Big Banks Go Wrong, but Pay a Little Price

Are banks too big to jail

If there was any doubt about the answer to that question, Eric Holder, the nation’s attorney general, last week blurted out what we’ve all known to be true but few inside the Obama administration have said aloud: Yes, they are.

“I am concerned that the size of some of these institutions becomes so large that it does become difficult for us to prosecute them when we are hit with indications that if we do prosecute â€" if we do bring a criminal charge â€" it will have a negative impact on the national economy, perhaps even the world economy,” Mr. Holder told the Senate Judiciary Committee. “I think that is a function of the fact that some of these institutions have become too large.”

Mr. Holder continued, acknowledging that the size of banks “has an inhibiting influence” He said that it affects “our ability to bring resolutions that I think would be more appropriate.”

In other words, Mr. Holder said, for the first time, that he has not pursued prosecutions of big banks out of fear that an indictment could jeopardize the financial system.

Mr. Holder’s comment raises all sorts of questions. Does this mean that our banks are still too big to fail Should we prosecute corporations Should the size of an institution or its systemic importance influence the decision of prosecutors What’s the right policy

At a minimum, Mr. Holder’s comments are embarrassingly at odds with the Obama administration’s view that too-big-to-fail was fixed by the Dodd-Frank financial regulation law.
Here’s Timothy Geithner, the former Treasury secretary, with the administration’s official line at a hearing in 2010 right before the Dodd-Frank bill passed: “The reforms will end too-big-to-fail,” he said unequivocally. “The federal government will have the authority to close large failing financial firms in an orderly and fair way, without putting taxpayers and the economy at risk.”

Apparently, Mr. Holder didn’t get the memo.

As you can imagine, both the left and the right made hay of Mr. Holder’s statement, using it as a damning explanation for the lack of prosecutions of Wall Street. Senator Elizabeth Warren led the charge.

“It has been almost five years since the financial crisis, but the big banks are still too big to fail,” Ms. Warren, a Democrat, said in a statement. “Attorney General Holder’s testimony that the biggest banks are too-big-to-jail shows once again that it is past  time to end too-big-to-fail.”

Putting aside the important matter of whether our banks are too big to fail, there is a more pressing and difficult question that needs to be answered here and now: Do we want to indict corporations And is it effective

In the aftermath of the financial crisis, the prevailing view is that nobody on Wall Street was held accountable for the damage caused to the economy and millions of Americans. But the fact that prosecutors have not claimed a big-time scalp in the financial crisis obscures the issue of pros! ecuting c! ompanies themselves and the complications such prosecutions raise.

Forgotten is the lesson of Arthur Andersen, the accounting firm that was charged with obstruction of justice in the bankruptcy of Enron. The charges against the firm put it out of business, and 28,000 employees â€" most of whom had nothing to do with the Enron case or the shredding of documents â€" lost their jobs. Making matters worse, the conviction of Arthur Andersen was overruled on appeal by the Supreme Court. Prosecutors decided not to pursue the case.

Ever since then, the Justice Department has been much more cognizant of the collateral damage of bringing a criminal case against a company â€" as opposed to prosecuting the individual employees responsible for the crime.

According to Justice Department guidelines, before bringing a criminal case, prosecutors must consder “the nature and seriousness of the offense, including the risk of harm to the public, and applicable policies and priorities, if any, governing the prosecution of corporations for particular categories of crime.”

The conventional wisdom is that simply charging a company with a crime raises the possibility of putting the firm out of business because customers, suppliers, counterparties and others will stop doing business with it. That is debatable, but it is a view that has been widely adopted by prosecutors.

In truth, our banks aren’t the only companies that are too big to jail. If any of the largest employers in the country were to be indicted, what would happen The government could clamp down with new controls on operations. But it is also possible that charges could bring down the companies, leaving huge job losses in their wake, and harming shareholders, pensioners and suppliers.

“There is something fundamentally wrong about condemnation of one person for the actio! ns of ano! ther, and if this is true for individuals, it is at least somewhat true when corporations, consisting of many component parts, are blamed for the actions of one component part,” Elizabeth K. Ainslie, a former prosecutor, wrote in a seminal paper called “Indicting Corporations Revisited: Lesson of the Arthur Andersen Prosecution.”

But what about the deterrence effect Doesn’t charging an entire company with a crime make employees less likely to engage in criminal behavior

“On balance, the public benefits generated by prosecuting Andersen criminally were minimal or, if they existed at all, were exceedingly subtle. No one went to jail as a result of its conviction, nor could they have under the law,” Ms. Ainslie wrote.

That’s not to say the government shouldn€™t pursue prosecutions of criminal conduct at corporations. They should do so aggressively.

But there is a powerful argument to be made that prosecutors should focus on the individuals responsible for the misconduct.

If prosecutors had already claimed a prominent scalp from the financial crisis, there wouldn’t be such a loud conversation about too-big-to-jail.

Responding to Financial Crisis, Britain Overhauls Its Regulators

LONDON â€" After the financial crisis, countries like the United States adopted wide-ranging changes to their banking regulation.

Yet Britain was the only major economic power to go a step further by completely overhauling its regulators.

Taking the place of the current watchdog, the Financial Services Authority, will be two new bodies created to oversee the country’s banks, hedge funds and other financial institutions. The Prudential Regulation Authority will monitor Britain’s largest banks, while the Financial Conduct Authority will be responsible for consumer protection and market abuse. They will take over in April.

“Britain has gone for a complete overhaul,” said James Smethurst, a regulatory partner at the law firm Freshfields Bruckhaus Deringer in London. “It’s a big task to ensure everything will work the way it should.”

By splitting the duties of the Financial Services Authority, policy makers hope to separate the daily monitoring of banks’ financial healthfrom the policing of illegal activity like insider trading. The goal is to allow the separated regulators to focus on their own areas, instead of trying to cover everything from banks’ capital buffers to market abuse.

It is the second time since the late 1990s that Britain has done a major regulatory revamping. In response to the growing complexity in the financial industry, the Financial Services Authority was created starting in 1997 by progressively combining nine smaller agencies. The authority also assumed control of banking regulation from the Bank of England.

Yet as the financial crisis left Britain’s banks on a knife-edge, politicians began to doubt whether the sole regulator could keep on top of the wide-ranging problems facing the country’s financial institutions.

“When a system of! regulation fails so spectacularly, people are going to ask what replaces it,” George Osborne, the chancellor of the Exchequer, said in a 2010 speech announcing the most recent major overhaul.

The task awaiting the new regulatory bodies will not be easy.

A series of recent scandals has tarnished London’s reputation as a global financial center. The wrongdoing raised questions about why regulators had failed to spot a glut of risky lending by British banks, money laundering for drug cartels and other illicit activity that has cost consumers around the world billions of dollars.

Further scandals, including a $2.3 billion loss from illegal activity in London by a former UBS trader, Kweku M. Adoboli, and a $6 billion trading loss at a London-based unit of JPMorgan Chase, have heaped further pressure on British regulators.

“When we look back, last year will be seen as the low point,” said Martin Wheatley, who will take control of the Financial Conduct Authority after six years with the Securities and Futures Commission, the regulator in Hong Kong. “The time is right; we can rebuild from here.”

This is the toughest job of Mr. Wheatley’s career. After earning a philosophy and English degree from the University of York, Mr. Wheatley, 54, worked for the London Stock Exchange for almost two decades before becoming a regulator. Over 6 feet tall, he comes off as relaxed and laid-back â€" traits that will inevitably be tested by future financial crises.

His counterpart at t! he Pruden! tial Regulation Authority will be Andrew Bailey, a Cambridge-educated economist, whose sometimes rambling comments would not be out of place at a university lecture hall.

Mr. Bailey, 53, who has spent more than 25 years working at the Bank of England, will oversee 1,300 regulators based in a building in London’s historic financial district, just around the corner from the British central bank. “We are holding institutions to higher standards than before the crisis,” he said.

In an odd twist, the regulators will work from the desks formerly used by one of the banks they regulate â€" JPMorgan Chase. The authority leased the building when JPMorgan moved its staff to Canary Wharf last year and bought much of the furniture in the building.

Canary Wharf, London’s newer financial hub, will also be home to the Financial Conduct Authority and its staff of 2,600.

Not everyone believes the two new bodies will have an impact.

While the regulatory structure has changed, the enforcemnt powers remain essentially unchanged. London’s financial community is awash with skeptics who question how dividing regulatory powers into two new bodies will safeguard against future abuses.

“Regulators never had a lack of powers â€" they had an unwillingness to use them,” said Bob Penn, a regulatory partner at the law firm Allen & Overy in London. “Regulators failed, not the regulatory structure.”

Both Mr. Bailey and Mr. Wheatley admit the new regulatory structure may not have stopped the recent failures that have blackened London’s reputation as a financial hub.

At the Prudential Regulation Authority, which will focus on banks’ governance and capital reserves, regulators will be expected to take a more aggressive stance on how firms price risk. That will include questioning boards on risky trading activity that may leave banks underfinanced, as well as subjecting senior management to greater scrutiny over how they run their businesses.

The efforts to change ! banking c! ulture follow widespread criticism of Barclays’ senior executives after the bank announced it would pay a $450 million fine to settle claims by American and British authorities related to manipulation of the London interbank offered rate, or Libor. In testimony to British politicians, Mr. Bailey accused the bank of having a “culture of gaming” the regulatory system.

“You can’t regulate culture,” Mr. Bailey said. “We expect standards that put more emphasis on the public interest.”

For its part, the Financial Conduct Authority plans to place a priority on industrywide investigations over those that take aim at individual firms.

In lat January, British regulators demanded that local lenders review the sale of certain interest-rate hedging products to small businesses after 90 percent of a sample of the instruments was found to have been sold improperly. The case, which already has forced banks to set aside more than $1 billion in potential payouts, resulted from a yearlong investigation that showed the misconduct was endemic across the country’s banking industry.

British regulators and their United States and international counterparts also continue to investigate several global banks over the manipulation of important global benchmark rates like Libor. So far, the abuses have been limited mostly to low-ranking traders and managers, though authorities will hold senior executives accountable if they are implicated.

“In most cases, a direct line to the top management hasn’t been there,” Mr. Wheatley said. “If we see a clear guiding hand from boards, we would take a stronger line.”

In the countdown to th! e regulat! ory changeover in early April, some analysts fear that the pending changes will lead to turf wars between the two new bodies.

Many of the country’s largest institutions will be policed by both institutions, though the separate authorities have different priorities.

The focus of the Prudential Regulation Authority, for example, is on banks’ financial well-being, while the Financial Conduct Authority will emphasize consumer protection. Sometimes, regulatory experts say, these different goals will lead to contradictory rulings with little clarity over who will act as referee between the two agencies.

For Britain to regain its reputation as a global financial center, a lot is riding on how Mr. Bailey and Mr. Wheatley will work with each other. Both men have put in all-nighters together dealing with scandals like the implosion of MF Global, and ach will sit on the other institution’s management board, though potential conflicts â€" particularly at times of financial crisis â€" are almost inevitable.

“We have to make it work,” Mr. Bailey said. “The system won’t succeed if we don’t work together.”

Oppenheimer Settles S.E.C.’s Accusations It Misled Investors

Oppenheimer & Company will pay nearly $3 million to settle accusations by federal and state regulators that it misled investors about the performance of one of its private equity funds, in a case that signals stepped-up scrutiny of the buyout industry and how it values its holdings.

The Securities and Exchange Commission said that Oppenheimer had inflated the value of the largest investment in its fund. The false valuation raised the fund’s internal rate of return â€" the preferred performance metric for private equity vehicles â€" to about 38 percent from 3.8 percent, the S.E.C. said.

“Honest discloure about how investments are valued and how performance is measured is vital to private equity investors,” said George S. Canellos, the S.E.C.’s acting director of enforcement. “This action against Oppenheimer for misleadingly writing up the value of illiquid investments is clear warning that the S.E.C. will not tolerate lax disclosure practices in the marketing of private equity funds.”

In recent years, the regulator has grown concerned over how private equity firms value their holdings, many of which are illiquid and hard to measure. Unlike mutual funds that own publicly traded stocks, private equity firms own private companies whose values can be difficult to determine.

Regulators have said that they are worried that certain firms might be embellishing returns in order to impr! ess prospective investors in their funds. S.E.C. officials have said that in the currently difficult fund-raising environment, there is a possible incentive for firms to exaggerate the value of their portfolios.

As part of its settlement, Oppenheimer agreed to pay the S.E.C. a fine of about $620,000 and return about $2.3 million to investors. It neither admitted nor denied the accusations. The firm also resolved a parallel action brought by the Massachusetts attorney general’s office, agreeing to pay an additional penalty of about $132,000.

An Oppenheimer spokesman said that the firm thought it had put in place additional policies and procedures related to the valuation of its funds and was pleased to put this matter behind it.

The Oppenheimer fund at the center of the case was a so-called fund of funds â€" a private equity fund that invested in other private equity vehicles. Called Oppenheimer Global Resource Private Equity Fund, it focused on investments in the energy sector. It was a elatively small fund, managing about $100 million, according to securities filings.

In 2009, just after the financial crisis hit, executives managing the Oppenheimer fund started to fudge its performance when trying to raise money from prospective investors, the S.E.C. said.

The Oppenheimer managers propped up the value of its largest position, a stake in a fund called Cartesian Investors, according to the regulators. Cartesian, it turned out, had only one holding, S. C. Fondul Proprietatea, a company that the Romanian government had set up to compensate its citizens for property seized by the Communist government.

Oppenheimer deceived the fund’s investors, which included public pension funds and school endowments, by telling them that outside auditors had vetted the returns. It also said that Cartesian itself had used a third-party valuation firm to determine its value. Neither was true, according to the S.E.C.

As the holdings of private equity firms have grown larger and m! ore compl! ex, a lucrative cottage industry has developed around providing independent valuations of hard-to-value investments. Last December, the Carlyle Group, one of the world’s largest private equity firms, led a group that agreed to buy Duff & Phelps, a firm that has a specialty in this area, for about $665 million.

The Billion-Dollar Banker

Which banker’s services are worth $1 billion

Apparently, those of Andre Esteves are. When Eike Batista, fellow Brazilian billionaire, said he was seeking financial and strategic advice from Mr. Esteves, the BTG Pactual boss, for his oil empire, investors initially lifted the market value of the six listed and intertwined arms by $1.3 billion. The expectations may be too high.

Mr. Esteves, a trading whiz, has forged a formidable reputation for value enhancement. After agreeing to sell his bank to UBS in 2006 for about $3.1 billion, he bought it back from the Swiss group a few years later for less. A year ago, he took BTG Pactual public at a value of more than $14 billion.

Reviving Mr. Batista’s struggling EBX group will put Mr. Esteves’s skills to a big test. Last week’s gains, which followed some $28 billion of market value destruction ina year, occurred without investors even knowing exactly what Mr. Esteves would be doing for Mr. Batista beyond providing access to an unspecified amount of credit and co-presiding over a weekly strategy meeting.

Management shakeups have been the game plan so far. Mr. Batista has fired five chief executives in less than a year. And at OGX, the flagship oil company where production targets have been slashed, the chief financial officer and exploration boss were fired, too.

Mr. Batista, who has lost the title of Brazil’s richest man, obviously needs more ideas. Output at OGX is just a quarter of what had been expected. Mr. Batista is also facing delays and cost overruns with port projects and shipbuilding. The country’s fortunes haven’t helped. Brazil’s G.D.P. growth rate slumped to 0.9 percent in 2012 from 7.5 percent in 2010.

Investors may be anticipating fresh capital or additional financing. BTG Pactual is providing EBX with a $1 billion line of credit, according to Bloombe! rg. Even so, it could be a challenge, even for a proven salesman like Mr. Esteves, to raise new money given recent experiences. Mubadala, the Abu Dhabi state investment fund, bought a $2 billion stake in the unlisted EBX holding company a year ago.

The X in Mr. Batista’s corporate names is supposed to represent multiplication of wealth. It’s just not clear yet given all the operational and cash needs throughout EBX that even Mr. Esteves can make the math work.

Christopher Swann is a columnist and Jeffrey Goldfarb is an assistant editor at Reuters Breakingviews. For more independent commentary and analysis, visit breakingviews.com.

Former Senator Scott Brown to Join Nixon Peabody

The tried-and-true tradition of law firms serving as homes for ousted and retired politicians is alive and well.

Scott Brown, the former Massachusetts senator who lost his seat to Elizabeth Warren last year, said on Monday that he was joining the law firm Nixon Peabody. He will work in the firm’s Boston headquarters and focus on the financial services industry and commercial real estate matters, according to firm.

“During my time in politics, I never hesitated to reach across the aisle to work with members of any political party to secure a preferable outcome,” Mr. Brown said in the news release. “My approach is consistent with the way Nixon Peabody does business and I believe we can be successful together.”

Last week, Jon Kyl, the longtime Republican senator from Arizona who recently retired, announced that he was joining Covington & Burling’s government affairs practice to focus on tax reform and health care, among other areas. Last month, Kay Bailey Hutchison, the senator from Texas who also retired, joined the Dallas office of Bracewell & Giuliani.

At Nixon Peabody, which has 700 lawyers, Mr. Brown will be practicing law and will not be working as a lobbyist. A graduate of Boston College Law School, Mr. Brown served as a state legislator for about a dozen years before he was elected in 2010 to the senate seat that became vacant after the death of Ted Kennedy. He has practiced law since 1985, and before his public service, had a solo practice handling real estate transactions.

In her campaign to unseat Mr. Brown, Ms. Warren had highlighted the senator’s ties to the financial services industry and accused him of defending Wall Street’s interests.

“Scott’s ability to connect people with opportunities is an excellent fit with Nixon Peabody’s culture and strategic priorities,” said Andrew I. Glincher, the firm’ chief executive and managing partner. “Scott’s personality and entrepreneurial spirit will build strong relationships.”

In addition to working at Nixon Peabody, the telegenic Mr. Brown â€" who had a lucrative modeling career in his 20s that helped him pay for law school â€" has a deal with Fox News to serve as a pundit.

Nominee for S.E.C. Chief Pledges to Keep Focus on Enforcement

WASHINGTON â€" Mary Jo White plans to strike a hard line against Wall Street wrongdoing at a Senate confirmation hearing on Tuesday, as she deflects concerns from lawmakers who question her ability to regulate banks she recently defended.

In written testimony released on Monday to the Senate Banking Committee, which must approve her nomination as head of the Securities and Exchange Commission, Ms. White outlined her experience pursuing white-collar crime as a federal prosecutor in New York. As head of the S.E.C., Ms. White wrote, she would continue her campaign to root out financial fraud.

âœIf confirmed, it will be a high priority throughout my tenure to further strengthen the enforcement function of the S.E.C. - it must be fair, but it also must be bold and unrelenting,” Ms. White, who has defended JPMorgan Chase, UBS and other Wall Street giants, said in the written testimony. “Strong enforcement is necessary for investor confidence and is essential to the integrity of our financial markets.”

The hearing on Tuesday will present the last opportunity to woo her critics. Over the last few weeks, Ms. White held meetings with committee members and answered the committee’s 20-page questionnaire detailing her qualifications.

Ms. White also provided the first window into her priorities as an S.E.C. chief. She placed a premium on unearthing financial fraud, and also spelled out an agenda that includes keeping a clo! ser eye on high-speed trading firms that now dominate the markets and putting the finishing touches on new rules for Wall Street.

Although Ms. White is widely expected to receive Senate approval later this month, she will face broader questions at the hearing about her turns through the revolving door bridging government service and private practice.

For three decades, she bounced between the federal government and a lucrative legal practice at Debevoise & Plimpton. As head of litigation at the firm, she defended JPMorgan Chase in financial crisis cases, Morgan Stanley’s board in vetting a chief executive and Michael Geoghegan, the former head of HSBC. She also worked side by side with clients uder scrutiny for selling troubled mortgage securities at the height of the housing boom.

To avert potential conflicts stemming from her work on behalf of Wall Street giants, Ms. White had already agreed to recuse herself for one year from most matters involving former clients and issues that touch the legal practice of her husband, John W. White, co-chairman of the corporate governance practice at Cravath, Swaine & Moore. Ms. White also vowed “as far as can be foreseen” never to return to Debevoise and plans to soon cut financial ties with the firm.

“There is no higher calling than public service,” she will assure lawmakers on Tuesday, according to the prepared remarks.

She will also confront a significant backlog of rules mandated under the Dodd-Frank Act, the regulatory overhaul passed in response to the financial crisis

“The S.E.C. needs to get the rules right, but it also needs to get them done,” she said in the prepared testimony.

Her focus on the overh! aul could! placate some lawmakers and consumer advocates who are nudging the S.E.C. to complete the rules. But some lawmakers are unsatisfied. Senator Sherrod Brown, Democrat of Ohio, has questioned whether Ms. White’s pledge to avoid matters involving former clients would undercut her ability to run the agency. Others are scrutinizing her lack of regulatory experience.

Despite concerns about her Wall Street ties, Ms. White’s nomination is expected to sail through the committee before receiving full Senate approval. The committee’s chairman, Senator Tim Johnson, Democrat of South Dakota, already hailed her nomination.

“Chairman Johnson recently had the opportunity to meet with S.E.C. nominee Mary Jo White, and the meeting was informative and candid,” his spokesman said in a statement. “The meeting made clear why Ms. White isso well-respected. She has a superb resume and Chairman Johnson was impressed with her in-depth knowledge of the issues and her commitment to taking a balanced approach at the S.E.C.”

Ms. White’s supporters also argue that her time defending Wall Street better prepared her to shine a light on its darkest corners. They further trumpet her long prosecutorial tenure.

During stints as a federal prosecutor in Brooklyn and later as the first woman to be United States attorney in Manhattan, she helped oversee the prosecution of the crime figure John Gotti and directed the case against those responsible for the 1993 World Trade Center bombing. The cases won her praise from several Democratic lawmakers, including Senator Charles Schumer, who called her “tough as nails.”

At the hearing on Tuesday, Ms. ! White wil! l testify alongside join Richard Cordray, who is in line to become director of the Consumer Financial Protection Bureau. In January, when the White House nominated Ms. White to the S.E.C. spot, it reappointed Mr. Cordray to a position he has held for the last year under a temporary recess appointment.

The Senate last year declined to confirm him in the face of Republican and Wall Street opposition to the newly created consumer bureau. Republicans are likely to voice similar skepticism at the hearing.

But the central focus will remain on Ms. White.

“If confirmed,❠she said, “I will vigorously embrace and carry out the S.E.C.’s mission to protect investors, maintain fair, orderly, and efficient markets, and facilitate capital formation.”

Hedge Fund Donates $30 Million to Imperial College

LONDON - Brevan Howard, the London-based hedge fund, agreed Monday to donate £20.1 million, or $30 million, to the Imperial College to set up a finance research center in its name.

Brevan Howard will give the money to the business school of the Imperial College in London, where Alan Howard, the hedge fund’s founder, studied chemical engineering for four years.

The research center will be called the Brevan Howard Center for Finance, said a spokesman for Brevan Howard at Peregrine Communications, a public relations firm. Imperial College, one of the top-ranking universities in Britain and whose main campus is in the high-end Kensington district, is best known for its science and engineering programs.

The focus of the research center has yet to be decided but is likely to include considering changes in the financial industry following the economic crisis. “I think the crisis has generated a different set of questions than have traditionally been taught in business school,” Mr. Howardsaid through the public relations firm.

Mr. Howard founded the hedge fund in 2002; it now manages about $39 billion. Mr. Howard’s personal wealth was estimated at $2.2 billion by The Sunday Times of London last year.

A Barclays Banker Bets on a ‘Fat Cat’

President Obama irked Wall Street bankers a few years ago by calling them “fat cats.” But one banker has embraced the name.

This week, Rich Ricci, the head of Barclays investment banking unit, is entering several horses in the Cheltenham Festival, including “Fat Cat in the Hat.”

At 10/1 odds, Fat Cat in the Hat is one of the favorites at the four-day racehorse event in central England that attracts the country’s high society. If the four-year-old horse wins, Mr. Ricci could take home more than $100,000 in prize money.

The race â€" and Mr. Ricci’s horse â€" is only stoking the long-simmering controversy surrounding the bank. Some lawmakers said it illustrated the gap between high-paid bankers and the wider public that continues to suffer from slow economic growth in Britain.

“It shows how out of touch these bankers are,†the British politician John Mann told a local newspaper.

Last summer, the bank agreed to pay $450 million to American and British authorities over the rate-rigging scandal. Mr. Ricci’s name surfaced in a relation to the inquiry in which some of the firm’s senior managers altered Barclays’ submissions to the London interbank offered rate, or Libor. The efforts were an attempt to mask the bank’s financial position at the height of the financial crisis. Mr. Ricci was not accused of any wrongdoing.

Barclays also came under fire last week after it announced that 428 of its employees still earned more than $1.5 million last year. Five of the bank’s staff members were paid more than $7.5 million in 2012. The compensation package of the American-born Mr. Ricci was not revealed as part of th! e bank’s annual disclosures.

His hobbies aren’t nearly as rewarding, at least financially speaking.

Last year, a horse owned by the Barclays banker called Champagne Fever also took home the first prize at one of the event’s most prominent races that had a total price purse of more than $80,000.

A Barclays Banker Bets on a ‘Fat Cat’

President Obama irked Wall Street bankers a few years ago by calling them “fat cats.” But one banker has embraced the name.

This week, Rich Ricci, the head of Barclays investment banking unit, is entering several horses in the Cheltenham Festival, including “Fat Cat in the Hat.”

At 10/1 odds, Fat Cat in the Hat is one of the favorites at the four-day racehorse event in central England that attracts the country’s high society. If the four-year-old horse wins, Mr. Ricci could take home more than $100,000 in prize money.

The race â€" and Mr. Ricci’s horse â€" is only stoking the long-simmering controversy surrounding the bank. Some lawmakers said it illustrated the gap between high-paid bankers and the wider public that continues to suffer from slow economic growth in Britain.

“It shows how out of touch these bankers are,†the British politician John Mann told a local newspaper.

Last summer, the bank agreed to pay $450 million to American and British authorities over the rate-rigging scandal. Mr. Ricci’s name surfaced in a relation to the inquiry in which some of the firm’s senior managers altered Barclays’ submissions to the London interbank offered rate, or Libor. The efforts were an attempt to mask the bank’s financial position at the height of the financial crisis. Mr. Ricci was not accused of any wrongdoing.

Barclays also came under fire last week after it announced that 428 of its employees still earned more than $1.5 million last year. Five of the bank’s staff members were paid more than $7.5 million in 2012. The compensation package of the American-born Mr. Ricci was not revealed as part of th! e bank’s annual disclosures.

His hobbies aren’t nearly as rewarding, at least financially speaking.

Last year, a horse owned by the Barclays banker called Champagne Fever also took home the first prize at one of the event’s most prominent races that had a total price purse of more than $80,000.

Mary Schapiro Is Nominated to G.E. Board

Mary Schapiro is starting to get a taste of opportunities in the private sector after stepping down as chairwoman of the Securities and Exchange Commission in December.

General Electric announced Monday that it had nominated Ms. Schapiro to serve as one of its directors. She will stand for election at the company’s coming annual meeting on April 24.

The G.E. board position will certainly earn her more than she did in government service. G.E. paid its directors about $250,000 in 2011; at the S.E.C., her annual salary was around $165,000. Presumably, there will be other board positions and job offers, although Ms. Schapiro has not hinted at her future career aspirations.

Before joining the S.E.C., Ms. Schapiro had served on other corporate boards, including those of Duke Energy and Kraft Foods. She had also been chief executive of the Financial Industry Regulatory Authority, or Finra, and had held other positions the organization and the National Association of Securities Dealers.

€œMary Schapiro will bring valuable expertise to G.E., particularly with her experience overseeing U.S. financial markets,” Jeff Immelt, chairman and chief executive of G.E., said in a statement. “Her understanding of corporate governance and financial regulation will be of great benefit to G.E. and its shareowners.”

Excluding new nominees, G.E. currently has 19 board members, 17 of whom are not employees of the company.

After Lehman, Callan Speaks Out on Balancing Work and Life

Erin Callan, the former chief financial officer of Lehman Brothers, has kept to herself after leaving Wall Street during the financial crisis.

But she is back in public view, with an opinion essay in The New York Times on Sunday about managing the demands of a high-intensity job.

Writing from Sanibel, Fla., Ms. Callan says she has some regrets â€" not about the disastrous collapse of Lehman, per se, but about how she allowed her job to consume her life. Making reference to Sheryl Sandberg, Facebook‘s chief operating officer, and Marissa Mayer, the chief executive of Yahoo â€" two powerful women who have recetly incited debates over work-life balance â€" Ms. Callan draws lessons from her experience.

“Whatever valuable advice I have about managing a career, I am only now learning how to manage a life,” she writes.

“I didn’t start out with the goal of devoting all of myself to my job. It crept in over time,” she says. “Each year that went by, slight modifications became the new normal. First I spent a half-hour on Sunday organizing my e-mail, to-do list and calendar to make Monday morning easier. Then I was working a few hours on Sunday, then all day. My boundaries slipped away until work was all that was left.”

“Until recently, I thought my singular focus on my career was the most powerful ingredient in my success. But I am beginning to realize that I sold myself short. I was talented, intelligent and energetic. It didn’t have to be so extreme. Besides, there were diminishing returns to that kind of labor.”

Ms. Callan, who had a stint at Credit Suisse after leaving Lehman in 2008, is adjusting to a new life with her husband, Anthony Montella. She recently put her home in East Hampton up for sale and is living for the time being in Florida.

Her essay, which was published just before the release on Monday of Ms. Sandberg’s book, “Lean In: Women, Work and the Will to Lead,” appears intended to add to the conversation over women in the workplace. It follow other meditations on the subject by Wall Street women.

Ruth M. Porat, the chief financial officer of Morgan Stanley, was said to be a tireless worker, according to a 2010 profile by DealBook’s Susanne Craig. Hamilton E. James, the president of the Blackstone Group, said at the time of Ms. Porat: “She never makes you feel like you are disturbing her personal life; I don’t even know if she has one.”

Balancing competing demands can be quite challenging. Alison Mass, co-head of the private equity banking group at Goldman Sachs, said in a 2010 commencement speech at New York University that she had to make some sacrifices.

“I’ve learned to accept that I cannot be an A+ at everything every day,” she said, according to a transcript. “I’ve also learned that I can be an A, on average, over the course of a week in my life.”

Sallie L. Krawcheck, a former executive at Bank of America and Citigroup, told Forbes in 2008 about the importance of taking breaks from work.

“What’s happened in this downturn, which I think is going to help me longer-term,” she said at the time, “is that I’ve found that backing away â€" even if it’s just for a 45-minute run in the morning or taking time off on the weekend â€" is crucial to getting through this.”

From a personal standpoint, the collapse of Lehman might have actually helped Ms. Callan have important realizations about her life, she says.

“In 2007, I did start to have my doubts about the way I was living my life. Or not really living it. But I felt locked in to my career,” she writes in the essay. “Without the crisis, I may never have been strong enough to step away.”

Online Betting Site Intrade Halts Operations

The online betting site Intrade announced late on Sunday that it had halted trading and frozen customer accounts after the company said it had discovered potential financial irregularities.

The firm, which is based in Dublin and allows consumers to bet on world events like the pending selection of a new Catholic pope, already has faced scrutiny from regulators.

In November, Intrade shut its Web site to United States residents when the Commodity Futures Trading Commission filed a civil complaint accusing the Irish company of offering the contracts outside traditional exchanges and without regulatory approval.

A spokesman for the Central Bank of Irelnd, which polices the country’s financial industry, said local regulators were not involved in the most recent problems confronting Intrade because the company was not regulated by the country’s central bank.

In its latest step, Intrade said it would close all outstanding bets after the company had discovered potential “financial irregularities” under Irish law. The company said it also had ceased trading, settled all outstanding customer contracts and stopped users’ banking transactions from the Web site.
“We will investigate these circumstances further and determine the necessary course of action,” Intrade said in a brief statement.

A representative for the company was not immediately available for comment.

Founded in 1999 by John Delaney, an Irish businessman who died in 2011 after trying to reach the summit of Mount Everest, Intrade had become a widely popular venue where customers could bet on everything from the! potential outcome of the United States presidential election to whether Israel would carry out an airstrike against Iran.

The business model, however, had angered some regulators and government officials because many American states prohibit gambling on elections.

The C.F.T.C. also said last year in its filing against the company that Intrade and an affiliate company had filed false annual forms with the agency, which had misled authorities over which investors could enter into contracts on the firm’s Web site.

“We are committed to reporting faithfully the status of things as they are clarified and hope you will bear with us,” Intrade said in a statement late on Sunday.

Icahn Signs Confidentiality Agreement With Dell

The billionaire investor Carl C. Icahn said on Monday that he had signed a confidentiality agreement with Dell Inc., potentially heading off a confrontation over the computer company’s $24.4 billion sale.

In a brief statement, Mr. Icahn’s firm said that it “looks forward to commencing its review of Dell’s confidential information.”

The signing of the confidentiality agreement may keep Mr. Icahn from speaking out against Dell’s planned sale to its founder, Michael S. Dell, and the investment irm Silver Lake. Mr. Icahn had threatened to publicly challenge the deal in a letter to the computer maker’s board, indicating that he would call for the company to borrow money and pay out a special dividend.

Over days of negotiations last week, advisers to a special committee of Dell’s board successfully coaxed Mr. Icahn into signing a confidentiality agreement, this person said. The directors had wanted Mr. Icahn to provide a proposal during the so-called go-shop process aimed at drawing higher bids than Mr. Dell’s $13.65-a-share offer.

One option is a preliminary proposal Mr. Icahn had floated early on in talks with the Dell committee, in which he would run a tender offer for some of the company’s shares at a price of $15 each.

He later focused on his demand for a special dividend, a move that the special committee said it had already considered and discarded as inferio! r to Mr. Dell’s offer.

Shares of Dell rose 1 percent, to $14.31, in premarket trading on Monday.

It is unclear how big a stake Mr. Icahn has amassed; he has described it only as “substantial.” The confidentiality agreement does not include a standstill agreement that would prevent him from adding to his stake, according to a person briefed on the matter.

“The special committee welcomes Carl Icahn and all other interested parties to participate in the ‘go-shop’ process,” the Dell committee said in a statement. “Our goal is to determine if there are alternative transactions that could be superior to the going-private transaction and to secure the best result for Dell’s public shareholders - whether that is the announced transaction or an alternative.”

Competing Interests in an I.P.O.

When it comes to hot initial public offerings, there is a long-running debate over the obligations of the underwriter. In one classic case, the 1999 I.P.O. of eToys, a cache of documents newly unearthed by Joe Nocera of The New York Times offers insight into the way one Wall Street firm, Goldman Sachs, has approached these deals. In a lawsuit that is still going on, lawyers for an eToys creditors’ committee claimed that Goldman purposely set a low price to create a first-day pop in the stock for institutional investors, at the expense of the company itself.

The newly discovered documents show “that Goldman knew exactly what it was doing when it underpriced the eToys I.P.O. â€" and many others as well,” Mr. Nocera writes in his column. “Taken in their entirety, the e-mails and internal reports show Goldman tok advantage of naïve Internet start-ups to fatten its own bottom line.”

“Goldman carefully calculated the first-day gains reaped by its investment clients. After compiling the numbers in something it called a trade-up report, the Goldman sales force would call on clients, show them how much they had made from Goldman’s I.P.O.’s and demand that they reward Goldman with increased business. It was not unusual for Goldman sales representatives to ask that 30 to 50 percent of the first-day profits be returned to Goldman via commissions, according to depositions given in the case.”

Goldman, for its part, says that it “did not engage in quid pro quos for allocation of hot I.P.O.’s, and none of the decade-old documents distorted by the eToys litigants suggests otherwise.” Mr. Nocera has posted the documents online. Felix Salmon of Reuters, who looked through the documents, writes: “Goldman likely made much much more money on the eToys I.P.O. from its buy-side clients than it did from eToys itself.”

CALLAN AFTER LEHMAN  |  Erin Callan, a former chief financial officer of Lehman Brothers, has largely kept to herself since leaving Wall Street during the financial crisis. But Ms. Callan has a new opinion essay in The New York Times, in which she expresses regret over how certain career choices affected her personal life.

“Since I resigned my position as chief financial officer of Lehman Brothers in 2008, amid mounting chaos and a cloud of public humiliation only months before the company went bankrupt, I have had ample time to reflect on the decisions I made in balancing (or filing to balance) my job with the rest of my life,” Ms. Callan writes. “I didn’t start out with the goal of devoting all of myself to my job. It crept in over time,” she continues. “Inevitably, when I left my job, it devastated me. I couldn’t just rally and move on.”

“I have often wondered whether I would have been asked to be C.F.O. if I had not worked the way that I did. Until recently, I thought my singular focus on my career was the most powerful ingredient in my success. But I am beginning to realize that I sold myself short.” She goes on: “I have also wondered where I would be today if Lehman Brothers hadn’t collapsed. In 2007, I did start to have my doubts about the way I was living my life. Or not really living it. But I felt locked in to my career.”

BRITISH PROPOSAL TO CURB RISK IS FAULTED  |  Proposed legislation to protect Britain’s financial services sector from futu! re crises! does not go far enough and may fail to stop banks from engaging in risky trading, British lawmakers warned in a report on Monday, DealBook’s Mark Scott reports. “The warning comes as Parliament is set to debate the new laws, which outline how firms could be split up if they do not separate their investment banking units from their retail banking operations.”

“The creation of a so-called ring fence between the banks’ businesses is an attempt to shield consumers from an implosion of trading activity and other risky behavior that led to several big banks being bailed out by British taxpayers during the financial crisis.”

ON THE AGENDA  |  Diamond Foods and Urban Outfitters report earnings after the market closes. Stephen A. Schwarzman of the Blackstone Goup is on CNBC at 11 a.m. Alexandra Lebenthal, chief executive of Lebenthal & Company, is on CNBC at 5 p.m.

MARKS WARNS OF A CREDIT BUBBLE  |  Howard Marks, the co-founder and chairman of Oaktree Capital Management, is a celebrity in financial circles, writing memos that are read by the likes of Warren E. Buffett. An expert in distressed debt, Mr. Marks tells Barron’s that he detects signs of a new credit bubble in its “fifth inning.” Debt issuance is soaring as investors are “acting bullish, if not thinking bullish,” Mr. Marks says. Barron’s writes: “Does it all spell a disaster in the making Probably not, he avers. The much-feared eventual rise in interest rates, which doomsday forecasters say could crush bonds, would likely res! ult from ! an improvement in the economy, he reasons. That alone would mitigate against a smashup in, say, the junk-bond market, as defaults would remain at minimal levels.”

WEIGHING THE RETURN OF MEGADEALS  |  Is the increasing number of big deals a sign of strength or simply a way for deal makers to get rich Four experts debate the issue in The New York Times’s Room for Debate. Steven M. Davidoff, DealBook’s Deal Professor, argues that “companies that do deals will be forced by the economy to soberly assess the risk and not get in over the heads.”

But that is often not enough to prevent lawsuits. A yearly report “shows that last year, 92 percent of all transactions with a value greater than $100 million experienced litigation,” Mr. Davidoff wrote in the Deal Professor column on Friday. “It is understandable that the knee-jerk reaction is that this litigation is bad and needs to stop. However, merger litigation can have real value.”

Mergers & Acquisitions »

Alibaba Names New Leader  |  Jonathan Lu, executive vice president of Alibaba Group Holding, has been named the new chief executive of the Chinese e-commerce company, succeeding Jack Ma. WALL STREET JOURNAL

What Would a Deal for Bed Bath & Beyond Look Like!  |  While there is no indication that Bed Bath & Beyond is looking to sell itself, a hypothetical buyer might pay “$85 a share â€" roughly 10 times this fiscal year’s projected earnings before interest, taxes, depreciation, and amortization (Ebitda) â€" consistent with prices paid for other quality companies, versus Bed Bath & Beyond’s current modest valuation of 6.5 times,” Barron’s writes. BARRON’S

Sycamore Turns Heads With Its Retail Shopping Spree  |  Stefan Kaluzny, who started the buyout firm Sycamore Partners just two years ago, has made a couple of splashy purchases, including the $600 million deal for the retail chain Hot Topic. DealBook »

Sony’s Chairman Announces Retirement  |  Howard Stringer, who was the first foreign president of Sony, announced on Friday that he would retire as chairman in June. ASSOCIATED PRESS

Temasek Said to Agree to Buy Stake in Evonik of Germany  | 
REUTERS

INVESTMENT BANKING »

!

Rebound in Employment Fuels Wall Street Rally  |  The New York Times writes: “Less than a week since the Dow Jones industrial average hit its all-time high, the broader Standard & Poor’s 500-stock index is on track to surpass its own 2007 high. The reason, in no small part, is because of investor confidence in the growing economic strength of American households.” NEW YORK TIMES

A Bad Year in Britain for Banks, Not Bankers  |  The disclosures this week by Barclays, Royal Bank of Scotland and HSBC add to the growing debate over outsized pay packages among bankers. DealBok »

Goldman Can Lead the Way for Wall Street  |  “If chief executive officer Lloyd Blankfein really wants to shake up the industry, Goldman Sachs should break further from what remains of the Wall Street pack, and act like the leader it is. It needs a revamped compensation system that rewards people for taking prudent risks and penalizes those who take foolish ones,” William D. Cohan writes in Bloomberg View. BLOOMBERG NEWS

For European Pay Packages, Back to the Drawing Board  |  Banks in Europe are rushing to revise pay packages ahead of upcoming annual meetings, in light of new rules, The Financial Times writes. FINANCIAL TIMES

N.Y.S.E. Prepares New Disaster Plan  | 
WALL STREET JOURNAL

PRIVATE EQUITY »

Rival Bidders Emerge for Hostess Assets  |  The New York Post reports: “Hostess creditor Silver Point Capital in the last few days has submitted a letter to Hostess’s bankers expressing interest in buying all or part of the Hostess business, a source said. What’s mor, Hurst Capital, a hedge-fund newcomer that wasn’t seen as much of a contender initially, has formed a partnership with other private-equity firms to make an offer, the source said.” NEW YORK POST

Cerberus Plans to Increase Stake in Seibu of Japan  | 
REUTERS

HEDGE FUNDS »

Paulson Said to Consider Moving to Puerto Rico  |  Bloomberg News reports: “John Paulson, a lifelong New Yorker, is exploring a move to Puerto Rico, where a new law would elim! inate tax! es on gains from the $9.5 billion he has invested in his own hedge funds, according to four people who have spoken to him about a possible relocation.” BLOOMBERG NEWS

Re-examining Board Priorities in an Era of Activism  |  As corporate boards have to steer companies owned by both long- and short-term shareholders, new ideas are needed to figure out how to cater to all constituencies, the lawyer Ira M. Millstein writes in the Another View column. DealBook »

J.C. Penney’s Self-Inflicted Problem  |  With the apparent support of William A. Ackmn, J.C. Penney lured Martha Stewart away from Macy’s, inciting a contract dispute. The New York Times columnist James B. Stewart writes that while the fight may not be Penney’s biggest headache, “it’s a purely self-inflicted one.” NEW YORK TIMES

I.P.O./OFFERINGS »

CVC-Led Group to Sell $1.4 Billion Stake in Retailer  |  The private equity group CVC Capital Partners is leading the sale of a 40 percent stake in Indonesia’s Matahari Department Store that is expected to raise up to $1.36 billion, according to a term sheet. DealBook »

Sandberg on ’60 Minutes’  |  Sheryl Sandberg, Facebook’s chief operating officer, discusses the ideas in her new book about women in the workplace, “Lean In.” CBS NEWS

VENTURE CAPITAL »

For Start-Ups, Creative Learning Is Lucrative  |  “While companies like Udacity and Coursera â€" providers of giant online open courses â€" are just beginning to introduce courses with fees that count for academic credit, other online learning companies have carved out a lucrative niche in courses on design, potography and other creative pursuits,” The New York Times writes. NEW YORK TIMES

How an Internet Entrepreneur Downsized His Life  | 
NEW YORK TIMES

LEGAL/REGULATORY »

German Financier Is Found and Jailed in Fraud  |  The New York Times reports: “Florian Homm, a flamboyant former hedge fund manager who spent the last five years in hiding, was arrested in Italy and faces extradition ! to the Un! ited States on securities fraud charges which could expose him to a lengthy prison sentence, the Federal Bureau of Investigation said.” NEW YORK TIMES

Intrade Abruptly Ceases Trading Activity  |  The online prediction market Intrade said it would shut down trading activity “due to circumstances recently discovered,” which “require immediate further investigation.” INTRADE

Commodity Futures Agency’s General Counsel to Depart  |  The Commodity Futures Trading Commission announced on Friday that its general counsel, Dan M. Berkovitz, would soon depart. Hi exit comes after the agency’s recent legal crackdown on Wall Street. DealBook »

Examining White’s Record as Prosecutor of Financial Cases  |  The New York Times columnist Gretchen Morgenson writes that questions still hang over some of the financial cases that came across the desk of Mary Jo White, President Obama’s choice to lead the Securities and Exchange Commission, while she was a federal prosecutor. NEW YORK TIMES

Finance Remains a Complex, Interconnected World  |  For one thing, Stephen J. Lubben writes in the In Debt column, wh! at is an ! emerging markets fund doing buying protection in the form of credit default swaps against France DealBook »

At the S.E.C., a Revolving Door That Helps the Public  |  The so-called revolving door between private sector and government posts means that law enforcement officials have some firsthand knowledge of how the industry they regulate works, David Zaring, assistant professor of legal studies at the Wharton School of Business at the University of Pennsylvania, writes in the Another View column. DealBook »

Competing Interests in an I.P.O.

When it comes to hot initial public offerings, there is a long-running debate over the obligations of the underwriter. In one classic case, the 1999 I.P.O. of eToys, a cache of documents newly unearthed by Joe Nocera of The New York Times offers insight into the way one Wall Street firm, Goldman Sachs, has approached these deals. In a lawsuit that is still going on, lawyers for an eToys creditors’ committee claimed that Goldman purposely set a low price to create a first-day pop in the stock for institutional investors, at the expense of the company itself.

The newly discovered documents show “that Goldman knew exactly what it was doing when it underpriced the eToys I.P.O. â€" and many others as well,” Mr. Nocera writes in his column. “Taken in their entirety, the e-mails and internal reports show Goldman tok advantage of naïve Internet start-ups to fatten its own bottom line.”

“Goldman carefully calculated the first-day gains reaped by its investment clients. After compiling the numbers in something it called a trade-up report, the Goldman sales force would call on clients, show them how much they had made from Goldman’s I.P.O.’s and demand that they reward Goldman with increased business. It was not unusual for Goldman sales representatives to ask that 30 to 50 percent of the first-day profits be returned to Goldman via commissions, according to depositions given in the case.”

Goldman, for its part, says that it “did not engage in quid pro quos for allocation of hot I.P.O.’s, and none of the decade-old documents distorted by the eToys litigants suggests otherwise.” Mr. Nocera has posted the documents online. Felix Salmon of Reuters, who looked through the documents, writes: “Goldman likely made much much more money on the eToys I.P.O. from its buy-side clients than it did from eToys itself.”

CALLAN AFTER LEHMAN  |  Erin Callan, a former chief financial officer of Lehman Brothers, has largely kept to herself since leaving Wall Street during the financial crisis. But Ms. Callan has a new opinion essay in The New York Times, in which she expresses regret over how certain career choices affected her personal life.

“Since I resigned my position as chief financial officer of Lehman Brothers in 2008, amid mounting chaos and a cloud of public humiliation only months before the company went bankrupt, I have had ample time to reflect on the decisions I made in balancing (or filing to balance) my job with the rest of my life,” Ms. Callan writes. “I didn’t start out with the goal of devoting all of myself to my job. It crept in over time,” she continues. “Inevitably, when I left my job, it devastated me. I couldn’t just rally and move on.”

“I have often wondered whether I would have been asked to be C.F.O. if I had not worked the way that I did. Until recently, I thought my singular focus on my career was the most powerful ingredient in my success. But I am beginning to realize that I sold myself short.” She goes on: “I have also wondered where I would be today if Lehman Brothers hadn’t collapsed. In 2007, I did start to have my doubts about the way I was living my life. Or not really living it. But I felt locked in to my career.”

BRITISH PROPOSAL TO CURB RISK IS FAULTED  |  Proposed legislation to protect Britain’s financial services sector from futu! re crises! does not go far enough and may fail to stop banks from engaging in risky trading, British lawmakers warned in a report on Monday, DealBook’s Mark Scott reports. “The warning comes as Parliament is set to debate the new laws, which outline how firms could be split up if they do not separate their investment banking units from their retail banking operations.”

“The creation of a so-called ring fence between the banks’ businesses is an attempt to shield consumers from an implosion of trading activity and other risky behavior that led to several big banks being bailed out by British taxpayers during the financial crisis.”

ON THE AGENDA  |  Diamond Foods and Urban Outfitters report earnings after the market closes. Stephen A. Schwarzman of the Blackstone Goup is on CNBC at 11 a.m. Alexandra Lebenthal, chief executive of Lebenthal & Company, is on CNBC at 5 p.m.

MARKS WARNS OF A CREDIT BUBBLE  |  Howard Marks, the co-founder and chairman of Oaktree Capital Management, is a celebrity in financial circles, writing memos that are read by the likes of Warren E. Buffett. An expert in distressed debt, Mr. Marks tells Barron’s that he detects signs of a new credit bubble in its “fifth inning.” Debt issuance is soaring as investors are “acting bullish, if not thinking bullish,” Mr. Marks says. Barron’s writes: “Does it all spell a disaster in the making Probably not, he avers. The much-feared eventual rise in interest rates, which doomsday forecasters say could crush bonds, would likely res! ult from ! an improvement in the economy, he reasons. That alone would mitigate against a smashup in, say, the junk-bond market, as defaults would remain at minimal levels.”

WEIGHING THE RETURN OF MEGADEALS  |  Is the increasing number of big deals a sign of strength or simply a way for deal makers to get rich Four experts debate the issue in The New York Times’s Room for Debate. Steven M. Davidoff, DealBook’s Deal Professor, argues that “companies that do deals will be forced by the economy to soberly assess the risk and not get in over the heads.”

But that is often not enough to prevent lawsuits. A yearly report “shows that last year, 92 percent of all transactions with a value greater than $100 million experienced litigation,” Mr. Davidoff wrote in the Deal Professor column on Friday. “It is understandable that the knee-jerk reaction is that this litigation is bad and needs to stop. However, merger litigation can have real value.”

Mergers & Acquisitions »

Alibaba Names New Leader  |  Jonathan Lu, executive vice president of Alibaba Group Holding, has been named the new chief executive of the Chinese e-commerce company, succeeding Jack Ma. WALL STREET JOURNAL

What Would a Deal for Bed Bath & Beyond Look Like!  |  While there is no indication that Bed Bath & Beyond is looking to sell itself, a hypothetical buyer might pay “$85 a share â€" roughly 10 times this fiscal year’s projected earnings before interest, taxes, depreciation, and amortization (Ebitda) â€" consistent with prices paid for other quality companies, versus Bed Bath & Beyond’s current modest valuation of 6.5 times,” Barron’s writes. BARRON’S

Sycamore Turns Heads With Its Retail Shopping Spree  |  Stefan Kaluzny, who started the buyout firm Sycamore Partners just two years ago, has made a couple of splashy purchases, including the $600 million deal for the retail chain Hot Topic. DealBook »

Sony’s Chairman Announces Retirement  |  Howard Stringer, who was the first foreign president of Sony, announced on Friday that he would retire as chairman in June. ASSOCIATED PRESS

Temasek Said to Agree to Buy Stake in Evonik of Germany  | 
REUTERS

INVESTMENT BANKING »

!

Rebound in Employment Fuels Wall Street Rally  |  The New York Times writes: “Less than a week since the Dow Jones industrial average hit its all-time high, the broader Standard & Poor’s 500-stock index is on track to surpass its own 2007 high. The reason, in no small part, is because of investor confidence in the growing economic strength of American households.” NEW YORK TIMES

A Bad Year in Britain for Banks, Not Bankers  |  The disclosures this week by Barclays, Royal Bank of Scotland and HSBC add to the growing debate over outsized pay packages among bankers. DealBok »

Goldman Can Lead the Way for Wall Street  |  “If chief executive officer Lloyd Blankfein really wants to shake up the industry, Goldman Sachs should break further from what remains of the Wall Street pack, and act like the leader it is. It needs a revamped compensation system that rewards people for taking prudent risks and penalizes those who take foolish ones,” William D. Cohan writes in Bloomberg View. BLOOMBERG NEWS

For European Pay Packages, Back to the Drawing Board  |  Banks in Europe are rushing to revise pay packages ahead of upcoming annual meetings, in light of new rules, The Financial Times writes. FINANCIAL TIMES

N.Y.S.E. Prepares New Disaster Plan  | 
WALL STREET JOURNAL

PRIVATE EQUITY »

Rival Bidders Emerge for Hostess Assets  |  The New York Post reports: “Hostess creditor Silver Point Capital in the last few days has submitted a letter to Hostess’s bankers expressing interest in buying all or part of the Hostess business, a source said. What’s mor, Hurst Capital, a hedge-fund newcomer that wasn’t seen as much of a contender initially, has formed a partnership with other private-equity firms to make an offer, the source said.” NEW YORK POST

Cerberus Plans to Increase Stake in Seibu of Japan  | 
REUTERS

HEDGE FUNDS »

Paulson Said to Consider Moving to Puerto Rico  |  Bloomberg News reports: “John Paulson, a lifelong New Yorker, is exploring a move to Puerto Rico, where a new law would elim! inate tax! es on gains from the $9.5 billion he has invested in his own hedge funds, according to four people who have spoken to him about a possible relocation.” BLOOMBERG NEWS

Re-examining Board Priorities in an Era of Activism  |  As corporate boards have to steer companies owned by both long- and short-term shareholders, new ideas are needed to figure out how to cater to all constituencies, the lawyer Ira M. Millstein writes in the Another View column. DealBook »

J.C. Penney’s Self-Inflicted Problem  |  With the apparent support of William A. Ackmn, J.C. Penney lured Martha Stewart away from Macy’s, inciting a contract dispute. The New York Times columnist James B. Stewart writes that while the fight may not be Penney’s biggest headache, “it’s a purely self-inflicted one.” NEW YORK TIMES

I.P.O./OFFERINGS »

CVC-Led Group to Sell $1.4 Billion Stake in Retailer  |  The private equity group CVC Capital Partners is leading the sale of a 40 percent stake in Indonesia’s Matahari Department Store that is expected to raise up to $1.36 billion, according to a term sheet. DealBook »

Sandberg on ’60 Minutes’  |  Sheryl Sandberg, Facebook’s chief operating officer, discusses the ideas in her new book about women in the workplace, “Lean In.” CBS NEWS

VENTURE CAPITAL »

For Start-Ups, Creative Learning Is Lucrative  |  “While companies like Udacity and Coursera â€" providers of giant online open courses â€" are just beginning to introduce courses with fees that count for academic credit, other online learning companies have carved out a lucrative niche in courses on design, potography and other creative pursuits,” The New York Times writes. NEW YORK TIMES

How an Internet Entrepreneur Downsized His Life  | 
NEW YORK TIMES

LEGAL/REGULATORY »

German Financier Is Found and Jailed in Fraud  |  The New York Times reports: “Florian Homm, a flamboyant former hedge fund manager who spent the last five years in hiding, was arrested in Italy and faces extradition ! to the Un! ited States on securities fraud charges which could expose him to a lengthy prison sentence, the Federal Bureau of Investigation said.” NEW YORK TIMES

Intrade Abruptly Ceases Trading Activity  |  The online prediction market Intrade said it would shut down trading activity “due to circumstances recently discovered,” which “require immediate further investigation.” INTRADE

Commodity Futures Agency’s General Counsel to Depart  |  The Commodity Futures Trading Commission announced on Friday that its general counsel, Dan M. Berkovitz, would soon depart. Hi exit comes after the agency’s recent legal crackdown on Wall Street. DealBook »

Examining White’s Record as Prosecutor of Financial Cases  |  The New York Times columnist Gretchen Morgenson writes that questions still hang over some of the financial cases that came across the desk of Mary Jo White, President Obama’s choice to lead the Securities and Exchange Commission, while she was a federal prosecutor. NEW YORK TIMES

Finance Remains a Complex, Interconnected World  |  For one thing, Stephen J. Lubben writes in the In Debt column, wh! at is an ! emerging markets fund doing buying protection in the form of credit default swaps against France DealBook »

At the S.E.C., a Revolving Door That Helps the Public  |  The so-called revolving door between private sector and government posts means that law enforcement officials have some firsthand knowledge of how the industry they regulate works, David Zaring, assistant professor of legal studies at the Wharton School of Business at the University of Pennsylvania, writes in the Another View column. DealBook »

Investors Led by CVC to Sell $1.4 Billion Stake in Indonesian Department Store Chain

HONG KONG-The private equity group CVC Capital Partners, a unit of the Indonesian conglomerate Lippo Group and Singapore’s state investment company on Monday began marketing the sale of a 40 percent stake in Indonesia’s largest department store operator, which could raise the sellers up to 13.13 trillion rupiah ($1.36 billion), according to the term sheet for the deal.

CVC, which is based in London and owns stakes in businesses that include the Formula One racing group, and its co-sellers are seeking to cash in on investors’ optimism that consumer spending power will continue to grow in Southeast Asia’s biggest economy.

CVC, Lippo’s Multpolar unit and the Government of Singapore Investment Corp., or G.I.C., are selling 1.17 billion existing shares in PT Matahari Department Store for 10,000 rupiah to 11,250 rupiah, according to a sale document. The price range represents total proceeds of $1.21 billion to $1.36 billion.

At the high end, the deal values Matahari at $3.4 billion, or nearly four times the $892 million valuation, including debt, at which CVC and its fellow investors acquired the department store operator in 2010.

Matahari, which opened its first shop in 1958 and today operates 116 stores in more than 50 Indonesian cities, saw its gross revenue increase 17.7 percent to 10.88 trillion rupiah last year, as demand rose among Indonesia’s growing middle class for clothing and cosmetics from brands like Polo, Clinique, Revlon and Levi’s, which Matahari sells on consignment. Same-store sales have grown at a double-digit pace for at least the past three years and rose 11.1 percent in 2012.

The deal is receiving strong support from so-called cornerstone investors â€" big institutions or wealthy individuals who agree to make a large investment in exchange for a guaranteed allocation of shares.

Two people with direct knowledge of the plan, who were not permitted to speak publicly on the matter, said CVC and G.I.C. had agreed to sell about $435 million worth of shares, representing about 32 percent of the overall deal, to 15 cornerstones. Those investors include: Azentus, Blackrock, Capital Research and Management, Fidelity, the asset management units of Morgan Stanley, Och-Ziff, Schroders and T. Rowe Price.

As part of the deal, G.I.C. will also purchase a stake of about 1.8 percent in the cornerstone offering, reducing its net ownership of Matahari to less than 10 percent from its current indirect holding of about 14 percent.

The sale does not involve any new shares, but is being managed like an initial public offering because only 2 percent of Matahari’s stock is now freely traded. On completion â€" and assuming a so-called ‘‘greenshoe’’ option to sell an additional 175 million existing shares is fully exercised â€" the department store operator will be 48 percent owned by the public, 31 ! percent b! y CVC and G.I.C., 20 percent by the Lippo unit and about 1 percent by management.

Final pricing for the share sale is expected to be set on March 22. CIMB, Morgan Stanley and UBS are the coordinators of the deal.