Wall Street Transfixed by SAC Deadline

For most of the day Monday, a report about the investor exodus at SAC Capital Advisors was the most-viewed article on the Bloomberg data terminals that permeate Wall Street trading floors.

In part, the story’s cliffhanger element drove its popularity. How much money will SAC investors pull out by a withdrawal deadline that expired late Monday? Will its billionaire owner, Steven A. Cohen, buffeted by the wave of so-called redemptions, shut the fund to outside investors and manage only his fortune? Will the government bring additional criminal charges as the insider trading investigation of the firm intensifies?

But a major reason for the intense interest on Wall Street, senior brokerage firm officials say, is a commercial one: SAC has generated billions of dollars in revenues for brokerage firms over the years. Several executives â€" all citing client confidentiality â€" said that the prospect of a severely diminished SAC would hurt their bottom line, which has created fear and anxiety on trading desks across Wall Street.

“This is going to have a significant impact to the Street, full stop,” said a senior executive at a brokerage firm that counts SAC as one of its largest clients. “It’s like that line in ‘Bonfire of the Vanities’: a lot of golden little crumbs have fallen off of SAC, and now it looks like there will be less of them.”

SAC employees â€" and the armies of brokers and stock salesmen that service the firm â€" are expecting outside investors to take back several billion dollars more by Monday’s regularly scheduled quarterly deadline, according to people with direct knowledge of the firm. The Blackstone Group, SAC’s largest outside investor, is expected to withdraw most of its money; another fund, Ironwood Capital Management, will also terminate its relationship with the firm.

Combined with the $1.7 billion that outside investors took out earlier this year, the withdrawals could leave SAC and Mr. Cohen with only about $1 billion of other people’s money. The fund could announce to its clients as soon as Tuesday the amount of money that investors asked to withdraw.

Investors are fleeing during the continuing government inquiry into insider trading at SAC. The firm, which had been giving investors regular updates on the investigation, recently told investors â€" after its senior executives received grand jury subpoenas â€" that it was no longer fully cooperating with the government and would not be providing further updates. That announcement heightened investors’ concerns, leading to an increase in withdrawal requests. At least nine former SAC employees have been tied to insider trading; four of them have pleaded guilty. Mr. Cohen has not been accused of any wrongdoing.

Given the substantial outflows, Mr. Cohen and SAC officials are discussing the possibility of returning all outside capital and transforming SAC into a “family office” that manages Mr. Cohen’s wealth, said people with knowledge of the firm’s thinking. Of the $15 billion that SAC managed at the beginning of the year, about $8 billion is Mr. Cohen’s, with about $1 billion more in employees’ money.

The loss of investors will cost SAC dearly and most likely will force it to reduce its staff of more than 1,000 employees. SAC, which is based in Stamford, Conn., pays for its large infrastructure by charging its investors some of the most expensive annual fees in the industry â€" as much as a 3 percent management fee and 50 percent of the profits. It commands those fees because of its nearly unparalleled investment track record, posting returns that have averaged nearly 30 percent a year over the last two decades.

While Mr. Cohen’s investors have benefited from the superior performance, so have the Wall Street brokerage firms that have catered to Mr. Cohen’s firm. The main reason, they say, boils down to one word: leverage. To juice its investment returns, SAC borrows heavily from banks, which earn big fees on the loans. The fund borrows, on average, about $3 for every dollar in the fund. At $15 billion managed, SAC had a staggering $45 billion in buying power.

People close to Mr. Cohen said that without outside investors, he would most likely run the business more conservatively and substantially reduce his borrowings.

SAC’s billions of dollars in buying power, combined with the fund’s aggressive trading style, have made it one of the top commission payers on Wall Street. Several executives said that the firm is a top trading client at most of the large banks, including Goldman Sachs and Morgan Stanley, paying out several hundred million dollars a year in stock trading commissions annually. The fund is also a highly profitable and important customer for the banks because it is among the most active buyers of the lucrative initial public offerings and secondary offerings that they underwrite.

“In these soft years for stocks, where margins have grown very thin, trading volume has become the lifeblood of the brokerage business,” said Matt Samelson, principal at Woodbine Associates, a capital markets consulting and research firm. “When you’ve got a major player like SAC either going away or downsizing, this just erodes the trading volume that the big Wall Street firms have been fighting so hard to get.”

Other areas of the large banks that generate big revenue from SAC are the so-called prime brokerage units, which provide a number of services to hedge funds, including lending money, clearing trades and introducing them to prospective investors. Most hedge funds use one or two prime brokers, but SAC has historically spread the wealth around, employing at least five, including Credit Suisse and JPMorgan Chase.

Wall Street officials note that despite the prospective loss in business, there are a number of silver linings. The impact of a diminished SAC would be buffered by the fact that Mr. Cohen would continue to manage billions of dollars. Another potential positive is that, should the fund reduce its head count, a number of leading SAC portfolio managers would be expected to start their own firms. The concern, however, was that their affiliation with SAC, whose reputation has been stained by the insider trading scandals, could hurt them in raising money.

An Earlier Hedge Fund Inquiry May Have Led to the SAC Capital Case

Some trades by Raj Rajaratnam’s younger brother in a technology stock nearly seven years ago may have inadvertently put SAC Capital Advisors, the hedge fund behemoth founded by Steven A. Cohen, on regulators’ radar, government documents show.

In recent weeks, the investigation into SAC has intensified, with Mr. Cohen and four of the firm’s top executives receiving subpoenas to appear before a grand jury and testify in the government’s investigation into insider trading at SAC. The hedge fund is the biggest to become the focus of a government inquiry since the Galleon Group, the fund run by Raj Rajaratnam.

Event-driven hedge funds, which SAC is and the defunct Galleon was, dive in and out of stocks before and after market-moving developments. As a result, large trades by such funds can draw regulators’ attention from time to time. Whenever there is a sharp run-up in a stock’s price, it is common for electronic monitoring systems at the nation’s biggest stock exchanges to flag the jump and produce reams of data on the buyers and sellers of that stock.

But in the summer of 2006, regulators had another reason to focus on Galleon and on SAC. In the course of investigating Sedna Capital, the $80 million fund of Mr. Rajaratnam’s younger brother, Rengan, over accusations of “cherry picking,” regulators found some communications between Rengan and an SAC trader who is no longer with the firm. “Cherry picking” is when an asset manager reserves his winning trades for one fund, typically a friends and family fund.

The exchanges between Rengan and the SAC trader coincided with Sedna and SAC’s accumulating big short positions â€" or bearish bets â€" in the shares of Arris Group, a communications equipment maker, days before that company posted earnings that fell short of expectations.

Before setting up Sedna Capital, Rengan was employed briefly at SAC. Though his elder brother and Mr. Cohen were not close friends, they traveled in similar circles. For instance, in February 2007, Mr. Cohen held a cocktail and dinner at his 1920s estate in Greenwich, Conn., to showcase some of his newest art purchases, among them a de Kooning “Woman” painting. Mr. Cohen invited Mr. Rajaratnam to the event, but the Galleon chief sent a deputy in his place.

In May 2011, Mr. Rajaratnam was convicted on insider trading charges. He is now serving an 11-year sentence in a Massachusetts prison.

Rengan Rajaratnam was indicted this spring on charges of profiting on inside information in connection with trades placed in stocks such as Advanced Micro Devices and Clearwire. In late March, the younger Rajaratnam, 42, flew to the United States from Brazil voluntarily and pleaded not guilty to insider trading charges in the same federal court in which his brother’s trial played out two years ago.

A court filing made public on Monday indicates that Rengan Rajaratnam is in talks with prosecutors over a possible plea agreement. The plea discussions were disclosed in a letter from prosecutors seeking to delay a court hearing scheduled for Tuesday. His lawyer declined to comment for this article.

SAC also declined to comment. Mr. Cohen has not been charged with wrongdoing, and he has maintained that he has behaved appropriately at all times.

The Arris trades that piqued the curiosity of regulators took place in the summer of 2006. On July 24, at 2:06 p.m., Rengan called the SAC trader and the two spoke for about a minute and a half. Three minutes later, Rengan sent an instant message to his brother saying that the SAC trader “is checking and will get back to me in 45 minutes,” according to government documents.

Then, at 2:35 p.m., the chief operating officer of Sedna sent an instant message to Rengan and said the SAC trader had called. “Asks that you call him on his cell.” Shortly after 3 p.m., minutes after Rengan hung up with the trader, he called Raj.

The next day, Sedna accumulated a short position in Arris of 707,000 shares and SAC Capital built up a bearish bet of 140,000 shares in the company’s stock, adding to a short position of 17,000 shares SAC accumulated the previous day, according to government documents.

The documents were disclosed during a hearing in October 2010 to decide if an affidavit to obtain a search warrant, or in this case a wiretap, relied on false statements as Mr. Rajaratnam had claimed.

Also on July 25, 2006, the SAC trader sent an instant message to Rengan highlighting news that Hewlett-Packard had paid $4.5 billion to acquire an Israeli technology company called Mercury Interactive, which traded under the ticker symbol MERQ.

“Now u know why we owned MERQ … this dude gets all these,” the SAC trader wrote.

“We need to talk at dinner. …,” Rengan replied.

“Well, I just lay it out so you can play it out,” the SAC trader messaged.

(Sedna also had acquired a long position, or bullish bet, in the shares of Mercury Interactive in June before the Hewlett-Packard deal was announced.)

The similarity of trades between Sedna and SAC in Arris and Mercury Interactive, and the exchanges between Rengan and the SAC trader, struck S.E.C. investigators as potentially significant.

“It is one thing to get a surveillance report that says this fund placed a well-timed trade,” said one person familiar with the early inquiry. “What the I.M.’s and other communications did was give us an ‘in.’ ”

By March 2007, when lawyers from the S.E.C. met with criminal authorities to enlist their help in the expanding investigation, they were still exploring the possibility of building a case against SAC around the Arris trades.

In a Federal Bureau of Investigation memo dated March 30, 2007, that requested an “initial inquiry” in trading in Arris and Advanced Micro Devices, SAC is named along with Rengan and his firm, Sedna, and Raj and his fund, Galleon.

Also cited on the title line of the F.B.I. memo was Canvas Capital, an SAC Capital subsidiary. Investigators at the time were exploring whether the SAC trader had shared information about Arris with Canvas Capital.

Ultimately, the government was unsuccessful in building a case around the trading in Arris. It could not link SAC Capital and its trader to receiving nonpublic information about Arris from Rengan Rajaratnam or sharing it with Canvas Capital. The five-year deadline for bringing a case has expired.

The trades in Arris served as a prelude to the government’s exhaustive investigation into SAC. Now the government has a multipronged investigation of the hedge fund under way.

One part of the inquiry focuses on SAC’s avoiding losses by dumping its $700 million stake in the pharmaceutical companies Elan and Wyeth after a former SAC employee, Mathew Martoma, received secret information from a doctor about problems with a new Alzheimer’s drug. Another part focuses on inside information about Dell that SAC has been accused of receiving through a network of sources.

Behind the Rise in House Prices, Wall Street Buyers

The last time the housing market was this hot in Phoenix and Las Vegas, the buyers pushing up prices were mostly small time. Nowadays, they are big time â€" Wall Street big.

Large investment firms have spent billions of dollars over the last year buying homes in some of the nation’s most depressed markets. The influx has been so great, and the resulting price gains so big, that ordinary buyers are feeling squeezed out. Some are already wondering if prices will slump anew if the big money stops flowing.

“The growth is being propelled by institutional money,” said Suzanne Mistretta, an analyst at Fitch Ratings. “The question is how much the change in prices really reflects market demand, rather than one-off market shifts that may not be around in a couple years.”

Wall Street played a central role in the last housing boom by supplying easy â€" and, in retrospect, risky â€" mortgage financing. Now, investment companies like the Blackstone Group have swooped in, buying thousands of houses in the same areas where the financial crisis hit hardest.

Blackstone, which helped define a period of Wall Street hyperwealth, has bought some 26,000 homes in nine states. Colony Capital, a Los Angeles-based investment firm, is spending $250 million each month and already owns 10,000 properties. With little fanfare, these and other financial companies have become significant landlords on Main Street. Most of the firms are renting out the homes, with the possibility of unloading them at a profit when prices rise far enough.

While these investors have not touched many healthy real estate markets, they are among the biggest buyers in struggling areas of the country where housing prices have been increasing the fastest. Those gains, in turn, have been at the leading edge of rising home prices nationwide.

Some see the emergence of Wall Street buyers as a market-driven answer to the nation’s housing ills. Investment companies are buying up rundown homes at a time when ordinary people can’t or won’t.

Nationwide, 68 percent of the damaged homes sold in April went to investors, and only 19 percent to first-time home buyers, according to Campbell HousingPulse. That is helping to shore up prices and create confidence in the broader markets.

“When people write the story of this housing recovery, these investors will be seen to have helped put the floor under the housing market,” said David Bragg, an analyst at Green Street Advisors. “In some of the key markets, that contributed to the recovery.”

The story, though, often looks more complicated on the ground. Joe Cusumano, a real estate agent in Riverside County, Calif., said that in recent months 90 percent of his business had been for companies like Invitation Homes, a Blackstone subsidiary. Home values in Riverside County have risen by 15 percent in the last year, according to CoreLogic.

But Mr. Cusumano said he wondered if faraway investors would properly maintain the homes they buy. He said that Invitation Homes had been willing to put money into the properties, but he was not so sure about the other players. He also worries what will happen when these investors start selling, as they inevitably will.

“The thing that scares me is the values going up so quickly,” said Mr. Cusumano. “That’s what happened before and that’s what’s scaring me. Is this going to happen again?”

The idea of investors’ buying homes and renting them out is nothing new. But in the past, landlords were almost always local. Now big investors are using agents like Mr. Cusumano to stake a claim to entire neighborhoods.

In a sign of the potential peril ahead, some of the investment firms have recently taken the first steps to cash out.

The investment fund financed by Colony Capital filed last week to go public, the second firm to do so in May. Another early player in the business, the Carrington Holding Company, said last week that prices had risen too far, leading the firm to begin selling some of its holdings.

Fitch Ratings warned last Tuesday that prices for single-family homes in the regions with the biggest housing rebounds had been outpacing the growth rate in the local economies and “could stall or possibly reverse” if big investors start selling.

“We see economies that continue to struggle â€" we don’t see them recovering enough to justify this drastic increase in prices,” said Ms. Mistretta at Fitch.

Despite the recent gains, housing prices remain well below their precrisis highs. In Riverside, for example, home values are still down more than 40 percent from their 2006 records, according to CoreLogic.

To the extent that the housing rebound is becoming overheated in some pockets, it does not carry the most significant risks of the real estate boom that came crashing down in 2008. The new investment groups are not heavily indebted, making them less vulnerable to small movements in real estate values, and the risks are not spread as widely through the financial system.

Nearly all of the big investors have insisted that they plan to rent the houses they are buying for years to come. The Blackstone unit, Invitation Homes, has opened 14 offices across the country to serve the homes it has bought, a spokesman for the firm said.

At American Residential Properties, which went public in May, the chief executive, Stephen G. Schmitz, said that if other firms start selling their houses, “we’ll step up our buying.”

He added: “We still think that we’re in a buyer’s market.”

Yet some investment companies are already pulling back in the markets that have had the fastest growth. In Phoenix, the percentage of all house purchases involving investors fell to about 25 percent in March from a high of 36 percent last summer, according to the Campbell HousingPulse Survey. The same survey shows that investors have been increasing their presence in new areas like Florida and California.

All of this has made it hard for house hunters like Jeff Martin, who is looking to buy a fixer-upper in Riverside County. Mr. Martin, 58, has made offers on 15 houses over the last year. Last Wednesday, he received his latest rejection. On most of the houses, Mr. Martin has lost out to investors offering all cash.

Mr. Martin, a retired Navy veteran, puts much of the blame on banks that have been holding onto empty houses, lowering the supply of available homes. He said he has trouble faulting the investors, given that he was involved in real estate financing during the last boom. But he is worried that if mortgage rates begin to rise he will lose out on his opportunity to buy. Rising mortgage rates could also lead to a broader slowdown in the real estate recovery.

Mr. Cusumano said that the investors he works for have been trimming back their purchases in the area. His agency closed on three houses for investors in May, down from eight in February.

But the fevered pitch of the market has not died down.

In late May, one of his clients closed on a house just a month after it went on the market. There were eight bidders, despite a listing that said “NEEDS TLC!!” Mr. Cusumano’s client won the house only after agreeing to go $500 over the asking price of $194,500.

“It’s just a strange market,” he said. “We are in uncharted territory.”

Questions, and Opinions, About Flickr

My column this week about the new, revised Flickr has generated plenty of responses from readers.

When researching the column, I read thousands upon thousands of complaints from users of Flickr, the online photo gallery, trying to pin down what, exactly, their beef was. Unfortunately, a huge majority just said, “I hate the changes,” without indicating specifically why.

As noted in the column, the largest population of offended Flickr fans consists of professional photographers. They deeply object to the friendlier, less technical presentation of photos. Here’s one example:

“When you click a photo to open it, the photo now has a black background instead of white. If the photo has lots of black in it, you can no longer see clearly where the edges are.”

Well, fine â€" but couldn’t you argue that the old presentation (white background) presented the same problem with photos that were mostly white?

In any case, it seems as though it would be easy enough for Yahoo to give members a choice (black, white, gray), and put this one to bed.

Here’s another comment: “One thing I don’t understand at all: the new mechanism for assigning a key photo (a representative thumbnail) to a photo set. On Picasa, it’s really simple and works really well. On Flickr, you never know what the result will be; when you center the representative photo in the little frame, that’s not what you’ll actually see when you view the set. It’s often chopped off at the top.”

True enough. It’s a dumb bug. Yahoo should fix it.

And then, there’s this complaint: “I can no longer download a photo.”

Yes, actually, you can. It’s not much simpler than it was before, though. Click to open a photo. Right-click it; from the shortcut menu, choose one of the “View all sizes” options (like “Original”). Now you see the “Download the Original size of this photo” link, which you can click to begin the download.

And this: “The dispute with Flickr on the part of users has to do with the rug being pulled out from under us.”

It seems clear that the suddenness of the switch is causing some of Flickr’s member unhappiness. When Facebook or Gmail changes its layout, for example, there’s often a transitional period where you can adopt or reject the new design. But that’s not so in this case.

That’s probably because the auto-renewing Pro members get to keep their unlimited storage. If people had known the change in policy was coming, they would have rushed to sign up for that deal. And clearly, Yahoo would prefer that most people to sign up for the one-terabyte free account instead.

“If Flickr’s free one terabyte of storage is such a big deal to you, why didn’t you mention Shutterfly? It offers unlimited free storage!”

Holy cow â€" because I didn’t know that!

Shutterfly is aimed more at letting you turn your photos into prints, mugs, mouse pads and other personal goodies than at serving as a social network for photo fans (like Flickr). But in terms of the storage deal, you certainly can’t beat unlimited and free.

Finally, I was amused and surprised by the number of readers who e-mailed sentiments like this:

“What offends me most is that you presented your OPINION as though it’s FACT. You’ve written your own bias in a news story.”

To me, it seems that some people fundamentally don’t understand the function of a critic. Drama critics, movie critics, restaurant critics, music critics, tech critics â€" all of us, it seems to me â€" are hired specifically to present our opinions.

I would never describe my weekly columns as “news stories,” even if there’s sometimes a news element. They are reviews meant to guide readers toward products that, in my opinion, are good or bad.

You can certainly disagree with a critic. Sometimes, knowing that you almost always disagree with a certain critic is just as helpful in guiding your buying decisions as always agreeing.

But in the end, a reviewer is entitled to like the new Flickr just as much as longtime photographers are entitled to hate it.

Either way, the incredibly generous amount of free storage on Flickr (one terabyte) and attractive new presentation of the photos are worth a look â€" and the substantive complaints of the Flickerati are worth listening to. That means you, Yahoo.

G.M. to Replace Heinz in the S.&P. 500

General Motors is on its way to repaying American taxpayers for its 2009 bailout, but this week the car maker will mark another milestone.

It will rejoin the Standard & Poor’s 100- and 500-stock indexes for the first time in years.

After market close on Thursday, G.M. will replace H. J. Heinz, which is being taken private by Berkshire Hathaway and the Brazilian-backed investment firm 3G Capital, Standard & Poor’s announced on Monday.

The move holds some symbolic significance for G.M., which took itself public again in late 2010 to begin paying down its tab from the United States government. Since then, the auto maker has resumed earning profits and now holds a market value of over $47 billion, though its stock price is barely up from when it began trading again on the New York Stock Exchange.

Making Monday even more of a banner day for companies rescued by the federal government, Standard & Poor’s also said that the American International Group would become part of its 100-stock index. It will replace the oil drilling equipment maker Baker Hughes, whose market capitalization has fallen below the minimum level of $21 billion.

But don’t read anything more into the index moves than valuation, Standard & Poor’s warns in its statement: “Additions to and deletions from S.&P. Dow Jones Indices do not in any way reflect an opinion on the investment merits of the companies involved.”

A Tale of Wall St. Excess

Turney Duff, former stock trader, recovering cocaine user and first-time author, stepped out the front door of his new home, the ground floor of a modest split-level house in a sleepy Long Island neighborhood.

“You want the grand tour?” said Mr. Duff, flashing a smile. “It’ll take 30 seconds.”

The humble environs stand in stark contrast to his digs a decade ago, when he lived in a $9,300-a-month triplex in TriBeCa and earned nearly $2 million a year as a hedge fund player.

Mr. Duff traces his descent from the peaks of Wall Street in “The Buy Side,” a raw and rollicking memoir about the sordid underbelly of big-money, fast-paced hedge funds. Set for publication on Tuesday, the industry tell-all illuminates the world at the center of insider trading scandals. Mr. Duff’s onetime boss, Raj Rajaratnam of the disgraced Galleon Group hedge fund, will spend the next decade in prison; an early mentor, David Slaine, was a crucial informant for the government.

“None of it surprises me,” Mr. Duff said, referring to the dozens of indictments of his onetime peers. “I liken it to the steroid era in Major League Baseball; it wasn’t about right and wrong but about getting an edge in a game where the stakes were huge.”

And were it not for the drug problems that hastened his exit from trading, Mr. Duff acknowledges that he, too, could have found himself in the authorities’ cross hairs.

“As an addict and alcoholic, the end of my road was different than those arrested by the F.B.I.,” said the 43-year-old Mr. Duff, who has not been charged with any wrongdoing. “But we were all in the same boat.”

“The Buy Side” is one of several titles due out this summer pegged to the extensive government insider trading investigation, a list that includes “Circle of Friends” by Charles Gasparino, a broad examination of the crackdown, and “The Billionaire’s Apprentice” by Anita Raghavan, an account of the case against the former Goldman director Rajat K. Gupta. (An article about insider trading by Ms. Raghavan, an occasional contributor to The New York Times, is on DealBook.) While the greed and excesses of Wall Street may not be a surprise, Mr. Duff’s book provides a window into the world of insider trading and the cowboy culture that blurs right from wrong.

At its heart, Mr. Duff’s book is a Wall Street bildungsroman. The son of a mechanical engineer and homemaker, Mr. Duff grew up middle class in Kennebunk, Me. After earning a journalism degree from Ohio University in 1994, he moved to New York, wanting to write for a living. Searching for connections, he called his rich uncle who worked in finance.

“He was on the trading desk and said he’d call me back,” Mr. Duff said. “Twenty minutes later he called and said, ‘You have 10 interviews.’ I’m like, ‘For what?’ And he’s like, ‘Just say that you want to get into sales.’ ”

And just like that, Mr. Duff became a money man. He landed an entry-level post at his uncle’s firm, Morgan Stanley, working for a team that managed money for wealthy families. From the get-go, he felt out of his depth in the office, but quickly discovered that he thrived during happy hour. He was socially adept, a party animal.

“I would never be able to stand out at my job,” Mr. Duff wrote, recalling an epiphany while out drinking with his colleagues one night. “There I’m out-experienced, out-connected and out-degreed. But here, with a glass in hand, I have as good a chance as any to move and shake.”

In 1999, on the cusp of the hedge fund boom, Mr. Duff moved to Galleon, which would become one of the world’s most powerful hedge funds, eventually managing more than $7 billion. He had by then moved to the buy side, placing trades for Galleon’s portfolio managers through brokerage firms, known as the sell side. “The buy side is the client,” he wrote. “The sell side loves clients.”

That his Galleon bosses lacked a moral compass is hardly shocking, but the breadth of wrongdoing that he claims to have witnessed is still startling. He said he not only saw instances of insider trading, but was also a willing participant in other illegal conduct like front-running (being tipped off about large orders by other customers, and trading ahead of them) and cherry-picking (directing the most profitable trades away from clients and into Galleon partners’ personal accounts).

So why didn’t Mr. Duff blow the whistle and put a stop to the criminal activity?

“You’re young and trying to get ahead, and while something might not feel right, the results feel so good,” Mr. Duff said. “I operated in a very gray area and made a lot of bad choices, but it wasn’t on the level of what we’re reading in the newspaper.”

Mr. Duff was long gone from Galleon by 2006, the year that federal authorities began investigating the fund. A half-decade earlier, he had left with one of Mr. Rajaratnam’s top lieutenants to start Argus Partners, a $1.4 billion fund focused on health care stocks.

As Argus’s head trader, Mr. Duff became a coveted contact for brokers seeking business from the fund. UBS organized a dinner for him, and 17 salesmen and traders signed up. Goldman Sachs thought enough of Mr. Duff to invite him to speak to its class of summer M.B.A. students.

One of the interns asked, “If I’m your broker and I want to increase my business with your hedge fund, what’s the best thing for me to do?”

“You can start by taking me to Vegas,” Mr. Duff said.

Brokerage firms, clamoring for his commissions, showered him with gifts. One flew him on a private jet to the Super Bowl and got him seats on the 50-yard line. Another provided regular helicopter service to the Hamptons. There was a five-day trip to Costa Rica, fishing off a 70-foot boat during the day and zip-lining through the rain forest at night â€" all expenses paid.

The high-priced perks intoxicated Mr. Duff, and so did his seven-figure compensation. To underscore his obsession with money, an entire chapter in the book consists only of a rendering of a check in the amount of his 2003 total compensation â€" $1.9 million.

After receiving a large bonus, he called the Chase automated teller line just to listen repeatedly to a woman’s voice announce his prodigious account balance. “I pressed the repeat button like five or six times in a row,” he said.

But while reveling in his good fortune, he also suffered bouts of self-loathing and self-doubt. He questioned his career choice while rooting against the success of a cancer cure because of a bet in place against a drug stock.

There is a cringe-worthy scene in the book on his TriBeCa roof deck, the morning after his raucous 34th birthday party, which featured a performance by the rappers Naughty by Nature. While smoking a joint, he asked himself, “Why do I feel so empty?”

If Mr. Duff partied his way to the top, he snorted his way to the bottom. When cocaine enters the picture, Mr. Duff’s Wall Street confessional becomes an addiction memoir.

Drug-fueled benders starring pills, pornography and Patrón Silver fill the second half of the book. His low point came when, in an effort to create an alibi for skipping work, he faked a mugging by rolling on the pavement and into a puddle until he was bleeding and bruised.

He left Argus and entered rehab. He found a job at another hedge fund, but relapsed and was forced back into rehab â€" and out of the business.

Mr. Duff has found redemption in writing and parenting. He sobered up more than three years ago. In 2011, he wrote “The Buy Side,” which Crown Business bought for more than $250,000. He puts words on the page every day, and is working on a novel.

A devoted father, Mr. Duff moved to Long Island a few months ago to be near his 7-year-old daughter, who lives with her mother, a former live-in girlfriend of Mr. Duff’s. He is trying to make a go of it as a writer, but if that doesn’t work out, he has zero interest in the returning to a trading desk.

“A friend told me that if I write this book it will be the final nail in the coffin for my Wall Street career,” he wrote. “At which point I said, ‘Give me the hammer.’ ”

Continental Grain to Walk Away From Smithfield

One of Smithfield Foods‘ biggest investors plans to drop its fight against the pork processor in light of its planned $4.7 billion sale to a Chinese meat producer.

The Continental Grain Company said on Monday that it had chosen to exit its roughly 6 percent position in Smithfield and wouldn’t challenge the pork company’s planned deal with Shuanghui International.

“Continental Grain congratulates Smithfield on the proposed merger with Shuanghui International,” Paul J. Fribourg, Continental Grain’s chairman and chief executive, said in a statement. “We have been advocating for value creation and are pleased that the Smithfield board of directors and management are being proactive in realizing value for the benefit of all of its shareholders.”

Continental Grain’s plan has been a focus of attention since the Smithfield deal was announced last Wednesday.

The company gained a stake in Smithfield about six years ago, when it bought Premium Standard Farms. But it called attention to the pork producer in March when the agricultural concern â€" one of the country’s biggest privately held companies â€" called for a break-up.

In late April, the shareholder strongly suggested that it would begin a proxy fight at Smithfield, including by naming a slate of directors.

Smithfield’s chief executive, C. Larry Pope, told DealBook last week that he believed Shuanghui was motivated by keeping the American company in one piece.

People close to the Chinese meat producer said that while Continental Grain’s campaign wasn’t a factor in the deal timing, the would-be buyer likes Smithfield’s vertically integrated model, which runs from raising hogs to slaughtering them and producing ham and pork.

France Investigating UBS Over Tax Evasion Accusations

France Puts UBS Under Investigation in Tax Evasion Inquiry

New York â€" A unit of the Swiss bank UBS has been placed under formal investigation in France following allegations that it designed investments to help its clients evade taxes.

The move comes more than a year after an inquiry was opened regarding the bank’s operations in France, a UBS executive briefed on the matter said Sunday. A handful of UBS executives have been put under investigation since the inquiry began in 2012.

UBS has been dogged for years by regulators who allege that it has helped wealthy individuals dodge taxes, and has successfully settled some of these charges. For instance, the bank agreed to a $780 million fine in 2009 with the U.S. authorities to settle charges that it had helped its American clients to hide funds.

But other countries continue to pursue their own cases against UBS. The executive, who was not authorized to speak on the record, said that while the decision was disappointing for the bank, it was not unexpected.

Several media outlets reported news of the investigation into UBS in recent days.

Tax evasion and avoidance is a hot topic right now as big companies like Apple find themselves denying allegations that they have avoided paying millions of dollars in taxes.

The issue is particularly prickly in France, in part because the country’s former budget minister, Jérôme Cahuzac, admitted to having stashed funds in an undeclared bank account in Switzerland.

The inquiry in France comes as Switzerland puts pressure on its banks to disclose client information, a break from its long-held policy of bank secrecy. In an effort to resolve a continuing dispute with the U.S. authorities over tax evasion by Americans, the Swiss government proposed legislation last week that would provide a legal basis for its banks to cooperate with the U.S. authorities.

Both houses of the Swiss Parliament will consider the legislation during the summer session; if passed, the law would be in effect for a year.

Prosecutors in the United States have opened criminal investigations into about a dozen Swiss and Swiss-style banks involving offshore private banking services that allowed tens of thousands of wealthy Americans to evade U.S. taxes.

The Swiss banks that have been the targets of U.S. 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; and three Israeli banks, Bank Hapoalim, Bank Mizrahi-Tefahot and Bank Leumi.

Julius Baer acknowledged last week that it had received a formal request from the U.S. authorities for data on American clients of the bank’s offshore services.

In 2012, the Justice Department indicted Wegelin & Co., Switzerland’s oldest private bank. The bank pleaded guilty to the charges in January, putting it out of business.

Lynnley Browning contributed reporting.

A version of this article appeared in print on June 3, 2013, on page B6 of the New York edition with the headline: France Starts Formal Inquiry Of UBS Unit On Tax Shelters.

Mid-America Apartment Communities to Buy Colonial Properties for $2.1 Billion

Colonial Properties Trust logo. (PRNewsFoto/MAA)

MEMPHIS, Tenn. and BIRMINGHAM, Ala., June 3, 2013 /PRNewswire/ -- MAA (NYSE: MAA) and Colonial Properties Trust (NYSE: CLP) today announced that they have entered into a deinitive merger agreement under which MAA and Colonial Properties Trust will merge, creating a Sunbelt-focused, publicly traded, multifamily REIT with enhanced capabilities to deliver superior value for residents, shareholders and employees.  The combined company is expected to have a pro forma equity market capitalization of approximately $5.1 billion and a total market capitalization of $8.6 billion.

(Logo: http://photos.prnewswire.com/prnh/20110614/CL19184LOGO )
(Logo: http://photos.prnewswire.com/prnh/20130603/CL24465LOGO )

Under the terms of the agreement, each Colonial Properties Trust common share will be converted into 0.36 newly issued MAA common share, and the combined company will be an UPREIT.  On a pro forma basis, following the merger, former MAA equity holders will hold approximately 56 percent of the combined company's equity, and former Colonial Properties Trust equity holders will hold approximately 44 percent.  The all-stock merger is intended to be a tax-free transaction.  The merger is subject to customary closing conditions, including receipt of the approval of a majority of both the MAA and Colonial Properties Trust shareholders.  The parties currently expect the transaction to close during the third quarter of 2013.

The merger brings together two highly complementary multifamily portfolios with a combined asset base consisting of approximately 85,000 multifamily units in 285 properties. The combined company will maintain strategic diversity across large and secondary markets within the high growth Sunbelt region of the U.S. The combined company's ten largest markets will be Dallas/Ft. Worth, Atlanta, Austin, Raleigh, Charlotte, Nashville, Jacksonville, Tampa, Orlando and Houston. 

"The combination of MAA and Colonial Properties Trust will provide an enhanced competitive advantage across the Sunbelt region," said H. Eric Bolton, Jr. , MAA CEO.  "The scale of the combined company will support accelerated growth and deployment of capital across our high-growth Sunbelt markets driving superior value creation opportunity for our shareholders.  In addition, through capitalizing on the strengths gained from the combination of the two platforms, we will enhance our ability to serve residents across the region, drive higher margins as a result of synergies and advantages generated by the merger, and enhance career opportunities for our associates."

"This is a combination that makes a lot of sense for the constituents of both Colonial Properties Trust and MAA," added Thomas H. Lowder , Colonial Properties Trust CEO.  "Our two companies have a shared vision for success that will only be enhanced by coming together through this merger transaction.  We are excited for the future of our combined company."

Leadership and Organization

Both the Board of Directors of MAA and Board of Trustees of Colonial Properties Trust have unanimously approved the merger.  The number of directors on MAA's Board of Directors will be increased to 12, of which 5 directors will be nominated by Colonial Properties Trust's Board of Trustees.  Thomas H. Lowder will join the Board of Directors along with four others from Colonial Properties Trust.  Alan B. Graf, Jr. and Ralph Horn , Co-Lead Independent Directors for MAA, will serve as Co-Lead Independent Directors for the combined company.

H. Eric Bolton, Jr. , MAA's CEO and Chairman of the Board of Directors, will serve as CEO and Chairman of the Board of Directors of the combined company.  Albert M. Campbell, III, MAA's CFO, will serve as CFO of the combined company, and Thomas L. Grimes, Jr. , MAA's COO, will serve as the COO of the combined company.

Upon completion of the merger, the company will retain the MAA name and will trade under the ticker symbol MAA (NYSE).  Following the close of the transaction, the combined company's corporate headquarters will be located in Memphis, TN.

Anticipated Synergies

Annual gross G&A savings are estimated to be approximately $25 million.  The combined company is expected to benefit from the elimination of duplicative costs associated with supporting a public company platform and the leveraging of state of the art technology and systems.  These savings are expected to be realized upon full integration, which is expected to occur over the 18-month period following the closing.

Pro Forma Operations and Balance Sheet 

Both companies have high quality properties diversified across the Sunbelt region.  On a consolidated basis the company will have a strong presence in both large and secondary markets.  With a significant regional overlap, meaningful opportunity for synergy and margin improvement is expected.  The combined company is committed to a strategy aimed at driving superior long-term shareholder performance with a full-cycle performance profile and objective.

The combined company is expected to have significant liquidity, a strong investment-grade balance sheet and a well-staggered debt maturity profile provided by long-standing lending partners.

"Our goal is to create one of the strongest balance sheets in the sector, providing us the financial flexibility in the capital markets to manage our cost of capital, allowing us to capitalize on business opportunities, ultimately supporting the growth of the combined company and the security of our dividend to our shareholders," said Albert M. Campbell, III , CFO of MAA.

Dividend Policy and Declaration

The timing of the pre-closing dividends of MAA and Colonial Properties Trust will be coordinated such that, if one set of shareholders receives their dividend for a particular quarter prior to the closing of the merger, the other set of shareholders will also receive their dividend for such quarter prior to the closing of the merger.

On May 21, 2013, MAA announced that its Board of Directors has declared its third quarter dividend of $0.695 per common share, payable on July 31, 2013, to stockholders of record on July 15, 2013.

Advisors

J.P. Morgan is acting as financial advisor, and Goodwin Procter LLP and Baker, Donelson, Bearman, Caldwell & Berkowitz, PC acted as legal advisors to MAA.  BofA Merrill Lynch is acting as financial advisor, and Hogan Lovells and Burr & Forman LLP acted as legal advisors to Colonial Properties Trust.

Conference Call and Webcast

The companies will host a conference call on Monday, June 3, 2013 at 7:30am CDT to discuss the business combination. Participants will include MAA's CEO and Colonial Properties Trust's CEO. The conference call-in number is 866-847-7859 or interested parties can join the live webcast of the conference call by accessing the investor relations section of each company's website at http://ir.maac.com or at www.colonialprop.com.   

A transcript of the call and the conference call replay will be posted when available on the respective companies' websites under the Investor Relations sections.

About MAA

MAA is a self-managed real estate investment trust (REIT) that acquires, owns and operates apartment communities across 13 states in the Sunbelt region of the United States.  As of March 31, 2013, MAA owned or had ownership interest in 49,591 apartment units at completed communities, focused on delivering full-cycle and superior investment performance for shareholders. For further details, please visit the MAA website at www.maac.com.

About Colonial Properties Trust

Colonial Properties Trust is a real estate investment trust (REIT) that creates value for its shareholders through the acquisition, management, and development of a multifamily portfolio in the Sunbelt region of the United States. As of March 31, 2013, the company owned, had partial ownership in or managed 35,181 apartment units. Headquartered in Birmingham, Alabama, Colonial Properties is listed on the New York Stock Exchange under the symbol CLP an is included in the S&P SmallCap 600 Index. For more information, please visit the company's website at www.colonialprop.com.

Forward-Looking Statements

This press release contains forward-looking statements within the meaning of Section 27A of the U.S. Securities Act of 1933, as amended, and Section 21E of the U.S. Securities Exchange Act of 1934, as amended.  These forward-looking statements, which are based on current expectations, estimates and projections about the industry and markets in which MAA and Colonial Properties Trust operate and beliefs of and assumptions made by MAA management and Colonial Properties Trust management, involve uncertainties that could significantly affect the financial results of MAA or Colonial Properties Trust or the combined company.  Words such as "expects," "anticipates," "intends," "plans," "believes," "seeks," "estimates," variations of such words and similar expressions are intended to identify such forward-looking statements, which generally are not historical in nature.  Such forward-looking statements include, but are not limied to, statements about the anticipated benefits of the business combination transaction involving MAA and Colonial Properties Trust, including future financial and operating results, and the combined company's plans, objectives, expectations and intentions. All statements that address operating performance, events or developments that we expect or anticipate will occur in the future â€" including statements relating to expected synergies, improved liquidity and balance sheet strength â€" are forward-looking statements. These statements are not guarantees of future performance and involve certain risks, uncertainties and assumptions that are difficult to predict.  Although we believe the expectations reflected in any forward-looking statements are based on reasonable assumptions, we can give no assurance that our expectations will be attained and therefore, actual outcomes and results may differ materially from what is expressed or forecasted in such forward-looking statements. Some of the factors t! hat may affect outcomes and results include, but are not limited to: (i) national, regional and local economic climates, (ii) changes in financial markets and interest rates, or to the business or financial condition of either company or business (iii) increased or unanticipated competition for our properties, (iv) risks associated with acquisitions, including the integration of the combined companies' businesses, (v) maintenance of real estate investment trust ("REIT") status, (vi) availability of financing and capital, (vii) risks associated with achieving expected revenue synergies or cost savings, (viii) risks associated with the companies' ability to consummate the merger and the timing of the closing of the merger, and (ix) those additional risks and factors discussed in reports filed with the Securities and Exchange Commission ("SEC") by MAA and Colonial Properties Trust from time to time, including those discussed under the heading "Risk Factors" in their respective most recently filed reports on Foms 10-K and 10-Q. Neither MAA nor Colonial Properties Trust undertakes any duty to update any forward-looking statements appearing in this document.

Additional Information about the Proposed Transaction and Where to Find It

This communication relates to the proposed merger transaction pursuant to the terms of the Agreement and Plan of Merger, dated as of June 3, 2013, among Mid-America Apartment Communities, Inc., Mid-America Apartments, L.P., Colonial Properties Trust, Colonial Realty Limited Partnership and Martha Merger Sub, LP.

In connection with the proposed transaction, MAA expects to file with the SEC a registration statement on Form S-4 that will include a joint proxy statement of MAA and Colonial Properties Trust that also constitutes a prospectus of MAA, which joint proxy statement will be mailed or otherwise disseminated to MAA and Colonial Properties Trust shareholders when it becomes available.  MAA and Colonial Properties Trust also plan to file other relevant documents with the SEC regarding the proposed transaction.  INVESTORS ARE URGED TO READ THE JOINT PROXY STATEMENT/PROSPECTUS AND OTHER RELEVANT DOCUMENTS FILED WITH THE SEC IF AND WHEN THEY BECOME AVAILABLE, BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION.  You may obtain a free copy of the joint proxy statement/prospectus (if and when it becomes available) and other relevant documents filed by MAA and Colonial Properties Trust with the SEC at the SEC's website at www.sec.gov.  Copies of the documents filed by MAA with the SEC will be available free of charge on MAA's website at www.maac.com or by emailing MAA Investor Relations at investor.relations@maac.com or contacting Leslie B.C. Wolfgang , Senior Vice President, Director of Investor Relations and Corporate Secretary at 901-248-4126.  Copies of the documents filed by Colonial Properties Trust with the SEC will be available free of charge on Colonial Properties Trust's website at www.colonialprop.com or by contacting Jerry A. Brewer , Executive Vice President, Finance at 800-645-3917.

Certain Information Regarding Participants

MAA and Colonial Properties Trust and their respective directors and executive officers may be deemed to be participants in the solicitation of proxies in respect of the proposed transaction.  You can find information about MAA's executive officers and directors in MAA's definitive proxy statement filed with the SEC on March 22, 2013 in connection with its 2013 annual meeting of shareholders.  You can find information about Colonial Properties Trust's executive officers and directors in Colonial Properties Trust's definitive proxy statement filed with the SEC on March 13, 2013 in connection with its 2013 annual meeting of shareholders.  Additional information regarding the interests of such potential participants will be included in the joint proxy statement/prospectus and other relevant documents filed with the SEC if and when they become available. You may obain free copies of these documents from MAA or Colonial Properties Trust using the sources indicated above.

No Offer or Solicitation

This document shall not constitute 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 offering of securities shall be made except by means of a prospectus meeting the requirements of Section 10 of the U.S. Securities Act of 1933, as amended.

 

SOURCE MAA; Colonial Properties Trust

RELATED LINKS
http://www.maac.com
http://www.colonialprop.com

France Investigating UBS Over Tax Evasion Accusations

France Puts UBS Under Investigation in Tax Evasion Inquiry

New York â€" A unit of the Swiss bank UBS has been placed under formal investigation in France following allegations that it designed investments to help its clients evade taxes.

The move comes more than a year after an inquiry was opened regarding the bank’s operations in France, a UBS executive briefed on the matter said Sunday. A handful of UBS executives have been put under investigation since the inquiry began in 2012.

UBS has been dogged for years by regulators who allege that it has helped wealthy individuals dodge taxes, and has successfully settled some of these charges. For instance, the bank agreed to a $780 million fine in 2009 with the U.S. authorities to settle charges that it had helped its American clients to hide funds.

But other countries continue to pursue their own cases against UBS. The executive, who was not authorized to speak on the record, said that while the decision was disappointing for the bank, it was not unexpected.

Several media outlets reported news of the investigation into UBS in recent days.

Tax evasion and avoidance is a hot topic right now as big companies like Apple find themselves denying allegations that they have avoided paying millions of dollars in taxes.

The issue is particularly prickly in France, in part because the country’s former budget minister, Jérôme Cahuzac, admitted to having stashed funds in an undeclared bank account in Switzerland.

The inquiry in France comes as Switzerland puts pressure on its banks to disclose client information, a break from its long-held policy of bank secrecy. In an effort to resolve a continuing dispute with the U.S. authorities over tax evasion by Americans, the Swiss government proposed legislation last week that would provide a legal basis for its banks to cooperate with the U.S. authorities.

Both houses of the Swiss Parliament will consider the legislation during the summer session; if passed, the law would be in effect for a year.

Prosecutors in the United States have opened criminal investigations into about a dozen Swiss and Swiss-style banks involving offshore private banking services that allowed tens of thousands of wealthy Americans to evade U.S. taxes.

The Swiss banks that have been the targets of U.S. 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; and three Israeli banks, Bank Hapoalim, Bank Mizrahi-Tefahot and Bank Leumi.

Julius Baer acknowledged last week that it had received a formal request from the U.S. authorities for data on American clients of the bank’s offshore services.

In 2012, the Justice Department indicted Wegelin & Co., Switzerland’s oldest private bank. The bank pleaded guilty to the charges in January, putting it out of business.

Lynnley Browning contributed reporting.

A version of this article appeared in print on June 3, 2013, on page B6 of the New York edition with the headline: France Starts Formal Inquiry Of UBS Unit On Tax Shelters.

SAC Capital’s Deadline for Withdrawals

Investors with SAC Capital Advisors may withdraw several billion dollars from the embattled hedge fund by a scheduled quarterly deadline on Monday, DealBook’s Peter Lattman and Ben Protess report. Investors are mindful of a separate deadline for law enforcement officials; over the next several weeks, the authorities must decide whether to bring a criminal case against SAC related to suspicious trading in two drug stocks.

Authorities have explored how they might bring a criminal case against the firm and possibly a civil action against its founder, Steven A. Cohen, people briefed on the case said, according to DealBook. Already, the government has brought charges against Mathew Martoma, a former SAC employee, connected to the suspicious trades, which involved Mr. Cohen. The intensifying scrutiny is making investors increasingly nervous.

If SAC has too many withdrawals it “could shut its door to outside investors and manage only internal funds,” DealBook writes. “But the ultimate fate of the fund may be determined this summer, as the government’s investigation enters the final stages. Prosecutors expect four senior SAC executives who received subpoenas last month to testify before a grand jury, according to the people briefed on the case.”

The situation facing Mr. Martoma, a 38-year-old former portfolio manager at SAC, can be understood as a version of what in game theory is known as the “prisoner’s dilemma,” James B. Stewart, a columnist for The New York Times, writes. Mr. Martoma may, or may not, be in a position to implicate Mr. Cohen. “So far, Mr. Martoma has defiantly asserted his innocence and refused to cooperate with prosecutors. He could change his mind, but the clock is ticking,” Mr. Stewart writes.

RIVALS UNITED OVER BLOOMBERG  |  Goldman Sachs and JPMorgan Chase found common ground in their frustration with the Bloomberg news and financial data empire, Susanne Craig and Jessica Silver-Greenberg report in DealBook. One day in April, Jake Siewert, Goldman’s public relations chief, called his counterpart at JPMorgan Chase, Joe Evangelisti, with a simple question: “Do you have any issues with Bloomberg?” DealBook writes: “The two men shared one major concern: they believed that Bloomberg reporters were using the company’s data terminals to monitor Wall Street sources â€" the executives at the banks that were spending thousands of dollars a year to use the data-rich machines. That phone call lifted the lid on a long-simmering, but seldom discussed, tension between Bloomberg and Wall Street.”

WALL STREET BEHIND CHINESE PORK BID  |  It was the Chinese executives of Shuanghui International who announced the company’s $4.7 billion bid last week to take over the American pork producer Smithfield Foods. “But behind the bid was a group of savvy investors and global deal makers who hold a substantial stake in the Chinese company: Goldman Sachs, CDH Investments, Singapore’s sovereign wealth fund and New Horizon Capital, a private equity firm co-founded by the son of a former Chinese prime minister, Wen Jiabao,” David Barboza writes in The New York Times.

“The presence of so many of Asia’s power brokers in the bid illustrates not just how deals get done in China these days but also how Wall Street and Asia’s elites are likely to collaborate on future cross-border mergers and acquisitions.”

ON THE AGENDA  |  Shareholders are voting on the deal by IntercontinentalExchange to take over NYSE Euronext. The ISM manufacturing index for May is out at 10 a.m. John Williams, president of the Federal Reserve Bank of San Francisco, speaks in Stockholm at 7:20 a.m. Ian Bremmer, president of the Eurasia Group, is on Bloomberg TV at 7 a.m.

LIFE LESSONS FROM FED CHAIRMAN  |  Ben S. Bernanke, chairman of the Federal Reserve, gave a commencement speech at Princeton University over the weekend. His points had “nothing whatsoever to do with interest rates,” he noted. Instead, Mr. Bernanke offered advice like this: “Speaking as somebody who has been happily married for 35 years, I can’t imagine any choice more consequential for a lifelong journey than the choice of a traveling companion.” As for economics, he said it was a “highly sophisticated field of thought that is superb at explaining to policy makers precisely why the choices they made in the past were wrong.”

Mergers & Acquisitions »

I.S.S. Backs Sprint’s Deal With SoftBank  |  Institutional Shareholder Services lent its support to Sprint Nextel’s proposed sale to SoftBank amid criticism of the deal by investors and a rival bid by Dish Network. DealBook »

Exor Sells SGS Stake for $2.6 Billion  |  Exor, the holding company that controls the Italian automaker Fiat, agreed to sell its 15 percent stake in the Swiss product inspection company SGS to Groupe Bruxelles Lambert for $2.6 billion. DealBook »

Chinese Developer in Deal for Stake in General Motors Building  |  The Wall Street Journal reports: “A prominent Chinese developer and a scion of the Safra banking family have purchased a 40 percent stake in the General Motors Building in a deal that values the Manhattan property at approximately $3.4 billion, likely making it the most valuable office building in the U.S., multiple people involved with the deal said.” WALL STREET JOURNAL

Bids for Hulu Said to Top $1 Billion  |  Reuters reports: “Satellite operator DirecTV and two other bidders have offered more than $1 billion apiece to buy Hulu, a source with knowledge of the bidding process said on Friday.” REUTERS

Rio Tinto Ore Business Draws Prospective Buyers  |  Glencore Xstrata and the Blackstone Group are among potential bidders looking at a 59 percent stake in a Canadian iron ore business being sold by Rio Tinto, The Wall Street Journal reports, citing unidentified people familiar with the matter. WALL STREET JOURNAL

Court Revives Financier’s Fraud Suit Against Citigroup Over the Sale of EMI  |  A federal appeals court vacated a 2011 jury verdict clearing Citigroup of any wrongdoing over its role in the sale of EMI to Guy Hands’s private equity firm, Terra Firma Capital Partners. DealBook »

Buffett’s Energy Gamble in Las Vegas  |  Warren E. Buffett’s $5.6 billion bet on NV Energy in Nevada suggests he is coming up short on decent ways to deploy his cash, Christopher Swann of Reuters Breakingviews writes. REUTERS BREAKINGVIEWS

INVESTMENT BANKING »

In China, Concern of a Chill on Foreign Investments  |  A ruling by the top court is one of a number of recent signals that China’s long-assumed tolerance for foreign investment may be on the wane. DEALBOOK

China’s State Capitalism Goes Global  |  “By buying companies, exploiting natural resources, building infrastructure and giving loans all over the world, China is pursuing a soft but unstoppable form of economic domination,” Heriberto Araújo and Juan Pablo Cardenal write in an opinion essay in The New York Times. NEW YORK TIMES

Bank of Ireland Bond Sale Confirms a Credit Boom  |  The bond bonanza has eased the short-term financing troubles for many of Europe’s struggling companies. DealBook »

Borrowing Like It’s 2007  |  “American investors have taken out more margin loans than ever before. That indicates that speculative investing has grown among retail investors, reaching levels that in the past indicated the market was getting to unsustainable levels and might be in for a fall,” Floyd Norris writes in The New York Times. NEW YORK TIMES

Bank Profits May Not Be Sustainable  |  At first glance, bank profits seem to be experiencing a strong recovery, and bank stocks are on a tear. “But, as is often the case, a more nuanced tale emerges when you look more closely at the profit figures,” Gretchen Morgenson writes in The New York Times. NEW YORK TIMES

Barclays Comes Up in Money Laundering Investigation  |  The British bank Barclays was pulled into a United States investigation into money laundering when prosecutors discovered a suspect held an account with the bank. REUTERS

A Rude Surprise for Mortgage Investors  |  The Wall Street Journal reports: “Some mortgage investors got an unexpected refresher course on the risks of subprime debt when they received notice of $1 billion of previously undisclosed losses.” WALL STREET JOURNAL

Keep Calm and Carry On  |  Each of us has a finite reservoir of energy in any given day. But there are techniques to avoid feeling exhausted, Tony Schwartz writes in the Life@Work column. DealBook »

PRIVATE EQUITY »

Dell Looks to Build Support for Buyout Proposal  |  Reuters reports: “Dell Inc. called on shareholders on Friday to approve a $24.4 billion buyout offer by founder and C.E.O. Michael Dell and the private equity firm Silver Lake, saying the bid was superior to other strategic options.” REUTERS

Carlyle Group Sells New York Tower for $1.3 Billion  |  The deal set a record for price per square foot in New York. BLOOMBERG NEWS

Now on the Line, the Dark Knight  |  A man going by “Bruce Wayne of Wayne Enterprises” popped up during an earnings call held by Archer, an oil company. He was apparently looking for some help fighting crime in Gotham City. DealBook »

HEDGE FUNDS »

Short-Seller Turns to Silicon Valley  |  Carson C. Block, founder of Muddy Waters, made his name with critical research on Chinese companies. Now, he tells The Wall Street Journal, he is taking a hard look at companies in Silicon Valley. WALL STREET JOURNAL

A Trader Recounts His Flameout  |  A new Wall Street memoir, “The Buy Side,” by Turney Duff, is a “portrait of a young man who seemingly never met a temptation he could deny,” Bryan Burrough writes in a review in The New York Times. NEW YORK TIMES

I.P.O./OFFERINGS »

Brazilian Cement Producer Plans $4.8 Billion I.P.O.  |  Brazil’s largest cement producer, Votorantim Cimentos, is planning to raise as much as $4.8 billion, in what would be one of the largest initial public offerings this year. DealBook »

Rio Tinto Said to Pursue I.P.O. of Gem Unit  | 
BLOOMBERG NEWS

VENTURE CAPITAL »

The Silicon Valley Echo Chamber  |  “Sometimes, tech entrepreneurs in San Francisco and Silicon Valley to the south create companies best appreciated by other people who live and breathe technology,” Nick Bilton writes on the Bits blog. NEW YORK TIMES

Apple Is Said to Be Pressing to Finalize Deals for Internet Radio Service  | 
NEW YORK TIMES

LEGAL/REGULATORY »

Bank of America Mortgage Settlement Goes to Court  |  Two years after Bank of America struck an $8.5 billion deal with mortgage bond investors, a judge is set to consider the settlement this week. BLOOMBERG NEWS

Former Goldman Sachs Partner Fined for Unauthorized Trades  |  Goldman Sachs and Glenn Hadden, one of Wall Street’s top traders, have been fined by the CME Group over a Treasury futures trade in 2008. Mr. Hadden also faces a 10-day suspension. DealBook »

E-Book Antitrust Trial Puts Apple in Spotlight  |  A trial begins this week over whether Apple conspired with publishers to raise prices in the e-book market, and it will “tell a broader story of how the introduction of e-books created upheaval in the publishing industry,” The New York Times writes. NEW YORK TIMES

Google’s Advocate in Washington  |  Susan Molinari, Google’s chief Washington lobbyist, is a “brassy, well-connected New York Republican who served seven years in the House,” The New York Times writes. NEW YORK TIMES

Money Market Fund Overhaul Is Early Test for Dodd-Frank  |  The success or failure of efforts to overhaul the money market fund industry depends in large part on how much power can be exerted by a regulatory body created under Dodd-Frank, David Zaring, assistant professor of legal studies at the Wharton School of Business at the University of Pennsylvania, writes. DealBook »