Most experts predicted dire outcomes for those deals, yet it hasn't quite turned out that way.

Take Hilton for example. I always remember the date of the Hilton buyout - July 3, 2007 â€" the same day that K.K.R. filed to go public. It turned out to be the last big deal of the boom - a $20 billion-plus deal, a big, brand-name company, and a lot of debt used to buy it.

As the financial crisis deepened Hilton appeared to be in trouble, yet they were able to do some pretty clever financial maneuvers, fix their debt situation and restructure their balance sheet. The business has since improved and at this point it appears to be a fairly healthy company and one that they've said they'll take public in the next couple years.

You spent time with a lot of the heads of these firms, including Stephen A. Schwarzman of Blackstone and Henry R. Kravis of K.K.R., David M. Rubenstein of Carlyle and David Bonderman of TPG.

Even as these firms have gotten bigger and bigger over the years, they are still very sharp reflections of their founders, and these guys are all now mostly in their 60s, closing in on 70, and are thinking a lot about their legacies having created what seem to be real lasting institutions at this point.

Private equity funds charge expensive fees and lock your money up for a decade or more. Are they worth it?

Their investors, especially public pension funds, are desperate for returns right now. In a zero interest rate environment and a situation where a pension needs to get returns of 8 percent on average, someone who is coming by and saying they can deliver upward of 20 percent is very attractive. But returns have suffered and we're seeing investors start to push for more transparency and more clarity on fees, and it will ultimately be a less lucrative business.

What does the business looks like decades from now?

As the biggest of these firms have gone public, they have reduced their reliance on private equity. At Blackstone, private equity now accounts for less than 20 percent of the firm's profit. They're as much a real estate firm or a money manager who directs money to hedge funds or a credit investor as they are a private equity firm, yet they're still best known for their private equity. It's hard for me to imagine that 20 years from now we're going to be thinking of them and K.K.R. and Carlyle as private equity firms.

Listen to the political rhetoric out there and you'd either believe that private equity is either a force for good or a force for evil. Your book seems to take a down-the-middle approach.

Part of the reason I wanted to write the book was to go beyond the headlines, which definitely tend toward heroic or villainous extremes.

As with so many things, the answers to the big questions aren't neat and tid y, whether around jobs, debt or taxes, and people wildly and loudly disagree on a lot of those issues.

You have a quote in the epigraph of your book from John Kenneth Galbraith: “There's a certain part of the contented majority who love anybody worth a billion dollars.” Why did you include that?

I was looking around for quotes related to billionaires - since all of the main characters fit that description many times over and I wanted to underscore the eye-popping wealth this industry has created.

That quote struck me as ironic to the point of hilarious, especially in 2011 and 2012. He had me at “contented majority.” Given what was going on down in the financial district and at places from Phoenix to Chapel Hill, all of which I happened to visit for one reason or another while I was writing, I also considered a lyric from the R.E.M. song “Welcome to the Occupation.”

What's the lyric?

You are mad and educated
Primitive and wil d
Welcome to the occupation
Here we stand and here we fight

I love R.E.M. and listened to their music enough while writing that I felt compelled to include them in the acknowledgments.

So you thank R.E.M. but not Mr. Romney? Let's leave it at that.

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Chinese Company to Acquire DNA Sequencing Firm

Complete Genomics, a struggling DNA sequencing company in Silicon Valley, said on Monday that it had agreed to be acquired for $117.6 million by BGI-Shenzhen, a Chinese company that operates the world's largest sequencing operation.

The price of $3.15 a share represents an 18 percent premium to Complete Genomics' closing price on Friday and a 54 percent premium to the closing price on June 4, the day before the company announced that it would fire 55 employees to save cash and that it had hired an adviser to explore strategic alternatives.

The deal, which will be carried out by a tender offer, is the latest sign of consolidation in the rapidly changing and fiercely competitive market for DNA sequencing. The price of determining the DNA blueprint of a person is tumbling and sequencing is starting to be used for medical diagnosis, not just for basic research.

In 2010, Life Technologies acquired Ion Torrent, and earlier this year, Illumina, the leading manu facturer of sequencing machines, successfully fought off a $6.2 billion hostile bid from Roche.

Complete Genomics, based in Mountain View, Calif., pioneered a new model, offering sequencing as a service instead of selling sequencing machines to laboratories that would do the work themselves.

While Complete Genomics gained a good reputation and charged low prices of around $5,000 per human genome for large orders, it never was able to make money at that price.

The company lost $39.1 million, or $1.16 per share, in the first half of 2012. Revenue was $12.6 million, about even with the first half of 2011, owing in part to problems Complete experienced in scaling up its operations. The stock is well below the $9 price of its initial public offering in November 2010 and the company said in regulatory filings that it might not be able to continue as a going concern.

The acquisition “represents the best outcome for our stockholders, offering them liquidit y and a premium value,'' Clifford Reid, the chief executive of Complete Genomics, said in a statement on Monday.

BGI-Shenzhen is descended from an organization started in 1999 as the Beijing Genomics Institute to play China's part in the international Human Genome Project.

It is believed to be the world's largest genome sequencing operation and a symbol of China's ambitions to play a major role in genomics, and in biotechnology in general. BGI shocked the industry in 2010 when it placed a record order for 128 of Illumina's high-end HiSeq 2000 sequencing machines at a cost undoubtedly reaching tens of millions of dollars.

While Complete Genomics specializes in human genomes, BGI has sequenced not only human genomes but those of the giant panda and asparagus, not to mention numerous pathogens. It has entered into collaborations with numerous companies, universities and nonprofit organizations in the United States, including Merck; the University of California , Davis; Children's Hospital of Philadelphia; and Autism Speaks.

Wang Jun, the chief executive of BGI-Shenzhen said that Complete Genomics, which would continue to operate as a separate entity, would “fit well with our research and business requirements.''

BGI apparently has a for-profit and nonprofit part, but the entity that will buy Complete Genomics is the for-profit part, according to a person close to BGI.

This person said BGI was not a Chinese government entity. It has apparently been helped in the past by the government, however, including a $1.5 billion agreement with the China Development Bank to finance the company's expansion. In its regulatory filings, Complete Genomics has listed BGI as a competitor that “may be funded by the government of China.''

The deal will need antitrust clearance as well as clearance from a national security review by the Committee on Foreign Investment in the United States. It also requires approval from cert ain governmental authorities in China.

Spokesmen for both Complete Genomics and BGI said they could not provide information beyond what was in the news release.

Citigroup and the law firm O'Melveny & Myers advised BGI. Complete Genomics was advised by Jefferies & Company and the law firm Latham & Watkins.

Square Closes Financing Round

Square, the San Francisco-based mobile payments company led by the Twitter co-founder Jack Dorsey, announced on Monday that it had closed its latest financing round.

The investment, of about $200 million, values the start-up at $3.25 billion, people familiar with the matter have previously told DealBook. The company did not disclose the terms of the transaction in its announcement on Monday.

While several large venture capital firms, including Sequoia Capital and Kleiner Perkins Caufield & Byers, have led Square's past financing rounds, this deal featured less traditional backers, like Rizvi Traverse Management, a boutique private equity firm and a Twitter investor, Citi Ventures and Starbucks, which contributed $25 million.

The investment will help Square keep pace, as it rapidly increases its staff and prepares for international expansion in the coming months. Over the last year, the company has more than doubled its staff to more than 400 employees. Square, which is best known for its mobile credit card reader, also noted on Monday that it was processing about $8 billion in payments each year - roughly eight times the amount from a year ago.

Despite its impressive growth rate, the three-year-old start-up is still many transactions away from becoming a highly profitable company. It makes razor-thin margins on processing credit card transactions and it is still working on increasing the adoption of Pay With Square, an application that allows consumers to open “tabs” with local vendors.

Activist Fund Takes Aim at Office Depot

Starboard Value, an activist hedge fund, said on Monday that it had taken a 13.3 percent stake in Office Depot, and it called on the struggling retailer to shift its strategy to one that reduces spending, focuses on smaller stores and sells noncore assets.

In a public letter to Office Depot's board, Starboard said that its stake made the hedge fund the company's biggest shareholder. It argued that Office Depot had significantly trailed competitors like OfficeMax and Staples in both operating and earnings margins, as well as stock price performance.

While Starboard acknowledged that Office Depot's management had already taken some steps to improve the company's performance, it argued that the efforts had yet to bear fruit.

“While these initiatives represent a step in the right direction, they clearly have not been adequate enough, as is evidenced by the dramatic decline in profitability and underperformance compared to peers,” Jeffrey C. Smith, Starboa rd's chief executive, wrote in the letter.

One potential way to raise money - or “unlock value,” in hedge fund parlance - is for Office Depot to sell its 50 percent stake in its Mexican joint venture, which Starboard claimed had been ignored by investors. Mr. Smith estimated that the holding could be worth more than $900 million, exceeding Office Depot's market value of $704.4 million.

The news of Starboard's letter was first reported in The Wall Street Journal.

Shares in Office Depot were up 10.5 percent in premarket trading on Monday.

Waste Connections to Buy R360 for $1.3 Billion

Waste Connections said on Monday that it would buy R360 Environmental Solutions, an oilfield treatment services company, for about $1.3 billion in cash, as it seeks to increase its toehold in the American energy boom.

Formed two years ago from the union of several smaller companies, R360 has become one of the big players in the business of cleaning up the oil and natural gas drilling fields that have sprouted across vast tracts of North America. Its services include cleaning up contaminated land, reclaiming oil from storage tanks and washing facilities.

R360 runs 26 facilities in Louisiana, New Mexico, North Dakota, Oklahoma, Texas and Wyoming. It generates about $300 million in annual revenue, according to Waste Connections' press release.

“We are extremely pleased about the opportunity to bring R360 into the Waste Connections family,” Ronald J. Mittelstaedt, Waste Connections' chairman and chief executive, said in a statement. “Through acquisition s and new facility development, R360 has created leading positions in key basins, providing closed loop oilfield waste services within an increasingly stringent regulatory environment.”

He added that the deal is expected to add more than 4 percent to Waste Connections' profit margins as measured by consolidated earnings before interest, taxes, depreciation and amortization.

Sberbank of Russia Starts $5.1 Billion Share Sale

LONDON - The Russian government announced on Monday that it would sell a 7.6 percent stake in the country's largest lender, Sberbank, in a rights offering that could raise around $5.1 billion.

The move would be one of Russia's largest share sales in recent years as the government aims to reduce its stakes in a number of the country's largest companies.

Investors have long awaited the announcement of Sberbank's rights offering, which had been hampered by volatility in global financial markets and the recent depressed performance of Russian stocks.

Under the terms of the deal, the Russian central bank said it would sell up to 1.71 billion shares in Sberbank, and had set the price range of between 91 rubles, or $2.99, and the firm's market price when the offering closes, according to a joint statement from Russian authorities and the bank.

At the lower end of the range, Sberbank would raise around $5.1 billion. In early afternoon trading in Moscow, the bank's share price had fallen 1.1 percent, to 95.99 rubles.

The rights offering, which is expected to close this week, will reduce the Russian government's holding in Sberbank to just over 50 percent. Authorities also raised around $3.3 billion by selling a 10 percent stake in another Russian bank, VTB Group, last year.

The share sale will take place in Moscow and London, with 10 percent of the rights to be offered to domestic investors and the remaining 90 percent holding offered to international clients, Sberbank said.

As part of the deal, the Russian lender said it might buy back stock worth up to 20 billion rubles at the same price as other investors.

‘‘The offerings represent an opportunity for us to further diversify Sberbank's investor base and secure an international stock exchange listing,'' Sberbank's chief executive, Herman Gref, said in a statement.

Earlier this year, the Russian bank agreed to buy the Turkish lender DenizBank f or around $3.5 billion as part of an expansion outside its home market.

Sberbank also has bought Volksbank International, a subsidiary of the Austrian lender Oesterreichische Volksbanken, for 505 million euros, $661 million.

Credit Suisse, Goldman Sachs, JPMorgan Chase, Morgan Stanley and Troika Dialog, a Sberbank subsidiary, are coordinating the rights offering.

Money-Laundering Inquiry Is Said to Aim at U.S. Banks

In one of the most aggressive crackdowns on money-laundering in decades, regulators, led by the Office of the Comptroller of the Currency, are said to be close to taking action against JPMorgan Chase for insufficient safeguards, write Jessica Silver-Greenberg and Ben Protess in The New York Times.

Lowe\'s Pulls $1.8 Billion Bid for Rona

Lowe's said on Monday that it had withdrawn its $1.8 billion takeover bid for a Canadian counterpart, Rona, citing the home-improvement chain's unwillingness to hold merger talks.

Shortly after it was unveiled in July, Lowe's offer of 14.50 Canadian dollars a share was rejected by Rona, prompting the American retailer to go hostile.

Lowe's had been seeking to expand in Canada, whose relatively healthy housing market and economy have drawn growth-hungry companies. It entered the country in 2007, and has about 31 big-box stores. Buying Rona would give it an additional 1,500 shops, including 840 run under the company's own name and several franchises and affiliated outlets.

But the bid was met by strong opposition, including comments by the finance minister of Quebec, where Rona is based, describing a potential merger as not appearing “to be in the interest of Quebec or Canada.”

“Lowe's has repeatedly attempted to engage the board of directors of Rona with respect to its proposal in order to conduct confirmatory due diligence and move forward with a friendly, negotiated transaction,” Lowe's said in a statement.

Lowe's added that it was committed to the Canadian market.

Morning Take-Out

TOP STORIES

American Banks Snared in Money-Laundering Crackdown  |  A handful of major American banks are being investigated by federal and state authorities for failing to monitor cash transactions in and out of their branches, Jessica Silver-Greenberg and Ben Protess report in The New York Times. The lapse may have allowed drug dealers and terrorists to launder tainted money, officials who spoke on the condition of anonymity told The Times.

JPMorgan Chase, Bank of America and several other Wall Street giants are being scrutinized by regulators led by the Office of the Comptroller of the Currency, the officials told The Times. The action was said to mark the beginning of “one of the most aggressive crackdowns on money-laundering in decades, intended to send a signal to the nation's biggest banks that weak compliance is unacceptable,” The Times writes.
NEW YORK TIMES

Sberbank of Russia Starts $5.1 Billion Share Sale  |  The Russian government announced on Monday that it would sell a 7.6 percent stake in the country's largest lender, Sberbank, in a rights offering that could raise around $5.1 billion.

The move will be one of Russia's largest share sales in recent years as the government aims to reduce its stakes in a number of the country's largest companies.

Investors have long awaited the announcement of Sberbank's rights offering, which had been hampered by ongoing volatility in global financial markets and the recent depressed performance of Russian stocks.

Under the terms of the deal, the Russian central bank said it would sell up to 1.71 billion shares in Sberbank, and had set the price range between 91 rubles, or $2.99, and the firm's market price when the offering closes, according to a joint statement from Russian authorities and the bank.

DealBook '

DEAL NOTES

Occupy Wall Street's Birthday Party  |  A number of activities have been planned to mark the first anniversary of the Occupy Wall Street movement on Monday, with protesters looking to highlight home foreclosures and the type of speculation that caused JPMorgan Chase's multibillion-dollar trading loss, The New York Times reports.
NEW YORK TIMES

Buffett Says Cancer Treatment Has Completed  |  Warren E. Buffett told a group of newspaper executives on Friday that he was done with radiation treatments for prostate cancer, seeming eager to return to work, The A ssociated Press reports.
ASSOCIATED PRESS

The Nonprofit Gala Season Commences  |  Vikram Pandit, John Paulson, Gary Cohn, George Soros and Steve Schwarzman are expected to attend events for a range of nonprofits they're involved with, Bloomberg News reports.
BLOOMBERG NEWS

A Case of Too Much Navel-Gazing?  |  James Atlas writes in an op-ed piece in The New York Times: “Call it Wall Street porn. Not only do we know more than most of us wish to know about how the rich live - we even know, thanks to the deep-digging efforts of the business reporters over at Bloomberg, how much they have. But there is such a thing as knowing too much.”
NEW YORK TIMES

Mergers & Acquisitions '

Lowe's Pulls $1.8 Billion Bid for Rona  |  Lowe's Companies said on Monday that it had withdrawn its $1.8 billion takeover bid for a Canadian counterpart, Rona, citing the home-improvement chain's unwillingness to hold merger talks.
DealBook '

India Backs Foreign Investment in Retail Sector  |  After years of intense debate, India's government agreed to open the country's retail sector to global behemoths like Walmart and Ikea, pushing for a profound shift in India's economic and political direction, Gardiner Harris reported for The New York Times.
DealBook '

Rip Curl Receives Unsolicited Approaches  |  As its rival Billabong fields private equity interest, the Australian surf wear company Rip Curl said it had “received unsolicited approaches from several international organisations,” Reuters reports. The company could be valued at about $506 million.
REUTERS

Hedge Funds Wager on a Glencore-Xstrata Deal  |  With Xstrata expected to recommend Glencore's revised offer as early as this week, some hedge funds see additional profit opportunity, Reuters reports.
REUTERS

Aerospace Merger Could Offer Chairman an Exit  |  A tie-up between EADS and BAE could give EADS the chance to replace Arnaud Lagardere, the French media mogul who recently was named chairman, The Wall Street Journal reports.
WALL STREET JOURNAL

G.E. Taps Morgan Stanley to Review Thai Bank Stake  |  General Electric is considering options for its 33 percent stake in Bank of Ayudhya of Thailand, worth about $2.2 billion, Reuters reports.
REUTERS

INVESTMENT BANKING '

Redemption of an Exiled Broker  |  Sandy Lewis, who was barred from Wall Street after pleading guilty to stock market manipulation in 1989, was later pardoned by Bill Clinton but remains in self-imposed exile, The New York Times writes. Now, from his farm in the Adirondacks, Mr. Lewis “wants to flip over Wall Street's paving stones and search for worms,” The Times writes.
NEW YORK TIMES

Corporate Earnings Begin to Feel a Pinch  |  A variety of factors are beginning to weigh on corporate earnings, which had far outpaced the broader economy's gains in the aftermath of the recession, The New York Times reports.
NEW YORK TIMES

Deutsche Bank Begins Cutting From Corporate Finance  |  Financial News reports: “Deutsche Bank is cutting a number of high-profile UK-focused bankers from its advisory business, after outlining plans last week to rationalise its corporate coverage.”
FINANCIAL NEWS

Bonus for Citigroup's Chief Remains Unharmed  |  Bloomberg News reports that the write-down Citigroup is taking on its stake in M organ Stanley Smith Barney “probably won't reduce a profit-sharing plan's award for Chief Executive Officer Vikram Pandit that could total $24 million. That's because the plan doesn't count losses at Citi Holdings, the division of unwanted assets that includes the Smith Barney brokerage, a regulatory filing shows.”
BLOOMBERG NEWS

Morgan Stanley Plans Deeper Cuts to Fixed Income  |  The firm plans to reduce the risk-weighted assets in its fixed-income business by at least 35 percent from the third quarter of 2011 through the end of 2014, a deeper cut than previously forecast, Bloomberg News reports.
BLOOMBERG NEWS

Citigroup Executive in Asia Resigns  |  David Khoo, who was Citigroup's head of financial institutions f or Southeast Asia, has left the company less than two years after joining, Reuters reports, citing an unidentified person with direct knowledge of the matter.
REUTERS

Credit Suisse to Hand Over More Data About Clients  |  Credit Suisse plans to give more information to United States authorities looking into whether the Swiss bank helped clients avoid taxes, Bloomberg news reports.
BLOOMBERG NEWS

UBS Expects Money to Leave Swiss Banks  |  UBS estimated that European clients of Swiss banks would withdraw “hundreds of billions of francs” as authorities crack down on tax evasion, Reuters reports.
REUTERS

PRIVATE EQ UITY '

A New Type of Master Limited Partnerships  |  The Wall Street Journal reports: “Private-equity firms, eager to offload assets, are turning mountains of sand, gas stations and coal mines into a special type of security that offers investors annual yields as high as 19% for years to come.”
WALL STREET JOURNAL

Carlyle to Buy Landmark Aviation  |  The Carlyle Group previously owned Landmark Aviation and is buying it again from GTCR and Platform Partners, Reuters reports.
REUTERS

Essdar Capital in Management Buyout  |  Essdar Capital, a specialized financial firm backed by Abu Dhabi royals, said it was bought out by management, Reute rs reports.
REUTERS

Buyout Firm Looks to Tap Demand for Asia  |  Affinity Equity Partners is looking to raise as much as $3.5 billion for a new fund focused on Asia, Reuters reports, citing unidentified people with direct knowledge of the plan.
REUTERS

Founder of Private Equity Firm Commits Suicide  |  Robert B. McKeon, the founder and chairman of Veritas Capital, took his own life earlier this month, Reuters reports. His firm said in a statement that Mr. McKeon “was an extraordinary person, a consummate professional, and a cherished friend and colleague.”
REUTERS

HEDGE FUNDS '

Starboard Value Said to Target Office Depot  |  Starboard Value, the activist investor, is expected to reveal on Monday that it has taken a 13.3 percent stake in Office Depot with plans to push for changes at the company, The Wall Street Journal reports, citing unidentified people familiar with the matter.
WALL STREET JOURNAL

Lasair Capital to Return Money to Clients  |  Lasair Capital, a hedge fund firm backed by General Electric that is owned by women, plans to wind down its portfolios and return about $250 million to clients, Reuters reports.
REUTERS

Seeking Advice From Hedge Funds  |  Pensions & Investments reports: “Hedge fund managers are becoming trusted advisers to their clients, adding the role of portfolio consultant to their investment duties for large and small investors.”
PENSIONS & INVESTMENTS

Trader Starts a Commodities Hedge Fund  |  Paul Crone, who was the head trader at Touradji Capital Management before leaving the firm in March, has started Citrine Capital Management, a hedge fund focused on metals, Bloomberg News reports.
BLOOMBERG NEWS

I.P.O./OFFERINGS '

Clouds Hang Over the I.P.O. Market  |  Financial News reports: “Equity capital markets bankers still cannot bring themselves to be enthusiastic about the future, despite multi-billion-dollar equity deals bursting onto the market last week.”
FINANCIAL NEWS

Russian Health Care Company Plans I.P.O.  |  MD Medical Group is looking to go public in London in October, with plans to raise about $150 million, Reuters reports.
REUTERS  |  FINANCIAL TIMES

Zynga Fights Back Against Electronic Arts  |  Zynga filed a countersuit against Electronic Arts on Friday, accusing the rival games maker of engaging in anticompetitive practices, The Associated Press reports.
ASSOCIATED PRESS

VENTURE CAPITAL '

Betting on a Class of Dropouts  |  The Silicon Valley investor Peter H. Thiel is behind a program that offers $50,000 a year for two years to people under the age of 20 to pursue their dreams outside of college. “You won't be shocked to learn that it is harder to get a Thiel Fellowship than it is to get into Princeton,” The New York Times writes.
NEW YORK TIMES

Winklevoss Twins Invest in a Social Site  |  Tyler and Cameron Winklevoss, whose fight with Mark Zuckerberg over Facebook made them famous, have invested $1 million into SumZero, a social network for professional investors co-founded by their fellow Harvard alumnus Divya Narendra, The Wall Street Journal reports.
WALL STREET JOURNAL

TV Streaming Service Walks a Fine Legal Line  |  Aereo, whi ch pick up broadcast channels and streams them online for subscribers, is trying to position itself for a television business model of the future, The New York Times writes.
NEW YORK TIMES

Silicon Valley's Covert Riches  |  Some in tech circles take pains to conceal their true wealth, writes Nick Bilton on the Bits blog.
NEW YORK TIMES BITS

Twitter Hands Over User's Messages  |  Twitter on Friday surrendered a printed stack of messages written by a user, after fighting a subpoena issued in January, The New York Times reports.
NEW YORK TIMES

LEGAL/REGULATORY '

Ex-UBS Trader Is Accused of Gambling in a Big Loss  |  In an opening statement, prosecutors in London said that Kweku Adoboli doctored documents, invented profits and fabricated clients to cover up trading that led to a $2.3 billion loss at the Swiss bank.
DealBook '

New York Stock Exchange Settles Case Over Early Data Access  |  The New York Stock Exchange agreed to adopt new internal controls and pay a $5 million penalty to settle accusations that its trading data gave select clients a split-second advantage.
DealBook '

Debt Collecto rs Find an Ally in Prosecutors  |  Debt-collection companies have been allowed to use letterhead from the local district attorney's office in their efforts to collect on bad checks, giving their ultimatums the imprimatur of law enforcement, The New York Times reports.
NEW YORK TIMES

A Look at an Insider Trading Case in Japan  |  An unpublished report commissioned by Daiwa Securities in response to a government investigation “provides excerpts of conversations in which several staffers allegedly gave customers suggestions or bits of nonpublic information related to the Nippon Sheet Glass offering,” The Wall Street Journal writes.
WALL STREET JOURNAL

How Much Does the Fed's Plan Really Help Main Street?  |  In theory, the Fed's bond purchases should drive down borrowing costs for companies and consumers. But many rates, like those for credit card loans, remain stubbornly high.
DealBook '

Fed Makes Unemployment Its Focus  |  Gone is the era when the central bank focused mainly on inflation, The New York Times writes.
NEW YORK TIMES

Fed Action Seen Having a Modest Effect on Home Sales  |  Some real estate economists said the Federal Reserve's asset-purchase program could encourage a recovery at the margins of the housing market, but that lower mortgage rates would not be enough to spur a broader recovery, The New York Times reports.
NEW YORK TIMES

A Housing Horror Story  |  Gretchen Morgenson writes in her column in The New York Times about a woman who tried unsuccessfully to get a loan modification on her Florida property. Ms. Morgenson writes, “Chaos and conflict rein over many mortgage workouts. Until that changes, housing will struggle.”
NEW YORK TIMES

European Bank Overhaul Meets Resistance  |  Finance ministers from major European nations raised objections on Saturday to a plan by the European Union to overhaul bank supervision and help troubled lenders, The New York Times reports.
NEW YORK TIMES

S.E.C. Keeps a Close Eye on Exchanges  |  The Wall Street Journal reports: “Ex changes are bracing for greater scrutiny from the top U.S. securities regulator as it clamps down on their efforts to bolster profits by pumping out products that increasingly have catered to high-speed traders.”
WALL STREET JOURNAL

Carlyle Hires Goldman Executive as Co-Head of Its Infrastructure Fund

The Carlyle Group apparently likes the assets it bought from the power company, Cogentrix. So much so that it has hired its chief executive to help lead further investments in the sector.

The private equity firm said on Monday that it had named Robert Mancini, Cogentrix's chief executive, as the co-head of its $1.14 billion infrastructure fund. Mr. Mancini is also a managing director at Goldman Sachs, which has owned Cogentrix since 2003.

Mr. Mancini will officially join Carlyle after the firm closes on its deal to buy Cogentrix's North American power plants, including five coal and solar power plants, from Goldman. He will be based in New York and will head the infrastructure fund alongside Robert Dove.

“This is a rare opportunity to help lead Carlyle's expansion into this critical sector,” Mr. Mancini said in a statement. “I look forward to building upon Carlyle's established infrastructure platform as we grow its investments in the power sector t hrough a combination of development and acquisitions.”

He joined Goldman in 1993, working as a legal executive before moving to the commodities side in 2004, eventually becoming the co-head of the securities firm's North American power asset business.

Carlyle has made a big push into energy investments, having struck deals for a diverse range of assets that include a Connecticut power plant and an oil refinery joint venture with Sunoco.

A Case for Watching Movies on a Phone

September 17, 2012, 8:11 am

From today's mailbag:

David, in your first impressions of the iPhone 5, you mention that the screen is 16:9, perfect for watching movies.

Just think how much you might offend the creators of movies when you speak of watching their creations on a four-inch screen. Movies are works of art (I hope) and they are created to be seen on a large screen, in a darkened hall, with suitable sound in many cases.

Just imagine the Louvre replacing Jacques-Louis David's “Coronation of Napoleon” with a four-inch copy on the wall. A line would form, and each visitor could approach the four-inch copy and view it from close up. Or imagine seeing “Aida” or “Nabucco” on a four-inch screen and hearing it on ear pods. You may have watched it and listened to it, but you did not see it or hear it.

iPhones are phones, and watching movies on them does not make us better people.

And my reply:

We'd all love to watch all movies in the cinemaplex. No question - that's the best setup for watching a movie.

But we'd also all love to eat every meal in a high-end restaurant. And we'd love to sleep every night in a five-star hotel with a view.

Unfortunately, for time and money reasons, that doesn't happen.

The truth is, millions of people watch videos on phones and tablets today. Because they can watch in places, and at times, when going to the cinema is not practical (on a plane, for example). Because it costs much less. Because they can pause, rewind, and fast-forward.

Also, the screen-size issue isn't as clear-cut as you suggest. A four-inch screen, 15 inches from your face, is effectively as large as a cinema screen if you're sitting in the back row. Close, anyway. It fills the same amount of your vision. And earbuds or headphones do a great job with the sound.

Finally, your analogy about removing a painting from the art museum isn't quite on target. Watching a movie on a phone does not replace the original experience; it remains available.

The correct analogy: How great it is to visit the Louvre to see the original painting! But how great that, for people who can't go to France routinely, they also have a chance to study those paintings online, in a book or even on a phone.