Credit Suisse Profit Soars in First Quarter

LONDON â€" Credit Suisse said on Wednesday that profit in the first three months of the year saw a large but widely expected increase, after the Swiss bank had booked significant charges on its own debt in the same period a year earlier.

Profit rose to 1.3 billion Swiss francs, or $1.4 billion, in the first quarter of this year, up from 44 million francs a year ago, when the bank booked a loss of 1.6 billion francs on the value of its own outstanding debt. Net revenue rose to 7.2 billion francs for the quarter, up from 6 billion francs a year earlier.

The results “show the positive momentum of our new business model,” chief executive Brady W. Dougan and chairman Urs Rohner wrote in a letter to shareholders published in its earnings report on Wednesday. “In an industry that still faces substantial restructuring, we have effectively completed our transformation.”

Mr. Dougan has started to cut back on businesses that could be more costly for the bank because of tighter regulations while seeking to grow its wealth management operations. The bank also said its number of employees fell by 4 percent in the quarter, to 46,900 people. But Mr. Dougan did not go as far as his main Swiss banking rival, UBS, in scaling back investment banking operations.

Credit Suisse on Monday agreed to sell its private equity business, Strategic Partners, to the Blackstone Group for an undisclosed sum in an effort to reduce its presence in so-called alternative investments. Last month, the bank agreed to buy Morgan Stanley’s wealth management unit in Europe, the Middle East and Africa, which has $13 billion in assets under management.

In February, Credit Suisse boosted its target for cost cuts by $440 million, and now plans to have reduced costs by $4.83 billion by the end of 2015. The bank said Wednesday that it was on track to achieve that target. It plans to achieve those savings partly by bringing its wealth management and asset management operations closer together.

Credit Suisse said pretax profit in its private banking and wealth management business fell 7 percent to 881 million francs in the first quarter, saying relatively low interest rates failed to offset an increase in commissions and fees. Net new assets for the period totaled 12 billion francs.

The investment banking operation reported a pretax profit of 1.3 billion francs, up from 907 million francs in the first quarter of 2012, partly the result of cost cuts but also driven by the performance of its fixed-income sales and trading business.

Hazy Future for S.E.C.’s Whistle-Blower Office

For years, Wall Street’s top enforcers lacked the firepower to thwart financial misdeeds like Bernard L. Madoff’s Ponzi scheme. But now that the Securities and Exchange Commission has turned to sophisticated statistical tools and financial experts, one of the most effective weapons in its new enforcement arsenal may be a more traditional one: whistle-blowers.

Already, a whistle-blower program has bolstered an investigation into a trading blowup that nearly toppled Knight Capital, the largest stock trading firm on Wall Street, according to lawyers briefed on the case.

With help from another whistle-blower, the lawyers said, the government discovered that Oppenheimer & Company had overstated the performance of a private equity fund. And after pursuing a Texas Ponzi scheme for more than a year, a cold trail heated up in 2010 when a tipster emerged.

The breakthroughs â€" previously undisclosed â€" show the promise of the agency’s 20-month-old whistle-blower program.

Yet, the program faces challenges on many fronts.

Some Wall Street firms are urging employees to report wrongdoing internally before running to the government, and one hedge fund, Paradigm Capital Management, was accused in a lawsuit of punishing an employee who had cooperated with the S.E.C., according to court and internal documents.

Another financial firm, the documents show, pressured an employee to forfeit potential “bounties or awards” â€" a possible violation of S.E.C. rules.

Some lawyers also complain that the agency takes weeks or months before it responds to a backlog of tips, while others question whether the S.E.C. overstates the power of the whistle-blower program.

“The S.E.C.’s program hangs in the balance right now,” said David K. Colapinto, general counsel of the National Whistleblowers Center, a nonprofit group. “Everybody is waiting to see what they do â€" and nobody really knows what the track record of this program is going to be.”

For its part, the S.E.C. notes that it fields dozens of tips a week. To cope with the onslaught, the agency has ramped up its whistle-blower team to include 11 lawyers and 3 paralegals.

“You’d be hard pressed to find another whistle-blower program that’s quicker,” said Sean McKessy, the director of the program.

And Mr. McKessy’s office has quietly gained momentum. The investigation into Knight Capital stems from last summer, when the firm introduced new trading software.

The firm bungled the switch and sent a flood of erroneous orders to buy shares. Knight later had to sell the stocks at a loss of more than $4oo million, draining capital and pushing it to the brink of collapse.

The S.E.C. initially charted a narrow investigation, lawyers briefed on the case said. But when a whistle-blower came forward, the lawyers said, the agency was able to shift gears and expand the investigation.

Regulators are looking at whether the firm broke rules that govern which customers and traders can gain direct access to stock exchanges.

Knight, rescued by a group of investors, has not been accused of any wrongdoing. It declined to comment.

A whistle-blower also played a role in the recent investigation of the investment firm Oppenheimer, the lawyers said.

With the tipster’s help, the S.E.C. fined the company nearly $3 million last month for inflating returns in one of its private equity funds.

The agency had another breakthrough after pursuing the China Voice Holding Corp for more than a year, which was suspected of operating a growing Ponzi scheme.

The turning point came when Dee Dee Stone, an outside consultant preparing the Dallas company’s tax return, produced documents that laid bare a scheme hidden in the company’s books.

Without naming the consultant or China Voice, the S.E.C. announced in August that it had doled out its first whistle-blower award. And Ms. Stone, 38, who collected about $46,000 to date, said in a recent interview that “I just wanted to stop the scheme before the investors lost everything they worked for.”

The S.E.C.’s whistle-blower program was born from painful missteps. For years, the agency ignored tips about Mr. Madoff’s glowing returns and rewarded tipsters only if they alerted the S.E.C. to insider trading cases.

Under pressure to change, the agency inaugurated its whistle-blower office in August 2011. The agency hired Mr. McKessy, a former executive at AOL and Caterpillar, to run the office.

Under the program, tipsters can reap up to 30 percent of the money the S.E.C. collects when fining a company or its executives.

To qualify for the reward, a whistle-blower must turn over new information that leads to successful enforcement actions yielding more than $1 million in fines.

With the corporate world grumbling, the S.E.C agreed to consider dishing out some of the highest possible awards to employees who report fraud at work before turning to the government.

Tipsters appear to have taken the S.E.C. up on the offer; more than 80 percent of aspiring whistle-blowers have reported internally first, according to people briefed on the matter.

Private lawyers also seized the opportunity. Stuart D. Meissner, a New York area lawyer, bought the Web site SECsnitch.com, and solicited tipsters with advertisements in theaters before the movie “Wall Street: Money Never Sleeps.”

Calls from whistle-blowers came pouring in. In a recent report to Congress, Mr. McKessy stated that his office in the last fiscal year received 3,001 tips.

“I expect you’ll see more cases in the coming year,” said Jordan A. Thomas, a former S.E.C. official who helped create the office and is now handling whistle-blower complaints at the law firm Labaton Sucharow.

The S.E.C. has boasted about the “high quality” of the tips, saying that several each week have proved fruitful.

But some S.E.C. officials have privately acknowledged that those numbers are somewhat exaggerated. And whistle-blower lawyers have complained about waiting months between inquiries.

The agency has also encountered obstacles from companies.

In recent months, several banks drafted policies compelling their staffs to report fraud internally, lawyers say.

Some companies require employees to attest annually that they never witnessed any fraud, a certification that could be used to discredit employees who later blew the whistle.

Corporate lawyers say the new policies help root out fraud at an early stage. “There is a sharper focus to encourage employees to keep their complaints at home through positive steps, rather than through punitive measures,” said Lloyd B. Chinn, a partner at Proskauer and co-head of the law firm’s whistle-blowing and retaliation group.

But whistle-blower lawyers say that some policies violate the spirit of the S.E.C.’s program.

David J. Marshall, a founder of the whistle-blower law firm Katz, Marshall & Banks, said that he had seen companies subtly insert language into severance agreements that looks innocuous, but that effectively stops the employee from going to the S.E.C.

In a few cases, he said, companies have asked departing employees to sign a document certifying that they have told the company about any confidential information the employee has given to outside parties.

“The craft is in designing language that doesn’t say that, but that can have that effect,” Mr. Marshall said.

In other cases, companies are accused of retaliating against whistle-blowers, in violation of S.E.C. rules.

James Nordgaard, a hedge fund trader, said in a lawsuit that his employer, Paradigm Capital, “embarked on a campaign of retaliation” against him, after he reported “trading violations” and a “deliberate disregard for compliance rules.” Mr. Nordgaard claims he was removed from the trading desk, isolated in a “room with little ventilation” and later “demoted.”

In reply, Paradigm wanted to move the case before an arbitration panel. Mr. Nordgaard agreed to do so.

Despite the challenges for the S.E.C., praise for the program has come from one of the agency’s longtime critics: Harry M. Markopolos, a securities analyst who suspected the Madoff fraud a decade ago, drew it to the S.E.C.’s attention, and was ignored.

In an interview, Mr. Markopolos said that when he has approached the new whistle-blower office, “they are very thankful and they actually do investigations.”

But Mr. Markopolos said that the agency has yet to bring the kind of big cases that would prove the worth of the new program.

“The question is whether they can turn it into successful enforcement actions,” he said.

A Flawed Bidding Process Leaves Dell at a Loss

The private equity firm Blackstone Group has exited the stage for Dell, abruptly bringing down the curtain on a budding takeover contest. It has the elements of a farce, and Dell’s board has no one to blame but itself.

The fizzled bidding for Dell is a result of the board’s extreme reliance on a process known as a go-shop and how it ran the initial sale. If this episode does not change the way companies sell themselves, perhaps it should.

A go-shop is a device that companies started using about a decade ago. The go-shop typically provides that after a deal is announced, the target company shops like Paris Hilton, as a Delaware judge once put it, looking to see if another bidder is willing to compete.

Why would the first bidder allow this?

The answer lies in its origins. Go-shops were first used in private equity buyouts. The private equity firm would often team with management to make a bid, demanding exclusive negotiations. Boards would agree to this exclusivity but in exchange demand a period of time when alternative bids could be solicited. This way they could be assured that the company was being sold for the highest possible price.

Yet there is also plenty of skepticism about this process. The conventional wisdom is that go-shops are a hollow ritual. The feel-good perception that the company is being actively shopped covers up the fact that the initial bidder has a perhaps unbeatable head start. Once a deal is announced, others don’t have time to catch up, nor do they want to get in a bidding war. A go-shop becomes just a cover-up for a pre-chosen deal.

There is truth to this. At least one study has found that go-shops don’t generally attract higher-valued bids when management and private equity firms are involved. This makes sense. After all, if the original bidding group has management locked up, how is a subsequent bidder going to run the company?

Despite such concerns, the Dell board used both exclusivity and a go-shop in structuring the sale process, although it did add some frills to try to protect shareholders further.

Instead of running an open auction contest at the very beginning, the Dell board negotiated with the private equity firms Silver Lake Partners and Kohlberg Kravis Roberts & Company. When K.K.R. dropped out, the board asked TPG to join the process.

But the board focused on only two bidders at a time and didn’t reach out to others. Instead, when Blackstone called about a deal in January, it was left to bid only in the go-shop after it was announced that Michael S. Dell and Silver Lake were offering $13.65 a share to take Dell private.

It is curious that the Dell board adopted the go-shop process so wholeheartedly. Even in the best of circumstances, they are seldom successful. Since 2004 there have been 196 transactions with go-shops in them, according to the research provider FactSet MergerMetrics. In only 6.6 percent of these did another bidder compete during the go-shop period. More than 93 percent of deals with go-shops do not attract competing bids.

You can slot Dell into the overwhelming majority. The Dell board hired Evercore to run the go-shop, and the investment bank contacted 71 parties. Now Dell appears left with only Carl C. Icahn.

It might have turned out differently, if the board had pulled Blackstone fully into the sale process before the announcement of an agreement to sell the company to Silver Lake and Mr. Dell. By failing to include Blackstone â€" with its growing technology practice that includes a former executive of Dell â€" from the get-go, it allowed the go-shop process to unfold in the harsh glare of the media.

And when your business is something like a melting ice cube, time matters. A recent International Data Corporation report showed the PC business in a free fall, with United States shipments down 12.7 percent in the first quarter of this year compared with the previous year, and Dell falling behind its competitors. The deterioration in the business was one of the reasons Blackstone decided not to bid.

Hindsight is 20-20, of course. Still, Dell’s board should have known that how it ran the sale would come under harsh scrutiny. Dell’s biggest shareholder outside of Mr. Dell, Southeastern Asset Management, had told the Dell board before the proposed buyout was announced that it would not support a transaction where it could not roll over its shares and that was not in the range of $14 to $15 a share, according to a securities filing. That Southeastern is now heavily protesting this deal is no surprise.

People close to Dell vigorously defend the sale process, calling the go-shop a “success” since it brought Blackstone even this close to bidding.

But Dell’s use of the go-shop now leaves its shareholders with a hollow choice. Silver Lake and Mr. Dell will most likely wait it out, possibly raising their offer a quarter or two at the last minute to win over shareholder holdouts. They certainly have no incentive to do anything before then or to do much more, if even that. And then shareholders will be forced to vote between this deal and taking the risk with a still publicly traded company that Blackstone has now so publicly spurned. It’s really not much of a choice.

Moreover, there will now be furious lobbying by Southeastern and Mr. Icahn to have equity stakes in a newly private Dell rather than take the buyout offer. Southeastern wants to salvage its investment in Dell â€" its cost basis in the stock is above the current offer price. But it appears the fund has little leverage unless it can persuade these now doubly cowed public shareholders to play a game of chicken with Mr. Dell.

At this point, it is simply speculation whether there could have been a healthy bidding war for Dell. Yet there are lessons here for companies that use go-shops in the future.

The risk that the process leaves shareholders with no real choice is particularly keen when management is involved. Dell’s board went admirably out of its way to secure the cooperation of Mr. Dell with any winning bidder, but even then it appears that he was not so willing to cooperate with Blackstone, as Andrew Ross Sorkin of The New York Times noted in his column.

Running a full auction of a company beforehand when there is leverage to fully secure management’s cooperation appears to be the better course.

In other words, the next time a company says that the price being paid to shareholders will be a good one because they have a go-shop, be wary. And as for directors, when executives from a private equity firm with $51 billion in assets under management comes knocking on your door, you might not want to turn them away.

Einhorn Supports Apple’s Big Payouts

Apple’s huge gift to investors has at least one big fan: David Einhorn, the prominent hedge fund manager who took on the company over its payouts to shareholders.

Here’s what Mr. Einhorn had to say soon after the company disclosed it was increasing its stock buyback program fivefold and its dividend by 15 percent, as well as taking on debt:

“We applaud Apple’s decision to borrow money and return excess capital to shareholders, an idea that was off the table only months ago. This positive development represents a more shareholder friendly capital allocation policy and demonstrates the conviction of Apple’s management and board in the company’s future.”

Apple’s moves aren’t quite what the Greenlight Capital chief had called for earlier this year. In a presentation earlier this year, Mr. Einhorn unveiled what he called “iPrefs,” a cheekily named variation of perpetual preferred shares. His plan involved issuing a preferred share, which carried a quarterly dividend of 50 cents, for each outstanding common share of Apple.

During his presentation, the hedge fund manager described iPrefs as an innovative way for Apple to pay shareholders from its cash pile while still maintaining financial flexibility. But he stressed that he didn’t oppose simpler measures, as long as they reached the same end goal.

When Apple pushed back, including eliminating its board’s ability to issue preferred shares at will, Mr. Einhorn went to federal court to press his case. A federal judge in Manhattan sided with Greenlight on a technical matter, namely that the company improperly bundled its preferred-share initiative with other shareholder proposals.

But Apple has also maintained that it was considering ways to return more money to shareholders.

Einhorn Supports Apple’s Big Payouts

Apple’s huge gift to investors has at least one big fan: David Einhorn, the prominent hedge fund manager who took on the company over its payouts to shareholders.

Here’s what Mr. Einhorn had to say soon after the company disclosed it was increasing its stock buyback program fivefold and its dividend by 15 percent, as well as taking on debt:

“We applaud Apple’s decision to borrow money and return excess capital to shareholders, an idea that was off the table only months ago. This positive development represents a more shareholder friendly capital allocation policy and demonstrates the conviction of Apple’s management and board in the company’s future.”

Apple’s moves aren’t quite what the Greenlight Capital chief had called for earlier this year. In a presentation earlier this year, Mr. Einhorn unveiled what he called “iPrefs,” a cheekily named variation of perpetual preferred shares. His plan involved issuing a preferred share, which carried a quarterly dividend of 50 cents, for each outstanding common share of Apple.

During his presentation, the hedge fund manager described iPrefs as an innovative way for Apple to pay shareholders from its cash pile while still maintaining financial flexibility. But he stressed that he didn’t oppose simpler measures, as long as they reached the same end goal.

When Apple pushed back, including eliminating its board’s ability to issue preferred shares at will, Mr. Einhorn went to federal court to press his case. A federal judge in Manhattan sided with Greenlight on a technical matter, namely that the company improperly bundled its preferred-share initiative with other shareholder proposals.

But Apple has also maintained that it was considering ways to return more money to shareholders.

Lasry Out of the Running for Ambassador to France

The billionaire hedge fund manager Marc Lasry will not be moving to the ambassador’s mansion in France.

Mr. Lasry, the chief executive and chairman of Avenue Capital, told his investors in a letter on Tuesday that he would remain at the hedge fund, ending speculation that President Obama was considering him for the role of French ambassador. The investor had been a prominent supporter of Mr. Obama during the presidential campaign.

“I am very grateful to have been considered,” Mr. Lasry said in the letter, which was obtained by DealBook. “I would like to put the speculation to rest and let you know that I will be remaining at Avenue.”

There had been questions about who might run the firm if the chief executive were to step down. Mr. Lasry is considered a “key man” in documents for a number of Avenue’s funds, according to a person briefed on the matter.

In addition, Mr. Lasry is personally invested in all of Avenue’s funds, this person said. The firm manages $11.5 billion as of the end of March; of that, about $3.7 billion is invested in Europe.

It’s not clear whether Mr. Lasry might have had to divest certain holdings in government service.

“Avenue is well positioned to continue to protect and grow investors’ assets, and I look forward to continuing to invest alongside all of you,” Mr. Lasry said in the letter.

The firm had reorganized its management amid speculation that the ambassadorship might be in Mr. Lasry’s future. In March, Sonia Gardner, the president of Avenue, who founded the firm with Mr. Lasry, her brother, told investors that Richard P. Furst would be the new chief investment officer.

The decision to promote Mr. Furst, who led Avenue’s European strategy, reflected “the increasingly global nature of the financial markets,” Ms. Gardner said in a letter at the time.

Speculation surrounding Mr. Lasry reached a pitch when Politico published a report suggesting that Bill Clinton had revealed that the hedge fund manager had been offered the ambassador job. The former president, whose daughter once worked at Avenue, had asked Mr. Obama to consider Mr. Lasry for the role, according to the report.

Lasry Out of the Running for Ambassador to France

The billionaire hedge fund manager Marc Lasry will not be moving to the ambassador’s mansion in France.

Mr. Lasry, the chief executive and chairman of Avenue Capital, told his investors in a letter on Tuesday that he would remain at the hedge fund, ending speculation that President Obama was considering him for the role of French ambassador. The investor had been a prominent supporter of Mr. Obama during the presidential campaign.

“I am very grateful to have been considered,” Mr. Lasry said in the letter, which was obtained by DealBook. “I would like to put the speculation to rest and let you know that I will be remaining at Avenue.”

There had been questions about who might run the firm if the chief executive were to step down. Mr. Lasry is considered a “key man” in documents for a number of Avenue’s funds, according to a person briefed on the matter.

In addition, Mr. Lasry is personally invested in all of Avenue’s funds, this person said. The firm manages $11.5 billion as of the end of March; of that, about $3.7 billion is invested in Europe.

It’s not clear whether Mr. Lasry might have had to divest certain holdings in government service.

“Avenue is well positioned to continue to protect and grow investors’ assets, and I look forward to continuing to invest alongside all of you,” Mr. Lasry said in the letter.

The firm had reorganized its management amid speculation that the ambassadorship might be in Mr. Lasry’s future. In March, Sonia Gardner, the president of Avenue, who founded the firm with Mr. Lasry, her brother, told investors that Richard P. Furst would be the new chief investment officer.

The decision to promote Mr. Furst, who led Avenue’s European strategy, reflected “the increasingly global nature of the financial markets,” Ms. Gardner said in a letter at the time.

Speculation surrounding Mr. Lasry reached a pitch when Politico published a report suggesting that Bill Clinton had revealed that the hedge fund manager had been offered the ambassador job. The former president, whose daughter once worked at Avenue, had asked Mr. Obama to consider Mr. Lasry for the role, according to the report.

Lasry Out of the Running for Ambassador to France

The billionaire hedge fund manager Marc Lasry will not be moving to the ambassador’s mansion in France.

Mr. Lasry, the chief executive and chairman of Avenue Capital, told his investors in a letter on Tuesday that he would remain at the hedge fund, ending speculation that President Obama was considering him for the role of French ambassador. The investor had been a prominent supporter of Mr. Obama during the presidential campaign.

“I am very grateful to have been considered,” Mr. Lasry said in the letter, which was obtained by DealBook. “I would like to put the speculation to rest and let you know that I will be remaining at Avenue.”

There had been questions about who might run the firm if the chief executive were to step down. Mr. Lasry is considered a “key man” in documents for a number of Avenue’s funds, according to a person briefed on the matter.

In addition, Mr. Lasry is personally invested in all of Avenue’s funds, this person said. The firm manages $11.5 billion as of the end of March; of that, about $3.7 billion is invested in Europe.

It’s not clear whether Mr. Lasry might have had to divest certain holdings in government service.

“Avenue is well positioned to continue to protect and grow investors’ assets, and I look forward to continuing to invest alongside all of you,” Mr. Lasry said in the letter.

The firm had reorganized its management amid speculation that the ambassadorship might be in Mr. Lasry’s future. In March, Sonia Gardner, the president of Avenue, who founded the firm with Mr. Lasry, her brother, told investors that Richard P. Furst would be the new chief investment officer.

The decision to promote Mr. Furst, who led Avenue’s European strategy, reflected “the increasingly global nature of the financial markets,” Ms. Gardner said in a letter at the time.

Speculation surrounding Mr. Lasry reached a pitch when Politico published a report suggesting that Bill Clinton had revealed that the hedge fund manager had been offered the ambassador job. The former president, whose daughter once worked at Avenue, had asked Mr. Obama to consider Mr. Lasry for the role, according to the report.

Einhorn Supports Apple’s Big Payouts

Apple’s huge gift to investors has at least one big fan: David Einhorn, the prominent hedge fund manager who took on the company over its payouts to shareholders.

Here’s what Mr. Einhorn had to say soon after the company disclosed it was increasing its stock buyback program fivefold and its dividend by 15 percent, as well as taking on debt:

“We applaud Apple’s decision to borrow money and return excess capital to shareholders, an idea that was off the table only months ago. This positive development represents a more shareholder friendly capital allocation policy and demonstrates the conviction of Apple’s management and board in the company’s future.”

Apple’s moves aren’t quite what the Greenlight Capital chief had called for earlier this year. In a presentation earlier this year, Mr. Einhorn unveiled what he called “iPrefs,” a cheekily named variation of perpetual preferred shares. His plan involved issuing a preferred share, which carried a quarterly dividend of 50 cents, for each outstanding common share of Apple.

During his presentation, the hedge fund manager described iPrefs as an innovative way for Apple to pay shareholders from its cash pile while still maintaining financial flexibility. But he stressed that he didn’t oppose simpler measures, as long as they reached the same end goal.

When Apple pushed back, including eliminating its board’s ability to issue preferred shares at will, Mr. Einhorn went to federal court to press his case. A federal judge in Manhattan sided with Greenlight on a technical matter, namely that the company improperly bundled its preferred-share initiative with other shareholder proposals.

But Apple has also maintained that it was considering ways to return more money to shareholders.

Apple’s Buyback Takes a Bite Out of Its Cash Pile, Temporarily

Apple Inc. is poised to put much more of its giant rainy day fund to use, announcing an eye-popping increase in its stock-buyback program by more than $50 billion.

Despite the attention-grabbing numbers, however, the company could quickly replace the withdrawal from its cash hoard â€" which now totals $145 billion.

Alongside its second-quarter earnings, the company said on Tuesday that it was quintupling its existing share repurchase plan, to $60 billion from $10 billion by the end of 2015. It is also planning on spending about $1 billion a year to settle vesting restricted stock units.

Apple also plans to raise its dividend by 15 percent and announced a payout of $3.05 a share.

Though the payout is enormous â€" the company, ever one for superlatives, declared it the single largest ever authorized â€" its effect on the company’s war chest may be mitigated pretty quickly. Apple reported $42.56 billion in free cash flow for the 12 months ended Sept. 29, meaning that at current levels, the money spent on the share repurchases could be replaced in less than a year and a half.

But that could be a fairly big assumption. Though Apple trumpeted an 11 percent rise in its quarterly revenue, to $43.6 billion, its profit and its gross margin both fell during the period.

Analysts, for one, continue to be fairly pessimistic about the prospects of the stock returning to its appetizing growth of yesteryear. The company trades at about 9.38 times its expected earnings for the 2013 fiscal year, compared with 15.11 times its earnings for its last full fiscal year.

Former Head of Dewey Pays to Settle Mismanagement Claims

The former head of the law firm Dewey & LeBoeuf has agreed to pay more than half a million dollars to resolve claims that mismanagement led to the firm’s collapse, according to court papers filed in the Federal Bankruptcy Court in Manhattan late Monday.

Dewey, which at its peak had 1,400 lawyers, filed for bankruptcy last May after being crippled by financial miscues and a partner exodus. Many of the firm’s lawyers blamed Dewey’s stunning demise on the leadership failures of Steven H. Davis, the firm’s former chairman.

Under the terms of a deal reached by the former chairman, an insurance company and the trustee liquidating Dewey’s bankrupt estate, Mr. Davis will pay $511,145 to settle accusations that he caused the demise of the firm. The insurer, XL Specialty Insurance Company, which issued Dewey’s management-liability policy, agreed to pay $19 million as part of the settlement. Those proceeds will ultimately go to the firm’s creditors.

“Mr. Davis is pleased that this is a fair and reasonable settlement and a practical outcome for all concerned,” his lawyer, Kevin Van Wart of Kirkland & Ellis, said.

Edward Weisfelner, a lawyer for the trustee, said that the settlement was “a substantially more favorable result than litigation,” which, he added, “would require extensive discovery, including millions of pages of documents to review and over 100 depositions.”

Mr. Davis was the visionary behind Dewey’s rapid expansion, which was fueled by heavy borrowing. He orchestrated a troubled merger in 2007 that created Dewey & LeBoeuf, which at its peak had 1,400 lawyers. He accelerated the firm’s growth by aggressively handing out lucrative guarantees to recruit star lawyers, and couldn’t meet those guarantees when the firm ran into financial difficulties.

The payment that Mr. Davis agreed to make is consistent with the formula used to determine the amount that about 450 former Dewey partners agreed to contribute under a “claw back” agreement struck last year. Because of the accusations of financial mismanagement leveled against him, Mr. Davis was excluded from that deal, which raised about $72 million for Dewey’s creditors. The firm’s creditors have said they are owed a total of about $550 million.

The “claw back” agreement forced former Dewey partners to return a portion of their 2011 and 2012 pay. The firm’s highest paid lawyers gave back as much as $3.5 million to repay creditors. Mr. Davis’s roughly $500,000 payment is far less than that because in he took a big pay reduction in the firm’s final years as its financial problems mounted.

Mr. Davis’s settlement with the trustee requires the approval of the bankruptcy court, which will hold a settlement hearing on May 13. Under the deal, the insurer would be released from any further claims against the estate.

While the agreement ends the mismanagement claims made in bankruptcy court against Mr. Davis and two others â€" former executive director Stephen DiCarmine and former chief financial officer Joel Sanders â€" there is an ongoing investigation by the Manhattan’s district attorney’s office into possible financial misconduct at Dewey. The three have maintained that they have done nothing wrong.

This settlement does not resolve all Dewey-related litigation and actions against Mr. Daivs. A former partner, Henry C. Bunsow, has filed a lawsuit against Dewey;s management team, including Mr. Davis, accusing them of fraud and deceiving the firm’s partners about the firm’s true financial condition.

Crackdown Expected on Big Banks’ Payday Loans

Federal regulators are poised to crack down on payday loans â€" the short-term, high-cost credit that can further mire borrowers in debt. But instead of taking aim at storefront payday lenders in strip malls and along highways, they are focusing on their big bank rivals like Wells Fargo and U.S. Bank, according to several people briefed on the matter.

A handful of banks offer the loans tied to checking accounts, and they typically vary slightly from those made by traditional payday lenders. The banks allow borrowers to take out money against a checking account with the promise that the lender can automatically withdraw the loan payment â€" plus the origination fee â€" when it is due.
Regulators from the Office of the Comptroller of the Currency and the Federal Deposit Insurance Corporation are expected to clamp down on the loans, which bear interest rates than can soar beyond 300 percent, by the end of the week, according to people with direct knowledge of the guidance.

The F.D.I.C. and the comptroller’s office declined to comment. Wells Fargo declined to comment and U.S. Bank could not be reached for comment.

The regulators are expected to impose more stringent requirements on the loans. Before making a payday loan, banks will have to assess a consumer’s ability to repay the loan. The banking authorities are also expected to institute a mandatory cooling-off period of 30 days between loans â€" a reform intended to halt what consumer advocates call a debt spiral with borrowers taking out new payday loans to cover their outstanding debt. As part of that, banks will not be able to extend a new loan until a borrower has paid off any previous direct-deposit loans.

Another requirement, the people said, will address the marketing of the products. Typically, the advances are not described as loans. The result is that the interest rates are largely hidden from borrowers. The banking regulators will now require that banks disclose the interest rates on the loans, according to the people familiar with the guidance.

Some of the guidelines would hew closely to mortgage rules already required under the Dodd-Frank financial overhaul law. Under the law â€" passed in the wake of the 2008 financial crisis to stem the kind of risky lending that plunged the housing market to its lowest levels since the Great Depression â€" lenders have to calculate a customer’s ability to shoulder the principal and interest payments over the life of a loan.

The direct deposit loans, bank analysts say, are an outgrowth of guidance issued by the comptroller’s office in 2000. At that point, the regulator effectively banned banks from becoming payday lenders. The direct-deposit loans, though, fall into a loophole in that guidance because they are not technically payday loans. They have proliferated since the financial crisis, according to consumer advocates, spurred in part by constricted credit and the aggressive search by banks for fresh sources of revenue after losing billions of dollars in income from federal regulations that restrict fees on debit and credit cards.

Banks vehemently deny that the loans are predatory and point out that they are simply catering to demand from consumers. The banks add that the costs are outlined up front and that the loans are explicitly identified as expensive forms of credit.

For low-income consumers, often already in a precarious financial position, the loans can result in a torrent of overdraft charges and fees for insufficient funds. Borrowers who take out payday loans are roughly two times as likely to be pummeled with an overdraft fee, according to a March report by the Center for Responsible Lending.
The impact of the loans can be especially devastating for seniors, according to the report. In March, the government began depositing benefits, including social security and disability payments, directly into checking accounts. Seniors who take out the loans could see their benefits siphoned to pay overdraft or other fees amassed from that initial payday loan.

The move by regulators is the latest salvo in sweeping push against the payday loans. Last May, the F.D.I.C. said the banking regulator was “deeply concerned” about payday lending. And the comptroller’s office said in June 2011 that the loans increased “operational and credit risks and supervisory concerns.”

At S.E.C., White Adds to Her Roster of Top Officials

A day after Mary Jo White shuffled the leadership of her enforcement unit, the Wall Street regulator announced on Tuesday that she hired a new lawyer to help run the Securities and Exchange Commission.

Anne K. Small, currently a special assistant to President Obama, will join the S.E.C. as its general counsel. In the role, her second at the agency, Ms. Small will oversee the writing of dozens of new rules.

Ms. Small will assume the role at a crucial period, one in which the agency has fallen far behind its rule-making responsibilities. Nearly three years after Congress passed the Dodd-Frank Act, the overhaul of Wall Street regulation, the S.E.C. has failed to implement many of the changes.

“I’m delighted that Annie will be returning the agency at a time when our rule writing is in full swing and our enforcement program continues to pursue cases involving some of the most complex transactions,” Ms. White, who became chairwoman of the S.E.C. this month, said in a statement.

Ms. Small, the first woman to be named general counsel at the S.E.C., is Ms. White’s second significant hire.

On Monday, Ms. White announced that Andrew J. Ceresney, her longtime lieutenant as a defense lawyer at Debevoise & Plimpton, would become the new joint leader of the S.E.C.’s enforcement unit. In his first few months on the job, Mr. Ceresney is expected to share the role with George Canellos, who became the commission’s interim enforcement chief this year when Robert S. Khuzami left the agency.

Ms. Small comes to the S.E.C. from the White House counsel’s office, which she joined in 2011. A former white-collar defense lawyer at WilmerHale, Ms. Small was also once a senior S.E.C. official overseeing enforcement cases.

“It is an honor to return to the commission,” Ms. Small said in the statement.

She will succeed Geoffrey Aronow, who became general counsel in January. Mr. Aronow will now become a senior counsel to Ms. White.

Baucus, Powerful Finance Chairman, Will Leave Senate

Baucus, Powerful Montana Democrat, Will Leave Senate

Christopher Gregory/The New York Times

Senator Max Baucus, Democrat of Montana, seen here after voting last Wednesday against expanding background checks for gun purchases, will leave the Senate after 36 years.

Senator Max Baucus of Montana, the chairman of the Finance Committee, will retire from the Senate after 36 years, becoming the sixth Senate Democrat to leave the chamber in the 2014 elections, according to Democratic officials close to the senator.

A Democratic official said former Gov. Brian Schweitzer of Montana, a Democrat and still one of the most popular political figures in the state, is leaning toward running for the seat, giving the party a strong chance at retaining it. But Mr. Baucus’s departure means the Democrats will now be defending open seats in Iowa, Michigan, Montana, New Jersey, South Dakota and West Virginia.

As recently as Friday, aides to Mr. Baucus indicated that he had no intention of retiring. He had amassed a $5 million campaign treasury and was in New York last week meeting with donors. His votes against gun legislation promoted by President Obama and against the Democratic leadership’s budget plan seemed calculated to appeal to conservative voters in his state.

But those votes isolated Mr. Baucus from other members of the Senate Democratic Caucus in ways reminiscent of 2001, when he infuriated Democrats by working with President George W. Bush to pass a 10-year, $1.35 trillion tax cut.

This week, over Mr. Baucus’s fierce opposition and without the Finance Committee’s imprimatur, Democratic leaders forced Internet sales tax legislation to the Senate floor. Montana is one of four states without a sales tax, and Mr. Baucus has tried to rally opposition to the Internet bill, which is championed by Senator Richard J. Durbin of Illinois, the Senate’s No. 2 Democrat.

“Baucus versus the Caucus” has become a catchphrase in the halls of the Capitol.

Thai Magnate Loads Up on Debt for Big Deals

Thailand’s richest man is rediscovering the joy of debt. Fresh from leveraging up to buy a stake in the Ping An Insurance Group of China, Dhanin Chearavanont is borrowing $6 billion to finance a takeover of Siam Makro, a cash-and-carry company. Combining that group with his 7-Eleven convenience store chain makes sense - as long as Southeast Asia’s financial boom keeps the cash flowing.

For Mr. Dhanin, the deal is a poignant return. He co-founded Siam Makro with the Dutch group SHV Holdings in the late 1980s, but was forced to sell in 1998 when the Asian crisis left his empire overextended. Emotion aside, the combined business should also be in a stronger position to expand into neighboring Southeast Asian countries like Laos and Myanmar.

The reunion does not come cheap. The offer price of 787 baht a share is 75 percent above where Siam Makro was trading in early January, and values the business at a whopping 53 times last year’s earnings. The advantage is that both Siam Makro and CP All, Mr. Dhanin’s partially listed Thai retail company, currently have no debt.

Deduct the net cash sitting on the two companies’ balance sheets at the end of last year, and Mr. Dhanin needs to borrow about $5.6 billion. Assuming financing costs of 6 percent, the annual interest bill will be roughly half the combined operating profit of the two businesses last year.

But that is before factoring in cost savings and increased purchasing clout when negotiating with food producers. Add in continued growth - Siam Makro’s earnings have doubled in the last two years - as well as the cash-generative nature of the retail business, and debt should soon fall.

The risks are more macroeconomic and political than financial. Thailand’s economy is booming, partly because of overgenerous government subsidies and hot-money flows that are pushing up consumer debt. The possible return from exile of Thaksin Shinawatra, a former Prime Minister, could also reignite political tensions. And Mr. Dhanin’s large Chinese operations are vulnerable to an economic slowdown. The Asian crisis will undoubtedly have taught Mr. Dhanin some financial lessons. He must hope that his timing has also improved.

Peter Thal Larsen is Asia editor at Reuters Breakingviews. For more independent commentary and analysis, visit breakingviews.com.

HSBC to Cut 1,150 Additional Jobs in Britain

LONDON â€" HSBC said Tuesday that it planned to cut about 1,150 jobs in Britain as the bank adjusts to new regulations for wealth advisers.

HSBC said it would eliminate 3,166 positions but create 2,017 jobs, mainly in its wealth management and advice business, after new rules took effect requiring advisers to hold additional qualifications. The job cuts are separate from a cost-cutting plan that HSBC announced in 2011, when it said it would reduce about 30,000 positions over the next three years.

“The changes reflect the changing nature of customer behavior and regulation,” HSBC said in a statement.

The new rules, which came into place in Britain at the beginning of the year, mean that financial advisers must have to be more transparent about how much their advice costs and how customers would pay for it. Previously, advisers often received commissions from the providers of certain products, such as pension plans or insurance.

HSBC is among a handful of British banks that had to set aside money to compensate some clients because the banks wrongly sold them an insurance product. The so-called payment protection insurance scandal shed additional light on the need to change the rules for financial advisers, who were under pressure to sell products.

Ian Gordon, an analyst at Investec, said other British banks might be considering similar steps because of changing regulation but that the job cuts are also an attempt to reduce costs further. “Ongoing revenue pressures are refocusing efforts on cost reduction,” he said.

Stuart T. Gulliver, who took over as HSBC’s chief executive in 2011, has embarked on a wide-ranging plan that he said would bring down costs by as much as $3.5 billion and improve profitability. The bank closed businesses as it exited some markets, for example retail banking in Russia.

In December, HSBC agreed to sell its stake in China’s Ping An Insurance to a Thai conglomerate for $9.4 billion. It sold its credit card unit in the United States to Capital One Financial for $2.6 billion and its unit in Panama to Bancolombia for $2.1 billion.

Despite the cost-cutting, some analysts are skeptical that HSBC would reach its 12 percent return-on-equity target, a measure of profitability, in the medium term. The company is to update investors on its strategy next month.

Tuesday’s announcement prompted Dominic Hook, national officer of Unite, Britain’s largest workers’ union, to say his organization might ask HSBC staff members whether they want to take part in a strike ballot. “HSBC is making staff suffer in the search for ever greater profits,” Mr. Hook said in a statement on Unite’s Web site. “The bank’s behavior is a disgrace. After making proposals to slash pensions, holidays and sick pay the bank is now slashing even more jobs.”

Bank officials say the changes were necessary to meet new regulatory rules.

“I understand change is always unsettling, particularly for those directly affected,” Brian Robertson, chief executive of HSBC Bank in Britain, said. “However, I also firmly believe what we are proposing is essential in order for us to fulfill our customers’ expectations.”

Sheila Birnbaum Leaves Skadden for Quinn Emanuel

Sheila L. Birnbaum, one of the country’s top product liability defense lawyers, is switching firms.

Ms. Birnbaum, a longtime partner at Skadden, Arps, Slate, Meagher & Flom, is joining Quinn Emanuel Urguhart & Sullivan along with another Skadden partner, Mark Cheffo.

“It is exceedingly rare that any firm has the opportunity to add world-class, one-of-a-kind talent of Sheila’s caliber,” said John Quinn, the managing partner at Quinn Emanuel. “To say that we are pleased she is joining us is an understatement.”

The move is a loss for Skadden, which under Ms. Birnbaum’s leadership has built a premier product liability practice, defending companies from complex mass tort claims. She is also considered one of the pre-eminent insurance defense litigators. In 2003, Ms. Birnbaum won an important victory before the United States Supreme Court in a landmark case, Campbell vs. State Farm, securing the reversal of a $145 million punitive damages claim against the insurer on the ground that it was unconstitutionally excessive.

In addition to State Farm, her clients have included Wyeth, Pfizer and Dow Corning. There are a few dozen lawyers in Skadden’s mass torts and insurance litigation practice; it is unclear whether any junior lawyers are joining Ms. Birnbaum at her new firm. Her co-head of the practice, John Belsner, will serve as sole chairman, Skadden said in an internal memo to its partners.

“I had a wonderful run at Skadden and have many great friends there,” Ms. Birnbaum said in a statement. “However, the opportunity to join Quinn Emanuel was an offer I could not refuse. Its pure litigation model is a more natural fit with my practice.”

Ms. Birnbaum is 73, and Skadden’s mandatory retirement age is 70, a factor that could have a played a role in her decision to leave, according to a person briefed on her decision.

With its hire of Ms. Birnbaum, Quinn Emanuel continues its ascent up the Big Law ladder. A litigation-only shop with more than 600 lawyers and a big trial practice, Quinn Emanuel is one of the most profitable firms in the country, posting profits per partner last year of $4.4 million. The firm has been aggressively hiring partners away from other firms, most recently bringing on two partners from Weil Gotshal & Manges’s Washington office.

Ms. Birnbaum, a Manhattan native and graduate of Hunter College and New York University School of Law, is perhaps the most prominent lateral hire in Quinn Emanuel’s 27-year history. In 2011, Attorney General Eric H. Holder Jr. chose her to serve as the special master of the September 11th Victim Compensation Fund program. From 2006 to 2009, she mediated settlements for 92 families of victims of the terrorist attacks who decided to pursue their clais in court rather than be compensated by the original compensation fund.

In an internal memo issued on Tuesday, Bruce Goldner, the head of Skadden’s New York office, wrote, “Over her past 30 years at Skadden, Sheila has built a world-class mass torts practice, and her contributions to the firm, as well as to the legal profession in general, cannot be overstated.”

MF Global Trustee Sues Corzine Over Firm’s Collapse

A bankruptcy trustee has sued Jon S. Corzine and other former MF Global executives, claiming they were “grossly negligent” in the lead up to the brokerage firm’s collapse.

The action by the trustee, Louis J. Freeh, comes just weeks after he agreed to postpone the lawsuit and enter mediation with Mr. Corzine. It is unclear when those talks broke down.

In the complaint filed in United States Bankruptcy Court late Monday, Mr. Freeh took aim at Mr. Corzine, a former senator and New Jersey governor who became MF Global’s chief executive in 2010. Mr. Freeh, the trustee for MF Global’s parent company and a former director of the F.B.I., also sued two of Mr. Corzine’s top deputies: Bradley I. Abelow, MF Global’s chief operating officer, and Henri J. Steenkamp, the chief financial officer.

“Defendants, in their capacities as officers, breached their fiduciary duties of care, loyalty, and oversight over the company, and failed to act in good faith,” Mr. Freeh wrote.

The lawsuit echoes a report Mr. Freeh issued this month that blamed MF Global executives for engineering a “risky business strategy” and ignoring “glaring deficiencies” in internal controls. The report and the lawsuit also blamed the executives for allowing more than $1 billion in customer money to disappear from the firm.

The lawsuit, which could help Mr. Freeh recover money for MF Global’s creditors, blamed Mr. Corzine for ramping up a risky bet on European debt. While the bonds were not by themselves to blame for the fall of MF Global, the wager spooked the firm’s investors and ratings agencies, helping to send it into a tailspin.

“Corzine engaged in risky trading strategies that strained the company’s liquidity and could not be properly monitored by the company’s inadequate controls and procedures,” Mr. Freeh said.

A spokesman for Mr. Corzine did not immediately respond to a request for comment. But in response to Mr. Freeh’s earlier report, the spokesman for Mr. Corzine argued that “there simply is no basis for the suggestion that Mr. Corzine breached his fiduciary duties or was negligent.” The spokesman, Steven Goldberg, added that “the trustee’s report, with its allegations of negligent conduct, is a clear case of Monday morning quarterbacking.”

Mr. Corzine, he noted, inherited a firm in 2010 that lost money in each of the previous three years. “Mr. Corzine worked tirelessly and in good faith to turn the business around,” Mr. Goldberg said.

The lawsuit from Mr. Freeh comes on top of other litigation facing Mr. Corzine. Lawyers for Mr. Corzine are also in negotiations with another MF Global trustee and some of the firm’s investors who filed a separate suit against him in 2011

Federal authorities also continue to investigate the misuse of customer money. Mr. Corzine has not been accused of any wrongdoing, and internal e-mails suggest he was not aware that at least some of the customer money was improperly sent to the firm’s banks.

In recent months, customers have recovered much of their missing money. By early April, MF Global’s customers in the United States had recovered about 89 percent of the shortfall.

EBay Joins Sales Tax Fight

It was once Amazon that led a lobbying campaign in Washington to prevent online merchants from having to collect state and municipal sales taxes from customers. Now, eBay has taken up the cause as the issue is moving through Washington in earnest for the first time, Andrew Ross Sorkin writes in the DealBook column. A bill introducing such a tax cleared a procedural hurdle in the Senate, setting it up for a vote this week.

John Donahoe, eBay’s chief executive, made his thoughts known over the weekend in an e-mail to tens of millions of eBay merchants. “This legislation treats you and big multibillion-dollar online retailers â€" such as Amazon â€" exactly the same,” wrote Mr. Donahoe. “It may harm your ability to grow and costs jobs, including yours.”

Mr. Sorkin writes: “Mr. Donahoe, who deserves credit for turning around eBay in recent years, isn’t trying to protect the mom-and-pop store or the struggling artist, he’s trying to keep substantial businesses with real revenue from paying taxes.”

“In the end, it is unclear whether the Republican-controlled House will approve tax legislation if it clears the Senate, as expected. But when consumers make purchases, either in a store or online, they should be prepared to pay the requisite sales tax. And, yes, merchants and lawmakers should provide the way to collect it.”

NEW LEADERSHIP FOR S.E.C.’S ENFORCEMENT TEAM  |  Andrew J. Ceresney, a former federal prosecutor turned defense lawyer who on Monday was named a co-director of the enforcement unit of the Securities and Exchange Commission, is confronting a fresh batch of challenges. “Mr. Ceresney will inherit a unit that is on pace to file the lowest number of enforcement cases in a decade, according to S.E.C. figures provided to The New York Times,” DealBook’s Ben Protess writes. “In the last six months, through March 31, the number of cases is down 23 percent from the same period a year ago â€" a sharp contrast from recent years when the agency trumpeted its record-high numbers.”

“Some longtime S.E.C. officials, who were not authorized to speak publicly, also question whether their focus on insider trading cases distracts from investigations of broader significance. What’s more, the officials say that the S.E.C. opened fewer investigations in the 2012 fiscal year than the previous year, presenting a potential obstacle to Mr. Ceresney, who will take the reins with George Canellos, an agency veteran.”

AWAITING A BLUEPRINT ON FED LENDING  |  “After the Federal Reserve lent more than $1 trillion to big banks during the 2008 financial crisis, Congress required the central bank to devise specific ways of protecting taxpayers when doling out emergency loans to financial institutions,” DealBook’s Peter Eavis writes. “But nearly three years after that overhaul became law, the Fed still has not established these regulations. The delay involves a crucial but little-noticed part of the Dodd-Frank act, the sweeping financial sector overhaul that Congress passed in July 2010. One part of the legislation focused on the Fed. While the government used many different tools to shore up the financial system during the crisis, Congress was well aware that the Fed played a decisive role.”

ON THE AGENDA  |  Senator Sherrod Brown, Democrat of Ohio, and Senator David Vitter, Republican of Louisiana, are to speak at the National Press Club in Washington about their plan to address too-big-to-fail institutions. Data on new home sales for March is out at 10 a.m. Delta Air Lines, US Airways and United Technologies report earnings before the market opens. Apple and AT&T report earnings on Tuesday evening.

NETFLIX SURPRISES WALL STREET  |  In a recent interview with GQ, a Netflix executive said the company’s goal was “to become HBO faster than HBO can become us.” By one measure, the company now has more subscribers than HBO in the United States. On Monday, Netflix said its revenue in the first quarter topped $1 billion for the first time, largely because it quickly added subscribers to its streaming service, gaining about two million in the United States during the quarter. The company’s stock soared in trading after hours, passing $200 a share for the first time since 2011.

“After the subscriber data was released, analysts rushed to note that Netflix, with 29.2 million such subscribers, had apparently surpassed HBO. Michael Olson, an analyst at Piper Jaffray, also pointed out that Netflix’s two million new subscribers beat industry expectations of about 1.7 million,” The New York Times writes.

Mergers & Acquisitions »

Thai Billionaire Offers $6.6 Billion for Discount Retailer  |  The Thai operator of 7-Eleven convenience stores, owned by the billionaire Dhanin Chearavanont, said on Tuesday that it would pay more than $6 billion to acquire the discount retailer Siam Makro in the biggest takeover announced in Asia this year. DealBook »

Credit Suisse Sells Private Equity Business to Blackstone  |  The Blackstone Group will buy Strategic Partners, a private equity business owned by Credit Suisse that specializes in buying stakes in funds from other investors. The unit has $9 billion of assets under management. DealBook »

Sprint Forms Special Committee to Review Dish Offer  |  Sprint Nextel said its board had formed a special committee and hired advisers to consider the $25.5 billion takeover offer from Dish Network. REUTERS

Head of Rosneft Willing to Hear Concerns of TNK-BP Minority Shareholders  | 
REUTERS

INVESTMENT BANKING »

Financial Firms Bow to Pressure on Executive Pay  |  Seven large financial firms in the United States, including the PNC Financial Services Group and Capital One Financial, said they were “scaling back the maximum bonuses awarded to executives who beat their performance targets, according to regulatory filings,” The Wall Street Journal writes. WALL STREET JOURNAL

CME Says It ‘Mistakenly’ Let Traders See Data  |  The CME Group said that it allowed “a small number” of traders to see confidential information on swaps that it collects, and corrected the problem within two days, Reuters reports. REUTERS

In Germany, Lazard Said to Hire Investment Banker From Credit Suisse  | 
BLOOMBERG NEWS

JPMorgan and Barclays Gain Ground in Dealing Energy Derivatives  | 
REUTERS

PRIVATE EQUITY »

Private Equity Firms Lose Enthusiasm for Chinese Currency  |  Private equity firms once hoped that funds raised in Chinese currency would be treated by the Chinese government as domestic, but uncertainty over that issue has weighed on fund-raising, The Wall Street Journal writes. WALL STREET JOURNAL

K.K.R.’s Municipal Water Deal  |  A deal in Bayonne, N.J., in which K.K.R. and another company are receiving water bill revenue from a utility, “is an example of the financial engineering pitched to cities across the U.S. that are in a jam,” The Wall Street Journal writes. WALL STREET JOURNAL

Taking a Page From Rhodes  |  Stephen A. Schwarzman’s move to contribute $100 million to start a scholarship program in China may not be entirely philanthropic, but there will still be many beneficiaries if it helps Western and Chinese elites understand each other better, Peter Thal Larsen of Reuters Breakingviews writes. REUTERS BREAKINGVIEWS

HEDGE FUNDS »

Hedge Fund Reveals $2 Billion Stake in Microsoft  |  Jeffrey W. Ubben of ValueAct Capital Management said at an investor conference on Monday that his firm held about $2 billion in Microsoft stock. REUTERS

Former Icahn Lieutenant Takes on Real Estate Trust  |  “We knew we were in for a fight before we bought the first share,” Keith Meister, managing partner of Corvex Management, and a former executive of Icahn Enterprises, said of his investment in CommonWealth REIT, according to The Wall Street Journal. WALL STREET JOURNAL

I.P.O./OFFERINGS »

Brazilian Power Company Raises $421 Million in I.P.O.  |  Alupar Investimento held what was “South America’s first initial public offering by a power utility since the Lehman Brothers bankruptcy in 2008,” according to Bloomberg News. BLOOMBERG NEWS

VENTURE CAPITAL »

Twitter Signs Deal With Advertising Agency  |  Twitter agreed to a multiyear deal, estimated to be worth hundreds of millions of dollars, with the Starcom MediaVest Group, part of Publicis Groupe. “This is what the company has been talking about for really the last year,” said Laura Desmond, the global chief executive of Starcom MediaVest. NEW YORK TIMES

A Messaging App, Kik, Attracts $19.5 Million  |  The app “just got a little more gas in the tank for its race against rivals like WhatsApp, GroupMe, MessageMe and Facebook Messenger,” the Bits blog writes. NEW YORK TIMES BITS

GlaxoSmithKline Partners With Venture Capital Firm  | 
REUTERS

LEGAL/REGULATORY »

Ralph Lauren Pays $1.6 Million to Resolve Bribery Case  |  The clothing retailer Ralph Lauren faced criminal and civil charges of violating a federal law against making illegal payments to foreign officials, the latest case highlighting a crackdown on overseas bribery by American companies. DealBook »

S.&P. Urges Judge to Dismiss Civil Case  |  Standard & Poor’s urged the dismissal of federal civil accusations that it inflated its credit ratings to win business during the boom in mortgage investments. DealBook »

In Europe, a Pint-Size Punishment for Google  |  Regulators in Germany fined Google just $189,225 for scooping up personal information in the Street View mapping project. “That’s how much Google made every two minutes last year, or roughly 0.002 percent of its $10.7 billion in net profit,” The New York Times writes. NEW YORK TIMES

News Corp. Reaches $139 Million Settlement With Shareholders  |  The group of United States shareholders had claimed that the board of News Corporation had breached its fiduciary responsibility in its handling of the phone-hacking scandal. NEW YORK TIMES

Earthquake Response and Political Tensions Return to the Spotlight  |  The government’s response to a deadly earthquake is yet another test of its ability to deliver the goods, Bill Bishop writes in the China Insider column. The administration of President Xi Jinping takes more steps to tackle corruption. DealBook »

Credit Suisse Sells Private Equity Business to Blackstone

LONDON - The Blackstone Group has agreed to buy a private equity business owned by Credit Suisse.

The sale by Credit Suisse, which is to report first-quarter results on Wednesday, comes as the bank reduces its presence in so-called alternative investments like private equity funds.

Under the terms of the deal, announced late on Monday, Blackstone will buy Strategic Partners, a private equity business owned by Credit Suisse, which is based in Zurich. The unit specializes in buying stakes in funds from other investors and has $9 billion of assets under management. The price of the acquisition was not disclosed.

Blackstone’s chief operating officer, Hamilton E. James, said the deal would help strengthen the firm’s existing operations as it continued to diversify away from leveraged buyouts.

Last year, Credit Suisse announced that it was planning to sell Strategic Partners, which was created in 2000, as part of a wider pullback from private equity investments because of uncertainty related to the so-called Volcker Rule. The American law limits the investments by financial institutions in the likes of private equity and hedge funds in an effort to reduce banks’ exposure to risky trading activity.

While Credit Suisse is expected to maintain its largest investment banking operation, it also recently has moved to expand its profitable wealth management division.

The bank agreed last month to buy Morgan Stanley’s wealth management unit in Europe, the Middle East and Africa. That unit has around $13 billion in assets under management and will increase the existing $840 billion that Credit Suisse already manages for wealthy clients.

The deal for Strategic Partners is expected to close by the third quarter of this year.