U.S. TAKES AIM AT CORZINE  | Jon S. Corzine, a veteran of Wall Street and New Jersey politics, faces the biggest fight of his career: a showdown with the United States government, DealBook’s Ben Protess writes. Federal regulators sued Mr. Corzine on Thursday in connection with the collapse of MF Global and the apparent misuse of customer money during the brokerage firm’s final days. Mr. Corzine ran the firm until its bankruptcy in October 2011.
The lawsuit, filed in the United States District Court in Manhattan, cites dozens of e-mails and captures previously unreleased phone calls to create the first real-time synopsis of a Wall Street blowup using executives’ own haunting words, Mr. Protess writes. In one call, the firm’s global treasurer indicated that the irm’s liquidity “situation†was “not sustainable†and that “we have to tell Jon that enough is enough. We need to take the keys away from him.†Mr. Corzine, who inherited a firm in 2010 that lost money in each of the previous three years, nicknamed this person “the Gravedigger.â€
Andrew J. Levander, Mr. Corzine’s lawyer, denounced what he called “an unprecedented lawsuit based on meritless allegations.â€
FED OFFICIALS SEEK TO EASE CONCERN  | In three separate but similar speeches on Thursday, Federal Reserve officials showed their frustration with the rise in interest rates that began in May and accelerated after remarks last week by the central bank’s chairman, Ben S. Bernanke. The economy is the victim of misunderstanding, the officials said, telling investors that they are misguided in believing the Fed’s stimulus campaign is about to wane, Binyamin Appelbaum writes in The New York Times.
“I don’t want to be too cute about a serious matter,†Dennis P. Lockhart, president of the Federal Reserve Bank of Atlanta, said in Marietta, Ga., “but to make an analogy, it seems to me the chairman said we’ll use the patch â€" and use it flexibly â€" and some in the markets reacted as if he said ‘cold turkey.’†The speeches appeared to make an impression; stocks rose modestly while interest rates ticked downward, Mr. Appelbaum writes.
OLD CHAMPION RETURNS FOR MORTGAGE BONDS Â |Â
Lewis S. Ranieri helped pioneer mortgage-backed securities in the 1980s. On Thursday, his new firm priced its first mortgage bond deal. With the recent turmoil in te bond markets, however, the $251 million offering was not without drama. The structure of the offering was changed to offer buyers more protection against losses, according to a person briefed on the matter who was not authorized to speak about the private deal.
ON THE AGENDA Â |Â BlackBerry reported earnings. The final version of the Reuters/University of Michigan consumer sentiment index for June is out at 9:55 a.m. Thomas J. Barrack, founder of Colony Capital, is on CNBC at 7 a.m.
DERIVATIVES AS A TOOL FOR DECEIT  | “For some derivatives, a desire for deception is the only reason they exist,†Floyd Norris, a columnist for The Ne! w York Ti! mes, writes. “That deception can allow those who own derivatives to evade taxes or accounting rules. It can allow activity that might otherwise be illegal, were it not called a derivative, or that would face regulation if it were labeled what it truly is. Sometimes, banks use derivatives they create to help their clients deceive the public. Other times, they enable the banks to deceive those clients.â€
“The latest revelation of deception by derivative came in Italian government documents leaked this week to two European newspapers, La Repubblica and The Financial Times,†Mr. Norris continues. “What seems to have happened in Italy is similar to something that we already know Greece did. Rather than borrow money â€" which would increase the reported budget deficit â€" the country entered into a derivatives contract that called for the banks to make large upfront payments in return for larger paymens later from the government.â€
U.S. Said to Take Depositions in Review of Airline Merger  | The Justice Department is taking sworn testimony as part of its review of the planned merger of American Airlines and US Airways, Reuters reports, citing unidentified people close to the discussions. That indicates the government “has concerns that the proposed merger creates antitrust problems,†Reuters writes.
REUTERS
Owner of Financial Times Says Newspaper Is Not for Sale  | A spokesman for Pearson, ! the owner! of The Financial Times, denied a report that claimed the company was in talks to sell the newspaper to Rupert Murdoch and Abu Dhabi’s state media group, The Telegraph reports. “The Financial Times is not for sale, and Pearson is not in any talks to sell it,†the spokesman said.
TELEGRAPH
Senate Agriculture Committee Calls Hearing on Smithfield Deal  | The Senate Agriculture Committee will examine Smithfield Foods’ $4.7 billion sale to a Chinese meat processor, stepping up government scrutiny of the pork producer’s deal.
DealBook »
Regulators Said Not to Seek Divestitures in Wireless Deal  | Reuters reports: “U.S. regulators do not plan to ask Sprint Nextel Corp or Clearwire Corp to sell any spectrum as they near a vote on Sprint’s proposed buyout of Clearwire, two sources familiar with the matter said on Thursday.â€
REUTERS
Times Company Said to Receive Bids for Boston Globe  |Â
REUTERS
B! ank Deal in Europe Seen as Progress With Flaws  | “The agreement is intended to reduce the chance that a bank crisis will descend into a government debt crisis, as happened in Spain and Ireland when the cost of bank rescues helped undermine public finances,†The New York Times writes. “But because Germany insisted on high hurdles before its taxpayers would be made liable for bank failures in other countries, there remains a risk that weaker countries could still become victims of the failure of a big domestic bank.â€
NEW YORK TIMES
Blankfein on the Federal Reserve  | “The market understood, but the market overreacted,†Lloyd C. Blankfein, Goldman Sachs’s chief executive, said on CNBC.
Goldman’s All-Night Puzzle Challenge  | Goldman Sachs sponsors a charity event known as Midnight Madness that is a night of extravagant puzzles around New York. The next one is planned for October.
DealBook »
HSBC Stakes a Claim in Asian Deals  | HSBC has, for the first time, moved into the top five advisers for mergers and acquisitions in Asia excluding Japan, according to preliminary data from Thomson Reuters.
REUTERS
PRESS RELEASE
Slim Pickings for Private Equity Firms  | “After a robust start to the year, volumes of leveraged buyouts shrank in the second quarter, highlighting the erratic pattern of the market’s recovery since the start of the financial crisis,†The Financial Times reports.
FINANCIAL TIMES
China Prepares to Name New Chief of Wealth Fund  | China’s sovereign wealth fund “is finally close to naming a new chief, ending a months-long delay during which several candidates turned down the job for fear it would prove to be a poisoned chalice,†The Financial Times reports.
FINANCIAL TIMES
DealBook »
Lansdowne Partners Names New Chief  |Â
REUTERS
A Tech Debate Over Allowing More Foreign Workers  | “A the Senate voted on a landmark immigration bill that would let Silicon Valley companies import more foreign engineers, some Americans remain locked in a deeply emotional argument over whether outsiders are taking jobs away†from older workers, The New York Times reports.
NEW YORK TIMES
K.K.R. Said to Tap Banks for I.P.O. of Tarkett  | An offering of Tarkett, a French floor maker, could raise about $651 million, Bloomberg News reports.
BLOOMBERG NEWS
Adobe to Buy Neolane, a Digital Marketing Company, for $600 Million  | Adobe Systems agreed on Thursday to buy Neolane, a digital marketing services provider, for about $600 million, as more companies look for ways to add social media advertising to their offerings.
DealBook »
Square Hires Facebook’s Director of Advertising Products  |Â
ALLTHINGSD
Moody’s Shows Wider Pension Gap for States  | Moody’s Investors Service released numbers showing that states may be misstating what they owe retirees, averaging just 48 cents for every dollar of pensions they have promised.
DealBook »
S.E.C. Begins an Inquiry of Thomson Reuters Data  | The Securities and Exchange Commission is investigating why certain clients of Thomson Reuters received and traded on manufacturing data ahead of its official release.
DealBook »
Cengage Learning Said to Be Ne! ar Bankru! ptcy  | The Wall Street Journal reports: “Cengage Learning Inc., the struggling textbook publisher owned by private-equity firm Apax Partners, is preparing to file for bankruptcy protection in the coming days, said several people familiar with the plans.â€
WALL STREET JOURNAL
Senate Finance Committee Makes Push for Tax Reform  | The Democratic and Republican leaders of the Senate Finance Committee asked all senators to identify what tax breaks, deductions and credits should be kept, The New York Times reports.
NEW YORK TIMES
Ireland Slides Back Into Recession  | Though Ireland is held up as an example of how austerity can help a country emerge stronger from the European crisis, “Ireland’s economy is disappointing its fans â€" again,†The New York Times reports.
NEW YORK TIMES
In Tourre Trial, a Disagreement Over a Witness  |Â
REUTERS
