Appeal in Insider Trading Case Centers on Wiretap

In March 2008, the Justice Department made an extraordinary request: It asked a judge for permission to record secretly the phone conversations of Raj Rajaratnam, a billionaire hedge fund manager.

The request, which was granted, was the first time the government had asked for a wiretap to investigate insider trading. Federal agents eavesdropped on Mr. Rajaratnam for nine months, leading to his indictment - along with charges against 22 others - and the biggest insider trading case in a generation.

On Thursday, lawyers for Mr. Rajaratnam, who is serving an 11-year prison term after being found guilty at trial, will ask a federal appeals court to reverse his conviction. They contend that the government improperly obtained a wiretap in violation of Mr. Rajaratnam's constitutional privacy rights and federal laws governing electronic surveillance.

Such a ruling is considered a long shot, but a reversal would have broad implications. Not only would it upend Mr. Rajaratnam's conviction but also affect the prosecution of Rajat K. Gupta, the former Goldman Sachs director who was convicted of leaking boardroom secrets to Mr. Rajaratnam. Mr. Gupta is scheduled to be sentenced on Wednesday.

A decision curbing the use of wiretaps would also affect the government's ability to police Wall Street trading floors, as insider trading cases and other securities fraud crimes are notoriously difficult to build without direct evidence like incriminating telephone conversations.

“Wiretaps traditionally have been used in narcotics and organized crime cases,” said Harlan J. Protass, a criminal defense lawyer in New York who is not involved in the Rajaratnam case. “Their use today in insider trading investigations indicates that the government thinks there may be no bounds to the types of white-collar cases in which they can be used.”

More broadly, Mr. Rajaratnam's appeal is being closely watched for its effect on the privacy protections of defendants regarding wiretap use. Three parties have filed “friend-of-the-court” briefs siding with Mr. Rajaratnam. Eight former federal judges warned that allowing the court's ruling to stand “would pose a grave threat to the integrity of the warrant process.” A group of defense lawyers said that upholding the use of wiretaps in this case would “eviscerate the integrity of the criminal justice system.”

To safeguard privacy protections, federal law permits the government's use of wiretaps only under narrowly prescribed conditions. Among the conditions are that a judge, before authorizing a wiretap, must find that conventional investigative techniques have been tried and failed. Mr. Rajaratnam's lawyers said the government misled the judge who authorized the wiretap, Gerard E. Lynch, in this regard.

They say that the government omitted that the Securities and Exchange Commission had already been building its case against Mr. Rajaratnam for more than a year using typical investigative means like interviewing witnesses and reviewing trading records. Had the judge known about the S.E.C.'s investigation, he would not have allowed the government to use a wiretap, Mr. Rajaratnam's lawyers argue.

Before Mr. Rajaratnam's trial, the presiding judge, Richard J. Holwell, held a four-day hearing on the legality of the wiretaps. Judge Holwell criticized the government, calling its decision to leave out information about its more conventional investigation a “glaring omission” that demonstrated “a reckless disregard for the truth.”

Nevertheless, Judge Holwell refused to suppress the wiretaps, in part, he said, because they were necessary to uncover Mr. Rajartanam's insider trading scheme. “It appears that the S.E.C., and by inference the criminal authorities, had hit a wall of sorts,” Judge Holwell wrote.

On appeal, Mr. Rajaratnam lawyers argued that the government's lack of candor should n ot be tolerated. They described the government's wiretap application as full of “misleading assertions” and “outright falsity” that made it impossible for Judge Lynch to do his job.

“The government's self-chosen reckless disregard of the truth and of the critical role of independent judicial review breached that trust and desolated the warrant's basis,” wrote Mr. Rajaratnam's lawyers at the law firm Akin Gump Strauss Hauer & Feld.

In their brief to the appeals court, federal prosecutors dispute that they acted with a “reckless disregard for the truth.” Instead, they argue that omitting details of the S.E.C.'s investigation was at most “an innocent mistake rising to the level of negligence.” In addition, they said that the S.E.C.'s inquiry failed to yield sufficient evidence for a criminal case, necessitating the use of a wiretap.

Once Judge Lynch signed off on the wiretap application, the government's investigation into Mr. Rajaratnam ac celerated. The wiretapping of Mr. Rajaratnam's phone, along with the subsequent recording of his supposed accomplices, yielded about 2,400 conversations. In many of them, Mr. Rajaratnam could be heard exchanging confidential information about technology stocks like Google and Advanced Micro Devices.

Three years ago this month, federal authorities arrested Mr. Rajaratnam and charged him with orchestrating a seven-year insider trading conspiracy. The sprawling case has produced 23 arrests of traders and tipsters, many of them caught swapping secrets with Mr. Rajaratnam about publicly traded companies.

Among the thousands of calls were four that implicated Mr. Gupta, a former head of the consulting firm McKinsey & Company who served as a director at Goldman Sachs and Procter & Gamble. On one call in July 2008, the only wiretapped conversation between the two men, Mr. Gupta freely shared Goldman's confidential board discussions with Mr. Rajaratnam. On another, Mr. Ra jaratnam told a colleague at his hedge fund, the Galleon Group, “I heard yesterday from somebody who's on the board of Goldman Sachs that they are going to lose $2 per share.”

Those conversations set off an investigation of Mr. Gupta. He was arrested in October 2011 and charged with leaking boardroom secrets about Goldman and P.& G. to Mr. Rajaratnam. A jury convicted him in May after a monthlong trial.

On Wednesday at Federal District Court in Manhattan, Judge Jed S. Rakoff will sentence Mr. Gupta. Federal prosecutors are seeking a prison term of up to 10 years. Mr. Gupta's lawyers have asked Judge Rakoff for a nonprison sentence of probation and community service. One proposal by the defense would have Mr. Gupta living in Rwanda and working on global health issues.

Regardless of his sentence, Mr. Gupta plans to appeal. And because prosecutors used wiretap evidence in his trial, Mr. Gupta would benefit from a reversal of Mr. Rajaratnam's conviction.

Yet a reversal would not affect the convictions of the defendants in the conspiracy who have pleaded guilty. As part of their pleas, those defendants waived their rights to an appeal.

Providence\'s Richardson to Assume Senior Adviser Role

Julie G. Richardson, a managing director at Providence Equity Partners and one of the most prominent female private equity executives, is cutting back on her responsibilities by becoming a senior adviser, the firm said on Tuesday.

During her nine years at Providence, Ms. Richardson led deals like the takeover of Altegrity, the security consulting firm, and took part in the leveraged buyout of SunGard Data Systems, a financial software maker.

She helped open the firm's New York office and, until assuming her new role, served as the firm's only female managing director.

Before joining in 2003, Ms. Richardson was a prominent banker at JPMorgan Chase, where she served as chairman of the telecommunications, media and technology group. She also previously worked at Merrill Lynch.

In her new role, Ms. Richardson will continue to provide advice to Providence's portfolio companies. Others who hold senior adviser roles at the firm include Richard D. Parsons, the former chairman of Time Warner and Citigroup, and Peter Chernin, a onetime president of the News Corporation.

“Julie has been a valued partner at Providence,” a spokesman for Providence said in an e-mailed statement. “We respect her decision to transition from full-time partner to senior advisor to focus on her family and other interests.”

News of Ms. Richardson's new role was reported earlier by The Wall Street Journal online.

With Election Nearing, Wall Street Ponders a Romney Presidency

With the presidential election drawing near, and the Republican candidate Mitt Romney surging in some polls, Wall Street may be cheering on the sidelines.

At the annual meeting of Wall Street's chief lobbying group on Tuesday, some speakers were eager to fan those hopes.

“Romney is in very good shape to win the election,” Charles K. Black, an outside adviser to the Republican candidate's campaign told the conference of Wall Street executives, hosted by the Securities Industry and Financial Markets Association. Mr. Black pegged President Obama's odds of winning re-election at “a one-in-three chance.”

While most blue-state New Yorkers would scowl at the suggestion that Mr. Obama's tenure was in jeopardy, this is Wall Street. The audience was packed with bankers, a group that helped bankroll Mr. Obama's first presidential run before the romance crumbled as the White House struck a harsher tone.

Mr. Obama has derided some bankers as “fat cats. ” The president also ushered in a wave of new regulatory oversight for Wall Street in the aftermath of the financial crisis, irking many firms that prefer the light regulatory touch that often comes with Republican administrations.

Mr. Romney, the former governor of Massachusetts and a longtime private equity executive, has vowed to “repeal and replace” the regulatory crackdown known as the Dodd-Frank Act. That promise alone is likely to turn out the vote on Wall Street.

“The governor thinks Dodd-Frank is way too regulatory and overreaching,” Mr. Black said on a panel.

He conceded, however, that Mr. Romney “hasn't gotten real specific about what the replacement will be.”

For the lonely Obama supporters in the crowd, the Democratic strategist Karen Finney offered some cause for cautious optimism.

With the economy showing some small signs of life, and the unemployment rate slowly ticking downward, “people are feeling more positive, ” she said on the panel. She further noted that polls fail to account for Latino, black and young voters, groups that are likely to come out in droves to support Mr. Obama.

Some Senate races could also turn in favor of Democrats. One campaign in particular â€" the face-off in Massachusetts between Scott Brown, a Republican, and Elizabeth Warren, a Democrat - has riveted the financial sector. Ms. Warren made her name in Washington as a loud critic of Wall Street and the chief architect of the Consumer Financial Protection Bureau, a new regulatory agency that examines big banks.

When panelists noted that Ms. Warren has opened up a lead in that race, Mr. Black cautioned against committing a major faux pas by “mentioning that name in this crowd.”

Few Winners in Heated Cellphone Wars

If you are wondering who will be your cellphone provider next year, so are the cellphone companies. Maneuvers by American cellphone providers to acquire one another are threatening to erupt into all-out war. And the question is not only which ones will survive, but whether the survivors will be ruined by the prey they are rushing to swallow, leaving consumers by the wayside.

The first move occurred in 2011, when AT&T made a bid to acquire T-Mobile U.S.A., the American subsidiary of Deutsche Telekom, which had been looking to sell it for a long time. AT&T's move was brave, considering the well-known antitrust concerns. As part of the deal, T-Mobile was put in the awkward position of arguing to antitrust regulators that it might not survive if it wasn't acquired because of its smaller size and its annual revenue of only $21 billion.

It was a bad move for AT&T. Regulators blocked the deal, and the company walked away poorer by about $6 billion - the amount it was required to pay Deutsche Telekom over the failed acquisition.

The failure should have made other carriers wary. Instead, the message was that unless you acted soon to get bigger, you were not likely to be in the cellphone business for long. And bigger means big enough to challenge AT&T and Verizon Wireless, the two 800-pound gorillas in the wireless arena, with 59 percent of the United States market and 210 million subscribers combined.

The runners-up in the market, Sprint and T-Mobile, knew they had to scramble to get bigger. And behind them were the poor cousins, Leap Wireless and Metro PCS, regional wireless services also looking to grow.

The stage was set to unleash the investment bankers.

Sprint and Metro PCS came close to a merger this year, but Sprint's board scrapped a deal at the 11th hour.

Metro PCS then went down the short list of other targets and agreed to a deal with T-Mobile, announcing a combination this month. If completed, join ing the two would create the third-largest mobile phone operator with 42.5 million subscribers. And the combination is really an acquisition of T-Mobile by Metro PCS with a $1.5 billion dividend kicker paid to Metro PCS shareholders.

This dividend is much less than Metro PCS shareholders could get in a sale. But this is the price that management is paying to get larger. Expect Deutsche Telekom, which will own 74 percent of the combined entity, to sell its shares quickly when, and if, the deal closes.

MetroPCS, however, was thinking broadly when it announced a combination with T-Mobile. According to people close to Metro PCS, it is also trying to nudge Sprint to make a “put up or shut up” move to acquire it - either now or after it combines with T-Mobile. Sprint's alternative is to become the odd man out, left behind by bigger and fiercer competitors.

Many expected Sprint to immediately take the bait and start a counterbid for Metro PCS. Instead, Sprint responded last week with an out-of-the-box move, announcing that SoftBank, the Japanese telecommunications behemoth, would acquire 70 percent of the company for $20.1 billion.

The money would be used to buttress Sprint's finances, presumably for more deal-making and expansion.

Flush with potential cash, Sprint quickly agreed to acquire a $100 million stake from Craig O. McCaw in Clearwire, the broadband service provider. This would raise Sprint's stake to 50.09 percent of the votes from 48.6 percent. Clearwire's stock slid on the news, as the market concluded that Sprint would now be uninterested in acquiring the remaining shares.

Such an acquisition didn't make sense, because Sprint already controlled the board and appointed seven of 13 directors. But what is clear is that Clearwire has become just another pawn in the cellphone wars.

Left out of this deal-making party so far is Leap Wireless. In August, its chief financial officer acknowledged that t he company might sell itself. Leap's stock fell 18 percent the day of the announcement that Metro PCS and T-Mobile were combining under the assumption that it no longer was an attractive acquisition target and would not be part of the deal-making.

That may be true - for now. Yet it is unlikely that Leap will be left out.

That is because we are heading to a place where there are likely to be three or four big wireless companies in the United States, but no more. And the big will continue to get bigger as they scoop up telecommunications companies with access to excess broadband spectrum.

While the endgame may be apparent, one has to wonder whether the wireless industry is in danger of entering the fog of deal-making.

We've seen this story before - in the battle over RJR Nabisco that was made famous by “Barbarians at the Gate” and in deal-making frenzy during the dot-com boom. When faced with a changing competitive landscape, executives spend billio ns because they believe they have no other choice. The cost to the company - and to shareholders - can be immense. In this world, executive hubris tends to dominate as overconfidence and the need to be the biggest on the block cloud reason.

Witness the comments of SoftBank's chief, Masayoshi Son, who told Jim Cramer on CNBC after the announcement of his company's investment in Sprint that “I am a man, and every man wants to be No. 1, not No. 2 or No. 3.”

Not so coincidentally, the deal would make SoftBank only the third-largest global wireless carrier.

AT&T has already lost more than $6 billion in the cellphone wars. This is no small change.

The rush to complete deals is an investment banker's dream.

But the hunt may lead these companies to not only overpay but acquire companies that are underperforming or otherwise don't fit well. Then they have to find a way to run them profitably.

And it may be that it is not being large that is cru cial to winning in this game, but technical innovation. That is what Apple found out to great success. So far in the cellphone wars, these other considerations appear meaningless.

For consumers, this means that there is likely to be less choice as wireless carriers disappear. And whether service will improve or large carriers will simply occupy more space is unknown. Regulators, meanwhile, are likely to stand aside from these smaller deals, instead buying the argument that AT&T and Verizon need a bigger third competitor to stand up to it.

It remains to be seen if that is true, but in the heat of the moment, cellphone executives believe there is no choice but to acquire one another. And in these wars, it is all about making a deal. Consumer concerns are secondary.

One Year After MF Global, New Protections for Customer Money

Nearly a year after MF Global raided customer accounts in a failed bid to survive, regulators moved this week to tighten restrictions for brokerage firms and to adopt new safeguards for client money.

The Commodity Futures Trading Commission voted unanimously to propose new customer protections aimed at closing loopholes, bolstering internal controls and forcing firms to provide more disclosures to their clients. The proposal, which may be changed over the next several months, comes as the futures industry suffers a crisis of confidence in the wake of the MF Global debacle.

“It is critical to enhance customer protection,” Gary Gensler, the agency's Democratic chairman, said on Tuesday. “We must do everything within our authorities and resources to strengthen oversight programs and the protection of customers and their funds.”

In agreeing to advance the rules, the agency ended a lengthy stalemate that stalled the proposal for several weeks. Mr. Gens ler had called a public meeting for later this week, a move that would have forced the agency's Republican commissioners, who have raised some concerns about the effort, to cast a vote. But on Tuesday, he suddenly announced at a speech in New York that all five commissioners voted to propose the rules, which are now open for public comment.

The new wave of regulation reverses a prolonged period of hands-off regulation for the futures industry. For years, futures firms reveled in their reputation as trusted stewards of customer money.

But the near-spotless record was marred with the collapse of MF Global, the firm run by Jon S. Corzine, the former governor of New Jersey. When the firm declared bankruptcy last October, it came to light that MF Global employees tapped customer accounts to patch holes in a debt-ridden balance sheet. The breach, which left thousands of farmers and other clients without $1.6 billion of their money, ignited a nationwide uproar that inc luded Congressional hearings and multiple federal investigations.

The controversy resurfaced this summer when another futures brokerage firm, Peregrine Financial Group, collapsed after misusing customer money. The chief executive, Russell Wasendorf Sr., attempted suicide before ultimately pleading guilty to carrying out a nearly 20-year scheme.

In response to a flurry of concerns, the Commodity Futures Trading Commission scrambled to plug the regulatory gaps. The agency's commissioners portrayed the new proposal announced on Tuesday as a first step to restoring confidence in the markets.

“MF and Peregrine may have never occurred if these rules were in place,” said Bart Chilton, a Democratic commissioner at the agency.

The agency's plan largely tracks a proposal outlined in July by the futures industry's self-regulator, the National Futures Association. The group, now armed with the C.F.T.C.'s support, would move to close an arcane loophole that pe rmits firms to spend some money belonging to customers who trade abroad. The new rule would strike down the exemption, known as the “alternative calculation,” which contradicts a cornerstone of the industry to always segregate client cash.

Under the plan, futures firms must also turn over to regulators daily reports that calculate segregated customer balances. A firm would also need top executives to sign off anytime it wanted to move around 25 percent or more of the money sitting in a customer account.

In addition to supporting policies from the National Futures Association, the C.F.T.C.'s proposed rules would raise the standards for how such self-regulators examine brokerage firms. And for the first time, the rules would grant regulators direct electronic access to a firm's bank accounts. Mr. Gensler described this step as “bringing the regulators' view of customer accounts into the 21st century.”

The proposal is part of broader federal effort to restore credibility to a much-maligned futures industry. In December, the trading commission limited how futures firms can invest customer money, largely barring them from using it to buy foreign sovereign debt.

Still, some officials questioned if the new proposal missed some critical aspects.

“While these measures are a good start, I believe that it is essential to focus on a comprehensive technological solution that goes beyond what the commission has proposed in this release,” Scott O'Malia, a Republican member of the agency, said in a statement.

Mr. Chilton has also championed an insurance fund for the futures industry, a policy that was locked out of Tuesday's plan. Mr, Chilton and some lawmakers have argued that farmers deserve a backstop akin to protections given to securities and banking customers.

“There's no reason futures customers shouldn't have similar protections,” Mr. Chilton said.

Google\'s Earnings Incident Shines Light on a Stealth Industry

A little-known fact regarding corporate earnings was unexpectedly revealed last week when the third-quarter earnings for Google were filed with the Securities and Exchange Commission several hours ahead of schedule.

The filing hit the markets like a missile. Google's stock quickly fell 9 percent before trading was halted 21 minutes. Google quickly pointed the finger at R.R. Donnelley & Sons, the S.E.C. filings agent that Google has used since the company's first filing on April 29, 2004.

Considering the importance of earnings information, especially for widely held stocks like Google, the incident raises questions about whether the information could fall into the wrong hands. A growing number of companies are increasingly aware of this and are bringing the S.E.C. filings function in-house, at least when it comes to their earnings reports.

Doug Fitzgerald, a spokesman for R.R. Donnelley did not respond to several requests for comment. Donnelley, which dat es back to 1864, has long dominated this market. Estimates vary, but it is believed that it has as much as 70 percent of the filings market.

Until Thursday, it wasn't widely known that filings agents like Donnelley had access to a client's earnings in advance â€" sometimes as much as 48 hours early.

During that time, the filings agent “Edgarizes” the filing â€" that is, making various changes to the underlying code. That involves converting the file from standard HTML to something called EDGAR HTML so that the content can be submitted to the S.E.C.'s Edgar system.

Typically, several test files are sent to the S.E.C. to make sure everything is correct before the real filing is transmitted, said Rob Mossefin, a vice president of production at FilePoint, a filing agent based in Raleigh, N.C.

“Once you push the live filing button, it's like pushing the big red button. There's no getting it back,” Mr. Mossefin said. That appears to be exactly what happened on Thursday: a draft of Google's earnings â€" the filing said “Pending Larry quote” at the top to indicate that a quote was coming from the chief executive, Larry Page â€" was accidentally filed with the S.E.C. and went live instantly.

While Google's premature filing was the most prominent example, other incidents over the last few years have involved similar inadvertent releases of information. Most of those, however, have involved a company posting a release on its own Web site prematurely, instead of submitting a filing via the S.E.C.

Two years ago, Microsoft, the Walt Disney Company and NetApp used Web addresses similar to previous releases to upload current earnings information before they were publicly available. That gave anyone looking for the earnings an instant edge.

In other cases, the use of outside firms could lead to deliberate leaks of confidential insider information. Two years ago, a low-level employee at Google's outside inves tor relations firm, Market Street Partners, was connected to the convicted former hedge fund manager Raj Rajaratnam for providing details of earnings for Google and Akamai Technologies. Google quickly fired the firm.

Some of these issues could be resolved by bringing the filings processes in-house. On the same day that R.R. Donnelley filed earnings for Google, other companies including Boston Scientific, Halliburton, Sandisk and Southwest Airlines filed their earnings without using a filing agent.

Some, like Intel, which released its earnings last Tuesday, have been doing it this way for years. Most of these companies use third-party software platforms to handle the filings in-house.

“The more we can control the earnings release, the better off we are,” said an Intel spokesman, Chuck Mulloy, adding that Intel has been doing it this way for at least 18 years. “We own the liability and the risk, and this allows us to maintain the integrity of the report ing process. If there's a problem, it's our problem.”

An executive at Webfilings, a company based in Ames, Iowa, that sells an application that allows companies to self-file, used last week's events as a marketing opportunity, reminding customers that “this unnecessary mistake reinforces the need for public companies to completely control the release of their financial data,” as Mike Sellberg wrote on the Webfilings blog.

A spokeswoman for Google declined to comment on why the company doesn't handle its filings in-house. Kevin Callahan, a spokesman for the S.E.C., declined to comment on whether the agency was investigating Google's early release. It is also unclear whether the S.E.C. thinks there is a larger worry about earnings winding up in the wrong hands before being made public.

But given Google's technical prowess, it could easily move its earnings release in-house to prevent future problems.

“Our biggest challenge is the status quo,” said Matt Rizai, chief executive of Webfilings. “We represent technology that disrupts the industry.”

Michelle Leder is the editor of footnoted.com, a Web site that takes a closer look at companies' regulatory filings.

Manchester United Not for Sale

Joel and Avram Glazer, right, during August's initial public offering of Manchester United shares on the floor of the New York stock exchange. The club are considered the most valuable sports franchise in the world, according to Forbes magazine. Photograph: Justin Lane/EPA

Manchester United's owners will not sell the club for "many, many years", despite ongoing interest, according to the vice-chairman. The sell-off of 10% of the Glazers' shares in August had raised some questions over the family's long-term involvement but Ed Woodward said they had no interest in cashing in the rest of their holding could not rule out one of the six Glazer siblings selling a stake in the future. "There is always interest in this business," he said.

"It is a phenomenal brand and club, but they are not willing sellers at all. They won't even engage, they are long-term investors.

" It's a very popular business that people have interest in. The answer is: 'Not for sale.' I talk to them [the Glazers] every day and the excitement they have in this club is undiminished and I don't see them selling completely [for] many, many years."

Woodward did accept, however, that one of the Glazers may sell at some point. "They could â€" they are a family of six siblings and from time to time, seven to 10 years, who knows if one wants to sell a small piece or not."

The vice-chairman also revealed that India and Australia are on a shortlist for United to tour next summer. The club are also to open an office on the east coast of the US to try to cash in on growing interest in the sport.

Was There a Bankruptcy Alternative for the Automakers?

Some months ago, I predicted that we would finally move on from the overheated rhetoric surrounding the automotive bankruptcy cases. After all, even Paul D. Ryan supported the Obama administration on this point.

Boy, was I wrong.

General Motors and Chrysler made another appearance last night, this in the foreign policy debate.

The dispute between the Obama and Romney campaign turns on a 2008 opinion article that Mitt Romney wrote in The New York Times entitled “Let Detroit Go Bankrupt.” The Obama campaign focuses on the title, the Romney campaign on the end of the piece, where he urges that the auto companies go through a “managed bankruptcy.”

Neither campaign disputes the need for bankruptcy in the Chapter 11 sense. The crucial issue is whether Mr. Romney's article was actually advocating something like bankruptcy in the Chapter 7 sense: appoint a trustee and liquidate.

Mr. Romney may not have actually advocated Chapter 7 for G.M. or Chrysler, but his ideas about a “managed bankruptcy” might have lead to the same place.

He has generally argued for a more traditional Chapter 11 case, without any direct government involvement. In his opinion article, he did suggest that the government might guarantee debtor-in-possession loans for the automakers.

That would have been a perfectly viable plan in 2006 or early 2007, when syndicated debtor-in-possession loans were still widely available. These would have been very large loans, but it's not impossible that they could have been arranged.

The question is whether this would have been viable in late 2008 or early 2009, and there I think we have to say that the answer is plainly “no.”

Traditionally, the top providers of debtor-in-possession loans have been financial institutions like Bank of America, GE Capital, Citigroup and Wachovia. Lehman Brothers also participated in a fair number of such loans.

After Sept. 15, 2008, when Lehman filed for bankruptcy, none of these institutions were in a place to provide what would have been the largest debtor-in-possession loan ever in the case of General Motors. The only way the government guarantee would have changed this is if it were nothing more than a fig leaf, disguising what would have been for all intents a government-financed debtor-in-possession loan.

I don't think the Romney campaign is arguing for something like that, which is essentially just an opaque version of the actual policy adopted by the Obama administration. After all, in another article Mr. Romney termed the Obama approach “crony capitalism on a grand scale.”

Ultimately, the Romney policy is one that advocates a private Chapter 11 solution that was likely to break down at the time it was put into effect, resulting in either the need for the government to step in and save G.M. and Chrysler at a point where they might have been beyond saving.

Vendors and empl oyees tend to stay away if it looks as if they won't get paid.

Or G.M. and Chrysler might have converted their Chapter 11 cases to Chapter 7 cases.

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

Central Park Draws Another Gift From a Fan in High Finance

Central Park has long been a favorite cause for the financial world. Now one of the most prominent names in high finance has given New York City's largest park its biggest-ever gift.

John A. Paulson, the hedge fund magnate who reaped a windfall by betting against mortgages before the financial crisis, has given $100 million to the Central Park Conservancy, in what city officials say is the largest donation on record to the group.

“This is a donation that will touch literally every acre of the city's park,” Douglas Blonsky, the chief executive of the conservancy and the Central Park administrator, said at a news conference on Tuesday.

Mr. Paulson's gift is certainly outsized: Half of it will go toward the Central Park Conservancy's endowment, which currently stands at only $144 million. But the billionaire investor - whose hedge fund has been having a rough time - is only one of many financiers to support the 843-acre park.

A quick look at the Ce ntral Park Conservancy's board reveals over a dozen members who hail from the world of finance. They include not only Mr. Paulson but also:

Central Park has long been a favorite haunt of another onetime power broker on Wall Street: Henry M. Paulson Jr., the former Treasury secretary and chief executive of Goldman Sachs. Virtually every profile of him mentions his affinity for bird-watching and his habit of getting up early to spot winged denizens of the park.

From The New Yorker last year:

It was a drizzly day, and Paulson showed up at the Boathouse wearing a baggy suit and carrying a London Fog rain jacket. In person, he seems less like the “Superman” villain Lex Luthor, whom his grandchildren thinks he resembles, or William Hurt, who played him in “Too Big to Fail,” and more like a park ranger, full of jerky energy.

“My wife's jealous,” Paulson said, of his walk in the Park. (His wife, Wendy, is a naturalist who led bird walk s there when the couple lived nearby.) Spotting a logbook where visitors record bird sightings, he flipped through until he came to a good entry. “See, this is someone who knew what they were doing,” he said and read off the species: “Everything from a house finch to a tufted titmouse and an Eastern towhee.”

At the press conference on Tuesday, Mr. Blonsky described a long walk he took with Mr. Paulson last fall through the park's North Woods. The hedge fund manager kept asking about the Cascades, the waterfall and staff efforts to improve the lands.

“This was a guy who understands the park the way we do,” Mr. Blonsky said.

For his part, Mr. Paulson said that after achieving what he modestly called “business success,” he looked at various potential recipients for his largess.

What he decided upon was Central Park, where, as a New York City native, he hung out at Bethesda Terrace and roller skated around the grounds. The lat ter, he admitted, is something he's not quite as good at doing these days.

Speaking at the press conference, he said: “It kept coming back that Central Park, in my mind, is the most deserving of New York's cultural institutions.”

New York's parks more generally have drawn attention from bankers and investors as well. The hedge fund manager Philip Falcone and his wife, Lisa, are well-known supporters of Manhattan's High Line.

And John A. Thain, the chief executive of the CIT Group and a former head of Merrill Lynch, supported the restoration of a forest in the New York Botanical Garden last year. To repay that generosity, signs noting the “Thain Family Forest” were placed throughout the forest, a fact that our colleague David W. Dunlap at City Room certainly noticed:

They turn up on prohibitory signs, too. “Please Stay on the Path: The Thain Family Forest is a fragile ecosystem.”

Indeed, by the time you reach the sign begi nning, “When a tree falls in the Thain Family Forest -,” you may be tempted to finish the thought yourself, “- does it make a Thain Family Sound?”

Business Day Live: A Tight Rope on China\'s Currency

Debate emphasizes China's dubious role as an economic villain. | What the Federal Reserve might look like under Mitt Romney.

Target to Sell $5.9 Billion Credit Card Portfolio to TD Bank

MINNEAPOLIS--(BUSINESS WIRE)--Target Corporation (NYSE:TGT) announced today that it has reached an agreement to sell its entire consumer credit card portfolio to TD Bank Group (TSX and NYSE: TD) for an amount equal to the gross value of the outstanding receivables (“par”) at the time of closing. Target's portfolio currently has a gross value of approximately $5.9 billion. In addition, the two companies entered into a seven-year program agreement under which TD will underwrite, fund and own future Target Credit Card and Target Visa receivables in the United States. Under the program agreement, TD will control risk management policies and regulatory compliance and Target will continue to perform account servicing functions. This transaction, which is subject to regulatory approval and other customary closing conditions, is expected to close in the first half of calendar 2013.

“This transaction achieves all of Target's strategic and financial goals for a portfolio sale. We look forward to working with this premier global financial institution to continue Target's long history of innovation in our guest-focused financial services strategy.”

"Target is very pleased to have reached this agreement with TD which is the result of extensive efforts by teams at both companies," said Gregg Steinhafel, chairman, president and chief executive officer of Target Corporation. "This transaction achieves all of Target's strategic and financial goals for a portfolio sale. We look forward to working with this premier global financial institution to continue Target's long history of innovation in our guest-focused financial services strategy."

"Our agreement with Target will significantly expand our presence in the North American credit card business and will establish TD as a key player in this space," said Ed Clark, Group President and CEO, TD Bank Group. "We're excited to be working with Target's strong team and leading retail brand. This asset acquisition aligns perfectly with our strategy, fits our risk profile and is a great complement to our high-growth credit card business."

Under the seven-year program agreement, which applies to Target's U.S. credit card operations, Target will maintain the current deep integration between its financial services operations and its retail operations. The agreement does not have any impact on Target's 5% REDcard Rewards program. Target team members will continue to provide all servicing for Target Credit Card and Target Visa accounts. The portfolio sale and program agreement are designed to have minimal impact on Target's current cardholders, guests and the Target team members who support financial products and services.

Transaction Structure, Accounting and Earnings Impacts

Target expects its third quarter 2012 GAAP earnings per share will reflect a pre-tax gain of approximately $150 million due to a change in the accounting treatment of its receivables from “held for investment” to “held for sale”. In addition, at closing Target expects to recognize an additional pre-tax gain of $350 to $450 million on the sale of its portfolio. Target has posted details on the accounting aspects of this transaction on its investor relations website: www.Target.com/investors.

Target expects to deploy proceeds from the sale in a manner that will preserve its strong investment-grade credit ratings. Specifically, the company expects to apply approximately 90 percent of net transaction proceeds to reduce the company's net debt position, with the remainder applied to share repurchase over time.

Under the terms of the program agreement, Target will continue to earn a substantial portion of the profits generated by the Target Credit Card and Target Visa portfolios. Target's income from the profit-sharing arrangement, net of account servicing expenses, will be recognized within SG&A expenses in its U.S. Retail Segment. Beginning with the fiscal quarter in which the transaction closes, Target will no longer report its U.S. Credit Card Segment.

Target expects that net income from this profit-sharing arrangement, combined with the benefit of debt reduction and share repurchase resulting from deployment of proceeds from the sale, will result in mild dilution to Target's adjusted earnings per share in the first 12 months following closing*. Specifically, Target expects that in the 12 months following closing its adjusted earnings per share will be approximately 10 cents lower compared with a scenario in which Target continued to fund its portfolio. Based on its forecast for income from profit sharing combined with the expected benefit from share repurchase and interest savings, Target expects that the adjusted EPS impact of this transaction will be neutral over time.

*Target calculates adjusted earnings per share to measure the results from operations in its U.S. businesses. Accordingly, adjusted earnings per share excludes the impact of Target's Canadian Segment and other non-segment expenses related to its Canadian market entry.

Miscellaneous

Statements in this release related to the closing of the transaction and timing thereof, the deployment of proceeds and the transaction's expected impact on earnings performance are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements speak only as of the date they are made and are subject to risks and uncertainties which could cause the company's actual results to differ materially. The most important risks and uncertainties include: (i) the risk that the transaction may not close or may not close on the expected timeline; (ii) the risk that cardholders will pay down their existing balances faster than anticipated; and (iii) the risks described in Item 1A of the company's Form 10-K for the fiscal year ended January 28, 2012 and Form 10-Q for the fiscal quarter ended July 28, 2012.

About Target

Minneapolis-based Target Corporation (NYSE:TGT) serves guests at 1,781 stores across the United States and at Target.com. The company plans to open its first stores in Canada in 2013. In addition, the company operates a credit card segment that offers branded proprietary credit card products. Since 1946, Target has given 5 percent of its profit through community grants and programs; today, that giving equals more than $4 million a week. For more information about Target's commitment to corporate responsibility, visit Target.com/hereforgood.

For more information, visit Target.com/Pressroom.

Ally to Sell Canadian Arm to RBC for $4.1 Billion

Ally Financial said on Tuesday that it had agreed to sell its Canadian operations to the Royal Bank of Canada for about $4.1 billion, as the lender continues to work toward repaying its taxpayer-financed bailout.

RBC had its own math for the deal, valuing the transaction at between $3.1 billion and $3.8 billion, depending on certain financial adjustments.

As the federal government continues to dismantle the many rescue programs created during the financial crisis, its 74 percent stake in Ally remains one of the most prominent reminders of the market nadir.

While the lender, once known as GMAC, has yet to pursue an initial public offering, it has embarked on a series of sales that could raise money to reduce that stake. Its troubled mortgage unit, Residential Capital, has already put itself in bankruptcy in an important move that would help free its parent from some expensive legal obligations.

The company announced last week that it would sell its M exican insurance business, ABA Seguros, to the Ace Group for about $865 million.

Ally still plans to sell off its Latin American and European divisions, with former parent General Motors considered a potential buyer. The lender said that it plans to provide an update on any deal for those units next month.

“This transaction represents another significant step toward our plans to pursue strategic alternatives for our international operations and accelerate plans to repay the remaining U.S. Treasury investment,” Michael A. Carpenter, Ally's chief executive, said in a statement.

Through the deal, RBC will be gaining one of biggest auto lending operations in Canada. One of the sold operations, Ally Credit Canada, claims about $9.4 billion in assets and about 450,000 consumer auto loans, and provides floor-plan financing to about 580 auto dealerships.

Another unit, ResMor Trust, offers a number of consumer deposit products and had $3.8 billion in depos its and $4.2 billion in assets.

RBC said that it expects the newly acquired division to contribute about $120 million in profit in the first year after closing, before integration costs.

Casting Call in Washington

CASTING CALL IN WASHINGTON  |  Monday night's presidential debate was supposed to be about foreign policy, but the candidates could not help talking occasionally about the domestic economy. That's probably not a bad thing. Whoever wins in November will likely have to find replacements for both Timothy F. Geithner and Ben S. Bernanke, two economic leaders whose jobs have become even more important in the aftermath of the financial crisis, Andrew Ross Sorkin writes in the DealBook column. The Treasury secretary and the Federal Reserve chairman “are the equivalent of roles in a buddy movie,” Mr. Sorkin says.

The speculation about possible successors to Mr. Geithner has centered on some well-known names, like Erskine Bowles and Jamie Dimon, and on some that are less known in business circles, like Jacob Lew, the president's chief of staff. When it comes to the F ed, the election could have an immediate impact on investors' assumptions, Binyamin Appelbaum writes in The New York Times. Mitt Romney, for instance, has pledged to replace the Fed chairman, and the Republican candidate's views would lead people to expect a shift in strategy at the central bank.

 

YAHOO'S FUTURE DEALS  | 
Marissa Mayer is planning to take Yahoo shopping. But don't expect big purchases. Ms. Mayer said on her first earnings call as Yahoo's chief executive that she would seek out acquisitions in the range of “double-digit millions and low hundreds of millions.” Deals above $1 billion are not likely, she said. “We're looking for smaller scale acquisitions that align well over all with our businesses.” Yahoo's shares were up more than 3 percent in trading before the opening bell on Tuesday.

 

VOLCKER RULE'S VICTIMS  |  Goldman Sachs and Morgan Stanley are already changing their businesses in anticipation of the Volcker Rule. But according to Standard & Poor's, those firms could still be hurt by a strict version of the rule, which limits proprietary trading. Certain big banks might even be downgraded. S.&P. analysts on Monday predicted a “one-in-three chance” that Goldman and Morgan would have their ratings cut.

In London, entrepreneurs are building an alternative to traditional banks, DealBook's Mark Scott writes. Some are drawing on their experience in finance or consulting to create payment companies and lenders. “Start-ups are taking advantage of London's position as a global financial center,” Adam Valkin, a partner at the European venture capital firm Accel Partners, told DealBook. “They are innovating in ways that banks just can't do.”

 

ON THE AGENDA  | 
The Securities Industry and Financial Markets Association, known as Sifma, has its annual meeting on Tuesday at the Marriott Marquis in Manhattan; speakers include Gary Gensler of the Commodity Futures Trading Commission, Mary L. Schapiro of the Securities and Exchange Commission and Alan Greenspan, a former Fed chairman. Apple is expected announce a smaller version of the iPad at 1 p.m. Julian Robertson, the founder of Tiger Management, is on CNBC at 4:30 p.m. Greg Smith, the former Goldman employee (and apparently financial commentator, with a new essay in Time magazine) is on CNBC at 4:40 p.m. Xerox reports earnings before the market opens, and Facebook reports after the closing bell. On Thursday, Procter & Gamble is to announce its quarterly results, with William A. Ackman pushing for changes.

 

CERBERUS EYES SUPERVALU  | 
Cerberus Capital Management has been lining up at least $4 billion in financing for a potential bid for Supervalu, the struggling supermarket company, a person briefed on the matter told DealBook. Supervalu's shares jumped nearly 45 percent after Cerberus's efforts were first reported.

 

FRANK DEFENDS JPMORGAN  | 
Jamie Dimon wasn't too happy when the government recently sued his bank over Bear Stearns, which he said he took over as a “favor.” Now, the JPMorgan Chase chief executive has an unexpected ally in Representative Barney Frank. The Massachusetts Democrat said on Monday: “The decision now to prosecute JPMorgan Chase because of activities undertaken by Bear Stearns before the takeover unfortunately fits the description of allowing no good deed to go unpunished.”

 

 

 

Mergers & Acquisitions '

Experian to Buy Rest of Brazilian Firm Serasa for $1.5 Billion  |  The credit information company Experian has agreed to buy the remaining stake in the Brazilian credit data provider Serasa it does not already own. DealBook '

 

Bidding to Begin for Residential Capital Assets  |  The Ocwen Financial Corporation and Nationstar Mortgage Holdings are both looking to buy mortgage assets from Residential Capital, and they are expected to go head-to-head this week. WALL STREET JOURNAL

 

Graphics: Sales by BP, and Ranking the Top Oil Companies  |  BP began a series of dives titures in 2010 to pay for its oil spill in the Gulf of Mexico. Despite paying at least $38 billion for the spill, the British energy giant remains committed to high-risk exploration in deepwater fields. From Australia to Texas, the company has been selling older, smaller assets considered to have limited growth potential. DealBook '

 

Cnooc's Deal for Nexen Still a Possibility  |  The decision to reject Petronas's $5.7 billion deal for Progress Energy Resources may not indicate that the Canadian government is adopting a harder line on mergers involving foreign companies. News Analysis '

 

Toyota Industries to Buy Cascade for $759 Million  |  Toyota Industries said on Monday that it planned to buy the Cascade Corporatio n for $759 million in cash as part of its plan to expand globally. DealBook '

 

INVESTMENT BANKING '

Report Draws Mixed Conclusion on Speedy Trading  |  A two-year British government study on high-speed trading firms rejected the accusation that the firms had caused great volatility, but the findings “confirm some of the problems with high-frequency trading that academics have pointed to in the past,” The New York Times reports. NEW YORK TIMES

 

Examining a Claim by Greg Smith  |  The former Goldman Sachs employee Greg Smith has talked about duping “unsophisticated” clients, but Alison Frankel of Thomson Reuters points out that this issue of sophistication has bee n the subject of lengthy legal debates. THOMSON REUTERS

 

Firms Take a Hard Look at Commodities Units  |  According to The Wall Street Journal, Goldman Sachs has “held preliminary internal discussions in recent years about splitting off its lucrative commodities-trading business.” WALL STREET JOURNAL

 

A Bear Stearns Wedding  |  Justin Brannan and Leigh Holliday, who met on the 36th floor of 383 Madison Avenue, the former Bear Stearns building, returned to that fateful spot to be married on Saturday, the City Room blog writes. NEW YORK TIMES CITY ROOM

 

Low Interest Rates Weigh on Bank Profits  |  
WALL STREET JOURNAL

 

UBS Head of Special Situations Said to Depart  |  Cesar Gueikian, who ran the special situations group at UBS, is starting a hedge fund with a former colleague, Bloomberg News reports, citing three unidentified people with knowledge of the matter. BLOOMBERG NEWS

 

PRIVATE EQUITY '

Ross Eyes Spanish Bank Assets  |  Wilbur Ross said he was in talks “almost every week” with large Spanish banks, Bloomberg News reports. BLOOMBERG NEWS

 

Buyout Bid in China Goes Hostile  |  Cathay Fortune, a Chinese private equity firm, is going directly to shareholders with its $856 million offer for Discovery Metals, after being rejected by the company's board, The Financial Times reports. FINANCIAL TIMES

 

A Target of Carlyle's Is Getting a New C.E.O.  |  The defense equipment maker Chemring Group, which is expected to draw a bid from the Carlyle Group, said its chief executive would step down, Reuters reports. REUTERS

 

Flag Capital to Acquire an Asian Investment Firm  |  The private equity firm Flag Capital Management said it had agreed to acquire Squadron Capital Advisors, a firm based in Hong Kong with about $1.5 billion under management. PRESS RELEASE  |  REUTERS

 

HEDGE FUNDS '

Farallon Capital's Founder to Step Down  |  Another hedge fund is preparing to move onto life beyond its founder, as Farallon Capital announced on Monday that its senior managing member, Thomas F. Steyer, would leave the firm at year-end. DealBook '

 

Argentine Official on ‘Vulture Funds'  |  An Argentine government official said that “vulture funds will never see Argentina kneeled down before their decisions,” apparently a reference to a struggle with Elliott Management. BUENOS AIRES HERALD

 

Greece Remains Popular With Hedge Funds  |  Firms like Third Point, Greylock Capital Management and Fir Tree Partners have been buying up Greek debt over the last few months, The Wall Street Journal reports. WALL STREET JOURNAL

 

Former Credit Suisse Trader Achieves 60% Returns  |  Charlie Chan oversees a relatively small $80 million at the Splendid Asia fund, but his bets have paid off, Reuters writes. REUTERS

 

I.P.O./OFFERINGS '

Forklift Maker, Backed by Private Equity, to Go Public  |  K.K.R. and Goldman Sachs are planning an initial offering of the Kion Group in the second quarter of next year, Bloomberg News reports, citing unidentified people familiar with the matter. BLOOMBERG NEWS

 

Japan Display Chooses Banks for 2014 I.P.O.  | 
REUTERS

 

VENTURE CAPITAL '

Outages at Amazon Data Centers Ripple to Other Sites  |  The Bits blog writes: “Some services at Amazon.com's data centers went down Monday afternoon, taking with them a number of popular Web sites and services, including Flipboard and Foursquare.” NEW YORK TIMES BITS

 

LEGAL/REGULATORY '

An Insider Trading Case That Puts 2 Defendants at Odds  |  The insider trading charges against Anthony Chiasson, a co-found er of Level Global Investors, and Todd Newman, a former portfolio manager at Diamondback Capital Management, may end up with one implicating the other as part of a defense strategy, Peter J. Henning writes in the White Collar Watch column. DealBook '

 

Candidates Debate Rise of China; China Debates Change  |  The presidential candidates debated the rise of China on Monday night, but China's next leader might wish his nation's economy were the juggernaut many Americans think it is, writes Bill Bishop in the China Insider column. DealBook '

 

Bankers Offer Criticisms of Capital Rules  |  In comment letters to regulators, bankers said proposed capital rules were too narrowly focused. WALL STREET JO URNAL

 

A.I.G. Settles Investigation Into Death Benefits  |  The American International Group agreed to pay $11 million to settle a multistate investigation into how it handled death benefits. WALL STREET JOURNAL

 

Owner of Woodchuck Cider Agrees Sale to Irish Rival

LONDON â€" The Irish beverage company C&C Group agreed on Tuesday to buy Vermont Hard Cider Company, the makers of Woodchuck Cider, for $305 million.

The deal is the latest in a flurry of recent acquisitions in the beverage industry, as alcohol giants like AnheuserBusch-InBev and Heineken search for new growth markets.

Under the terms of the deal announced on Tuesday, C&C, based in Dublin, will acquire Vermont Hard Cider, whose brands include Woodchuck Cider which is the largest cider brand in the United States.

The deal will combine C&C's own cider business, including brands like Magners, Bulmers and Gaymers, with those of Vermont Hard Cider, as the Irish company looks to expand its business in the U.S.

“This transaction transforms our international cider business and accelerates our growth prospects,” C&C's chief executive, Stephen Glancey, said in a statement.

In morning trading in London, shares in C&C rose 6 percent.

Vermont Ha rd Cider, based in Middlebury, Vt., reported a pretax profit of $10 million last year, which is expected to increase 50 percent, to around $15 million, in 2012, according to a company statement.

The beverage industry is going through a new round of consolidation. Earlier this year, AnheuserBusch-InBev agreed to buy the share of Grupo Modelo that it did not already own for $20.1 billion. The Dutch beer giant Heineken also recently received shareholder approval to buy the Singaporean-based company Asia Pacific Breweries for around $4.6 billion.

C&C said it would fund the deal for Vermont Hard Cider through existing cash reserves and bank loan facilities.

The deal is expected to close early next year.

Restoration Hardware Sets Price Range for I.P.O.

Restoration Hardware said in a filing on Tuesday that it planned to sell 5.2 million shares at $22 to $24 a share in an initial public offering.

At the midpoint of that price range, the company would have a market value of more than $850 million. Restoration Hardware is being classified as an “emerging growth company” under the Jumpstart Our Business Start-Ups Act, or the JOBS Act, which was enacted this year to ease the regulatory burden for companies that want to go public.

An I.P.O. has been long awaited for the specialty home furnishings retailer, which was taken private in 2008 by the private equity firms Catterton Partners and Tower Three Partners and its top executive at the time, Gary Friedman, for about $175 million.

Mr. Friedman recently stepped down as co-chief executive and chairman after an internal inquiry into a personal relationship with a 26-year-old female employee. Mr. Friedman, who still owns 17.6 percent of the company, is an adv iser to the company and board, with the title of creator and curator, as well as chairman emeritus of the board.

The amended S-1 filing gives details on a five-year advisory services agreement between the company and Mr. Friedman, whose termination date was Oct. 20. The agreement calls for an annual fee of $1.1 million. Mr. Friedman can also earn a minimum annual bonus of $500,000 if certain performance goals are met.

Bank of America-Merrill Lynch and Goldman Sachs are leading the underwriting of the offering. Restoration Hardware's shares are set to trade on the New York Stock Exchange under the ticker symbol RH.

Experian to Buy Stake in Brazilian Unit for $1.5 Billion

LONDON - Experian agreed on Tuesday to buy the remaining stake in its Brazilian unit, Serasa, that it does not already own for $1.5 billion.

Under the terms of the deal, Experian, which provides credit checks for individuals and business, will buy a 29.6 percent stake in Serasa to take its holding in the Brazilian company to almost 100 percent.

Experian will acquire the stake from a consortium of banks, including HSBC and Banco Santander.

In 2007, Experian bought a 70 percent stake in Serasa, Brazil's largest credit data provider, and is looking to benefit from consumers' fast growing use of credit in the Latin American country.

As the financial crisis continues to hit developed markets in the United States and Europe, the credit information company is increasingly turning to emerging economies for new sources of growth.

“We see significant potential for future growth in Brazil,” Experian's chief executive, Don Robert, said in a statement . “We are delighted to have the opportunity to further invest in this exciting region.”

Serasa has a roughly 60 percent market share in Brazil and reported a pretax profit of $312 million for the 12 months through March 31, according to a company statement.

Experian said it would use existing cash reserves and bank loan facilities to fund the deal.

The acquisition is expected to close by the end of the year.

Goldman Sachs and Morgan Stanley advised Experian on the deal.