More Clients Ask Questions of Bloomberg

Fallout From Snooping Controversy: Amy Chozick of The New York Times and Tom Lowry of CNBC Digital discuss on CNBC that reporters for Bloomberg News used the company’s terminals to monitor subscribers’ use.

With new concerns emerging about practices at its news division, Bloomberg L.P., the sprawling financial services company founded by Michael R. Bloomberg, scrambled to shield its lucrative terminal business and appease nervous customers.

The report on Friday that a Bloomberg reporter had used the company’s financial data terminals to monitor a Goldman Sachs partner’s logon activity has set off a ripple effect of inquiries from other worried subscribers, including JPMorgan Chase, Deutsche Bank, the Federal Reserve, the Department of Treasury and the European Central Bank.

The revelations now stretch back to 2011, when UBS complained after a Bloomberg Television host alluded on air to his monitoring of the London-based rogue UBS trader Kweku Adoboli’s terminal logon information to confirm his employment status at the bank. Then, last summer, executives at JPMorgan Chase questioned Bloomberg reporters’ techniques after they were first to report on the trader Bruno Iksil, nicknamed the London Whale.

The fallout continued on Monday. Bloomberg has now received about 20 inquiries about whether reporting practices violated the company’s polices about getting access to subscriber information, including one from Bank of America. The bank also contacted Bloomberg to raise questions about the security of its employees’ private information, people briefed on the matter said.

Citigroup and other Wall Street banks have also reached out to Bloomberg in recent days, according to these people who would not be identified discussing confidential conversations. The banks all declined to comment. In response, the company has been reaching out to subscribers. As of Monday, Bloomberg L.P.’s top executives, including the chief executive, Daniel L. Doctoroff; the chairman of the board, Peter T. Grauer; and senior sales executives had made over 300 phone calls to subscribers to reassure them. A person briefed on those calls said no one immediately canceled their Bloomberg subscription.

Every Bloomberg user who logs onto a terminal is greeted with a screen that contains a letter from Mr. Doctoroff calling the practice a “mistake” and addressing privacy concerns. The company is introducing a blog next week where subscribers can discuss concerns about data security. Bloomberg subscribers pay on average about $20,000 a year to lease each financial data-splicing desktop computer

Mr. Bloomberg, who stepped away from day-to-day operations when he became mayor, declined to comment on the situation at the company that bears his name. “No, I can’t say anything. I have an agreement with the Conflict of Interests Board,” he said in a news conference on Monday.

The company also began to discuss possible legal ramifications. While people close to the company doubted that clients would threaten legal action, Bloomberg hired outside lawyers on Friday to steer it through the crisis. The lawyers, according to the people close to the company, have assured Bloomberg that there is no basis for a lawsuit, since the subscribers did not suffer any damages and the information obtained was more trivial than confidential. An early analysis conducted by Bloomberg further suggested that reporters rarely, if ever, published stories based solely on information gleaned from the terminals.

The people close to the company also noted that Bloomberg’s sales agreement with subscribers disclosed that company employees had access to certain private information. While the agreement did not specify that Bloomberg News reporters were among those with access, the journalists are technically employees of Bloomberg L.P.

But some bank executives said the snooping could have violated a common confidentiality clause in their contracts with Bloomberg. In the clause, Bloomberg promises to keep large swaths of information “in confidence,” meaning that it won’t be shared with “third parties.”

One Wall Street executive, who asked not to be named because of a firm policy prohibiting employees from speaking to the media, said his company was involved in a sensitive situation last year and he now wondered if reporters were monitoring his activities.

Susanne Craig and Jack Ewing contributed reporting.

Making a Case for One Leader at JPMorgan

“This isn’t about good governance; it’s about busybodies without a clue, trying to do the dumbest thing â€" slapping and shaming a superb C.E.O. for utterly no practical reason.”

That’s what Barry Diller, the media mogul, told me on Monday about the possibility that shareholders could vote to strip Jamie Dimon, the chairman and chief executive of JPMorgan Chase, of his chairman role.

Mr. Diller’s colorful bluntness adds some much-needed sanity to the all the hyperventilating pundits and corporate governance hysteria about the fate of Mr. Dimon in recent days. (Incidentally, Mr. Diller expressed this view even though his company, IAC/InterActiveCorp, has split the chairman and chief executive roles.)

Next Tuesday, Mr. Dimon will face a nonbinding shareholder vote about whether the roles of chairman and chief executive at JPMorgan should be split. The vote may not sound like a big deal. If he loses, he would remain the C.E.O., and technically, he could remain the chairman since the vote is nonbinding. But the question before shareholders has moved beyond simply a philosophical debate about whether corporations should have a separate chairman and chief executive.

The vote increasingly appears to have become a referendum on Mr. Dimon personally.

In truth, the machinations around the vote at JPMorgan have an “Alice in Wonderland” quality. Call it “Jamie at the Mad Hatter’s Tea Party: The Tempest in a Teapot Edition.”

JPMorgan’s Trading Loss

While Mr. Dimon has made his share of mistakes â€" among them the “London Whale” scandal and a series of regulatory blunders â€" they have hardly been life-threatening, despite making great headlines. It may not be popular to say, but the incontrovertible fact remains that JPMorgan has remained one of the best-performing banks on Wall Street under Mr. Dimon. The firm is possibly the only major bank in the nation that did not require a bailout. It hasn’t lost money in any single quarter while Mr. Dimon has been at the helm. And it has outperformed most of the Standard & Poor’s 500-stock index as well as many of its peer banks over the last five years.

Worse, the frenzy over splitting chairman and chief executive at JPMorgan misses a crucial and fundamental point: the person that would most likely become the chairman, Lee Raymond, is already the board’s “lead director” and already performs virtually the same duties that he would with the chairman title.

So the debate has seemingly become about semantics. Should Mr. Raymond, currently the lead director, hold the title of chairman? If you didn’t think there was enough accountability and adult supervision with him in that role, it’s hard to believe you will think there will be if he becomes chairman. Of course, the board could bring in an outside chairman, but that adds its own series of complications.

Even Ira Millstein, one of the fathers of the corporate governance movement, told me that while he preferred a separation of powers, his view had evolved. “Because of the evolution of a broad consensus on the need for strong board leadership, I now believe that one size may not necessarily fit all. A strong lead director with the same duties as a chair might serve the purpose,” said Mr. Millstein, chairman for the Center for Global Markets and Corporate Ownership at Columbia Law School and a partner at Weil, Gotshal & Manges.

The knee-jerk response, including my own, to governance is to separate the roles of chairman and chief executive. It just sounds more responsive.

But the evidence that splitting the chairman and C.E.O. roles has a positive impact on performance is thin, if it exists at all. A number of studies have tried to quantify the impact, but ultimately the debate has far from concluded.

In Europe, for example, most public companies have split the roles of chairman and C.E.O. But then consider the financial crisis: virtually every big high-street bank in Britain required a bailout despite the corporate governance structure. Remember Enron? That company had a split structure.

Take a look at Fortune’s 50 most admired companies list. Only four companies have split the role.

I also spoke with Henry M. Paulson Jr., the former Treasury secretary and former chairman and chief executive of Goldman Sachs, about the debate over Mr. Dimon’s role. In theory, Mr. Paulson said that he was not opposed to splitting the roles of chairman and chief executive in certain circumstances generally, but in this case believes it would be the wrong decision.

“Jamie Dimon saw JPMorgan through the worst financial crisis in a generation, and now through this period of great regulatory change,” Mr. Paulson said. “To me, in periods of great change, continuity of the leadership team and structure, especially under his strong leadership, is the best path. A change in structure is unwarranted, and could be counterproductive.”

Indeed, the greatest immediate risk to JPMorgan is change: the possibility that Mr. Dimon decides to take his ball and go home. Mr. Diller said such a decision would be “petulant.” But it is also hard to believe that Mr. Dimon would want to continue running the firm for many years if he received the equivalent of a no-confidence vote.

For better or worse, as much as some shareholders might wish there were other more attractive alternatives, that is the reality.

Elliott Rejects a Proposal by Hess to End Proxy Fight

The Hess Corporation on Monday offered a concession to an activist investor, after the investor’s board nominees waived their rights to a controversial compensation plan.

Hess, an oil and gas company, said it was prepared to support two of the five nominees put forward by the activist hedge fund Elliott Management. But the proposal, which was intended to end the proxy fight being waged by Elliott, was promptly rejected by the hedge fund.

Elliott, which has said Hess suffers from a lack of discipline and poor oversight, said on Monday that Hess’s latest proposal was a “PR stunt.”

“If Hess were serious, they would have engaged in substantive conversation with Elliott rather than blast out desperate press releases,” Elliott said in a statement Monday evening.

The back-and-forth was the latest development in the ongoing fight between Elliott and Hess, which said on Friday it would separate its chairman and chief executive roles. The company hopes that all five of its board nominees are elected at the annual meeting on Thursday.

Elliott’s slate of nominees for the board, which have garnered the support of the influential proxy advisory firms Institutional Shareholder Services and Glass Lewis, announced on Monday that they would give up a compensation plan that could have paid them millions of dollars.

The arrangement, which would have tied director compensation to Hess’s stock price, was causing an “ongoing distraction,” the nominees said in a letter to Hess shareholders on Monday.

“While each of us believes that these arrangements are appropriate and consistent with the performance of our duties as independent directors, each of us has made the decision to waive our right to receive these payments from Elliott,” the letter said.

The compensation plan, which was described by Steven M. Davidoff in the Deal Professor column in April, would have paid any nominees who win a seat and serve for a year an aggregate $30,000 for each percentage point Hess’s stock price outperforms a peer group of stocks over three years from January 2013.

Hess responded favorably to that letter from Elliott’s nominees, saying in a statement that it showed the nominees acknowledging that the proposed compensation plan was “wrong.”

“As we have said all along, Elliott’s directors compromised their independence and judgment by agreeing to accept Elliott’s compensation scheme,” John Mullin, the lead director of Hess, said in a statement.

Hess then went further, saying it was “ready to be responsive” to the possibility of adding directors nominated by Elliott to the board. The company said it was prepared to add two of Elliott’s nominees “whom we would choose in consultation with shareholders.”

“We would effect this change promptly after annual meeting if all five of Hess’ new, independent nominees are elected,” the company said.

That did not sit well with Elliott, which said in a statement: “Hess should accept all five shareholder nominees and replace as many of their incumbent directors with management’s nominees as is reasonable.”

Congress’s Role in the I.R.S. Focus on Conservative Groups

Outrage continues to escalate over the revelation that Internal Revenue Service employees focused on conservative groups applying for tax-exempt status. The indignation is understandable: political targeting is an abuse of power, and the idea of using the I.R.S. to go after one’s enemies is a classic dirty trick. Unfortunately, the incident provides a new fuel source for the paranoid style in American politics.

The reality is that this is a story of institutional incompetence. And Congress should share the blame.

The root of the problem is poor institutional design, not a political conspiracy. Current law forces the I.R.S. to enforce a vague set of campaign finance laws that have next to nothing to do with raising revenue. The conservative groups at issue were applying for tax-exempt status as “social welfare” organizations rather than Section 527 tax-exempt political organizations. The chief benefit of becoming a social welfare organization is the ability to keep the names of one’s donors private. These social welfare organizations may engage in issue advocacy, and may do some lobbying, but are not supposed to engage in political campaigning. How much political activity is too much? No one really knows.

The I.R.S. is designed to enforce the tax code, not to administer a byzantine campaign finance system. It is good at gathering and processing enormous amounts of data that help us raise revenue. Under current law, however, it has little choice but to exercise discretion in the constitutionally dangerous waters of campaign finance.

As Lloyd Mayer, a law professor at the University of Notre Dame, explained, “because Congress and the Treasury have left both the definition of political activity and, for [social welfare organizations], the amount of permitted political activity uncertain, the I.R.S. is required to make broad inquiries and to use politically sensitive criteria to decide if a given organization qualifies for tax-exempt status.”

We should not be surprised that things have not worked out well. The I.R.S. does not have the infrastructure to handle that kind of regulatory burden. Donald Tobin, a professor at Ohio State University, has noted that even if these organizations are properly organized as social welfare organizations, “the existing regulatory structure never envisioned the massive use of [social welfare] organizations as a means of avoiding the disclosure of huge donations designed to influence elections.” Professor Tobin added that the recent debacle was the “foreseeable consequence of putting campaign finance in the tax code.”

The I.R.S. has been subject to attack from both sides. Indeed, as Senator Carl Levin recently noted, the Senate Permanent Subcommittee on Investigations has been investigating the I.R.S.’s failure to enforce the law that requires tax-exempt groups to be engaged exclusively in social-welfare activities, not partisan politics. In stepping up its attention, it is not surprising that some I.R.S. employees bungled their attempt to enforce the law.

Congress should shoulder some of the responsibility for having loaded this weight onto the agency’s shoulders in the first place. To the extent that Congress wants to regulate political activity, Professor Mayer explained, it also should consider whether the I.R.S. is the agency best suited for such activities. “Current events,” he noted dryly, “indicate it is not.”

For further reading, see Donald B. Tobin, “Campaign Disclosure and Tax-Exempt Entities: A Quick Repair to the Regulatory Plumbing,” 10 Election L.J. 427 (2011), Ellen P. Aprill, “Why the I.R.S. Should Want to Develop Rules Regarding Charities and Politics,” 62 Case Western Res. L. Rev. 643 (2011), and Brian D. Galle, “Charities in Politics: A Reappraisal” (2012).

Victor Fleischer is a professor at the University of Colorado Law School, where he teaches partnership tax, tax policy and deals. Twitter: @vicfleischer

British Hedge Fund Finds Success by Forging Its Own Path

Ewan M. Kirk never quite fit the Wall Street mold.

As a partner at Goldman Sachs, he wore a kilt to the firm’s annual black-tie dinner in New York. After leaving Goldman, Mr. Kirk, an astrophysicist by training, set up a hedge fund in Cambridge, England, a world away from the fashionable neighborhood of Mayfair in London where many hedge funds are based.

But Mr. Kirk’s firm, Cantab Capital Partners, has been turning heads recently in London and New York with a new fund that aggressively undercuts its competitors on fees. The fund, which uses computer models to trade on trends in markets around the world, opened to outside investors in the first quarter and grew to more than $600 million by the beginning of April.

Unlike rival funds, in which the price of investing is often 2 percent of assets and 20 percent of profits, Cantab charges a 0.5 percent fee and 10 percent of profits for its new fund. That structure has generated buzz in Mayfair at a time when lackluster returns have some big investors wondering whether hedge funds are worth the expense.

“They’ve lowered the fees to a point that not everybody can afford to do,” said Phillip G. Chapple, an executive director at KB Associates, a consulting firm that advises London hedge funds. “It’s quite scary.”

Cantab is not the only fund to lower its fees. Since the financial crisis, some other hedge funds have also moved to lower the cost of investing. The Children’s Investment Fund, which is based in London, charges performance fees of 15 percent to 16.5 percent, with hurdles that must be cleared before fees are paid, according to a person close to the fund. Two funds run by Renaissance Technologies, in East Setauket, N.Y., have performance fees of 10 percent, a person close to the firm said.

About 11 percent of hedge funds in Europe charge performance fees less than 20 percent, compared with 5.7 percent of hedge funds in the United States, according to Hedge Fund Intelligence.

To Mr. Kirk, 52, who founded Cantab in 2006 with Erich Schlaikjer, a colleague from Goldman, the new product is a logical outgrowth of his primary investing strategy. With the technological infrastructure in place, it was relatively inexpensive for Cantab to introduce the new program, which takes a more conservative approach with lower volatility.

That technology puts Cantab â€" a relatively small firm with about 40 employees and $5.3 billion under management â€" in a position to shake up the market.

“Do I think that another random hedge fund is going to suddenly decide to cut their fees to a half and 10? No, I don’t,” Mr. Kirk said. “That would effectively destroy their business model.”

Run by scientists and mathematicians with ties to the nearby University of Cambridge, Cantab fosters an eccentric laboratory atmosphere. Certain devices, like a 3-D printer and a rice cooker powered by a neural network, are in the office simply to amuse the employees.

A technophile, Mr. Kirk claims to have no view on the political and economic dramas that obsess some money managers. Even his Friday lunch order is steeped in science: the office uses an algorithm to determine what type of food to buy.

But almost despite himself, Mr. Kirk is gaining recognition as a financier. Last year, Cantab’s flagship fund returned 15.3 percent when comparable funds in London suffered losses. In 2008, with the financial crisis gathering, Cantab returned 48.7 percent.

Though the firm’s record is mixed â€" it lost 9.2 percent in 2009 â€" it has attracted billions of dollars to manage, growing from just $30 million. Last November, with investors clamoring to get in, Cantab determined it had reached capacity and shut the doors on its fund.

As if to signal his arrival among the Mayfair elite, Mr. Kirk made his debut in April on a ranking of the wealthiest hedge fund managers in Britain published by The Sunday Times, which estimated his net worth at £280 million, or $433.3 million.

Born in Swindon, England, and brought up in Glasgow, , Mr. Kirk did not set out to work in finance. He developed a model of gravitational radiation for his Ph.D at the University of Southampton and started a career in computer systems design. When he landed at Goldman in 1992, he devoured books on futures and options to get himself up to speed.

“I couldn’t balance my own checkbook,” he told an audience of Ph.D mathematics students at the University of Cambridge several years ago.

But Mr. Kirk learned finance quickly, rising to become the head of the strategies group in Europe, where he oversaw Goldman’s quantitative technology.

“Ewan was known to be very â€" at Goldman, we used the term ‘commercial,’ “ said Jay S. Dweck, a former head of equities strategies at Goldman, who was in Mr. Kirk’s partnership class. “He was good at generating profit for the business.”

Mr. Kirk’s success helped him secure a deal on his departure to pay for continued access to Goldman’s in-house software â€" what Mr. Dweck called the “magic that every firm wanted to try to reproduce.”

That deal, according to Mr. Dweck, who was involved in the negotiations, was “unique.” A spokeswoman for Goldman declined to comment.

Cantab said in a letter to investors in December that it had been making progress in developing its own information-technology infrastructure. As part of that transition, the hedge fund revised its deal with Goldman last year; instead of fees, Goldman now has a small ownership stake in Cantab.

As the only prominent hedge fund in a region dominated by technology companies, Cantab can make a unique pitch to university students who might not have considered finance as a career. One such hire, Tom Howat, now a partner at the firm, hurried to finish his Ph.D in mathematical biology so he could join Cantab on its first day.

During the job interview in a local pub, Mr. Kirk described Cantab as a “start-up technology company that happens to apply itself to finance,” Mr. Howat, 31, recalled in a recent essay.

That entrepreneurial spirit means Cantab can have some fun. Last year, in the Cambridge Dragon Boat Festival, a race on the River Cam, the team from Cantab finished second in the mixed division.

The team also won best dressed, outfitted in the style of Noah’s Ark with zebra, giraffe and meerkat costumes.

Such self-expression wasn’t part of the culture at Goldman, as Mr. Kirk learned the hard way.

He wore the kilt only once, “given the slightly strange looks I got turning up at a fancy New York partners’ dinner wearing a dress,” he recalled. “It certainly created a little bit of a stir.”

An S.E.C. Settlement That Seems to Favor Falcone

There is an adage that a good legal settlement is one in which no one leaves the courtroom happy. That appears to be the case if the terms of the tentative agreement between the hedge fund manager Philip A. Falcone and the Securities and Exchange Commission to resolve civil fraud charges are approved.

While each side looks to be giving up something, the terms appear to favor Mr. Falcone.

The S.E.C. sued Mr. Falcone and his hedge fund firm, Harbinger Capital Partners, in June 2012, asserting that the “charges read like the final exam in a graduate school course in how to operate a hedge fund unlawfully.”

The agency had actually filed two cases. One claims that Mr. Falcone had obtained a loan for $113 million without properly disclosing it to his investors and flouted the rules to favor certain investors in his hedge funds. The other case asserts manipulation of the price of bonds in which he had invested. Both involve charges of violating the broad antifraud provisions, asserting that Mr. Falcone intentionally or recklessly violated the securities laws.

The settlement, which was reached last week, is subject to approval by the five agency commissioners as well as Paul A. Crotty, a Federal District Court judge in Manhattan who has been presiding over the cases. It is also not yet clear whether the agreement will involve only provisions that require proof of negligence, a low threshold of intent that cannot be used by private parties in their own securities fraud claims.

According to a filing with the S.E.C., Mr. Falcone has agreed to pay $4 million out of a total civil penalty of $18 million - a rounding error for a billionaire, as a DealBook article pointed out. Like most such settlements, this one will be without an admission or denial of liability by Mr. Falcone, meaning there is no acknowledgment of wrongdoing.

Harbinger Capital will be required to “take all actions reasonably necessary to expeditiously satisfy all received redemption requests of investors.” Its hedge funds cannot raise new money or make capital calls on its investors for two years, although this was unlikely to happen anyway given the turmoil surrounding Mr. Falcone over the last few years.
The strongest remedy looks to be a two-year ban on Mr. Falcone from working as an investment adviser. Yet, even that prohibition permits him continue to work with nine investment advisers affiliated with Harbinger Capital to help them wind down operations to deal with investor redemptions.

The S.E.C.’s action also does not preclude Mr. Falcone from serving as an officer or director of a publicly traded company, positions he occupies at the Harbinger Group as its chairman and chief executive. The original complaint sought such a ban, so the settlement lets him stay at the helm of the enterprise.

In another interesting twist, the S.E.C. will not ask the court to impose an order prohibiting Mr. Falcone from future violations of the securities laws. This is commonly known as a “sin no more” injunction because it tells a defendant not to engage in any future misconduct that might transgress securities laws.

The S.E.C. asks for this type of injunction almost as a matter of routine, including in its original complaints against Mr. Falcone. For example, the settlements with Goldman Sachs and Citigroup over marketing practices for synthetic securities tied to subprime mortgages included broad prohibitions on future violations.

A “sin no more” injunction gives the S.E.C. the power to seek a civil contempt from the court that issued it if a defendant engages in misconduct in the future. But that is largely understood to be a hollow threat, at least for a public company. There are instances in which the S.E.C. has obtained multiple injunctions against the same entity over the years without ever pursuing a civil contempt.

Some courts have questioned whether a command to obey the securities laws is permissible given the breadth of the securities law. But the S.E.C. has fought efforts to cut back on these types of injunctions.

A footnote in a 2005 decision in S.E.C. v. Smyth by the United States Court of Appeals for the Eleventh Circuit declared that this type of injunction was “unenforceable” because it violated a defendant’s due process rights if a contempt proceeding were pursued. The S.E.C. filed a brief asking the court to “delete the extensive dictum” in its opinion, to no avail.

In S.E.C. v. Goble, the appellate court reiterated its position that an injunction simply parroting an antifraud provision of the securities laws may be improper. It found that a district court entering such an order “should craft terms that provide the defendant fair notice of what conduct risks contempt and clearly inform the defendant of what he is ordered to do or not do.”

So why would Mr. Falcone negotiate to keep this type of order out of the settlement, given the general perception that these injunctions are more for show than a real threat of future enforcement, and perhaps even unenforceable in a contempt proceeding?

One reason is its permanency is that Mr. Falcone would have to make complete disclosure of the injunction for the foreseeable future when he holds an executive or board position with a public company. Unlike the two-year ban on acting in any capacity with an investment adviser, an injunction would say to the world that he agreed not to engage in fraudulent conduct again, a type of back-handed admission no one wants to make.

For the S.E.C., giving up the injunction is not very costly because it is rarely used as a means to police the future conduct of defendants. The danger is that the decision not to ask the court to issue one against Mr. Falcone as part of the settlement sends a signal to other defendants that they too might be able to avoid an order to abjure future sinfulness.

The S.E.C. could move away from the broad “sin no more” approach and focus any injunctive relief on prohibiting the actual misconduct that triggered the case. Although that would be a more cumbersome approach than simply telling a defendant to obey the law, it might help avoid judicial questioning of the propriety of a settlement.

As European Acquisition Struggles, Tata Takes $1.6 Billion Write-Down

Tata Steel, India’s largest steel producer, said on Monday that it would take a $1.6 billion write-down, citing the “weaker macroeconomic and market environment in Europe.”

The trouble stems mainly from Tata’s acquisition of Corus.

Tata made an aggressive push into Europe, buying Corus for 6.2 billion pounds in 2007. But the deal, just before the onset of the financial crisis, was ill timed. Since the acquisition, demand for steel in Europe has fallen by about 30 percent, including about 8 percent in the company’s last fiscal year, which ended in March.

Tata’s European operations, which employed 33,000 people a year ago, are concentrated at IJmuiden in the Netherlands, South Wales and Northeast England. The company has announced restructurings in the past, including the loss of 900 jobs, mainly in Wales, last November.

The problems have taken their toll on earnings. Tata Steel, which is set to report earnings on May 23, said that it lost $78 million in Europe for the quarter ending Dec. 31, before accounting for interest, depreciation and taxes.

Jeff Largey, an analyst at Macquarie Securities in London, said that Tata’s European operations had “been quite challenged in terms of margins and costs.”

Tata is far from alone in struggling in Europe.

ArcelorMittal, the world’s largest steel company, has recently taken steps to close blast furnaces at Florange in France and Liege in Belgium. The company also wrote off $4.8 billion on its European operations in the fourth quarter of 2012.

Lakshmi N. Mittal, the chairman and chief executive of ArcelorMittal, suggested in an interview on Friday that he might also close steel plants in eastern Europe, where four of the company’s blast furnaces were idled. Mr. Mittal said the company was monitoring the environment to see whether further closures were warranted.

In his remarks to analysts, Mr. Mittal was cautiously upbeat on the outlook for steel, saying he expected demand to rise 2 percent to 3 percent this year. Other companies in the industry have been downbeat. Most have either reported disappointing results or warned about the future, according to Mr. Largey.

Like competitors, Tata’s issues go beyond Europe, as demand for steel slumps amid the global economic weakness. The parent company reported a $139 million loss for the last three months of 2012. In the announcement on Monday, Tata said that it was also taking impairment charges on operations in Thailand and South Africa.

Ex-Level Global Manager Sentenced to More Than 6 Years

During the sentencing of the former hedge fund manager Anthony Chiasson on Monday, Judge Richard J. Sullivan marveled at his prodigious wealth, ticking off the annual income listed on his tax returns. “$16 million, $10 million, $23 million,” he said.

“It’s hard to imagine why someone would risk all that to engage in a crime like this,” the judge said.

The crime is insider trading, and Judge Sullivan handed down one of the stiffest sentences yet in the government’s vast campaign to root out the illicit activity on Wall Street trading floors. He sentenced Mr. Chiasson, the co-founder of Level Global Investors, to six and a half years in prison after a jury found him guilty last December of illegally trading technology stocks.

“This kind of conduct can’t go unpunished,” Judge Sullivan of Federal District Court in Manhattan said.

Mr. Chiasson, 39, who did not address the court, was ordered to pay a
$5 million fine and forfeit illegally obtained proceeds of as much as
$2 million. He must report to the Federal Bureau of Prisons in 90 days.

His legal team, led by Reid H. Weingarten of Steptoe & Johnson and Gregory Morvillo of Morvillo Law, is appealing his conviction. They have brought on Mark F. Pomerantz, a lawyer at Paul, Weiss, Rifkind, Wharton & Garrison, to handle the appeal.

Mr. Chiasson was tried last year alongside Todd Newman, a former portfolio manager at Diamondback Capital Management. The government accused them of being the two most-senior Wall Street traders in an eight-member “criminal club” that made $72 million in profits by trading shares of Dell and Nvidia based on corporate secrets obtained from inside those companies.

After a six-week trial, a jury convicted Mr. Chiasson and Mr. Newman.
Earlier this month, Judge Sullivan sentenced Mr. Newman to four and a half years in prison.

The sentencing of Mr. Chiasson caps an ignominious end to a once-highflying Wall Street career.

As a young technology-industry analyst in his mid-20s, Mr. Chiasson joined SAC Capital Advisors, the giant hedge fund owned by the billionaire stock picker Steven A. Cohen. Working under David Ganek, one of Mr. Cohen’s star traders, Mr. Chiasson made a name for himself making a large, negative bet against Internet stocks just before the dot-com bubble burst.

He also met his wife at SAC. Sandra Janson worked as an assistant controller at the fund, and according to a court filing, their relationship started when Mr. Chiasson wandered into her office and playfully complained about the candy selection in a dish she kept on her desk.

“The next time Anthony visited the accounting department, the dish contained tiny, single-serving boxes of Junior Mints â€" Anthony’s favorite candy,” Mr. Chiasson’s lawyers wrote. The couple lives in Manhattan with their young son and baby girl, but they are moving to the suburbs.

“I’m so sorry for your family and I’m so sorry for your wife,” Judge Sullivan said.

A decade ago, Mr. Chiasson left SAC along with Mr. Ganek to start Level Global Investors. The firm flourished, attracting marquee investors like Aetna and Cornell University. At it peak, the firm managed $4.2 billion and had 75 employees. In April 2010, Goldman Sachs bought a minority stake in the fund.

Just a few months later, Level Global’s ascent came to a crashing halt when F.B.I. agents raided its offices. The government investigation into Level Global came as part of an inquiry into hedge funds’ use of expert network firms, which are research shops that connect money managers to public company employees.

Mr. Chiasson became ensnared in the case after a junior analyst at Level Global, Sam Adondakis, turned state’s evidence. He told investigators - and later testified at trial - that he shared with Mr.
Chiasson secret information gleaned from a source inside Dell.

Lawyers for Mr. Chiasson had some success in arguing that their client should receive a sentence lower than the one recommended under federal guidelines, which was for as much as 10 years.

The guideline sentence was so stiff because the government said that Mr. Chiasson caused Level Global to earn about $40 million in profits as a result of the improper trades, and the profit amount primarily drives the guideline amount. Mr. Chiasson’s lawyers said that adhering to the guidelines “would be as draconian as it would be unwarranted.”

Judge Sullivan, though, disparaged one aspect of the defense’s argument that Mr. Chiasson should receive a lenient sentence because he lived an otherwise honorable life beside the crimes for which he was convicted - an argument commonly made by insider-trading defendants.

Mr. Morvillo described Mr. Chiasson as “an extraordinary man,” almost entirely focusing on his becoming a trustee while only in his 30s at both his secondary school, Cheverus High School in Portland, Me., and alma mater, Babson College in Wellesley, Mass. After Mr. Morvillo suggested that those appointments had nothing to do with money, Judge Sullivan cut him off.

“You think money had nothing to do with it?” the judge asked, referring to the trusteeships. “Do I have to suspend my disbelief this much?”

Mr. Chiasson’s case is one of several insider-trading prosecutions that have touched SAC, which has become a central target of the government’s investigation. Prosecutors charged two former SAC employees with participating in the insider-trading ring involving Mr. Chiasson. Jon Horvath, a former SAC technology stock analyst, has admitted to being a part of the scheme. In March, Mr. Horvath’s boss, Michael S. Steinberg, was indicted. He is fighting the charges and is scheduled to go on trial in November.

Mr. Ganek was not charged as part of the case, either criminally or civilly. But he figured prominently at the trial because he executed some of the questionable Dell trades. Although Mr. Adondakis testified that he did not tell Mr. Ganek about the source inside Dell, Judge Sullivan deemed Mr. Ganek an un-indicted co-conspirator in the case.

Federal prosecutors took an aggressive stance toward Mr. Ganek in their court papers connected to Mr. Chiasson’s sentencing.

“The evidence demonstrated that Mr. Ganek was aware that Adondakis’s information on Dell came from a source inside the company, and Ganek was a coconspirator with Chiasson,” prosecutors wrote. “That evidence included a number of instant messages and e-mails between Ganek and others that indicated that Ganek was kept comprised of Adondakis’s updates and the source of the information.”

John K. Carroll, a lawyer for Mr. Ganek at Skadden, Arps, Slate, Meagher & Flom, blasted the prosecutors’ comments about his client.

“The government’s conclusory statements about my client are unsubstantiated and unfair,” Mr. Carroll said. “It’s particularly unfair that prosecutors continue to defame my client with patched-together innuendo when they well know that they have comprehensively investigated his conduct and concluded that no charges should be brought.”

As China’s Economy Stumbles, Government Eyes Reform

Another week, another set of weak economic data out of China. Fixed-asset investment slowed, industrial production grew less than projected and while retail sales growth met expectations it was driven almost entirely by a 72.2 percent increase in jewelry purchases, apparently by consumers taking advantage of the drop in gold prices.

As Capital Economics concluded in a note about Monday’s data:

The upshot is that today’s figures are not encouraging for anyone hoping for signs of an economic rebound. There is probably less to the pickup in industrial output growth than first appears. Investment is slowing. Retail sales, the relative bright spot, are simply holding their ground. Our position remains as before: as long as there is little sign of problems in the labor market, weak growth numbers on their own will not prompt policymakers into substantial further policy loosening

Monetary policy in China is far from tight. According to data released on Friday, China’s total social financing for April was 1.75 trillion yuan, ahead of the median estimate of 1.5 trillion yuan. Perhaps this loan activity will translate into more growth going forward, or perhaps it is just barely keeping gross domestic product growth above the official target of 7.5 percent.

Xinhua, China’s state news agency, declared that the April data shows policymakers are reinforcing prudent monetary policy. April M2 growth was 16.1 percent, once again ahead of the government’s 2013 overall M2 growth target of 13 percent. Either M2 growth will have to slow dramatically later in 2013 or the government will exceed its annual target.

Last week China reported surprisingly strong import growth for the January-April period, but good luck finding anyone who actually believes that data. A Chinese newspaper calculated that companies, using fake invoices and other tricks, brought in $58 billion of “hot money.”

How times change. Just a few months ago analysts were worried about capital outflows, but now money is pouring back in and forcing up the value of the yuan. The underlying economic fundamentals would not seem to support such bullishness. Perhaps the relative political certainty that has returned with the Xi administration’s consolidation of power, along with Abenomics and the devaluation of the Japanese yen, have renewed the appetite for the yuan.

Whatever is driving the inflow, Chinese state media is signaling that additional appreciation of the currency is not desirable. Sunday’s Global Times quoted “experts and insiders” as saying that the “Chinese yuan has limited room to appreciate further and may be depreciated to foster the country’s struggling exports and the broader economy.”

URBANIZATION AND COMPREHENSIVE ECONOMIC REFORM are among the main hopes for supporting and improving the quality of China’s growth, as well as for commodity producers and investors globally. The urbanization bill will be huge: Researchers at the Chinese Academy of Governance have just released a report estimating the costs at over 1.8 trillion yuan.

Urbanization is near the top of the agenda for the government but there is still much debate about the details of what urbanization really means and how it will be implemented. First Financial, a leading Chinese newspaper, reported on Monday that a national urbanization conference originally expected this month has been delayed, apparently because the top leadership was unhappy with the draft. Top-level pressure could be good news for those hoping for an aggressive urbanization program, but it could also be a sign of bureaucratic paralysis and infighting over a massively complex initiative that touches on many powerful interests.

The government continues to state that it is pushing forward with significant reform. Australian journalist John Garnaut, one of the top foreign reporters in China, reported Monday that “China is drawing up a blueprint for sweeping reforms aimed at averting an economic crisis” that would be delivered to the Third Plenum of the 18th Party Congress, expected to meet in October. Third Plenums have a special place in Chinese history; the December 1978 Third Plenum of the 11th Party Congress kicked off the “reform and opening up” policy.

The next phase of reform will likely be much more complicated and painful than the program Deng Xiaoping set in motion, and assuming it moves forward we should expect it to be messy and fitful at times. Too much hope may be placed on the upcoming Third Plenum, but there is still reason for optimism about the prospects for much deeper economic reforms.

The main reason I remain optimistic is that the leadership, and especially Xi Jinping, seem very clear that without more reform there will be no fulfilling the “Chinese dream.”

As China’s Economy Stumbles, Government Eyes Reform

Another week, another set of weak economic data out of China. Fixed-asset investment slowed, industrial production grew less than projected and while retail sales growth met expectations it was driven almost entirely by a 72.2 percent increase in jewelry purchases, apparently by consumers taking advantage of the drop in gold prices.

As Capital Economics concluded in a note about Monday’s data:

The upshot is that today’s figures are not encouraging for anyone hoping for signs of an economic rebound. There is probably less to the pickup in industrial output growth than first appears. Investment is slowing. Retail sales, the relative bright spot, are simply holding their ground. Our position remains as before: as long as there is little sign of problems in the labor market, weak growth numbers on their own will not prompt policymakers into substantial further policy loosening

Monetary policy in China is far from tight. According to data released on Friday, China’s total social financing for April was 1.75 trillion yuan, ahead of the median estimate of 1.5 trillion yuan. Perhaps this loan activity will translate into more growth going forward, or perhaps it is just barely keeping gross domestic product growth above the official target of 7.5 percent.

Xinhua, China’s state news agency, declared that the April data shows policymakers are reinforcing prudent monetary policy. April M2 growth was 16.1 percent, once again ahead of the government’s 2013 overall M2 growth target of 13 percent. Either M2 growth will have to slow dramatically later in 2013 or the government will exceed its annual target.

Last week China reported surprisingly strong import growth for the January-April period, but good luck finding anyone who actually believes that data. A Chinese newspaper calculated that companies, using fake invoices and other tricks, brought in $58 billion of “hot money.”

How times change. Just a few months ago analysts were worried about capital outflows, but now money is pouring back in and forcing up the value of the yuan. The underlying economic fundamentals would not seem to support such bullishness. Perhaps the relative political certainty that has returned with the Xi administration’s consolidation of power, along with Abenomics and the devaluation of the Japanese yen, have renewed the appetite for the yuan.

Whatever is driving the inflow, Chinese state media is signaling that additional appreciation of the currency is not desirable. Sunday’s Global Times quoted “experts and insiders” as saying that the “Chinese yuan has limited room to appreciate further and may be depreciated to foster the country’s struggling exports and the broader economy.”

URBANIZATION AND COMPREHENSIVE ECONOMIC REFORM are among the main hopes for supporting and improving the quality of China’s growth, as well as for commodity producers and investors globally. The urbanization bill will be huge: Researchers at the Chinese Academy of Governance have just released a report estimating the costs at over 1.8 trillion yuan.

Urbanization is near the top of the agenda for the government but there is still much debate about the details of what urbanization really means and how it will be implemented. First Financial, a leading Chinese newspaper, reported on Monday that a national urbanization conference originally expected this month has been delayed, apparently because the top leadership was unhappy with the draft. Top-level pressure could be good news for those hoping for an aggressive urbanization program, but it could also be a sign of bureaucratic paralysis and infighting over a massively complex initiative that touches on many powerful interests.

The government continues to state that it is pushing forward with significant reform. Australian journalist John Garnaut, one of the top foreign reporters in China, reported Monday that “China is drawing up a blueprint for sweeping reforms aimed at averting an economic crisis” that would be delivered to the Third Plenum of the 18th Party Congress, expected to meet in October. Third Plenums have a special place in Chinese history; the December 1978 Third Plenum of the 11th Party Congress kicked off the “reform and opening up” policy.

The next phase of reform will likely be much more complicated and painful than the program Deng Xiaoping set in motion, and assuming it moves forward we should expect it to be messy and fitful at times. Too much hope may be placed on the upcoming Third Plenum, but there is still reason for optimism about the prospects for much deeper economic reforms.

The main reason I remain optimistic is that the leadership, and especially Xi Jinping, seem very clear that without more reform there will be no fulfilling the “Chinese dream.”

Dell Demands More Information From Icahn and Southeastern

The special committee of Dell Inc’s. board overseeing the sale of the computer maker asked Carl C. Icahn and Southeastern Asset Management on Monday to furnish more information about their recent demand for a special dividend.

The request comes after the announcement by Mr. Icahn and Southeastern late last week that they want Dell to scrap a planned $24.4 billion sale to Michael S. Dell and Silver Lake. Instead, they are seeking a special dividend of $12 a share either in cash or stock.

The two, who already own more than 12 percent of the company’s shares, would take stock and are seeking to form a group that owns 20 percent. If they succeed, they would essentially take control of about two-thirds of the company’s shares.

In a letter to Mr. Icahn and Southeastern, the special committee said it wasn’t sure how to treat the new plan, highlighting its skepticism that it can evaluate the proposal as a clear alternative to the management buyout.

“It is not clear to us whether you intend to formulate your transaction as an actual acquisition proposal that the board could evaluate and potentially endorse or accept or rather to propose it as an alternative that the board could consider in the event the pending sale to Silver Lake and Michael Dell is not approved,” the directors wrote.

Among the details that the special committee is seeking are a draft of the plan and who would run the company if Mr. Icahn and Southeastern succeed, because they have been vocal in seeking out replacements for Mr. Dell.

The directors are also seeking more information about how the dividend plan would be financed. So far, Mr. Icahn has suggested that he would provide a “couple of billion” dollars in bridge loans and has provisionally lined up about $1.6 billion from the Jefferies Group.

The Dell committee in particular questioned Mr. Icahn’s suggestion that the plan could be financed in part by drawing upon Dell’s existing cash and the sale of its accounts receivable, saying that the move would reduce future cash flow.

JPMorgan’s Lead Director in Focus

JPMORGAN VOTE MAY HINGE ON LEAD DIRECTOR  |  The shareholder vote at JPMorgan Chase on splitting Jamie Dimon’s roles of chairman and chief executive could hinge on whether Lee R. Raymond, the lead director, is seen as strong enough to stand up to Mr. Dimon, Jessica Silver-Greenberg and Susanne Craig report in DealBook.

Though Mr. Raymond, 74, was known for his ferocity as chief executive of Exxon Mobil, a growing number of investors are now wondering whether he had done enough to fortify risk controls and root out problems in the aftermath of JPMorgan’s multibillion-dollar trading loss last year, some big shareholders say. “I am really surprised that there has not been more blood spilled in the boardroom,” said Fadel Gheit, managing director of oil and gas research for Oppenheimer & Company. But Mr. Raymond has his defenders. “He has shown the ability to take serious and respective action in response to the trading losses,” said Lawrence A. Bossidy, a former chief of Honeywell International who served with Mr. Raymond on JPMorgan’s board. The results of the nonbinding vote will be announced on May 21.

“The vote on whether to separate the chairman and chief executive roles is sure to be close,” DealBook writes. “While Mr. Dimon has been careful not to tip his hand as to his plans in recent meetings with shareholders, according to various attendees who spoke on the condition of anonymity, investors are factoring in the possibility that Mr. Dimon may resign if they vote to split the roles.”

On Friday, Mr. Raymond and William C. Weldon, the chairman of the board’s corporate governance and nominating committee, released a letter recommending shareholders vote against the proposal to split Mr. Dimon’s roles and endorsing the re-election of all the directors. “It bears mention that there is little evidentiary support for the proposition that a split of chairman and C.E.O. positions is in all cases good for company performance and beneficial to shareholders,” the letter said.

BLOOMBERG ADMITS TERMINAL SNOOPING  |  “Reporters at Bloomberg News were trained to use a function on the company’s financial data terminals that allowed them to view subscribers’ contact information and, in some cases, monitor login activity in order to advance news coverage, more than half a dozen former employees said,” The New York Times’s Amy Chozick reports. After Goldman Sachs complained to Bloomberg last month, the company acknowledged that at least one reporter had gained access to customer information. On Sunday, Ty Trippet, a spokesman for Bloomberg, said that “reporters would not have been trained to improperly use any client data.”

In an editorial published on Bloomberg View Sunday night, Matthew Winkler, editor in chief of Bloomberg News, said the practice of allowing reporters access to limited subscriber information dated back to the inception of the news arm of the financial information company founded by Michael R. Bloomberg. “The recent complaints relate to practices that are almost as old as Bloomberg News,” Mr. Winkler said. “Some reporters have used the so-called terminal to obtain, as The Washington Post reported, ‘mundane’ facts such as logon information.” He continued, “Our reporters should not have access to any data considered proprietary. I am sorry they did. The error is inexcusable.”

As early as 2011, Erik Schatzker, a host on Bloomberg Television, said on his show that he had used a terminal subscriber’s data to report on a finance executive, BuzzFeed reported over the weekend. Bloomberg conducted an internal review after the remarks.

MAXINE WATERS’S NEW TACK  |  Once known as “kerosene Maxine,” Representative Maxine Waters has adopted a softer stance toward banks since rising to become the ranking Democrat on the House Financial Services Committee at the start of this year, The New York Times’s Ben Protess reports. “You have a lot of good will right now,” she told bankers during a visit to her Los Angeles district in March. As for Dodd-Frank, Ms. Waters, a Democrat, said she was ready to defend the law but also asked the bankers to compile a “laundry list” of concerns. “I don’t want you to look at this as being impossible to tweak,” she said.

“The move may seem at odds with her track record as a rabble-rouser and consumer activist,” Mr. Protess writes. “But after two decades in Congress, she says she has learned to pick her battles.”

ON THE AGENDA  |  Angela Merkel, the German chancellor, speaks to the German Council for Sustainable Development. Data on retail sales in April is out at 8:30 a.m. Howard Marks of Oaktree Capital is on CNBC at 8 a.m. The billionaire financier Kenneth G. Langone is on Bloomberg TV at 8 a.m.

A REPLACEMENT FOR LIBOR  |  The Libor benchmark, which was plagued by scandal after revelations that banks tried to manipulate it, “is likely to be replaced by a dual-track system with survey-based lending rates running alongside transaction-linked indices as soon as next year,” according to The Financial Times. A parallel system would provide continuity while also allowing for a new benchmark tied more closely to actual data, the British regulator Martin Wheatley said, the newspaper reports. Still, the proposal may set up a conflict with United States regulators.

Mergers & Acquisitions »

Elan in Deal on Drug Royalties  |  Elan, an Irish drug maker that is the target of a hostile takeover, agreed to pay $1 billion for a share of royalties on new drugs from Theravance of the United States.
DealBook »

Chinese Automakers Put Down Roots in Detroit  |  The New York Times reports: “Chinese-owned companies are investing in American businesses and new vehicle technology, selling everything from seat belts to shock absorbers in retail stores, and hiring experienced engineers and designers in an effort to soak up the talent and expertise of domestic automakers and their suppliers.”
NEW YORK TIMES

SoftBank, in Bid for Sprint, Plans Silicon Valley Office  | 
BLOOMBERG NEWS

Danone Acquires Baby Food Company  |  Danone paid “hundreds of millions of dollars” for Happy Family, which makes organic food for babies and toddlers, The Wall Street Journal reports.
WALL STREET JOURNAL

What Lies Ahead for Dell After Icahn’s New Demand  |  A new proposal by Carl C. Icahn and Southeastern Asset Management presents some new complications for Dell’s special board committee. But in some ways, it simplifies matters a bit.
DealBook »

Actavis in Preliminary Talks With Warner Chilcott  |  Actavis, the maker of generic drugs, said it was in early talks to acquire Warner Chilcott.
DealBook »

INVESTMENT BANKING »

Lloyds Bank Chairman to Retire  |  Winfried Bischoff, chairman of the Lloyds Banking Group and a former interim chief executive of Citigroup, will step down by May 2014.
DealBook »

Salomon Sues Citigroup Over Secretary  |  William R. Salomon, the onetime leader of Salomon Brothers, has sued Citigroup over Karen Febles, the secretary provided by the bank who was convicted of stealing from him, Bloomberg News reports.
BLOOMBERG NEWS

Short-Seller Takes Aim at Standard Chartered’s Debt  |  Carson C. Block, the founder of Muddy Waters, said he is betting against the debt of the British bank Standard Chartered, warning of “deteriorating” loan quality, Bloomberg News reports.
BLOOMBERG NEWS

What Board Members Don’t Do  |  “The risk-management fiasco at JPMorgan was an obvious failing, but directors of public companies often let down their outside shareholders in ways that are more subtle, but equally important, say some experts on public company board practices,” Gretchen Morgenson, a columnist for The New York Times, writes. “Directors commonly neglect chief executive succession planning and inadequately analyze company performance as it relates to managers’ pay.”
NEW YORK TIMES

Alan Abelson, Longtime Columnist for Barron’s, Dies at 87  |  Mr. Abelson wrote “a pugnacious, sagacious stock market column that denounced Wall Street hucksterism and routinely rocked share prices,” The New York Times writes.
NEW YORK TIMES

PRIVATE EQUITY »

A Private Equity Tax Move Said to Draw I.R.S. Interest  |  Clifford Warren, a senior Internal Revenue Service official, said at a recent legal conference that the agency was “studying” a technique that can lower taxes on private equity management fees, The Wall Street Journal writes.
WALL STREET JOURNAL

TowerBrook to Purchase True Religion Apparel for $835 Million  |  The buyout by the private equity firm underscores the rise of premium-priced jeans as a high-fashion staple and status symbol.
DealBook »

Warburg Pincus Closes Latest Fund at $11.2 Billion  |  It is one of the biggest private equity fund-raising rounds since the end of the financial crisis.
DealBook »

HEDGE FUNDS »

How Cooper Union’s Endowment Failed  |  “Cooper Union may be an extreme example, but it’s hardly the only college suffering from a combination of decades of bad decisions and recent treacherous markets,” James B. Stewart, a columnist for The New York Times, writes.
NEW YORK TIMES

A Strong Response to Paying Board Nominees  |  Eight partners at Wachtell, Lipton, Rosen & Katz are proposing that company boards consider adopting a bylaw prohibiting shareholder activists from compensating director nominees, Steven M. Davidoff writes in the Deal Professor column.
DealBook »

Hedge Funds Increase Bet on Greek Banks  |  Farallon Capital and York Capital Management are among the hedge funds putting money more into the Greek banking sector, according to The Financial Times.
FINANCIAL TIMES

A Social Media View of the Davos of Hedge Funds  |  A look at some of the social media dispatches from SALT conference in Las Vegas. The SkyBridge Alternatives Conference brings together more than 1,800 wealthy investors and hedge funds for four days of conferences, concerts and revelry.
DEALBOOK

I.P.O./OFFERINGS »

An Emerging Recovery in I.P.O.’s  |  Companies in the United States “are on track to raise the most money through initial public offerings since before the financial crisis,” The Wall Street Journal writes.
WALL STREET JOURNAL

AirAsia X Said to Seek Up to $300 Million in Malaysia I.P.O.  | 
REUTERS

VENTURE CAPITAL »

Twitter Estimated to Be Worth Nearly $10 Billion  |  The valuation of Twitter was based on the value of shares held by GSV Capital, according to Bloomberg News.
BLOOMBERG NEWS

Musk Abandons Technology Industry Lobbying Group  |  The technology titan Elon Musk, a founder of Tesla and an exponent of clean energy, has stepped down from Fwd.us, the advocacy group spearheaded by Mark Zuckerberg that has sponsored advertisements in favor of an oil pipeline, The New York Times writes.
NEW YORK TIMES

Even Tech Elites Need Time Without Mobile Devices  | 
NEW YORK TIMES BITS

LEGAL/REGULATORY »

As a Tool to Launder Money, Art Is Invaluable  |  Law enforcement officials say criminals have increasingly turned to the famously opaque art market to hide illicit profits, as other forms of money-laundering come under closer scrutiny, The New York Times reports.
NEW YORK TIMES

Bernanke, the ‘Washington Super-Whale’  |  Some hedge fund traders likely view the Federal Reserve as an enormous trader distorting market prices, akin to the so-called London Whale, the economist Brad DeLong writes.
BRAD DELONG

In Germany, Recovery Is Relatively Fast  |  “The euro zone’s troubles have helped Germany’s export-oriented economy,” Floyd Norris, a columnist for The New York Times, writes.
NEW YORK TIMES

Tax Crackdown in Greece Yields Little Revenue  |  “Politicians, business executives and bankers are being raked through the headlines or incarcerated in a white-collar crackdown as the Greek government goes after people suspected of tax dodging,” The New York Times writes.
NEW YORK TIMES

Lehman May Sell Off Some Unsecured Claims  | 
ASSOCIATED PRESS

JPMorgan’s Lead Director in Focus

JPMORGAN VOTE MAY HINGE ON LEAD DIRECTOR  |  The shareholder vote at JPMorgan Chase on splitting Jamie Dimon’s roles of chairman and chief executive could hinge on whether Lee R. Raymond, the lead director, is seen as strong enough to stand up to Mr. Dimon, Jessica Silver-Greenberg and Susanne Craig report in DealBook.

Though Mr. Raymond, 74, was known for his ferocity as chief executive of Exxon Mobil, a growing number of investors are now wondering whether he had done enough to fortify risk controls and root out problems in the aftermath of JPMorgan’s multibillion-dollar trading loss last year, some big shareholders say. “I am really surprised that there has not been more blood spilled in the boardroom,” said Fadel Gheit, managing director of oil and gas research for Oppenheimer & Company. But Mr. Raymond has his defenders. “He has shown the ability to take serious and respective action in response to the trading losses,” said Lawrence A. Bossidy, a former chief of Honeywell International who served with Mr. Raymond on JPMorgan’s board. The results of the nonbinding vote will be announced on May 21.

“The vote on whether to separate the chairman and chief executive roles is sure to be close,” DealBook writes. “While Mr. Dimon has been careful not to tip his hand as to his plans in recent meetings with shareholders, according to various attendees who spoke on the condition of anonymity, investors are factoring in the possibility that Mr. Dimon may resign if they vote to split the roles.”

On Friday, Mr. Raymond and William C. Weldon, the chairman of the board’s corporate governance and nominating committee, released a letter recommending shareholders vote against the proposal to split Mr. Dimon’s roles and endorsing the re-election of all the directors. “It bears mention that there is little evidentiary support for the proposition that a split of chairman and C.E.O. positions is in all cases good for company performance and beneficial to shareholders,” the letter said.

BLOOMBERG ADMITS TERMINAL SNOOPING  |  “Reporters at Bloomberg News were trained to use a function on the company’s financial data terminals that allowed them to view subscribers’ contact information and, in some cases, monitor login activity in order to advance news coverage, more than half a dozen former employees said,” The New York Times’s Amy Chozick reports. After Goldman Sachs complained to Bloomberg last month, the company acknowledged that at least one reporter had gained access to customer information. On Sunday, Ty Trippet, a spokesman for Bloomberg, said that “reporters would not have been trained to improperly use any client data.”

In an editorial published on Bloomberg View Sunday night, Matthew Winkler, editor in chief of Bloomberg News, said the practice of allowing reporters access to limited subscriber information dated back to the inception of the news arm of the financial information company founded by Michael R. Bloomberg. “The recent complaints relate to practices that are almost as old as Bloomberg News,” Mr. Winkler said. “Some reporters have used the so-called terminal to obtain, as The Washington Post reported, ‘mundane’ facts such as logon information.” He continued, “Our reporters should not have access to any data considered proprietary. I am sorry they did. The error is inexcusable.”

As early as 2011, Erik Schatzker, a host on Bloomberg Television, said on his show that he had used a terminal subscriber’s data to report on a finance executive, BuzzFeed reported over the weekend. Bloomberg conducted an internal review after the remarks.

MAXINE WATERS’S NEW TACK  |  Once known as “kerosene Maxine,” Representative Maxine Waters has adopted a softer stance toward banks since rising to become the ranking Democrat on the House Financial Services Committee at the start of this year, The New York Times’s Ben Protess reports. “You have a lot of good will right now,” she told bankers during a visit to her Los Angeles district in March. As for Dodd-Frank, Ms. Waters, a Democrat, said she was ready to defend the law but also asked the bankers to compile a “laundry list” of concerns. “I don’t want you to look at this as being impossible to tweak,” she said.

“The move may seem at odds with her track record as a rabble-rouser and consumer activist,” Mr. Protess writes. “But after two decades in Congress, she says she has learned to pick her battles.”

ON THE AGENDA  |  Angela Merkel, the German chancellor, speaks to the German Council for Sustainable Development. Data on retail sales in April is out at 8:30 a.m. Howard Marks of Oaktree Capital is on CNBC at 8 a.m. The billionaire financier Kenneth G. Langone is on Bloomberg TV at 8 a.m.

A REPLACEMENT FOR LIBOR  |  The Libor benchmark, which was plagued by scandal after revelations that banks tried to manipulate it, “is likely to be replaced by a dual-track system with survey-based lending rates running alongside transaction-linked indices as soon as next year,” according to The Financial Times. A parallel system would provide continuity while also allowing for a new benchmark tied more closely to actual data, the British regulator Martin Wheatley said, the newspaper reports. Still, the proposal may set up a conflict with United States regulators.

Mergers & Acquisitions »

Elan in Deal on Drug Royalties  |  Elan, an Irish drug maker that is the target of a hostile takeover, agreed to pay $1 billion for a share of royalties on new drugs from Theravance of the United States.
DealBook »

Chinese Automakers Put Down Roots in Detroit  |  The New York Times reports: “Chinese-owned companies are investing in American businesses and new vehicle technology, selling everything from seat belts to shock absorbers in retail stores, and hiring experienced engineers and designers in an effort to soak up the talent and expertise of domestic automakers and their suppliers.”
NEW YORK TIMES

SoftBank, in Bid for Sprint, Plans Silicon Valley Office  | 
BLOOMBERG NEWS

Danone Acquires Baby Food Company  |  Danone paid “hundreds of millions of dollars” for Happy Family, which makes organic food for babies and toddlers, The Wall Street Journal reports.
WALL STREET JOURNAL

What Lies Ahead for Dell After Icahn’s New Demand  |  A new proposal by Carl C. Icahn and Southeastern Asset Management presents some new complications for Dell’s special board committee. But in some ways, it simplifies matters a bit.
DealBook »

Actavis in Preliminary Talks With Warner Chilcott  |  Actavis, the maker of generic drugs, said it was in early talks to acquire Warner Chilcott.
DealBook »

INVESTMENT BANKING »

Lloyds Bank Chairman to Retire  |  Winfried Bischoff, chairman of the Lloyds Banking Group and a former interim chief executive of Citigroup, will step down by May 2014.
DealBook »

Salomon Sues Citigroup Over Secretary  |  William R. Salomon, the onetime leader of Salomon Brothers, has sued Citigroup over Karen Febles, the secretary provided by the bank who was convicted of stealing from him, Bloomberg News reports.
BLOOMBERG NEWS

Short-Seller Takes Aim at Standard Chartered’s Debt  |  Carson C. Block, the founder of Muddy Waters, said he is betting against the debt of the British bank Standard Chartered, warning of “deteriorating” loan quality, Bloomberg News reports.
BLOOMBERG NEWS

What Board Members Don’t Do  |  “The risk-management fiasco at JPMorgan was an obvious failing, but directors of public companies often let down their outside shareholders in ways that are more subtle, but equally important, say some experts on public company board practices,” Gretchen Morgenson, a columnist for The New York Times, writes. “Directors commonly neglect chief executive succession planning and inadequately analyze company performance as it relates to managers’ pay.”
NEW YORK TIMES

Alan Abelson, Longtime Columnist for Barron’s, Dies at 87  |  Mr. Abelson wrote “a pugnacious, sagacious stock market column that denounced Wall Street hucksterism and routinely rocked share prices,” The New York Times writes.
NEW YORK TIMES

PRIVATE EQUITY »

A Private Equity Tax Move Said to Draw I.R.S. Interest  |  Clifford Warren, a senior Internal Revenue Service official, said at a recent legal conference that the agency was “studying” a technique that can lower taxes on private equity management fees, The Wall Street Journal writes.
WALL STREET JOURNAL

TowerBrook to Purchase True Religion Apparel for $835 Million  |  The buyout by the private equity firm underscores the rise of premium-priced jeans as a high-fashion staple and status symbol.
DealBook »

Warburg Pincus Closes Latest Fund at $11.2 Billion  |  It is one of the biggest private equity fund-raising rounds since the end of the financial crisis.
DealBook »

HEDGE FUNDS »

How Cooper Union’s Endowment Failed  |  “Cooper Union may be an extreme example, but it’s hardly the only college suffering from a combination of decades of bad decisions and recent treacherous markets,” James B. Stewart, a columnist for The New York Times, writes.
NEW YORK TIMES

A Strong Response to Paying Board Nominees  |  Eight partners at Wachtell, Lipton, Rosen & Katz are proposing that company boards consider adopting a bylaw prohibiting shareholder activists from compensating director nominees, Steven M. Davidoff writes in the Deal Professor column.
DealBook »

Hedge Funds Increase Bet on Greek Banks  |  Farallon Capital and York Capital Management are among the hedge funds putting money more into the Greek banking sector, according to The Financial Times.
FINANCIAL TIMES

A Social Media View of the Davos of Hedge Funds  |  A look at some of the social media dispatches from SALT conference in Las Vegas. The SkyBridge Alternatives Conference brings together more than 1,800 wealthy investors and hedge funds for four days of conferences, concerts and revelry.
DEALBOOK

I.P.O./OFFERINGS »

An Emerging Recovery in I.P.O.’s  |  Companies in the United States “are on track to raise the most money through initial public offerings since before the financial crisis,” The Wall Street Journal writes.
WALL STREET JOURNAL

AirAsia X Said to Seek Up to $300 Million in Malaysia I.P.O.  | 
REUTERS

VENTURE CAPITAL »

Twitter Estimated to Be Worth Nearly $10 Billion  |  The valuation of Twitter was based on the value of shares held by GSV Capital, according to Bloomberg News.
BLOOMBERG NEWS

Musk Abandons Technology Industry Lobbying Group  |  The technology titan Elon Musk, a founder of Tesla and an exponent of clean energy, has stepped down from Fwd.us, the advocacy group spearheaded by Mark Zuckerberg that has sponsored advertisements in favor of an oil pipeline, The New York Times writes.
NEW YORK TIMES

Even Tech Elites Need Time Without Mobile Devices  | 
NEW YORK TIMES BITS

LEGAL/REGULATORY »

As a Tool to Launder Money, Art Is Invaluable  |  Law enforcement officials say criminals have increasingly turned to the famously opaque art market to hide illicit profits, as other forms of money-laundering come under closer scrutiny, The New York Times reports.
NEW YORK TIMES

Bernanke, the ‘Washington Super-Whale’  |  Some hedge fund traders likely view the Federal Reserve as an enormous trader distorting market prices, akin to the so-called London Whale, the economist Brad DeLong writes.
BRAD DELONG

In Germany, Recovery Is Relatively Fast  |  “The euro zone’s troubles have helped Germany’s export-oriented economy,” Floyd Norris, a columnist for The New York Times, writes.
NEW YORK TIMES

Tax Crackdown in Greece Yields Little Revenue  |  “Politicians, business executives and bankers are being raked through the headlines or incarcerated in a white-collar crackdown as the Greek government goes after people suspected of tax dodging,” The New York Times writes.
NEW YORK TIMES

Lehman May Sell Off Some Unsecured Claims  | 
ASSOCIATED PRESS