The effort by the hedge fund manager David Einhorn to press Apple to return some of its huge cash hoard to shareholders did not sit well with Martin Lipton, one of the nation’s top corporate lawyers. In a scathing memorandum to clients, Mr. Lipton wrote: “The activist-hedge-fund attack on Apple â€" in which one of the most successful, long-term-visionary companies of all time is being told by a money manager that Apple is doing things all wrong and should focus on short-term return of cash â€" is a clarion call for effective action to deal with the misuse of shareholder power.â€
Mr. Lipton, one of the founding partners of Wachtell, Lipton, Rosen & Katz, “has a point worth considering,†Andrew Ross Sorkin writes in the DealBook column. The lawyer contends that long-term shareholders of public companies are being hurt “by a gaggle of activist hege funds†in search of short-term profit. Increasingly, it appears that “shareholder democracy†can, in some cases, lead to “a perverse game in which so-called activist investors take to the media to pump or dump stocks in hopes of creating a fleeting rise or fall in a company’s stock price,†Mr. Sorkin writes. “The battle over Apple is just one minor example. Carl Icahn’s investment in Herbalife, betting against William Ackman’s accusation that the company is a ‘pyramid scheme,’ is another.â€
The question is whether activists are focused on a company’s long-term prospects. Leo E. Strine Jr., the chief judge of the Delaware Court of Chancery, is skeptical. “Many activist investors hold their stock for a very short period of time and may have the potential to reap profits based on short-term trading strategies that arbitrage corporate policies,†he wrote in an essay for the American Bar Association. At the same time, Mr. Sorkin notes, “not all activist inv! estors are created equal and not all of their investments should be considered in the same way.â€
S.E.C. NOMINEE TO FACE THE SENATE IN MARCH  | Mary Jo White, President Obama’s nominee to lead the Securities and Exchange Commission, is set to testify in March at a confirmation hearing before the Senate Banking Committee, a crucial step on her path to becoming a regulator, DealBook’s Ben Protess reports. Though there is no firm date, lawmakers have tentatively scheduled her to appear the week of March 11, three Congressional officials briefed on the matter said on Monday.
Ms. White’s nomination is not expected to face major complications, and the timetable laid out on Monday gives her additional weeks to prepare, Mr. Protess writes. “Over the last couple o weeks, she has received multiple briefings from agency staff members about new securities rules and the structure of the stock market, an official said. The briefings will in part prepare her for the confirmation hearing, which is expected to cover a broad scope of topics.†Some Democrats will ask whether Ms. White, a former prosecutor who had banking clients in private practice, is too cozy with Wall Street, a person briefed on the matter said.
At the hearing, Ms. White will probably appear alongside Richard Cordray, who was reappointed in January as director of the Consumer Financial Protection Bureau, one official said.
LEW BUILDS SUPPORT IN WASHINGTON  | President Obama’s choice for the next Treasury secretary, Jacob J. Lew, in recent weeks “has sought to show he has enough Wall Street experience to handle turbulent financial markets, but not enough to prevent him from reining in the! powerful! banking industry,†The New York Times reports. Though he is expected to win initial approval from the Senate Finance Committee on Tuesday, Mr. Lew, White House chief of staff and a former budget director, who also spent time at Citigroup, has fielded pointed questions about his time in the private sector. “To shore up his support, Mr. Lew has met privately in recent weeks with 41 senators and responded to 738 questions for the record. On Tuesday, he is scheduled to head to Capitol Hill for another meeting.â€
Questions from lawmakers have centered on the terms of Mr. Lew’s contract with Citigroup, which allowed him to keep certain bonus compensation if he left for a “high level position with the United States government or regulatory body†but not a private sector competitor, according to several people with direct knowledge of the contract. Lawmakers have also focused on Mr. Lw’s money-losing investment in a fund based in the Cayman Islands.
JPMORGAN INVESTOR DAY  | Starting at 8:30 a.m. on Tuesday, executives of JPMorgan Chase face shareholders in the first investor day since the “London whale†losses last year. The tone is expected to be upbeat. According to The Financial Times, the executives plan to “announce a jump in international revenues and increased cross-selling between the commercial and investment banks,†and they will “describe how global corporate bankers - who focus on multinational clients - have tripled to 300 since 2009.â€
ON THE AGENDA  | The chairman of the Federal Deposit Insurance Corporation, Martin J. Gruenberg, announc! es the ag! ency’s report on last year’s bank earnings at 10 a.m. Ben S. Bernanke, the Federal Reserve chairman, gives a report on monetary policy to the Senate Banking Committee at 10 a.m. Christy Romero, the special inspector general for the Troubled Asset Relief Program, appears at a 10 a.m. hearing of a House Oversight and Government Reform subcommittee, focusing on executive compensation at taxpayer-financed companies. Staff members of the Commodity Futures Trading Commission and the International Organization of Securities Commissioners hold a public meeting at 1 p.m.to discuss a report on ways to overhaul benchmark interest rates. Home Depot reports earnings before the market opens. The S.&P./Case-Shiller housing price index for December and the fourth quarter is out at 9 a.m. Wilbur Ross is on CNBC at 7 p.m.
BANKS VULNERABLE IN DISPUTE OVER ARGENTINE DEBT  | A federal appeals court on Wednesday will hear the case between the government of Argentina and a group of investors in its debt. Those investors, including the hedge fund tycoon Paul E. Singer, sued Argentina seeking payment on bonds that defaulted in 2001, and have already won a favorable opinion at the United States Court of Appeals for the Second Circuit. “But the issue that the appeals court is still undecided about is perhaps the most important,†DealBook’s Peter Eavis writes! . “! It involves devising a method to pressure Argentina to pay up on the disputed bonds. And that has left the investors who hold a majority of Argentina’s foreign debt vulnerable, as well as the banks that process the payments to those investors.â€
What’s Behind the Challenge to the Beer Deal  | According to the Justice Department’s view of the deal, Anheuser-Busch InBev wants to buy the rest of Grupo Modelo “not because it thinks the company makes great beer, or because it covets Corona’s 7 percent U.S. market share, but because owning Corona would allow AB InBev to raise prices across all of its brands,†Adam Davidson writes in The New York Times Magazine. NEW YORK TIMES MAGAZINE
For Time Inc. and Meredith, the Challenge Is Integration  | Employees of Time Inc. and the Meredith Corporation “have been wondering how executives will take on the harder task of merging two very different corporate cultures,†The New York Times writes. NEW YORK TIMES
H.P. Board Moves to Toughen Oversight  | The board of Hewlett-Packard “is investigating the company’s flawed $11 billion acquisition of software firm Autonomy Corp., and has set up an informal committee to provide strategic advice to Chief Executive Meg ! Whitman,â! € The Wall Street Journal reports. WALL STREET JOURNAL
Cnooc’s Deal for Nexen Closes  |Â
REUTERS
Carestream Health Said to Be on the Block  | The medical technology company Carestream Health, which was acquired by the private equity firm Onex in 2007, could sell for as much as $3.5 billion, according to Reuters. REUTERS
What Barnes & Noble’s Retail Arm Might Be Worth  | Now that Barnes & Noble’s chairman has said he plans to bid for the retailer’s physical stores, how much will he pay According to some analysts, maybe not all that much. DEALBOOK
German Bourse Said to Have Held Talks With CME  | Underscoring the pressure on exchanges, the CME Group contacted Deutsche Börse †twice in recent months to gauge interest in potential deals, a person familiar with the matter said,†according to The Wall Street Journal. The discussions did not turn into formal merger talks, the newspape! r says. WALL STREET JOURNAL
Buyout Offer Will Likely Not End Elan’s Deal Ambitions  | Royalty Pharma’s $6.6 billion buyout offer is too small to tempt Elan’s management away from its own acquisition ambitions, Robert Cyran of Reuters Breakingviews writes. REUTERS BREAKINGVIEWS
Ratings Agencies Warn Over Mortgage Bonds  | The Financial Times reports: â€U.S. banks are marketing mortgage bonds with new features that shield them from having to buy back defective loans, potentially raising risks for investors, two credit rating agencies have warned.†FINANCIAL TIMES
Heinz Deal Tarnishes Wells Fargo, Moody’s Says  | Wells Fargo’s role in providing financing for the takeover of H.J. Heinz indicates the increased riskiness of the bank as it moves further into investment banking, Moody’s said. BLOOMBERG NEWS
Goldman Sachs Said to Plan Job Cuts  | Goldman Sachs “will begin a fresh roun! d of job ! cuts as early as this week, sources familiar with the matter said on Monday, with its equities-trading business bracing for bigger cuts than fixed-income trading,†Reuters reports. REUTERS
Blankfein of Goldman Said to Attend Oscars Party  |Â
NEW YORK POST
Citigroup’s Orszag to Oversee Financial Strategy Unit  | Citigroup “named Peter Orszag chairman of its expanded financial strategy and solutions group, while selecting Ajay Khorana and Elinor Hoover to co-lead the unit. Orszag will take the role in addition to his duties as vice chairman of corporate and investmet banking, according to a memo today to the New York-based lender’s employees,†Bloomberg News reports. BLOOMBERG NEWS
Carlyle Said to Seek Sale of Arinc  | The Carlyle Group has hired JPMorgan Chase and Evercore Partners for a sale of the aerospace company Arinc, which could fetch up to $1.5 billion, Reuters reports, citing three unidentified people familiar with the matter. REUTERS
Carlyle Hires Morgan Stanley Executive for Fund of Funds  | Jacques Chappuis, who runs the fund-of-funds business at Morgan Stanley, is headed to the Carlyle Group to run its Solutions business, Bloomberg News reports. BLOOMBERG NEWS
St. Joe Co. Investors Lose Appeal of a Fraud Lawsuit  | Shareholders sued the company, saying they were blindsided by the assessment of a hedge fund manager. DealBook Â'
Singapore Investment Trust Prices $1.3 Billion I.P.O. Â |Â The Mapletree Greater China Commercial Trust priced at the top of its expected range, for the largest I.P.O. in Singapore in two years, The Wall Street Journal reports. WALL STREET JOURNAL
In Prison, an Incubator for Aspiring Entrepreneurs  | Inmates of California’s San Quentin prison recently presented proposals for start-ups as part of a program modeled on Silicon Valley incubators, Reuters writes. REUTERS
Pynchon Takes On Silicon Alley  | A new novel by Thomas Pynchon, to be released in September, takes place in “the lull between the collapse of the dot-com boom and the terrible events of September 11,†according to its publisher. DealBook Â'
Gupta Ordered to Reimburse Goldman Sachs $6.2 Million  | A federal judge on Monday ordered Rajat K. Gupta, a former Goldman Sachs director, to reimburse the bank for some legal expenses connected to his insider trading case. DealBook Â'
The Challenge of Sentencing White-Collar Defendants  | A recent appeals court decision reflects an underlying tension in the sentencing white-collar criminals who present no real threat of physical harm to society and conti! nue to le! ad productive lives after committing a crime, Peter J. Henning writes in the White Collar Watch column. DealBook Â'
Italian Election Produces Little Clarity  | “Italian voters delivered a rousing anti-austerity message and a strong rebuke to the existing political order in national elections on Monday, plunging the country into political paralysis after results failed to produce a clear winner,†The New York Times writes. NEW YORK TIMES
Incoming Head of Bank of England Says Banks Should Embrace Regulation  | “Bankers need to see themselves as custodians of their instituions, improving them before passing them along to their successors,†Mark Carney, the governor of the Bank of Canada, who is scheduled to become head of the Bank of England, said in a speech in Ontario. BLOOMBERG NEWS
Banks Face Private Lawsuits in Rate-Rigging Scandal  | Barclays, the Royal Bank of Scotland, UBS and other banks that are dealing with regulators over accusations of rate-rigging are facing “more than 30 lawsuits filed by borrowers, lenders and other plaintiffs who claim they were cheated by the same financial institutions,†The Wall Street Journal reports. WALL STREET JOURNAL
Liquidation Authority and the Bankruptcy Clause  | The litigation challenging the orderly liquidation authority under the Dodd-Frank Act proceeds from the faulty notion that Chapter 11 bankruptcy provides a one-size-fits-all solution, Stephen J. Lubben writes in his column, In Debt. DealBook Â'
After the First 100 Days of Xi Jinping  | Three important political meetings will occur in the next two weeks, with pollution problems likely to be on the agenda of at least one of them, Bill Bishop writes in the China Insider column. DealBook Â'
