Federal authorities have opened a bribery investigation into whether JPMorgan Chase hired the children of Chinese officials to help the bank win business, Jessica Silver-Greenberg, Ben Protess and David Barboza report in DealBook.
In one example, the bank hired the son of Tang Shuangning, a former Chinese banking regulator who is now chairman of the China Everbright Group, a state-controlled financial conglomerate, according to a confidential United States government document reviewed by The New York Times, as well as public records, DealBook reports. After the chairman’s son started at the bank, JPMorgan secured multiple coveted assignments from the Chinese conglomerate, records show.
The focus of the civil investigation by the Securities and Exchange Commission’s antibribery unit has not been previously reported, though JPMorgan made an oblique reference to the inquiry in its quarterly filing this month, stating that the S.E.C. had sought information about JPMorgan’s “employment of certain former employees in Hong Kong and its business relationships with certain clients.†The government document and public records do not definitively link JPMorgan’s hiring practices to its ability to win business, and the bank has not been accused of any wrongdoing.
“Yet the S.E.C.’s request outlined in the confidential document hints at a broader hiring strategy at JPMorgan’s Chinese offices,†DealBook writes. “Authorities suspect that JPMorgan routinely hired young associates who hailed from well-connected Chinese families that ultimately offered the bank business.â€
PUBLIC FUNDS DODGING WALL STREET  | A number of the world’s biggest pension and sovereign wealth funds are moving to reduce their reliance on the Wall Street firms that used to manage almost all their money, Nathaniel Popper reports in DealBook. A group that is part of that push, the Institutional Investors Roundtable, has kept a low public profile since it began in 2011, but it attracted 27 funds managing public money to its latest meeting.
“The efforts to change the way public money is managed are motivated, in no small part, by the big fees and lackluster performance that many hedge funds and private equity firms have delivered to their biggest clients in recent years,†Mr. Popper writes. “Investment managers like Leo de Bever, at the Canadian province of Alberta’s $70 billion fund, have found they can often manage their own money at a lower cost without losing out on returns.â€
Though the moves are not yet threatening to eat into the overall profits of the big hedge funds and private equity firms, they “point to a mistrust of Wall Street’s ability to deliver the kind of outsize returns it has long promised.â€
SAC LOOKS TO CUT BACK Â |Â
SAC Capital Advisors, a hedge fund that typically heads into the end of the year in a position of strength, is preparing to become leaner with virtually no outside investors, Alexandra Stevenson and Peter Lattman report in DealBook. With a regularly scheduled deadline of midnight on Friday for investors to ask for their money, the hedge fund was expecting to lose virtually all its outside capital.
Already this year, investors had asked for $5 billion of the $6 billion in outside capital from the $15 billion that the fund had at the start of the year, DealBook reports. “The Blackstone Group, the influential hedge fund investor that once had more than $500 million with SAC, has pulled its entire investment from the firm, according to people briefed on the matter, speaking only on the condition of anonymity.â€
ON THE AGENDA Â |Â President Obama is scheduled to meet with the heads of the Securities and Exchange Commission, the Commodity Futures Trading Commission, the Consumer Financial Protection Bureau and other regulatory agencies on Monday afternoon to discuss the implementation of the Dodd-Frank regulatory overhaul. Urban Outfitters reports earnings after the market closes.
ALIBABA SEEN BUYING E-COMMERCE STAKE  | The latest deal by Alibaba, the Chinese e-commerce giant that is preparing for an initial public offering, may raise some eyebrows, DealBook’s Michael J. de la Merced writes. “Alibaba has agreed to pay about $75 million for a minority stake in ShopRunner, a retail shipping service run by Scott Thompson, who briefly, and controversially, served as Yahoo’s chief executive, a person briefed on the matter said on Saturday.â€
Atlas Copco of Sweden to Buy Edwards Group  | The Swedish engineering company Atlas Copco agreed on Monday to buy the British industrial company Edwards Group for up to $1.2 billion. DealBook »
To Cover New York, Zillow Buys a Rival Site  | The real estate Web site Zillow will acquire StreetEasy, a much smaller site, for about $50 million to patch what it described as a “glaring hole†in its coverage. DealBook »
Bezos, Master of the Unexpected  | It is increasingly hard to dispute that Jeffrey P. Bezos, the founder of Amazon, who recently bought The Washington Post, “is the natural heir of Steve Jobs as the entrepreneur with the most effect on the way people live now,†The New York Times writes. NEW YORK TIMES
Baidu Deal Could Reduce App Piracy in China  | The New York Times reports: “The biggest Internet takeover to date in China has already sharpened a rivalry among the country’s digital powerhouses, but the deal could also bring more order to China’s messy world of mobile apps.†NEW YORK TIMES
Mayor Bloomberg Puts Wall Street First  | “No mayor in New York’s history has done more to consolidate the city’s identity with Wall Street,†Ginia Bellafante writes in the Big City column in The New York Times. NEW YORK TIMES
Goldman Seeks to Attract Banks to Bond Platform  | “Goldman Sachs has been trying to recruit other banks to its electronic bond trading platform, in a move which highlights some of the tentative industry efforts under way to boost liquidity†in the corporate bond market, The Financial Times reports. FINANCIAL TIMES
Bank of America May Merge Merrill Lynch With Parent  | The move would simplify Bank of America’s organization and reduce costs but would not be noticeable to most outsiders. DealBook »
Fund Set Up for UBS Bailout Repays Loan  | The move clears the way for UBS to buy back a portfolio of distressed assets that were moved off the UBS books during the financial crisis. DealBook »
Blackstone Said to Be in Talks for Stake in British Insurer  | The Blackstone Group is in talks to buy a minority stake in Rothesay Life, Goldman Sachs’s pension insurance business in Britain, The Financial Times reports, citing unidentified people familiar with the matter. FINANCIAL TIMES
Brazilian Fund, Under Fire, Has a Defender  | An investor in GP Investments, one of Latin America’s largest private equity funds, has attacked its compensation policies, but another says that criticism is misguided. DealBook »
A Private Equity Tycoon From an Earlier Era  | David Bonderman, the co-founder of the Texas Pacific Group, “is seen by many as emblematic of a bygone era in the industry, with his intuitive and informal style,†The Financial Times reports. “Yet TPG may need Mr. Bonderman’s charisma now more than ever.†FINANCIAL TIMES
An Often Overlooked Division of Sony  | The activist investor Daniel S. Loeb has sharply criticized Sony’s entertainment division, but the company’s television unit is quietly producing ambitious work, The New York Times writes. “It hasn’t always gotten the recognition it deserves,†said Michael Lynton, the chief executive of Sony Entertainment. NEW YORK TIMES
Departures From Brevan Howard  | Two credit traders left the London-based hedge fund Brevan Howard Asset Management in recent weeks, “as the firm scales back after its biggest hedge fund had the worst monthly loss since 2008 in June,†Bloomberg News reports, citing two unidentified people familiar with the matter. BLOOMBERG NEWS
Alibaba Said to Discuss Ownership Structure With Exchange  | The Wall Street Journal reports: “Alibaba Group Holding Ltd. is in talks with the Hong Kong Stock Exchange to come up with an ownership structure that would allow the Chinese e-commerce company to list its shares while enabling founder Jack Ma and his management team to maintain control, people familiar with the talks said.†WALL STREET JOURNAL
Replicating a Shopping Mall Experience Online  | A category of e-commerce known loosely as social shopping has attracted venture capitalists and caught the attention of giants like Amazon and eBay, The New York Times reports. NEW YORK TIMES
Detroit Awaits Challenge to Bankruptcy Eligibility  | “Unions, creditors and retirees are expected to file formal objections to Detroit’s eligibility for bankruptcy protection before a Monday deadline, the opening of a legal fight over whether the largest municipal bankruptcy in the nation’s history should proceed,†The New York Times reports. NEW YORK TIMES
One Airline Merger Too Many  | James B. Stewart, a columnist for The New York Times, writes: “Shareholders and employees of American Airlines and US Airways may well be wondering: why us?†NEW YORK TIMES
For Airlines, Deregulation Led to Consolidation  | “Deregulation worked all too well at first, and then it didn’t work well at all. The natural tendency of companies to seek monopoly power took over, and nobody tried to stop it until now, when it is really too late,†Joe Nocera writes in his columnist for The New York Times. NEW YORK TIMES
The Problem With Leeway in Valuing Securities  | The case against two former JPMorgan Chase traders offers larger lessons for investors and regulators, Gretchen Morgenson writes in her column for The New York Times. NEW YORK TIMES
