JPMORGAN RUNS AFOUL OF ENERGY AUTHORITIES  | Government investigators contend that JPMorgan Chase devised “manipulative schemes†that turned “money-losing power plants into powerful profit centers,†and that a senior executive of the bank gave “false and misleading statements†under oath â€" findings that appear in a confidential government document that was sent to the bank in March, Jessica Silver-Greenberg and Ben Protess report in DealBook. The document warned of a potential crackdown by the Federal Energy Regulatory Commission, the regulator of the nation’s energy markets.
In addition, the bank faces showdowns with other agencies, like the Office of the Comptroller of the Currency, which is considering new enforcement actions against JPMorgan over how it collected credit card debt and its possible failure to alert authorities to suspicions about Bernard L. Madoff, people who were not authorized to discuss the cases publicly said. “In a meeting last month at the bank’s Park Avenue headquarters, the comptroller’s office delivered an unusually stark message to Jamie Dimon, the chief executive and chairman: the nation’s biggest bank was quickly losing credibility in Washington. The bank’s top lawyers, including Stephen M. Cutler, the general counsel, have also cautioned executives about the bank’s regulatory problems, employees say,†according to DealBook. “For executives, the bank’s transition from model citizen to problem child in the eyes of the government has been jarring.â€
In the energy market investigation, a 70-page document took aim at Blythe Masters, a top executive who is known on Wall Street for helping expand the boundaries of finance. The document cites her supposed “knowledge and approval of schemes†carried out by energy traders in Houston. The investigators claimed she had “falsely†denied under oath her awareness of the problems. “We intend to vigorously defend the firm and the employees in this matter,†said Kristin Lemkau, a spokeswoman for the bank. “We strongly dispute that Blythe Masters or any employee lied or acted inappropriately in this matter.â€
BUFFETT’S BEAR  | Douglas A. Kass, the head of Seabreeze Partners Management, was handpicked by Warren E. Buffett to add some spice to Berkshire Hathaway’s annual meeting this weekend. “It’s fair to say that I’m Daniel in the lion’s den,†said Mr. Kass, who, as Berkshire’s first credentialed bear, is betting that the stock will fall. “But I’ve prepared intensely.†DealBook’s Michael J. de la Merced writes that Mr. Buffett “has tried to toughen up the questioning at the annual meeting, a 180-degree turn from what the majority of publicly traded companies seek to do. He has asked reporters, including one from The New York Times, and analysts to ask tougher questions. Inviting Mr. Kass, 64, is perhaps the boldest move yet.†As of Thursday, Mr. Kass was winnowing 25 potential questions down to six.
Mr. Buffett, who is likely to reiterate at the meeting that his company has a succession plan in place, and will also most likely discuss his desire to strike more big deals, is making a bold foray into the latest technology. He fired up a new Twitter account on Thursday and quickly attracted many thousands of followers, including Mr. Kass. The service had at least one feature going for it, Mr. Buffett said. “The co-founder came from Nebraska,†he said, in an apparent reference to Evan Williams. “So it can’t all be bad.â€
SAC BEEFS UP COMPLIANCE  | Steven A. Cohen, facing a criminal investigation into questionable trading at his hedge fund SAC Capital Advisors, sought on Thursday to convince investors and regulators that he takes compliance seriously. In a letter to investors, Mr. Cohen announced a broad set of changes including clawing back the pay of employees who violate the law, DealBook’s Peter Lattman reports. “These reforms send an unmistakable message: We have zero tolerance for wrongdoing and if you are caught breaking the rules, it will cost you,†Mr. Cohen wrote in the letter. “This problem is our problem to solve. It’s my name on the door and we will solve it.â€
Mr. Cohen’s investors must soon decide whether to withdraw their money. Last week, the firm extended a May 15 deadline for withdrawals by three months.
ON THE AGENDA Â |Â The unemployment report for April is out at 8:30 a.m. Berkshire Hathaway is expected to report earnings. Mr. Buffett is on Bloomberg TV at 8 a.m. Mary Jo White, the new leader of the Securities and Exchange Commission, speaks at a meeting of the Investment Company Institute in Washington at 8 a.m.
APPLE’S MOVE KEEPS TAX BILL LOW  | Apple, which borrowed $17 billion this week in the largest corporate bond offering ever, “has been a pioneer in tactics to avoid paying taxes to Uncle Sam,†Floyd Norris, a columnist for The New York Times, writes. Distributing some of its cash pile to shareholders would force Apple to pay taxes. “So it borrows instead to buy back shares and increase its stock dividend.†Mr. Norris continues: “The borrowings were at incredibly low interest rates, as low as 0.51 percent for three-year notes and topping out at 3.88 percent for 30-year bonds. And those interest payments will be tax-deductible. Isn’t that nice of the government? Borrow money to avoid paying taxes, and reduce your tax bill even further.â€
Verizon Chief Said to Talk Tough on a Deal With Vodafone  | A JPMorgan analyst, Philip Cusick, said the chief executive of Verizon Communications had said he did not think Verizon would need to pay a premium to buy Vodafone’s 45 percent stake in Verizon Wireless, Reuters reports.
REUTERS
BC Partners Offers $1.3 Billion for Animal Identification Company  | The European private equity firm BC Partners has offered $1.3 billion to buy the electronic animal identification company Allflex from its private equity owners Electra Partners.
DealBook »
OfficeMax Investor Seeks to Block Office Depot Deal  | A shareholder of OfficeMax sued the company’s directors on Thursday in an effort to prevent the acquisition by Office Depot, Reuters reports.
REUTERS
Glencore Completes Deal for Xstrata  | Glencore International, the Swiss commodities trader, announced on Thursday that its merger with the mining giant Xstrata was complete and that shares in the newly combined company, called Glencore Xstrata, will start trading in London on Friday.
DealBook »
With Deal Done, Glencore Chief Rolls Up His Sleeves  | The number of layoffs at the combined Glencore-Xstrata is “going to be big,†Ivan Glasenberg, the chief executive, told The Wall Street Journal.
WALL STREET JOURNAL
Instagram Deal Is Looking Better and Better  | The acquisition of Instagram by Facebook a year ago was risky, and Instagram is still not profitable. But the potential payout is increasing, Robert Cyran of Reuters Breakingviews writes.
REUTERS BREAKINGVIEWS
R.B.S. Prepares to Sell Shares as Profit Surges  | The Royal Bank of Scotland has signaled that it is moving closer to privatization as it reported its first quarterly profit since 2011.
DEALBOOK
BNP Paribas First Quarter Profit Falls 45% Â |Â The decrease in earnings at the biggest French bank was slightly better than analysts expected and was partly due to one-off charges.
DealBook »
Advice for Dimon, as Shareholders Vote  | JPMorgan Chase shareholders are voting whether to recommend that Jamie Dimon, the chief executive, be stripped of his chairman role. “Dimon could end this needless drama in one stroke: Hand the chairman post to someone else,†Jonathan Weil writes in Bloomberg View.
BLOOMBERG VIEW
Buffett Supports Dual Role for Dimon  |Â
BLOOMBERG NEWS
Perelman Pledges $100 Million to Columbia Business School  | Ronald Perelman, a billionaire and longtime deal maker, has pledged $100 million to Columbia Business School, the university announced on Thursday.
DealBook »
Why a UBS Split Would Not Be the Best Move  | The chief executive of the Swiss banking giant UBS, writes Dominic Elliott of Reuters Breakingviews, should see Knight Vinke’s intervention as a warning â€" stick with the program and don’t stop cutting risk.
REUTERS BREAKINGVIEWS
Lazard Hires Slaughter, a Former JPMorgan Deal Maker  | Lazard said on Thursday that it had hired Larry Slaughter, who was most recently a co-head of North American investment banking for JPMorgan Chase, as a vice chairman for investment banking.
DealBook »
Private Equity Giants Attract Less Money to Invest  | The Financial Times reports: “The 50 largest private equity groups raised less capital over the past five years as the industry struggled to attract and retain investors, according to a study of the 300 biggest companies.â€
FINANCIAL TIMES
Man Group Faces Further Client Outflows  | Clients continued to withdraw money from the Man Group, as the world’s largest publicly traded hedge fund announced plans to buy back almost $500 million of its own debt.
DealBook »
For Hedge Funds, Japan’s Monetary Policy Is a Boon  |Â
FINANCIAL TIMES
Shares of ING’s U.S. Unit Rise 7% in Debut  | Shares of the American arm of the Dutch financial services firm ING Group edged up in their trading debut on Thursday.
DealBook »
Yelp Shares Rise on Report of Improving Revenue  | Yelp’s stock reached an all-time high, climbing as high as 27 percent on Thursday to $32.14, The Wall Street Journal notes.
WALL STREET JOURNAL
Ares Management Said to Talk to Banks About I.P.O. Â |Â
REUTERS
Colony American Homes Files to Go Public  |Â
BLOOMBERG NEWS
Twitter Hires Morgan Stanley Banker  | Twitter hired Cynthia Gaylor, a managing director at Morgan Stanley, to be its head of corporate development.
DealBook »
Venture Capital’s Rocky Road for Entrepreneurs  | New data point to higher failure rates among start-ups that take venture capital and even fewer chances for the founders of companies to earn anything in an exit, Steven M. Davidoff writes in the Deal Professor column.
DealBook »
New Venture Firm Opens in New York  | The firm, Bowery Capital, plans to invest in business-oriented start-ups with a marketing or technology focus. It is led by Mike Brown Jr., who previously co-founded AOL Ventures.
DealBook »
Hedge Fund Trader Is Sentenced to 4.5 Years in Insider Case  | Todd Newman, a onetime hedge fund trader at Diamondback Capital who was convicted of insider trading, was sentenced as part of the government’s widespread crackdown.
DealBook »
Senior S.E.C. Officials Depart  | The Securities and Exchange Commission announced on Thursday that Carlo V. di Florio, head of the agency’s Office of Compliance Inspections and Examinations, and David P. Bergers, the interim No. 2 enforcement official, will step down.
DealBook »
Shaky Agreements Over Corporate Tax System  | Despite widespread support for fixing the corporate tax system, “the campaign for an overhaul is exposing deep fault lines within the business world that suggest it may fall apart,†The New York Times writes.
NEW YORK TIMES
European Central Bank Hints at Limits  | The central bank, which cut its benchmark interest rate to a record low on Thursday, also indicated that its promise to do “whatever it takes†to save the euro had limits, The New York Times writes.
NEW YORK TIMES
Proposed European Tax on Financial Transactions Is Criticized by Lobbying Group  | The tax would fall disproportionately on London firms, the London Chamber of Commerce and Industry, a business lobbying group, said in a report published Thursday.
NEW YORK TIMES
A Tobin Tax, Bankruptcy Style  | Starting this month, there is a $25 fee to file a notice that a debtor claim in a Chapter 11 case has been sold, Stephen J. Lubben writes in the In Debt column.
DealBook »
British Activists Press Tax Case Involving Goldman Sachs  | An activist group asked a court to review a deal struck in 2010 between Goldman Sachs and British tax authorities that allowed the firm to avoid as much as $31 million in interest on unpaid taxes.
DealBook »
Auto Lenders Come Under Scrutiny  | The Wall Street Journal reports: “The Consumer Financial Protection Bureau has issued subpoenas to U.S. auto lenders over the sale of extended warranties and other financial products, according to people familiar with the investigation.â€
WALL STREET JOURNAL
