JPMorgan Chase is nearing settlements with federal authorities over its ties to Bernard L. Madoff, reaching tentative deals that would involve roughly $2 billion in penalties and a rare criminal action, Jessica Silver-Greenberg and Ben Protess report in DealBook. The government plans to use a sizable portion of the money to compensate Mr. Madoff’s victims, according to DealBook.
The settlements, coming together on the five-year anniversary of Mr. Madoff’s arrest, would fault JPMorgan for turning a blind eye to his huge Ponzi scheme, according to people briefed on the case who were not authorized to speak publicly. “A settlement with federal prosecutors in Manhattan, the people said, would include a so-called deferred-prosecution agreement and more than $1 billion in penalties to resolve the criminal case. The rest of the fines would be imposed by Washington regulators investigating broader gaps in the bank’s money-laundering safeguards,†Ms. Silver-Greenberg and Mr. Protess report.
“The agreement to deferred prosecution would also list the bank’s criminal violations in a court filing but stop short of an indictment as long as JPMorgan pays the penalties and acknowledges the facts of the government’s case. In the negotiations, the prosecutors discussed the idea of extracting a guilty plea from JPMorgan, the people said, but ultimately chose the steep fine and deferred-prosecution agreement, which could come by the end of the year.
“Until now, no big Wall Street bank has ever been subjected to such an agreement, which is typically deployed only when misconduct is severe. JPMorgan, the authorities suspect, continued to serve as Mr. Madoff’s primary bank even as questions mounted about his operation, with one bank executive acknowledging before the arrest that Mr. Madoff’s ‘Oz-like signals’ were ‘too difficult to ignore,’ according to a private lawsuit.â€
JPMorgan declined to comment, and no one at the bank has been accused of wrongdoing. The bank has repeatedly said that “all personnel acted in good faith†in the Madoff matter.
HILTON SET TO BEGIN TRADING  | Hilton Worldwide, which went private in a $26 billion deal with the Blackstone Group, is now set to become one of the largest companies to go public this year, DealBook’s Michael J. de la Merced reports. The company priced its initial public offering on Wednesday at $20 a share, just above the midpoint of its expected range, achieving an equity value of about $19.7 billion. Hilton raised nearly $2.4 billion from the sale of 117.6 million shares after raising the size of the offering by about 4 percent from its original estimate.
Blackstone, for its part, will have an initial paper profit of $8.5 billion. The private equity firm focused on turning around Hilton after the hotel company initially began to struggle after its sale. Such has been Hilton’s success that Blackstone is not selling any of its holdings in the I.P.O., retaining a stake of about 76 percent. Blackstone is the latest private equity firm to sell its holdings into a booming stock market.
REASSURANCES ON ‘TOO BIG TO FAIL’ WITH LITTLE MEANING  | “This summer, President Obama’s new Treasury secretary, Jacob J. Lew, offered a financial reform litmus test: By the end of 2013, could we say with a straight face that we have solved the ‘too big to fail’ problem?†Jesse Eisinger of ProPublica writes in his column for DealBook, The Trade. “Last week, Mr. Lew gave a sweeping overview of the efforts to overhaul financial regulation. It was the talk of a man who has been practicing his straight face in the mirror.â€
“To judge by his performance, one technique for remaining stone-faced is to recite platitudes. Mr. Lew told the attendees: ‘Going forward, we cannot be afraid to ask tough questions, with an open mind and without preconceived judgments.’ That requires that ‘we must remain vigilant as emerging threats appear on the horizon.’ He reassured us that ‘we have made tough choices, and very significant progress toward reforming our financial system.’ This is not the stuff of persuasion.â€
ON THE AGENDA Â |Â Hilton Worldwide and Aramark are expected to debut on the New York Stock Exchange. Chris Nassetta, the chief executive of Hilton, is on Bloomberg TV at 10:20 a.m., while Eric Foss, the chief executive of Aramark, is on Bloomberg TV at 10:30 a.m. Data on retail sales in November is released at 8:30 a.m.
FACEBOOK TO JOIN S.&P. 500  | Facebook is taking its place among influential American firms, joining the Standard & Poor’s 500-stock index at the end of next week. Shares of the social media giant jumped almost 4 percent in after-hours trading on Wednesday on the news, DealBook’s Rachel Abrams reports. The move becomes official at the close of trading on Dec. 20. “We view Facebook as a leading company from a leading industry, and we find that it’s very representative of the technology sector,†a spokesman for S.&P., Dave Guarino, said. “So it’s a good fit for the S.&P. 500.â€
Malone’s Liberty in Takeover Talks With Dutch Cable Provider  | Liberty Global, the media company controlled by John C. Malone, is in discussions to buy Ziggo, a Dutch cable operator with a market value of $9.1 billion. DealBook »
Centerbridge Partners Is Said to Offer to Buy LightSquared  | The Wall Street Journal reports: “Private equity firm Centerbridge Partners LP reached a tentative deal to buy LightSquared Inc. out of bankruptcy proceedings, said people familiar with the matter, potentially upstaging a bid by Dish Network Corp. to take over the wireless-telecommunications firm.†WALL STREET JOURNAL
Judge Allows LightSquared Suit to Go Forward  | A federal bankruptcy judge has ruled that LightSquared can proceed with most of its claims against Charles W. Ergen and his satellite television company, Dish Network, Law 360 reports. DealBook »
Morgan Stanley Is Said to Seek Buyer for Oil Terminal Business  | Reuters reports: “Morgan Stanley has launched a formal effort to sell its controlling stake in U.S. oil terminal and transport business TransMontaigne, four sources said on Wednesday, following other Wall Street powerhouses in yielding to intense regulatory pressure to get out of commodity investments.†REUTERS
Pritzker Group Buys Milestone AV Technologies  | The private capital arm of the Pritzker Group announced on Thursday that it bought Milestone AV Technologies, a designer of audio-visual products, from the Duchossois Group, which will continue to have a stake in the business. The price was not disclosed. PRITZKER GROUP
Canadian Utility Buys UNS Energy of Arizona for $2.5 Billion  | Fortis, the biggest gas and electricity distribution utility in Canada, agreed to buy the UNS Energy Corporation, at a 31 percent premium over the stock’s closing price on Wednesday. DealBook »
JPMorgan Chase to Spend $250 Million on Jobs Skills Initiative  | The five-year initiative will focus on filling the skills gaps in some of the largest United States and European job markets, including New York, Chicago, Los Angeles and London. DealBook »
Wall Street’s Washington Problem  | Politico reports: “At both ends of the political spectrum, the titans of American finance today find themselves alienated from politics to a surprising degree.†POLITICO
Citigroup Names New Board Member  | Duncan P. Hennes, a former Bankers Trust and Soros Fund executive and a co-founder of the Promontory Financial Group, will join the board as an independent director. DealBook »
Goldman to Lend $120 Million to Firm Backed by Warburg  | The Chinese warehouse developer e-Shang, which was established by the private equity firm Warburg Pincus and two entrepreneurs, said on Thursday that Goldman Sachs had agreed to provide a $120 million loan in advance of an initial public offering. REUTERS
A Happy Hour for Private Equity  | A back-of-the-envelope calculation suggests that a sale of the South Korean brewer Oriental Brewery could earn Kohlberg Kravis Roberts a 34 percent annualized return, Una Galani writes for Reuters Breakingviews. REUTERS BREAKINGVIEWS
Shares in Chinese ‘Bad Bank’ Surge in Hong Kong Debut  | Shares in state-run China Cinda Asset Management, which buys deadbeat loans from Chinese banks, rose as much as 33 percent on their trading debut in Hong Kong on Thursday morning after its $2.5 billion listing. DealBook »
Aramark Prices Its I.P.O. at $20, Low End of Range  | Aramark, the big food services company, priced its initial public offering on Wednesday at $20 a share, the low end of its expected range. DealBook »
TrueCar Raises $30 Million From Paul Allen’s Firm  | TrueCar plans to announce on Thursday that it has raised $30 million from Vulcan Capital, the firm that manages the fortune of the billionaire Paul G. Allen. DealBook »
Coinbase, a Bitcoin Start-Up, Raises $25 Million  | Andreessen Horowitz led a $25 million financing round in Coinbase, which lets owners of Bitcoin store the virtual currency and buy and sell it, AllThingsD reports. ALLTHINGSD
Shopify Raises $100 Million in Third Round of Financing  | Shopify plans to announce on Thursday that it has raised $100 million in a Series C round of financing, led by the venture capital arm of the Canadian pension fund OMERS and the investment firm Insight Venture Partners. DealBook »
White House Favors Fischer for No. 2 at the Fed  | The New York Times reports: “Stanley Fischer, the former governor of the Bank of Israel and a mentor to the Federal Reserve’s chairman, Ben S. Bernanke, is the leading candidate to become vice chairman of the Fed, according to former and current administration officials.†NEW YORK TIMES
Former Banker at Morgan Stanley in Hong Kong Ordered to Pay Restitution  | A court in Hong Kong on Thursday imposed the $3 million penalty on Du Jun, who is already serving a jail term for insider trading. DealBook »
In Ireland, Hardships Linger  | “International investors have been impressed with Ireland’s ability to improve its finances,†The New York Times writes. “But the rigor required to get there has been painful.†NEW YORK TIMES
