Barclays and Credit Suisse Post Strong Earnings in Investment Banks

LONDON â€" As European policy makers push financial institutions to cut back on their risky trading activity, some of the region’s largest banks are becoming more reliant on their investment banking operations to bolster performance.

On Wednesday, the British bank Barclays and a Swiss rival, Credit Suisse, both reported strong first-quarter earnings for their investment banks that helped to offset some sluggish growth in other divisions like retail banking and wealth management.

The healthy performance comes despite a push by European politicians to limit firms’ exposure to financial risks and to promote lending to local economies.

New tougher capital requirements have forced European banks to shed billions of dollars of assets since the financial crisis began. A proposed cap on banker bonuses that will become effective at European institutions next year has led to fears of a mass exodus of firms’ top earners to international competitors.

The two banks’ first-quarter earnings reflected the strength of investment banking.

Barclays’ quarterly pretax profit for its investment bank rose 11 percent, to £1.3 billion, or $2 billion, or roughly 74 percent of the company’s combined pretax profit over the period.

Over all, Barclays’ quarterly profit, when adjusted for one-time charges, was £1.8 billion, down 25 percent from the same period last year, which missed analysts’ estimates. The fall was linked to £514 million ($784 million) of costs related to a restructuring that includes 3,800 layoffs and a £235 million ($359 million) charge connected to the value of the bank’s debt.

Barclays’ investment bank benefited from renewed deal activity and a bullish stock market performance in the United States, where it now generates around 50 percent of its revenue. For example, the bank is advising Dish Network on its proposed $25.5 billion takeover of Sprint Nextel. “The reality is that investment banking is becoming more dominant for Barclays,” said Ian Gordon, a banking analyst at Investec in London. “The first quarter was a blowout performance.”

At Credit Suisse, pretax profit in its investment banking division rose 43 percent, to 1.3 billion Swiss francs, or $1.4 billion, partly driven by a strong performance in the bank’s fixed-income sales and trading business. In contrast, earnings from the company’s private banking and wealth management business fell 7 percent, to 881 million francs, over the same period.

Credit Suisse reported a net profit of 1.3 billion francs ($1.4 billion) in the first quarter, compared with a profit of 44 million francs ($47 million) in the same period last year, when the bank booked a loss of 1.6 billion francs ($1.7 billion) on the value of its own outstanding debt.

Analysts said the bank’s strong earnings were a result of a cost-cutting program started by the chief executive, Brady W. Dougan. The company’s investment banking division also benefited from a pickup in global stock markets in the first three months of the year.

“The investment bank was the main driver with impressive cost management,” Kian Abouhossein, a banking analyst at JPMorgan Chase in London, said in a research note to investors.

Shares in Barclays fell 1.3 percent in London on Wednesday, while Credit Suisse’s stock price rose 1.5 percent in Zurich.

Attention will now turn to other large European banks that will report their first-quarter earnings over the next few weeks.

Deutsche Bank, the largest bank in Germany and one with a major investment banking division, will announce its results on Tuesday, as will the Swiss banking giant UBS. Analysts are expecting a fall in UBS’s first-quarter net profit as the company continues to carry out sharp reduction in its investment bank, which includes around 10,000 job cuts, to focus on its wealth management business.

The continued reliance on investment banking at some of Europe’s largest institutions follows efforts by politicians and top banking executives to reshape the Continent’s financial sector.

Some banks, like UBS and Royal Bank of Scotland, are reducing their exposure to risky trading assets, while others, like HSBC and Standard Chartered, are increasing their operations in fast-growing emerging markets.

Antony P. Jenkins, Barclays’ chief executive, also is trying to rehabilitate the company’s image after a series of recent scandals. Last year, the bank agreed to a $450 million settlement with the United States and British authorities after some of its traders were found to have manipulated crucial global benchmark rates for financial gains.

Capital One Settles Accusations It Understated Loan Losses

Federal regulators on Wednesday accused Capital One and two of its executives of low-balling millions of dollars in auto loan losses suffered during the financial crisis.

The case, which the Securities and Exchange Commission agreed to settle with Capital One and the executives, illustrated a common financial misdeed during the crisis. As losses mounted in 2007 and 2008, some Wall Street firms covered up the red ink from the public, prompting a wave of federal actions against Countrywide Financial and other lending giants.

In the case of Capital One’s auto-lending business, according to the S.E.C., the bank “materially understated” its loan loss expenses and “failed to maintain effective internal controls.” The S.E.C. contended that Peter A. Schnall, who was Capital One’s chief risk officer at the time, and David A. LaGassa, a lower-level executive, failed to prevent the improper statements.

“Accurate financial reporting is a fundamental obligation for any public company, particularly a bank’s accounting for its provision for loan losses during a time of severe financial distress,” George Canellos, the co-chief of the S.E.C.’s enforcement unit, said in a statement. “Capital One failed in this responsibility.”

But the S.E.C. could face questions over whether its penalties fit the crime. Capital One, one of the nation’s biggest banks, paid $3.5 million to settle the case, a rounding error for a company of its size. And like most banks accused of wrongdoing during the 2008 crisis, Capital One was not required to admit or deny wrongdoing.

“The settlement does not require a restatement of Capital One’s financial results,” a bank spokeswoman, Tatiana Stead, said. She added that the deal “will not affect any current or future business activities by Capital One.”

The two executives also emerged relatively unscathed. In resolving the case, Mr. Schnall agreed to pay an $85,000 penalty, and Mr. LaGassa settled for $50,000. Neither is barred from the securities industry. In fact, they are still employed by Capital One, though in different roles.

“The company continues to have confidence in Mr. Schnall and Mr. LaGassa and we believe that they can perform in their current roles with the company,” Ms. Stead said.

Lawyers for both men did not respond to requests for comment.

The S.E.C.’s case stems from mid-2007, when the subprime lending market was melting down. Capital One’s auto-lending business was not spared. The losses grew so large, according to the S.E.C., that they outpaced Capital One’s initial forecast.

In June 2007, the bank’s own internal alarms went off, the S.E.C. said, signaling a “significant impact” on its loan loss expense.

Mr. LaGassa, who organized a “swat team” to diagnose the losses, provided almost daily e-mail updates to Capital One senior executives. In a June 19 e-mail cited by the S.E.C., Mr. LaGassa warned he was “not optimistic that we are going to suddenly see a slowing in losses.”

Ultimately, an internal “loss forecasting tool” traced the mounting problems to “exogenous” factors - external problems like the souring economy.

But the bank, according to the S.E.C., looked the other way. For example, Capital One failed to include any “exogenous-driven losses” in its second-quarter assessment in 2007.

Capital One, the S.E.C. said in the order, “gave insufficient weight to the evidence available at the time.”

The decision, the S.E.C. said, caused the company to “materially” understate its loan loss expense in public filings. In the second quarter alone, Capital One low-balled the expense by up to $72 million, or by about 18 percent.

“Financial institutions, especially those engaged in subprime lending practices, must have rigorous controls surrounding their process for estimating loan losses to prevent material misstatements of those expenses,” Gerald W. Hodgkins, a senior S.E.C. enforcement official said. “The S.E.C. will not tolerate deficient controls surrounding an issuer’s financial reporting obligations, including quarterly reporting obligations.”

Caesars Blinds Market With Science

The private equity owners behind Caesars Entertainment have been working overtime in their financial laboratory. Apollo Global Management and TPG are following last year’s microscopic initial public offering with a spinoff and rights issue concoction. Aiming to raise $1.2 billion, the complex transaction mostly seems designed to buy still more time for the ailing $31 billion leveraged buyout.

The casino empire may be out of textbook solutions. Shortly after going private in 2006, Caesars rejigged itself several times in a bid to reduce leverage. But it couldn’t keep pace with the Great Recession, which took a toll on Las Vegas. An I.P.O. attempt in 2010 faltered. A subsequent effort in 2012 sold less than 1.5 percent of the shares and raised only about $20 million.

Things haven’t much improved for Caesars. Last year, net revenue tumbled 4 percent, swinging the company to an operating loss. And $2.1 billion of interest payments on $24 billion of debt exceeded the company’s adjusted Earnings before interest, taxes, depreciation and amortization. Investment must be constrained. Moody’s last month cut the corporate family credit rating to Caa2, narrowly above default.

Hence the convoluted experiment laid out on Tuesday. Caesars is creating Caesars Growth Partners and giving its shareholders the right to buy a piece of the new vehicle through a holding company. Apollo and TPG are kicking in $250 million apiece. Caesars is contributing its Internet operations, handing off about $1.1 billion in debt, and selling the new unit a stake in a casino being developed in Baltimore and the Planet Hollywood in Sin City. Caesars will retain a big economic interest in Growth Partners. In three years, it will have the option to buy back voting control and, after five years, it can liquidate the business.

For all the intricacies, the plan hardly makes Caesars any more the master of its fate. It’s also a precarious time to value the online division given the uncertainty surrounding U.S. Internet gambling law. Investors nevertheless sent Caesars shares up by more than a quarter on Tuesday. With the $2 billion company still mostly owned by the two buyout firms and their co-investors, who originally put in $6 billion in equity, the few public shareholders may have been blinded by science.

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

In Defense of Regulatory Capital Trades

Glenn Blasius is the chief executive of Ovid Capital Advisors LLC. He has worked with many large international banks on regulatory capital transactions involving real risk transfer over the last decade.

Increased media attention has been paid to a recent surge in “regulatory capital” transactions by banks. This has spurred criticism of this technique from some quarters.

We believe these transactions are valid and effective tools for banks to reduce risk while enabling them to continue to run their core businesses, which are at the heart of the economic recovery. Since the purpose and operation of these transactions appear superficially complex, they merit a brief description.

A bank’s capital serves as a cushion against unexpected losses that can arise in the course of business and endanger both the banking system and the real economy. “Expected losses” in the form of occasional loan defaults or operational miscues are a cost of doing business, much like a grocer who has to account for the risk of spoilage of his produce in determining the price of his goods.

Banks cover expected losses in their lending business from annual revenues, but the coverage of unexpected losses must be provided by the banks’ capital base. The definition and amount of required capital is set independently by the banking regulator, which is why we refer to it as regulatory capital. The goal of these requirements is to ensure the stability of the banking system.

Banking regulations, from the first set of Basel accords through to the current Basel III framework, have increased the strength of the link between the amount of capital required and the riskiness of a bank’s business model. The riskier the loan or business, the greater the required capital. The latest Basel agreement has increased both the amount and the quality of regulatory capital.

A bank can meet the new requirements by increasing its common equity or by reducing the riskiness of its business. The latter can be achieved by entering into a regulatory capital transaction: private investors agree to cover losses on a designated part of the bank’s portfolio in return for a fee; this is similar to buying reinsurance against losses in any other business. The transaction transfers a quantum of risk of loss from the bank to a third party. The counterparty’s obligation is fully collateralized with high quality assets, guaranteeing the transaction’s performance. The risk to the bank of a catastrophic loss event is therefore reduced.

Regulatory capital transactions offer banks a valuable tool to manage the risk of business without having to resort to selling prized assets. Banks may not wish to sell illiquid parts of their businesses for good reasons: a) they may wish to retain part of the risk of a portfolio considered a core business; b) transferring illiquid assets to a third party can be very difficult, and as a result banks may not receive an acceptable price.

An essential feature of regulatory capital transactions must be real risk transfer from the bank to investors. Here, regulators play an important oversight role, by setting the rules for capital relief transactions and by determining whether specific transactions meet appropriate standards.

Investors who work with regulatory relief specialists like Ovid Capital Advisors can enter into a partnership with the bank: the bank indirectly provides the investors with the strength of its underwriting and loan servicing, while the investors provide the means to absorb unexpected risk of loss. In this manner, the banks can reduce risk while retaining the banking relationships at the core of their business.

There is nothing murky about a transaction designed to transfer unexpected losses from the banking system to pools of private capital in a manner that has been approved by the regulator. Risk transfer is one of the primary roles of a well-functioning financial market, and takes place daily across equity, debt and commodity markets worldwide.

These transactions should be encouraged as a way to privatize some of the risks taxpayers across the globe unwittingly bear. The baby should not be thrown out with the bath water - regulatory capital transactions have a vital role to play in the rehabilitation and management of banks’ balance sheets in a way that minimizes the negative effect on Main Street.

By privatizing risk, these transactions allow the banks to continue lending to the businesses they value most, an important element of continuing a global economic recovery.

Down Payment Rules Are at Heart of Mortgage Debate

The housing market is showing signs of life, as home prices rise and mortgage-backed bonds return. But the revival may not gain full steam until regulators sort out one of the thorniest problems: the appropriate size of a down payment on a house.

After the housing collapse, initial reform proposals emphasized the need for buyers to put down a large chunk of money. The reasons seemed sensible and obvious. Many of the mortgages that went bad involved tiny down payments â€" if any at all â€" and studies have shown that borrowers with a larger amount of equity in their homes are less likely to default.

“If our goal is to prevent foreclosures,” said Paul S. Willen, a senior economist and policy adviser at the Federal Reserve Bank of Boston, “I can’t think of anything more effective than requiring a down payment.”

But in a surprising reassessment of the causes of the housing mess, many lawmakers, lenders and consumer advocates are now cautioning against rules that would require many borrowers to come up with significant down payments. Their main concern is that such efforts could end up cutting the supply of mortgages to lower-income borrowers, who simply do not have the money put down. They also contend that the subprime debacle has distorted the issue.

“The problem with this conversation is that it’s like discussing the future of shipbuilding from the deck of the Titanic,” said Roberto G. Quercia, director of the Center for Community Capital at the University of North Carolina at Chapel Hill. “There’s a lack of perspective.”

Professor Quercia studied mortgages in a special program for low-income borrowers, typically those with minimal down payments. From 1998 through the end of last year, 5.5 percent of the mortgages ended up in foreclosure, he found. Subprime mortgages made during the last housing boom, regardless of down payment size, had far higher foreclosure rates, roughly 25 percent.

The outcome of the down payment debate has major implications for the mortgage market.

Currently, taxpayers, through the Federal Housing Administration, backstop most of the low-down-payment mortgages. But the aim is to scale back the government’s involvement in mortgages.

As that happens, policy makers are hoping a major part of the mortgage market will come back. Specifically, they need the return of private bond investors, who once bought trillions of dollars’ worth of mortgage-backed bonds with no government backing.

Other than some small bond deals, that market remains dormant. A major reason is that the banks that sell the mortgage-backed bonds are waiting for regulators to complete rules aimed at strengthening this market.

This is where down payments could play a crucial role. The proposed rules require banks to hold a slice of the mortgage-backed bonds they sell to investors. Banks do not like those types of restrictions.

But lenders would not have to keep a piece of the bonds if the underlying loans included features that made them less likely to default. These exempt loans would be called qualified residential mortgages. Regulators effectively proposed that these loans should have a 20 percent down payment.

The proposal prompted widespread objections from consumer advocates, bankers and home builders, who said the plan could shut many borrowers out of the housing market. Banks, they argued, are likely to focus heavily on making qualified residential mortgages. And if those mortgages require high down payments, lenders will be hesitant to make loans with little money down.

Consumer advocates make a nuanced case. They do not deny that down payments reduce the risk of default. But they say defaults can be reduced almost as much by applying other rules that curb lending to certain types of borrowers.

Consider another set of mortgage rules, already put in place this year. These regulations emphasize the affordability of the loan. Under them, a borrower’s overall monthly debt payments cannot exceed 43 percent of personal income.

In his study, Professor Quercia of the University of North Carolina found that loans that complied with those rules defaulted at a relatively low rate during the housing bust. About 5.8 percent of them went bad, irrespective of how much the borrower put down.

He then calculated the losses on loans to borrowers in the same group who had down payments of at least 20 percent. The default rate on that smaller group was lower, at 3.9 percent.

But that lower rate came at a cost. More than half of the borrowers in his study group had to be excluded from the second calculation, because they didn’t have down payments of 20 percent or more. This shows how restrictive a down payment rule could be, said Professor Quercia.

Some real estate analysts are skeptical of this approach.

They assert that the new mortgage rules, which do not insist on down payments, may be relatively ineffective at preventing high levels of defaults.

This type of ratio is not a strong predictor of whether a loan will default, said Thomas A. Lawler, a former chief economist of Fannie Mae who founded Lawler Economic and Housing Consulting, a research firm. “It’s not even in the top three,” he said.

Also, Mr. Lawler and others who favor higher down payments argue that Professor Quercia’s analysis underestimates the psychological and practical importance of the down payment. Borrowers who saved up for down payments may have budgeting skills that later help them make their payments, they argue, and borrowers with equity in their homes are less likely to walk away altogether, rather than try to find a solution.

Supporters of a down payment requirement also make a broader argument. They point out that the financial sector overhaul was not just meant to protect borrowers. It was also intended to make banks and financial markets more resilient to shocks like housing busts. In other words, the legislation always envisioned a trade-off between homeownership and the stability of the financial system.

“The key is what is the right balance between some risk and access,” Professor Quercia said. “Just looking at the risks is one-sided.”

MetroPCS Shareholders Approve Revised T-Mobile Deal

RICHARDSON, Texas, April 24, 2013 /PRNewswire/ -- MetroPCS Communications, Inc. (NYSE: PCS; "MetroPCS" or the "Company") announced today that MetroPCS' stockholders overwhelmingly voted to approve all of the proposals required for closing the proposed combination with T-Mobile USA, Inc. ("T-Mobile").  With today's approvl of the proposals by MetroPCS' stockholders, all requisite approvals required to complete the proposed combination have been received.  The proposed combination is expected to be completed after the close of business on April 30, 2013.

"We are pleased with the outcome of today's vote and thank all of our stockholders for their support," said Roger D. Linquist , Chairman and Chief Executive Officer of MetroPCS.  "Our combination with T-Mobile will create the value leader in the U.S. wireless marketplace, and we are confident that the combination of these two outstanding businesses is the best outcome for MetroPCS and our stockholders and will maximize stockholder value.  We look forward to completing the combination shortly and delivering compelling value to the stockholders and customers of the combined company." 

Upon completion of the proposed combination, MetroPCS' stockholders of record as of the close of business on the closing date, which is expected to be April 30, 2013, will receive an immediate $1.5 billion aggregate cash payment, or approximately $4.06 per share (prior to the reverse stock split that will occur in connection with the closing of the proposed combination), as well as an approximate 26% ownership stake in the combined company. 

Approximately 86.21% of MetroPCS' total outstanding shares of common stock as of the March 11, 2013 record date for the Special Meeting were voted.  MetroPCS had 369,882,190 shares of common stock outstanding as of the record date for the Special Meeting. The full results are below:

• Proposal 1 - The Stock Issuance Proposal:  A proposal to approve the stock issuance of MetroPCS common stock to Deutsche Telekom in connection with the proposed combination.

For	Against	Abstain
296,521,190	21,194,467	854,123

• Proposal 2 - The Recapitalization Proposal:  A proposal to approve the Fourth Amended and Restated Certificate of Incorporation of MetroPCS to effect the recapitalization that will incur in connection with the proposed combination.

For	Against	Abstain
296,524,154	21,177,792	859,832

• Proposal 3 - The Declassification Proposal:  A proposal to approve the Fourth Amended and Restated Certificate of Incorporation of MetroPCS to declassify the MetroPCS board with all members of the MetroPCS board being elected annually.

For	Against	Abstain
301,128,477	16,600,684	840,619

• Proposal 4 - The Deutsche Telekom Director Designation Proposal:  A proposal to approve the Fourth Amended and Restated Certificate of Incorporation of MetroPCS to provide that, so long as Deutsche Telekom beneficially owns 10% or more of the outstanding combined company's common stock, Deutsche Telekom will have the right to designate a number of individuals to the combined company's board and any committees thereof equal to the percentage of the combined company's common stock beneficially owned by Deutsche Telekom multiplied by the number of directors on the combined company's board.

For	Against	Abstain
295,661,550	22,069,434	841,396

• Proposal 5 - The Director Removal Proposal:  A proposal to approve the Fourth Amended and Restated Certificate of Incorporation of MetroPCS to provide that any MetroPCS director (other than a director designated by Deutsche Telekom, who may not be removed without the prior written consent of Deutsche Telekom) may be removed from office at any time, with or without cause, by the affirmative vote of the holders of at least a majority of the voting power of all of the outstanding shares of MetroPCS' capital stock entitled to elect such director, voting separately as a class, at a duly organized meeting of stockholders or by written consent.

For	Against	Abstain
288,993,635	28,715,023	861,122

• Proposal 6 - The Deutsche Telekom Approvals Proposal:  A proposal to approve the Fourth Amended and Restated Certificate of Incorporation of MetroPCS to grant Deutsche Telekom approval rights with respect to the combined company's ability to take certain actions without Deutsche Telekom's prior written consent as long as Deutsche Telekom beneficially owns 30% or more of the outstanding shares of the combined company's common stock.

For	Against	Abstain
290.845,683	26,861,306	862,611

• Proposal 7 - The Calling of Stockholder Meeting Proposal: A proposal to approve the Fourth Amended and Restated Certificate of Incorporation of MetroPCS to provide that a special meeting of the combined company's stockholders (a) may be called by the chairman of the combined company's board or the combined company's chief executive officer and (b) must be called by the combined company's secretary at the request of (1) a majority of the combined company's board or (2) as long as Deutsche Telekom beneficially owns 25% or more of the outstanding shares of combined company's common stock, the holders of not less than 33-1/3% of the voting power of all of the outstanding voting stock of the combined company entitled to vote generally for the election of directors.

For	Against	Abstain
300,659,064	17,063,740	846,976

• Proposal 8 - The Action by Written Consent Proposal:  A proposal to approve the Fourth Amended and Restated Certificate of Incorporation of MetroPCS to provide that, as long as Deutsche Telekom beneficially owns 25% or more of the outstanding shares of the combined company's common stock, any action required or permitted to be taken at any annual or special meeting of the combined company's stockholders may be taken without a meeting, without prior notice and without a vote, if a consent or consents in writing setting forth the action so taken is signed by the holders of outstanding stock having not less than the minimum number of votes that would be necessary to authorize or take such action at a meeting at which all shares entitled to vote thereon were present and voted.

For	Against	Abstain
280,180,164	37,530,330	859,356

• Proposal 9 - The Bylaw Amendments Proposal:  A proposal to approve the Fourth Amended and Restated Certificate of Incorporation of MetroPCS to provide that the combined company's bylaws may be amended upon the affirmative vote of the holders of shares having a majority of the combined company's voting power.

For	Against	Abstain
285,328,261	32,364,410	877,109

• Proposal 10 - The Governing Law and Exclusive Forum Proposal:  A proposal to approve the Fourth Amended and Restated Certificate of Incorporation of MetroPCS to provide that the Fourth Amended and Restated Certificate of Incorporation and the internal affairs of the combined company will be governed by and interpreted under the laws of the State of Delaware and the Court of Chancery of the State of Delaware will be the sole and exclusive foum for (a) any derivative action brought on behalf of the combined company, (b) any action asserting a claim of breach of a fiduciary duty owed by any director, officer or other employee of the combined company to the combined company or its stockholders, (c) any action asserting a claim arising pursuant to any provision of the General Corporation Law of the State of Delaware, the Fourth Amended and Restated Certificate of Incorporation or the new bylaws, or (d) any other action asserting a claim arising under, in connection with, and governed by the internal affairs doctrine.

For	Against	Abstain
289,266,185	28,418,980	884,615

• Proposal 11 - The Change in Control Payments Proposal:  A proposal to approve, on a non-binding, advisory basis, the compensation that may be paid or become payable to MetroPCS' named executive officers based on, or otherwise relating to, the proposed combination.

For	Against	Abstain
185,111,181	131,468,927	1,989,633

About MetroPCS Communications, Inc.

Dallas-based MetroPCS Communications, Inc. (NYSE: PCS) is a provider of no annual contract, unlimited wireless communications service for a flat-rate. MetroPCS is the fifth largest facilities-based wireless carrier in the United States based on number of subscribers served.  With Metro USA(SM), MetroPCS customers can use their service in areas throughout the United States covering a population of over 280 million people.  As of December 31, 2012, MetroPCS had approximately 8.9 million subscribers.  For more information please visit www.metropcs.com.

Cautionary Statement Regarding Forward-Looking Statements

This document includes "forward-looking statements" for the purpose of the "safe harbor" provisions within the meaning of the Private Securities Litigation Reform Act of 1995, as amended. Any statements made in this document that are not statements of historical fact, and statements about our beliefs, opinions, projections, strategies, and expectations, are forward-looking statements and should be evaluated as such. These forward-looking statements often include words such as "anticipate," "expect," "suggests," "plan," "believe," "intend," "estimates," "targets," "views," "projects," "should," "would," "could," "may," "become," "forecast," and other similar expressions. These forward-looking statements include, among others, statements about the benefits of the proposed combination, the prospects, value and value creation capability of the combined company, future free cash flows of the combined company, projected valuatio and valuation modeling, the positioning of the combined company versus its competitors, compelling terms and nature of the proposed combination, value of the proposed combination to MetroPCS stockholders, the success of the combined company, compliance, and other statements regarding the combined company's strategies, prospects, projected results, plans, or future performance.

All forward-looking statements involve significant risks and uncertainties that could cause actual results to differ materially from those in the forward-looking statements, many of which are generally outside the control of MetroPCS, Deutsche Telekom and T-Mobile and are difficult to predict. Examples of such risks and uncertainties include, but are not limited to, the possibility that the proposed transaction is delayed or does not close, the failure to satisfy other closing conditions, the possibility that the expected synergies will not be realized, or will not be realized within the expected time period, the significant capital commitments of MetroPCS and T-Mobile, global economic conditions, fluctuations in exchange rates, competitive actions taken by other companies, natural disasters, difficulties in integrating the two companies, disruption from the transaction making it more difficult to maintain business and opeational relationships, actions taken or conditions imposed by governmental or other regulatory authorities and the exposure to litigation.  Additional factors that could cause results to differ materially from those described in the forward-looking statements can be found in MetroPCS' annual report on Form 10-K, filed March 1, 2013, and other filings with the SEC available at the SEC's website (www.sec.gov).  The results for any prior period may not be indicative of results for any future period.

The forward-looking statements speak only as to the date made, are based on current assumptions and expectations, and are subject to the factors above, among others, and involve risks, uncertainties and assumptions, many of which are beyond our ability to control or ability to predict. You should not place undue reliance on these forward-looking statements. MetroPCS, Deutsche Telekom and T-Mobile do not undertake a duty to update any forward-looking statement to reflect events after the date of this document, except as required by law.

Investor Relations Contacts:
Keith Terreri , Vice President - Finance & Treasurer
Jim Mathias , Director - Investor Relations
214-570-4641
investor_relations@metropcs.com

SOURCE MetroPCS Communications, Inc.

Comparing the Valuations Behind Amazon and Apple Shares

And people wonder why it’s hard to understand the stock market.

Take a consumer sitting at home buying stuff on Amazon.com with his iPhone. To him, Apple’s product is a clear leader in the market, while Amazon is the retailer he uses most. Amazon’s are shares up nearly 40 percent over the last 12 months, while Apple’s are down nearly 30 percent over the same period. So why have the stock prices of both companies diverged so much when both companies appear to be at the top of their game?

Growth is the most common answer you’ll hear. When a company convinces investors that its earnings can keep going up, an enthusiasm grows around the shares, and they tend to perform well. Wall Street analysts expect Amazon’s earnings next year to be 66 percent higher than the forecast for 2013. They project a 10 percent uptick for Apple.

But there’s another conversation you need to have.

It revolves around whether the market has already factored in the hoped-for growth into the stock price. It is possible to pay too much for excellence.

There are all sorts of ways to gauge how much credibility investors ascribe to a company’s “growth story.” One is to look at investors are paying now for a company’s free cash flows, or the hard dollars it takes from profits and spending on plant and equipment. The results are stark. Apple’s stock market value is 13 times last year’s free cash flows. On this metric, Amazon is at over 300 times. Sane investors would never touch a stock with such a dear valuation unless they felt cash flows were going to soar in the future.

And this brings us to the part of investing that usually separates winners from losers: guessing whether companies will actually do what we expect them to.

Amazon’s believers don’t mind that it’s spending such huge amounts on setting up new operations for its retail and data businesses. At some point, hopefully in the not too distant future, that spending will fall as the expansion reaches its limits. In that case, Amazon will be churning out much bigger cash flows as it enjoys near unassailable dominance.

Sure, but how wondrous will those cash flows be? Amazon’s operations produced $4.2 billion of cash flows last year. Let’s generously assume 10 percent annual growth for them, which would take them to $5.1 billion by the end of 2014.

Let’s be kind again and assume that capital expenditures fall a lot, to, say, $1 billion a year, from last year’s $3.8 billion. Free cash flows in 2014 would therefore total $4.1 billion.

Now, remember, at this future point, Amazon’s growth in free cash flow will have slowed a lot. Investors will probably decide to attach a lower valuation to the company. Being generous, let’s assume they value those hypothetical 2014 free cash flows at 21 times, Google’s multiple today. That would give Amazon a market worth of about $86 billion. That’s 30 percent lower than today.

Of course, the stock market believes what it wants to believe. It may well decide to stay starry-eyed about Amazon and give it a much higher valuation for years to come. But Apple’s recent drubbing suggests even the strongest runs can end nastily.

Guggenheim Hires Lehman Veteran in Continued Hiring Spree

Guggenheim Partners signaled its intention to continue building out its investment bank on Wednesday, announcing that it has hired Glenn H. Schiffman, a longtime deal maker at Lehman Brothers.

Mr. Schiffman, who’s joining as a senior managing director, was most recently at the Raine Group, a boutique investment bank focused on the media and entertainment industries. Previously, he served as the head of investment banking in the Americas at Nomura of Japan.

And before that, he was the head of investment banking for Asia ex-Japan for Nomura and for Lehman Brothers. Mr. Schiffman joined Nomura in the fall of 2008 after it bought the Asian operations of the failed American investment bank.

“Over the years, I’ve had the opportunity to work with Glenn on both sides of the table in numerous projects, and have witnessed first-hand his client impact and ability to serve as a trusted adviser,” Alan Schwartz, Guggenheim’s executive chairman, said in a statement. “Glenn’s track record both in building and managing successful businesses and in advising clients in major transactions is unmatched, and I am very pleased to have him join our growing team.”

His arrival signals the continuing growth of Guggenheim, which has sought to bolster its investment banking arm. That push began in 2009 when the firm hired Mr. Schwartz, the former chief executive of Bear Stearns.

Guggenheim has also hired the likes of Ross Levinsohn, the former interim chief executive of Yahoo; Henry Silverman, a vice chairman of Apollo Global Management; and Herbert Lurie, a onetime senior banker at Merrill Lynch.

Strategic Posturing Behind the Suit Against Corzine

Louis J. Freeh, the bankruptcy trustee for the failed futures firm MF Global, filed a lawsuit aimed at pinning its collapse squarely on Jon S. Corzine, the former chief executive, and two of his top lieutenants. And unlike in many other suits, Mr. Freeh has not named other groups like a company’s directors.

The tale Mr. Freeh weaves in the complaint presents Mr. Corzine and the other defendants, Bradley I. Abelow, the former chief operating officer, and Henri J. Steenkamp, the former chief financial officer, as having failed to properly manage risk at MF Global while recklessly trading in European sovereign debt. It is a picture of a headlong rush into failure. Mr. Freeh asserts that the three defendants breached their fiduciary duties by allowing MF Global to take on excessive risks.

The core of the case is that the three men did not properly “develop the appropriate controls, procedures and systems needed to transform” MF Global into a full-service investment bank. Not only that, but Mr. Corzine took personal control of MF Global’s proprietary trading “without ensuring that the Company had sufficient controls and adequate liquidity to properly manage the risks inherent in such trading.”

Mr. Corzine’s representatives have vehemently denied the accusations, and question why Mr. Freeh is taking such actions while court-order mediation is still proceeding.

But regardless of the merits of the case, Mr. Freeh is clearly making a tactical move with his lawsuit. Among the questions that arise in any corporate failure is this important one: Where were the directors, who are ultimately responsible for oversight of the company? In Mr. Freeh’s version of events, it turns out they were quite active in approving the risk limits and other acts by Mr. Corzine. But they were not the primary wrongdoers in this tale, and are not named as defendants. This seems to be part of his legal strategy in this suit. He appears to feel he has a better chance at overcoming the legal hurdles to holding executives liable for business decisions than members of MF Global’s board.

Mr. Freeh’s complaint is noteworthy for adopting an all-in strategy against Mr. Corzine, Mr. Abelow and Mr. Steenkamp. Strategically, Mr. Freeh may be hoping the directors will turn on Mr. Corzine and blame him for being a pied piper who led them to approve policies that turned out to be disastrous for MF Global. In corporate litigation, it is always helpful to have someone inside the boardroom pointing the finger at a wrongdoer to help show that these were not just ordinary business decisions that turned out badly.

It may be that Mr. Freeh will settle a claim against the directors later. But by suing Mr. Corzine first, the directors should get the message that they are bit players at best in Mr. Freeh’s account.

In addition, it is much easier under the law to hold officers liable for misdeeds than it is in the case of directors. Under Delaware law, where MF Global was incorporated, corporate directors cannot be sued to recover monetary damages for anything except a breach of the duty of loyalty, which usually requires showing that they gained improper benefits from their actions. To establish that directors are liable for failing to oversee the company and its risk management practices, Mr. Freeh would have to prove that “the directors demonstrated a conscious disregard for their responsibilities” and acted in bad faith.

This is an extremely high standard to meet, and Delaware courts regularly dismiss such claims. In a shareholder derivative case involving claims that Citigroup’s board failed to properly oversee the bank’s risk management before the financial crisis, for example, a Delaware court refused to find the board liable despite the bank’s near collapse and subsequent government bailout. Indeed, the court stated that under Delaware law “[t]o impose oversight liability on directors for failure to monitor ‘excessive’ risk would involve courts in conducting hindsight evaluations of decisions at the heart of the business judgment of directors.” The case against the Citigroup directors was dismissed because the plaintiffs could not show that the directors had actedin bad faith, but instead may have merely failed in their risk monitoring.

Mr. Freeh is keenly aware that Delaware law presents an almost insurmountable barrier to any suit against the directors. The board certainly looks foolhardy in trusting Mr. Corzine to take the risks that he did, but proving that they acted in bad faith would be quite difficult.

In contrast, Delaware law does not afford corporate officers the same level of protection. That means Mr. Freeh can seek to recover for a breach of the duty of due care by showing gross negligence on the part of the leaders of MF Global.

That is still a high standard, requiring something akin to proving recklessness by Mr. Corzine. But unlike a suit against the directors, which would probably be dismissed quickly, this claim has a reasonable chance of surviving a motion to dismiss that would allow it to proceed toward a trial. A public airing of MF Global’s plunge into bankruptcy is probably the last thing Mr. Corzine wants, so the settlement value of the case is higher.

Mr. Corzine was very careful to state in his Congressional testimony that he acted in good faith and that his actions were based on advice provide by others for policies that were ultimately approved by the directors. He will offer the business judgment rule, a cornerstone of Delaware corporate law, to argue that these were merely bad business decisions, which cannot create liability. Even Mr. Freeh admits that the MF Global directors signed off on much of the conduct, giving Mr. Corzine some cover for his management of the firm.

While Mr. Freeh has an uphill battle to win the case, Mr. Corzine’s more immediate problem may be the high costs of a potential trial. Because MF Global is in bankruptcy, he cannot look to the company to indemnify him for any settlement or even pay his legal expenses, something normally provided to corporate officers sued for their actions.

Instead, Mr. Corzine must rely on MF Global’s insurance - and it had two pretty hefty policies. At the time of the bankruptcy, MF Global had a “directors and officers” liability policy for $225 million and an “errors and omissions” liability policy for $150 million. The judge in the bankruptcy case has already authorized Mr. Corzine and other employees to draw up to $30 million from the policy to pay for their legal fees.

But this cap has probably been exceeded by now, given the numerous Congressional hearings about MF Global’s collapse and the criminal and regulatory investigations of the firm. The question is whether the bankruptcy court will allow Mr. Corzine and the other defendants to continue to draw on the insurance to pay for their mounting legal costs or seek to preserve the policy for payments to MF Global’s customers and claims holders.

Mr. Corzine’s biggest concern is not that he may lose the case, but that the mounting legal fees will take a significant bite out of the fortune he amassed from his days at Goldman Sachs. Mr. Freeh is clearly aiming straight at Mr. Corzine, and is not the type of opponent who can be sent packing with a quick settlement.

Georgia-Pacific to Buy Buckeye for $1.5 Billion

MEMPHIS, Tenn. and ATLANTA, April 24, 2013 /PRNewswire/ -- Buckeye Technologies Inc. (NYSE: BKI) and Georgia-Pacific LLC today announced that they have reached a definitive agreement for Georgia-Pacific to acquire all of the outstanding shares of Buckeye Technologies' common stock for $37.50 per share in cash.  The transaction, subject to completion, is valued at approximately $1.5 billion, including debt.

(Logo: http://photos.prnewswire.com/prnh/20030425/PAPLOGO )
(Logo: http://photos.prnewswire.com/prnh/20130424/CL00712LOGO )

Under the terms of the agreement, which has been unanimously approved by both companies' boards of directors, stockholders of Buckeye Technologies will receive $37.50 in cash per share, representing a premium of approximately 29 percent based on the average closing price of Buckeye Technologies' common stock over the last week.

Georgia-Pacific expects to launch a cash tender offer for all outstanding shares of Buckeye Technologies' common stock.  The tender offer is subject to the expiration or termination of any waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, other regulatory approvals and other customary closing conditions, and requires at least 75 percent of the outstanding shares of Buckeye Technologies' common stock to be tendered, consistent with the threshold for approval of a merger specified in Buckeye Technologies' certificate of incorporation. The transaction is not conditioned on financing.  In certain circumstances, the parties have agreed to complete the transaction hrough a merger, subject to receipt of stockholder approval.

Buckeye Technologies, based in Memphis, Tenn., is a leading manufacturer and marketer of specialty fibers and nonwoven materials made from wood and cotton.  The company's manufacturing assets include a specialty pulp mill at Perry, Fla.; cotton cellulose mills at Memphis, Tenn./span>, and Lumberton, N.C.; and mills producing nonwovens at Mt. Holly, N.C., and Steinfurt, Germany.   Buckeye Technologies also has global sales offices in Beijing, the United Kingdom, France, Italy and Switzerland.  The company has approximately 1,200 employees worldwide.

"This transaction enables our stockholders to realize significant value, while also representing an important next step in the growth of Buckeye Technologies," said John Crowe , chairman and CEO.  "We are pleased that Georgia-Pacific recognizes the significant value of our company's special and unique assets, talented employees, and research and development capabilities.  Georgia-Pacific's acquisition of Buckeye will provide our company and our employees with exciting future growth opportunities. We will continue to execute on our business plan in partnership with a committed new owner that has a long history of delivering superior business performance through its dedication to operational excellence and innovation."

"Buckeye Technologies' competitive assets and capabilities strongly complement Georgia-Pacific's existing cellulose business and products.  The talented employees, innovation capabilities, advanced technologies, and specialty fibers and nonwovens businesses of Buckeye Technologies will provide a significant platform for continued growth and success," said Jim Hannan , CEO and president, Georgia-Pacific. 

Barclays is serving as exclusive financial advisor and Dechert LLP is serving as legal advisor to Buckeye Technologies. UBS and Blackstone are serving as financial advisors to Georgia-Pacific.

Headquartered in Atlanta, Georgia-Pacific is one of the world's leading manufacturers and marketers of building products, tissue, packaging, paper, cellulose and related chemicals. The company employs nearly 35,000 people worldwide. For more information, visit www.gp.com.

Headquartered in Memphis, Tenn., Buckeye Technologies currently operates manufacturing facilities in the United States and Germany. Its products are sold worldwide to makers of consumer and industrial goods. www.bkitech.com

NOTICE TO INVESTORS ABOUT THE OFFER: This announcement is neither an offer to purchase nor a solicitation of an offer to sell securities. The tender offer for the outstanding shares of Buckeye Technologies' common stock described in this news release has not commenced.  At the time the tender offer is commenced, Georgia-Pacific will file or cause to be filed a Tender Offer Statement on Schedule TO with the Securities and Exchange Commission (SEC) and Buckeye Technologies will file a Solicitation/Recommendation Statement on Schedule 14D-9 with the SEC related to the tender offer.  The Tender Offer Statement (including an Offer to Purchase, a related Letter of Transmittal and other tendr offer documents) and the Solicitation/Recommendation Statement will contain important information that should be read carefully before any decision is made with respect to the tender offer.  Those materials will be made available to Buckeye Technologies' stockholders at no expense to them by the information agent for the tender offer, which will be announced. In addition, all of those materials (and all other offer documents filed with the SEC) will be available at no charge on the SEC's website at www.sec.gov.

NOTICE TO INVESTORS ABOUT THE MERGER: In connection with the potential subsequent merger, Buckeye Technologies would expect to file a proxy statement with the SEC, as well as other relevant materials in connection with the proposed transaction pursuant to the terms of an Agreement and Plan of Merger, dated April 23, 2013, by and among Buckeye Technologies Inc., Georgia-Pacific LLC and GP Cellulose Group LLC.  The materials to be filed by Buckeye Technologies will be made available to Buckeye Technologies' investors and stockholders at no expense to them.  In addition, all of those materials will be available at no charge on the SEC's website at www.sec.gov.  Investors and stockholders of Buckeye Technologies are urged to read the proxy statement and the other relevant materials when they become available beore making any voting or investment decision with respect to the proposed merger because they contain important information about the merger and the parties to the merger.

Buckeye Technologies and its respective directors, executive officers and other members of its management and employees, under SEC rules, may be deemed to be participants in the solicitation of proxies of Buckeye Technologies' stockholders in connection with the proposed merger.  Investors and security holders may obtain more detailed information regarding the names, affiliations and interests of certain of Buckeye Technologies' executive officers and directors in the solicitation by reading Buckeye Technologies' proxy statement for its 2012 annual meeting of stockholders, annual report on Form 10-K for the fiscal year ended June 30, 2012, and the proxy statement and other relevant materials which may be filed with the SEC in connection with the merger when and if they become available.  Information concerning the interests of Buckeye Technologies' participants in the solicitation, which may in some cases, be different than those of Buckeye Technologies' stockholders generally, will be set forth in the proxy statement relating to the merger when it becomes available.  Additional information regarding Buckeye Technologies' directors and executive officers is also included in Buckeye Technologies' proxy statement for its 2012 annual meeting of stockholders and in Buckeye Technologies' annual report on Form 10-K for the fiscal year ended June 30, 2012.

FORWARD-LOOKING STATEMENTS: Any statements made regarding the proposed transaction between Georgia-Pacific and Buckeye Technologies, the expected timetable for completing the transaction, successful integration of the business, benefits of the transaction, earnings and any other statements contained in this news release that are not purely historical fact are "forward-looking statements" that are based on management's beliefs, certain assumptions and current expectations as of the date hereof and which are believed to be reasonable. These statements may be identified by their use of forward-looking terminology such as the words "expects," "projects," "anticipates," "intends" and other similar ords.  Such forward-looking statements involve risks and uncertainties that could cause actual results to differ materially from those projected or implied.  These risks and uncertainties include, but are not limited to, general economic, business and market conditions and the satisfaction of the conditions to closing of the proposed transaction. Other risks and uncertainties that could cause actual results to differ from those contained in the forward-looking statements include those that may be contained from time to time in the documents filed with the SEC by Buckeye Technologies, including Buckeye Technologies' annual report on Form 10-K for the fiscal year ended June 30, 2012, and quarterly and current reports on Form 10-Q and Form 8-K, respectively.  The forward-looking statements contained in this news release are made as of the date hereof, and we do not undertake any obligation to update any forward-looking statements, whether as a result of future events, n! ew information or otherwise, except as expressly required by law.

SOURCE Buckeye Technologies Inc. and Georgia-Pacific LLC

Former Goldman Co-President Joins Thrive Capital as Adviser

With a number of high-profile investments under its belt, Thrive Capital is turning to a former top Goldman Sachs executive to help advise on its growth plans.

Last month, Thrive hired Jon Winkelried, a former Goldman co-president, as a strategic adviser to provide guidance as the three-year-old venture capital firm continues to expand.

Mr. Winkelried is the most prominent addition yet by the firm, which has raised $200 million since its inception. And it is perhaps the biggest perch yet for Mr. Winkelried since retiring from the bank in 2009.

“Jon has been tremendously successful in his career because of his judgment and integrity,” Joshua Kushner, Thrive’s founder, said in a telephone interview. “We feel incredibly grateful to have him intimately involved in Thrive as we build out the firm over the next few years.”

Thrive made its name with early investments in hot Internet start-ups like Instagram, Spotify and the trendy eyewear maker Warby Parker. Now it has broadened its focus within the technology world, looking at potential opportunities ranging from health care to financial servies to education.

Mr. Kushner, the son of the real estate magnate Charles Kushner and brother of newspaper publisher Jared Kushner, first met Mr. Winkelried through mutual friends about a year ago. Soon afterward, the onetime investment banker began providing informal advice to the young investor on how to expand his burgeoning firm.

Over the last few months, Mr. Winkelried’s role became more official as he began coming into Thrive’s offices weekly, dispensing advice on both the firm’s growth and its broader strategy.

He is the most prominent adviser yet for Thrive, which has already hired the likes of Jared Weinstein, a former White House official under George W. Bush.

Since retiring after a 26-year career as one of Goldman’s top bankers and one of the best-paid executives on Wall Street, Mr. Winkelried has kept a fairly low profile. He is also advising a credit fund at TPG Capital run by Alan Waxman, a former colleague at Goldman. He also manages JW Capital Partners, his family office, and his own personal ranching operations.

“The team at Thrive Capital has built something very impressive in a short period of time and they really understand how technology is impacting every single industry,” Mr. Winkelried said in a statement. “I am excited to work with them as they continue to grow Thrive.”

Make Wall Street Choose: Go Small or Go Home

 WASHINGTON

PROGRESSIVES and conservatives can debate the proper role of government, but this is one principle on which we can all agree: The government shouldn’t pick economic winners or losers.

In 2008, at the height of the financial crisis, the government stepped in and decided which Wall Street banks were so large and interconnected that they would receive extraordinary help from the government to enable them to survive. They were deemed, to use a now ubiquitous phrase, too big to fail. Meanwhile, smaller banks in communities across the country, including Cleveland and Covington, La., in the states we represent, were allowed to fail. They were, evidently, too small to save.

Today, the nation’s four largest banks â€" JPMorgan Chase, Bank of America, Citigroup and Wells Fargo â€" are nearly $2 trillion larger than they were before the crisis, with a greater market share than ever. And the federal help continues â€" not as direct bailouts, but in the form of an implicit government guarantee. The market knows that the government won’t allow these institutions to fail.

It’s the ultimate insurance policy â€" one with no coverage limits or premiums.

These institutions can then borrow and lend money at a lower rate than regional banks, Main Street savings and loan institutions, and credit unions. This implicit taxpayer subsidy has been confirmed by three independent studies in the last year; one of them estimated it at $83 billion per year. We have, in essence, a financial system that rewards banks for their size, not the quality of their operations. It’s a “heads the megabanks win, tails the taxpayers lose” scenario, one that discourages innovation and competition and is distinctly un-American.

 How did we get here? When the government established the Federal Reserve in 1913 as a lender of last resort, to mitigate the severity of financial panics, and then, 20 years later, created deposit insurance in response to the Depression, those protections were intended for commercial banks that provided savings products and loans to American consumers and businesses. At that time, most banks had shareholder equity equal to 15 to 20 percent of their assets.

 In the ensuing decades, the expanding federal safety net allowed financial institutions to depend less and less on their own capital. Federal support was stretched far beyond its original focus, as successive generations of lawmakers and regulators allowed financial institutions to enter the business of insurance, securities dealing and investment banking.

We want to reverse this dangerous trend with bipartisan action aimed at ending “too big to fail” in a practical, responsible fashion. On Wednesday, we will introduce legislation to ensure that all banks have proper capital reserves to back up their sometimes risky practices â€" so that taxpayers don’t have to. We would require the largest banks to have the most equity, as they should.

 Our bill aims to end the corporate welfare enjoyed by Wall Street banks, by setting reasonable capital standards that would vary depending on the size and complexity of the institution. Economic and financial experts on both the left and the right agree that capital is a vital element of financial stability. Adequate capital levels lower the likelihood that an institution will fail and lower the costs to the rest of the financial system and the economy if one does.

Unfortunately, existing capital rules are insufficient to prevent another crisis and are either too complex to administer or too easy to manipulate. Andy Haldane, the executive director for financial stability at the Bank of England, has estimated that an average large bank would have to conduct more than 200 million calculations to figure out whether it meets the capital regulations under the so-called Basel II framework, a set of international standards that banking regulators use to determine how much capital banks need at their disposal to guard against risk.

A new set of standards known as Basel III is still being implemented. But it would take years to finalize, and even the new proposed standards are too weak: in many scenarios, for every $1 of equity a bank used, it could borrow $24. That means that the bank could become insolvent if its assets declined by as little as 4 percent. As we know from the housing meltdown, that is far too narrow a margin of error.

Senators Sherrod Brown, Democrat of Ohio, and David Vitter, Republican of Louisiana, are members of the Senate Banking Committee.

Uncertainty on Whistle-Blower Program

The use of whistle-blowers at the Securities and Exchange Commission has proved effective. A tipster bolstered an investigation into a trading blowup that almost took down Knight Capital; another aided the discovery that Oppenheimer & Company had overstated the performance of a private equity fund; and a whistle-blower helped the government pursue a Ponzi scheme in Texas, Ben Protess and Nathaniel Popper report in DealBook.

But the S.E.C.’s 20-month-old whistle-blower program faces challenges on several 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,” DealBook writes. “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 say the S.E.C. takes weeks or months before it responds to a backlog of tips. Still, the agency, which fields dozens of tips a week, has ramped up the whistle-blower team to include 11 lawyers and three paralegals. “You’d be hard pressed to find another whistle-blower program that’s quicker,” said Sean McKessy, the director of the program. One longtime critic of the S.E.C., Harry M. Markopolos, a securities analyst who suspected the Madoff fraud a decade ago, said: “The question is whether they can turn it into successful enforcement actions.”

APPLE’S PLAN TO REWARD SHAREHOLDERS  |  Apple on Tuesday announced that it would more than double its program to return cash to shareholders through stock buybacks and a higher dividend, with plans to spend $100 billion on the effort through the end of 2015, The New York Times reports. The company said its share repurchase plan, which will increase to $60 billion from the $10 billion it committed previously, was the largest in history. Apple also plans to raise its dividend by 15 percent and pay out $3.05 a share.

The announcement came as Apple reported its first profit decline in a decade. The company’s stock, which has been on declining path for months, rose slightly in trading after hours. The effect of the payout to shareholders “may be mitigated pretty quickly” by the company’s cash flow, DealBook’s Michael J. de la Merced notes.

It was not exactly what the hedge fund manager David Einhorn had been pushing for. But Mr. Einhorn, who runs Greenlight Capital, was nevertheless pleased. He said in a statement: “We applaud Apple’s decision to borrow money and return excess capital to shareholders, an idea that was off the table only months ago.”

LASRY TO STAY AT AVENUE CAPITAL  |  The billionaire hedge fund manager Marc Lasry will not be moving to the ambassador’s mansion in Paris. 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 ambassador to France. 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.” Mr. Lasry is considered a “key man” in documents for a number of Avenue’s funds, according to a person briefed on the matter. A waiver of that provision wold have been required for him to assume a new job, and it was becoming clear that not all investors would grant such a waiver, this person said.

ON THE AGENDA  |  Stephen A. Schwarzman of the Blackstone Group is on MSNBC’s “Morning Joe” to discuss his scholarship for study at a Chinese university. Sprint Nextel, which recently received a $25.5 billion takeover offer from Dish Network, reports earnings before the market opens. Zynga reports earnings on Wednesday evening. Senator David Vitter is on Bloomberg TV at 8:15 a.m. Sallie L. Krawcheck, a former executive for both Bank of America and Citigroup, is on CNBC at 10 a.m.

AUSTERITY FUN  |  Stephen Colbert on Tuesday hosted Thomas Herndon, the graduate student at the University of Massachusetts, Amherst, who found apparent errors in the work of the Harvard economists Kenneth S. Rogoff and Carmen M. Reinhart, whose research was often cited to justify austerity policies. Or, as Mr. Colbert put it on his show, Mr. Herndon discovered “a few simple spreadsheet errors, and a couple of little staggering omissions that made it slightly fundamentally wrong. Even worse, none of their pie charts contained real pie.”

ERRANT TWITTER MESSAGE MOVES STOCKS  |  The Dow Jones industrial average fell more than 150 points after the The Associated Press sent out an erroneous Twitter message, the result of a hack, reporting explosions at the White House that injured President Obama. Stocks soon recovered when it became clear there had been no incident.

SUPPORT FOR FORCING DISCLOSURES OF DONATIONS  |  “A loose coalition of Democratic elected officials, shareholder activists and pension funds has flooded the Securities and Exchange Commission with calls to require publicly traded corporations to disclose to shareholders all of their political donations, a move that could transform the growing world of secret campaign spending,” Nicholas Confessore writes in The New York Times. “S.E.C. officials have indicated that they could propose a new disclosure rule by the end of April, setting up a major battle with business groups that oppose the proposal and are preparing for a fierce counterattack if the agency’s staff moves ahead.”

Mergers & Acquisitions »

Flawed Bidding Process Leaves Dell at a Loss  |  The use of the so-called go-shop process left shareholders with a hollow choice after the Blackstone Group withdrew from bidding, Steven M. Davidoff writes in the Deal Professor column. Deal Professor »

Dell Approves Retention Bonuses  |  Dell revealed in a filing that its board had approved a $91.1 million special bonus pool. WALL STREET JOURNAL

European Regulators to Review Exchange Merger  |  European Union antitrust regulators will review the planned takeover of NYSE Euronext by IntercontinentalExchange, “in line with a request from the exchange operators themselves,” Reuters reports. REUTERS

Google Buys Wavii, an App for Summarizing News  |  Google’s deal, worth roughly $30 million, came after a similar purchase by Yahoo, Reuters reports. REUTERS

Thai Magnate Loads Up on Debt for Big Deals  |  The latest deals for Thailand’s richest man, Dhanin Chearavanont, only make sense as long as Southeast Asia’s financial boom keeps the cash flowing, Peter Thal Larsen of Reuters Breakingviews writes. REUTERS BREAKINGVIEWS

INVESTMENT BANKING »

Credit Suisse Profit Soars in First Quarter  |  Credit Suisse posted first-quarter earnings of $1.4 billion, a large increase from the period a year earlier when the bank booked large charges on its own debt. DealBook »

Barclays Earnings Fall Sharply on Restructuring Costs  |  The British bank Barclays said on Wednesday that first-quarter pretax profit dropped 25 percent as it set aside money to pay for a major overhaul of its operations. DealBook »

HSBC to Cut 1,150 Additional Jobs in Britain  |  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. DealBook »

BlackRock Changes Course on Bond Trading Platform  |  The giant asset manager “is retreating from plans to allow customers to trade corporate bonds directly with one another on its own platform,” The Wall Street Journal writes. WALL STREET JOURNAL

J.C. Penney Hires AlixPartners to Find Cost Savings  | 
WALL STREET JOURNAL

PRIVATE EQUITY »

Billabong Agrees to Extend Takeover Talks  |  A group led by a former director of Billabong and Sycamore Partners Management will have an additional 10 days to complete a report on the company’s earnings. BLOOMBERG NEWS

Springer Science Said to Attract Private Equity Interest  |  Reuters reports: “Five private equity groups are set to bid for Springer Science+Business Media, owned by private equity firm EQT and sovereign wealth fund GIC,” according to unidentified people close to the process. REUTERS

HEDGE FUNDS »

Jana Partners Muses on a Takeover for Rockwood  |  The activist hedge fund Jana Partners said in a letter to investors that Rockwood Holdings, a specialty chemicals maker, might be worth $80 a share in a takeover, Bloomberg News reports. BLOOMBERG NEWS

Cautious Optimism Among Hedge Fund Managers  |  More than half of hedge fund managers expected better performance this year than last, but 42 percent said 2013 would be difficult or somewhat difficult for the industry, according to a new survey by the professional services firm Rothstein Kass. NEWS RELEASE

I.P.O./OFFERINGS »

Lloyds Banking Group Plans I.P.O. After Branch Sale Collapses  |  The British bank is planning an initial public offering of part of its branch network after a deal fell through to sell the division to a rival British lender, Co-operative Bank. DealBook »

VENTURE CAPITAL »

On the Road to Electric Cars, Fisker Broke Down  |  “Fisker, with its technical problems, management turmoil and mounting losses, offers a cautionary tale in the fiercely competitive arena of alternative-fuel vehicles and of government subsidies for start-up businesses,” The New York Times writes. “The company’s messy demise will fall under the glaring spotlight of a Congressional hearing on Wednesday.” NEW YORK TIMES

Shapeways Attracts $30 Million to Make 3-D Printing Mainstream  | 
NEW YORK TIMES BITS

LEGAL/REGULATORY »

Regulators to Restrict Big Banks’ Payday Lending  |  Federal regulators are expected to crack down on short-term, high-cost credit offered by large banks like Wells Fargo and U.S. Bank. DealBook »

Former Head of Dewey Pays to Settle Mismanagement Claims  |  The former head of the law firm Dewey & LeBoeuf, Steven H. Davis, has agreed to pay more than half a million dollars to resolve claims that mismanagement led to the firm’s collapse. DealBook »

MF Global Trustee Sues Firm’s 3 Top Executives  |  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. DealBook »

Baucus, Powerful Finance Chairman, Will Leave Senate  |  Senator Max Baucus will retire from the Senate after 36 years, Jonathan Weisman reports in The New York Times. No other lawmaker on Capitol Hill has more former aides working as tax lobbyists, representing blue-chip clients that include financial firms, according to an analysis of lobbying filings. DealBook »

Top product Liability Lawyer Leaves Skadden for Quinn Emanuel  |  Sheila Birnbaum, a top product liability defense lawyer, is leaving Skadden, Arps, Slate, Meagher & Flom to join Quinn Emanuel Urquhart & Sullivan. DealBook »

Accounting Board Taps Next Chairman  |  Russell G. Golden, a former partner at Deloitte & Touche, was named chairman of the Financial Accounting Standards Board. NEW YORK TIMES

At S.E.C., White Adds to Her Roster of Top Officials  |  Anne K. Small, a special assistant to President Obama, will join the Securities and Exchange Commission as its general counsel. DEALBOOK

This post has been revised to reflect the following correction:

Correction: April 24, 2013

An earlier version of this post misspelled the name of a law firm. It is Quinn Emanuel Urquhart & Sullivan, not Urguhart.