An Old Champion Returns for Mortgage-Based Bonds

Lewis S. Ranieri helped pioneer mortgage-backed securities in the 1980s. On Thursday, his new firm priced its first mortgage bond deal.

With the recent turmoil in the bond markets, however, the offering was not without drama. The structure of the offering was changed to offer buyers more protection against losses, according to a person briefed on the matter who was not authorized to speak about the private deal.

The firm, Shellpoint Partners, of which Mr. Ranieri is chairman, sold  $251 million in residential mortgage-backed securities tied to loans that are not backed by Fannie Mae or Freddie Mac. The largest portion of the deal was sold at a rate of 2.85 percentage point above ultrasafe government debt, according to the person briefed on the deal.

Through a spokesman, Mr. Ranieri and Shellpoint declined requests for comment.

Bond prices have fallen since the Federal Reserve indicated that it planned to start reducing the stimulus it has used to keep interest rates low since the financial crisis.

For residential mortgage bonds without government backing, the fall has been steep. After a rapid climb in 2012, prices of these bonds began to stumble this year and have fallen about 3.5 points on average since the beginning of June, according to an index of prime and subprime mortgage-based securities from Markit.

“You had this panic that rates were rising, and you had all these redemptions coming out of bond funds,” said Ken Shinoda, portfolio manager on the mortgage-backed securiti! es desk at DoubleLine Capital. “There were a lot of things not trading.”

Few know this market like Mr. Ranieri, 66, who ran the mortgage group at Salomon Brothers in the 1980s and rose to become vice chairman of the firm. A college dropout from Brooklyn, Mr. Ranieri started in Salomon’s mailroom before distinguishing himself as a trader.

“He was a bull in a china shop,” said Robert F. Dall, a onetime boss of Mr. Ranieri. “He was a guy who knew lots about lots of things and was not loath to say so.”

By 1987, Mr. Ranieri was pushed out of Salomon, and he began a second career as a private investor.  As the financial crisis unfolded, he watched as mortgage bonds and other, more exotic mortgage-based products fell in value.

“I used to think we had done something important and good, and then, unfortunately, we had the last bubble,” Mr. Ranierisaid in a speech last week at the Bipartisan Policy Center in Washington. “The system we built showed the cracks and the clay feet.”

To Mr. Ranieri’s mind, there is another problem today: that the government still controls Fannie Mae and Freddie Mac, the mortgage finance giants it rescued in the financial crisis. That level of involvement by the government is “unacceptable,” Mr. Ranieri said.

But as the last-minute restructuring of Thursday’s deal showed, investors remain nervous about the types of investments Mr. Ranieri is pushing, which do not have government backing.

In addition, the Shellpoint deal had some features that raised eyebrows among prospective buyers. The security includes a number of loans to foreign nationals and real estate investors, in addition to a relatively high concentration of properties in California, according to a report by Fitch Ratings.

And yet, Mr. Ranieri remains determined to bring the market back to life.

“Hello,” he said in his speech last week. “I’m Dr. Frankenstein.”

An Old Champion Returns for Mortgage-Based Bonds

Lewis S. Ranieri helped pioneer mortgage-backed securities in the 1980s. On Thursday, his new firm priced its first mortgage bond deal.

With the recent turmoil in the bond markets, however, the offering was not without drama. The structure of the offering was changed to offer buyers more protection against losses, according to a person briefed on the matter who was not authorized to speak about the private deal.

The firm, Shellpoint Partners, of which Mr. Ranieri is chairman, sold  $251 million in residential mortgage-backed securities tied to loans that are not backed by Fannie Mae or Freddie Mac. The largest portion of the deal was sold at a rate of 2.85 percentage point above ultrasafe government debt, according to the person briefed on the deal.

Through a spokesman, Mr. Ranieri and Shellpoint declined requests for comment.

Bond prices have fallen since the Federal Reserve indicated that it planned to start reducing the stimulus it has used to keep interest rates low since the financial crisis.

For residential mortgage bonds without government backing, the fall has been steep. After a rapid climb in 2012, prices of these bonds began to stumble this year and have fallen about 3.5 points on average since the beginning of June, according to an index of prime and subprime mortgage-based securities from Markit.

“You had this panic that rates were rising, and you had all these redemptions coming out of bond funds,” said Ken Shinoda, portfolio manager on the mortgage-backed securiti! es desk at DoubleLine Capital. “There were a lot of things not trading.”

Few know this market like Mr. Ranieri, 66, who ran the mortgage group at Salomon Brothers in the 1980s and rose to become vice chairman of the firm. A college dropout from Brooklyn, Mr. Ranieri started in Salomon’s mailroom before distinguishing himself as a trader.

“He was a bull in a china shop,” said Robert F. Dall, a onetime boss of Mr. Ranieri. “He was a guy who knew lots about lots of things and was not loath to say so.”

By 1987, Mr. Ranieri was pushed out of Salomon, and he began a second career as a private investor.  As the financial crisis unfolded, he watched as mortgage bonds and other, more exotic mortgage-based products fell in value.

“I used to think we had done something important and good, and then, unfortunately, we had the last bubble,” Mr. Ranierisaid in a speech last week at the Bipartisan Policy Center in Washington. “The system we built showed the cracks and the clay feet.”

To Mr. Ranieri’s mind, there is another problem today: that the government still controls Fannie Mae and Freddie Mac, the mortgage finance giants it rescued in the financial crisis. That level of involvement by the government is “unacceptable,” Mr. Ranieri said.

But as the last-minute restructuring of Thursday’s deal showed, investors remain nervous about the types of investments Mr. Ranieri is pushing, which do not have government backing.

In addition, the Shellpoint deal had some features that raised eyebrows among prospective buyers. The security includes a number of loans to foreign nationals and real estate investors, in addition to a relatively high concentration of properties in California, according to a report by Fitch Ratings.

And yet, Mr. Ranieri remains determined to bring the market back to life.

“Hello,” he said in his speech last week. “I’m Dr. Frankenstein.”

S.E.C. Starts Inquiry Into Data Release by Thomson Reuters

Federal securities regulators have opened an inquiry into the media company Thomson Reuters and how it releases closely watched manufacturing data to its trading clients, a move that highlights the government’s continued effort to understand the high-speed trading systems that have transformed Wall Street.

Officials from the Securities and Exchange Commission are investigating why certain clients of Thomson Reuters received and traded on the Institute of Supply Management’s manufacturing data ahead of its official release earlier this month. Thomson Reuters has an agreement with the institute, which is privately held, to release the influential survey.

On June 3, as traders were waiting for Thomson Reuters’s 10 a.m. release of the often market-moving I.S.M. manufacturing number, a small group of traders received the data milliseconds before the rest of Wall Street and, because it was disappointing, made rapid-fire, aggressive bets against the market. The traders used sophisticated compuer trading systems to process and trade on the information.

The incident speaks to the increasing importance of speed in the nation’s stock markets. More than half of all American stock trades are now executed by firms that rely on high-speed connections to place and withdraw thousands of orders a second. In order to compete, these traders look for any leg up, including quicker ways to receive market data.

Most providers of market data, including the exchanges, now charge premimums for faster delivery of information. Regulators have been grappling with how to respond to the recent changes in the market and are considering whether, by selectively disclosing data to people who pay more money, the playing field has been unfairly tilted in favor of an elite group of traders. The current inquiry into the relationship between Thomson Reuters and I.S.M. adds to similar issues related to the release of market data and high-speed trading that regulators have been investigating.

Lemuel Brew! ster, a spokesman for Thomson Reuters, said that the company received a phone call from the S.E.C. regarding the premature release and explained to the agency that the early release was due to a “clock synchronization issue.”

“As part of this conversation, the S.E.C. requested a copy of the contract with I.S.M.,” Mr. Brewster said. “After obtaining I.S.M.’s consent, Thomson Reuters voluntarily provided a copy of the contract with the pricing details omitted.”

Thomson Reuters has not been subpoenaed for the information nor has it been notified of a formal S.E.C. investigation, a person briefed on the matter said. CNBC earlier reported on both the premature release of the I.S.M. data and the S.E.C.’s inquiry.

Adobe to Buy Nelolane, a Digital Marketing Company, for $600 Million

Adobe Systems agreed on Thursday to buy Neolane, a digital marketing services provider, for about $600 million, as more companies look for ways to add social media advertising to their offerings.

Neolane, which is privately held, specializes in providing a platform through which companies can manage and automate their marketing across the Web, social media and mobile. Adobe plans to fold it into its marketing cloud division, which already offers services like analysis.

Other companies have made big moves into the space. Earlier this month, Salesforce.com agreed to buy ExactTarget for $2.5 billion, paying a 53 percent premium for the digital marketing firm.

Adobe itself has struck anumber of deals for marketing-related companies, including Omniture, Day Software and Efficient Frontier.

The deal is expected to close in July.

Moody’s Shows Wider Pension Gap for States

Moody’s Investors Service, dissatisfied with the way states measure what they owe their retirees, released its own numbers on Thursday, showing that the 50 states have, in aggregate, just 48 cents for every dollar of pensions they have promised.

That is much less than the 74 cents on the dollar that the states now report. The disparity suggests that politically difficult steps taken recently by many states to fix their pension problems â€" raising retirement ages, requiring bigger contributions from workers, lowering benefits for new hires â€" will prove insufficient because they were based on underestimates of the problem.

Moody’s new method reflects a belief, held by many economists, that states and local governments are severely distorting their pension numbers by failing to take proper account of market risks; this makes public pensions look cheaper than they are turning out to be, wreaking havoc with budgets. Moody’s new method does not go as far as these economists might wish. Butit does eliminate some of the distortion by converting the value of future pensions into current dollars using a corporate bond rate.

Moody’s also said Thursday that its analysts had decided that the states’ so-called funded ratio â€" the dollars in their pension funds compared with dollars promised to retirees â€" was not useful for issuing credit ratings, even though the ratios are widely cited and easy to understand. Moody’s said funded ratios were good for certain things, like determining whether a state pension system was at risk of running out of money. But for ratings, it said it wanted to compare each state’s pension promises with its total economic resources, whether the money was in a pension fund or not.

Measured that way, the state struggling with the most outsized pension burden is Illinois. Moody’s found that its unfunded pension promises were more than three times the amount of revenue the state takes in every year through taxes and fees. By the same measure, Neb! raska’s pension plan posed the least credit concern, with a shortfall of just 7 percent of the state’s annual revenue.

Surprises emerged when Moody’s measured each state’s ability to pay not by its tax revenue but by its gross domestic product. In that case, Alaska surged to the top of the list with a pension shortfall of more than one-fifth of its total output, surpassing even Illinois, which is widely considered to have America’s biggest pension problems.

Alaska also scored the biggest burden when Moody’s measured economic capacity on the basis of personal income. But when Moody’s added Puerto Rico into its rankings, it rocketed to the top of the list, ahead of even Alaska and Illinois. The territory’s pension shortfall was 59 percent of the personal income of its residents, more than eight times the 50-state median of about 7 percent. Alaska was the runner-up, with a pension shortfall 32 percent of its residents’ personal income, and Illinois came in third at 24 percent.Puerto Rico’s financial burdens are of great interest to investors because it has an unusual amount of debt outstanding, much of it in mutual funds. Its rating is one notch above the junk-bond range, lower than the rating of any state.

Some states that are widely thought to have pension problems, like California, fared better than might have been expected under Moody’s new rating method. That was because Moody’s noted that much of what appeared to be their duty to pay pensions was really the duty of local bodies of government, like school districts. Current government accounting rules, now being changed, make it look as if those states must pay the total cost.

U.S. to Announce Civil Charges Against Corzine

Federal regulators are set to announce on Thursday a lawsuit against Jon S. Corzine, the former chief executive of MF Global, in connection with the brokerage firm’s misuse of customer money during its final days, according to a person briefed on the matter.

The Commodity Futures Trading Commission, the federal agency that regulated MF Global, is expected to accuse Mr. Corzine of failing to prevent a lower-level MF Global employee from transferring customer money to banks and clearinghouses. The agency also plans to announce a lawsuit against that employee, Edith O’Brien, who oversaw the transfer of customer money from the firm’s Chicago office.

Mr. Corzine has indicated that he will fight the charges. In a statement, a spokesman for Mr. Corzine denounced the trading commission for planning to file what he called an “unprecedented and meritless civil enforcement action.”

If found liable, Mr. Corzine could face millions of dollars in fines and possibly a ban from trading commodiies.

The trading commission has scheduled a press conference for 2:30 p.m. to announce the civil charges.

Senate Agriculture Committee Calls Hearing on Smithfield Deal

The Senate Agriculture Committee said on Thursday that it would convene a hearing on July 10 to examine Smithfield Foods’ $4.7 billion sale to Shuanghui International, a Chinese meat processor, stepping up government scrutiny of the deal.

The meeting is aimed at determining whether the sale poses risks to United States food standards and whether the review process for foreign companies buying American food companies needs to be reconsidered.

Smithfield Foods’ chief executive, Larry Pope, is scheduled to testify.

The hearing follows a letter sent by members of the committee to Treasury Secretary Jacob J. Lew, who supervises a panel of agencies that reviews foeign investments into the country, urging tighter review of the Smithfield sale to Shuanghui International. That group of senators, led by the committee chairwoman, Debbie Stabenow, called on Mr. Lew to add the Agriculture Department and the Food and Drug Administration to the panel.

The deal is already under review by the panel of agencies, formally known as the Committee on Foreign Investment in the United States, which is charged with ensuring that an investment by a foreign entity does not pose risks to American security. It has been known to be tough in its consideration of transactions in in! dustries like energy, technology and aerospace, but has had little precedent in examining food deals.

Smithfield and Shuanghui have said that the transaction poses no risk to the country’s national security or food safety standards. Driving the deal is a desire by the Chinese company to import more American pork.

Senate Agriculture Committee Calls Hearing on Smithfield Deal

The Senate Agriculture Committee said on Thursday that it would convene a hearing on July 10 to examine Smithfield Foods’ $4.7 billion sale to Shuanghui International, a Chinese meat processor, stepping up government scrutiny of the deal.

The meeting is aimed at determining whether the sale poses risks to United States food standards and whether the review process for foreign companies buying American food companies needs to be reconsidered.

Smithfield Foods’ chief executive, Larry Pope, is scheduled to testify.

The hearing follows a letter sent by members of the committee to Treasury Secretary Jacob J. Lew, who supervises a panel of agencies that reviews foeign investments into the country, urging tighter review of the Smithfield sale to Shuanghui International. That group of senators, led by the committee chairwoman, Debbie Stabenow, called on Mr. Lew to add the Agriculture Department and the Food and Drug Administration to the panel.

The deal is already under review by the panel of agencies, formally known as the Committee on Foreign Investment in the United States, which is charged with ensuring that an investment by a foreign entity does not pose risks to American security. It has been known to be tough in its consideration of transactions in in! dustries like energy, technology and aerospace, but has had little precedent in examining food deals.

Smithfield and Shuanghui have said that the transaction poses no risk to the country’s national security or food safety standards. Driving the deal is a desire by the Chinese company to import more American pork.

Business Venture, and Friendship, Sours After Insider Conviction

Rajat Gupta, the former managing director of the consulting giant McKinsey & Company, and Parag Saxena were not just business partners in a South Asian private equity fund, New Silk Route.

For 25 years, the men had been friends. Their families vacationed together at the Palm Island Resort in Cape Haze in southwest Florida. And the two men shared a common passion for bridge.

But simmering tensions between them have erupted. Mr. Gupta has now sued his business partner in Federal District Court in Manhattan, essentially accusing Mr. Saxena of trying to stop him from having a say over the fund. A year after being convicted on charges of tipping the hedge fund billionaire Raj Rajaratnam on secrets gleaned while a director at Goldman Sachs, Mr. Gupta is now embroiled in a dispute over his biggest business venture.

The dispute stems from an arrangement the two men put in place in early 2012 when Mr. Gupta was facing criminal charges. Since then, however, Mr. Saxena has been maneuvering behind the scenes for months to get his friend to sever all his ties with New Silk Route, according to people briefed on the situation.

Both men declined to comment for this article, but close friends of the two corroborated the account of their dispute.

Mr. Saxena, a, longtime player in private equity and venture capital, started New Silk Route with Mr. Gupta in 2006 after stepping down from the helm of Invesco Private Capital, where he led a team that invested in a glittering array of start-ups and ear! ly-stage companies including Amgen, Metro PCS, Staples, Costco and Starbucks.

Soon after Mr. Gupta’s conviction, Mr. Saxena visited his onetime friend at his Westport, Conn., estate, once the home of the retailing magnate James Cash Penney. Mr. Saxena had come on a mission: he wanted to find a way for Mr. Gupta to exit New Silk elegantly.

Some of New Silk Route’s limited partners were unhappy with Mr. Gupta’s continuing role in the fund. In India, where the fund invests heavily, Mr. Gupta’s involvement in the purchase of big stake in a South Indian bank years earlier had raised the hackles of the Reserve Bank of India, making it difficult at times for New Silk Route to do business.

In March 2011, shortly after he was accused of insider trading by the Securities and Exchange Commission, Mr. Gupta, who was chairman of the fund, took a leave of absence. In February 2012, he agreed to step down from New Silk’s two-person board after Mr. Saxena requested that he distance himself from the company while securities charges were pending.

To protect his interests in the company, Mr. Gupta was allowed to designate one member of the company’s board. His suit against Mr. Saxena claims that his former business partner is trying to remove his board designee and thwart his effort to na! me a dire! ctor.

Mr. Gupta has a 43.5 percent stake in the private equity firm; he is invested in its funds and is also entitled to residual management fees and carried interest income, or the profits that fund managers are paid as part of their compensation.

During a meeting in the study overlooking the pool on the Gupta estate, Mr. Saxena made an offer: he was willing to pay Mr. Gupta about $9 million for his stake and related investments in New Silk. Mr. Gupta indicated that he felt the sum did not reflect his contribution to the fund. He believed that New Silk â€" which he, Mr. Saxena, Mr. Rajaratnam and Mark Schwartz, a Goldman Sachs executive â€" had teamed up to start in happier times, had gotten off the ground in large part because of him. He felt he had played a pivotal role in helping the fund raise $1.4 billion in 2007 and in securing marquee investors like Swiss Re and Credit Suisse, according to people briefed on the situation.

For months afterward, talks between the two men went nowhere. Mr. Gupta was preoccupied with something far more important: he was busy collecting letters on his behalf from his important friends and former colleagues ahead of his sentencing before Judge Jed S. Rakoff in late October, and afterward with preparing for his appeal.

But last spring, shortly after Mr. Gupta sued Mr. Saxena, the two men met again after months of not speaking to each other. They met in the offices of a law firm unaffiliated with either man, a neutral site, in Midtown Manhattan.

Mr. Saxena was eager to find a way for Mr. Gupta to exit New Silk, and Mr. Gupta, after talking to friends familiar with the fund, had come to the view that it was in his! best int! erest to cut ties with the fund. Though he hadn’t indicated exactly what price he was seeking for his stake and related investments, it was far higher â€" on the order of $35 million â€" than the $9 million Mr. Saxena was proposing.

The sum that Mr. Gupta can obtain for his stake in New Silk Route could prove critical for him. In 2008, he had a net worth of $100 million. Mr. Gupta’s defense has cost $40 million, but so far he hasn’t had to pay a cent. That’s because under Goldman’s bylaws, the bank is required to pay the legal fees of its top officers and directors.

But as part of an agreement reached with Goldman before his trial last summer, Mr. Gupta agreed that if he were found guilty of insider trading, he would reimburse the bank for the legal fees that were paid on his behalf. That payment would be made only after his appeal was resolved.

“For N.S.R. to have a future, it is very important you not be a part of it,” Mr. Saxena told Gupta, according to people with knowlede of the conversation.

The former McKinsey chief countered by placing the blame squarely on Mr. Saxena.

“You say N.S.R.’s future is not bright because of my involvement,” Mr. Gupta said. “It is not me, it is the management of the investments.”

New Silk, like many funds invested heavily in India, has been a poor performer in large part because of the devaluation of the rupee.

At the meeting, which at times got emotional, Mr. Saxena suggested that Mr. Gupta provide him with an idea of the percentage of the value in New Silk Route that he should receive, rather than an absolute dollar figure. That way, Mr. Gupta would have the opportunity to participate in any upside at the firm.

Last week, Mr. Gupta came back to Mr. Saxena with a percentage, which was undisclosed, that leaves the two men as far apart as when they started.

Business Venture, and Friendship, Sours After Insider Conviction

Rajat Gupta, the former managing director of the consulting giant McKinsey & Company, and Parag Saxena were not just business partners in a South Asian private equity fund, New Silk Route.

For 25 years, the men had been friends. Their families vacationed together at the Palm Island Resort in Cape Haze in southwest Florida. And the two men shared a common passion for bridge.

But simmering tensions between them have erupted. Mr. Gupta has now sued his business partner in Federal District Court in Manhattan, essentially accusing Mr. Saxena of trying to stop him from having a say over the fund. A year after being convicted on charges of tipping the hedge fund billionaire Raj Rajaratnam on secrets gleaned while a director at Goldman Sachs, Mr. Gupta is now embroiled in a dispute over his biggest business venture.

The dispute stems from an arrangement the two men put in place in early 2012 when Mr. Gupta was facing criminal charges. Since then, however, Mr. Saxena has been maneuvering behind the scenes for months to get his friend to sever all his ties with New Silk Route, according to people briefed on the situation.

Both men declined to comment for this article, but close friends of the two corroborated the account of their dispute.

Mr. Saxena, a, longtime player in private equity and venture capital, started New Silk Route with Mr. Gupta in 2006 after stepping down from the helm of Invesco Private Capital, where he led a team that invested in a glittering array of start-ups and ear! ly-stage companies including Amgen, Metro PCS, Staples, Costco and Starbucks.

Soon after Mr. Gupta’s conviction, Mr. Saxena visited his onetime friend at his Westport, Conn., estate, once the home of the retailing magnate James Cash Penney. Mr. Saxena had come on a mission: he wanted to find a way for Mr. Gupta to exit New Silk elegantly.

Some of New Silk Route’s limited partners were unhappy with Mr. Gupta’s continuing role in the fund. In India, where the fund invests heavily, Mr. Gupta’s involvement in the purchase of big stake in a South Indian bank years earlier had raised the hackles of the Reserve Bank of India, making it difficult at times for New Silk Route to do business.

In March 2011, shortly after he was accused of insider trading by the Securities and Exchange Commission, Mr. Gupta, who was chairman of the fund, took a leave of absence. In February 2012, he agreed to step down from New Silk’s two-person board after Mr. Saxena requested that he distance himself from the company while securities charges were pending.

To protect his interests in the company, Mr. Gupta was allowed to designate one member of the company’s board. His suit against Mr. Saxena claims that his former business partner is trying to remove his board designee and thwart his effort to na! me a dire! ctor.

Mr. Gupta has a 43.5 percent stake in the private equity firm; he is invested in its funds and is also entitled to residual management fees and carried interest income, or the profits that fund managers are paid as part of their compensation.

During a meeting in the study overlooking the pool on the Gupta estate, Mr. Saxena made an offer: he was willing to pay Mr. Gupta about $9 million for his stake and related investments in New Silk. Mr. Gupta indicated that he felt the sum did not reflect his contribution to the fund. He believed that New Silk â€" which he, Mr. Saxena, Mr. Rajaratnam and Mark Schwartz, a Goldman Sachs executive â€" had teamed up to start in happier times, had gotten off the ground in large part because of him. He felt he had played a pivotal role in helping the fund raise $1.4 billion in 2007 and in securing marquee investors like Swiss Re and Credit Suisse, according to people briefed on the situation.

For months afterward, talks between the two men went nowhere. Mr. Gupta was preoccupied with something far more important: he was busy collecting letters on his behalf from his important friends and former colleagues ahead of his sentencing before Judge Jed S. Rakoff in late October, and afterward with preparing for his appeal.

But last spring, shortly after Mr. Gupta sued Mr. Saxena, the two men met again after months of not speaking to each other. They met in the offices of a law firm unaffiliated with either man, a neutral site, in Midtown Manhattan.

Mr. Saxena was eager to find a way for Mr. Gupta to exit New Silk, and Mr. Gupta, after talking to friends familiar with the fund, had come to the view that it was in his! best int! erest to cut ties with the fund. Though he hadn’t indicated exactly what price he was seeking for his stake and related investments, it was far higher â€" on the order of $35 million â€" than the $9 million Mr. Saxena was proposing.

The sum that Mr. Gupta can obtain for his stake in New Silk Route could prove critical for him. In 2008, he had a net worth of $100 million. Mr. Gupta’s defense has cost $40 million, but so far he hasn’t had to pay a cent. That’s because under Goldman’s bylaws, the bank is required to pay the legal fees of its top officers and directors.

But as part of an agreement reached with Goldman before his trial last summer, Mr. Gupta agreed that if he were found guilty of insider trading, he would reimburse the bank for the legal fees that were paid on his behalf. That payment would be made only after his appeal was resolved.

“For N.S.R. to have a future, it is very important you not be a part of it,” Mr. Saxena told Gupta, according to people with knowlede of the conversation.

The former McKinsey chief countered by placing the blame squarely on Mr. Saxena.

“You say N.S.R.’s future is not bright because of my involvement,” Mr. Gupta said. “It is not me, it is the management of the investments.”

New Silk, like many funds invested heavily in India, has been a poor performer in large part because of the devaluation of the rupee.

At the meeting, which at times got emotional, Mr. Saxena suggested that Mr. Gupta provide him with an idea of the percentage of the value in New Silk Route that he should receive, rather than an absolute dollar figure. That way, Mr. Gupta would have the opportunity to participate in any upside at the firm.

Last week, Mr. Gupta came back to Mr. Saxena with a percentage, which was undisclosed, that leaves the two men as far apart as when they started.

Don’t Forget the Small Ideas That Make a Difference

Usually, it’s the big products that get the headlines â€" your iPhones and Surfaces and Galaxies. But in basement shops and garages, worthy invention is taking place on a much tinier scale â€" and sometimes, that work is worth a look.

To be specific, this week, I offer reviews of three intriguing accessories that recently landed on my desk: accompaniments to the headline-grabber gadgets.

ChargeCard

It’s one of the great unsung trends of the latest gadgets: they can recharge from USB jacks, which are found not only on every computer, but also in many cars, planes, wall jacks and TV sets. Unfortunately, you still have to pack and carry the cords for your USB-chargeable gizmos.

The cleverly named ChargeCard ($25) was a Kickstarter.com success story. It’s a replacement charging “cable” shaped like a black rubber credit card; you’re supposed to carry it in your wallet. At one end is the connector foryour gadget; in the middle is a flexible rubber tongue with USB contacts on the end.

The idea is that you’ll never again suffer Battery Death Anxiety, where you’re out for the evening, watching your phone’s charge approach zero because you have no way to charge it. Now, you’ll always have the “cable” right there in your wallet. Find the nearest TV or computer and charge away.

The ChargeCard comes in three versions. One has a 30-pin connector for charging and syncing iPhones, iPod Touches and iPads with the original 30-pin connector (2012 and earlier). One has the new Lightning connector, for the iPhone 5, latest iPod Touch and newest iPad. And one has a Micro USB connector for all those Android phones and tablets, Sony cameras, Blackberries, Nokias, Kindles, Jamboxes and so on.

The ChargeCard is twice the thickness of a credit card, so it does add some bulk to a wallet. And the need to twist around that central USB tongue makes you worry about its longevity (although it ! has a lifetime guarantee).

But yes, it works, and yes, it’s a relief to know you’ll never be without a way to charge.

iFlyPad

The iFlyPad ($30, available in late July) is a small contraption, about three inches across, in white or black, with powerful suction cups on both sides. The back has one big suction cup (with a sliding lever that increases the suction for an amazingly strong bond), which you’re supposed to attach to the airplane video screen on the seat back in front of you. The front has many small suction cups; they grip the back of your tablet, phone or e-reader.

This thing suspends your gadget so that you can enjoy your own video entertainment instead of whatever overpriced videos the airline offers. You’re hands-free, you can use your tray table for food, and the viewing angle is better.

The iFlyPad can also, of course, stick your phone, tablet or Kindle to any smooth hard surface in daily life: a kitchen cabnet, bathroom mirror, treadmill console or car touch screen (so you can use the Google Maps app for navigation instead of whatever awful GPS software came with your car). Click here for all the details: duration of suspension, curved-glass questions, and so on.

Not everyone is crying out for a suction cup to suspend a gadget; that in-flight scenario might not have universal appeal. But if the idea appeals to you, you’re in luck: the iFlyPad is well-designed, compact and extremely secure.

MagStay MS-01

When Apple invented its magnetic MagSafe connector for its laptop power cords, I cheered. As I wrote last year, “Apple found precisely the right balance between attachment and detachment. Strong enough to hold the connector in place, weak enough to detach if it gets yanked,” so that your laptop doesn’t go c! rashing t! o the floor.

But last year, when Apple replaced the MagSafe connector with a thinner, weaker one, I booed. Now the power cord drops out constantly, at the slightest touch or wrong angle.

If you’ve had no problem with yours, it’s probably because you always use your laptop on a desk. If you try using it on your lap (yes, some people use laptops on laps), abandon all hope. If it brushes your leg, or if you lean over to grab something, the power cord falls out. I despise this thing.

I have found a ridiculous-looking but very effective solution: the MagStay 2 ($20). It’s a perfectly designed plastic white clip, of sorts, that keeps the connector in place.

“Clip” isn’t the right word, because there’s no hinge or spring. It’s more of a slotted wedge that firmly grips the left edge of your MacBook Pro or Air. A tunnel through the middle connects the metal end of your MagSafe power cord to the laptop. A hole in the MagSta’s top surface lets you see the connector’s indicator light, so you can still see if it’s getting power.

A substantial yank still detaches the cord, but the connector never, ever comes out from simple thigh pressure, or reaching-to-the-side pressure, or lifting-up-the-laptop-to-look-for-your-glasses pressure. In short, it fixes what’s wrong with the MagSafe 2. (It fits both the MacBook Pro and MacBook Air.)

You can’t close the laptop with the MagStay in place, which is a huge drag. In fact, what you’re supposed to do is detach the MagStay, remove the cord, reverse the MagStay, rethread the cord through it, close the laptop, and reattach; the larger opening of the MagStay now grips the closed laptop just as firmly as it previously gripped only the lower half.

That’s way too much hassle; when I want to close the laptop, I just slide the MagStay down the white power cord to get it completely out of the way. (Few people complain that the MagSafe connector drops out by itse! lf when t! he laptop is sitting, closed, charging on your bedside table.)

It’s really, really a shame that a $20 glorified clothespin is required to make these premium laptops’ power cords stay attached. But the MagStay is certainly better than some of my readers’ previous suggestions, which included duct tape and Super Glue. It’s the most useful piece of plastic I’ve added to my arsenal in a long time.

Don’t Forget the Small Ideas That Make a Difference

Usually, it’s the big products that get the headlines â€" your iPhones and Surfaces and Galaxies. But in basement shops and garages, worthy invention is taking place on a much tinier scale â€" and sometimes, that work is worth a look.

To be specific, this week, I offer reviews of three intriguing accessories that recently landed on my desk: accompaniments to the headline-grabber gadgets.

ChargeCard

It’s one of the great unsung trends of the latest gadgets: they can recharge from USB jacks, which are found not only on every computer, but also in many cars, planes, wall jacks and TV sets. Unfortunately, you still have to pack and carry the cords for your USB-chargeable gizmos.

The cleverly named ChargeCard ($25) was a Kickstarter.com success story. It’s a replacement charging “cable” shaped like a black rubber credit card; you’re supposed to carry it in your wallet. At one end is the connector foryour gadget; in the middle is a flexible rubber tongue with USB contacts on the end.

The idea is that you’ll never again suffer Battery Death Anxiety, where you’re out for the evening, watching your phone’s charge approach zero because you have no way to charge it. Now, you’ll always have the “cable” right there in your wallet. Find the nearest TV or computer and charge away.

The ChargeCard comes in three versions. One has a 30-pin connector for charging and syncing iPhones, iPod Touches and iPads with the original 30-pin connector (2012 and earlier). One has the new Lightning connector, for the iPhone 5, latest iPod Touch and newest iPad. And one has a Micro USB connector for all those Android phones and tablets, Sony cameras, Blackberries, Nokias, Kindles, Jamboxes and so on.

The ChargeCard is twice the thickness of a credit card, so it does add some bulk to a wallet. And the need to twist around that central USB tongue makes you worry about its longevity (although it ! has a lifetime guarantee).

But yes, it works, and yes, it’s a relief to know you’ll never be without a way to charge.

iFlyPad

The iFlyPad ($30, available in late July) is a small contraption, about three inches across, in white or black, with powerful suction cups on both sides. The back has one big suction cup (with a sliding lever that increases the suction for an amazingly strong bond), which you’re supposed to attach to the airplane video screen on the seat back in front of you. The front has many small suction cups; they grip the back of your tablet, phone or e-reader.

This thing suspends your gadget so that you can enjoy your own video entertainment instead of whatever overpriced videos the airline offers. You’re hands-free, you can use your tray table for food, and the viewing angle is better.

The iFlyPad can also, of course, stick your phone, tablet or Kindle to any smooth hard surface in daily life: a kitchen cabnet, bathroom mirror, treadmill console or car touch screen (so you can use the Google Maps app for navigation instead of whatever awful GPS software came with your car). Click here for all the details: duration of suspension, curved-glass questions, and so on.

Not everyone is crying out for a suction cup to suspend a gadget; that in-flight scenario might not have universal appeal. But if the idea appeals to you, you’re in luck: the iFlyPad is well-designed, compact and extremely secure.

MagStay MS-01

When Apple invented its magnetic MagSafe connector for its laptop power cords, I cheered. As I wrote last year, “Apple found precisely the right balance between attachment and detachment. Strong enough to hold the connector in place, weak enough to detach if it gets yanked,” so that your laptop doesn’t go c! rashing t! o the floor.

But last year, when Apple replaced the MagSafe connector with a thinner, weaker one, I booed. Now the power cord drops out constantly, at the slightest touch or wrong angle.

If you’ve had no problem with yours, it’s probably because you always use your laptop on a desk. If you try using it on your lap (yes, some people use laptops on laps), abandon all hope. If it brushes your leg, or if you lean over to grab something, the power cord falls out. I despise this thing.

I have found a ridiculous-looking but very effective solution: the MagStay 2 ($20). It’s a perfectly designed plastic white clip, of sorts, that keeps the connector in place.

“Clip” isn’t the right word, because there’s no hinge or spring. It’s more of a slotted wedge that firmly grips the left edge of your MacBook Pro or Air. A tunnel through the middle connects the metal end of your MagSafe power cord to the laptop. A hole in the MagSta’s top surface lets you see the connector’s indicator light, so you can still see if it’s getting power.

A substantial yank still detaches the cord, but the connector never, ever comes out from simple thigh pressure, or reaching-to-the-side pressure, or lifting-up-the-laptop-to-look-for-your-glasses pressure. In short, it fixes what’s wrong with the MagSafe 2. (It fits both the MacBook Pro and MacBook Air.)

You can’t close the laptop with the MagStay in place, which is a huge drag. In fact, what you’re supposed to do is detach the MagStay, remove the cord, reverse the MagStay, rethread the cord through it, close the laptop, and reattach; the larger opening of the MagStay now grips the closed laptop just as firmly as it previously gripped only the lower half.

That’s way too much hassle; when I want to close the laptop, I just slide the MagStay down the white power cord to get it completely out of the way. (Few people complain that the MagSafe connector drops out by itse! lf when t! he laptop is sitting, closed, charging on your bedside table.)

It’s really, really a shame that a $20 glorified clothespin is required to make these premium laptops’ power cords stay attached. But the MagStay is certainly better than some of my readers’ previous suggestions, which included duct tape and Super Glue. It’s the most useful piece of plastic I’ve added to my arsenal in a long time.

Goldman’s All-Night Puzzle Challenge

Charity events on Wall Street are typically reserved, buttoned-up affairs. But one sponsored by Goldman Sachs, known as Midnight Madness, has a decidedly more madcap flavor.

A “geeky, over-the-top scavenger hunt,” Midnight Madness was held last fall after a hiatus of several years, Euny Hong writes in an article in Quartz. The game, a night of extravagant puzzles around New York City, included “laser mini golf” and an iPhone app that allowed players to change the color of lights on the One Bryant Park tower in Manhattan. It raised $1.4 million, according to the article.

Goldman is involved through its Goldman Sachs Gives fund, which makes grants based on recommendations from current and former partners. The next staging of Midnight Madness is planned for this October.

Last time, many of the players were Goldman employees. From the Quartz article

The first place team, which arrived at the finishing line at 10:20 am, was 0xFFFFoo (from the Global Securities Services division, which helps clients set up hedge funds.) The name comes from the hexadecimal code for yellow. Why yellow? Team co-captain Igor Modlin explained, “In the ‘Midnight Madness’ movie, the yellow team wins. They’re the good guys.” oxFFFFoo’s win came as a surprise, especially since it had the triple handicaps of having only one laptop between the 10 of them, no bicycles, and no previous Midnight Madness players. Modlin said his team’s victory lay in the skill sets of their division. “We are in a customer-facing business - our job is to help clients solve complex problems. The key is we work well together. During Midnight Madness, the goal wasn’t to have the single smartest guy in the room. You don’t have time to have the smartest guy in the room.”

New Rules Expected for Insurance Accounting May Lead to Erratic Earnings

The Financial Accounting Standards Board on Thursday will propose new rules for insurance accounting that seem likely to increase volatility in reported profits for many insurers and lower reported revenue for rapidly growing companies.

Some of the largest protests might come from companies that until now have thought insurance accounting rules did not apply to them. The new rules would cover any company that issues contracts that are seen as insurance, or similar to insurance.

Insurance is defined as “accepting significant risk” from another party â€" the insured policyholder â€" by agreeing to pay compensation “if a specified uncertain future event adversely affects the policyholder.” That could include product warranties issued by third parties, mortgage guaantees and residual value guarantees. Most banks would have at least some products subject to the insurance rules.

But not all products that seem like insurance would be covered. The accounting for credit-default swaps, which pay if a borrower like a company or country defaults, would not change. The logic behind that is that such swaps are sold to speculators, who are betting that a default will come, as well as to bondholders who would suffer from a default.

“The proposed standard is intended to bring greater consistency and relevance to the accounting for contracts that transfer significant risk between parties,” said Leslie F. Seidman, the FASB chairwoman. “Current U.S. standards on insurance have evolved over the years as new products have been introduced, leading to some inconsis! tencies” in insurance accounting.

One important change for some life insurance companies would be the timing on recognizing revenue. Instead of recognizing premiums when they are received, premiums would be recognized over time, when the insurance is being provided. Expenses would also be delayed, so the effect on net income might not be large, but revenue growth might seem much slower for some companies.

Life insurance companies now set up reserves when a policy is sold, based on estimates of factors like life expectancy and the chance the policy will lapse before the policyholder dies. Under the new rules, those assumptions would have to be revised every three months, leading to changes in the book value of the policies. But many of those changes would go into a category called “other comprehensive income” and thus not affect the net income figures.

For property and casualty insurers, an important change would come in how reserves are calculated. Currently, most companies estimatethe most likely result. Under the new rules, they would have to average out the possible results, based on probability. So for a company that thought there was a 60 percent chance that it would have to pay $1,000 on a claim, and a 40 percent chance it would have to pay $2,000, its required reserve would rise from $1,000, the most probable number, to $1,400 â€" the average of the probabilities.

That calculation would have to be updated frequently, leading to changes in earnings in one quarter that could be reversed in the next.

A significant change would be that reserves would now be subject to discounting based on time and interest rates. In the example above, the figure now would be $1,000 whether the company expected to pay the claim next year or 10 years from now. Under the proposal, the reserve for the claim that is not expected to be paid for 10 years would be discounted and would then rise every year as the expected payment date neared.

The new rules would affect only companie! s that is! sue insurance. Purchasers of insurance â€" basically every company â€" would not have to change their current accounting.

The proposal is similar to one issued by the International Accounting Standards Board last week, although there are some differences. The boards are seeking public comment through Oct. 25 and will then decide whether to change their proposals before issuing final rules.

I.P.O.’s Hit Market Turbulence

I.P.O.’S FACE TURBULENCE  |  The market turmoil of recent weeks is affecting a range of companies seeking to go public, DealBook’s Michael J. de la Merced reports. HD Supply, a former Home Depot division that serves construction and maintenance contractors, priced its stock sale at $18 a share on Wednesday, well below its expected range. Tremor Video, a leading video advertising network, priced its offering at $10 a share, below an anticipated range of $11 to $13, according to a person briefed on the matter. The CDW Corporation, a technology products retailer, priced its shares at $17, the low end of an already-reduced range.

Markets that recently seemed ebullient have turned shaky on concerns that the Federal Reserve will soon begin pulling back on ts economic stimulus. With the Standard & Poor’s 500-stock index down nearly 3 percent over the last month, some investors in I.P.O.’s are pushing for better terms from sellers and underwriters. “What we’ve been seeing are deals that are being reconfigured,” said David Menlow, the president of IPOfinancial.com, a research firm. “Some companies will be able to endure such a process, while others won’t.”

It’s an unwelcome turn for companies owned by private equity firms, which are eager to sell their holdings. Many of these companies took on significant amounts of debt in their takeovers, especially those struck at the height of the credit boom in 2007, Mr. de la Merced writes. Both HD Supply and CDW disclosed that they would use the proceeds from their I.P.O.’s to pay down their obligations.

WALL STREET CHEERS DECISION ON GAY MARRIAGE  |  The Supreme Court rulings on Wednesday that bolstered gay marriage prompted bouts of celebration around the country. Among the gratified were the heads of Wall Street firms. “This is good for our company and clients, but more importantly, it’s the right thing to do,” Jamie Dimon, the chief executive of JPMorgan Chase, said in a statement. “The rights of all people are important and must be protected.”

“Marriage equality lowers burdens and challenges imposed on employers, and will lead to building successful businesses and a strong American economy,” Goldman Sachs said in a statement, according to Bloomberg News. On Twitter, Lloyd C. Blankfein, the firm’s chief executive, said: “Today’s decisions help define who weare as a people, whether or not we are part of the group directly affected.”

In a pair of rulings, the Supreme Court decided that married same-sex couples were entitled to federal benefits, and effectively allowed same-sex marriages in California. Some experts noted that the ruling on benefits could be good for corporations, simplifying administrative duties and making it easier to recruit workers.

S.E.C. TO TEST POLICY OF ADMITTING GUILT  |  “Securities and Exchange Commission enforcement chiefs have drawn up a hit list of impending cases where officials intend to test their new policy of requiring admissions of wrongdoing when settling civil charges, according to people close to the agency,” Jean Eaglesham reports in The Wall Street Journal. “The handful of like! ly target! cases include a planned enforcement action against a company alleged to have made illicit profits by charging investors undisclosed markups on top of commissions, one of the people said.”

ON THE AGENDA  |  ConAgra reports earnings before the market opens, while Nike reports earnings this evening. Data on personal income and spending in May is out at 8:30 a.m. Lloyd Blankfein of Goldman Sachs is on CNBC at 4 p.m. Henry M. Paulson Jr., a former Treasury secretary, is on CNBC at 4:30 p.m.

STRESS IN MUNICIPAL BOND MARKET  |  States and cities are learning that the days of easy money are coming to an end, Mary Williams Walsh writes in DealBook. “Interest rates have been inchng up everywhere, sending America’s vast market for municipal bonds, a crucial source of financing for roads, bridges, schools and more, into its steepest decline since the dark days of the financial crisis in 2008.”

“For one state, Illinois, the higher interest rates will add up to $130 million over the next 25 years â€" and that is for just one new borrowing. All told, the interest burden of states and localities is likely to grow by many billions, sapping tax dollars that otherwise might have been spent on public services. The same concerns about rising rates that have buffeted the world’s stock markets recently have also affected the market for municipal bonds. The muni market, despite a modest rally on Wednesday, is headed for one of its worst months in years.”

Mergers & Acquisitions »

Dish Wi! thdraws Its Bid for Clearwire  |  Dish Network withdrew its $4.40-a-share offer for Clearwire on Wednesday, nearly a week after the bid was trumped with a sweetened proposal by Sprint Nextel.
DealBook »

Verizon Looks to Canada for Wireless Deals  |  Reuters reports: “Verizon Communications Inc. has offered to buy Canadian telecom startup Wind Mobile and is in talks to acquire Mobilicity, as it seeks to challenge Canada’s three big wireless providers, sources familiar with the deals said on Wednesday.”
REUTERS

Zimmer Fires Back at Men’s Wearhouse Board  |  George Zimmer, the founder of Men’s Wearhouse, was critical of the board in an open letter to the company on Wednesday. “To justify their actions, they now have tried to portray me as an obstinate former C.E.O., determined to regain absolute control by pushing a going private transaction for my own personal benefit and ego,” he wrote. “Nothing could be further from the truth.”
HUFFINGTON POST

A Second Bid Emerges for Empire State Building  |  Bloomberg News reports: “An unidentified bidder offered to buy New York’s Empire State Building for $2.1 billion, the second takeover proposal reported before a planned initial public offering that would include the skyscraper.”
BLOOMBERG NEWS

Precision Castparts Plans to Buy Permaswage for $600 Million  | 
REUTERS

Cerberus Said to Bid for Harris Teeter Supermarket Chain  | 
WALL STREET JOURNAL

INVESTMENT BANKING »

Europe Agrees on New Rules for Troubled Banks  |  The plan that Eropean Union finance ministers agreed to early Thursday specifies the order in which banks’ investors and creditors, and then uninsured depositors, face losses when banks collapse.
NEW YORK TIMES

In Shareholder Say-on-Pay Votes, More Whispers Than Shouts  |  The Dodd-Frank Act required shareholder approval of executive pay packages, but investors don’t seem to care about pay if their stocks are up, Jesse Eisinger of ProPublica writes in his column, The Trade.
The Trade »

Contemplating the End of Fannie and Freddie  |  A new bill in Washington “would eliminate Fannie and Freddie; the two companies are supposed to be wound down within five years. But does that mean the private market will take over? Not a chance,” Joe Nocera, a columnist for The New York Times, writes.
NEW YORK TIMES

Nomura Hires Former JPMorgan Banker in Leveraged Finance  | 
WALL STREET JOURNAL

Barclays Names New Head of South Korea Operations  | 
WALL STREET JOURNAL

PRIVATE EQUITY »

Where Private Equity Deals Are Done  |  Last year, private equity firms invested $347 billion in more than 2,000 companies based in the United States, according to an annual report from the Private Equity Growth Capital Council to be released on Thursday. The report includes rankings of states and congressional districts according to investment.
PRIVATE EQUITY GROWTH CAPITAL COUNCIL

K.K.R. Said to Pursue Bushnell  |  The private equity firm Kohlberg Kravis Roberts “has submitted a formal bid” for Bushnell, the manufacturer of hunting equipment, The New York Post reports.
NEW YORK POST

HEDGE FUNDS »

For Commodities, an End to the ‘Supercycle’  |  “If anyone was still in doubt about whether the era of ever-rising prices driven by rapid Chinese growth was over, events of the past week have surely dispelled it,” The Financial Times reports.
FINANIAL TIMES

Starboard Value Proposes 4 Nominees for Office Depot Board  | 
REUTERS

I.P.O./OFFERINGS »

Rough Markets in Asia Affect Casino I.P.O.’s  |  Resorts World Manila, a Philippine casino business, put a $500 million I.P.O. in Manila on hold, while Macau Legend Development reduced the size of its Hong Kong I.P.O. by half, The Wall Street Journal reports.
WALL STREET JOURNAL

VENTURE CAPITAL »

Sex Discrimination Suit Against Venture Firm to Stay in Public View  |  Reuters reports: “A high-profile Silicon Valley sex discrimination lawsuit moved closer to a trial after a panel of justices ruled that venture capital firm Kleiner Perkins Caufield & Byers cannot take a former partner’s claims to arbitration.”
REUTERS

Some Small Businesses Accept Payments in Bitcoin  | 
WALL STREET JOURNAL /a>

The Hartford to Sell an Annuities Unit to Berkshire Hathaway

The Hartford said on Thursday that it has agreed to sell an international annuities unit to Berkshire Hathaway for $285 million in cash, as part of an effort to shed businesses outside of property and casualty insurance.