Morgan Stanley announced in an internal memorandum on Wednesday that Kenneth deRegt, the executive in charge of its once-powerful fixed-income department, would retire, DealBook’s Susanne Craig reports. Colm Kelleher, the firm’s president of institutional securities, said Mr. deRegt would be succeeded by Michael Heaney and Robert Rooney, two executives who have worked closely with Mr. Kelleher. Morgan Stanley said Mr. deRegt was leaving to become a partner at a new company, the Canarsie Capital Group.
“The change puts a spotlight back on Morgan Stanley’s fixed-income division, which the Wall Street firm has been aggressively shrinking since the financial crisis,†Ms. Craig writes. “The division had been one of its biggest moneymakers. Now, thanks to new regulations and other pressures, it is a drain on operations. As a result, Morgan Stanley has shifted gears and has aggressively expanded into wealth management, which is a lower-return business but comes with less risk.â€
“Some people inside Morgan Stanley say the last few years have been tough on Mr. deRegt, having to oversee cutbacks. In addition, areas like interest-rate trading, a fixed-income business that Morgan Stanley has actually made a big push into, have not performed as well as some had hoped recently, putting additional pressure on Mr. deRegt.â€
DIMON MOVES TO MEND FENCES  | The resounding shareholder endorsement of Jamie Dimon this week finally helps JPMorgan Chase move beyond the multibillion-dollar trading loss that has dogged the bank for more than a year, Jessica Silver-Greenberg writes in DealBook. After about 70 percent of shares voted to keep Mr. Dimon as both chairman and chief executive, “Mr. Dimon is now redoubling his efforts toward repairing JPMorgan’s frayed relationships with regulators, fortifying risk controls and bolstering the bank’s businesses, people briefed on the matter say,†Ms. Silver-Greenberg writes.
“Mr. Dimon has bolstered his influence at the helm of JPMorgan, while the proxy advisory firms that advise investors on corporate governance issues saw their influence wilt. The tally demonstrated that more investors, especially mutual funds, are doing their own work on proxy questions instead of simply relying on the recommendations of firms like Institutional Shareholder Services or I.S.S.â€
TESLA REPAYS FEDERAL LOAN EARLY  | “The taxpayer no longer has to worry about Tesla Motors,†DealBook’s Peter Eavis writes. Telsa, the maker of electric cars, paid off a $465 million loan on Wednesday that the Energy Department made in 2010, using money it raised last week in the markets. The company repaid the government nine years before the loan was due.
“Tesla’s payment will be the latest source of excitement to its supporters,†Mr. Eavis writes. “But whether Tesla remains a good advertisement for government aid partly depends on how the company now performs. Should Tesla falter badly, it will only highlight the risks of lending to experimental companies.â€
ON THE AGENDA  | Goldman Sachs holds its annual meeting in Salt Lake City. Lloyd C. Blankfein, Goldman’s chief executive, spoke with Bloomberg TV in an interview airing at 10 a.m. Fox Business Network reports on an off-camera interview with Bernard L. Madoff at 11 a.m. Sears Holdings reports earnings before the market opens. Data on new home sales in April is out at 10 a.m.
HERBALIFE’S DEFENSE  | In the months after the hedge fund manager William A. Ackman claimed Herbalife was a pyramid scheme, the debate over the company has intensified, with Carl C. Icahn amassing a stake. Mr. Icahn made his interest known on Christmas Eve, just days after Mr. Ackman’s original presentation, with a phone call to Herbalife’s chief executive, Michael Johnson, Bloomberg Businessweek reports.
“We’ve had some mistakes along the way, but that doesn’t say we’re a corrupt organization by any means. It’s really insulting to see the stuff that’s coming out and being taken as the truth because of one person’s financial motivation,†Mr. Johnson told the magazine. Asked if Herbalife has ever been a pyramid scheme, Mr. Johnson said: “No.â€
Fidelity National and THL Partners Said to Be in Talks for Loan Processing Firm  | Lender Processing Services, a provider of technology support to mortgage lenders, is in advanced talks to sell itself to its former parent, Fidelity National Financial, and the buyout firm THL Partners for about $2.9 billion, a person briefed on the matter said on Wednesday. DealBook »
H.P. Earnings Exceed Forecasts, but Challenges Remain  | While Meg Whitman, the chief executive of Hewlett-Packard, “is rebuilding cash reserves and rushing to create new products, it may be years before H.P. can make as much from new hardware and software as it used to make from older products, if it ever does,†The New York Times writes. NEW YORK TIMES
Flagstar Said to Consider Selling Mortgage-Servicing Rights  |Â
BLOOMBERG NEWS
Timing Just Right for Markit  | With Bloomberg L.P. on the defensive, it is a good moment to suggest there is potential for another competitor - perhaps, before too long, another publicly traded one. It could be Markit, Richard Beales of Reuters Breakingviews writes. REUTERS BREAKINGVIEWS
Indonesia Links Ownership of Banks to More Access Elsewhere  | Indonesia will insist on greater access to the financial systems of Singapore and other countries as a condition for approving the purchase of local banks by foreign financial institutions. DealBook »
Clearwire Approves Higher Bid From Sprint  | The board of Clearwire has approved a revised offer from Sprint Nextel to acquire the 50 percent stake in the company it does not own for $3.40 a share. DealBook »
Diamond Said to Consider Backing New Firm  | Robert E. Diamond Jr., former chief executive of Barclays, “is considering backing a firm started by former executives at the bank’s investment unit that was acquired by BlackRock,†Bloomberg News reports, citing an unidentified person familiar with the matter. BLOOMBERG NEWS
Lloyds Bank Said to Be Selling $8.7 Billion of Mortgage Bonds  | The Lloyds Banking Group is planning an auction next week of about $8.7 billion of United States mortgage bonds without government backing, as the lender looks to bolster capital, Bloomberg News reports, citing an unidentified person with knowledge of the sale. BLOOMBERG NEWS
A.I.G. Said to Seek New Director With Regulatory Experience  | The board of the American International Group “is looking for a new director with regulatory experience, as the insurer readies for the government to classify it as big enough to merit greater scrutiny, according to two sources familiar with the situation,†Reuters reports. REUTERS
In Japan, Stocks Take a Dive  | Japan’s Nikkei 225 stock index fell 7.3 percent on Thursday, the biggest drop since the aftermath of the earthquake in March 2011, The Financial Times reports. It was “the first big setback for the bull market touched off by prime minister Shinzo Abe’s drive to reflate the world’s third-largest economy,†the newspaper writes. FINANCIAL TIMES
Japan Stays the Course on Monetary Policy  | “In a unanimous vote, the bank’s board stuck to its strategy of expanding the monetary base at an annual pace of 60 trillion yen to 70 trillion yen, or $586 billion to $684 billion, through purchases of government bonds, commercial debt and other assets,†The New York Times writes. NEW YORK TIMES
K.K.R.’s Plans for Saks  | Kohlberg Kravis Roberts is “weighing an investment in Saks†and “may seek a merger with rival Neiman Marcus Group,†Bloomberg News reports, citing unidentified people with knowledge of the matter. BLOOMBERG NEWS
Wall Street’s A-List Turns Out to Fight Skin Cancer  | The Leveraged Finance Fights Melanoma benefit at Rockefeller Plaza’s garden on Tuesday night attracted a star-studded Wall Street crowd that raised more than $1.2 million to help fight skin cancer. DealBook »
Ares Management Hires Former Adviser to Blair  |Â
FINANCIAL TIMES
Moves by Hedge Funds Prompt Debate Over Sovereign Debt  | The Financial Times reports: “Concerned that an imperfect but functioning sovereign debt restructuring system could now be disrupted by emboldened hedge funds, the International Monetary Fund is considering how to reform the process. Later this week it will publish a paper and minutes from an executive board discussion on the subject.†FINANCIAL TIMES
General Electric Considers I.P.O. for Parts of Finance Unit  | “In financial services, putting things up for sale with the assumption that a bank would buy it has been a fool’s journey,†Jeffrey Immelt, chief executive of General Electric, said at a conference, according to Bloomberg News. “So the only way you’ve been able to think about this is by thinking about I.P.O.’s.†BLOOMBERG NEWS
Pfizer to Split Off Rest of Zoetis  | Pfizer announced on Wednesday that it would shed its remaining 80 percent stake in its former animal health business, Zoetis, through an exchange offer. DealBook »
Twitter Moves to Strengthen Account Security  | Twitter adopted a two-step authentication feature to make it more difficult for accounts to be hacked. BLOOMBERG NEWS
Square, a Mobile Payments Company, Loses 2 Executives  |Â
ALLTHINGSD
In Retreat From Secrecy, Europe Tries to Shed Stigma of Tax Haven  | The attention on the tax practices of Apple and other American corporations obscures another development, “the relentless pressures being piled on opaque money centers around the world amid a sweeping global assault on tax evasion and the secrecy that enables it,†The New York Times writes. NEW YORK TIMES
Pitchforks for I.R.S., Cheers for Apple  | “One thing became clear this week on Capitol Hill: It is better to be a tax dodger than a tax collector,†The New York Times writes. NEW YORK TIMES
Fed Stands by Stimulus, but the Message Is Muddied  | “Confusion on Wall Street over the Fed’s intentions led to a topsy-turvy day in the stock market,†The New York Times writes. NEW YORK TIMES
Senator’s Book Deal  | Senator Elizabeth Warren, Democrat of Massachusetts, has a deal with Henry Holt & Company for a book scheduled to be released next year, the publisher announced. ASSOCIATED PRESS
Exchanges Are Sued in Dispute Over Fees  | Reuters reports: “A group of investment firms including Citadel Securities L.L.C. sued the Chicago Board Options Exchange Inc. and four other exchanges on Wednesday for improper charges on millions of options trades over a seven-year period.†REUTERS
The Case of the Vanishing Subsidiary  |Â
WALL STREET JOURNAL
