Switzerland Weighs Deal in Tax Cases

The Swiss government is considering a proposal to disclose bank client names and pay a multibillion-dollar fine to the United States to help resolve a long-running dispute between the two countries over the handling of tax-evasion cases, American and Swiss sources briefed on the matter said on Tuesday.

The fine, which could reach at least $7 billion to $10 billion according to these people, could be paid in part by the Swiss government, which would then seek reimbursement from the banks.

The possibility of an agreement is a turning point in a deepening conflict between Switzerland and the United States over the matter.

American prosecutors have been conducting criminal investigations of about a dozen Swiss and Swiss-style banks involving offshore private banking services that allowed at least tens of thousands of wealthy Americans to evade federal taxes. The Swiss government, which has long prized the secrecy of its banking system, now appears to be willing to cooperate with authorities, one person said.

The Swiss banks that have been the targets of investigations include Credit Suisse, which disclosed in July 2011 that it had received a letter saying it was under a grand jury investigation; the Zurich-based Julius Baer; two cantonal, or regional, banks; the Swiss operations of HSBC Holdings; and three Israeli banks, Hapoalim, Mizrahi-Tefahot Bank and Bank Leumi.

Members of the top echelon of the Swiss government known as the Federal Council are expected to discuss the matter as early as Wednesday, according to people briefed on the talks. These people asked to be unidentified because the discussions were continuing.

Hans Kaufmann, a Swiss parliamentarian and member of the conservative Swiss People’s Party, said that various levels of Parliament would be informed of the Federal Council’s decision in stages over the next 10 days or so.

“The Federal Council has already discussed the topic a few times in the last weeks, but has reached no conclusions so far,” said Anne Césard, a spokeswoman for the State Secretariat for International Financial Matters, a part of Switzerland’s finance ministry.

Eveline Widmer-Schlumpf, the head of the finance ministry, told Swiss radio on May 18 that “We are on the verge of presenting a solution,” adding that “it is clear that it will not be a pleasant solution.”

André Simonazzi, a vice chancellor and spokesman for the Federal Council, declined to comment until Wednesday on the matter. A spokeswoman for the United States Justice Department also declined to comment.

The bank Julius Baer acknowledged on Tuesday that it had received a formal request from American authorities for data on American clients of the bank’s offshore services. “We welcome the fact that the two governments obviously are close to an agreement on how to settle the tax dispute and will continue our early, proactive and cooperative steps addressing our situation,” said Sabine Jaenecke, a spokeswoman for Julius Baer.

American authorities have indicted dozens of Swiss bankers and their clients in recent years. A breakthrough came in 2009, after UBS, the largest Swiss bank, agreed to enter into a deferred-prosecution agreement. The bank turned over 4,450 client names and paid a $780 million fine after admitting to criminal wrongdoing in selling tax-evasion services to wealthy Americans.

In 2012, the Justice Department indicted Wegelin & Company, Switzerland’s oldest bank. The bank pleaded guilty in January, putting it out of business, and prosecutors have said off the record in recent months that more indictments could be coming.

Whistle-blowers have been a crucial part of the investigations and could continue to be so. Last year, the Internal Revenue Service said it would pay Bradley Birkenfeld, a former UBS banker, more than $104 million for his cooperation in revealing the secrets of the Swiss banking system and in that way helping to collect millions in unpaid taxes from wealthy Americans.

At least one other banker is said to be in discussions with American authorities. Swiss officials have been interested in a settlement since the United States threatened to press charges against cantonal banks. Most cantonal banks are wholly or largely owned by the cantons, or regions, in which they operate, making them state institutions backed by Swiss taxpayers.

Two cantonal banks, Basler Kantonalbank and Zürcher Kantonalbank, are under scrutiny by prosecutors in the Southern District of New York.

“Every bank under investigation negotiates on its own,” said Igor Moser, a spokesman for Zürcher Kantonalbank, in Zurich. He declined to elaborate but indicated that the bank would not be part of any global resolution that is reached.

Michael Buess, a spokesman for Basler Kantonalbank, said that the “negotiations with U.S. authorities has been defined as strictly confidential.”

In early May, prosecutors in New York sent a second request to the government of Liechtenstein, a tax haven now seeking to cooperate with the United States in rooting out tax evaders. Prosecutors are seeking details on eight or nine firms involved in setting up Liechtenstein-based foundations and establishments on or after Jan. 1, 2008, that may have helped American citizens evade taxes.

The request reflects efforts by prosecutors to “use Liechtenstein as a blunt wedge to pry open Switzerland,” according to a person briefed on the matter.

A Hotel Company Is Hobbled by a Deal Struck in Tough Times

If you are reading this column by the pool at the Delano South Beach in Miami Beach or while hanging out at the bar at St. Martins Lane Hotel in London or the Royalton in Manhattan, you may not be aware that behind the scenes of your comfortable surroundings, all is not well.

Morgans Hotel Group, the owner and manager of these three boutique hotels and others like the Mondrian in SoHo, is being crushed by a deal it cut with Ronald W. Burkle’s investment firm, the Yucaipa Companies.

It all started back in October 2009. Morgans, founded by Ian Schrager and Steve Rubell of Studio 54 fame, was struggling under the weight of the financial crisis. Revenue was declining precipitously as consumers panicked and shunned luxury.

Worried about liquidity and searching for expansion, Morgans hit upon a deal with Yucaipa. The investment firm would make a $72 million infusion in what is known as a private investment in public equity, or PIPE.

Such deals are complicated and are usually done with distressed or struggling companies. An investment firm will take a large ownership position, rescuing the company. But the price for this rescue is high. A PIPE is usually done on quite advantageous terms and includes complicated options, preferred returns and redemption features all intended to give more value to the investor.

The reason for this trade-off is that typically the company has no choice. One study of PIPEs found that without the investment, the majority of target companies would be out of cash within a year.

Unfortunately, this comes at the expense of other shareholders. This same study, of over 2,500 such deals, found that after the investment, existing shareholders receive average returns of negative 22 percent, compared with average gains of 27 percent for the PIPE investor.

It is no surprise that a knowledgeable investor like Mr. Burkle, known for buying and selling supermarket chains, negotiated great terms for his PIPE. In exchange for $72 million, Yucaipa received preferred securities and warrants to acquire as many as 12.5 million shares of Morgans Hotel. The preferred even has a “death spiral” feature: It starts at a dividend rate of 8 percent, but this rises to 10 percent in 2014 and 20 percent in 2016 if the preferred is not repaid.

The kicker is that Yucaipa also received the right to nominate one director and extensive control rights over Morgans. This includes veto rights over a sale of the company, acquisitions worth more than $100 million and any sale of nearly all of the company’s assets.

It is unclear if Morgans’ management appreciated the consequences of handing this degree of control over the company to Mr. Burkle’s Yucaipa. On an investor conference call in 2009, the president of the company at that time said that Mr. Burkle’s investment was “shareholder friendly” and provided the company with a “great deal of flexibility to weather the remainder of the downturn.” Shareholders may not have done so either, as they also approved part of the transaction.

Looking back at the deal, a company representative said on Tuesday: “Morgans Hotel Group was deeply indebted and needed an equity lifeline in 2009 and the Yucaipa deal was a good solution to provide necessary equity capital. The terms of the transaction were generally consistent with the credit market environment at that time. That deal was validated by stockholders, 87 percent of which voted in favor of allowing the transaction to proceed.”

Nearly four years later, Mr. Burkle has continued to take control. Yucaipa owns 27.9 percent of Morgans, and with the company’s consent he also bought $88 million of its debt, which comes due in October 2014. Yucaipa’s first appointment to the board, Michael J. Gross, now runs Morgans.

But Morgans has a problem. It has mortgage debt of $180 million due in 2015 and $172 million in debt due in 2014, about half of which is held by Mr. Burkle’s Yucaipa. Remember that the interest payments on the preferred rise to 20 percent in 2016.

Morgans, meanwhile, has changed its business strategy, so that it is selling hotels and focusing on managing luxury hotels under its brand. It has been a fitful transition, and the company has lost more than $200 million in the past three years.

In normal times this might create financing problems for Morgans. But we currently live in a near-zero interest rate environment, and luxury hotels are an increasingly hot commodity. If you have been to the Delano lately you can see that is the case as the 1 percent luxuriates en masse by the pool. So even though its performance is less than stellar, Morgans should be able to refinance its debt.

The problem is that Morgans’ friendly deal with Mr. Burkle is looking not so welcoming to other investors.

According to people close to Morgans, the company has been told by its bankers that if it cannot eliminate the favorable terms and various forms of financing with Yucaipa, it will not be able to raise significantly new amounts of capital.

So Morgans has announced another complicated deal that it calls a deleveraging transaction. The hotel company has agreed to give Yucaipa the Delano South Beach and Morgans nightclub and food and beverage management business in exchange for cancellation of the warrants, preferred shares and debt.

As part of this transaction, Morgans announced a $100 million rights issuance amounting to more than 50 percent of its current equity, an extraordinary number of shares to issue. Yucaipa also agreed to backstop the rights offering, having the potential to raise its share ownership by a significant percentage if other shareholders did not participate.

OTK Associates, an investment vehicle run by the Olshan and Taubman real estate families that owns 13.9 percent of Morgans, has started a campaign to stop the transaction with Mr. Burkle’s Yucaipa.

The investment group has sued in a Delaware court, claiming that the deleveraging transaction was unduly favorable to Yucaipa. At a hearing in April on the matter, Vice Chancellor J. Travis Laster halted completion of the transaction and appeared to find evidence to support OTK’s allegations. The judge stated that “there is evidence in the record to call into question things” the directors did, implying that they may have been too close with Mr. Burkle and Yucaipa.

Now OTK, which voted for the 2009 transaction, is running a slate of seven directors to try to unseat the Morgans board at its June 14 annual meeting. The investment group’s claim is that in today’s environment the Burkle deal is too expensive, and the hotel company instead should be able to find a deal, something evidenced by Morgans’ recently receiving a proposal to acquire the entire company.

This is a mess, and it has created a huge upheaval at the company with tens of millions being spent on lawyers and bankers.

I sympathize with the position Morgans is in. It is very difficult to find a better deal than the one with Yucaipa, given the rights that Mr. Burkle’s fund already has. An analyst at MKM Partners echoed this in a note, rating the company neutral but stating that the deleveraging transaction “has the power to be transformative.” Still, it also appears that Morgans may not have fought as hard in the past as it probably should have.

It is clear there is a lesson here for other companies.

In 2009, Morgans needed money but was not completely out of options. Still, it took a PIPE deal with hard terms. That deal is coming back to haunt the company.

You can’t blame Yucaipa for acting in its self-interest, but you can blame Morgans’ management then for failing to appreciate the consequences of the PIPE investment at the time. It locked them into the arms of Yucaipa in a way that is exceedingly difficult to escape.

It’s a reminder for every corporate board the next time it contemplates an investment like this, and a sobering thought for those executives and beautiful people sitting today by that Delano pool â€" your investment choices years ago can linger, pushing you to even worse decisions.

Valeant Shows How M.&A. Can Favor the Brave

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Valeant Pharmaceuticals shows how some M.&A. favors the brave. Buying $8.7 billion Bausch & Lomb is the biggest deal yet for the acquisitive company, but it comes with huge cost savings that investors glorified. Chief executives elsewhere should take note.

A big part of Valeant’s success has been its ability to find drugs in the marketplace instead of the lab. It shares have gained 10-fold over the past five years compared to just 50 percent for the sector at large.

The industry spends huge sums on research and development because the prospect of developing a blockbuster is so alluring. Unfortunately, lab productivity has lagged, broadly delivering a poor return on overall investment. The internal rate of return for the top 12 pharmaceutical companies last year was only 7 percent, according to a study by Deloitte and Thomson Reuters.

Instead, Valeant buys up smaller firms and deeply slashes costs. Whatever expertise it may lack with test tubes it more than makes up for with the accounting ledgers. Valeant’s tax rate is only about 5 percent. The combination has been potent, especially when new purchases are thrown into the mix.

Valeant estimates it can cut $800 million of costs by uniting with Bausch & Lomb. It’s an impressive sum â€" amounting to about half its target’s R.&D. and administrative costs - considering the eye-care company was already owned by notoriously stingy private equity. Applying a standard corporate tax rate of 30 percent would make the savings worth about $5.6 billion today, or about the same amount added to the company’s market value following the deal’s announcement. If Valeant can keep its tax rate down, the value created will be greater.

Valeant’s chief executive, Michael Pearson, sees room for more takeovers, particularly in ophthalmology and dermatology. He even alluded to the idea that Valeant isn’t yet as large or diversified as $250 billion Johnson & Johnson. That’s plenty of ambition for a company almost a tenth the size. So long as Mr. Pearson adheres to the same financial logic, investors will stay on side.

And with M.&A. activity broadly stagnant, C.E.O.’s elsewhere might consider the lesson from Valeant.

Robert Cyran is a columnist for Reuters Breakingviews. For more independent commentary and analysis, visit breakingviews.com.

Bankia Shares Tumble After a New Stock Issue

MADRID â€" Shares in Bankia, the giant Spanish mortgage lender that was at the heart of the country’s banking crisis, fell sharply on Tuesday after a large share issue that was meant to herald a new start.

Bankia closed down 5 percent at 57 euro cents a share. They had fallen as much as 21 percent at the start of trading session, when about 11.5 billion new Bankia shares were issued as part of a 15.5 billion-euro ($20 billion) recapitalization plan. Before the new-share sale, only about 20 million Bankia shares were trading.

The bank’s stock had already fallen over 50 percent last week, when institutional shareholders sold amid concerns about the flood of new shares and Bankia’s ability to return to profits as swiftly.

On Tuesday, many retail investors offloaded the new shares that they had received in exchange for swapping at a discount of 70 percent from their preferred shares, a form of convertible debt that recently led to litigation and street protests against Bankia and other Spanish banks.

The preferred shares were sold by Bankia and other banks to their retail clients when Spain was caught up in the euro debt crisis but not yet facing a full-fledged banking collapse. That came in May 2012, when Bankia revealed extensive losses on its mortgage portfolio that forced the government to seize control of the bank, replace its management and negotiate a European banking bailout.

Over all, Spain allocated to Bankia about 18 billion euros of the 40 billion euros of European bailout money that it has received. Spain’s bank restructuring fund now owns about 68 percent of Bankia’s equity, while the rest is in free float, of which over a quarter is owned by institutional investors.

Bankia’s share price decline came as the Spanish stock market enjoyed an otherwise positive day, with the benchmark Ibex index rising 1.8 percent on Tuesday.

Bankia shares are expected to decline further as the latest price remains above the target price set by investment banks. Most analysts recently estimated Bankia’s book value at far below the book value of 1 euro a share that was made as part of the latest recapitalization. And even though Bankia’s new management has promised a swift return to profits, credit rating agencies have warned that the bank would remain dependent on financing from the European Central Bank for the foreseeable future.

“The previous prices were irrational, and today’s level is a lot more reasonable,” said Daragh Quinn, a banking analyst at Nomura in London, commenting on Tuesday’s drop. Nomura has a price target of 40 euro cents a share for Bankia, so that there is a possibility of “further downside,” Mr. Quinn added.

While the sale of risky preferred shares to retail clients has proved among the most controversial aspects of Spain’s banking crisis, Bankia is the object of several other lawsuits.

The former management of Bankia, led by Rodrigo Rato, is being sued over allegations of misstating the bank’s accounts ahead of an initial public offering in 2011.

As part of a separate case, Mr. Rato’s predecessor as executive chairman, Miguel Blesa, spent a night in jail this month, before posting bail. Mr. Blesa stands accused of leaving his bank saddled with huge losses because of the takeover of a bank based in Miami in 2008.

Tamping Down Expectations on China’s Growth

The prospects for China’s economy look so challenging for the remainder of 2013 that increasing numbers of usually cheerleading investment bank economists are cutting their rosy growth forecast for China. The release last Thursday of preliminary manufacturing data for May, which surprisingly indicated a contraction in manufacturing activity, was just one more in a series of weak data points.

The government is not denying the weakness, nor does it appear to be panicking. Officials continue to state that no further government stimulus measures are likely:

“Enterprises need to close down backward production and upgrade their industrial structure, and should not expect further economic stimulus measures by the government,” an official from the National Development and Reform Commission, who wished to remain anonymous, told the Beijing-based newspaper [The Economic Observer].

In a sign of how concerned the new administration is about China’s environmental crisis and the constraints it places on the country’s future development, President Xi Jinping told senior officials at a study session last Friday that the government should “set and strictly observe an ecological ‘red line’ amid the country’s rapid urbanization in order to protect the environment.”

Mr. Xi also said “China will not sacrifice the environment for temporary economic growth” and that officials will be held responsible for pollution “for life.”

Premier Li Keqiang is also talking down expectations for China’s growth. During a visit to Germany he said on Monday that China had “huge challenges as it seeks 7 percent annual growth this decade, down from more than 10 percent in the previous 10 years.”

Two weeks ago, this column noted that urbanization and comprehensive economic reform were among the main hopes for supporting and improving the quality of China’s growth. The signals for deepening economic change remain strong.

On Friday, the State Council released “Opinions on Economic Reforms in 2013,” a document that further detailed plans to reduce the state’s role in the economy. Jun Ma, greater China chief economist for Deutsche Bank, was impressed and said some of the reforms would have meaningful implications for the real economy.

Urbanization is still the subject of debate. Reuters reported last week that Premier Li had “rejected” a draft urbanization plan because it was heavy on infrastructure investment and relatively light on economic reform. An official at the National Development and Reform Commission dismissed the report of a rejection and said the draft was “still under discussion and there’s no clear timetable for implementation.”

Ting Lu, China economist for Bank of America Merrill Lynch, addressed the areas under debate in a research note published after the report of a rejection of the draft:

There are a number of controversial issues related to the urbanization plan: (1) First and foremost, how to deal with the rights of land for those farmers who are willing to move to cities? Should the government start rural land ownership reform first? (2) How to unwind the Hukou system orderly? (3) Shall the central government and local governments determine the locations for urban expansions? Or should the market play a bigger role? (4) What’s the right distribution of city sizes? Shall China encourage the growth of numerous small towns? Or should the government develop bigger cities which could be more efficient? (5) Can local governments force farmers to move to towns by consolidating (or even confiscating) their lands? If not, how to prohibit land grab? (6) Last but certainly not the least, how to finance spending on infrastructure and social housing which are related to urbanization?

Whatever is going on with the drafting of the incredibly complex and politically fraught urbanization plan, investors should not be holding their breath that it will be a panacea for the Chinese economy and commodity producers around the world.

TRYING TO UNDERSTAND CHINESE ECONOMICS without also paying attention to Chinese politics is usually a mistake. In the midst of the acceleration of economic change there appears to be quite a leftward ideological shift under way. The Chinese Communist Party has spent decades trying to understand and learn from the collapse of the Soviet Union. Among the key lessons are that a struggling economy, an unaccountable, incompetent government and a dissolute, flaccid party whose members have strayed from the true path and lost their faith doomed the Soviet Union.

President Xi inherited many challenges, including but not limited to: a troubled economy; a growing debt mess; widespread corruption in the party and society in general; and a huge environmental crisis. Combine those challenges with what looks to be a very significant economic reform agenda that will affect many powerful interests across society and it may be that the logical response from the party is to batten down the ideological hatches, rectify the party, strengthen control over the military, and increase oversight of the media (especially the Internet) and educational institutions before undertaking those jarring economic changes.

I do not think Mr. Xi wants to revert to Maoism. There are other signs that he is serious about making the Chinese Communist Party much more of a responsive, consultative, authoritarian ruling party. But there are so many serious problems right now that he may believe any sign of weakness will be the end of the party.

An “ideological crackdown” may have foreign implications, as the Jamestown Foundation argues in the recent essay “Exploring the International Aspects of China’s Ideological Crackdown.”

President Obama and the Chinese president will have their first summit meeting on June 7 and 8 at Sunnylands, the Walter and Leonore Annenberg estate in Southern California. Thomas E. Donilon, President Obama’s national security adviser, was just in Beijing to prepare for the meetings.

Given the difficult 2013 China appears to be having, it is hard to expect many positive breakthroughs in the United States-China relationship in the near term.

SAC Could Give the Justice Dept. a High-Value Target

The subpoenas issued to executives at SAC Capital Advisors to testify before a grand jury provide a powerful indication that prosecutors have made the firm the focus of their latest effort to crack down on insider trading. Unfortunately for SAC, it may also be a case of being in the wrong place at the wrong time.

SAC may end up being the poster child for prosecuting companies, if criminal charges are filed against the firm. It would also help the Justice Department counter critics who say it has allowed too many companies to settle cases without facing criminal prosecution.

The Justice Department has tried for months to backtrack from a comment that Attorney General Eric H. Holder Jr. made in March, when he said it can “become difficult” to prosecute large financial institutions because of the potential impact on the economy.

In an effort to ramp up its posturing, Mythili Raman, the acting assistant attorney general for the criminal division, testified before a House subcommittee last week, saying, “No individual or institution is immune from prosecution, and we intend to continue our aggressive pursuit of financial fraud.”

Pursuing a case against SAC would not bring the economy to its knees, nor would it raise concerns about the firm being “too big to prosecute.” SAC does not have interests spread throughout the global financial system that could drag down other banks, and charges would have little effect on investors or markets even if it were required to cease operations.

An added benefit to pursuing the firm is that the action can be a proxy for going after its owner, Steven A. Cohen. Despite being the object of intense scrutiny in the last few years, prosecutors appear to have been unable to build a case directly implicating him in insider trading. Both Mr. Cohen and SAC have asserted they were not involved in wrongdoing.

As reported by DealBook, the subpoenas to appear before the grand jury were issued to Mr. Cohen and Thomas Conheeney, SAC’s president; Solomon Kumin, its chief operating officer; Steven Kessler, chief compliance officer; and Phillip Villhauer, the head of trading. Mr. Cohen is expected to assert his Fifth Amendment privilege against self-incrimination and refuse to respond to questions.

The other executives called to testify do not appear to have any significant connection to the insider trading charges previously leveled against two former SAC portfolio managers, Mathew Martoma and Michael Steinberg. Mr. Villhauer executed the trades in the stocks involved in Mr. Martoma’s case, but there is no indication he had any knowledge of the reasons for the sales.

To prove that a company committed a crime, all the government has to show is that an agent or employee engaged in criminal conduct in the performance of his duties and for the benefit of the organization. Even if the person’s conduct was counter to explicit directions, the organization can be held accountable as long as the employee was motivated at least in part to act for the firm’s benefit.

So why call these men to testify before the grand jury when corporate criminal liability is fairly easy to establish? Pursuing a criminal case against an organization, if it goes to trial, involves more than just showing the bare minimum that an employee like Mr. Martoma or Mr. Steinberg traded on inside information and SAC reaped the benefit. Prosecutors would also want to establish that the culture of the organization tolerated such conduct, and perhaps even encouraged it.

Portraying SAC as a den of thieves - to borrow a phrase from James B. Stewart’s famous book about insider trading in the 1980s - could send a message about how the Justice Department is policing Wall Street. So if prosecutors really want to build a case against SAC, they will need someone from the inside to testify about how it conducted business.

The four SAC executives can be a vehicle for prosecutors to gather evidence about the firm’s operations and management, including how much oversight was exercised over trading by its portfolio managers, including Mr. Cohen. Calling them in front of a grand jury, rather than just interviewing them, signals how serious the government is about pursuing the case.

Individuals subpoenaed to testify can assert the Fifth Amendment if answering questions would pose any threat of implicating themselves in criminal conduct. So the SAC executives could refuse to testify, but if prosecutors are really intent on building a case against the firm then they have a way around that if the witness is not someone they plan to prosecute: a grant of immunity.

Immunity supplants the Fifth Amendment, so the person must testify or risk being held in contempt, which usually means going to jail until the end of the grand jury’s term. The protection afforded to an immunized witness under federal law is that “no testimony or other information compelled under the order (or any information directly or indirectly derived from such testimony or other information) may be used against the witness in any criminal case.”

If the SAC executives were to indicate they planned to follow Mr. Cohen’s lead in responding to the subpoenas, then I think there is a good chance prosecutors would grant them immunity. They are unlikely to be considered targets of the investigation, so calling them to testify and, if necessary, imposing immunity allows the government to get information it might not be able to otherwise.

SAC could still try to negotiate for a deferred or nonprosecution agreement, which would probably entail a significant payment beyond the $616 million it agreed to turn over to settle a civil case with the Securities and Exchange Commission. Last year, the United States attorney’s office in Manhattan, which is leading the SAC investigation, entered into a nonprosecution agreement with the hedge fund firm Diamondback Capital Management over insider trading by one of its portfolio managers that included a $6 million payment.

But SAC’s recent statement that it would no longer provide “unconditional cooperation” to the government makes such a resolution unlikely, at least in the short term.
The Justice Department has clearly been stung by criticism about its lack of charges against companies over financial wrongdoing. SAC is hardly a substitute for the large banks that have worked out settlements with no criminal charges, as HSBC did in a case involving money laundering violations.
Nevertheless, pursuing a case against SAC could be offered as evidence of the government’s willingness to take a hard line against an organization without risking the collateral consequences associated with convicting a big bank.

Fidelity National Buys Loan Processing Firm

Fidelity National Financial, Inc. - Fidelity National Financial, Inc. to Acquire Lender Processing Services, Inc. for $33.25 per Common Share; Pro-Forma 2012 Earnings Accretion of 11.3%

Fidelity National Financial, Inc. to Acquire Lender Processing Services, Inc. for $33.25 per Common Share; Pro-Forma 2012 Earnings Accretion of 11.3%

Jacksonville, Fla. -- (May 28, 2013) -- Fidelity National Financial, Inc. (NYSE:FNF), a leading provider of title insurance, mortgage services and diversified services, and Lender Processing Services, Inc. (NYSE:LPS), a leading provider of integrated technology, services, data and analytics to the mortgage and real estate industries, today announced the signing of a definitive agreement under which FNF will acquire all of the outstanding common stock of LPS for $33.25 per common share, for a total equity value of approximately $2.9 billion.

Under the terms of the definitive agreement, FNF will pay 50% of the consideration for the LPS shares of common stock in cash and 50% in shares of FNF common stock, subject to adjustment as described below. The purchase price represents a 19% and 25% premium, respectively, to the prior 30-day and 60-day average closing prices for LPS' common stock through May 22, 2013, the last trading day before media reports regarding a potential transaction between FNF and LPS.

At closing, FNF will combine its ServiceLink business with LPS in a new consolidated holding company and sell a 19% minority equity interest in the new consolidated holding company to funds affiliated with Thomas H. Lee Partners, L.P. for approximately $381 million in cash. FNF will retain an 81% ownership interest in the new consolidated holding company.

Under the definitive agreement, FNF's shares of common stock have been valued at $25.489 per share (the "Reference Price"), representing a fixed exchange ratio of 0.65224 shares of FNF common stock for each share of LPS common stock. Based on the Reference Price, FNF expects to issue approximately 57.4 million shares of FNF common stock to LPS common stockholders, representing approximately 20.151% of FNF's pro-forma, fully diluted outstanding shares.

If FNF's average common stock price at closing is greater than $24.215, the exchange ratio remains fixed at 0.65224 per share of FNF common stock and LPS stockholders will receive the benefit of any price appreciation on the FNF common stock portion of the purchase consideration. If FNF's average common stock price at closing is between $20.00 and $24.215 per share, FNF will increase the number of shares of FNF common stock to be received by LPS stockholders such that LPS stockholders receive a minimum of $15.794 per share in value on the stock portion of the consideration, or $32.419 per share in total. If FNF's average common stock price at closing is less than $20.00, the exchange ratio will be fixed at 0.7897 per share of FNF common stock, in which event LPS will have a right to terminate the transaction. Additionally, on or before three trading days prior to the anticipated date of effectiveness of FNF's registration statement on Form S-4, FNF has the option to increase the cash portion of the cosideration from $16.625 per share of LPS common stock up to $33.25 per share of LPS common stock with a corresponding decrease in the stock portion of the merger consideration as provided for under the terms of the merger agreement, in which case the exchange ratio will be adjusted to reflect the new consideration mix. However, if FNF elects to increase the cash portion of the consideration and FNF's average common stock price at closing is greater than $26.763, then the exchange ratio will be adjusted to reflect the increased value that would have been received at closing without any change in consideration mix.

The acquisition agreement includes a "go-shop" period effective through July 7, 2013, during which LPS is permitted to actively solicit alternative acquisition proposals from third parties. The acquisition agreement contains a break-up fee equal to approximately 1.25% of the total equity value of $2.9 billion payable to FNF if LPS terminates the acquisition agreement based on receiving a superior proposal during the "go-shop" period. The acquisition agreement also contains a break-up fee equal to approximately 2.5% of the total equity value if LPS fails to hold a shareholders meeting or terminates the agreement after the expiration of the "go-shop" period because it received a superior proposal after the expiration of the "go-shop" period. In addition, the acquisition agreement includes a break-up fee equal to approximately 2.5% of the total equity value if (i) a competing offer for LPS is made public by a third party, (ii) the acquisition agreement is terminated either as a result of the LPS shareholdes voting against the transaction or the date of March 31, 2014 being reached and the LPS shareholders meeting not having been held or if LPS breaches its obligations which results in the failure of a closing condition and (iii) within twelve months after termination, LPS enters into or consummates any alternative transaction.

"We are excited to welcome LPS and its market-leading technology and services to the FNF family," said FNF Chairman William P. Foley, II. "We have significant experience and familiarity with LPS from our previous ownership of these businesses. This combination will create a larger, broader, more diversified and recurring revenue base for FNF and makes us the nation's leading title insurance, mortgage technology and mortgage services provider. We believe there are meaningful synergies that can be generated through the similar businesses in centralized refinance and default related products, elimination of some corporate and public company costs and the shared corporate campus. We have set a target of $100 million for cost synergies and are confident that we can meet or exceed that goal. Including those cost synergies, the transaction is 11.3% accretive to pro-forma 2012 net earnings. We also expect the transaction to be meaningfully accretive to future earnings and we look forward to creating signifiant value for our shareholders through this strategic transaction."

"As the mortgage industry continues to face increasing regulation, participants in the industry are seeking out those strategic partners who offer quality, comprehensive solutions, a strong balance sheet and a commitment to innovation," said Hugh Harris, President and CEO of LPS. "The combined LPS and FNF offer comprehensive technology and services to address many of the challenges facing the industry today and the best solutions to support future success."

The transaction is subject to approval by LPS and FNF stockholders, approvals from applicable federal and state regulators and satisfaction of other customary closing conditions. Closing of the transaction is currently expected to occur in the fourth quarter of 2013.

Bank of America Merrill Lynch and J.P. Morgan Securities LLC acted as financial advisors and are providing committed financing to FNF on the transaction. Credit Suisse Securities (USA) LLC and Goldman, Sachs & Co. served as financial advisors to LPS.

Conference Call
FNF will host a call with investors and analysts to discuss the acquisition of LPS on Tuesday, May 28, 2013, beginning at 11:00 a.m. Eastern Time. The dial-in number is 800-288-8961. A live webcast of the conference call will be available on the Events and Multimedia page of the FNF Investor Relations website at www.fnf.com. The conference call replay will be available via webcast through the FNF Investor Relations website at www.fnf.com. The telephone replay will be available from 1:00 p.m. Eastern Time on May 28, 2013, through June 4, 2013, by dialing 800-475-6701 (USA) or 320-365-3844 (International). The access code will be 294623.

About FNF
Fidelity National Financial, Inc. (NYSE:FNF), is a leading provider of title insurance, mortgage services and diversified services. FNF is the nation's largest title insurance company through its title insurance underwriters - Fidelity National Title, Chicago Title, Commonwealth Land Title and Alamo Title - that collectively issue more title insurance policies than any other title company in the United States. FNF owns a 55% stake in American Blue Ribbon Holdings, LLC, a family and casual dining restaurant owner and operator of the O'Charley's, Ninety Nine Restaurant, Max & Erma's, Village Inn, and Bakers Square concepts. FNF also owns an 87% stake in J. Alexander's, LLC, an upscale dining restaurant owner and operator of the J. Alexander's and Stoney River Legendary Steaks concepts. In addition, FNF also owns a 51% stake in Remy International, Inc., a leading designer, manufacturer, remanufacturer, marketer and distributor of aftermarket and original equipment electrical components for automobiles, ligh trucks, heavy-duty trucks and other vehicles. FNF also owns a minority interest in Ceridian Corporation, a leading provider of global human capital management and payment solutions. More information about FNF can be found at www.fnf.com.

About LPS
Lender Processing Services (NYSE: LPS) delivers comprehensive technology solutions and services, as well as powerful data and analytics, to the nation's top mortgage lenders, servicers and investors. As a proven and trusted partner with deep client relationships, LPS offers the only end-to-end suite of solutions that provides major U.S. banks and many federal government agencies the technology and data needed to support mortgage lending and servicing operations, meet unique regulatory and compliance requirements and mitigate risk. These integrated solutions support origination, servicing, portfolio retention and default servicing. LPS' servicing solutions include MSP, the industry's leading loan-servicing platform, which is used to service approximately 50 percent of all U.S. mortgages by dollar volume. The company also provides proprietary data and analytics for the mortgage, real estate and capital markets industries. LPS is a Fortune 1000 company headquartered in Jacksonville, Fla., and employs approximaely 7,500 professionals. For more information, please visit www.lpsvcs.com.

Important Information Will be Filed with the SEC
FNF plans to file with the SEC a Registration Statement on Form S 4 in connection with the transaction. FNF and LPS plan to file with the SEC and mail to their respective stockholders a Joint Proxy Statement/Prospectus in connection with the transaction. The Registration Statement and the Joint Proxy Statement/Prospectus will contain important information about FNF, LPS, the transaction and related matters. INVESTORS AND SECURITY HOLDERS ARE URGED TO READ THE REGISTRATION STATEMENT AND THE JOINT PROXY STATEMENT/PROSPECTUS CAREFULLY WHEN THEY ARE AVAILABLE.

Investors and security holders will be able to obtain free copies of the Registration Statement and the Joint Proxy Statement/Prospectus and other documents filed with the SEC by FNF and LPS through the web site maintained by the SEC at www.sec.gov or by phone, email or written request by contacting the investor relations department of FNF or LPS at the following:

FNF 601 Riverside Avenue Jacksonville, FL 32204 Attention: Investor Relations 904-854-8100 dkmurphy@fnf.com

LPS 601 Riverside Avenue Jacksonville, FL 32204 Attention: Investor Relations 904-854-8640 nancy.murphy@lpsvcs.com

FNF and LPS, and their respective directors and executive officers, may be deemed to be participants in the solicitation of proxies in respect of the transactions contemplated by the merger agreement. Information regarding the directors and executive officers of FNF is contained in FNF's Form 10-K for the year ended December 31, 2012 and its proxy statement filed on April 12, 2013, which are filed with the SEC. Information regarding LPS's directors and executive officers is contained in LPS's Form 10-K for the year ended December 31, 2012 and its proxy statement filed on April 9, 2013, which are filed with the SEC. A more complete description will be available in the Registration Statement and the Joint Proxy Statement/Prospectus.

This communication shall not constitute an offer to sell or the solicitation of an offer to sell or the solicitation of an offer to buy any securities, nor shall there be any sale of securities in any jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such jurisdiction. No offer of securities shall be made except by means of a prospectus meeting the requirements of Section 10 of the Securities Act of 1933, as amended.

Forward Looking Statements
This press release contains forward-looking statements that involve a number of risks and uncertainties. Statements that are not historical facts, including statements regarding expectations, hopes, intentions or strategies regarding the future are forward-looking statements. Forward-looking statements are based on FNF or LPS management's beliefs, as well as assumptions made by, and information currently available to, them. Because such statements are based on expectations as to future financial and operating results and are not statements of fact, actual results may differ materially from those projected. FNF and LPS undertake no obligation to update any forward-looking statements, whether as a result of new information, future events or otherwise. The risks and uncertainties which forward-looking statements are subject to include, but are not limited to: the ability to consummate the proposed transaction; the ability to obtain requisite regulatory and stockholder approval and the satisfaction of other coditions to the consummation of the proposed transaction; the ability of FNF to successfully integrate LPS's operations and employees and realize anticipated synergies and cost savings; the potential impact of the announcement or consummation of the proposed transaction on relationships, including with employees, suppliers, customers and competitors; changes in general economic, business and political conditions, including changes in the financial markets; weakness or adverse changes in the level of real estate activity, which may be caused by, among other things, high or increasing interest rates, a limited supply of mortgage funding or a weak U. S. economy; FNF's dependence on distributions from its title insurance underwriters as a main source of cash flow; significant competition that FNF and LPS face; compliance with extensive government regulation; and other risks detailed in the "Statement Regarding Forward-Looking Information," "Risk Factors" and other sections of FNF's and LPS' Form 10-K and ! other filings with the Securities and Exchange Commission.

SOURCE: Fidelity National Financial, Inc.
CONTACTS: Daniel Kennedy Murphy, FNF Senior Vice President and Treasurer, 904-854-8120, dkmurphy@fnf.com; Michelle Kersch, LPS Senior Vice President, Corporate Communications and Marketing, 904-854-5043, michelle.kersch@lpsvcs.com

Fidelity National Financial, Inc. - Fidelity National Financial, Inc. to Acquire Lender Processing Services, Inc. for $33.25 per Common Share; Pro-Forma 2012 Earnings Accretion of 11.3%

Fidelity National Financial, Inc. to Acquire Lender Processing Services, Inc. for $33.25 per Common Share; Pro-Forma 2012 Earnings Accretion of 11.3%

Jacksonville, Fla. -- (May 28, 2013) -- Fidelity National Financial, Inc. (NYSE:FNF), a leading provider of title insurance, mortgage services and diversified services, and Lender Processing Services, Inc. (NYSE:LPS), a leading provider of integrated technology, services, data and analytics to the mortgage and real estate industries, today announced the signing of a definitive agreement under which FNF will acquire all of the outstanding common stock of LPS for $33.25 per common share, for a total equity value of approximately $2.9 billion.

Under the terms of the definitive agreement, FNF will pay 50% of the consideration for the LPS shares of common stock in cash and 50% in shares of FNF common stock, subject to adjustment as described below. The purchase price represents a 19% and 25% premium, respectively, to the prior 30-day and 60-day average closing prices for LPS' common stock through May 22, 2013, the last trading day before media reports regarding a potential transaction between FNF and LPS.

At closing, FNF will combine its ServiceLink business with LPS in a new consolidated holding company and sell a 19% minority equity interest in the new consolidated holding company to funds affiliated with Thomas H. Lee Partners, L.P. for approximately $381 million in cash. FNF will retain an 81% ownership interest in the new consolidated holding company.

Under the definitive agreement, FNF's shares of common stock have been valued at $25.489 per share (the "Reference Price"), representing a fixed exchange ratio of 0.65224 shares of FNF common stock for each share of LPS common stock. Based on the Reference Price, FNF expects to issue approximately 57.4 million shares of FNF common stock to LPS common stockholders, representing approximately 20.151% of FNF's pro-forma, fully diluted outstanding shares.

If FNF's average common stock price at closing is greater than $24.215, the exchange ratio remains fixed at 0.65224 per share of FNF common stock and LPS stockholders will receive the benefit of any price appreciation on the FNF common stock portion of the purchase consideration. If FNF's average common stock price at closing is between $20.00 and $24.215 per share, FNF will increase the number of shares of FNF common stock to be received by LPS stockholders such that LPS stockholders receive a minimum of $15.794 per share in value on the stock portion of the consideration, or $32.419 per share in total. If FNF's average common stock price at closing is less than $20.00, the exchange ratio will be fixed at 0.7897 per share of FNF common stock, in which event LPS will have a right to terminate the transaction. Additionally, on or before three trading days prior to the anticipated date of effectiveness of FNF's registration statement on Form S-4, FNF has the option to increase the cash portion of the cosideration from $16.625 per share of LPS common stock up to $33.25 per share of LPS common stock with a corresponding decrease in the stock portion of the merger consideration as provided for under the terms of the merger agreement, in which case the exchange ratio will be adjusted to reflect the new consideration mix. However, if FNF elects to increase the cash portion of the consideration and FNF's average common stock price at closing is greater than $26.763, then the exchange ratio will be adjusted to reflect the increased value that would have been received at closing without any change in consideration mix.

The acquisition agreement includes a "go-shop" period effective through July 7, 2013, during which LPS is permitted to actively solicit alternative acquisition proposals from third parties. The acquisition agreement contains a break-up fee equal to approximately 1.25% of the total equity value of $2.9 billion payable to FNF if LPS terminates the acquisition agreement based on receiving a superior proposal during the "go-shop" period. The acquisition agreement also contains a break-up fee equal to approximately 2.5% of the total equity value if LPS fails to hold a shareholders meeting or terminates the agreement after the expiration of the "go-shop" period because it received a superior proposal after the expiration of the "go-shop" period. In addition, the acquisition agreement includes a break-up fee equal to approximately 2.5% of the total equity value if (i) a competing offer for LPS is made public by a third party, (ii) the acquisition agreement is terminated either as a result of the LPS shareholdes voting against the transaction or the date of March 31, 2014 being reached and the LPS shareholders meeting not having been held or if LPS breaches its obligations which results in the failure of a closing condition and (iii) within twelve months after termination, LPS enters into or consummates any alternative transaction.

"We are excited to welcome LPS and its market-leading technology and services to the FNF family," said FNF Chairman William P. Foley, II. "We have significant experience and familiarity with LPS from our previous ownership of these businesses. This combination will create a larger, broader, more diversified and recurring revenue base for FNF and makes us the nation's leading title insurance, mortgage technology and mortgage services provider. We believe there are meaningful synergies that can be generated through the similar businesses in centralized refinance and default related products, elimination of some corporate and public company costs and the shared corporate campus. We have set a target of $100 million for cost synergies and are confident that we can meet or exceed that goal. Including those cost synergies, the transaction is 11.3% accretive to pro-forma 2012 net earnings. We also expect the transaction to be meaningfully accretive to future earnings and we look forward to creating signifiant value for our shareholders through this strategic transaction."

"As the mortgage industry continues to face increasing regulation, participants in the industry are seeking out those strategic partners who offer quality, comprehensive solutions, a strong balance sheet and a commitment to innovation," said Hugh Harris, President and CEO of LPS. "The combined LPS and FNF offer comprehensive technology and services to address many of the challenges facing the industry today and the best solutions to support future success."

The transaction is subject to approval by LPS and FNF stockholders, approvals from applicable federal and state regulators and satisfaction of other customary closing conditions. Closing of the transaction is currently expected to occur in the fourth quarter of 2013.

Bank of America Merrill Lynch and J.P. Morgan Securities LLC acted as financial advisors and are providing committed financing to FNF on the transaction. Credit Suisse Securities (USA) LLC and Goldman, Sachs & Co. served as financial advisors to LPS.

Conference Call
FNF will host a call with investors and analysts to discuss the acquisition of LPS on Tuesday, May 28, 2013, beginning at 11:00 a.m. Eastern Time. The dial-in number is 800-288-8961. A live webcast of the conference call will be available on the Events and Multimedia page of the FNF Investor Relations website at www.fnf.com. The conference call replay will be available via webcast through the FNF Investor Relations website at www.fnf.com. The telephone replay will be available from 1:00 p.m. Eastern Time on May 28, 2013, through June 4, 2013, by dialing 800-475-6701 (USA) or 320-365-3844 (International). The access code will be 294623.

About FNF
Fidelity National Financial, Inc. (NYSE:FNF), is a leading provider of title insurance, mortgage services and diversified services. FNF is the nation's largest title insurance company through its title insurance underwriters - Fidelity National Title, Chicago Title, Commonwealth Land Title and Alamo Title - that collectively issue more title insurance policies than any other title company in the United States. FNF owns a 55% stake in American Blue Ribbon Holdings, LLC, a family and casual dining restaurant owner and operator of the O'Charley's, Ninety Nine Restaurant, Max & Erma's, Village Inn, and Bakers Square concepts. FNF also owns an 87% stake in J. Alexander's, LLC, an upscale dining restaurant owner and operator of the J. Alexander's and Stoney River Legendary Steaks concepts. In addition, FNF also owns a 51% stake in Remy International, Inc., a leading designer, manufacturer, remanufacturer, marketer and distributor of aftermarket and original equipment electrical components for automobiles, ligh trucks, heavy-duty trucks and other vehicles. FNF also owns a minority interest in Ceridian Corporation, a leading provider of global human capital management and payment solutions. More information about FNF can be found at www.fnf.com.

About LPS
Lender Processing Services (NYSE: LPS) delivers comprehensive technology solutions and services, as well as powerful data and analytics, to the nation's top mortgage lenders, servicers and investors. As a proven and trusted partner with deep client relationships, LPS offers the only end-to-end suite of solutions that provides major U.S. banks and many federal government agencies the technology and data needed to support mortgage lending and servicing operations, meet unique regulatory and compliance requirements and mitigate risk. These integrated solutions support origination, servicing, portfolio retention and default servicing. LPS' servicing solutions include MSP, the industry's leading loan-servicing platform, which is used to service approximately 50 percent of all U.S. mortgages by dollar volume. The company also provides proprietary data and analytics for the mortgage, real estate and capital markets industries. LPS is a Fortune 1000 company headquartered in Jacksonville, Fla., and employs approximaely 7,500 professionals. For more information, please visit www.lpsvcs.com.

Important Information Will be Filed with the SEC
FNF plans to file with the SEC a Registration Statement on Form S 4 in connection with the transaction. FNF and LPS plan to file with the SEC and mail to their respective stockholders a Joint Proxy Statement/Prospectus in connection with the transaction. The Registration Statement and the Joint Proxy Statement/Prospectus will contain important information about FNF, LPS, the transaction and related matters. INVESTORS AND SECURITY HOLDERS ARE URGED TO READ THE REGISTRATION STATEMENT AND THE JOINT PROXY STATEMENT/PROSPECTUS CAREFULLY WHEN THEY ARE AVAILABLE.

Investors and security holders will be able to obtain free copies of the Registration Statement and the Joint Proxy Statement/Prospectus and other documents filed with the SEC by FNF and LPS through the web site maintained by the SEC at www.sec.gov or by phone, email or written request by contacting the investor relations department of FNF or LPS at the following:

FNF 601 Riverside Avenue Jacksonville, FL 32204 Attention: Investor Relations 904-854-8100 dkmurphy@fnf.com

LPS 601 Riverside Avenue Jacksonville, FL 32204 Attention: Investor Relations 904-854-8640 nancy.murphy@lpsvcs.com

FNF and LPS, and their respective directors and executive officers, may be deemed to be participants in the solicitation of proxies in respect of the transactions contemplated by the merger agreement. Information regarding the directors and executive officers of FNF is contained in FNF's Form 10-K for the year ended December 31, 2012 and its proxy statement filed on April 12, 2013, which are filed with the SEC. Information regarding LPS's directors and executive officers is contained in LPS's Form 10-K for the year ended December 31, 2012 and its proxy statement filed on April 9, 2013, which are filed with the SEC. A more complete description will be available in the Registration Statement and the Joint Proxy Statement/Prospectus.

This communication shall not constitute an offer to sell or the solicitation of an offer to sell or the solicitation of an offer to buy any securities, nor shall there be any sale of securities in any jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such jurisdiction. No offer of securities shall be made except by means of a prospectus meeting the requirements of Section 10 of the Securities Act of 1933, as amended.

Forward Looking Statements
This press release contains forward-looking statements that involve a number of risks and uncertainties. Statements that are not historical facts, including statements regarding expectations, hopes, intentions or strategies regarding the future are forward-looking statements. Forward-looking statements are based on FNF or LPS management's beliefs, as well as assumptions made by, and information currently available to, them. Because such statements are based on expectations as to future financial and operating results and are not statements of fact, actual results may differ materially from those projected. FNF and LPS undertake no obligation to update any forward-looking statements, whether as a result of new information, future events or otherwise. The risks and uncertainties which forward-looking statements are subject to include, but are not limited to: the ability to consummate the proposed transaction; the ability to obtain requisite regulatory and stockholder approval and the satisfaction of other coditions to the consummation of the proposed transaction; the ability of FNF to successfully integrate LPS's operations and employees and realize anticipated synergies and cost savings; the potential impact of the announcement or consummation of the proposed transaction on relationships, including with employees, suppliers, customers and competitors; changes in general economic, business and political conditions, including changes in the financial markets; weakness or adverse changes in the level of real estate activity, which may be caused by, among other things, high or increasing interest rates, a limited supply of mortgage funding or a weak U. S. economy; FNF's dependence on distributions from its title insurance underwriters as a main source of cash flow; significant competition that FNF and LPS face; compliance with extensive government regulation; and other risks detailed in the "Statement Regarding Forward-Looking Information," "Risk Factors" and other sections of FNF's and LPS' Form 10-K and ! other filings with the Securities and Exchange Commission.

SOURCE: Fidelity National Financial, Inc.
CONTACTS: Daniel Kennedy Murphy, FNF Senior Vice President and Treasurer, 904-854-8120, dkmurphy@fnf.com; Michelle Kersch, LPS Senior Vice President, Corporate Communications and Marketing, 904-854-5043, michelle.kersch@lpsvcs.com

Coty Seeks Up to $1 Billion in I.P.O.

Coty sees plenty of investor appetite for celebrity-branded cosmetics, as the company disclosed on Tuesday that it is hoping to raise as much as $1 billion from its forthcoming initial public offering.

It now plans to sell 57.1 million shares in the stock sale at a price of $16.50 to $18.50 apiece, according to an amended prospectus filed on Tuesday. At the midpoint of that range, the company would be valued at about $6.7 billion.

The new filing suggests that Coty is one step closer to becoming a publicly traded company, a year after it tried and failed to buy its much bigger rival, Avon Products Inc. Despite having the backing of its wealthy parent, the German conglomerate Joh. A. Benckiser, and Berkshire Hathaway, the smaller cosmetics company was unable to coax the embattled Avon into a deal.

Days after withdrawing its bid, Coty filed for an initial public offering. But whipsawing markets kept the sale on ice until the recent boom in stock prices.

Over its 108 years, Coty has grown from perfumes into a global purveyor of fragrances and high-end nail polishes, with products endorsed by the likes of Beyoncé , Sarah Jessica Parker and Jennifer Lopez. It has posted three years of consecutive sales growth, reporting $4.6 billion in revenue last year.

The company reported only a tiny rise in revenue growth for the nine months ended March 31, at $3.59 billion. But profit has jumped considerably over the same time: Coty earned $258.1 million in profit for the period, up more than fourfold from the year-ago period.

The offering is being led by Bank of America Merrill Lynch, JPMorgan Chase and Morgan Stanley.

For Sale: A Madoff Home

For Sale: A Madoff Home With a Pool, and Shadows

Uli Seit for The New York Times

It's a Steal: A tour of the former home of Peter B. Madoff, brother and co-conspirator of Bernard L. Madoff. Both men are in jail for a Ponzi scheme, and the home has been seized and is being sold to repay victims.

The lush white mansion for sale at 34 Pheasant Run in Old Westbury on Long Island makes a grand first impression. It has a long, winding driveway; a tennis court; a two-bedroom pool house surrounded by lavish gardens; a parade of antiques in its hallways; and marble in hues of lapis and gold throughout the ground floor.

The rear of Peter B. Madoff’s former home in Old Westbury, on Long Island. The asking price for the property is $4.495 million.

Items that are not part of the house itself are appraised and tagged. The Marshals Service will sell them at auction to the public.

Crystal candlesticks and other items were tagged for sale.

A collection of walking sticks tagged for sale in the foyer.

In many ways, the house is quite beautiful. But it is also a place full of shadows, a haunting just visible in its empty silver picture frames and in the red, white and blue signs that hang on every door: “United States Marshal,” the signs say. “No Trespassing.”

The shadow behind all that opulence is other people’s money. This was one of the residences of Peter B. Madoff, chief compliance officer at the firm owned by his older brother, Bernard L. Madoff.

Peter Madoff pleaded guilty last year to a host of crimes, including falsifying documents and lying to regulators. He was sentenced to 10 years in prison and ordered to forfeit all of his and his family’s assets to the government, so they could be sold, piece by piece, and the proceeds distributed to victims of his brother’s Ponzi scheme.

The Marshals Service took possession of the Old Westbury home in January, and late last month it put the property on the market for $4.495 million.

“When dealing with a home this grandiose, the outside world can lose sight of where all these fine things come from,” Kevin Kamrowski, a deputy United States marshal, said in an e-mail. “Everything in this home was obtained on the backs of other people.”

When the Marshals Service takes over a property, a well-practiced process is set in motion. First, the house is secured and the locks are changed; motion-sensing security systems and surveillance cameras might be installed. (In the foyer of the Madoff property, there is a sturdy-looking gray box standing on an ornate little table. Feel free to wave at it.)

Next, contractors are hired to do a bit of maintenance, and a real estate management company brings in a local agent to sell the property. In a high-profile case, the Marshals Service helps to select the sales team.

An important preliminary: Every single piece of property that is not a part of the house itself is indexed, appraised and tagged.

At the house on Pheasant Run, in the 600-square-foot formal living room, a forest of little white tags swing from every surface. They are on gold-color lamps, crystal candlesticks and a delicate wooden coffee table piled high with books, including “Dog Painting: The European Breeds,” “Dog Painting: A Social History of the Dog in Art” and “A Breed Apart.”

Above the fireplace, centered over a mantel of dark wood and darker marble, the dog theme continues, with a painting of what appears to be a chocolate Labrador retriever. Nearby, a painting of a blond toddler playing with another dog â€" also large, but this time shaggy â€" hangs in a gilded frame. In the library, two smaller dogs reside together in a frame above a sofa.

And if you were to take them off the wall, you would find a little white tag behind every one. Even the patio furniture, the dog dishes in the kitchen, and bottles of gin and Cognac in a mirrored bar in the corner of the library are tagged and numbered. Once the house is sold, its contents will be auctioned to the public, in what will surely be one of Long Island’s best-attended tag sales.

Despite these little touches, the house generally does not feel like a criminal’s lair. Indeed, like any other high-priced home for sale, it has been carefully staged to show its prettiest face to potential buyers. A bit of landscaping was done here, some robes were hung in an immense bathroom over there, and there was even an elaborate picnic spread arranged in a basket on the kitchen table, complete with checkered napkins and cutlery.

“This was staged with, believe it or not, my recommendations and the hard work of the U.S. Marshals office,” said Shawn Elliott of Shawn Elliott Luxury Homes and Estates, the broker brought in to sell the property. “Every single book in here was actually taken off the shelf, tagged and numbered, and then put back.”

One book, however, was left out, prominently displayed on a table in the library: “A Code of Jewish Ethics, Volume 1: You Shall Be Holy,” by Rabbi Joseph Telushkin.

As a part of the staging, the asset forfeiture division of the Marshals Service tries to remove personal effects, like clothing, that might walk away during a tour, or might remind potential buyers of who once padded down these hallways in his slippers. A small bedroom is stacked high with cardboard boxes full of clothing and other items that will eventually go to auction. Photographs removed from frames are returned to the family.

Even with a name as notorious as “Madoff,” there is no felon discount on a home like this. Bernard Madoff’s Manhattan apartment was sold for $8 million and Peter Madoff’s Park Avenue two-bedroom for $4.6 million, prices in line with the market at the time. Some personal belongings can even fetch inflated prices, like Bernard Madoff’s Mets jacket, which sold at auction in 2009 for $14,500.

Some potential buyers who have come through the Old Westbury house have been curious about the Madoffs, Mr. Elliott said. But for his part, he tries to think about the scandal as little as possible.

“The less I know about a situation, for me, the better,” Mr. Elliott said. “My job as the real estate broker on this is to get the victims as much money as humanly possible.”

Mr. Elliott has received offers on the property, but none has been accepted yet. When the house is finally sold, the proceeds will go to a victims compensation fund administered by the Justice Department, which has so far recovered more than $2.3 billion for Madoff victims. A separate fund for property and proceeds associated with Bernard L. Madoff Investment Securities is being administered by Irving Picard and has recovered $9.345 billion.

Though Peter and Marion Madoff’s primary residence was in Manhattan, they owned the house in Old Westbury for more than 20 years, and despite best efforts, that amount of history can be difficult to completely scrub away. Last week, there were still a few signs of the lives lived in that house before: a pair of reading glasses on a marble countertop; two jars of marmalade left in a bare refrigerator; and inside a long pearl box in Mrs. Madoff’s bathroom, a single artificial fingernail tip, painted a warm shade of cotton candy pink.

A version of this article appeared in print on May 28, 2013, on page A17 of the New York edition with the headline: For Sale: A Madoff Home With a Pool, and Shadows.