S.E.C. Ends Scrutiny of Former Top Aide to Buffett

The Securities and Exchange Commission has decided not to file insider trading charges against David L. Sokol, a onetime top lieutenant at Berkshire Hathaway, Mr. Sokol's lawyer said Thursday.

Mr. Sokol came under scrutiny in 2011 after abruptly resigning as chairman of Berkshire's MidAmerican Energy Holdings, one of the many holdings of the investment conglomerate run by the billionaire Warren E. Buf fett. At the time, Berkshire revealed that Mr. Sokol bought shares in Lubrizol, a maker of lubricants that he wanted Mr. Buffett to buy. Mr. Sokol bought the shares two months before Berkshire announced a $9 billion acquisition of the company. After the deal was announced, the value of his Lubrizol stake rose by $3 million.

But Mr. Sokol's lawyer, Barry Wm. Levine, said that the S.E.C. informed his client on Thursday that it had decided not to pursue any charges related to the trades.

Mr. Levine said he was happy that his client was “exonerated” and that Mr. Sokol never acted improperly in the trades. “He is the paragon of rectitude,” said Mr. Levine, a partner at the law firm Dickstein Shapiro in Washington.

John Nester, a spokesman for the S.E.C., declined to comment on Thursday. The agency typically does not comment when it decides not to pursue action in the case. The news was first reported online by The Wall Street Journal.

Mr. Sokol 's resignation in 2011 was a rare black eye for Berkshire. A star manager, Mr. Sokol had run several Berkshire subsidiaries, including MidAmerican Energy and NetJets, which sells fractional ownerships of private jets. He was long considered to be a leading candidate to succeed Mr. Buffett, 82.

His sudden resignation caught Berkshire and Mr. Buffett by surprise. Mr. Buffett said he did not ask for Mr. Sokol's resignation. Initially, it seemed like a personal decision by Mr. Sokol.

Mr. Buffett at first defended his protégé's trading. “Neither Dave nor I feel his Lubrizol purchases were in any way unlawful,” Mr. Buffett said at the time. “He has told me that they were not a factor in his decision to resign.”

But additional information surfaced after the Berkshire board investigated Mr. Sokol's trading record. Berkshire directors ultimately accused Mr. Sokol of misleading the company about his personal stake in Lubrizol.

Mr. Sokol bought $10 mil lion worth of stock in Lubrizol shortly before bringing the company to Mr. Buffett's attention, according to the board. It said that Mr. Sokol did not tell Mr. Buffett that he had bought his stake in Lubrizol after Citigroup bankers had pitched the company as a potential takeover target. He also bought some of the shares, according to the Berkshire directors, after learning that Lubrizol would entertain a takeover offer.

“His misleadingly incomplete disclosures to Berkshire Hathaway senior management concerning those purchases violated the duty of candor he owed the company,” the board's report in 2011 says. It adds that Mr. Sokol may have failed his fiduciary duty under the law of Delaware, where Berkshire is incorporated.

At the time, Mr. Levine countered that Mr. Sokol was considering a personal investment in Lubrizol since summer 2010, before meeting with bankers to discuss the company as a potential takeover target.

Still, Mr. Buffett considered the trades violated company trading policy and called Mr. Sokol's actions “inexplicable and inexcusable.”

He also provided testimony to S.E.C. investigators. Berkshire continued to pay Mr. Sokol's legal bills. Mr. Buffett could not be immediately reached for comment on Thursday night.

Later in 2012, S.E.C. lawyers decided that there was insufficient evidence to mount a case against Mr. Sokol. The evidence was circumstantial, S.E.C. officials concluded, and it was unclear whether Mr. Sokol had a true window into the deal-making process. He also had no indication that Mr. Buffett would be interested in acquiring Lubrizol.

Since resigning from Berkshire, Mr. Sokol has been managing his own portfolio, Mr. Levine said.

Seeing Opportunity, WPP Adds to Its Investments in Latin America

Martin Sorrell, chief executive of the British advertising giant WPP, is not deterred by the political tension in Argentina or economic setbacks in Brazil. Far from it: his firm is still investing in Latin America.

In its latest move, WPP has invested $70 million in Buenos Aires-based information technology services company Globant, in exchange for a 20 percent ownership stake. The agreement closed last week, according to Martin Migoya, the chief executive of Globant.

“This is Latin America's time,” said Mr. Sorrell, whose company has acquired Chilean, Mexican and Brazilian agencies over the last two years, including F.biz and Gringo.

WPP's new investment in Globant also gives it increased access to social and gaming technology development, a focus of the Argentine start-up a nd an area WPP company has been aggressively chasing. Last year, WPP acquired the digital marketing agency AKQA, originally based in London.

“We're not in the business of creating technology,” but applying it more to our clients, Mr. Sorrell said.

According to ZenithOptimedia, a media buying agency, ad spending in Latin America is estimated to increase by 10 percent this year, to $41.78 billion. That compares with a projected growth rate globally of just 4.11 percent.

Digital is a driver of the increase. The ZenithOptimedia report also forecast that online ad spending in Latin America grew by 22.9 percent in Latin America in 2012, versus 7.8 percent globally. And this year, digital ad spending in the the region is expected to grow 22.7 percent, compared with 10.2 percent globally.

WPP's competitors are also increasing their investments in the digital sector. The Publicis Groupe said last month that it acquired two digital agencies - Monterosa and Rokkan. It previously bought the Rosetta Marketing Group, Razorfish and Digitas.

In a December research note, JPMorgan Chase Cazenove maintained its positive stance on both WPP and Publicis in part because it said that “more revenues from outside mature markets and from digital should sustain mid-term growth in spite of the uncertain macro outlook.”

Still, compared with recent transactions in the industry, WPP's investment in Globant is a bit of an outlier because it is a minority shareholder. “Our primary focus is taking control of a company,” Mr. Sorrell said, but he added that the company was open to taking smaller stakes.

The WPP investment values Globant at about $350 million, according to Mr. Sorrell. Two earlier firms, Riverwood Capital and FTV Capital, have invested about $40 millio n, according to Mr. Migoya. Endeavor Catalyst is also a small investor.

Globant, which was founded by four Argentines in 2003 with $5,000, said its revenue in the first half of last year was $57 million. Clients include Google and several WPP companies.

Globant has also bought four smaller companies, including the Brazilian technology company Terra Forum last year. Negotiations with WPP preceded this, but Mr. Migoya says that having a presence in Brazil “had a certain influence in WPP's investment.”

Globant has also influenced Argentina's nascent start-up scene. Electronic Arts was a Globant client when John Pleasants was chief operating officer. When Mr. Pleasants left Electronic Art to lead Playdom, he continued working with Globant.

As a result, Mr. Pleasants became more aware of Argentina's software developers. In 2010, Playdom bought Three Melons, a social gaming company based in Buenos Aires, which was ultimately acquired by the Walt Disney Company.

Can SeaWorld Make a Splash in Its I.P.O.?

SeaWorld's next investment splash might be smaller than its last. Blackstone Group is ready to take public the amusement parks operator it bought in 2009 from Anheuser-Busch InBev.

Dividends have helped the buyout firm recoup a big part of its original cash outlay already and it may end up trebling its money. But new buyers hoping for a similar performance after the initial public offering should beware getting soaked.

Blackstone put in about $1 billion of equity to acquire SeaWorld for a headline price of $2.3 billion, according to the I.P.O. prospectus. Since then, the firm led by Stephen Schwarzman has collected some $610 million in special payouts. Now it looks to be in line for even more.

Six Flags potentially shows how. The rival owner of 19 parks full of roller coasters and log flumes trades at an enterprise value of just over 11 times estimated earnings before interest, taxes, depreciation and amortization, or Ebitda, for 2013, according to Thomson Reuters data. Using the same multiple and assuming SeaWorld's Ebitda hits $400 million this year, the company's total value would be $4.4 billion.

Shamu the whale's home is, however, weighed down by $1.7 billion of debt. That would leave SeaWorld with an equity value of $2.7 billion. When combined with the earlier dividends, the figures imply Blackstone's investment â€" at least on paper â€" is now worth about $3.3 billion. Even after allowing for up to $400 million in performance bonuses Blackstone may have to hand over to the original seller, SeaWorld should deliver a handsome rate of return.

New investors may be hard-pressed to manage the same feat. Though I.P.O. proceeds would help reduce the ratio a bit, SeaWorld's debt is more than four times expected 2013 Ebitda, compared with less than three at Six Flags. Also, Blackstone's acquisition timing, amid a consumer spending slump, was shrewd. As the company and its banking advisers start pitching and pricing the shares, investors should be careful not to buy into any fish tale.

Antony Currie is an associate editor at Reuters Breakingviews. For more independent commentary and analysis, visit breakingviews.com.

BuzzFeed Announces $20 Million in New Financing

BuzzFeed, the social news Web site that was one of the media industry darlings of 2012, began the new year by announcing Thursday morning that it had raised nearly $20 million in new financing from its investors.

With the infusion of capital the company will hire more employees, try to strengthen its presence on mobile phones and potentially add international flavors of its Web site.

Jonah Peretti, the site's founder and chief executive said in a statement: “We have the senior management, board, and investors we need to build the next great media company: socially native, tech enabled, with massive scale. We are all focused on that big goal and raised this capital to move even faster.”

Indeed, it was just a year ago that BuzzFeed hired Ben Smith, a star reporter from Politico, to be its editor in chief, and raised $15.5 million in venture capital financing. Money from that round, its Series C round, essentially h asn't been touched yet - the site's traffic and revenue growth has helped to pay for some of the now 70 reporters and editors the site employs. But the board of BuzzFeed wanted to invest more now.

The Series D round, totaling $19.3 million, was led by New Enterprise Associates. All of the investors who participated in prior rounds invested more this time, including RRE Ventures, Hearst Interactive Media, SoftBank, and Lerer Ventures. The company announced two new investors on Thursday, Michael and Kass Lazerow, the co-founders of Buddy Media.

“We think BuzzFeed will be one of the great media companies of the next decade,” Patrick Kerins, a board member who led the round for New Enterprise Associates, said in a statement.

BuzzFeed has been around since 2006, but it gained attention last year for hiring Mr. Smith and several other young, Web-savvy reporters and editors. Its mix of political scoops, links to viral videos and easy-to-digest lists (“23 Adorable Photos of…” “17 Things You Should Know About…”) has been both praised as a model for the future of online publishing and lampooned by skeptics.

Mr. Peretti told David Carr last year that the site is a natural response to a changing Web world. “As the world has realigned from being about portals and then search and now social, how do you build a media company for a social world?” he said. “And a big part of that is scoops and exclusives and original content, and it's also about cute kittens in an entertaining cultural context.”

Former SAC Analyst Pleads Not Guilty in Insider Case

The man at the center of the most lucrative insider trading case ever brought pleaded not guilty on Thursday, raising the stakes in the governmentʼs investigation of his former employer, SAC Capital Advisors.

In denying the charges against him, Mathew Martoma, the onetime SAC portfolio manager, sets the stage for a possible courtroom battle that would put the spotlight on SAC and its owner, Steven A. Cohen, the billionaire money manager and one of the most revered investors on Wall Street.

Federal prosecutors have accused Mr. Martoma of using secret information about a drug trial to help SAC gain profits and avoid losses totaling $276 million. Six former SAC employees have been tied to insider trading while at the firm, but Mr. Martoma's case is the first time that the government has aimed to connect questionable trades to Mr. Cohen.

Mr. Martoma, 38, of Boca Raton, Fla., appeared at his arraignment in Federal District Court in Manhattan accompanied by his wife, Rosemary, and his parents. Flanked at the defense table by his lawyers, Charles A. Stillman and Nathaniel Z. Marmur, Mr. Martoma denied the charges on all three counts of securities fraud and conspiracy brought against him.

“I plead not guilty, your honor,” Mr. Martoma repeated three times to Judge Paul Gardephe before a packed courtroom in Federal District Court in Manhattan.

The authorities have failed at several attempts to get Mr. Martoma to cooperate and help them build a case against his former boss, according to a person familiar with the case.

Mr. Cohen has not been accused of any wrongdoing and has told his investors and employees that he believes that he acted appropriately at all times. Prosecutors have not said that Mr. Cohen was in possession of any inside information related to Mr. Martoma's trades.

The Securities and Exchange Commission, however, has warned SAC that it is considering filing a civil lawsuit against the fund for fraud related to Mr. Martoma's case. Based in Stamford, Conn., SAC is one of the world's largest hedge funds, managing $14 billion and owning one of the best investment track records in the hedge fund industry.

Any trial date for Mr. Martoma would still be months away. Judge Gardephe set March 5 for the next court hearing to hear an update on pretrial discovery in the case. Either side can also file pretrial motions at that time.

Federal prosecutors told the judge that the case will be primarily based on trading records, telephone records, and e-mails. Arlo Devlin-Brown, a prosecutor, said that the government did not plan on using any wiretap evidence in the case.

Key evidence in the case will likely come from the testimony of Sidney Gilman, a Michigan doctor who is said to have leaked to Mr. Martoma secret information about clinical trials for an Alzheimer's drug that he had been overseeing for the pharmaceutical companies Elan and Wyeth. The government has agreed to not bring criminal charges against Dr. Gilman, and as part of a nonprosecution agreement, he has agreed to make himself available to testify against Mr. Martoma.

Mr. Martoma joined SAC in 2006. The son of Indian immigrants, Mr. Martoma was a summa cum laude graduate from Duke with a degree in biomedicine, ethics and public policy . He also earned a business degree at Stanford before pursuing a career as a health care-stock analyst. In 2008, the year he made the Elan and Wyeth trades that form the basis of the government's case, SAC paid him a $9.4 million bonus.

During the hearing on Thursday, Mr. Martoma appeared at ease. As he left the courtroom, his wife by his side, Mr. Martoma kissed the forehead of his mother and hugged his father, who was wearing a necktie decorated with American flags.

Swiss Bank Pleads Guilty to Tax Law Violations

Switzerland's oldest private bank admitted to helping Americans evade United States taxes on Thursday, the first time a foreign financial institution has pleaded guilty to tax-law violations.

Representatives for Wegelin & Company, a Swiss bank founded in 1741, appeared in Federal District Court in Manhattan and acknowledged that for nearly a decade the firm helped dozens of wealthy American customers dodge taxes by hiding more than $1.2 billion in secret accounts.

As part of guilty plea, Wegelin agreed to pay $74 million in fines, restitution, and forfeiture proceeds to the United States government. Several Wegelin executives appeared at the hearing before Judge Jed S. Rakoff, including one of its managing partners, Karl Hummler, a controversial figure in the Swiss private banking industry.

“From about 2002 through 2010, Wegelin agreed with certain U.S. taxpayers to evade the tax obligations of these U.S. taxpayer clients, who filed false tax returns with the I.R.S.” Otto Bruderer, another Wegelin partner, said in court. “Wegelin was aware the conduct was wrong.”

Mr. Bruderer said that Wegelin assisted the American clients because it believed that it would not be prosecuted in the United States because it had no offices here, and had acted in accordance with Swiss law. He also noted that the conduct was common practice in the Swiss banking industry.

Although Wegelin ceases to exist, last January the firm's partners sold its non-U.S. clients' accounts to Raiffeisen Group, an Austrian bank, just before its indictment. That move was sharply criticized by Judge Rakoff in a court hearing last year as a “fraud upon fraud.”

Nevertheless, Wegelin's admission of guilt represents a victory for the Obama administration in its sweeping crackdown on Americans using offshore banks to evade taxes. It also demonstrates the long arm of the Justice Department, extracting a guilty plea from a foreign company with no business operations in the United States.

The case strikes another blow at Swiss banking secrecy, a shadowy world that United States authorities have penetrated in recent years after decades of looking the other way. For decades, secrecy has been a hallmark â€" and a main selling point â€" of Switzerland's private banks, which, alongside chocolate and watchmaking, are one of the country's iconic businesses.

In 2009, UBS avoided criminal charges by striking a so-called deferred prosecution agreement in which it paid a $780 million fine and turned over the names of about 4,500 clandestine accounts believed to hold the assets of United States taxpayers. Around the same time, the Internal Revenue Service initiated an amnesty program that allowed Americans to avoid criminal liability by divulging offshore accounts. The program was a success, yielding more than $2.7 billion in taxes and penalties from about 30,000 taxpayers.

As part of the push to eliminate tax cheats, a federal grand jury in Manhattan indicted Wegelin last February. The firm's elaborate scheme involved its Swiss bankers opening secret accounts for American clients using code names and setting up sham entities to avoid detection in far-flung locales inclu ding Panama and Liechtenstein.

“There is no excuse for wealthy Americans flouting their responsibilities as citizens of this great country to pay their taxes, and there is no excuse for foreign financial institutions helping them to do so,” said Preet Bharara, the United States attorney in Manhattan. “Today's guilty plea is a watershed moment in our efforts to hold to account both the individuals and the banks â€" wherever they may be in the world â€" who are engaging in unlawful conduct that deprives the U.S. Treasury of billions of dollars of tax revenue.”

Mr. Bharara's office h ad also brought an indictment against three Wegelin executives last year, but they are expected to avoid having to face the charges because the extradition treaty between Switzerland and the United States does not provide for extradition of Swiss individuals for tax crimes.

The Justice Department said that Wegelin had lured clients away from larger Swiss financial institutions like UBS after those banks came under investigation. As of December 2010, Wegelin had about $25 billion in assets under management.

From its headquarters in St. Gallen, a quiet mountain town in northeast Switzerland, Wegelin pitched itself as a safe haven for American taxpayers because it had no operations in the United States. A Web site marketing Wegelin's services said, “Neither the Swiss government nor any other government can obtain information about your bank account.”

Included in the $74 million in penalties is about $16 million in forfeited proceeds that Wegelin held in a UBS bank account in Stamford, Conn. The account, prosecutors said, was used to launder money from Switzerland to American clients and conceal that money from United States tax authorities.

The balance of the penalties is more than $20 million in restitution for taxes evaded; about $16 million in fees on United States taxpayer client accounts. and a fine of about $22 million. Wegelin was represented by Richard Strassberg of Goodwin Procter.

Just two months after the case was brought against UBS, Wegelin raised the hackles of the Justice Department. In April 2009, Mr. Hummler, the Wegelin partner, wrote an eight-page note titled “Farewell America.” The memo by Mr. Hummler, who served as chairman of the Swiss Private Bankers Association, championed Swiss banking laws and said that Wegelin was in the process of recommending that its clients exit all direct investments in United States securities. Mainly, though, the note was a rambling jeremiad against America.

“The U.S.A. has fought by far the larges number of wars, sometimes with, but mostly without a U.N. mandate,” Mr. Hummler wrote. “It has broken the international laws of war, maintained secret prisons, and fought an absurd war against drugs.”

“A country,” he continued, “whose underclass enjoys neither the benefits of an adequate education, nor a halfway functional health care system; a country whose economic system is increasingly inclined to overconsumption, and in which saving and investing have increasingly become alien concepts, a situation that has undoubtedly been one of the driving forces behind the current recession, with all its catastrophic consequences for the whole world.”

After representatives of Wegelin failed to appear in federal court at the time of its indictment last February, federal prosecutors labeled the Swiss bank a “fugitive.”

The typically colorful Judge Rakoff was subdued during Thursday's hearing. But in a court session last January, he blasted Wegelin for selling its non-U.S. business just prior to an indictment, suggesting that it was a blatant attempt to shield its assets from the United States government.

If an American partnership had taken those actions, Judge Rakoff said, “the government would be here saying with perhaps considerable force that this was a fraud upon fraud compounding the prior alleged crime with patent evasions and consciousness of guilt.”

Daniel Levy, a federal prosecutor, did not disagree. “That would be one reasonable view of the facts,” Mr. Levy said.

Banks Face New Checks on Derivatives Trading

After spending millions of dollars to temper new rules, the world's biggest banks are facing a new regulatory regime.

By New Year's Eve, 65 banks had registered their derivatives business with regulators and turned over heaps of real-time trading data to outside warehouses, fulfilling a central rule of the Obama administration's financial regulatory crackdown. Late Wednesday, a warehouse also posted an early batch of data online, shining a rare spotlight on an opaque business that blew up in the 2008 financial crisis.

The changes, regulators say, signal a pivotal moment in the fight over Wall Street regulation. Until now, regulators had little authority and little information to scrutinize the minutiae of derivatives trading, a vast market that totals more than $600 trillion.

“They are an historic change for the markets that will benefit the public and the economy at large,” Gary Gensler, chairman of the Commodity Futures Trading Commission, the archi tect behind the derivatives overhaul, said in a statement.

The banks forced to register and produce data this week, including overseas giants like Deutsche Bank in Germany and Barclays in England as well as some of the biggest names on Wall Street, including Goldman Sachs, Citigroup, Morgan Stanley, and JPMorgan Chase. The group signed up as so-called swap dealers, the designation for firms that arrange derivative contracts tied to the value of commodities, interest rates or mortgage securities.

The new oversight is a major component of the Dodd-Frank Act, the Wall Street regulatory overhaul passed after the financial crisis. The law took particular aim at derivatives, which proved pernicious in the crisis.

Banks had bought billions of dollars in derivatives as dubious insurance on mortgage-backed investments. When the investments soured, American International Group lacked the capital to honor their agreements to the banks, prompting a $180 billion governm ent bailout of the giant insurance company.

Hoping to prevent such calamities, lawmakers spelled out a plan in Dodd-Frank to force derivatives dealers to register with Mr. Gensler's agency. Under the law, the banks and hedge funds must also open up their trading books to regulators and the broader public.

The oversight, carried out through new rules written at Mr. Gensler's agency, developed in fits and starts. At times, a plan that was supposed to kick in during 2011 seemed like it might never take effect.

The delay was due in part to an aggressive lobbying campaign on Wall Street, which dispatched lawyers and lobbyists to temper the overhaul. In turn, Mr. Gensler's agency conceded modest tweaks and postponed the oversight for several months.

In one victory for the derivatives industry, regulators agreed to apply the swap-dealer designation only to firms that arrange more than $8 billion worth of swaps contracts annually, up significantly from an ini tial proposal of $100 million. The plan could excuse some energy firms and large regional banks from registering.

Even so, the rule still captures the biggest banks in the world, forcing them to register as swap dealers by Dec. 31. The designation requires that banks, among other things, adopt internal risk management controls, bolster disclosures to trading partners and meet certain record-keeping requirements.

The banks must also turn over in real-time the data from their trading book. The disclosures, posted on the Web site of The Depository Trust & Clearing Corporation, a data warehouse, include the volume, time and price of each derivatives trade. The trades involve interest rate swaps and credit indices, including the index where JPMorgan Chase suffered its recent multibillion-dollar trading loss.

The spreadsheet, regulators say, presents the public the first window into the swaps market. While the public is blocked from viewing the identity of the tr ader, regulators have access to such granular information.

“Real-time reporting brings transparency to the formerly opaque swaps market,” Mr. Gensler noted.

Barnes & Noble Reports Fall in Nook Sales

The state of Barnes & Noble‘s struggling digital Nook Media business, which last week received a significant investment from Pearson, became more clear on Thursday.

The bookseller said that revenue for the Nook unit, including e-readers, digital content and accessories, fell 12.6 percent, to $311 million, during the holiday shopping season, compared with the same nine-week period a year ago. Digital content sales rose 13.1 percent, while sales of Nook devices declined.

“Nook device sales got off to a good start over the Black Friday period, but then fell short of expectations for the balance of holiday,” William Lynch, chief executive of Barnes & Noble. said in a statement. “We are examining the root cause of the December shortfall in sales, and will adjust our strategies accordingly going forward.”

The company said that as result of the sales shortfall, it was forecasting Nook unit revenue of $3 billion for the fiscal year and losses “at a comparable level to fiscal year 2012.”

The Nook business has in the past generated talk of acquisition interest or a full spinoff to Barnes & Noble shareholders. And it has attracted some big name investors. Yet the digital business has struggled to compete with Amazon.com, the leader with its Kindle e-readers, as well as with Apple and Google.

Last week, Pearson, the big British education company and publisher of The Financial Times, agreed to invest $89.5 million into Nook Media for a 5 percent stake. It was also granted warrants to buy an additional 5 percent stake.

Pearson's investment follows a $300 million investment in the Nook by Microsoft in April.

Pearson's investment valued the Nook business at $1.8 billion. That is nearly double Barnes & Noble's market value of $869 million as of Wednesday.

Hormel to Buy Skippy Peanut Butter

The Hormel Foods Corporation said on Thursday that it had agreed to buy the Skippy peanut butter business from Unilever for $700 million.

Unilever, the British-Dutch food and consumer products giant, announced in October that it was considering selling Skippy, the No. 2 peanut butter brand in the United States, behind J.M. Smucker's Jif, in order to focus on emerging markets. Skippy has annual sales of roughly $370 million, with $100 million of that coming from outside the United States. It is the leading peanut butter brand in China.

It is the biggest acquisition by Hormel, known primarily for its fresh, cured, smoked and frozen meats Non-frozen groce ry products account for 14 percent of its annual revenue, according to Thomson Reuters data. The last big purchase by the Austin, Minn.-based company was its $334 million acquisition of the Turkey Store Company in 2001, according to Standard & Poor's Capital IQ data.

Jeffrey M. Ettinger, chief executive of Hormel Foods, said in a statement: “The acquisition of the Skippy peanut butter business represents a significant opportunity for Hormel Foods. It allows us to grow our branded presence in the center of the store with a non-meat protein product and it reinforces our balanced portfolio.”

Barclays is advising Hormel Foods.

Bracing for the Next Political Standoff

One fiscal showdown drew to a close this week, as the president signed a bill to raise taxes on the wealthiest Americans. But the sense of relief among businesses was tempered by the anticipation of political battles to come. Next month, Congress is set to negotiate over raising the debt ceiling.

“We're in for another round of brinkmanship and uncertainty,” said Mark Zandi, the chief economist at Moody's Analytics. “I don't think the economy can really find its footing and jump to a higher level of growth until we get to the other side of this.” President Obama has vowed to stay out of the debt ceiling debate, but his position “sets the stage for a nail-biting standoff that economists warn could lead to a damaging financial default and doubt from investors about the ability of the country to pay its obligations,” The New York Times writes. The ratings agency Moody's issued a warning on Wednesday, saying a “lack of further deficit reduction measures could affect the rating negatively,” and that the “need to raise the debt limit may affect the outcome of future budget negotiations.”

The deal reached this week preserved tax breaks for a range of industries, The New York Times reports. “A bevy of tax breaks and credits that had been scheduled to expire at the end of 2012 will be extended for another year, costing taxpayers $46.1 billion over the next decade, according to Congress's Joint Committee on Taxation.”

Some companies moved to avoid coming changes in tax policy. Goldman Sachs, for instance, distributed $65 million in stock to 10 senior executives in December instead of January. “That move helped them avoid the higher tax rates that will now be imposed on income of $400,000 or more. The chief executive of Goldman, Lloyd C. Blankfein, was among the most prominent corporate executives who backed higher taxes as part of a broader deficit-reduction package.”

 

WHEN A BANK IS A ‘BLACK BOX'  |  Sophisticated investor s increasingly are wary of big banks, Frank Partnoy and Jesse Eisinger write in the cover story of The Atlantic. Some say that bank disclosures leave out or obscure crucial information, a view that has become more widespread since the financial crisis. “Several financial executives told us that they see the large banks as ‘complete black boxes,' and have no interest in investing in their stocks. A chief executive of one of the nation's largest financial institutions told us that he regularly hears from investors that the banks are ‘uninvestable,' a Wall Street neologism for ‘untouchable.'”

The list of skeptics includes some prominent Wall Street names. Paul Singer of Elliott Management recently wrote to his partners, “There is no major financial institution today whose financial statements provide a meanin gful clue” about its risks, according to The Atlantic. William A. Ackman of Pershing Square Capital Management told the magazine about his troubled bet on Citigroup. Mr. Ackman bought a stake of almost $1 billion in the bank in 2010 but sold it last spring at a loss approaching $400 million. “For the first seven years of Pershing Square, I believed that an investor couldn't invest in a giant bank. Then I felt I could invest in a bank, and I did - and I lost a lot of money doing it.”

 

AL JAZEERA TO BUY CURRENT TV  | 

The pan-Arab news giant Al Jazeera is gaining a larger foothold in the United States with a deal to take over Current TV, the low-rated cable channel founded by Al Gore and his business partners. The price was not disclosed, “but people with direct knowledge of the deal pegged it a t around $500 million, indicating a $100 million payout for Mr. Gore, who owned 20 percent of Current,” Brian Stelter reports for The New York Times Media Decoder blog.

Al Jazeera, which is viewed with some skepticism in this country, plans to shut down Current and start an English-language channel that will be available in more than 40 million homes. The acquisition is a “coming of age moment” for the news operation, which is financed by the government of Qatar, Mr. Stelter writes. “Mr. Gore and his partners were eager to complete the deal by Dec. 31, lest it be subject to higher tax rates that took effect on Jan. 1, according to several people who insisted on anonymity because they were not authorized to speak publicly. But the deal was not signed until Wednesday.”

 

< p>ON THE AGENDA  |  Peter Orszag, vice chairman of global banking at Citigroup, is on CNBC at 7 a.m. Jeffrey Gundlach of DoubleLine Capital is on CNBC at 11:45 a.m. The Federal Reserve's policy-making committee releases minutes from its recent meeting at 2 p.m.

 

AVIS'S BET ON CAR SHARING  |  The deal by the Avis Budget Group to buy Zipcar for about $500 million “represents a new direction in a fiercely competitive car rental market, and an about-face for Ronald L. Nelson, the company's chairman and chief executive, who had resisted entering the car-sharing segment,” Andrew Martin reports in DealBook. Mr. Nelson said on Wednesday, “I've been somewhat dismissive of car sharing i n the past.” But he said he had realized that car sharing could complement Avis's traditional rental car business and give the company access to younger customers. Zipcar, which has been “more successful as a collectivist concept than as a profit-making venture,” should realize savings from the deal while tapping Avis's fleet to meet demand on weekends, Mr. Martin writes.

 

 

 

Mergers & Acquisitions '

CVC Capital to Buy Cerved for $1.49 Billion  |  CVC Capital Partners has agreed to buy the Italian credit data and business intelligence company Cerved from two rival private equity firms, Bain Capital and Clessidra. DealBook '

 

Krolls' K2 Firm Buys a Corporate Watchdog  |  K2 Intelligence has acquired Thacher Associates, a leading player in the niche business of overseeing real estate development projects on behalf of governments and developers to ferret out corruption. DealBook '

 

Gap to Buy Intermix, a Luxury Fashion Retailer  |  Gap is moving into the luxury market with a $130 million deal, The Wall Street Journal reports. WALL STREET JOURNAL

 

Analyst Sees Possible Bank Unit Sales  |  What could banks be shopping this year? Mike Mayo, an analyst with CLSA, says Bank of America's brokerage business, JPMorgan Chase's asset-management unit and Citigroup's Latin American operations are good candidates to be sold to bolster their banks' stock prices, Bloomberg News reports. DealBook '

 

INVESTMENT BANKING '

Deferring Six Figures on Wall Street for Te acher's Salary  |  Teach for America, the nonprofit organization that recruits high-achieving college graduates to teach in some of the nation's poorest schools for two years, has garnered renewed interest among would-be finance professionals. DealBook '

 

Buffett's $2.5 Billion Deal in Renewable Energy  |  Warren E. Buffett's MidAmerican Energy Holdings has agreed to spend up to $2.5 billion on a solar photovoltaic operation in California, The Financial Times reports. FINANCIAL TIMES

 

Mortgage Bonds Are Popu lar, But Some See Risks  |  Demand for bonds backed by commercial mortgages has sent prices soaring, but “some investors remain worried that defaults on these loans remain at historically high rates,” The Wall Street Journal reports. WALL STREET JOURNAL

 

PRIVATE EQUITY '

Ghostwriting for a Private Equity Titan  |  In the latest issue of Vanity Fair, Rich Cohen writes about the experience of being a ghostwriter for Theodore Forstmann's autobiography. Tensions arose. “Instead of it being me and Teddy in the world, it was going to be me and Teddy in my mind and he did not like it,” Mr. Cohen says. VANITY FAIR

 

HEDGE FUNDS '

Former Citigroup Proprietary Trader to Start Hedge Fund  |  Joel Salomon, who left Citigroup a year ago, plans to start SaLaurMor Capital, named for his two daughters, and hopes to attract $700 million, Bloomberg News reports. BLOOMBERG NEWS

 

Greenlight Capital's Difficult Month  |  David Einhorn's hedge fund, Greenlight Capital, was down 2.7 percent in December, bringing his per formance for the year to a 7.1 percent gain, according to Institutional Investor's Alpha. INSTITUTIONAL INVESTOR ALPHA

 

Omega's Cooperman Expresses Optimism About Stocks  | 
CNBC

 

I.P.O./OFFERINGS '

Divining Twitter's I.P.O. Plans  |  The research firm Greencrest Capital predicts that Twitter may go public in 2014, Forbes reports. FORBES

 

More Changes for Facebook's Mobile Platform  | 
NEW YORK TIMES

 

Macau Casino Operator Said to Plan $800 Million I.P.O.  |  Macau Legend Development is looking to raise up to $800 million in a Hong Kong I.P.O. that may come as soon as the second quarter, according to Bloomberg News. BLOOMBERG NEWS

 

VENTURE CAPITAL '

Tumblr's Moment in the Spotlight  |  The chief executive of Tumblr, David Karp, is featured on the cover of Forbes, for a story that says: “This is Tumblr's make-or-break year, where it needs to prove three things: That it can continue the growth. That it can actually make money. And that David Karp, the creative genius and quintessential minimalist, is the right guy to lead Tumblr to glory.” FORBES

 

Should an Entrepreneur Give Up Control?  |  The New York Times offers a case study of Jacqui Rosshandler, the entrepreneur behind Eatwhatever, who had the option of taking a n investment that meant losing control of her company. NEW YORK TIMES

 

LEGAL/REGULATORY '

Paulson & Company Named in Revised C.D.O. Lawsuit  |  The hedge fund Paulson & Company was named as a defendant in a proposed revised lawsuit brought by the bond insurer ACA Financial Guaranty Corporation over a complex collateralized debt obligation, Bloomberg News reports. DealBook '

 

Are the Basel Rules for Banks Too C omplex?  |  Bloomberg News reports: “While higher capital requirements, curbs on banks trading with their own money and other rules have reduced risk, they have magnified the complexity of supervision, according to two dozen regulators, bankers and analysts.” BLOOMBERG NEWS

 

Google Said to Be Poised to Resolve Antitrust Inquiry  |  Google “will resolve a 20-month antitrust probe by U.S. regulators today with a voluntary agreement and a consent decree on the company's alleged misuse of patents, three people familiar with the matter said,” Bloomberg News reports. BLOOMBERG NEWS

 

Paulson Named in Revised C.D.O. Lawsuit

Paulson & Co., the New York hedge fund, was named as a defendant in a proposed revised lawsuit by ACA Financial Guaranty Corp. (MANF) against Goldman Sachs Group Inc. (GS) over a collateralized debt obligation called Abacus.

Paulson and Goldman Sachs conspired to induce ACA to provide financial guaranty insurance for the Abacus deal, which was “doomed to fail,” the firm said in papers filed yesterday in New York State Supreme Court in Manhattan. ACA, which sued Goldman Sachs in 2011, is seeking court permission to file a revised complaint adding Paulson as a defendant.

“The proposed amended complaint properly pleads that, at a bare minimum, Paulson gave Goldman Sachs substantial assistance in achieving the fraud,” ACA said.

Goldman Sachs in July 2010 won court approval of a $550 million settlement with the U.S. Securities and Exchange Commission over claims that it misled investors in the Abacus CDO. Goldman Sachs failed to disclose aulson's role in selecting underlying securities or that Paulson had taken a short position against the CDO, the SEC said.

Goldman Sachs and Paulson deceived ACA into believing that Paulson was a long investor in the deal and agreed to structure the transaction in a manner that concealed Paulson's short interest, ACA said in court papers.

The request to add Paulson as a defendant “is completely without merit,” Armel Leslie, a spokesman for Paulson, said in a statement.

“As there is no basis in law or fact for the proposed amendment, Paulson will defend itself against this baseless action if the amendment is allowed,” he said.

State Supreme Court Justice Barbara Kapnick ruled in April that ACA's fraud claims against New York-based Goldman Sachs could proceed. ACA is seeking to recover $120 million in damages, according to a court filing.

The case is ACA Financial Guaranty Corp. v. Goldman Sachs & Co., 650027-2011, New York State Supreme Court (Manhattan).

To contact the reporter on this story: David McLaughlin in New York at dmclaughlin9@bloomberg.net

To contact the editor responsible for this story: John Pickering at jpickering@bloomberg.net

CVC Capital to Buy Cerved for $1.49 Billion

LONDON â€" The European private equity firm CVC Capital Partners has agreed to buy the Italian credit data and business intelligence company Cerved from two rival private equity firms, Bain Capital and Clessidra.

Under the terms of the deal, CVC Capital will pay for 1.13 billion euros , or $1.49 billion, for Cerved.

The private equity firm will seek to expand Cerved's business outside its core Italian market, where it already serves around 80 percent of the Southern European countries' leading companies, according to a statement released late on Wednesday.

‘‘Our plan is to continue pursuing the growth of the business both organically and through acquisitions,'' Cerved's chief executive, Gianandrea De Bernardis, said in a statement.

Bain Capital and Clessidra created the Italian company in 2008 after the private equity firms bought several units from local banks to form Cerved.

Last year, the Italian company, which currently employs around 1,000 people, reported revenues of 292 million euros, a 9 percent increase from 2011, according to Cerved's Web site.

Deutsche Bank advised CVC Capital on the deal, while HSBC advised Bain Capital and Clessidra. Credit Suisse, Deutsche Bank and HSBC provided financing for the acquisition.

Al Jazeera Seeks a U.S. Voice Where Gore Failed

Danny Moloshok/Associated Press Al Gore, a co-founder of Current TV, which will be shut down by the Qatar-based news organization Al Jazeera.

9:16 p.m. | Updated Al Jazeera, the pan-Arab news giant, has long tried to convince Americans that it is a legitimate news organization, not a parrot of Middle Eastern propaganda or something more sinister.

It just bought itself 40 million more chances to make its case.

Al Jazeera on Wednesday announced a deal to take over Current TV, the low-rated cable channel that was founded by Al Gore, a former vice president, and his business partners seven years ago. Al Jazeera plans to shut Current and start an English-language channel, which will be available in more than 40 million homes, with newscasts emanating from both New York and Doha, Qatar.

For Al Jazeera, which is financed by the government of Qatar, the acquisition is a coming of age moment. A decade ago, Al Jazeera's flagship Arabic-language channel was reviled by American politicians for showing videotapes from Al Qaeda members and sympathizers. Now the news operation is buying an American channel, having convinced Mr. Gore and the other owners of Current that it has the journalistic muscle and the money to compete head-to-head with CNN and other news channels in the United States.

Al Jazeera did not disclose the purchase price, but people with direct knowledge of the deal pegged it at around $500 million, indicating a $100 million payout for Mr. Gore, who owned 20 percent of Current. Mr. Gore and his partners were eager to complete the deal by Dec. 31, lest it be subject to higher tax rates that took effect on Jan. 1, according to several people who insisted on anonymity because they were not authorized to speak publicly. But the deal was not signed until Wednesday.

A spokesman for Al Jazeera said that antitrust regulators had not expressed any objections to the deal.

Going forward, the challenge will be persuading Americans to watch - an extremely tough proposition given the crowded television marketplace and the stereotypes about the channel that persist to this day.

“There are still people who will not watch it, who will say that it's a ‘terrorist network,' ” said Philip Seib, the author of “The Al Jazeera Effect.” “Al Jazeera has to override that by providing quality news.”

With a handful of exceptions (including New York City and Washington), American cable and satellite distributors have mostly refused to carry Al Jazeera English since its inception in 2006. While the television sets of White House officials and lawmakers were tuned to the channel during the Arab Spring in 2011, ordinary Americans who wanted to watch had to find a live stream on the Internet.

To change that, Al Jazeera lobbied distributors and asked supporters to write letters to the distributors - but accomplished next to nothing.

Some activists accused distributors like Comcast and DirecTV of blacklisting a channel that is widely respected elsewhere in the world. But the distributors said there was scant evidence that many American viewers wanted to watch.

Current, similarly, has suffered from paltry ratings. “Nobody's watching,” one of the channel's prime-time hosts, Eliot Spitzer, quipp ed to a reporter last month.

Current was conceived in 2005 after Mr. Gore and another co-founder, Joel Hyatt, bought the small cable news channel Newsworld International. After several years in obscurity showing viewer-submitted videos and documentaries, Current tacked to the left in 2011 with the hiring of MSNBC's Keith Olbermann. A year later, Mr. Olbermann was fired, but a channel made in his image remained, with Mr. Spitzer, Jennifer Granholm and other liberal pundits as hosts. But on a typical night last year, just 42,000 people watched their shows, according to Nielsen.

By selling Current, Mr. Gore and Mr. Hyatt are giving up their vision for an alternativ e to MSNBC, which has much higher-rated liberal hosts.

On Wednesday, Mr. Hyatt praised Al Jazeera for “bringing large-scale resources to journalism - something which we have not been able to do.” In a letter to Current employees, some of whom are expected to lose their jobs, he said he and Mr. Gore would join the advisory board of the newly rebranded channel.

“We look forward to helping build an important news network,” Mr. Hyatt wrote.

Rather than simply use Current to distribute its existing English-language channel, Al Jazeera said it plans to create a channel based in New York. Tentatively titled Al Jazeera America, roughly 60 percent of the programming will be produced in the United States, while the remaining 40 percent will come from Al Jazeera English.

Al Jazeera, which has bureaus in New York, Washington, Los Angeles, Miami and Chicago, intends to open several more in other American cities.

“There's a major hole right now that Al Jazeera can fill. And that is providing an alternative viewpoint to domestic news, which is very parochial,” said Cathy Rasenberger, a cable consultant who has worked with Al Jazeera on distribution issues in the past. However, she warned, “there is a limited amount of interest in international news in the United States.”

And others are trying to elbow their way in. News channels financed by Britain, China and Russia are especially hungry for American cable deals. To date, the BBC has had the most success; its BBC World News channel is now available in about 25 million homes thanks to a deal struck last month with Time Warner Cable.

But the takeover of Current brings Al Jazeera to the front of the line. In recent weeks, Mr. Gore personally lobbied the distributors that carry Current on the importance of Al Jazeera, accord ing to people briefed on the talks who were not authorized to speak publicly.

Distributors can sometimes wiggle out of their carriage deals when channels change hands. Most consented to the sale, but Time Warner Cable did not, Mr. Hyatt told employees.

Time Warner Cable had previously warned that it might drop Current because of its low ratings. It took advantage of a change-in-ownership clause and said in a terse statement Wednesday night, “We are removing the service as quickly as possible.”