Pay for Boards at Banks Soars Amid Cutbacks

Wall Street pay, while lucrative, isn’t what it used to be â€" unless you are a board member.

Since the financial crisis, compensation for the directors of the nation’s biggest banks has continued to rise even as the banks themselves, facing difficult markets and regulatory pressures, are reining in bonuses and pay.

Take Goldman Sachs, where the average annual compensation for a director â€" essentially a part-time job â€" was $488,709 in 2011, the last year for which data is available, up more than 50 percent from 2008, according to Equilar, a compensation data firm. Some of the firm’s 13 directors make more than $500,000 because they have extra responsibilities.

And those numbers are likely to skyrocket for 2012 because the firm’s shares rose more than 35 percent last year and its directors are paid in stock. Goldman Sachs is expected to release fresh pay data in the coming weeks.

Goldman’s board is the best compensated of any big American bank and the fifth-highest paid of any company in the country, according to Equilar. Some of its rivals are not that far behind. The nation’s biggest banks paid their directors over $95,000 a year more on average in 2011 than what other large corporations paid.

Goldman defends the board’s pay, saying that the bulk of the compensation is in stock that directors cannot touch until after they have left the board.

That arrangement, the firm says, aligns directors’ interests with those of shareholders.

“The board’s pay is set at a level that reflects the firm’s long-term performance as well as directors’ substantial time commitment and the increased demands placed on them in recent years by new laws and regulations,” said David Wells, a Goldman spokesman.

More broadly, banks and compensation experts say, financial firms must now pay a premium to entice and keep qualified directors.

After the financial crisis, some financial firms’ boards were criticized for being asleep at the wheel and not understanding the risks being taken. Recruiters say banks are redoubling efforts to recruit directors with more financial expertise who can exercise better oversight.

Yet it is also a balancing act, because too much pay may end up giving boards an incentive to not rock the boat.

Some Wall Street insiders also question the need to pay bank directors more than their counterparts at other big corporations, arguing that the increased regulation has actually limited bank boards’ ability to perform important tasks, like raising capital and issuing dividends. Even when it comes to paying senior executives, boards have less leeway because regulators have pressured boards to bring down executive pay.

“About the only thing bank directors have more of these days is meetings,” joked one senior Wall Street executive who has frequent interaction with his board but spoke on the condition he not be named because he was not authorized to speak on the record.

“Regulators have all but stripped boards of the main powers they had before the crisis.”

After Goldman, Morgan Stanley’s director pay is the second highest on Wall Street, with an average of $351,080, roughly the same as it was in 2008 but much higher than the pay at bigger and more complicated rivals like JPMorgan Chase and Citigroup.

Board pay at Morgan Stanley has drawn criticism from Daniel S. Loeb’s hedge fund, Third Point, which recently bought 7.8 million shares, or a 0.4 percent stake, in the firm. While praising Morgan Stanley and its management, Mr. Loeb said in a letter to investors how “surprised” he was about how much its directors received.

“We hope Morgan Stanley will show that its reinvention begins at the top and set an example for the company by quickly revising its board practices,” he wrote.

At Citigroup, directors make an average of $315,000 a year, according to Equilar, up 64 percent from 2008. The value of the annual cash retainer and deferred stock award Citigroup directors receive has not changed since 2005, but the pay for additional work, like leading a committee, has risen.

Of the five financial institutions to have reported director pay for 2012, JPMorgan is the biggest, but it gives its directors compensation, on average, worth $278,194 each. Only Bank of America, where directors are paid $275,000 each, pays less.

All told, the average compensation for a director at one of the six biggest banks in 2011 was $328,655, according to Equilar. This compares with $232,142 at almost 500 publicly traded companies analyzed in a study by the executive search firm Spencer Stuart. In 2012, that number rose to $242,385.

“I get you have to pay up for sophisticated board, but what is that complexity worth” said Timothy M. Ghriskey, co-founder of the Solaris Group, a financial services shareholder that voted in 2011 to reject a pay plan for top executives at Citigroup. “Does it take $200,000 or $500,000 The discrepancy between a board like JPMorgan and Goldman is confusing.”

This spring, the big banks will hold shareholder meetings. While executive pay is often a hot-button issue, Mr. Ghriskey said it was unlikely that there would be a shareholder revolt on board pay this year, in part because the numbers aren’t that big on an individual basis.

Still, Lynn Joy, a senior adviser with the executive pay consulting firm Exequity, said board pay deserved more attention, especially at financial firms, which are looking to cut costs.

Shareholders, she said, should look at the total cost of operating a board. In the case of Goldman, its 11 independent directors make roughly $5 million, and the cost of holding board meetings, sometimes overseas, can run many millions more. “It adds up,” she said.

Shareholders vote on directors, but a board almost always sets director pay packages, in consultation with compensation experts.

For any director, the work comes in fits and starts. Bank boards met more frequently during the financial crisis to plot strategy, and Citigroup’s directors put in extra time last year in their discussions over whether to replace Vikram S. Pandit, the bank’s chief executive.

While board pay has increased at every major bank, the rise is most pronounced at Goldman, in part because directors’ compensation is driven by the value of the firm’s stock, which closed on Thursday at $147.15.

While compensation for Goldman directors is up substantially from 2008, it is actually down from 2007, when the stock price was higher and directors were paid an average of $670,292 each, according to Equilar.

In 2011, Goldman directors were each granted 2,500 shares, with a value of more than $250,000. This is on top of an annual retainer of stock valued at $75,000. A director who is a chairman of a board committee is paid more.

Goldman’s directors met 15 times in 2011, and there were more meetings that involved only the firm’s independent directors.

Stephen Friedman and James A. Johnson are the top earners on Goldman’s board, each making $503,287 for their service that year, according to Equilar.

In 2009, during the height of the financial crisis, Goldman directors decided to take no compensation for their service.

Other banks pay some cash and grant stock up to a certain dollar amount, limiting the value. At JPMorgan, for example, directors are compensated for extra duties, but the value of their main share grant cannot exceed $170,000.

In a regulatory filing explaining the pay of its board, Goldman noted that directors could not sell the stock grants until they left the board, and even then there was a waiting period. The firm also said independent directors did not get paid to attend meetings, a practice on some other boards.

“While the Goldman pay is high, the directors are paid all in equity that cannot be cashed until they leave the board,” added Lucian A. Bebchuk, a professor at Harvard Law School. “These features are beneficial for shareholders but reduce the value of the compensation for the directors.”

Investment Bank Director Pay

2007 2008 2011 2012

Source: Equilar
Goldman Sachs	$670,292	$310,324	$488,709	-
Morgan Stanley	$346,875	$343,500	$357,708	$351,080
Wells Fargo	$217,634	$253,502	$294,628	$299,429
Citigroup	$227,282	$192,087	$281,136	$315,000
Bank of America	$248,571	$248,571	$275,000	$275,000
JPMorgan Chase	$256,296	$255,500	$274,750	$278,194
Average	$327,825	$267,247	$328,655	-

Pay for Boards at Banks Soars Amid Cutbacks

Wall Street pay, while lucrative, isn’t what it used to be â€" unless you are a board member.

Since the financial crisis, compensation for the directors of the nation’s biggest banks has continued to rise even as the banks themselves, facing difficult markets and regulatory pressures, are reining in bonuses and pay.

Take Goldman Sachs, where the average annual compensation for a director â€" essentially a part-time job â€" was $488,709 in 2011, the last year for which data is available, up more than 50 percent from 2008, according to Equilar, a compensation data firm. Some of the firm’s 13 directors make more than $500,000 because they have extra responsibilities.

And those numbers are likely to skyrocket for 2012 because the firm’s shares rose more than 35 percent last year and its directors are paid in stock. Goldman Sachs is expected to release fresh pay data in the coming weeks.

Goldman’s board is the best compensated of any big American bank and the fifth-highest paid of any company in the country, according to Equilar. Some of its rivals are not that far behind. The nation’s biggest banks paid their directors over $95,000 a year more on average in 2011 than what other large corporations paid.

Goldman defends the board’s pay, saying that the bulk of the compensation is in stock that directors cannot touch until after they have left the board.

That arrangement, the firm says, aligns directors’ interests with those of shareholders.

“The board’s pay is set at a level that reflects the firm’s long-term performance as well as directors’ substantial time commitment and the increased demands placed on them in recent years by new laws and regulations,” said David Wells, a Goldman spokesman.

More broadly, banks and compensation experts say, financial firms must now pay a premium to entice and keep qualified directors.

After the financial crisis, some financial firms’ boards were criticized for being asleep at the wheel and not understanding the risks being taken. Recruiters say banks are redoubling efforts to recruit directors with more financial expertise who can exercise better oversight.

Yet it is also a balancing act, because too much pay may end up giving boards an incentive to not rock the boat.

Some Wall Street insiders also question the need to pay bank directors more than their counterparts at other big corporations, arguing that the increased regulation has actually limited bank boards’ ability to perform important tasks, like raising capital and issuing dividends. Even when it comes to paying senior executives, boards have less leeway because regulators have pressured boards to bring down executive pay.

“About the only thing bank directors have more of these days is meetings,” joked one senior Wall Street executive who has frequent interaction with his board but spoke on the condition he not be named because he was not authorized to speak on the record.

“Regulators have all but stripped boards of the main powers they had before the crisis.”

After Goldman, Morgan Stanley’s director pay is the second highest on Wall Street, with an average of $351,080, roughly the same as it was in 2008 but much higher than the pay at bigger and more complicated rivals like JPMorgan Chase and Citigroup.

Board pay at Morgan Stanley has drawn criticism from Daniel S. Loeb’s hedge fund, Third Point, which recently bought 7.8 million shares, or a 0.4 percent stake, in the firm. While praising Morgan Stanley and its management, Mr. Loeb said in a letter to investors how “surprised” he was about how much its directors received.

“We hope Morgan Stanley will show that its reinvention begins at the top and set an example for the company by quickly revising its board practices,” he wrote.

At Citigroup, directors make an average of $315,000 a year, according to Equilar, up 64 percent from 2008. The value of the annual cash retainer and deferred stock award Citigroup directors receive has not changed since 2005, but the pay for additional work, like leading a committee, has risen.

Of the five financial institutions to have reported director pay for 2012, JPMorgan is the biggest, but it gives its directors compensation, on average, worth $278,194 each. Only Bank of America, where directors are paid $275,000 each, pays less.

All told, the average compensation for a director at one of the six biggest banks in 2011 was $328,655, according to Equilar. This compares with $232,142 at almost 500 publicly traded companies analyzed in a study by the executive search firm Spencer Stuart. In 2012, that number rose to $242,385.

“I get you have to pay up for sophisticated board, but what is that complexity worth” said Timothy M. Ghriskey, co-founder of the Solaris Group, a financial services shareholder that voted in 2011 to reject a pay plan for top executives at Citigroup. “Does it take $200,000 or $500,000 The discrepancy between a board like JPMorgan and Goldman is confusing.”

This spring, the big banks will hold shareholder meetings. While executive pay is often a hot-button issue, Mr. Ghriskey said it was unlikely that there would be a shareholder revolt on board pay this year, in part because the numbers aren’t that big on an individual basis.

Still, Lynn Joy, a senior adviser with the executive pay consulting firm Exequity, said board pay deserved more attention, especially at financial firms, which are looking to cut costs.

Shareholders, she said, should look at the total cost of operating a board. In the case of Goldman, its 11 independent directors make roughly $5 million, and the cost of holding board meetings, sometimes overseas, can run many millions more. “It adds up,” she said.

Shareholders vote on directors, but a board almost always sets director pay packages, in consultation with compensation experts.

For any director, the work comes in fits and starts. Bank boards met more frequently during the financial crisis to plot strategy, and Citigroup’s directors put in extra time last year in their discussions over whether to replace Vikram S. Pandit, the bank’s chief executive.

While board pay has increased at every major bank, the rise is most pronounced at Goldman, in part because directors’ compensation is driven by the value of the firm’s stock, which closed on Thursday at $147.15.

While compensation for Goldman directors is up substantially from 2008, it is actually down from 2007, when the stock price was higher and directors were paid an average of $670,292 each, according to Equilar.

In 2011, Goldman directors were each granted 2,500 shares, with a value of more than $250,000. This is on top of an annual retainer of stock valued at $75,000. A director who is a chairman of a board committee is paid more.

Goldman’s directors met 15 times in 2011, and there were more meetings that involved only the firm’s independent directors.

Stephen Friedman and James A. Johnson are the top earners on Goldman’s board, each making $503,287 for their service that year, according to Equilar.

In 2009, during the height of the financial crisis, Goldman directors decided to take no compensation for their service.

Other banks pay some cash and grant stock up to a certain dollar amount, limiting the value. At JPMorgan, for example, directors are compensated for extra duties, but the value of their main share grant cannot exceed $170,000.

In a regulatory filing explaining the pay of its board, Goldman noted that directors could not sell the stock grants until they left the board, and even then there was a waiting period. The firm also said independent directors did not get paid to attend meetings, a practice on some other boards.

“While the Goldman pay is high, the directors are paid all in equity that cannot be cashed until they leave the board,” added Lucian A. Bebchuk, a professor at Harvard Law School. “These features are beneficial for shareholders but reduce the value of the compensation for the directors.”

Investment Bank Director Pay

2007 2008 2011 2012

Source: Equilar
Goldman Sachs	$670,292	$310,324	$488,709	-
Morgan Stanley	$346,875	$343,500	$357,708	$351,080
Wells Fargo	$217,634	$253,502	$294,628	$299,429
Citigroup	$227,282	$192,087	$281,136	$315,000
Bank of America	$248,571	$248,571	$275,000	$275,000
JPMorgan Chase	$256,296	$255,500	$274,750	$278,194
Average	$327,825	$267,247	$328,655	-

What Dell Thought of Alternatives to the Silver Lake Proposal

Dell Inc. directors have repeatedly stressed that they considered all potential ways to improve value for shareholders before accepting a $24.4 billion takeover bid by Michael S. Dell and Silver Lake.

The company’s voluminous proxy statement, filed on Friday, shows their concerns about other alternatives, including a big stock buyback and selling off parts of the business.

Buried in one of the filing’s exhibits is a presentation that JPMorgan Chase bankers delivered to a special committee of Dell’s board on Jan. 18. In it, the bankers listed potential problems with some of the alternatives to a full take-private bid by Silver Lake or another private equity firm.

Some of Dell’s shareholders, including Southeastern Asset Management and the billionaire Carl C. Icahn, have called on the company to turn away from the $13.65-a-share bid by Mr. Dell and Silver Lake. Southeastern has loudly demanded that existing shareholders be given the chance to stay on as investors, through what’s known as a stub. And Mr. Icahn has suggested the possibility of paying out a special dividend to investors.

The two new bids that arose out of a 45-day “go-shop” process, from both Mr. Icahn and the Blackstone Group, contemplate leaving some of Dell publicly traded. Both are essentially variations on a stub, since some of the computer maker will remain publicly traded.

Of the two most commonly mentioned possibilities â€" borrowing money to either buy back lots of stock or to pay out a special dividend â€" JPMorgan said that the moves would seriously limit Dell’s financial flexibility.

Both would severely limit the company’s cash flow, according to the bankers. And the latter would both push Dell’s dividend to levels beyond what its rivals pay and signal that the computer maker has no further places to invest.

The presentation also ran through the benefits and drawbacks of other possibilities, including a sale to a strategic buyer (“strategic buyer for the entire business is unlikely”) and a sale of Dell’s core PC manufacturing arm (“loss of scale and intersegment synergies” and “potentially diminished free cash flow and debt capacity”).

Given those arguments, one wonders what Dell directors will ultimately consider when deliberating the bids by Blackstone and Mr. Icahn.

How Michael Dell’s Takeover Bid Got Hatched

Shareholders may still be irate over the $13.65 a share that Michael S. Dell has bid for the company that bears his name.

But according to the company’s proxy filing on Friday, the price has come a long way from what Mr. Dell‘s partner, Silver Lake, first offered.

Here’s a chronology of Silver Lake’s bidding history, stretching well back to the early days of Dell’s deliberations about whether to go private.

They’re set against what the proxy describes as a series of missed financial projections and increasingly dire assessments by the Boston Consulting Group, which the committee had retained as an additional adviser.

June 15: Southeastern Asset Management, Dell’s biggest outside investor with what is now an 8.4 percent stake, reaches out to Mr. Dell with a novel idea: taking the company private. Southeastern had expressed interest in staying invested in the computer maker in any leveraged buyout and furnished Mr. Dell with a spreadsheet and other information.

July 17 to Aug. 14: Mr. Dell first meets with Silver Lake at an industry conference and begins discussing the idea of taking the company private. Mr. Dell also has conversations with an unnamed private equity firm, dubbed “Sponsor A” in the proxy filing, about a leveraged buyout. (That firm was Kohlberg Kravis Roberts, according to people briefed on the matter.)

Last month, DealBook noted that Mr. Dell had had discussions with top executives at both firms â€" Egon Durban of Silver Lake and George R. Roberts of K.K.R. â€" in Hawaii, where all three men have residences.

On Aug. 14, Mr. Dell formally notified Alex Mandl, the company’s lead independent director, that he was interested in taking the computer maker private. Six days later, the board formed a special committee, with Mr. Mandl as its head.

Months of deliberations within the Dell special committee began, as Silver Lake and K.K.R. began conducting due diligence.

Oct. 23: Both Silver Lake and K.K.R. submitted preliminary offers for the computer company. Silver Lake offered to pay $11.22 a share to $12.16 a share for all of Dell. Its bid envisioned Mr. Dell contributing his 16 percent stake in the company to the deal.

K.K.R. contemplated paying $12 a share to $13 a share. The firm assumed that both Mr. Dell and Southeastern Asset Management, Dell’s biggest outside investor with a roughly 8.4 percent stake, would join the offer. Mr. Dell was also expected to kick in an additional $500 million.

Nov. 2: Bankers at JPMorgan Chase, on behalf of a special committee of Dell’s board, contacted both Silver Lake and K.K.R. about initial feedback on their offers.

Nov. 16 and Nov. 17: Mr. Dell and other top Dell executives met with Silver Lake and K.K.R. to discuss potential revised bids. The company founder told both firms “that they should assume that he would be prepared to participate at the highest price they were willing to pay,” according to the filing.

Dec. 3: A Goldman Sachs analyst published a research note musing on the possibility of Dell going private, sending the company’s shares up to $10.06 a share. Later that day, K.K.R. dropped out of the sale process.

Dec. 4: K.K.R. elaborated, saying that its investment committee “was not able to get comfortable with the risks to the company associated with the uncertain PC market, and the concerns of industry analysts regarding the competitive pressures the company faced.”

Also that day, Silver Lake raised its bid to $12.70 a share and stripped away unspecified conditions from its earlier proposal.

Dec. 5: During a meeting of the special committee, JPMorgan bankers said that they considered Silver Lake and K.K.R. the most likely private equity bidders for Dell. A third investment firm, “Sponsor B” â€" which people briefed on the matter confirmed was TPG Capital â€" was the next most likely to make “a credible proposal.”

Dec. 7: Mr. Mandl of the Dell special committee reached out to TPG to invite it to consider making a bid. The private equity firm agreed, and two days later began looking at the company’s books.

Dec. 10: Mr. Mandl told Silver Lake that its bid of $12.70 was too low and would need to be raised much higher. At that meeting, the investment firm asked for permission to approach Microsoft about providing financing, as well as other potential lenders.

The special committee granted permission for that outreach the next day.

Dec. 14 to Dec. 16: Dell signed confidentiality agreements with a number of potential lenders to Silver Lake. The banks were the Royal Bank of Canada, Credit Suisse, Barclays and Bank of America

Later that day, JPMorgan began talking with Silver Lake about raising its bid.

Jan. 20: Silver Lake floated another revised bid, worth $13.50 a share. But JPMorgan said that likely wouldn’t pass muster.

Jan. 21: Silver Lake began discussing with Mr. Dell the possibility of his rolling over his shares in a deal below the price offered to other shareholders. The company founder said he was willing to value his shares at $13.36 a share to prod Silver Lake into offering $13.60 a share.

Jan. 24: Silver Lake told JPMorgan that it was prepared to offer $13.60 a share as its “best and final offer.”

Later that day, bankers at Evercore Partners, another adviser to the Dell special committee, received a number of unsolicited proposals. One came from an unnamed strategic bidder â€" which people briefed on the matter said was General Electric‘s GE Capital â€" offering to buy Dell’s financial services arm for book value, or about $3.5 billion to $4 billion.

And the Blackstone Group said it was interested in participating in any “go-shop” process aimed at flushing out alternatives to any bid from Mr. Dell and Silver Lake.

Jan. 29: Advisers to Dell’s special committee met with Southeastern and its outside lawyers. During the meeting the asset management firm said that it would oppose any deal in the range of $14 a share to $15 a share that didn’t give existing big investors, such as itself, the chance to roll over their stakes as part of a deal.

Informed of Southeastern’s demands later that day, Mr. Dell and Silver Lake said that they weren’t interested in any deal that would let public investors keep a stake in the company.

Feb. 3: Silver Lake offers to revise its bid in one of two ways. Either it would pay $13.60 a share and let Dell continue to pay its quarterly dividends until the deal closed, or $13.75 a share if Dell halted its dividends.

The special committee reiterated that it wouldn’t accept a price of $13.60 a share.

Feb. 4: Silver Lake contacted the special committee to say that it would be willing to pay $13.65 a share while allowing dividends to continue being paid.

Following a series of meetings, Dell’s special committee ultimately recommended that the full board accept the $13.65-a-share bid.

A little after 11 p.m., the Dell board voted to accept Silver Lake’s final bid. Lawyers for the two sides worked through the night to finalize the necessary legal documents.

Feb. 5: Dell and the buyers signed contracts and formally announced the deal.

How Michael Dell’s Takeover Bid Got Hatched

Shareholders may still be irate over the $13.65 a share that Michael S. Dell has bid for the company that bears his name.

But according to the company’s proxy filing on Friday, the price has come a long way from what Mr. Dell‘s partner, Silver Lake, first offered.

Here’s a chronology of Silver Lake’s bidding history, stretching well back to the early days of Dell’s deliberations about whether to go private.

They’re set against what the proxy describes as a series of missed financial projections and increasingly dire assessments by the Boston Consulting Group, which the committee had retained as an additional adviser.

June 15: Southeastern Asset Management, Dell’s biggest outside investor with what is now an 8.4 percent stake, reaches out to Mr. Dell with a novel idea: taking the company private. Southeastern had expressed interest in staying invested in the computer maker in any leveraged buyout and furnished Mr. Dell with a spreadsheet and other information.

July 17 to Aug. 14: Mr. Dell first meets with Silver Lake at an industry conference and begins discussing the idea of taking the company private. Mr. Dell also has conversations with an unnamed private equity firm, dubbed “Sponsor A” in the proxy filing, about a leveraged buyout. (That firm was Kohlberg Kravis Roberts, according to people briefed on the matter.)

Last month, DealBook noted that Mr. Dell had had discussions with top executives at both firms â€" Egon Durban of Silver Lake and George R. Roberts of K.K.R. â€" in Hawaii, where all three men have residences.

On Aug. 14, Mr. Dell formally notified Alex Mandl, the company’s lead independent director, that he was interested in taking the computer maker private. Six days later, the board formed a special committee, with Mr. Mandl as its head.

Months of deliberations within the Dell special committee began, as Silver Lake and K.K.R. began conducting due diligence.

Oct. 23: Both Silver Lake and K.K.R. submitted preliminary offers for the computer company. Silver Lake offered to pay $11.22 a share to $12.16 a share for all of Dell. Its bid envisioned Mr. Dell contributing his 16 percent stake in the company to the deal.

K.K.R. contemplated paying $12 a share to $13 a share. The firm assumed that both Mr. Dell and Southeastern Asset Management, Dell’s biggest outside investor with a roughly 8.4 percent stake, would join the offer. Mr. Dell was also expected to kick in an additional $500 million.

Nov. 2: Bankers at JPMorgan Chase, on behalf of a special committee of Dell’s board, contacted both Silver Lake and K.K.R. about initial feedback on their offers.

Nov. 16 and Nov. 17: Mr. Dell and other top Dell executives met with Silver Lake and K.K.R. to discuss potential revised bids. The company founder told both firms “that they should assume that he would be prepared to participate at the highest price they were willing to pay,” according to the filing.

Dec. 3: A Goldman Sachs analyst published a research note musing on the possibility of Dell going private, sending the company’s shares up to $10.06 a share. Later that day, K.K.R. dropped out of the sale process.

Dec. 4: K.K.R. elaborated, saying that its investment committee “was not able to get comfortable with the risks to the company associated with the uncertain PC market, and the concerns of industry analysts regarding the competitive pressures the company faced.”

Also that day, Silver Lake raised its bid to $12.70 a share and stripped away unspecified conditions from its earlier proposal.

Dec. 5: During a meeting of the special committee, JPMorgan bankers said that they considered Silver Lake and K.K.R. the most likely private equity bidders for Dell. A third investment firm, “Sponsor B” â€" which people briefed on the matter confirmed was TPG Capital â€" was the next most likely to make “a credible proposal.”

Dec. 7: Mr. Mandl of the Dell special committee reached out to TPG to invite it to consider making a bid. The private equity firm agreed, and two days later began looking at the company’s books.

Dec. 10: Mr. Mandl told Silver Lake that its bid of $12.70 was too low and would need to be raised much higher. At that meeting, the investment firm asked for permission to approach Microsoft about providing financing, as well as other potential lenders.

The special committee granted permission for that outreach the next day.

Dec. 14 to Dec. 16: Dell signed confidentiality agreements with a number of potential lenders to Silver Lake. The banks were the Royal Bank of Canada, Credit Suisse, Barclays and Bank of America

Later that day, JPMorgan began talking with Silver Lake about raising its bid.

Jan. 20: Silver Lake floated another revised bid, worth $13.50 a share. But JPMorgan said that likely wouldn’t pass muster.

Jan. 21: Silver Lake began discussing with Mr. Dell the possibility of his rolling over his shares in a deal below the price offered to other shareholders. The company founder said he was willing to value his shares at $13.36 a share to prod Silver Lake into offering $13.60 a share.

Jan. 24: Silver Lake told JPMorgan that it was prepared to offer $13.60 a share as its “best and final offer.”

Later that day, bankers at Evercore Partners, another adviser to the Dell special committee, received a number of unsolicited proposals. One came from an unnamed strategic bidder â€" which people briefed on the matter said was General Electric‘s GE Capital â€" offering to buy Dell’s financial services arm for book value, or about $3.5 billion to $4 billion.

And the Blackstone Group said it was interested in participating in any “go-shop” process aimed at flushing out alternatives to any bid from Mr. Dell and Silver Lake.

Jan. 29: Advisers to Dell’s special committee met with Southeastern and its outside lawyers. During the meeting the asset management firm said that it would oppose any deal in the range of $14 a share to $15 a share that didn’t give existing big investors, such as itself, the chance to roll over their stakes as part of a deal.

Informed of Southeastern’s demands later that day, Mr. Dell and Silver Lake said that they weren’t interested in any deal that would let public investors keep a stake in the company.

Feb. 3: Silver Lake offers to revise its bid in one of two ways. Either it would pay $13.60 a share and let Dell continue to pay its quarterly dividends until the deal closed, or $13.75 a share if Dell halted its dividends.

The special committee reiterated that it wouldn’t accept a price of $13.60 a share.

Feb. 4: Silver Lake contacted the special committee to say that it would be willing to pay $13.65 a share while allowing dividends to continue being paid.

Following a series of meetings, Dell’s special committee ultimately recommended that the full board accept the $13.65-a-share bid.

A little after 11 p.m., the Dell board voted to accept Silver Lake’s final bid. Lawyers for the two sides worked through the night to finalize the necessary legal documents.

Feb. 5: Dell and the buyers signed contracts and formally announced the deal.

The Path to a Three-Way Race for Dell

Though the race for Dell Inc. now has narrowed to three contestants, there were many more who arose over a month ago.

Advisers to Dell directors spoke to 71 potential bidders during a 45-day period aimed at flushing out alternatives to a $24.4 billion offer by Michael S. Dell and the investment firm Silver Lake, according to a securities filing by the company on Friday.

The long-awaited proxy filing includes one of the lengthiest recaps of a merger’s history in recent memory, detailing over 26 pages the months-long negotiations that led to the Dell transaction. But it especially shines a light on the 45-day “go-shop” period, which wrapped up last week with two preliminary bids by the Blackstone Group and the billionaire Carl C. Icahn.

Dell is expected to point to the efforts recounted in the proxy as proof that its board fought hard to find the best possible outcome for shareholders, as several investors continue to fight the existing $13.65-a-share bid by Mr. Dell and Silver Lake as far too low.

According to Friday’s filing, bankers at Evercore Partners began reaching out to a panoply of possible strategic and financial buyers shortly after the deal with Mr. Dell was signed on Feb. 5. In total, the investment bank spoke to 21 other companies, 20 private equity firms and 30 other potential investors.

According to the filing, several potential suitors ultimately were rejected because they were interested only in a piece of Dell’s businesses. A special committee of the company’s board was primarily interested in selling the company as a whole, mirroring the proposal by Mr. Dell and Silver Lake.

On Feb. 6, Blackstone contacted Evercore, saying it was interested in participating in the go-shop process. The private equity giant had already expressed interest in potentially bidding for Dell the previous month, after word of the company’s deal deliberations emerged in the press.

A month later, Blackstone, together with potential partners, met with Mr. Dell to further discuss a potential bid.

Other private equity shops emerged as well. The filing names a “Sponsor B” that had previously held discussions with Dell directors late last year, willing to take another look at the company despite passing on making a bid the first time. People briefed on the matter identified that firm as TPG Capital.

Ultimately, TPG decided again not to participate in any bids.

A “Sponsor C” also expressed preliminary interest, but ultimately decided to walk away after inspecting Dell’s books.

A corporate bidder, identified as “Strategic Party A,” contacted Evercore on Feb. 8 to say it was interested in information about Dell’s financial services arm. That company â€" which people briefed on the matter said was General Electric‘s GE Capital â€" later expressed interest in working with whatever group Blackstone convened to make a bid.

At least three other strategic buyers sought to gain access to Dell’s books. Most were denied access because they appeared interested in only bidding for part of the company.

Mr. Icahn, who had amassed a position in Dell, first contacted Evercore on Feb. 26 about signing a confidentiality agreement. Over a week later, the billionaire wrote to the Dell special committee, disclosing owning a “substantial” stake and warning that he would fight the proposed takeover by Mr. Dell.

By March 11, Dell advisers gave Mr. Icahn access to Dell’s private financial information.

By the go-shop’s deadline of March 22, Evercore bankers received three expressions of interest. One was from GE Capital, proposing to buy Dell Financial Services only if combined with any takeover proposal, including Mr. Dell’s.

Blackstone also submitted an offer, now known to be over $14.25 a share and which would leave an unspecified portion of Dell public to let investors continue owning a piece of the company if they so wished. The firm disclosed that it was working with Francisco Partners and Insight Venture Partners.

In a twist, however, Blackstone demanded that the Dell special committee reimburse the costs of assembling that rival bid, up to $25 million. That request was granted on Monday.

Mr. Icahn submitted his offer, in which he would buy about 58.1 percent of the company for about $15.6 billion, or $15 a share. His offer envisioned several major shareholders, including Southeastern Asset Management and T. Rowe Price, contributing their stakes as well.

Privately, some Dell advisers considered Mr. Icahn’s proposal a non-starter and a place-holder to keep negotiating with the special committee, according to people briefed on the matter. The hedge fund manager has said that he is reviewing Blackstone’s offer as well, leaving the door open to joining that other consortium.

Toys ‘R’ Us Withdraws I.P.O.

The stock market may be on a roll, but Toys “R” Us will not be joining the fun.

The retailer on Friday asked to withdraw its filing for an initial public offering. The company cited “unfavorable market conditions,” and the recent management changes.

The withdrawal was not a surprise. A year ago, a Toys “R” Us I.P.O. seemed to many to be like a wind-up toy that was running out of steam. As Stephanie Clifford and DealBook’s Peter Lattman wrote at that time, the chain was “grappling with how to grow”:

The company is facing management defections, a decline in same-store sales and relentless competition from Walmart and Amazon

Toys “R” Us had first filed to go public in May 2010. An offering would have given its private equity backers an exit from one of the most famous deals of the buyout boom era in the years before the financial crisis. The private equity giants Bain Capital and Kohlberg Kravis Roberts & Company along with the real estate developer Vornado Realty Trust acquired the company for $6.6 billion in 2005.

Also on Friday, the company, which operates 1,540 stores, said that fourth-quarter net sales fell 2.6 percent, to $5.77 billion. Net earnings for the quarter slid to $239 million, compared with $343 million in the previous year â€" a decline the company attributed largely to a $34 million increase in interest expense and a $33 million increase in income tax expense.

Jerry Weissman, Silicon Valley’s Storyteller

Jerry Weissman may produce more revenue than almost any director in history. His big successes haven’t been plays or movies, though. For more than two decades, Mr. Weissman, a former television and stage director, has coached the executives of technology companies on the theater of the initial public offering.

Mr. Weissman’s company, Power Presentations, works with chief executives on the “roadshow,” a major step toward a stock offering. The presentations consist of speeches, slide shows and question-and-answer sessions with prospective investors. Getting that story right builds enthusiasm for a company’s shares, sending initial stock prices higher.

His clients have included Intuit, eBay, Cisco, Dolby, Netflix and most recently Trulia, the real estate Web site. His clients also include executives at established companies like Microsoft, where he helps with other kinds of presentations, like conference speeches and product marketing.

Mr. Weissman, who is based in Burlingame, Calif., has written several books on his craft, the most recent of which is “Winning Strategies for Power Presentations.” I caught up with him recently, in between client meetings.

Q.

How different is an I.P.O. pitch from a conference presentation

A.

I have worked on I.P.O.’s, private placements, product launches, board meetings, keynotes, conference talks and partner meetings. The goal is always the same: Tell a crisp, clean story; make sure your PowerPoint doesn’t become “death by PowerPoint” by cluttering things up or confusing the audience; show poise and confidence; and show you can handle tough questions.

Q.

If it’s that easy, how do you stay employed

A.

They’ve been selling stuff to a different audience, people who want to buy software or computers. They have to rotate the benefit of their product to a different audience. If the audience is potential investors, those people have only two interests: return on investment and risk management.

Most of my clients come at the task of telling their story like engineers, in a logical fashion. But they assign six slides to Tom, eight points from Dick and four items from Harry, and that creates a patchwork of ideas that don’t flow and ideas that don’t match each other. Then they see the audience squirm at what they’ve done, and that raises their discomfort level, which the audience feels. After that, it’s lost.

They need to merge the logic with the art, and that goes back 2,300 years, to Aristotle. Give things a beginning, a middle and an end.

Q.

How do you do that

A.

You set the context by defining who the audience is and what you want to achieve by talking to them. Then you let the ideas flow about what you can say, you brainstorm like crazy without throwing out anything. You distill that into four or five key ideas. Then you put it into a logical flow that is meaningful for what the audience wants.

Q.

How long have you been doing this

A.

It will be 25 years on Sept. 1.

Q.

What has changed

A.

My specialty is I.P.O.’s. The biggest change there is NetRoadshow, which is a Web site where people post a video of their pitch. That means they have to put something tight into the can. Then they go on the road, and if they’re good, it’s 90 percent audience questions about investing. If it’s not good, it’s all about how people didn’t understand what they were talking about. So, I train them to make a video, then I train them for a Q.&A. session that is tougher than anything they’ll face on the road.

The other change is that sometimes people just post slides on the Web, and get on the phone and talk. Either way, the new media means they have to learn to tell stories without making eye contact. It’s even more important that you have a clear story that flows. In the questions, you listen to make sure you understand the key issues. You paraphrase the question to level the playing field for the rest of the audience, and to make sure it addresses the question. And you pitch yourself, so you can end up saying “…and that’s why we are the best.”

Q.

How is the I.P.O. market doing

A.

It is smaller, compared with 10 years ago, but there is lots of other kinds of work. If I’m a bellwether, though, I’d say I have more companies knocking on my door for I.P.O. training this year than last, and more last year than the year before.

Glass Lewis Urges MetroPCS Investors to Reject T-Mobile Deal

MetroPCS, at least you have Egan Jones.

The cellphone service provider was dealt another blow to its proposed merger with T-Mobile USA on Friday, as a second major proxy advisory firm recommended that investors reject the deal.

In its report, Glass Lewis & Company found the proposed transaction lacking in significant ways, from the way that MetroPCS agreed to the T-Mobile deal to the amount of compensation that shareholders will receive.

The firm joined its larger rival, Institutional Shareholder Services, in casting aspersions on the transaction. Both sided with two big shareholders who hold over 12 percent of MetroPCS’ stock and have called on the company to demand better terms or walk away.

The combined opposition of I.S.S. and Glass Lewis raises the pressure on MetroPCS and T-Mobile to sweeten the terms of the merger or risk defeat. MetroPCS shareholders are scheduled to vote on April 12.

Together, I.S.S. and Glass Lewis are considered the major players in the field of proxy advisory firms, which counsel clients like big institutional investors on how to vote in corporate matters. While the influence of the two has waned over the years, their recommendations still carry weight with many shareholders.

T-Mobile’s parent, Deutsche Telekom, is weighing whether to offer concessions or to walk away from the deal, people briefed on the matter said this week.

It isn’t clear whether the German telecommunications giant is willing to give up further control of the combined company or take a chance that it can strike a deal for its American subsidiary with another suitor, including either a newly revitalized Sprint or Charles Ergen’s Dish Network.

Like I.S.S., Glass Lewis raised questions about the terms of the deal, including a payout to shareholders of over $4 a share and a cumulative 26 percent stake in the combined company. It also contended that the amount of debt the merged entity would owe could clamp down on its ability to make investments in new business opportunities.

In some ways, Glass Lewis went further than I.S.S. in its criticisms, questioning why MetroPCS didn’t pursue a full auction of itself before settling on a deal with T-Mobile. While the proxy adviser acknowledged the upsides of the merger â€" helping the largely regional MetroPCS become a nationwide carrier â€" the firm argued that T-Mobile and Deutsche Telekom appeared to have the upper hand in negotiations throughout the process.

“As constructed, the agreement appears to undervalue MetroPCS’ contribution to the combined company and offers shareholders a merger consideration that does not fairly value MetroPCS in a takeover by Deutsche Telekom,” Glass Lewis wrote in its report.

SAC Capital Manager Arrested in Insider Trading Case

Federal agents have arrested a SAC Capital Advisors portfolio manager, the most senior employee at the giant hedge fund ensnared government’s vast insider trading investigation.

Michael Steinberg, 40, was arrested at his Park Avenue apartment early Friday morning and taken out of his building in handcuffs. He has worked at SAC since 1997 and became one of the firm’s senior portfolio managers, focusing on technology stocks.

He is expected to make an appearance in Federal District Court in Manhattan on Friday before Judge Richard Sullivan.

“Michael Steinberg did absolutely nothing wrong,” said Barry H. Berke, a lawyer for Mr. Steinberg. “Caught in the crossfire of aggressive investigations of others, there is no basis for even the slightest blemish on his spotless reputation. Mr. Steinberg is thankful for all the people who have continued to stand by him and believe in his innocence.”

The charges against Mr. Steinberg had widely been expected.

Last September, a former SAC analyst, Jon Horvath, who worked directly for Mr. Steinberg pleaded guilty to being part of an insider trading ring that illegally traded the technology stocks Dell and Nvidia. As part of his guilty plea, he implicated Mr. Steinberg, saying that he gave the confidential information to his SAC boss and that they traded based on the secret financial data about those two companies.

In recent months, Mr. Horvath has met with authorities and provided them with information about his former boss.

The government has previously identified Mr. Steinberg, a technology stock specialist in SAC’s Sigma Capital unit, as a co-conspirator in a case involving Mr. Horvath and two former hedge fund managers at other firms, Todd Newman and Anthony Chiasson. A jury convicted Mr. Newman and Mr. Chiasson in December on charges that they traded shares of Dell while in possession of secret information about the technology company.

Mr. Steinberg has been named in a superseding indictment in Mr. Newman and Mr. Chiasson’s case, according to person familiar with Mr. Steinberg’s case.

Including Mr. Steinberg, at least nine current or former SAC employees have been tied to allegations of insider trading while working there. Four have pleaded guilty to federal charges.

Cyberattacks Seem Meant to Destroy, Not Just Disrupt

Jung Yeon-Je/Agence France-Presse â€" Getty Images

Officials at a South Korean security agency study an attack that disabled 32,000 computers.

American Express customers trying to gain access to their online accounts Thursday were met with blank screens or an ominous ancient type face. The company confirmed that its Web site had come under attack.

The assault, which took American Express offline for two hours, was the latest in an intensifying campaign of unusually powerful attacks on American financial institutions that began last September and have taken dozens of them offline intermittently, costing millions of dollars.

JPMorgan Chase was taken offline by a similar attack this month. And last week, a separate, aggressive attack incapacitated 32,000 computers at South Korea’s banks and television networks.

The culprits of these attacks, officials and experts say, appear intent on disabling financial transactions and operations.

Corporate leaders have long feared online attacks aimed at financial fraud or economic espionage, but now a new threat has taken hold: attackers, possibly with state backing, who seem bent on destruction.

“The attacks have changed from espionage to destruction,” said Alan Paller, director of research at the SANS Institute, a cybersecurity training organization. “Nations are actively testing how far they can go before we will respond.”

Security experts who studied the attacks said that it was part of the same campaign that took down the Web sites of JPMorgan Chase, Wells Fargo, Bank of America and others over the last six months. A group that calls itself the Izz ad-Din al-Qassam Cyber Fighters has claimed responsibility for those attacks.

The group says it is retaliating for an anti-Islamic video posted on YouTube last fall. But American intelligence officials and industry investigators say they believe the group is a convenient cover for Iran. Just how tight the connection is â€" or whether the group is acting on direct orders from the Iranian government â€" is unclear. Government officials and bank executives have failed to produce a smoking gun.

North Korea is considered the most likely source of the attacks on South Korea, though investigators are struggling to follow the digital trail, a process that could take months. The North Korean government of Kim Jong-un has openly declared that it is seeking online targets in its neighbor to the south to exact economic damage.

Representatives of American Express confirmed that the company was under attack Thursday, but said that there was no evidence that customer data had been compromised. A representative of the Federal Bureau of Investigation did not respond to a request for comment on the American Express attack.

Spokesmen for JPMorgan Chase said they would not talk about the recent attack there, its origins or its consequences. JPMorgan has openly acknowledged previous denial of service attacks. But the size and severity of the most recent one apparently led it to reconsider.

The Obama administration has publicly urged companies to be more transparent about attacks, but often security experts and lawyers give the opposite advice.

The largest contingent of instigators of attacks in the private sector, government officials and researchers say, remains Chinese hackers intent on stealing corporate secrets.

The American and South Korean attacks underscore a growing fear that the two countries most worrisome to banks, oil producers and governments may be Iran and North Korea, not because of their skill but because of their brazenness. Neither country is considered a superstar in this area. The appeal of digital weapons is similar to that of nuclear capability: it is a way for an outgunned, outfinanced nation to even the playing field. “These countries are pursuing cyberweapons the same way they are pursuing nuclear weapons,” said James A. Lewis, a computer security expert at the Center for Strategic and International Studies in Washington. “It’s primitive; it’s not top of the line, but it’s good enough and they are committed to getting it.”

American officials are currently weighing their response options, but the issues involved are complex. At a meeting of banking executives, regulators and representatives from the departments of Homeland Security and Treasury last December, some pressed the United States to hit back at the hackers, while others argued that doing so would only lead to more aggressive attacks, according to two people who attended the meeting.

A version of this article appeared in print on March 29, 2013, on page B1 of the New York edition with the headline: Cyberattacks Seem Meant to Destroy, Not Just Disrupt .

An Easy Way to Capture Live Video of Your iPhone’s Screen

As alert readers might have discovered, my videos are back. They’re called “60 Seconds with David Pogue,” and they illustrate whatever my column is about. I make one about every other week. (Here is last week’s, on light bulbs.)

The thing is, more and more often, creating tech videos requires filming the screen of the phone, and that’s a nightmare. There’s grease, there are reflections, there are exposure problems. And there are blocking problems â€" as you demonstrate some phone feature for the camera, you can’t help your hand getting in between the camera and the phone, blocking the very thing you’re trying to film. (The camera starts focusing on your hand instead of the screen, and things just keep getting worse.)

If you saw my video about Google Maps, you might have noticed that I’ve solved this problem. I’ve found a way to capture the live video from the iPhone’s screen â€" brilliantly, clearly, easily and without using a camera at all.

It’s a $13 Mac program called Reflector (a time-limited trial is available), and it transmits the iPhone/iPad/Touch’s video image to the screen of your Mac or PC. From there, you can record it or project it.

The clever part is how it works. AirPlay is Apple’s wireless video-transmission technology. Most people use it to view their Mac, iPhone or iPad’s screen image on a big TV â€" for example, to watch a Netflix or Hulu show on the TV screen instead of the laptop. (Your TV requires an Apple TV box, about $100.)

But Reflector turns AirPlay inside out. It tricks the iPhone into thinking that your Mac or PC is an Apple TV.

Both have to be on the same network. When you’re ready to project the iPhone to the computer, you double-press the Home button. The usual app switcher appears. Scroll it to the right until you see the AirPlay button. Tap it, choose Reflector’s name, and boom: the iPhone’s live video image shows up on the computer’s screen, with incredibly high resolution and clarity. (It also works with the iPad or iPod Touch.)

Reflector transmits audio, too. In other words, the computer plays whatever the phone is playing.

You can opt to see a frame around the image, representing the body of the phone or tablet itself. You can even specify which iPhone/iPad color you want that frame to be.

There’s a Start Recording command right there in the menu. It creates a movie of whatever you’re doing on the phone, which is handy for people who make tech videos (ahem).

I couldn’t believe how simple and smooth the answer was to the problem I’ve had for years. Reflector is terrific for anyone who wants to make videos, but it’s also great for trainers, teachers or product demos. It means that, for the first time, there’s a high-quality way to project the phone’s image onto a big screen (via a projector attached to the computer) â€" and to amplify its sound.

I haven’t researched Android equivalents â€" if they exist, maybe you can let us know in the comments to this post. But for iPhone and Mac, Reflector is a brilliant solution to a sticky problem.

As Pace of China’s Junk Bond Sales Grows, So Do Worries

HONG KONG â€" It has an all-too-familiar ring. Investors, in search of better rates, rush to risky, high-yield bonds, raising worries that the market is overheated.

But the concerns â€" which have already been voiced about the $120 billion of European and American junk bonds issued this year â€" are now being applied to the fledgling Chinese market.

While American and European companies have been selling high-yield debt for decades, Chinese businesses only recently started to tap into the junk bond market in earnest.

It’s a sign that the Chinese capital markets are growing up. As the country’s economy continues to open up, private sector businesses have looked to foreign investment to finance their expansions efforts, rather than relying on hard-to-get loans from the state-controlled banks.

The junk bond market in China took off this year. Although the deals still accounts for a small share of the global total, Chinese companies have sold $8 billion of high-yield bonds to overseas investors since January. That’s up from $2.3 billion during the same period a year earlier, according to figures from Dealogic.

“Bond markets are booming because companies have had difficulty getting the level of debt they want out of banks onshore or offshore, and in tapping equity markets,” said Nick Gronow, a senior managing director at FTI Consulting in Hong Kong and an expert in Chinese bankruptcies. “So bonds have really taken up the slack.”

But the pace of growth is troubling to some analysts.

As investors have plowed into junk bonds across the globe, yields have plummeted. In the United States, rates on junk bonds have dipped below 6 percent, compared with the historical payouts of roughly 10 percent or more.

The trend is similar in the China.

Country Garden, a builder based in the southern city of Guangzhou, raised $750 million in January by selling 10-year bonds that paid 7.5 percent a year. In 2011, the company sold $900 million of seven-year bonds at a much higher 11.125 percent.

The borrowing costs for Kaisa Group Holdings, a commercial real estate company in the southern city of Shenzhen, have also dropped rapidly. In September, it sold $250 million of five-year bonds at 12.875 percent. By January, it was able to sell $500 million of bonds at 10.25 percent. This month, it issued new bonds at 8.875 percent.

“Chinese real estate issuance is happening for structural reasons: 50 percent of the population needs to be urbanized and housed, traditional funding from banks may be more restricted now, and global appetite for yield is on the rise,” said Gregorio Saichin, the London-based head of emerging markets and high-yield, fixed-income portfolio management at Pioneer Investments. “When you combine all the above factors with a massive refinancing exercise by Chinese property developers, you get this type of outcome.”

But it’s a slim difference in yields for such disparate markets.

Chinese high-yield bonds have many of the same characteristics â€" and risks â€" as American debt. They tend to be sold by companies looking to finance ventures in new or untested areas or businesses that compete in industries where earnings are subject to volatile swings.

But the Chinese market has its own set of potential problems, and some analysts worry that investors aren’t being properly compensated for the added layer of risks.

For one, the bulk of the high-yield bonds in Asia this year â€" roughly half â€" come from Chinese real estate companies. The fear is that the housing market, which has been booming, is a bubble that will eventually burst.

The industry is especially uncertain, given the periodic government intervention. On March 1, Beijing announced new measures to curb excess in the market, including the strict enforcement of a 20 percent capital gains tax on the sale of preowned homes.

“With the new leadership in China, people are still not sure which way things will go in terms of property policies,” said Suanjin Tan, an Asia fixed-income portfolio manager based in Singapore at BlackRock. “That also adds to the desire among these guys to remain cashed up, so they can take advantage of any wobbles in the market to pick up land on the cheap.”

Chinese junk bonds also have a unique structure, which could leave investors vulnerable.

Mainland China’s domestic bond market remains largely off limits to foreign buyers. So most investors buy offshore Chinese bonds, which are issued through holding companies headquartered in places like the Cayman Islands.

The bonds tend not to be backed by the actual businesses and underlying assets in mainland China. That means foreign bondholders may have little legal recourse if a company defaults on its debt, especially if local banks or other Chinese creditors make claims.

Bondholders are now facing such difficulties with the bankruptcy of Suntech Power.

Earlier this month, Suntech, the world’s largest solar panel maker, stopped making payments on $541 million in convertible bonds largely held by foreign investors, including Pioneer Investments. On March 21, a court in Wuxi, a city in eastern China, accepted a bankruptcy petition filed by eight Chinese banks against Suntech’s main operating unit in China, a group that’s seeking to recoup some of the money it lent to the company.

If previous Chinese bankruptcies are any indicator, those local banks will take priority in the so-called liquidation process, while foreign bondholders may lose everything. “The greatest difficulty the bondholders have, when things go wrong, is what leverage do they actually have against the company” Mr. Gronow of FTI Consulting said.

The answer, usually, is not much. Mr. Gronow cites the case of Asia Aluminum, a manufacturer in the small southern city of Zhaoqing that collapsed in 2009 after accumulating more than $1.7 billion in debt.

After several months of often strained negotiations between the company, mainland and Hong Kong banks, foreign bondholders and the government, Mr. Gronow and his co-workers, acting as liquidators, worked out a deal that gave back Asia Aluminum’s bank creditors in Hong Kong 100 percent of their capital.

Others were not so lucky. The owners of bonds issued by one offshore subsidiary received about 20 cents on the dollar. And investors in riskier “payment-in-kind” notes, a sort of hybrid bond where interest payments can be made by selling more debt, received only about 1 cent on the dollar.

“The thing you face as a liquidator dealing with these situations is how to maximize the recovery,” Mr. Gronow said. “Clearly, getting that sort of return, they were not very happy about it.”

Judge Questions S.E.C. Settlement with Steven Cohen’s Hedge Fund

How can a hedge fund pay the government a roughly $600 million penalty to settle insider trading accusations but not have to admit that it did anything illegal

Judge Victor Marrero raised that question at Federal District Court in Manhattan on Thursday, as he considered whether to approve the landmark settlement between the Securities and Exchange Commission and the hedge fund SAC Capital Advisors, which is owned by the billionaire stock picker Steven A. Cohen.

“There is something counterintuitive and incongruous about settling for $600 million if it truly did nothing wrong,” Judge Marrero said.

Martin Klotz, a lawyer for SAC, said that his client made a business decision in agreeing to pay such a large fine.

“We’re willing to pay $600 million because we have a business to run and don’t want this hanging over our heads with litigation that could last for years,” Mr. Klotz said.

Judge Marerro reserved judgment on approving the settlement, which related to accusations that SAC made $276 million in profits and avoided losses by illegally trading two pharmaceutical stocks after a former portfolio manager obtained secret information from a doctor about clinical drug trials. But the judge made it clear that he was troubled that, as part of the agreement, SAC did not have to acknowledge wrongdoing.

The Greenwich, Conn. hedge fund has emerged as a major focus of the federal government’s long-running inquiry into criminal activity at hedge funds. Earlier this month, it agreed to settle two insider-trading cases - one for $602 million, which was at issue on Thursday, and the other for $14 million.

At least nine SAC employees or former employees have been tied to insider trading while at the fund. Among them is Mathew Martoma, the former portfolio manager who was criminally charged with illegally trading in the drug stocks, Elan and Wyeth. Mr. Martoma, who has pleaded not guilty, did not attend Thursday’s hearing, but his lawyer, Charles A. Stillman, made an appearance, as did Mr. Martoma’s wife.

The Martoma case has increased scrutiny of Mr. Cohen, as he was directly involved in trading Elan and Wyeth alongside Mr. Martoma. Mr. Cohen has not been charged or sued by the government, and has denied any wrongdoing. In recent days, he made headlines for embarking on a shopping spree amid his legal woes, agreeing to pay $60 million for an oceanfront estate in East Hampton and purchasing a Picasso painting for $155 million.

Thursday’s hearing, which focused heavily on the “neither admit nor deny wrongdoing” language in the S.E.C. settlement with SAC, comes as federal judges across the country have expressed concerns over whether government agencies are letting defendants off easy by not forcing them to admit liability. Most prominently, last year Judge Jed S. Rakoff rejected the settlement of a fraud case brought against Citigroup by the S.E.C. that let the bank avoid an acknowledgment that it did anything wrong.

Judge Rakoff’s decision - and the question of whether he exceeded his authority in rejecting the settlement - is now under review by a federal appeals court, and on Thursday, Judge Marerro hinted that he might condition any approval of the SAC settlement on the outcome of the Citigroup appeal.

“That decision will be very much pertinent to what the court has been asked to do here,” Judge Marrero said.

Mr. Klotz, the SAC lawyer, argued that the decision from the United States Court of Appeals from the Second Circuit would be limited to Judge Rakoff’s ruling within the context of the specific facts of the Citigroup case, which relate to the bank’s sale of a complex $1 billion mortgage bond deal. Therefore, he said, Judge Marerro was well within his authority to approve the S.E.C.’s settlement with Citigroup. (Coincidentally, Mr. Klotz’s co-counsel in representing SAC in this matter is Daniel Kramer of Paul Weiss Rifkind Wharton & Garrison, the same law firm defending Citigroup in its case against the S.E.C.)

Judge Marerro noted that other federal judges across the country had recently followed Judge Rakoff’s lead and cast skepticism on the “neither admit nor deny language,” in some cases demanding greater accountability before approving settlements.

Charles D. Riely, a lawyer for the S.E.C., also urged Judge Marerro to approve its settlement with SAC, despite the pending appeals court decision.

“There is always a risk to the legal landscape shifting,”
Mr. Riely said.

“But the ground is shaking,” Judge Marerro said. “There are tremors.”

Ruth Porat Withdraws Name From Deputy Treasury Race

Ruth Porat is staying put.

Morgan Stanley‘s chief financial officer  informed the White House on Wednesday that she wanted her name withdrawn as a candidate for deputy Treasury secretary, according to people familiar with her plans but not authorized to speak on the record.

Ms. Porat, a long-time Morgan Stanley banker who in early 2010 was named the bank’s chief financial officer, decided to take her name out of the running in part because she did not want to face questions about her finances and was worried about a highly charged environment in Washington against Wall Street bankers, according to these people.

Ms. Porat’s exact net worth is not known, but she made more than $10 million in 2011 alone, the most recent year for which her compensation is available. Jack Lew, the man who would have been her boss had she been confirmed as Treasury Secretary, faced pointed questions during his confirmation about the compensation he received while working on Wall Street.

Mr. Lew worked at Citigroup from 2006 to 2008. Under the terms of his contract with Citi, compensation worth as much as $500,000 that had been previously granted to him but had not yet vested was awarded to him because he left the firm for a senior government position.

Ms. Porat withdrew her name early in the process; she hadn’t gone as far as to submit her tax returns to the White House, according to these people.

There are now no clear front-runners for the job of deputy Treasury Secretary and the White House is potentially months away from naming a candidate. One Washington insider suggested the White House may select a candidate already in the administration. This will allow them to sidestep, at least temporarily, a confirmation hearing.

Possible candidates already in the administration include Mary Miller, currently a top treasury official, and Lael Brainard, the under secretary of the Treasury for international affairs.

At Morgan Stanley, the news that Ms. Porat is staying will end months of speculation there about who was going to succeed her.

Bloomberg News reported earlier that Ms. Porat was no longer in the running for the Treasury job.

John Malone’s Ziggo Stardust

John C. Malone’s latest swoop in the cable sector is true to form.

The cable tycoon’s Liberty Global was sitting on a paper profit of over 40 million euros hours after buying a 12.7 pct stake in Dutch cable company Ziggo from Barclays on March 28. Malone has shrewdly exploited a forced seller, after Barclays was lumbered with the millions of Ziggo shares it failed to sell for the company’s private-equity owners days earlier. What’s more, he has plenty of experience in using blocking stakes as a takeover strategy.

Barclays has suffered unwelcome publicity from the episode but it will still be pleased with the outcome. The bank’s bungled share sale was a reminder of how risky it is to sell big blocks of stock for clients and commit to achieving a set price. Not that a reminder was needed. Placings in German satellite operator ProSieben, Spanish travel software group Amadeus and French voucher company Edenred all left banks saddled with unwanted stakes.

Barclays’ Ziggo stake dwarfed these: it was equivalent to about 1.5 percent of the bank’s Basel III core capital. The sale to Mr. Malone should shake regulators off its back.

Furthermore, the 25 euros a share paid - financed by existing Liberty funds and a loan from another bank - is only a 5 euro cent discount to what the British bank paid for the block on March 18. Factor in fees and a hedge and Barclays may have even made money.

Ziggo shareholders should have mixed feelings. Mr. Malone’s stake is a deterrent to a bid for the company, and could thereby deprive them of a tasty takeover premium. True, he was the natural bidder anyway. But it’s not clear that even a low-ball takeover offer from him could come any time soon. Liberty has yet to digest its $20 billion takeover of Britain’s Virgin Media.

Further out, Mr. Malone is in pole position to snap up the remaining 17.1 percent combined stake held by buyout shops Warburg Pincus and Cinven. There may be valuable synergies from mashing Ziggo into UPC, another Dutch cable company he owns. But if he fails, he will still wield influence. The chief executive of Belgium’s Telenet - in which Mr. Malone also took a big stake - resisted Liberty’s overtures. Not long afterward, he was replaced - with a former Liberty group executive.

Dominic Elliott is a columnist at Reuters Breakingviews. For more independent commentary and analysis, visit breakingviews.com.

MetroPCS: At Least One Proxy Adviser Likes Our T-Mobile Deal

While the biggest proxy advisory firm around may have recommended that shareholders reject MetroPCS‘ planned merger with T-Mobile USA, the cellphone service provider hasn’t lost hope yet. Another firm is on board with the deal.

MetroPCS said on Thursday that the transaction had won the blessing of Egan-Jones, a consolation prize of sorts after Institutional Shareholder Services criticized the T-Mobile merger as not in the best interests of shareholders.

Another proxy advisory firm, Glass Lewis, is expected to make its recommendation soon.

Announced last year, the union would create one of the biggest low-cost cellphone service providers in the country and provide more competition for the likes of Sprint Nextel. MetroPCS has argued that the deal would help provide it with necessary spectrum, the radio pathways that gird wireless data transmissions.

“While we are disappointed in ISS’ report, we are gratified that Egan Jones’ recommendation supports our belief that this proposed combination is the best strategic alternative for the company and its stockholders and will maximize value for MetroPCS’ stockholders,” the company said in a statement

I.S.S.’ report, published Wednesday night, sided firmly with arguments made by vocal opponents of the telecom merger. They include two hedge funds, Paulson & Company and P. Schoenfeld Asset Management, that together own over 12 percent of MetroPCS’ stock.

Among the chief objections to the current deal are the high level of debt that the combined company would owe, as well as what the dissident investors argue are too-high interest rates. The shareholders also contended that MetroPCS shareholders should own more than the 26 percent of the merged entity that the deal currently proposes.

Shares of MetroPCS climbed nearly 4 percent by midday on Thursday after I.S.S. published its report, trading at $10.92.

In its response on Thursday, MetroPCS argued that it had carefully considered alternatives to the T-Mobile deal and reiterated that shareholders would be better off agreeing to the merger than risking the company faltering as an independent concern.

“Although we are pleased that I.S.S. recognizes the thoroughness of the process undertaken by the MetroPCS board of directors, we strongly believe that I.S.S.’ report contains material flaws and reaches the wrong conclusion,” MetroPCS said.

A vote on the deal is scheduled for April 12.