Deutsche Bank Books $3 Billion Loss in Fourth Quarter

FRANKFURT-Deutsche Bank reported a surprise net loss of 2.2 billion euros, or about $3 billion, for the fourth quarter of 2012 on Thursday, as Germany’s largest bank was hit by the diminished value of some assets as well as costs related to numerous legal proceedings.

The results underline the task ahead for Jürgen Fitschen and Anshu Jain, the co- chief executives who took over the bank less than seven months ago and have declared their intention to deal more severely with the legacy of the financial crisis.

‘‘This is the most comprehensive reconfiguration of Deutsche Bank in recent times,’’ Mr. Fitschen and Mr. Jain said in a statement. Warning that ‘‘deliberate but sometimes uncomfortable change’’ lay ahead, they said, ‘‘This journey will take years not months.’’

Deutsche Bank avoided a government bailout during the financial crisis, but has suffered from numerous lawsuits and official investigations, including a tax-evasion probe which led to a raid on compay headquarters last month by German police.

‘‘Significant’’ charges related to legal proceedings contributed to the loss, Deutsche Bank said without immediately giving specifics.

Analysts consider the bank to be among the most highly leveraged in Europe, and bank management has promised to reduce the number of risky activities, a process that sometimes requires it to recognize the reduced value of some assets and book losses.

Deutsche Bank said that, despite the loss, revenue during the last three months of 2012 rose 14 percent to 7.9 billion euros from a year earlier. The bank also said that it increased the amount of capital it holds as insurance against risk, and reduced the amount of money it needed to set aside to cover possible bad loans. The bank said it had reduced total employee pay to the lowest level in years.

The bank had warned in December that it would incur major charges in the quarter, without saying how much.

Hostess Confirms Lead Bidder for Twinkies

KANSAS CITY, Mo., Jan. 30, 2013 /PRNewswire/ -- Hostess Brands Inc. ("Hostess Brands" or the "Company") today announced that the Company has selected affiliates of Apollo Global Management, LLC (NYSE: APO) (collectively with its subsidiaries "Apollo") and Metropoulos & Co. ("Metropoulos") as the stalking horse bidder for the majority of the assets of the Company's snack cake business, which includes both Hostess® and Dolly Madison® branded products, including the iconic Twinkies® brand.

Apollo and Metropoulos have agreed to pay $410 million to purchase the brands, 5 bakeries and certain equipment.

"We are pleased to name Apollo and Metropoulos as the stalking horse bidder for these valuable and beloved brands," said Hostess Brands Chairman and Chief Executive Officer Gregory F. Rayburn . "Interest in these iconic brands has been intense and competitive and we expect that to continue through a robust, court-authorized auction process. The ultimate goal will be the same we have had since we began marketing all of our assets - to maximize value for all of the Company's stakeholders and ensure these great products can be enjoyed by their loyal fans for many years to come."

Hostess Brands has requested that the U.S. Bankruptcy Court for the Southern District of New York (the "Court") authorize the Company to proceed with an auction for the majority of the assets of the snack cake business on March 13, provided the Company receives competing qualified bids. The Company will select the highest and best offer at the conclusion of the auction. The sale to the winning bidder requires Court approval.

As previously announced, Hostess Brands has reached stalking horse agreements, contemplating an aggregate purchase price of more than $440 million, to sell the majority of the assets related to its bread business, including its Wonder®, Butternut®, Home Pride®, Merita®, Nature's Pride®, Beefsteak®, Sweetheart®, Eddy's®, Standish Farms® and Grandma Emilie's® bread brands as well as its Drake's® snack cake business.

The Company will select the winning bidders for the assets of the bread and snack cake businesses at the conclusion of various auctions. Sales to the winning bidders require Court approval.

"The stalking horse bids have set a floor of more than $850 million for the bulk of the Company's assets," Mr. Rayburn said. "We look forward to competitive auctions to further drive value for all of the Company's stakeholders."

Jones Day provided legal advice to Hostess Brands on the transaction. Perella Weinberg Partners served as the Company's financial advisor.

About Hostess Brands

Founded in 1930, the Company's products include iconic brands such as Hostess®, Wonder®, Nature's Pride®, Dolly Madison®, Drake's®, Butternut®, Home Pride®, and Merita®. 

 

SOURCE Hostess Brands Inc.

Prominent Prosecutor Is Expected to Join the Private Sector

In 2011, the government lawyer Reed Brodsky was part of a trial team that secured a conviction of the hedge fund titan Raj Rajaratnam on insider trading charges.

A year later, Mr. Brodsky led the successful prosecution of Rajat K. Gupta, the former Goldman Sachs director found guilty of leaking boardroom secrets about the bank to Mr. Rajaratnam.

On Thursday, Gibson Dunn & Crutcher is expected to announce that Mr. Brodsky will leave the United States attorney’s office in Manhattan to join the law firm as a partner in its white-collar criminal defense practice.

“Reed is a star in federal prosecutorial circles,” said Randy M. Mastro, co-head of Gibson Dnn’s litigation practice. “He has tried some of the hardest, most high-profile cases in his office, winning one after the other.”

Mr. Brodsky is the latest government lawyer to leave public service for the private sector. On Wednesday, Lanny A. Breuer, the head of the Justice Department’s criminal division, announced his departure, and he is widely expected to resume his previous career as a defense lawyer.

The two prosecutors who tried Mr. Rajaratnam with Mr. Brodsky â€" Jonathan R. Streeter and Andrew Z. Michaelson â€" have already moved on to partnerships at corporate law firms.

Raised in Melville, N.Y., on Long Island, Mr. Brodsky, 43, was educated earned his undergraduate degree from Duke University and attended law school at Vanderbilt. Before joining the Justice Department, Mr. Brodsk! y was an associate at WilmerHale, where he worked on the internal investigations of the corporate accounting frauds at Enron and WorldCom.

He joined the United States attorney’s office in Manhattan in 2004, working stints in the general crimes and narcotics units. But Mr. Brodsky made his mark in the securities fraud section as a crucial part of the team that has secured more than 70 guilty pleas or convictions in the office’s broad crackdown on insider trading on Wall Street.

Before the Rajaratnam and Gupta trials, Mr. Brodsky won two insider trading convictions: securing guilty verdicts against Hafiz Muhammad Zubair Naseem, a former Credit Suisse investment banker, and Joseph Contoriis, a former money manager at the Jefferies Group.

Around the office, Mr. Brodsky was known as a workhorse. Colleagues marveled at his pulling all-nighters both before and during trials, breaking only for dinner at his nearby apartment with his two children and wife, a principal at a public school in the South Bronx.

But Mr. Brodsky was also a show horse. Fresh faced and animated, Mr. Brodsky endeared himself to juries with an impassioned, eloquent presentation. He could also be tenacious and combative in the courtroom, frequently butting heads with his adversaries. Mr. Rajaratnam’s defense lawyer, John M. Dowd, called him a crybaby; Gary P. Naftalis, the lawyer for Mr. Gupta, often complained about Mr. Brodsky’s aggressive tactics.

“Reed was one of the most dogged, tough and skilled prosecutors I knew at the U.S. attorneyâ! €™s offic! e,” said Mr. Streeter, now a partner at Dechert.

In Gibson Dunn, Mr. Brodsky joins a 1,100-lawyer firm known for its litigation prowess. His new partners will include the appellate lawyers Theodore B. Olson, Theodore J. Boutrous Jr., and Miguel A. Estrada, as well as the trial lawyer Orin Snyder. Debra Wong Yang, a former United States attorney for the Central District of California, is a partner in the firm’s Los Angeles office.

The firm recently won a significant victory for its client Cablevision in a lawsuit against Dish Network, striking a $700 million settlement midtrial.

Gibson has several trials on the docket this coming year, includng defending Moody’s in a securities lawsuit brought by investors relating to the rating of a complex mortgage security, and representing Chevron in a 19-year legal fight related to an $18.2 billion judgment against the oil company by an Ecuadorean court.

Gibson Dunn is not going to waste any time in exploiting Mr. Brodsky’s advocacy skills, and will most likely use him on one of the firm’s coming trials, Mr. Mastro said.

“I fully expect Reed to come here and have an immediate impact,” Mr. Mastro said.

Renewable Energy Industries Push for New Financing Options

For years, green energy industries like wind and solar have been telling Congress that they cannot yet compete with fossil fuels without hefty tax breaks intended especially for them.

But with antipathy for renewable energy subsidies running high among many Republicans, the industries are bringing a new plea to Washington: allow wind and solar companies to qualify for some of the tax advantages that are used by the oil, gas and real estate industries to raise money from investors.

“We’ve made great progress in bringing down the cost of renewable energy technologies like wind turbines and solar panels,” said Dan Reicher, who is executive directr of the Steyer-Taylor Center for Energy Policy and Finance at Stanford and who has been pushing for the changes. “Where we haven’t made the necessary progress is on bringing down the cost of financing the projects that use that equipment, so the cost of renewable energy is higher than it needs to be.”

The industries are looking to two investment structures â€" the master limited partnership and the real estate investment trust â€" to help make financing easier and cheaper. Mr. Reicher estimated that opening them up to renewable companies could cut the cost of their energy by a third.

There are many challenges to changing the tax code â€" particularly in an era when many in Washington are trying to raise revenue, not reduce it. But the proposals are receiving serious attention.

The Internal Revenue Service is considering allowing at least one company to form a real estate investment trust, or REIT, for a group of renewable energy projects, with a decision expected soon.

And last month, 31 lawmakers, including Senators Lisa Murkowski of Alaska and Jerry Moran of Kansas and Representative Ted Poe of Texas, sent a letter to President Obama urging him to support the changes. All three are Republicans supported by gas and oil interests, according to OpenSecrets.org.

Senator Chris Coons, a Democrat from Delaware who was a sponsor of a bill on master limited partnerships, or M.L.P.’s, during the last session, said he plans o reintroduce it this year. He said he had been meeting with Obama administration officials and lawmakers and building support for the measure, including among Republicans.

Allowing solar and wind firms to use a tax break offered to oil and gas companies fits into the worldview of “an all-of-the-above energy strategy,” he said, “not picking winners and losers in technology.”

But the effort may run aground in the larger tax overhaul that Congress and President Obama are pursuing.

Although White House officials say they see expanding REITs and M.L.P.’s as keeping with their larger clean energy goals, they are more focused on eliminating direct subsidies and loopholes for fossil fuels and establishing a permanent production tax credit for renewables.

Clark W. Stevens, a White House spokesman, declined to comment on particular programs, saying, “The administration continues to support a number of provisions that provide needed support to the development of cutting-edge! technolo! gies and clean energy projects here in the United States, expanding renewable energy production and ensuring the jobs of the 21st century are created here at home.”

As with conventional power plants, the cost of building wind and solar farms can run into the billions of dollars, involving elaborate planning, construction and equipment.

Under current law, the federal government offers renewable energy companies a generous tax credit against their income. But since few of them make enough profit to use the credits, they need to find investors â€" typically companies seeking to shield nonenergy profit from taxes â€" to take advantage of the breaks. Because the pool of such prospects is small, the investors that do jump in, like Google, have been able to command high rates of return.

By using a REIT or M.L.P. for renewable energy projects, the copanies could reach a broader range of investors. M.L.P.’s and REITs are similar in that they do not pay corporate income taxes, passing most of their income to their investors, who then pay taxes on it at their own personal rates. Both are also often traded publicly like stock, giving companies access to a much larger pool of investors who are willing to take a lower rate of return, according to tax lawyers and experts.

It is unclear how much the proposed financing changes would cost taxpayers. But M.L.P.’s for conventional energy industries like oil, gas and pipelines have a market capitalization of about $300 billion and are expected to cost the Treasury roughly $1.2 billion over five years, from fiscal 2011 through 2015.

Recent forecasts estimated that the renewable energy industries could raise as much as $6 billion from fiscal 2013 through 2020, so the tax break would probably run much lower, less than $1 billion over a 10-year period, according to a rough estimate from Senator C! oons.

!

By contrast, the investment and production tax credit programs now in effect for renewable energy projects are expected to cost the federal government $11.6 billion from fiscal 2011 through 2015.

“If we can get access to these long-term capital-formation strategies, that will lessen the burden on public finance, on tax credits, on subsidies,” said Dan Adler, managing director of the California Clean Energy Fund. “As these technologies continue to mature, and their costs drop â€" and the cost of capital drops at the same time â€" it becomes more purely competitive with the fossil energy industry.”

There are differences in the ways the two investment vehicles work. REITs, which are typically used to bundle groups of apartments or office buildings into tradable investments, cannot take advantage of tax credits. So a solar REIT would not be able to use the 30 percent investment tax credit still available to such projects through 2016.

M.L.P.’s can use tax credits, but the partnersips are more complicated, tax lawyers said, which might keep investors away.

The I.R.S. could effectively open up the use of REITs on its own. Mr. Adler’s group has invested in a company, Renewable Energy Trust Capital, that has petitioned the I.R.S. for a private letter ruling allowing it to use a REIT structure.

If the request is granted, others pursuing similar projects would be likely to copy the approach. (Similar rulings have allowed cellphone towers and electrical transmission systems to be bundled into REITs.) The Treasury Department could also push through a more formal regulation change.

It would take an act of Congress to change M.L.P.’s, which have helped drive development of conventional energy infrastructure, particularly pipelines. The partnerships are required to derive 90 percent of their income from certain sources, including only depletable natural resources like oil and coal.

Whether the clean-tech industries’ efforts to gain access to either mechanis! m will be! ar fruit is uncertain, but policy advocates and some lawmakers say they are optimistic because there is something in the plan to appeal to both Democrats and Republicans.

For Democrats, “if the idea of investing in these companies is opened up to a broader array of the American public, then people have more of a stake in renewables besides just buying electricity from wind or solar,” said Kelly Kogan, a lawyer at Chadbourne & Parke in Washington who advises clients on the tax consequences of renewable energy investments.

At the same time, she added, Republicans might respond to the idea that “the government’s going to get out of the direct subsidy through credits: they’re going to make renewables equivalent to hotels and office buildings and pipelines and what-have-you, and the free market can play more of a role.”

Jesse Jackson Proposes Creation of a New Lender

There’s been no shortage of ideas for how to jump-start economic growth in the aftermath of the financial crisis. But a new one comes with a high-profile backer: the Rev. Jesse Jackson.

At a three-day conference in New York that began on Wednesday, Mr. Jackson discussed a proposal for increasing the availability of capital by using pension money to make loans in low-income communities. The idea â€" which is for now just an idea â€" is getting a prominent debut at the 16th annual Wall Street Project Economic Summit, hosted by Mr. Jackson’s Rainbow PUSH Coalition and the Citizenship Education Fund.

“We’ve got to think outside the present fiscal-cliff-debt-ceiling box,” Mr. Jackson said in an interview on Wednesday. “We must have some plan for reconstruction.â

The conference features some big names, with a keynote speech from President Bill Clinton. The comptroller of New York City, John C. Liu, who oversees the city’s pension funds, is speaking on Thursday.

Mr. Jackson, who regularly speaks out about banks’ abuses in minority communities, envisions the creation of a lender similar to development banks in other countries. With political gridlock in Washington, and with banks limiting access to capital, a separate solution is needed, Mr. Jackson said, comparing the idea to the Marshall Plan.

Using pension money would simultaneously achieve another of Mr. Jackson’s goals: encouraging pensions t! o focus on socially responsible investments.

“New York would be a great place to do this,” Mr. Jackson said. “You’ve got Harlem and Wall Street on the same island.”

There is precedent in the city for getting creative with pension funds. Mr. Jackson recalled the fiscal crisis in 1975, when the investment banker Felix G. Rohatyn engineered a rescue. That plan involved pension funds backing the city’s debt.

Fundamentally, Mr. Jackson’s proposal is about leveling the playing field.

“We bailed out the banks,” Mr. Jackson said. “We didn’t bail out the victims of the recession.”

Living Dangerously Without Ring-Fencing

European banks won’t have to ring-fence their risky activities after all.

In October, an advisory group headed by the governor of the Bank of Finland, Erkki Liikanen, wrote a report for European Commissioner Michel Barnier. It recommended that lenders in Europe put firewalls between their retail banks and their investment bank trading activity, if the latter exceeded a certain size. Now Germany has said how it will respond.

On the surface, the German finance ministry’s draft law seems to stick with Mr. Liikanen’s original ideas. Any bank with so-called proprietary trading activities exceeding 100 billion euros, or 20 percent of its balance sheet, will have to put that business in a separate, capitalized subsidiary. But in reality, Germany has ignored the spirit of the Liikanen report. Simply cutting off proprietary trading, where banks play for their own profit instead of for clients, doesn’t take the risk out of investment banking.

For starters, pure prop trading caused only 4 ercent of credit crunch losses, according to consultancy Tricumen and the Bank of International Settlements. More important, prop and market making are hard to differentiate from a risk perspective â€" the viewpoint with which politicians and regulators should be most concerned.

Take Goldman Sachs. Market making accounted for a third of the Wall Street bank’s $34 billion revenue in 2012. But in order to make markets in products, Goldman stockpiles inventory in anticipation of client orders. That business carries the same kind of risk as prop trading.

The banks argue that the more present they are in markets, the more they are able to offer their clients better prices and larger deals. That clearly has benefits for the economy. With lenders still in recovery mode, that argument has won the day in France and now Germany.

But it also means European depositors are still exposed to major trading losses. One could argue that the scale of global investment banks means governments still c! annot let them fail, and the only solution is proper bail-inable debt (instruments that could be converted into equity in an emergency) and resolution plans. But in the continuing absence of these, ring-fencing at least offers a safety net. European taxpayers will just have to keep on living dangerously.

George Hay and Dominic Elliott are columnists at Reuters Breakingviews. For more independent commentary and analysis, visit breakingviews.com.

Wall Street Prepares to Crack BrickBreaker Habit

Another Wall Street mainstay may be facing extinction.

New versions of the BlackBerry mobile device won’t come equipped with BrickBreaker, a simple game that for years was installed on every BlackBerry and at its peak developed a cult following among traders and Wall Street executives. Richard S. Fuld, the former Lehman Brothers chief executive, became so addicted, that in 2006 he had his technology department remove the game from his device in an attempt to break his habit.

Nick Manning, a spokesman for BlackBerry, on Wednesday confirmed the company’s decision to remove the game from new devices. Still he is hopeful users will soon be able to down load a version of it.

BrickBreaker, he explained, was developed by BlackBerry in 2002 and the company owned the rights to it. In the game, the player navigates a ball with a paddle, hoping to demolish bricks at the top of the screen. Players advance by clearing all the bricks on a given screen.

The game was a big feature on the irst color BlackBerry mobile device the company released in 2003. As the game grew in popularity it spawned a number of knock offs, but only BlackBerry users could access the original game.

Now, BlackBerry is “open sourcing” the game, said Mr. Manning. This means third-party application developers can create their own version of BrickBreaker. Mr. Manning said.

BlackBerry chose to let go of the game because it wants to promote third-party development of applications. “The market demands we have a deep ecosystem of applications and it is important we do things to encourage that,” he said.

Wall Street executive Richard Handler is among those who will no doubt be glad to hear that all is not lost for BrickBreaker. For years, the Jefferies chief executive was known to play the game in elevators and between meetings.

On Wednesday he told DealBook that he has yet to forsake the game, despite the sharp rise in popularity of the iPhone, which offers owners access to hundre! ds of more advanced games.

Wall Street Prepares to Crack BrickBreaker Habit

Another Wall Street mainstay may be facing extinction.

New versions of the BlackBerry mobile device won’t come equipped with BrickBreaker, a simple game that for years was installed on every BlackBerry and at its peak developed a cult following among traders and Wall Street executives. Richard S. Fuld, the former Lehman Brothers chief executive, became so addicted, that in 2006 he had his technology department remove the game from his device in an attempt to break his habit.

Nick Manning, a spokesman for BlackBerry, on Wednesday confirmed the company’s decision to remove the game from new devices. Still he is hopeful users will soon be able to down load a version of it.

BrickBreaker, he explained, was developed by BlackBerry in 2002 and the company owned the rights to it. In the game, the player navigates a ball with a paddle, hoping to demolish bricks at the top of the screen. Players advance by clearing all the bricks on a given screen.

The game was a big feature on the irst color BlackBerry mobile device the company released in 2003. As the game grew in popularity it spawned a number of knock offs, but only BlackBerry users could access the original game.

Now, BlackBerry is “open sourcing” the game, said Mr. Manning. This means third-party application developers can create their own version of BrickBreaker. Mr. Manning said.

BlackBerry chose to let go of the game because it wants to promote third-party development of applications. “The market demands we have a deep ecosystem of applications and it is important we do things to encourage that,” he said.

Wall Street executive Richard Handler is among those who will no doubt be glad to hear that all is not lost for BrickBreaker. For years, the Jefferies chief executive was known to play the game in elevators and between meetings.

On Wednesday he told DealBook that he has yet to forsake the game, despite the sharp rise in popularity of the iPhone, which offers owners access to hundre! ds of more advanced games.

Big Investor Supports Elliott Push for Hess Shake-Up

A big investor in the energy company Hess Corporation said on Wednesday that it supported the changes called for by the hedge fund Elliott Management.

Relational Investors, the activist investment firm run by Ralph V. Whitworth, said in a letter to John Hess, the chief executive and chairman of Hess, that “Elliott’s suggestions for unlocking value are similar to our recommendations, including a significant change in the board’s composition.” Relational says it has 9.2 million shares of Hess, which would make of its 10 biggest shareholders.

On Tuesday, Elliott, which is led by Paul Singer, presented five possible candidates for the Hess board and called on the company to make a number of major strategic moves, including selling off some parts of the business and spinning off its Bakken shale assets in North Dakota.

Shares of Hess, which surged 9 percent on Tuesday, slippedback 0.34 percent on Wednesday, to $67.88.

In the letter, Relational wrote:

We recognize the natural tendency is to be defensive and cautious. This is the time, however, for the board to be assertive, take control and promptly negotiate a resolution.

“We would be disappointed if the board adopted a defensive posture and forced a proxy contest,” the letter added.

With BlackBerry\'s New Name, an Abridged History of Corporate Rebranding

As the new BlackBerry line was introduced on Wednesday, a corporate name was sent to the dustbin.

No longer called Research in Motion, the BlackBerry maker will now go simply by BlackBerry. The new name reflects the company’s efforts to reinvent itself and unify its brand, said Thorsten Heins, the chief executive, at an event on Wednesday where he unveiled the new product line. The ticker symbol on Nasdaq will change to BBRY from RIMM.

“Our customers use a BlackBerry, our employees work for BlackBerry, and our shareholders are owners of BlackBerry,” Mr. Heins said.

The BlackBerry name, more widely known than Research in Motion, was chosen by Lexicon Branding. That firm, based in California, also came up with Procter & Gamble’s Swiffer and Febreze brands and the name of Apple’s PowerBook.

BlackBerry, the corporation, on Wednesday joined a list of companies that have decided to rebrand themselves forone reason or another.

Some work out. Some don’t.

2011: Qwikster | Netflix had decided to spin off its old-fashioned DVD service and call it Qwikster, explaining that the name “refers to quick delivery.” After an outcry from subscribers, the company reversed course, dropping the plan.

2010: Ally Financial | GMAC Financial Services, a lender that once was owned by General Motors, changed its name to Ally Financial. The original brand had been tarnished during the financial crisis when GMAC needed a bailout. Ally is still largely owned by the government.

2009: Hostess Brands | After emerging from bankruptcy, the Interstate Bakeries Corporation changed its name to Hostess Brands, shedding a generic-sounding name in favor of one that was more recognizable among lovers of Twinkies and other treats. The company filed for bankruptcy again, and is now going through liquidation and selling off its iconic brands.

2007: Apple | In the same year it introduced the iPhone, Apple! Computer changed its name to simply Apple, Inc., reflecting its expansion into handheld devices. The iPhone now accounts for over half of Apple’s revenue.

2003: Altria | Philip Morris, the cigarette and food giant, changed its name to the Altria Group. The move was seen as an effort by the company to distance itself from the negative image that had grown around its well-known cigarette brand.

2001: Accenture | Andersen Consulting, after splitting from the accounting firm Arthur Andersen, changed its name to Accenture. The name, derived from “accent” and “future,” was dreamed up by an employee in Norway, who said at the time that the word conveyed “bold growth, operational excellence and a great place to work.” Shortly thereafter, Arthur Andersen collapsed amid an accounting scandal.

The Rich Math Behind the Handler Handout

One of Wall Street’s relative minnows is getting a whale-size paycheck. Jefferies is paying boss Richard Handler $19 million for the year to November 2012.

That might not sound too rich considering that Goldman Sachs‘s chief executive, Lloyd Blankfein, raked in $21 million. But Jefferies is a much smaller firm, meaning Mr. Handler’s compensation equates to a huge 5.9 percent of earnings.

Bigger, bulge-bracket investment banks weren’t shelling out anywhere near that much even during the boom years. Now they’ve become stingier still. Mr. Blankfein’s boanza for last year represented less than a third of a percentage point of the bank’s $7.5 billion of net income, for example. Using the same cut of profit as Mr. Handler enjoys would bag Mr. Blankfein well north of $400 million. But it’s JPMorgan’s Jamie Dimon who would get the real bonanza at that payout rate â€" a cool $1.2 billion, more than 100 times his actual pay.

If the pay-to-profit metric doesn’t appeal, try one based on the bank’s value. The Handler handout works out at about half a percent of Jefferies’ market capitalization. The same math for Mr. Dimon would still get him within range of $1 billion.

Nothing even approaching any of these f! igures would wash for Jefferies’ larger rivals, of course. Likewise, paying Mr. Handler the same percentage of earnings as Mr. Blankfein would set his pay at $900,000 - handsome for most people, but miserly for a top Wall Street banker and chief executive.

Mr. Handler’s pay increase was, at least, matched by the increase in his firm’s share price last year. Even so, with Jefferies’ return on equity languishing at around 8 percent - below the 10 percent rule-of-thumb threshold for banks to beat their cost of capital - directors seem to have been a bit too generous.

And they risk repeating that in the future, having set up another stock incentive plan payable over the next three years worth as much as $39 million. It’s hardly the first board on Wall Street, though, to let pay get out of step with performance.

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

A Warning to Wall Street About Misleading Clients

A former trader of residential mortgage-backed securities at Jefferies & Company, Jesse Litvak, was indicted on charges of lying to investors about the prices and commissions of securities sold as part of a government program to prop up the mortgage bond market.

The charges serve as a warning to Wall Street that misleading customers - including sophisticated ones - can result in criminal action, even for a broker who did not owe a fiduciary duty to clients.

The Justice Department charged Mr. Litvak with 11 counts of securities fraud in connection with so-called R.M.B.S. transactions that were part of the financial bailout under the Troubled Asset Relief Program, or TARP. The Securities andExchange Commission filed parallel civil charges accusing him of fraud.

Among Mr. Litvak’s customers were investment advisers retained by the Treasury Department as part of the Public-Private Investment Program, in which the government put up money to buy residential mortgage-backed securities issued before the financial crisis to try to unfreeze the market. Firms involved in the transactions include AllianceBernstein, BlackRock, and Wellington Management, all leading Wall Street investment advisers that manage billions of dollars of assets.

With government fund! ing at stake, prosecutors added charges under two other federal statutes not usually seen in this type of case. Some of the transactions involved investment vehicles financed through TARP, so Mr. Litvak was charged with violating the statute that makes it a crime to defraud the United States.

He was also charged with four counts of making false statements to the Treasury Department. Although Mr. Litvak never dealt directly with that department, it had contracted with the investment advisers to act on its behalf in the residential mortgage investments.

The accusations outline a rather simple act: Mr. Litvak is charged with telling clients that the cost of the residential mortgage investments was higher or lower than what Jefferies paid for them, depending on which side of the transaction the firm was on. In other trades, he took securities from the firm’s inventory and sold them at an undisclosed markup, although he indicated Jefferie was only matching firms for the transaction.

Mr. Litvak communicated with clients by text messages and chat sessions, and his communications contain questionable comments like those often seen in other cases. In one instance, he claimed to have tried to get a better price from his boss but that “i thought i could work him over … but he is kind of being a weenie.”

“The kind of false claims made by Litvak were unfit for a used-car lot, let alone a marketplace for mortgage-backed securities,” said George S. Canellos, deputy director of enforcement at the S.E.C.

But Mr. Litvak was dealing with investment advisers managing millions of dollars of securities. So could they have been duped, as authorities claim

Unlike stocks that trade on an open market, transactions involving these securities were much more opaque. As described in the S.E.C. complaint, the market for residential mortgage-backed securities is “generally illiquid and discovering a market price for them is ! difficult! . Participants trading in the M.B.S. market must rely on informal sources, including their broker, for this information.”

Thus, according to prosecutors, Mr. Litvak’s statements about how much Jefferies paid for the securities and its profits were material to the investment advisers.

What makes this case different is that Mr. Litvak did not owe a fiduciary duty to the investment advisers he dealt with. While those firms owe a duty to put their clients’ interests first, a broker like Jefferies is only required to make suitable investment recommendations when acting as a market maker in a security.

This was the explanation offered by Lloyd C. Blankfein, chief executive of Goldman Sachs, when he was testified before a Senate subcommittee in 2010 about the firm’s sale of a synthetic derivative obligation that was the basis for an S.E.C. civil fraud suit. In response to an accusation that Goldman had improperly bet against the security it sold to a client, Mr. Blankfein responded, “In the context of market-making, that’s not a conflict.”

Mr. Litvak’s lawyer said his client “did not cheat anyone out of a dime. In fact, most of these trades turned out to be hugely profitable.” He also pointed out that the clients were all sophisticated investors, perhaps implying they should not have relied on Mr. Litvak’s word alone about the prices of the securities.

The defense can argue that the fact the market is opaque, with prices based on informal sources. And the decision whether to buy or sell a security is based on the total cost, so whether it included a higher commission or price spread than the customer was led to believe mi! ght not h! ave been material to the transaction.

But fraud does not require that the victim be gullible or lose money on the transaction. The indictment claims that outright falsehoods were made in connection with the transactions, not just the shady practices of the used-car dealer who proclaims that the vehicle was only driven to church on Sunday.

Proving a fraud charge is much easier if it can be shown that the defendant made deliberate misstatements, even if the person was only acting as a broker who did not have a duty to disclose all relevant information to the client.

The charges against Mr. Litvak should put Wall Street on notice that the government will try to police markets that require trust among the participants in the absence of transparent price information. The defense of caveat emptor, or let the buyer beware, will not necessarily protect against criminal charges for fraud.

Will the New BlackBerry Save Research in Motion

BlackBerry 10 Critical to Research in Motion

OTTAWA â€" Research in Motion’s introduction on Wednesday of a new BlackBerry phone will be the most important event in the company’s history since 1996, when its founders showed investors a small block of wood and promised that a wireless e-mail device shaped like that would change business forever.

Thorsten Heins, chief executive of Research in Motion, demonstrated functions of the BlackBerry 10 in California.

Now with just 4.6 percent of the global market for smartphones in 2012, according to IDC, RIM long ago exchanged dominance for survival mode. On Wednesday, the company will introduce a new line of smartphones called the BlackBerry 10 and an operating system of the same name that Thorsten Heins, the president and chief executive of RIM, says will restore the company to glory.

But Frank Mersch, who became one of RIM’s earliest investors after seeing the block of wood, is far less excited by what he sees this time around.

“You’re in a very, very competitive market and you’re not the leader,” Mr. Mersch, now the chairman and a vice president at Front Street Capital in Toronto, said of RIM. “You have to ask: ‘At the end of the day are we really going to win’ I personally think the jury’s out on that.”

The main elements of the new phones and their operating system are already well known. Mr. Heins and other executives at RIM have been demonstrating the units for months to a variety of audiences. App developers received prototype versions as far back as last spring.

While analysts and app developers may be divided about the future of RIM, there is a consensus that BlackBerry 10, which arrives more than year behind schedule, was worth the wait.

Initially RIM will release two variations of the BlackBerry 10, one a touch-screen model that resembles many other phones now on the market. The other model is a hybrid with a keyboard similar to those now found on current BlackBerrys as well as a small touch screen.

The real revolution, though, may be in the software that manages a person’s business and personal information. It is clearly designed with an eye toward retaining and, more important, luring back, corporate users.

Corporate and government information technology managers will be able to segregate business-related apps and data on BlackBerry 10 handsets from users’ personal material through a system known as BlackBerry Balance. It will enable an I.T. manager to, among other things, remotely wipe corporate data from fired employees’ phones while leaving the newly jobless workers’ personal photos, e-mails, music and apps untouched. The system can also block users from forwarding or copying information from the work side of the phone.

Messages generated by e-mail, Twitter, Facebook, instant messaging and LinkedIn accounts are automatically consolidated into a single in-box that RIM calls BlackBerry Hub.

Charles Golvin, an analyst with Forrester Research, called the new phones “beautiful” and described the operating system as “a giant leap forward” from RIM’s current operating system. Ray Sharma, who followed RIM’s glory years as a financial analyst but who now runs XMG Studio, a mobile games developer in Toronto, has been similarly impressed.

But both men are among many analysts who question the ability of BlackBerry 10, whatever its merits, to revive RIM’s fallen fortunes.

“If it’s good, it will help inspire the upgrade cycle,” Mr. Sharma said. “But it has to be great in order to inspire touch-screen users to come back. If it’s good, not great, I will be concerned.”

Mr. Golvin was more blunt. “They’ll need to prove themselves in the face of a simultaneous onslaught of marketing from Microsoft, not to mention the continued push from Apple plus Google and its Android partners,” he wrote. “This is a gargantuan challenge for a company of RIM’s size.”

In the year since he took over from the founders, Jim Balsillie and Mike Lazaridis, Mr. Heins has certainly remade RIM. He cut 5,000 jobs in a program to reduce operating costs by about $1 billion a year. Along the way, he also replaced RIM’s senior management and straightened out its balance sheet. While unprofitable, RIM remains debt-free and holds $2.9 billion in cash.

With BlackBerry 10, RIM not only started over with its operating system, it also rebuilt the company through acquisitions. Its core operating system comes from QNX Software Systems, the design of the user interface is largely the work of the Astonishing Tribe in Sweden while other main components, like the touch-screen technology, came from smaller companies that are now part of RIM.

Integrating all of those acquisitions, analysts and former RIM employees say, added to the delays that plagued BlackBerry 10.

Now that the new phones are finally here, Mr. Heins is counting on RIM’s remaining base of 79 million users globally to eagerly upgrade. But where those customers reside may be as important in their numbers in determining the success of that plan.

In the United States, which leads the world in setting smartphone trends, about 11 million BlackBerry users switched to other phones between 2009 and the middle of last year, according to an analysis by Horace Dediu on Asymco, a wireless industry blog he founded.

Until the final months of 2012, RIM continued to increase its subscriber base through sales of low-cost handsets to less developed countries like Nigeria and Indonesia. Although BlackBerry 10 will be made available worldwide, the initial phones will be too expensive for a majority of BlackBerry fans in those regions.

RIM may also have confused its loyalists, particularly in North America and Europe, in the run-up to the BlackBerry 10 debut. Many of those users stuck with BlackBerrys because of their physical keyboards. But public demonstrations for BlackBerry 10 were centered on the touch-screen-only version and its virtual keyboard.

While some corporations have remained loyal to BlackBerry, RIM not only has to sell them on the new handsets, it also must persuade them to upgrade server software to accommodate the new operating system, a costly and time-consuming process. Companies whose employees continue to use older BlackBerrys will have to run two separate BlackBerry servers.

Mr. Heins’s pitch to those corporations is that the BlackBerry 10 server software will also allow them to manage and control data on employees’ Android phones and iPhones. But any corporation or organization that allows those phones to connect with its systems long ago installed mobile device management software from other companies, including Good Technology and SAP. RIM is likely to find that the competition in device management software is as severe as it is in the handset business.

This article has been revised to reflect the following correction:

Correction: January 30, 2013

An earlier version of this story incorrectly stated that Frank Mersh is the chairman and a vice president at First Street Capital in Toronto. Mr. Mersh is the chairman and a vice president at Front Street Capital in Toronto.

A version of this article appeared in print on January 30, 2013, on page B1 of the New York edition with the headline: On Eve of Debut, BlackBerry Maker Holds Its Breath.

End of the Road for Chesapeake\'s C.E.O.

After months of criticism of his compensation plan, Aubrey K. McClendon is retiring as chief executive of Chesapeake Energy on April 1, the company announced on Tuesday. A larger-than-life figure, Mr. McClendon co-founded Chesapeake and built the company through a series of deals that shaped the natural gas industry. “It’s an end of an era,” said Fadel Gheit, a senior oil analyst at Oppenheimer.

Mr. McClendon’s departure comes after months of scrutiny and upheaval. Under pressure from shareholders, the company replaced more than half of its directors after news reports said the chief executive had gotten personal loans using stakes in company-owned wells as collateral. The company said the board’s review of Mr. McClendon’s financial dealings “to date has not revealed improper onduct.”

Investors welcomed the news of Mr. McClendon’s departure, sending shares up more than 10 percent after hours. On Tuesday, Carl C. Icahn, one of the shareholders who had pushed for a revamped board, was generous in his praise. “Aubrey has every right to be proud of the company he has built, the world-class team of people at Chesapeake and the collection of assets he has assembled, which in my opinion are the best portfolio of energy assets in the country,” he said.

Still, Chesapeake faces challenges. The company has struggled as the natural gas boom has faded, losing more than two-thirds of its value over the last few years, Clifford Krauss and Michael J. de la Merced write in DealBook.

MF GLOBAL CUSTOMERS’ HAPPY RESULTS  |  Under a proposal that will be reviewed by a bankruptcy court on Thursday, customers of the failed brokerage firm MF Global would receive 93 p! ercent of their missing money. “And the trustee who has submitted the proposal, James W. Giddens, has quietly identified a way that, if sent to the judge and approved, could plug the remaining shortfall for customers in the United States, according to people involved in the case,” DealBook’s Ben Protess reports. “The broad push to make MF Global customers nearly whole, a goal now surprisingly within reach, is a remarkable turnaround from the firm’s 2011 bankruptcy filing when such a recovery seemed impossible.”

Investigators continue to collect evidence on the firm’s demise. Federal authorities interviewed Jon S. Corzine, a former New Jersey governor who ran MF Global when it collapsed, over two days in September, according to people close to the case, “a sign that the government saw him more as a witness than a suspect,” Mr. Protess writes. “Investigators cotinue to examine one of his statements from the September session, the people close to the case said. The statement involved Mr. Corzine’s recollection about a phone call he had with JPMorgan Chase, which received a suspicious $175 million transfer from MF Global on its last day of business.”

Mr. Corzine, for his part, is beginning to put the saga behind him. In addition to working on a charitable effort in Central America, Mr. Corzine “was close to cooperating with Richard Ben Cramer, an author and a Pulitzer Prize-winning reporter, on a biography. Mr. Corzine’s lawyers were in the final stages of negotiating with Mr. Cramer this month when the author died from complications of lung cancer.”

TOP FEDERAL PROSECUTOR TO DEPART  |  Lanny A. Breuer, who went after financial wrongdoing as head of the Justice Department’s criminal division, is to announce on Wednesday that he is st! epping do! wn after nearly four years, DealBook’s Ben Protess reports. Mr. Breuer’s departure is effective March 1, and it is expected that he will return to private practice. “While he has come under fire for a dearth of prosecutions on Wall Street in response to the crisis, Mr. Breuer also oversaw an aggressive crackdown on money laundering and interest-rate manipulation at some of the world’s biggest banks. In two weeks last month, he joined a nearly $2 billion case against HSBC for money laundering and a $1.5 billion settlement with UBS for rate-rigging. Next week, he is expected to take a similar rate-rigging action against the Royal Bank of Scotland.” In an interview, Mr. Breuer said his work at the agency had been “the highlight of my professional career.”

ON THE AGENDA  |  Research i Motion is to introduce the new BlackBerry at 10 a.m. The Federal Reserve’s policy-making committee issues a statement at 2:15 p.m., at the conclusion of a two-day meeting. Facebook and ConocoPhillips report earnings after the market closes. An estimate of gross domestic product in the fourth quarter is to be released at 8:30 a.m. Greg Rayburn, chief executive of Hostess Brands, is on Bloomberg TV at 8 a.m. Thorsten Heins, chief executive of Research in Motion, is on CNBC at 2 p.m.

DRAWING LESSONS FROM A DEAL GONE WRONG  |  The legal dispute over the $580 million sale of Dragon Systems to Lernout & Hauspie may offer some lessons for entrepreneurs and others working with investment bankers. The fight between Dragon’s founders and Goldman Sachs, which was resolved ! last week! in Goldman’s favor, centered on whether the investment bank had been negligent with its advice in the all-stock deal, which soured when Lernout’s accounting was exposed as a fraud and the company collapsed. “The biggest lesson may be to know your advisers,” Steven M. Davidoff writes in the Deal Professor column. The role of an investment bank “can be quite narrow,” and it is up to accountants to catch possible fraud. The founders of Dragon “appear to think that their advisers should have saved them from themselves and that they could negotiate a better deal than Goldman Sachs. That was a mistake.”

Mergers & Acquisitions Â'

Kinder Morgan to Buy Copano Energy fr $3.2 Billion  |  Kinder Morgan Energy Partners has agreed to buy the natural gas services company Copano Energy in an all-stock deal worth $3.2 billion. DealBook Â'

Write-Downs From Mining Deals Reach $50 Billion  |  Bloomberg News reports: “The world’s biggest mining and steel companies have wiped about $50 billion off project valuations in the past year and the purge is poised to continue this earnings season as managers reassess expensive takeovers.” BLOOMBERG NEWS

Hostess Said to Pick Apollo and Metropoulos as Lead Bidder! for Twin! kies  |  Hostess Brands is near a deal to name a pair of private equity firms as the collective lead bidder for its Twinkies brand, a person briefed on the matter said on Tuesday. DealBook Â'

AMR Chief Said to Be in Talks to Become Chairman of Merged Company  |  Tom Horton, the chief executive of AMR, “is in talks about becoming board chairman if the American Airlines parent merges with US Airways Group Inc., one of a number of signs both companies are nearing a deal that could create the world’s largest airline by traffic, said people familiar with the discussions,” The Wall Street Journal reports. WALL STREET JOURNAL

Thermo Fisher Said to Weigh Making an Offer for Life Technologies  | 
REUTERS

DuPont Said to Consider Selling Cyanide Unit  | 
REUTERS

OpenTable to Acquire Foodspotting for $10 Million  |  OpenTable, the online reservation business, said on Tuesday that it had agreed to buy Foodspotting, a San Francisco social media start-up, for $10 million. DealBook Â'

INVESTMENT BANKING Â'

Chief of the Jefferies Earned $19 Million in 2012  |  Richard B. Handler, the chief executive of the Jefferies Group, made more in 2012 than Jamie Dimon, head of JPMorgan Chase. DealBook Â'

Deutsche Bank Expected to Report a Loss  |  Analysts surveyed by Bloomberg said restructuring costs would likely weigh on Deutsche Bank’s fourth-quarter results, which are to be reported on Thursday. BLOOMBERG NEWS

Gleacher to Leave His Investment Bank  |  Eric J. Gleacher, a veteran deal maker who participated in the fight over RJR Nabisco, said on Tuesday that he would leave the investment bank he founded about 23 years ago. DealBook Â'

Morgan Stanley’s Cross-Asset Strategist to Leave the Firm  | 
BLOOMBERG NEWS

PRIVATE EQUITY Â'

In Dell Buyout, Founder Said to Seek Majority Control  |  Bloomberg News reports: “Michael Dell is seeking majority control of Dell Inc. in a buyout that would combine his 15.7 percent stake in the company with as much as $1 billion of his personal funds, said people familiar with the matter.” BLOOMBERG NEWS

Rubenstein Pledges $50 Million to Kennedy Center  |  David M. Rubenstein, the Carlyle Group co-founder, is giving $50 million to the John F. Kennedy Center for the Performing Arts, making him the center’s largest donor, Bloomberg News reports. BLOOMBERG NEWS

Archer Capital Said to Consider Putting Ausfuel on the Block  |  The Australian private equity firm Archer Capital is considering selling Ausfuel, a wholesale oil distributor that could be worth up to $681 million, The Wall Street Journal reports. WALL STREET JOURNAL

HEDGE FUNDS Â'

Pensioners on the Side of Hedge Funds Against Argentina  |  Several holdouts from a debt swap who are pensioners traveled to New York, a month before an appeals court is to make an important decision on a legal case that has pitted the hedge fund manager Paul E. Singer against the government of Arg! entina. DealBook Â'

Herbalife Registers Web Sites in Ackman’s Name  |  After the hedge fund manager William A. Ackman accused Herbalife of being a fraud, the company registered Internet domain names that involve the investor’s name, including therealbillackman.com and billackman.net, Bloomberg News reports. BLOOMBERG NEWS

Elliott Management Calls for Board Shake-Up at Hess  |  The hedge fund, run by Paul E. Singer, pushed Hess investors on Tuesday to vote for a slate of five independent directors, as part of broader effort to blster the oil company’s share price. DealBook Â'

The Case for Shaking Up the Hess Board  |  With a too cozy board, It’s no coincidence that the oil company has had a record of inefficient operations, Christopher Swann of Reuters Breakingviews writes. DealBook Â'

I.P.O./OFFERINGS Â'

How Facebook Is Remaking Itself  |  In an effort to improve its market value, Facebook is “re-engineering itself into a mobile business,” The Wall Street Journal! writes. ! WALL STREET JOURNAL

Mapletree Investments Said to Seek $1.2 Billion I.P.O. of Property Assets  | 
BLOOMBERG NEWS

VENTURE CAPITAL Â'

In Tech Deals, Google and Facebook Were Active in 2012  |  The data provider CB Insights released a report showing that 2,277 private technology companies were acquired in 2012. TECHCRUNCH

LEGAL/REGULATORY Â'

Fed May Be Forced to Sell Bonds at a Loss  |  The Wall Street Journal reports: “The Federal Reserve could be charting a course that leaves the highly profitable central bank with no extra income to hand over to the U.S. Treasury for several years. That is the conclusion of five Fed staff economists who examined how the central bank’s bond-buying programs will affect its profitability over the long run.” WALL STREET JOURNAL

French Central Bank! Workers ! on Strike  |  The New York Times reports: “The French central bank is going on strike. More than 1,500 employees were demonstrating Tuesday in Paris, union officials said, in a protest against a restructuring of the Banque de France that is expected to result in the loss of about 2,500 jobs by 2020.” NEW YORK TIMES

R.B.S. Stock Drops Amid Concerns of Potential Guilty Plea in Libor Case  |  Shares of the Royal Bank of Scotland stumbled on Tuesday after it emerged that federal authorities were pursuing a guilty plea against an Asian subsidiary at the center of an interest-rate manipulation scandal. DealBook Â'/p>

Fischer to Leave Bank of Israel  |  Stanley Fischer, a former vice chairman of Citigroup, announced on Tuesday that he would step down on June 30 as governor of Israel’s central bank. DealBook Â'

Smog, Fraud and Diplomacy  |  Some believe that China’s environmental crisis, if left unchecked, may ultimately threaten the Communist Party’s rule, Bill Bishop writes in the China Insider column. DealBook Â'

End of the Road for Chesapeake\'s C.E.O.

After months of criticism of his compensation plan, Aubrey K. McClendon is retiring as chief executive of Chesapeake Energy on April 1, the company announced on Tuesday. A larger-than-life figure, Mr. McClendon co-founded Chesapeake and built the company through a series of deals that shaped the natural gas industry. “It’s an end of an era,” said Fadel Gheit, a senior oil analyst at Oppenheimer.

Mr. McClendon’s departure comes after months of scrutiny and upheaval. Under pressure from shareholders, the company replaced more than half of its directors after news reports said the chief executive had gotten personal loans using stakes in company-owned wells as collateral. The company said the board’s review of Mr. McClendon’s financial dealings “to date has not revealed improper onduct.”

Investors welcomed the news of Mr. McClendon’s departure, sending shares up more than 10 percent after hours. On Tuesday, Carl C. Icahn, one of the shareholders who had pushed for a revamped board, was generous in his praise. “Aubrey has every right to be proud of the company he has built, the world-class team of people at Chesapeake and the collection of assets he has assembled, which in my opinion are the best portfolio of energy assets in the country,” he said.

Still, Chesapeake faces challenges. The company has struggled as the natural gas boom has faded, losing more than two-thirds of its value over the last few years, Clifford Krauss and Michael J. de la Merced write in DealBook.

MF GLOBAL CUSTOMERS’ HAPPY RESULTS  |  Under a proposal that will be reviewed by a bankruptcy court on Thursday, customers of the failed brokerage firm MF Global would receive 93 p! ercent of their missing money. “And the trustee who has submitted the proposal, James W. Giddens, has quietly identified a way that, if sent to the judge and approved, could plug the remaining shortfall for customers in the United States, according to people involved in the case,” DealBook’s Ben Protess reports. “The broad push to make MF Global customers nearly whole, a goal now surprisingly within reach, is a remarkable turnaround from the firm’s 2011 bankruptcy filing when such a recovery seemed impossible.”

Investigators continue to collect evidence on the firm’s demise. Federal authorities interviewed Jon S. Corzine, a former New Jersey governor who ran MF Global when it collapsed, over two days in September, according to people close to the case, “a sign that the government saw him more as a witness than a suspect,” Mr. Protess writes. “Investigators cotinue to examine one of his statements from the September session, the people close to the case said. The statement involved Mr. Corzine’s recollection about a phone call he had with JPMorgan Chase, which received a suspicious $175 million transfer from MF Global on its last day of business.”

Mr. Corzine, for his part, is beginning to put the saga behind him. In addition to working on a charitable effort in Central America, Mr. Corzine “was close to cooperating with Richard Ben Cramer, an author and a Pulitzer Prize-winning reporter, on a biography. Mr. Corzine’s lawyers were in the final stages of negotiating with Mr. Cramer this month when the author died from complications of lung cancer.”

TOP FEDERAL PROSECUTOR TO DEPART  |  Lanny A. Breuer, who went after financial wrongdoing as head of the Justice Department’s criminal division, is to announce on Wednesday that he is st! epping do! wn after nearly four years, DealBook’s Ben Protess reports. Mr. Breuer’s departure is effective March 1, and it is expected that he will return to private practice. “While he has come under fire for a dearth of prosecutions on Wall Street in response to the crisis, Mr. Breuer also oversaw an aggressive crackdown on money laundering and interest-rate manipulation at some of the world’s biggest banks. In two weeks last month, he joined a nearly $2 billion case against HSBC for money laundering and a $1.5 billion settlement with UBS for rate-rigging. Next week, he is expected to take a similar rate-rigging action against the Royal Bank of Scotland.” In an interview, Mr. Breuer said his work at the agency had been “the highlight of my professional career.”

ON THE AGENDA  |  Research i Motion is to introduce the new BlackBerry at 10 a.m. The Federal Reserve’s policy-making committee issues a statement at 2:15 p.m., at the conclusion of a two-day meeting. Facebook and ConocoPhillips report earnings after the market closes. An estimate of gross domestic product in the fourth quarter is to be released at 8:30 a.m. Greg Rayburn, chief executive of Hostess Brands, is on Bloomberg TV at 8 a.m. Thorsten Heins, chief executive of Research in Motion, is on CNBC at 2 p.m.

DRAWING LESSONS FROM A DEAL GONE WRONG  |  The legal dispute over the $580 million sale of Dragon Systems to Lernout & Hauspie may offer some lessons for entrepreneurs and others working with investment bankers. The fight between Dragon’s founders and Goldman Sachs, which was resolved ! last week! in Goldman’s favor, centered on whether the investment bank had been negligent with its advice in the all-stock deal, which soured when Lernout’s accounting was exposed as a fraud and the company collapsed. “The biggest lesson may be to know your advisers,” Steven M. Davidoff writes in the Deal Professor column. The role of an investment bank “can be quite narrow,” and it is up to accountants to catch possible fraud. The founders of Dragon “appear to think that their advisers should have saved them from themselves and that they could negotiate a better deal than Goldman Sachs. That was a mistake.”

Mergers & Acquisitions Â'

Kinder Morgan to Buy Copano Energy fr $3.2 Billion  |  Kinder Morgan Energy Partners has agreed to buy the natural gas services company Copano Energy in an all-stock deal worth $3.2 billion. DealBook Â'

Write-Downs From Mining Deals Reach $50 Billion  |  Bloomberg News reports: “The world’s biggest mining and steel companies have wiped about $50 billion off project valuations in the past year and the purge is poised to continue this earnings season as managers reassess expensive takeovers.” BLOOMBERG NEWS

Hostess Said to Pick Apollo and Metropoulos as Lead Bidder! for Twin! kies  |  Hostess Brands is near a deal to name a pair of private equity firms as the collective lead bidder for its Twinkies brand, a person briefed on the matter said on Tuesday. DealBook Â'

AMR Chief Said to Be in Talks to Become Chairman of Merged Company  |  Tom Horton, the chief executive of AMR, “is in talks about becoming board chairman if the American Airlines parent merges with US Airways Group Inc., one of a number of signs both companies are nearing a deal that could create the world’s largest airline by traffic, said people familiar with the discussions,” The Wall Street Journal reports. WALL STREET JOURNAL

Thermo Fisher Said to Weigh Making an Offer for Life Technologies  | 
REUTERS

DuPont Said to Consider Selling Cyanide Unit  | 
REUTERS

OpenTable to Acquire Foodspotting for $10 Million  |  OpenTable, the online reservation business, said on Tuesday that it had agreed to buy Foodspotting, a San Francisco social media start-up, for $10 million. DealBook Â'

INVESTMENT BANKING Â'

Chief of the Jefferies Earned $19 Million in 2012  |  Richard B. Handler, the chief executive of the Jefferies Group, made more in 2012 than Jamie Dimon, head of JPMorgan Chase. DealBook Â'

Deutsche Bank Expected to Report a Loss  |  Analysts surveyed by Bloomberg said restructuring costs would likely weigh on Deutsche Bank’s fourth-quarter results, which are to be reported on Thursday. BLOOMBERG NEWS

Gleacher to Leave His Investment Bank  |  Eric J. Gleacher, a veteran deal maker who participated in the fight over RJR Nabisco, said on Tuesday that he would leave the investment bank he founded about 23 years ago. DealBook Â'

Morgan Stanley’s Cross-Asset Strategist to Leave the Firm  | 
BLOOMBERG NEWS

PRIVATE EQUITY Â'

In Dell Buyout, Founder Said to Seek Majority Control  |  Bloomberg News reports: “Michael Dell is seeking majority control of Dell Inc. in a buyout that would combine his 15.7 percent stake in the company with as much as $1 billion of his personal funds, said people familiar with the matter.” BLOOMBERG NEWS

Rubenstein Pledges $50 Million to Kennedy Center  |  David M. Rubenstein, the Carlyle Group co-founder, is giving $50 million to the John F. Kennedy Center for the Performing Arts, making him the center’s largest donor, Bloomberg News reports. BLOOMBERG NEWS

Archer Capital Said to Consider Putting Ausfuel on the Block  |  The Australian private equity firm Archer Capital is considering selling Ausfuel, a wholesale oil distributor that could be worth up to $681 million, The Wall Street Journal reports. WALL STREET JOURNAL

HEDGE FUNDS Â'

Pensioners on the Side of Hedge Funds Against Argentina  |  Several holdouts from a debt swap who are pensioners traveled to New York, a month before an appeals court is to make an important decision on a legal case that has pitted the hedge fund manager Paul E. Singer against the government of Arg! entina. DealBook Â'

Herbalife Registers Web Sites in Ackman’s Name  |  After the hedge fund manager William A. Ackman accused Herbalife of being a fraud, the company registered Internet domain names that involve the investor’s name, including therealbillackman.com and billackman.net, Bloomberg News reports. BLOOMBERG NEWS

Elliott Management Calls for Board Shake-Up at Hess  |  The hedge fund, run by Paul E. Singer, pushed Hess investors on Tuesday to vote for a slate of five independent directors, as part of broader effort to blster the oil company’s share price. DealBook Â'

The Case for Shaking Up the Hess Board  |  With a too cozy board, It’s no coincidence that the oil company has had a record of inefficient operations, Christopher Swann of Reuters Breakingviews writes. DealBook Â'

I.P.O./OFFERINGS Â'

How Facebook Is Remaking Itself  |  In an effort to improve its market value, Facebook is “re-engineering itself into a mobile business,” The Wall Street Journal! writes. ! WALL STREET JOURNAL

Mapletree Investments Said to Seek $1.2 Billion I.P.O. of Property Assets  | 
BLOOMBERG NEWS

VENTURE CAPITAL Â'

In Tech Deals, Google and Facebook Were Active in 2012  |  The data provider CB Insights released a report showing that 2,277 private technology companies were acquired in 2012. TECHCRUNCH

LEGAL/REGULATORY Â'

Fed May Be Forced to Sell Bonds at a Loss  |  The Wall Street Journal reports: “The Federal Reserve could be charting a course that leaves the highly profitable central bank with no extra income to hand over to the U.S. Treasury for several years. That is the conclusion of five Fed staff economists who examined how the central bank’s bond-buying programs will affect its profitability over the long run.” WALL STREET JOURNAL

French Central Bank! Workers ! on Strike  |  The New York Times reports: “The French central bank is going on strike. More than 1,500 employees were demonstrating Tuesday in Paris, union officials said, in a protest against a restructuring of the Banque de France that is expected to result in the loss of about 2,500 jobs by 2020.” NEW YORK TIMES

R.B.S. Stock Drops Amid Concerns of Potential Guilty Plea in Libor Case  |  Shares of the Royal Bank of Scotland stumbled on Tuesday after it emerged that federal authorities were pursuing a guilty plea against an Asian subsidiary at the center of an interest-rate manipulation scandal. DealBook Â'/p>

Fischer to Leave Bank of Israel  |  Stanley Fischer, a former vice chairman of Citigroup, announced on Tuesday that he would step down on June 30 as governor of Israel’s central bank. DealBook Â'

Smog, Fraud and Diplomacy  |  Some believe that China’s environmental crisis, if left unchecked, may ultimately threaten the Communist Party’s rule, Bill Bishop writes in the China Insider column. DealBook Â'

HSBC Adds to Oversight Effort With Board Committee

LONDON - HSBC said on Wednesday that it had created a new board committee to improve oversight, appointing five independent advisers to work with the group of directors.

The group, called the financial system vulnerabilities committee, is part of the renewed focus on compliance and governance after HSBC’s $1.92 billion settlement over money laundering charges. American authorities accused the bank of allowing Mexican drug cartels to launder money and of working closely with Saudi Arabian banks linked to terrorist organizations.

“The new committee, which will benefit from the experience of the expert advisers, will provide invaluable guidance and advice as we strengthen our capabilities and enforce the highest standards, in particular in relation to combating financial crime,” Stuart T. Gulliver, the chief executive of HSBC, said in a statement. “The caliber, status and experience of the individuals reinforce once more how seriously we are taking this.”

Among the advisers is Davd Hartnett, a former British permanent secretary for tax who was criticized in 2011 by British lawmakers for favoring corporate taxpayers, including Goldman Sachs, and overseeing a mistake in calculating interest owed. He retired from the job last year.

The committee will also be advised by William Hughes, who led Britain’s Serious Organized Crime Agency for six years until 2010, and Juan C. Zarate, a former United States deputy national security adviser for combating terrorism. The other advisers are Nick Fishwick, a former British counterterrorism official, and Leonard H. Schrank, the former chief executive of the global financial messaging system called Swift.

Europe Blocks U.P.S.\'s $6.9 Billion Takeover of TNT Express

European antitrust regulators on Wednesday officially blocked United Parcel Service's proposed $6.9 billion takeover of the Dutch shipping company TNT Express. The announcement comes two weeks after U.P.S. said it was withdrawing its bid because it had failed to meet the demands from Europe's competition authorities. Read more »

Europe Blocks U.P.S.\'s $6.9 Billion Takeover of TNT Express

European antitrust regulators on Wednesday officially blocked United Parcel Service's proposed $6.9 billion takeover of the Dutch shipping company TNT Express. The announcement comes two weeks after U.P.S. said it was withdrawing its bid because it had failed to meet the demands from Europe's competition authorities. Read more »