After Mishaps, Nasdaq Loses Standing to Rivals

Nasdaq was once the upstart of the financial world, set to take over the American stock market. Now, the company is looking more like a vulnerable also-ran.

The reputation of the market operator has been dented by a number of recent mishaps, the biggest and most prominent coming on Thursday, when a technical problem shut down all trading in Nasdaq stocks for three hours. That was just a few weeks after prosecutors announced that hackers had managed to break into and remain in Nasdaq’s computer systems for two years.

Even before its technical problems, Nasdaq has been losing its commanding position in stock trading as younger rivals steal its business. Two of those rivals â€" BATS Global Markets and Direct Edge â€" are in talks to merge, according to a person briefed on the matter. That combination would make it bigger than Nasdaq and close to the New York Stock Exchange in terms of trading volume. The deal talks are showcasing the rise of two markets built to favor computerized high-speed trading.

The N.Y.S.E., the longtime archival of Nasdaq, has dealt with these competitive pressures by selling itself to another young, fast-growing exchange in a deal that recently received approval from regulators. But Nasdaq has failed in its two notable efforts to buy other exchanges. And the acquisitions it has recently made have often been far from the stock trading business. All of which has left a big question mark hanging over its future.

“They’ve got a real problem,” said David B. Weiss, an exchange analyst at Aite Group. “They need to do something to get the pull they used to have.”

A number of industry participants have complained that Nasdaq’s response to the trading halt on Thursday showed many of the same flaws that have caused the company problems in other circumstances; most of all, poor communication with other members of the industry.

“This draws into question a lot of the issues surrounding Nasdaq, and the general leadership of the exchange,” said Christopher Nagy, the founder of Kor Trading.

The leader of the Nasdaq is Robert Greifeld, who has been chief executive since 2003. He is known for his intensity and somewhat quixotic interests, including marathon running and the turtle pond in his New Jersey back yard.

It was Mr. Greifeld who was seen as the driving force behind Nasdaq’s failed efforts to buy the London Stock Exchange in 2007 and the N.Y.S.E. in 2011.

He has had a tempestuous relationship with both his regulators and customers. In the middle of the bidding for the London exchange, the founder of the large trading firm Tradebot, Dave Cummings, wrote a letter to other industry participants in which he called Mr. Greifeld a “bully.”

“A number of people have recounted sales meetings in which Bob led with the slogan ‘our customers are our hostages,’ ” Mr. Cummings’ letter said.

Nasdaq has said his letter was not worthy of a response.

For the broader market, the biggest lingering sore spot before this week was Nasdaq’s handling of the Facebook initial public offering in May 2012. Mr. Greifeld stood next to Facebook’s founder, Mark Zuckerberg, to ring the opening bell, but when Nasdaq’s technology went haywire as Facebook’s stock began trading, Mr. Greifeld got on a plane back to New York and was out of touch for hours while the market was in chaos.

The Facebook debacle lost Nasdaq some credibility with the company’s main regulator, the Securities and Exchange Commission, where some officials have been frustrated with Nasdaq’s lack of communication â€" and at times, lack of contrition. The agency’s enforcement unit ultimately fined the exchange $10 million for its role in the botched I.P.O. As the S.E.C. investigated the I.P.O., people briefed on the matter said, Nasdaq played down the problem and questioned whether regulators were overreacting.

Mr. Nagy said he was “appalled” to see many of the same issues of communication coming up after this week’s incident.

On Thursday, the exchange did not immediately notify the S.E.C. when the problem surfaced, the people briefed on the matter said. As a courtesy, other exchanges typically alert the agency to serious threats. Nasdaq did open a phone call with their employees and with employees from other exchanges soon after the problem was detected.

Ben Protess and Michael J. de la Merced contributed reporting.

Hedge Funds Win Ruling in Argentina Bond Case

A dogged group of hedge funds secured a significant victory in a federal appeals court on Friday in a case that is likely to have far-reaching effects on international bond markets, parts of the banking system and the struggling nation of Argentina.

The hedge funds, including one affiliated with the investment firm of the billionaire Paul E. Singer, bought a handful of bonds that Argentina’s government defaulted on early in the last decade. Their aim was to buy the debt for pennies on the dollar and then sue Argentina to press it to pay the bonds in full. A lower court judge ruled in their favor, and a three-judge panel of the United States Court of Appeals for the Second Circuit in New York upheld his decision.

The funds may not be in line for a big financial return on their high-risk bet, even after the court victory on Friday. But even if their wager never pays off, the funds’ litigation strategy is bringing important changes to the international market in which many countries borrow to finance their deficits and support their economies.

The litigation could also create a situation in which Argentina, led by President Cristina Fernández de Kirchner, chooses to default on billions of dollars of bonds, a move that would deepen the country’s economic problems. Argentina has employed prominent New York lawyers to fight its case. Mrs. Kirchner has often commented combatively on the case, calling the hedge funds “vultures.”

“This is legal history in the making,” said Arturo C. Porzecanski, a professor of international economics at the American University in Washington. “The ruling, as well as the entire Argentina litigation, is really setting precedent.”

The appeals court decision has its roots in a dark period of Argentina’s recent history. Reeling from a harsh economic slowdown, Argentina defaulted on nearly $100 billion of debt in 2001. In the years afterward, many of the country’s bondholders agreed to deals in which they received new “exchange” bonds that were worth a lot less than the original ones. Argentina has kept up with the payments on the exchange bonds since it issued them.

But some investors, known as holdouts, refused to join the exchange deals and demanded full repayment. This included Mr. Singer’s firm, Elliott Management, which has sued other developing countries to make money on defaulted bonds. In the Argentina case, it even persuaded a court in Ghana to seize an Argentine naval vessel.

The funds demanded that they be paid in full on $1.3 billion of defaulted Argentine bonds, and Judge Thomas P. Griesa of Federal District Court in New York ruled forcefully in their favor.

His ruling contained two crucial features. First, he said Argentina had to pay the holdouts on their defaulted bonds whenever it next made payments on the restructured bonds. And in a move that has few precedents, Judge Griesa came up with a way to potentially enforce his decision if Argentina chose to ignore it. He singled out the financial firms that pass the payments on the restructured bonds from the Argentine government to their holders. If these firms handled the payments, they could effectively find themselves in contempt of the court’s ruling.

Not wanting to break the law, the firms, like Bank of New York Mellon, would stop processing the bond payments. Mrs. Kirchner would then have to decide whether to pay the holdouts to clear the way for the payment-processing firms to funnel money to the holders of the exchange bonds or, in the alternative, default on the exchange bonds.

Though the appeals court sided with Judge Griesa, it delayed the enforcement of the decision while the Supreme Court decides whether to take the case.

“Today’s unanimous, well-reasoned decision appropriately condemns Argentina’s persistent violation of its obligations and its extraordinary defiance of the laws of the United States,” Theodore B. Olson, a partner at Gibson, Dunn & Crutcher, the law firm that is representing an affiliate of Elliott Management, said in a statement.

“This is another opportunity for my government to do what it should do and deal in good faith,” said Horacio Vázquez, a Buenos Aires native who leads a group of bondholders who want to be repaid in full.

One big question is whether the appeals court decision will disrupt the sort of debt reductions that can ease the economic burdens of some countries. Investors might be emboldened to take a tough line after seeing Elliott’s legal successes.

But the appeals court argued that this Argentina case was narrow in nature, suggesting that it may not apply in other defaults. “This case is an exceptional one with little apparent bearing on transactions that can be expected in the future,” Judge Barrington D. Parker wrote in the decision.

Legal specialists who think the Argentina case won’t have a wide effect have also noted that many bonds now have a special feature that make it much harder for hedge funds to hold out.

Still, bonds continue to have a so-called pari passu clause, from the Latin for “on equal footing,” which has been crucial in this case. The clause provided the legal basis for the courts to demand that the holdouts be paid when the holders of the exchange bonds are paid.

“Everyone who has a clause like this had better look at it very carefully,” Mitu Gulati, a law professor at Duke, said.

Perhaps the most jarring development is that the appeals court upheld the provisions that are designed to stop banks from passing on payments on the exchange bonds. The government debt market lacks an authority, like a bankruptcy court, that can sort out disputes between creditors and debtors. By effectively tying the hands of firms like Bank of New York Mellon, the United States courts could become such an enforcer.

“This is the revolution in this case,” Mr. Gulati said. “For the first time in hundreds of years of sovereign debt, a court is saying, ‘We’re going to go out there and improve the market by helping you to enforce it.’ ”

The odds of Argentina getting the Supreme Court to rule on the case do not look strong.

“On the one hand, just looking at these questions as questions of law, I don’t think the Supreme Court is likely to take it up,” Henry Weisburg, a partner at Shearman & Sterling, said. “But you do have to balance this against the fact that sovereign states do get deference from the Supreme Court.”

In Argentina, Mrs. Kirchner is likely to keep up her strong opposition to the hedge funds for the foreseeable future, which means they probably won’t get paid in full any time soon.

But political analysts are starting to doubt whether she can win the 2015 election. That could pave the way for a new president who may be more willing to settle with the holdouts.

Obama Says Law School Should Be Two Years, Not Three

President Obama urged law schools on Friday to consider cutting a year of classroom instruction, wading into a hotly debated issue inside the beleaguered legal academy.

“This is probably controversial to say, but what the heck. I am in my second term, so I can say it,” Mr. Obama said at a town hall-style meeting at Binghamton University in New York. “I believe that law schools would probably be wise to think about being two years instead of three years.”

The president’s surprising remarks, made while discussing how to make education more affordable, comes at a time of crisis for law schools. With an increasing number of graduates struggling with soaring tuition costs, heavy student debt and a difficult job market, a growing number of professors and administrators are pushing for broad reforms in legal education.

“We academics toil in the wilderness,” said Samuel Estreicher, a professor at the New York University School of Law who is leading a movement to allow graduates to be able to take the bar exam and practice after two years. “It is great to have the president join the cause.”

Mr. Obama has plenty of credibility inside the legal academy. After graduating from Harvard Law School, where he served as the president of the Harvard Law Review, he taught constitutional law at the University of Chicago from 1992 until his election to the Senate in 2004.

On Friday, he questioned the utility of a third year of classes and suggested that students use their final two semesters to gain work experience.

“In the first two years, young people are learning in the classroom,” Mr. Obama said. “The third year, they’d be better off clerking or practicing in a firm even if they weren’t getting paid that much, but that step alone would reduce the costs for the student.”

He acknowledged that eliminating a third year could possibly hurt a law school’s finances and ability to maintain a strong faculty.

“Now, the question is,” Mr. Obama said, “can law schools maintain quality and keep good professors and sustain themselves without that third year? My suspicion is, is that if they thought creatively about it, they probably could.”

The president was preaching to a growing choir of law professors and administrators who agree that reforms must be made.

Earlier this year, New York University held a symposium on reforming law school. Professor Estreicher argued that making the third year optional would reduce the cost of a legal education while encouraging clinical work outside the classroom. The school recently revamped its third-year curriculum with a focus on foreign study and specialized concentrations.

William D. Henderson, a law professor at the University of Indiana who has also pushed for changes, was pleased with Mr. Obama’s remarks. But he said he was happy law school wasn’t only two years when he attended the University of Chicago Law School, graduating in 2001.

“I took Obama’s class in my third year,” Mr. Henderson wrote in an e-mail. “I would have missed out!”

Week in Review: S.E.C. Pushes to Fix Market Flaws

A barrage of bad trades from Goldman Sachs and pricing paralysis on Nasdaq is spurring regulators to push ahead on new safeguards.

The Securities and Exchange Commission’s chairwoman, Mary Jo White, said that she would “shortly convene a meeting of the leaders of the exchanges” to push ahead on new testing requirements that have been rebuffed by exchange companies.

A look back on our reporting of the past week’s highs and lows in finance.

FRIDAY, AUG. 23

Nasdaq Chief Defends Handling of Trading Halt | Robert Greifeld said that the exchange needs to work on its “defensive driving” to deal better with mistakes by others. DealBook »

THURSDAY, AUG. 22

Pricing Problem Suspends Nasdaq for Three Hours | The United States stock market remains vulnerable to technological breakdowns even as regulators and market operators work to keep up with trading that is increasingly electronic and driven by speed. DealBook »

News Analysis: In Markets Tuned Up Machinery, Stubborn Ghosts Remain | Why are markets failing, and failing so often? One reason is the need for speed, says Floyd Norris. Another is increased competition. DealBook »

Big Name Is Leaving Boies’s Firm After a Year | Once staid partnerships where lawyers spent their entire careers, firms are increasingly collections of individuals with portable books of business. DealBook »

Moody’s Threatens to Cut Credit Ratings of Banks | If it follows through, Moody’s could reduce the ratings of Wall Street giants like Goldman Sachs, Morgan Stanley and JPMorgan Chase as much as two grades. DealBook »

Goldman Sachs Banker Charged With Rape | Jason Lee was arraigned on charges of raping a 20-year-old woman in an East Hampton rental home and posted $20,000 bail. The New York Times »

New Claims in U.S. Case Against SAC Ex-Trader | The updated charges against Mathew Martoma mesh with the accusations contained in the S.E.C. lawsuit brought against Steven Cohen last month. DealBook »

WEDNESDAY, AUG. 21

Bloomberg to Increase Oversight After Privacy Lapses | Investigators found that when the issue was first brought to the company’s attention in 2011, top executives decided to stop giving journalists access to the data but that no concrete steps were taken. DealBook »

For Activist Fund’s Chief, a Sober Self-Evaluation | William A. Ackman sounded a note of contrition in a letter to investors, saying that Pershing Square Capital Management’s investment in J. C. Penney had been a “failure.” DealBook »

Fed Appeals Rejection of Rule on Debit Card Fees | The appeal will be a crucial test of the courts’ power to overturn the financial regulations that stemmed from the sweeping banking overhaul after the crisis. DealBook »

TUESDAY, AUG. 20

Currency Volatility Unnerving Investors | Lawmakers and central bankers in India, Indonesia, Turkey and several emerging-market economies are scrambling to contain the damage from falling currencies and to keep foreign investors from heading for the exits. DealBook »

Many Wall St. Banks Woo Children of Chinese Leaders | Although many of those hired have worked diligently, others have been placed on the payroll with little or no work expected of them. DealBook »

Barnes & Noble’s Founder Will Not Pursue a Bid for the Bookstores | Leonard S. Riggio’s disclosure accompanied the retailer’s latest results, which included a loss that more than doubled from the same time last year. DealBook »

MONDAY, AUG. 19

An Admission of Wrongdoing as S.E.C. Takes a Harder Line | The agreement sets a potential precedent for the regulator, which is busy with investigations involving JPMorgan Chase and the hedge fund SAC Capital Advisors. DealBook »

Obama Presses for Action on Bank Rules In a private White House meeting, President Obama told the nation’s top financial regulators that they must work to prevent a repeat of the 2008 financial crisis. The New York Times »

DealBook Column: Hiring the Connected Isn’t Always a Scandal | In financial firms, does hiring the children of the elite constitute bribes? Hardly, says Andrew Ross Sorkin. DealBook »

Banks Coming Up Short in Planning for the Worst, Fed Says | The Fed said some banks were not taking into account the possibility of falling house prices when valuing certain mortgage-related assets for the tests. DealBook »

Norway’s Statoil Will Sell Some North Sea Assets to OMV of Australia | The $2.65 billion transaction saves $7 billion in capital costs, notably on Rosebank, a deepwater discovery that is likely to be one of Europe’s most expensive projects. DealBook »

Oversight Board Faults Broker-Dealer Audits | Auditors performed complete and correct audits of at least three brokerage firms last year. That amounted to only 5 percent of the 60 audits reviewed. DealBook »

Ex-Prosecutor in Enron Case Coming Back | The Justice Department named Leslie R. Caldwell, a defense lawyer at the firm Morgan Lewis, as the next head of its criminal division. DealBook »

To Cover New York, Zillow Buys a Rival Site | The seven-year-old start-up StreetEasy sold itself to the giant of online real estate information for $50 million in cash. DealBook »

SUNDAY, AUG. 18

Public Funds Take Control of Assets, Dodging Wall St. | The world’s biggest pension and sovereign wealth funds have found they can often manage their own money at a lower cost without losing out on returns. DealBook »

SATURDAY, AUG. 17

Hiring in China by JPMorgan Under Scrutiny | Federal authorities have opened a bribery investigation into whether JPMorgan Chase hired the children of powerful Chinese officials to help the bank win lucrative business in the booming nation, according to a confidential United States government document. DealBook »

WEEK IN VERSE

‘Cups’ “You’re gonna miss me when I’m gone,” sings Anna Kendrick. Even if it’s only for three hours. DealBook »

Next Microsoft Chief Should Pare the Menu

The next boss of Microsoft needs a “less is more” mindset. Chief Executive Steve Ballmer is finally on the way out. A $20 billion bump in the company’s value after the news shows just how badly investors want a new approach. The wasteful “try everything” strategy should go.

Mr. Ballmer inherited a near-monopoly in the Windows operating system and Office productivity software, and he has done well fattening up that cash cow. Microsoft earned $22 billion last year, more than twice as much as in 2000, when he became C.E.O. But his empire-building ambitions are evident in sales, which have increased more than threefold.

About three-quarters of profit still comes from Windows, Office and the like, with the company’s server and tools division making up most of the rest. The online services division, which contains the search engine Bing, has been bleeding cash, losing $12 billion over the last three years alone. The entertainment and devices division is in the black but hasn’t yet come close to recouping its cost of capital. Its missteps include the awful Zune music player and Kin phone.

The company says it still wants to sell more devices and has only just started its push in that direction. The company also says it might take up to a year to find a new C.E.O. Insiders like Terry Myerson, in charge of operating systems, could be in the running, as could exiled former rivals to Mr. Ballmer like Paul Maritz and dark-horse outsiders like Sheryl Sandberg of Facebook.

Whoever lands the job can score quick points by narrowing the focus on business software, at least to begin with. Selling the Xbox gaming unit could bring in some extra capital. Shutting down or spinning off search and Microsoft’s efforts in mobile devices would reduce losses like the $900 million write-down it took on its Surface tablets in July. It would also allow the company to concentrate on things like making Office work well on gadgets like Apple’s iPad.

Concentrating on business software would also make Microsoft simpler to understand and manage, tasks that became more complicated-looking in Ballmer’s last reorganization. Shareholders would surely be happy with the prospect of higher cash returns, too. Even the outgoing C.E.O. might find solace. The promise of his departure lifted the value of his 4 percent stake by nearly $1 billion, and real change would deliver more.

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

Two Market Operators, BATS and Direct Edge, Said to Be in Talks to Merge

BATS Global Markets and Direct Edge are in talks to merge, potentially creating one of the biggest stock market operators in the country, a person briefed on the matter told DealBook on Friday.

Talks are continuing and may still fall apart. Both companies are privately held.

If successful, a merger would jump the combined company ahead of the Nasdaq OMX Group and put it close to the New York Stock Exchange and its electronic platform in terms of volume, as well as showcasing the rise of two markets built to favor computerized high-speed trading.

Word of the talks, reported earlier by The Wall Street Journal, emerged just one day after Nasdaq halted trading in all stocks listed on its market because of technical glitches.

Last year, BATS sought to go public, listing shares on its own exchange. But technical issues that affected trading in stocks like Apple forced the market operator to halt trading, and the company eventually withdrew its initial public offering.

Dutch Bank ABN Amro Takes Step Toward an I.P.O.

LONDON - The nationalized bank ABN Amro moved a step closer to the public markets on Friday after the Dutch government said it would seek an initial public offering for the bank.

The announcement comes five years after the Dutch government bailed out ABN Amro after a consortium of European banks acquired the bank for around 72.2 billion euros, or $99 billion.

The takeover was one of the worst deals struck at the beginning of the financial crisis, and led to the nationalizations of both ABN Amro and Royal Bank of Scotland, the British bank that led the buying consortium.

After years of restructuring, including 28 billion euros of government funds, the Dutch prime minister, Mark Rutte, said on Friday that the bank was now getting reading for an I.P.O.

“We will get as good a price as possible. The chance of selling with a profit is small,” Mr. Rutte told reporters at a press conference, according to Reuters.

Analysts say ABN Amro is currently worth around 15 billion euros, and any listing would depend on greater stability in the European markets.

“ABN Amro is ready to start preparations for an I.P.O.,” the Dutch bank said in a statement on Friday. “At the moment, however, ABN Amro is suffering from the Dutch economic recession.”

A potential listing is not likely to come before 2015, and is expected to generate a loss on the Dutch taxpayers’ investment in the nationalized bank. That would contrast with the profit that United States taxpayers have earned from their bank bailouts.

The British government is also likely to generate returns from the part nationalization of Lloyds Banking Group, which is currently 39 percent owned by local taxpayers. British authorities are expected to start selling shares in the bank by early next year, and Lloyds’ share price is currently trading above what the government paid for its stake in the firm.

The pending offering for ABN Amro follows a difficult restructuring plan. The bank has suffered from weak domestic growth and a rise in delinquent loans.

On Friday, ABN Amro, which generates more than 80 percent of its revenue from its domestic operations, reported a 3 percent fall, to 817 million euros, in its net income during the first half of the year, as an increase in troubled loans was offset by one-time gains. Without these one-off earnings, ABN Amro said its first half earnings fell 36 percent compared with the same period in 2012.

“We expect loan impairments for 2013 to rise above last year’s level as the economic conditions in the Netherlands are set to remain challenging for the remainder of 2013,” ABN Amro’s chairman, Gerrit Zalm, said in a statement on Friday.

Ballmer’s Greatest Hits and Misses as Microsoft’s Chief Deal Maker

By announcing a 12-month timetable for his departure as Microsoft‘s chief executive, Steven Ballmer has signaled an impending end to one of the most prolific deal-making streaks in technology over the past two decades.

But his record as a serial acquirer is as much notable for its misses as its hits.

Under Mr. Ballmer, Microsoft has purchased 149 companies, according to data from Standard & Poor’s Capital IQ. Most were well under $1 billion. But some were genuine blockbusters, notably the $8.5 billion acquisition of Skype in 2011 and the nearly $6 billion takeover of aQuantive in 2007.

In general, Microsoft has used deals to either move into new business areas, from messaging to digital advertising to social networking.

It’s too soon to tell how well Skype has been working out for Microsoft, which has been working to integrate the video messaging service into core products like Windows. Skype has grown under its new parent, rising from about $800 million in sales two years ago to an expected $2 billion for its current fiscal year.

Microsoft also joined Apple, BlackBerry and others in a collective $4.5 billion bid for patents held by the defunct Nortel Networks two years ago. The unusual move was meant to keep the cellular networking patents available for the entire industry, and trumped a competing offer by archrival Google.

But aQuantive proved an expensive flop. Microsoft took a $6.2 billion accounting charge â€" essentially writing off the entire deal â€" for the unit last summer.

Still, the most notable deal effort that Mr. Ballmer undertook may be the one he couldn’t finish: Yahoo. The Microsoft chief audaciously bid for the Web pioneer in early 2008, calling a merger of the two as “the next major milestone” in his company’s future. But three months of fruitless talks, during which Mr. Ballmer neither significantly raised his bid beyond $33 a share nor decided to go fully hostile, passed by before he walked away.

Not all of the blame lies with Mr. Ballmer. Yahoo was persistent â€" too stubborn, in many investors’ views â€" in resisting Microsoft’s approach. And some shareholders were unhappy with the intercessions of Carl C. Icahn, a major Yahoo stakeholder.

But the collapse of what would have been a blockbuster $45 billion merger lingered for years afterward, and Microsoft never seriously attempted another deal of that magnitude again.

It remains to be seen whether his successor, whether that person comes from inside or outside the technology behemoth, will attempt to be as bold.

Nasdaq Chief Defends Handling of Trading Halt

The chief executive of the Nasdaq stock exchange, Robert Greifeld, on Friday shot back at criticism of how his exchange handled a three-hour halt in trading on Thursday afternoon.

Mr. Greifeld said in an interview on Friday morning that the breakdown on Thursday had been set off by another participant in the market, not something inside Nasdaq.

“We had an external environment happen,” he said.

That problem, which Mr. Greifeld declined to describe more fully, caused issues with the data system that provides prices for recent trades in Nasdaq stocks. Nasdaq operates that system.

The long-time Nasdaq executive said that the exchange needs to work on its “defensive driving” to deal better with mistakes by others.

The exchange was up and running smoothly on Friday morning, and the Nasdaq composite index was trading up slightly. But the exchange has heard from angry customers and industry veterans who said that the company left the market in confusion for much of the lengthy shutdown, during which none of the stocks listed on Nasdaq could be bought or sold.

Mr. Greifeld said that he did not understand the criticism.

“In our opinion, we communicated with our constituents as well as we possibly could have,” he said.

The incident happened less than two years after a problem with Nasdaq’s technology delayed the initial public offering of Facebook stock. Mr. Greifeld said that the two big incidents don’t point to any deeper flaw with Nasdaq’s technology system.

“People recognize the superior nature of our technology,” he said. “We recognize that we need to get better at what I’m calling defensive driving. ”

Nasdaq’s own stock was up 1.2 percent on Friday morning, after falling 3.4 percent on Thursday.

Morning Agenda: Nasdaq’s Latest Breakdown

PRICING PROBLEM HALTS NASDAQ FOR THREE HOURS  |  A technological problem shut down trading on the Nasdaq market and its more than 3,000 stocks for more than three hours Thursday afternoon, Nathaniel Popper reports in DealBook. The halt was prompted by a problem with the data system that disseminates prices, Nasdaq officials said, adding that the cause had been “identified and addressed.”

The latest trouble showed again how the stock market “remained vulnerable to technological breakdowns even as regulators and market operators work to keep up with trading that is increasingly electronic and driven by speed,” Mr. Popper writes. “The disruption on the nation’s second-largest stock market, after the New York Stock Exchange, reverberated up and down Wall Street, affecting other markets as investors cautiously stepped back.”

The chief executive of one Wall Street firm, who asked not to be named, said: “We didn’t lose any money on the shutdown, but we also made very little money today.”

Thursday’s episode brought back memories of past difficulties for Nasdaq, which trades shares of some of the world’s most prominent technology companies. Squirrels â€" two of them â€" have caused power failures, and computer glitches have led to market interruptions. Last year, the initial public offering of Facebook was plagued by errors at the exchange.

“While Nasdaq’s failure on Thursday appears to be one of the most significant technology problems to strike the markets, it was less important than the earlier errors in one key way,” Floyd Norris writes in DealBook. “When Nasdaq determined it was unable to distribute quotes on all stocks listed on its exchange, it asked that other markets that trade Nasdaq stocks also halt trading, and they did. As a result, no one could trade.”

BIG NAME IS LEAVING BOIES’S FIRM  |  David M. Bernick, a former general counsel at the tobacco giant Philip Morris, is leaving his current firm, Boies Schiller & Flexner, after just a year there, DealBook’s Peter Lattman reports. He is expected to announce on Friday that he is headed to the law firm Dechert, according to people briefed on the matter. It is the third time in recent months that a well-known partner has left the firm, which was started by the renowned trial lawyer David Boies.

MOODY’S THREATENS TO CUT BANK RATINGS  |  Moody’s Investors Service threatened on Thursday to downgrade the credit ratings of several big financial firms, arguing that the government was now more likely to let large banks fail in a crisis, DealBook’s Peter Eavis reports. Moody’s, if it follows through, could reduce the ratings of giants like Goldman Sachs, Morgan Stanley and JPMorgan Chase as much as two grades.

“Such a move might weigh most heavily on Morgan Stanley because a two-notch downgrade would leave the company just above a junk credit rating. But the effects on the bank may also be muted,” Mr. Eavis writes. “Confidence in large banks, judging by their stock prices and other financial indicators, appears to have risen since Moody’s cut their ratings last year.”

ON THE AGENDA  |  Robert Greifeld, the chief executive of the Nasdaq OMX Group, is scheduled to appear on CNBC at 7:30 a.m. Central bankers and economists have descended on Jackson Hole, Wyo., for the Federal Reserve Bank of Kansas City’s annual monetary policy conference. Janet Yellen, the vice chairwoman of the Fed, is expected to moderate panel discussions.

NEW CLAIMS AGAINST EX-SAC TRADER  |  Federal prosecutors filed an updated indictment in the criminal insider trading case against Mathew Martoma, a former SAC Capital Advisors portfolio manager, adding a claim that he got secret information about drug trials from a second doctor, DealBook’s Peter Lattman reports. After originally claiming that one doctor leaked Mr. Martoma the results of clinical tests â€" allowing SAC to earn profits and avoid losses totaling $276 million â€" the government now claims that Mr. Martoma corrupted two doctors to obtain confidential data about a drug being developed by Elan and Wyeth.

The second doctor has not been charged and was described only as a “co-conspirator.” The first doctor, Sidney Gilman, a neurologist at the University of Michigan, has agreed to testify against Mr. Martoma.

Mergers & Acquisitions »

How BlackBerry Handled Its Past Prosperity  |  In better times, BlackBerry handled its profits in “a way that served BlackBerry executives well and that pleased Wall Street but provided no benefits to loyal shareholders,” Floyd Norris, a columnist for The New York Times, writes.
NEW YORK TIMES

Bidders Line Up for Panasonic’s Health Care Unit  |  Toshiba, K.K.R. and a consortium that includes Bain Capital “are expected to participate in the final round of bids next week for Panasonic Corp.’s health care business, a deal that could fetch as much as $1.5 billion, sources with knowledge of the matter said on Friday,” Reuters reports.
REUTERS

Tribune Papers Are No Longer on Kochs’ Radar  |  Still, Charles and David Koch continue to be interested “in the media business” and are exploring opportunities, a spokeswoman said.
NEW YORK TIMES

J.C. Penney Adopts Takeover Defense  |  The struggling retailer adopted a “poison pill” shareholder rights plan that would be triggered if an investor acquired at least 10 percent of the company’s shares.
BLOOMBERG NEWS

A Second Act for AOL Co-Founder  |  Stephen M. Case, who engineered the disastrous merger of AOL and Time Warner, is “thriving again, in a self-made role that in some ways makes him more influential than ever,” Bloomberg Businessweek reports.
BLOOMBERG BUSINESSWEEK

Sears, Facing Weak Sales, Reports a Loss  | 
ASSOCIATED PRESS

INVESTMENT BANKING »

Goldman Banker Arrested on Rape Charges in East Hampton  |  A Goldman Sachs managing director, Jason Lee, 37, was charged with raping a young woman in an East Hampton rental home, authorities said on Thursday. A lawyer for Mr. Lee said his client “adamantly denies the allegations.”
NEW YORK TIMES

Asian Currencies Fall, But Fears of Contagion Are Muted  |  “South and Southeast Asia are being buffeted by broad shifts in international economics, but with Japan and China to the north largely unaffected, fears of a more widespread crisis are being played down,” Keith Bradsher reports in The New York Times.
NEW YORK TIMES

UBS Reorganizes Hedge Fund Business  |  UBS promoted an executive of its $5.2 billion hedge fund business as part of a larger push to increase assets under management, Bloomberg News reports.
BLOOMBERG NEWS

PRIVATE EQUITY »

Equity Firm Said to Be in Talks for Stake in Hexaware of India  |  Baring Private Equity “is in final talks” to buy 68 percent of Hexaware Technologies, an Indian software company, for about $400 million, The Wall Street Journal reports, citing an unidentified person familiar with the matter.
WALL STREET JOURNAL

A New Refinancing Offer for Billabong  | 
WALL STREET JOURNAL

HEDGE FUNDS »

Icahn Tweets Dinner Plans With Apple’s Chief, and Investors Applaud  |  Despite the hullabaloo over the Nasdaq stock market’s failure on Thursday afternoon, traders remained fixated squarely on Apple’s then-frozen stock price. Why? Because Carl C. Icahn had taken to Twitter again.
DealBook »

I.P.O./OFFERINGS »

Alibaba Said to Push to Allow Partners to Nominate Board Members  |  The Chinese e-commerce giant, which analysts expect could be valued at $100 billion or more in an initial public offering, has made a proposal to allow key executives to retain control over corporate strategy, according to a person with knowledge of the matter.
DealBook »

Nasdaq’s Halt Briefly Pauses a Good Day for a Newly Public Company  |  Shares in Regado Biopharmaceuticals, a drug maker and the only company to stage its market debut on Thursday, had risen more than 20 percent before Nasdaq halted trading in all its listed stocks.
DealBook »

VENTURE CAPITAL »

Uber Is Valued at $3.5 Billion in Financing Round  |  Uber said in a filing that it sold shares to the private equity firm TPG. AllThingsD reports that, in addition, Uber has received an investment from Google Ventures.
ALLTHINGSD

The Pentagon as Tech Incubator  |  “In the last year, former Department of Defense and intelligence agency operatives have headed to Silicon Valley to create technology start-ups specializing in tools aimed at thwarting online threats,” Somini Sengupta writes in The New York Times.
NEW YORK TIMES

A Start-Up Scene for Ad Agencies  |  Boulder, Colo., is increasingly becoming known as a home for entrepreneurs in the advertising business, Stuart Elliott writes in The New York Times.
NEW YORK TIMES

Consumer Services Company Raises $23 Million  |  Slice, which makes an app that helps people manage purchases and organize receipts, is announcing on Friday that it has raised $23 million in a financing round led by the Japanese e-commerce giant Rakuten.
SLICE

LEGAL/REGULATORY »

An Expanded ‘Cooling Off’ Period for the S.E.C.  |  The Securities and Exchange Commission “is making more of its staff who leave the agency for the private sector subject to a one-year cooling-off period,” Reuters reports.
REUTERS

Airlines Propose Trial Date to Fight U.S. Lawsuit  |  American Airlines and US Airways sought a 10-day trial that would begin Nov. 12, as they prepared to defend their planned merger, Reuters reports.
REUTERS

British Credit Card Customers to Be Reimbursed  |  Some of the largest banks and credit card companies in Britain will have to pay a total of up to $2 billion to customers who were sold inappropriate financial products, a British regulator said on Thursday.
DealBook »

Morning Agenda: Nasdaq’s Latest Breakdown

PRICING PROBLEM HALTS NASDAQ FOR THREE HOURS  |  A technological problem shut down trading on the Nasdaq market and its more than 3,000 stocks for more than three hours Thursday afternoon, Nathaniel Popper reports in DealBook. The halt was prompted by a problem with the data system that disseminates prices, Nasdaq officials said, adding that the cause had been “identified and addressed.”

The latest trouble showed again how the stock market “remained vulnerable to technological breakdowns even as regulators and market operators work to keep up with trading that is increasingly electronic and driven by speed,” Mr. Popper writes. “The disruption on the nation’s second-largest stock market, after the New York Stock Exchange, reverberated up and down Wall Street, affecting other markets as investors cautiously stepped back.”

The chief executive of one Wall Street firm, who asked not to be named, said: “We didn’t lose any money on the shutdown, but we also made very little money today.”

Thursday’s episode brought back memories of past difficulties for Nasdaq, which trades shares of some of the world’s most prominent technology companies. Squirrels â€" two of them â€" have caused power failures, and computer glitches have led to market interruptions. Last year, the initial public offering of Facebook was plagued by errors at the exchange.

“While Nasdaq’s failure on Thursday appears to be one of the most significant technology problems to strike the markets, it was less important than the earlier errors in one key way,” Floyd Norris writes in DealBook. “When Nasdaq determined it was unable to distribute quotes on all stocks listed on its exchange, it asked that other markets that trade Nasdaq stocks also halt trading, and they did. As a result, no one could trade.”

BIG NAME IS LEAVING BOIES’S FIRM  |  David M. Bernick, a former general counsel at the tobacco giant Philip Morris, is leaving his current firm, Boies Schiller & Flexner, after just a year there, DealBook’s Peter Lattman reports. He is expected to announce on Friday that he is headed to the law firm Dechert, according to people briefed on the matter. It is the third time in recent months that a well-known partner has left the firm, which was started by the renowned trial lawyer David Boies.

MOODY’S THREATENS TO CUT BANK RATINGS  |  Moody’s Investors Service threatened on Thursday to downgrade the credit ratings of several big financial firms, arguing that the government was now more likely to let large banks fail in a crisis, DealBook’s Peter Eavis reports. Moody’s, if it follows through, could reduce the ratings of giants like Goldman Sachs, Morgan Stanley and JPMorgan Chase as much as two grades.

“Such a move might weigh most heavily on Morgan Stanley because a two-notch downgrade would leave the company just above a junk credit rating. But the effects on the bank may also be muted,” Mr. Eavis writes. “Confidence in large banks, judging by their stock prices and other financial indicators, appears to have risen since Moody’s cut their ratings last year.”

ON THE AGENDA  |  Robert Greifeld, the chief executive of the Nasdaq OMX Group, is scheduled to appear on CNBC at 7:30 a.m. Central bankers and economists have descended on Jackson Hole, Wyo., for the Federal Reserve Bank of Kansas City’s annual monetary policy conference. Janet Yellen, the vice chairwoman of the Fed, is expected to moderate panel discussions.

NEW CLAIMS AGAINST EX-SAC TRADER  |  Federal prosecutors filed an updated indictment in the criminal insider trading case against Mathew Martoma, a former SAC Capital Advisors portfolio manager, adding a claim that he got secret information about drug trials from a second doctor, DealBook’s Peter Lattman reports. After originally claiming that one doctor leaked Mr. Martoma the results of clinical tests â€" allowing SAC to earn profits and avoid losses totaling $276 million â€" the government now claims that Mr. Martoma corrupted two doctors to obtain confidential data about a drug being developed by Elan and Wyeth.

The second doctor has not been charged and was described only as a “co-conspirator.” The first doctor, Sidney Gilman, a neurologist at the University of Michigan, has agreed to testify against Mr. Martoma.

Mergers & Acquisitions »

How BlackBerry Handled Its Past Prosperity  |  In better times, BlackBerry handled its profits in “a way that served BlackBerry executives well and that pleased Wall Street but provided no benefits to loyal shareholders,” Floyd Norris, a columnist for The New York Times, writes.
NEW YORK TIMES

Bidders Line Up for Panasonic’s Health Care Unit  |  Toshiba, K.K.R. and a consortium that includes Bain Capital “are expected to participate in the final round of bids next week for Panasonic Corp.’s health care business, a deal that could fetch as much as $1.5 billion, sources with knowledge of the matter said on Friday,” Reuters reports.
REUTERS

Tribune Papers Are No Longer on Kochs’ Radar  |  Still, Charles and David Koch continue to be interested “in the media business” and are exploring opportunities, a spokeswoman said.
NEW YORK TIMES

J.C. Penney Adopts Takeover Defense  |  The struggling retailer adopted a “poison pill” shareholder rights plan that would be triggered if an investor acquired at least 10 percent of the company’s shares.
BLOOMBERG NEWS

A Second Act for AOL Co-Founder  |  Stephen M. Case, who engineered the disastrous merger of AOL and Time Warner, is “thriving again, in a self-made role that in some ways makes him more influential than ever,” Bloomberg Businessweek reports.
BLOOMBERG BUSINESSWEEK

Sears, Facing Weak Sales, Reports a Loss  | 
ASSOCIATED PRESS

INVESTMENT BANKING »

Goldman Banker Arrested on Rape Charges in East Hampton  |  A Goldman Sachs managing director, Jason Lee, 37, was charged with raping a young woman in an East Hampton rental home, authorities said on Thursday. A lawyer for Mr. Lee said his client “adamantly denies the allegations.”
NEW YORK TIMES

Asian Currencies Fall, But Fears of Contagion Are Muted  |  “South and Southeast Asia are being buffeted by broad shifts in international economics, but with Japan and China to the north largely unaffected, fears of a more widespread crisis are being played down,” Keith Bradsher reports in The New York Times.
NEW YORK TIMES

UBS Reorganizes Hedge Fund Business  |  UBS promoted an executive of its $5.2 billion hedge fund business as part of a larger push to increase assets under management, Bloomberg News reports.
BLOOMBERG NEWS

PRIVATE EQUITY »

Equity Firm Said to Be in Talks for Stake in Hexaware of India  |  Baring Private Equity “is in final talks” to buy 68 percent of Hexaware Technologies, an Indian software company, for about $400 million, The Wall Street Journal reports, citing an unidentified person familiar with the matter.
WALL STREET JOURNAL

A New Refinancing Offer for Billabong  | 
WALL STREET JOURNAL

HEDGE FUNDS »

Icahn Tweets Dinner Plans With Apple’s Chief, and Investors Applaud  |  Despite the hullabaloo over the Nasdaq stock market’s failure on Thursday afternoon, traders remained fixated squarely on Apple’s then-frozen stock price. Why? Because Carl C. Icahn had taken to Twitter again.
DealBook »

I.P.O./OFFERINGS »

Alibaba Said to Push to Allow Partners to Nominate Board Members  |  The Chinese e-commerce giant, which analysts expect could be valued at $100 billion or more in an initial public offering, has made a proposal to allow key executives to retain control over corporate strategy, according to a person with knowledge of the matter.
DealBook »

Nasdaq’s Halt Briefly Pauses a Good Day for a Newly Public Company  |  Shares in Regado Biopharmaceuticals, a drug maker and the only company to stage its market debut on Thursday, had risen more than 20 percent before Nasdaq halted trading in all its listed stocks.
DealBook »

VENTURE CAPITAL »

Uber Is Valued at $3.5 Billion in Financing Round  |  Uber said in a filing that it sold shares to the private equity firm TPG. AllThingsD reports that, in addition, Uber has received an investment from Google Ventures.
ALLTHINGSD

The Pentagon as Tech Incubator  |  “In the last year, former Department of Defense and intelligence agency operatives have headed to Silicon Valley to create technology start-ups specializing in tools aimed at thwarting online threats,” Somini Sengupta writes in The New York Times.
NEW YORK TIMES

A Start-Up Scene for Ad Agencies  |  Boulder, Colo., is increasingly becoming known as a home for entrepreneurs in the advertising business, Stuart Elliott writes in The New York Times.
NEW YORK TIMES

Consumer Services Company Raises $23 Million  |  Slice, which makes an app that helps people manage purchases and organize receipts, is announcing on Friday that it has raised $23 million in a financing round led by the Japanese e-commerce giant Rakuten.
SLICE

LEGAL/REGULATORY »

An Expanded ‘Cooling Off’ Period for the S.E.C.  |  The Securities and Exchange Commission “is making more of its staff who leave the agency for the private sector subject to a one-year cooling-off period,” Reuters reports.
REUTERS

Airlines Propose Trial Date to Fight U.S. Lawsuit  |  American Airlines and US Airways sought a 10-day trial that would begin Nov. 12, as they prepared to defend their planned merger, Reuters reports.
REUTERS

British Credit Card Customers to Be Reimbursed  |  Some of the largest banks and credit card companies in Britain will have to pay a total of up to $2 billion to customers who were sold inappropriate financial products, a British regulator said on Thursday.
DealBook »

Slice, a Shopping Tracking Service, Raises $23 Million

Company Behind the Award-Winning Shopping App, Slice, and Slice Bookshelf Closes Round

PALO ALTO, CA--(Marketwired - Aug 23, 2013) - Slice today announced that it has closed $23 million in funding, led by Rakuten, the largest e-commerce company in Japan, with Siguler Guff's Russia Partners and NPD Group joining the round. Existing investors DCM, Innovation Endeavors and Lightspeed Venture Partners also participated. The investment serves as an endorsement of the company's vision to create fun and useful apps that draw from the wealth of information buried in our inboxes to improve daily experiences.

Slice launched its flagship app in 2011 with the mission to simplify online shopping and has since parsed more than 90 million items at a rate of two items per second, for a total purchase value of nearly $3 billion. The Slice shopping app makes it fun and effortless to keep track of everything you buy online, automatically organizing your purchase history and receipts, sending you push notifications when packages are en route for delivery and alerting you when you're eligible to recoup money for items you've bought that have dropped in price.

Slice has further expanded its reach to consumers through partnerships that leverage its set of APIs in order to make the most of a consumer's purchase history, track packages across multiple carriers and tap into Slice's ancillary services such as Price Drop Alerts. Most recently, TheFind has integrated Slice into its iPad and Web apps in order to further personalize shoppers' search results and enable them to track shipments right within the app.

The latest product from Slice, called Slice Bookshelf, is the easiest way to share and discover books with friends. Like the Slice shopping app, Bookshelf syncs with your email inbox and automatically pulls information from your past book purchases, making it simple to build your virtual library. With Bookshelf, you can instantly dive in and discover new content, borrow and lend among friends and start conversations around your favorite books.

"Our massive growth over the past two years topped off with this round of financing validates our vision to solve consumer needs with services that go far beyond their expectations," said Scott Brady, Slice CEO and co-founder. "We will continue to execute on that vision by supporting and evolving our products, growing our team and extending our APIs to partners, all with the ultimate goal of making life easier for consumers."

About Slice
Slice uses the information buried in your email inbox to create fun and useful consumer applications and experiences. The popular flagship app, Slice, provides a simple way for consumers to manage all their purchases, organize receipts, track shipping, take advantage of price adjustments and improve their shopping experiences. Slice Bookshelf is the easiest way to share and discover books with friends. Based in Palo Alto, CA, Slice is backed by DCM, FLOODGATE, Innovation Endeavors (Eric Schmidt), Lightspeed Venture Partners, NPD Group, Rakuten, and Siguler Guff, as well as Michael Birch and Rick Thompson. To learn more about Slice, visit www.slice.com.

Kochs No Longer Interested in Tribune

Kochs No Longer Interested in Buying Tribune Papers

Charles and David Koch are no longer contemplating a purchase of the Tribune Company’s chain of newspapers, a spokeswoman for the billionaire industrialists said on Thursday.

The spokeswoman, Melissa Cohlmia, affirmed a report by the conservative news Web site The Daily Caller that said Koch Industries â€" where Charles is chairman and chief executive and David is an executive vice president â€" had concluded that the acquisition was “not economically viable.”

But other acquisitions in the media industry might be: “Koch continues to have an interest in the media business, and we’re exploring a broad range of opportunities where we think we can add value,” Ms. Cohlmia said in a statement. She declined to elaborate.

The notion that the Kochs could acquire Tribune’s newspapers, including The Los Angeles Times and The Chicago Tribune, arose nearly six months ago. It was divisive at the time, prompting protests by liberal groups and media reform groups that cast the Kochs â€" who are prominent donors to libertarian causes and Republican politicians â€" as threats to independent journalism.

The ensuing controversy drew unwanted attention to the Kochs, who had previously shown just a passing interest in media investments.

Tribune declined to comment on the news reports about the Kochs on Thursday, but a spokesman said the company’s plan to spin off the newspapers was proceeding apace. That plan was announced in July as an alternative to selling the newspapers right away, though a sale of all or some of the papers could still happen.

In the spinoff, Tribune-owned Web sites like CareerBuilder.com will be separated from the print publications, potentially removing an important stream of advertising revenue for the papers. The Daily Caller’s report quoted an anonymous source as saying that the newspaper acquisition would not be palatable for the Kochs without that Web revenue.

Ms. Cohlmia said that “In terms of the Tribune, the Daily Caller story is accurate.”

The Daily Caller’s source also said Koch Industries’ interest in the newspapers faded “a couple months” ago. In July, when Charles Koch was interviewed by The Wichita Eagle, the local newspaper where Koch Industries is based in Kansas, he said a bid for Tribune’s newspapers was possible â€" “it’s not on the front burner, but it’s possible.”

“There are tremendous changes going on in media, in taking media as a whole, all forms of communication. We’re back at square one analyzing where is the most change, where are the best opportunities for new entrants to come in and add value. And so newspapers are one, but there are all sorts of others. There’s the Internet, there’s TV. There’s entertainment. And so we don’t know where we’ll end up on that,” Mr. Koch told the paper.

A version of this article appears in print on August 23, 2013, on page B4 of the New York edition with the headline: Kochs No Longer Interested In Buying Tribune Papers.

Alibaba Said to Push to Allow Partners to Nominate Board Members

Alibaba Group, the Chinese e-commerce giant planning that is expected to be a blockbuster share sale, has made a proposal to the Hong Kong stock exchange that would allow the company’s partners to nominate the majority of its board members, a person with knowledge of the matter said on Friday.

Alibaba, which analysts expect could be valued at $100 billion or more in an initial public offering, made the proposal as it seeks ways for top executives to retain their sway over corporate strategy while it weighs the merits of a listing in Hong Kong or the United States, the person said, declining to be identified because the information was not public.

Both the Nasdaq and the New York Stock Exchange permit companies to issue more than one class of shares, which can allow founders or management to exert disproportionate control over a company by increasing the voting rights of the shares they hold. The U.S.-listed Internet companies Facebook and Google have dual-class listings, while some family-controlled companies, including The New York Times Co., also use the structure.

Hong Kong, however, discourages dual-class listings. For example, the English soccer club Manchester United had explored a Hong Kong I.P.O. but ultimately chose to list last year in New York, where it was able to issue two classes of shares.

Alibaba’s proposal to the Hong Kong exchange would see the nominations for the majority of its board seats be made by a committee of more than 20 partners, including the co-founder and executive chairman Jack Ma, top lieutenants and other long-serving senior staff members, according to the person.

The partner committee would not include SoftBank, the Japanese telecommunications company that owns 36.7 percent of Alibaba, or Yahoo, which has a 24 percent stake.

The proposal “still gets to the heart of some of the issues that cause people to go dual-class, but it would still be single-class,” said the person, adding that any board nominations made by the partners would still be subject to the approval of shareholders.

A spokesman for the Hong Kong stock exchange declined to comment.

News of Alibaba’s proposal was earlier reported on Friday by the Hong Kong Economic Times newspaper.

Alibaba has yet to appoint underwriters or to decide where it will list, according to the person familiar with the matter, but analysts and investors already expect the I.P.O. to be one of the biggest and most highly anticipated since Facebook raised $16 billion in May of 2012.

Alibaba operates online businesses including the merchandise sourcing Web site Alibaba.com; Tmall.com, a platform for retailers to connect with online shoppers; and the consumer-to-consumer retail Web site Taobao Marketplace.

Alibaba’s profit tripled in the first quarter of the year, rising to $668.7 million from $220.5 million in the same period a year earlier, according to Yahoo’s stock exchange filings. Quarterly revenue increased to $1.38 billion, up 72 percent from a year earlier.