Billabong Avoids Wipeout With $540 Million From Private Equity

HONG KONGâ€"Billabong International, the struggling Australian surfwear company, said on Thursday it had accepted a financial rescue package worth more than $500 million to be provided by the private equity groups Centerbridge Partners and Oaktree Capital.

The two buyout firms will eventually win a controlling 34 percent stake in Billabong as a result of their financing proposal, which involves a combined 571 million Australian dollars, or $542 million, in debt and equity financing.

Thursday’s announcement means that Centerbridge and Oaktree have trumped an earlier, rival approach for Billabong that had been made by Altamont Capital Partners, a private equity investor, and GSO Capital Partners, the credit arm of the Blackstone Group.

‘‘In fully evaluating the competing refinancing proposals, on a range of factors, the board determined that the Centerbridge-Oaktree consortium proposal was in the best interests of the company,’’ Ian Pollard, Billabong’s chairman, said in a statement. ‘‘As Billabong continues to restructure its operations globally, the need for immediate long-term funding certainty and a strong financial base from which to reinvigorate an iconic group of brands is best met by entering into this agreement now.’’

Billabong also said Thursday that it had appointed Neil Fiske, a former head of the retailers Eddie Bauer and Bath & Body Works, as its new chief executive. The company had been without a chief executive since Aug. 2, when Launa Inman stepped down after about a year in the job. Ms. Inman was to have been replaced by Scott Olivet, a former chief executive of the sunglasses maker Oakley, as part of the Altamont deal â€" but Mr. Olivet had never formally stepped into the role.

Whether Centerbridge and Oaktree will succeed with their turnaround project remains to be seen.

This month, Billabong was removed from the S&P/ASX 200, Australia’s benchmark share index. Last month, in reporting a record net loss of 859.5 million dollars for the financial year that ended in June, Billabong wrote down the value of its namesake clothing brand to zero.

Shares in Billabong were up around 6 percent in afternoon trading in Sydney on Thursday following the announcement of the Centerbridge-Oaktree deal. They have fallen around 42 percent so far this year.

Threatening Letters Sent to 140 MF Global Vendors

When MF Global collapsed in 2011, Lorie Meg Karlin’s brokerage company nearly disappeared along with it.

The company, Managed Capital Advisory Group, cleared trades through MF Global and was owed more than $100,000 in commissions from the firm. Ms. Karlin, a widow who runs Managed Capital from her Westchester County home overlooking a horse farm, figured that MF Global was unlikely to pay her.

But she did not anticipate that MF Global’s brokerage unit might threaten to sue her company two years later.

James W. Giddens, the court-appointed trustee liquidating the brokerage unit, recently warned Ms. Karlin’s company that he was “considering whether to seek to recover” $529,000 it received from MF Global in the months before its bankruptcy.

“Records suggest,” Mr. Giddens said in a letter reviewed by The New York Times, that Ms. Karlin’s company might have “received more than” it was entitled to. If she did not contact the trustee by this Friday, he said, “litigation may be commenced against you.”

Ms. Karlin’s 15-year-old company is not the only one on Mr. Giddens’s radar. It is one of about 140 brokerage companies and other MF Global vendors swept up in the trustee’s pursuit of cash. Under United States bankruptcy law, Mr. Giddens must verify whether MF Global’s eve-of-bankruptcy payouts to the companies were in the “ordinary course of business” and were not “preferential.”

Yet his effort has left Ms. Karlin and her colleagues asking: Why us? The $529,000 in payments, Ms. Karlin said, were commissions her brokers earned from July to September of 2011. And a review of her company’s bank records confirms that Managed Capital received similar amounts from MF Global around the same time each month in 2010 and 2011, suggesting that the payments in question were routine.

Still, the scrutiny by Mr. Giddens is the latest setback for so-called introducing brokers like Ms. Karlin, who were among the hardest-hit by MF Global’s demise. MF Global, whose collapse was the largest Wall Street bankruptcy since the financial crisis, still owes the brokers millions of dollars in commissions.

These struggles were largely overshadowed by the stunning loss of customer money at MF Global â€" more than $1 billion belonging to farmers and other clients was missing â€" and a regulatory investigation into the firm’s chief executive, Jon S. Corzine, the former governor and United States senator from New Jersey.

“We already got kicked in the butt,” Ms. Karlin said. “Now, with this threat, the whole industry is even more angry and upset.”

Paradoxically, many who received the letters from Mr. Giddens are creditors themselves. And if Mr. Giddens recovers any money as a result of the letters, he will turn it over to creditors.

Mr. Giddens, widely praised for his separate efforts to recover money for MF Global customers, has held off suing the introducing brokers. A spokesman for Mr. Giddens described the letters as routine, explaining that the trustee had focused on certain vendors who received more than $50,000 from MF Global within 90 days of the bankruptcy. Collectively, these vendors received about $42 million during that time.

The bankruptcy code allows Mr. Giddens to scrutinize such payments, with an eye toward taking back money from companies that foresaw MF Global’s collapse and demanded payments earlier than usual to circumvent the bankruptcy process.

“The trustee has the duty to verify that significant payments made to noncustomers of MF Global Inc. on the eve of bankruptcy were made properly and in the normal course of business, and these letters are a customary step taken to fulfill that duty,” said the spokesman, Kent Jarrell. “We are seeking information about a limited number of payments to make sure that the payments were not preferential or accelerated, which would render them subject to return to the MF Global Inc. estate under the Bankruptcy Code.”

Mr. Giddens contacted the 140 companies, Mr. Jarrell said, because he lacked access to bank records and other statements that could verify the legitimacy of the payments. In the letters, Mr. Giddens asked the companies to outline any “defenses that you might have.” And in recent days, Mr. Jarrell said, the trustee received “information we did not have access to before” indicating that some payments were appropriate.

“We will only pursue payments,” he added, “for which there is no reasonable explanation.”

Even so, fighting Mr. Giddens could be costly.

MF Global owes more than $25,000 to Joseph J. Mazza’s company, Compliance Supervisors Inc., which conducted inspections of MF Global’s branch offices. But Mr. Giddens is contemplating clawing back a similar amount that Compliance Supervisors received from MF Global in the 90 days before the bankruptcy.

To combat Mr. Giddens’s inquiry â€" Mr. Mazza said that Compliance Supervisors has invoices showing that it worked with MF Global for 10 years â€" his company must hire a lawyer.

“I believe in the end we’ll prevail, but we may still incur substantial attorney’s fees and expend time and effort away from our clients,” said Mr. Mazza, a former regulator at the National Futures Association.

Some companies objected to the aggressive tone of Mr. Giddens’s letter. After warning about potential “litigation,” and reserving “his right to insist on payment,” the letter offered to settle for 90 percent of the “preference amount.” Mr. Giddens attached instructions for wiring the money.

Even Mr. Giddens’s supporters questioned the tactic.

“There’s such a presumption of guilt,” said James L. Koutoulas, a Chicago hedge fund manager and lawyer who became a voice for thousands of MF Global customers whose money disappeared. Mr. Koutoulas, who praised Mr. Giddens’s efforts on behalf of MF Global customers, added, “It’s low-class behavior coming from a trustee who’s been a class act.”

While acknowledging that “we do want to get the attention of the recipients of these letters,” Mr. Jarrell said that Mr. Giddens did not intend to intimidate anyone. The letters, he said, were sent out of fairness to examine whether anyone “in effect, got 100 cents on the dollar, to the detriment” of MF Global’s creditors.

“These are standard and routine letters sent out to a limited number of sophisticated parties, many of whom have counsel and already have filed claims against the MF Global Inc. estate,” Mr. Jarrell said.

Until now, Mr. Giddens has largely focused on the plight of MF Global customers. As MF Global teetered on the brink of collapse, employees transferred more than $1 billion in customers’ money to plug holes in the firm’s own accounts. Much of that money vanished into MF Global’s banks and clearinghouses.

Filling that gap â€" a task that once seemed impossible â€" is now surprisingly within reach. After recovering money from banks like JPMorgan Chase, Mr. Giddens has returned 98 percent to customers who traded in the United States. That group, which is ultimately expected to recover all of its money, has largely praised his effort.

“He’s always had the agenda of getting the money back in the hands of customers as quickly as possible,” said Mahesh Desai, a software account executive who was an MF Global customers.

Mr. Giddens also joined a private lawsuit against Mr. Corzine, whom many customers have blamed for failing to prevent the firm’s downfall. The lawsuit foreshadowed a regulatory action against Mr. Corzine, who is fighting the civil charges.

For Ms. Karlin’s part, she is hopeful that Mr. Giddens will drop his inquiry into her firm.

“I do think this will be resolved,” she said. “I think they were following a protocol, but one hopes there would have been a kinder way of doing it.”

Delay to End of the Stimulus Surprises Wall Street

Ben S. Bernanke and the markets are having a hard time understanding each other.

Despite a near uniform consensus on Wall Street that the Federal Reserve would start to withdraw its economic stimulus this month, the central bank surprised strategists by announcing Wednesday afternoon that it would indefinitely maintain its bond-buying program at full strength.

Stocks jumped after the 2 p.m. statement from the Fed, and the 10-year Treasury yield, an important benchmark for consumer borrowing rates, fell.

While the continuation of the stimulus program helps stock investors, the Fed’s apparent change of heart sowed confusion that is likely to last far beyond Wednesday in markets around the world. Many on Wall Street were left wondering how they got it so wrong, with several pointing an accusing finger at Mr. Bernanke, the Fed chairman, and the central bank’s communication strategy.

For his part, Mr. Bernanke appeared to put some of the blame on Wall Street.

“The Fed and the market have not been on the same page, and that’s very apparent in what happened at 2:01 p.m.,” said Michael Hanson, senior United States economist at Bank of America, and one of the few strategists to have predicted that the Fed would stand pat on its bond buying.

Since May, when Mr. Bernanke first signaled that the Fed could start to wind down its efforts to stimulate borrowing and the economic growth, Wall Street has been preoccupied with predicting when and by what degree that would happen. At its June meeting, Fed policy makers said that the economy was nearly strong enough to begin doing without the full force of the stimulus program.

As a result, investors around the world spent much of the summer adjusting to the idea that the Fed would begin a retreat from its monthly buying of $85 billion in Treasuries and mortgage-backed securities.

Figuring out what would come next involved navigating in uncharted territory: the breadth and scale of the steps taken by the central bank to get the economy back on its feet in the wake of the financial crisis have been without precedent. The bond-buying programs have helped push up stock prices and kept interest rates low, making it easier for borrowers to take out home and auto loans.

The expectation that those programs would soon start to ease has caused interest rates to rise, which has hurt many emerging market economies that had come to rely on lower rates.

The recent preparations paved the way for the mixture of confusion and euphoria that broke out on Wednesday afternoon.

“In one line: Delay is good policy, the communications strategy is in pieces,” Ian Shepherdson, chief economist of Pantheon Macroeconomics, wrote in a note on Wednesday.

The Standard & Poor’s 500-stock index jumped 20.76 points, or 1.2 percent, to close at 1,725.52. The Dow Jones industrial average rose 147.21 points, or nearly 1 percent, to 15,676.94. Both indexes reached record nominal closing highs.

The Nasdaq composite index gained 37.94 points, or 1 percent, to 3,783.64, its highest close since late September 2000, when the dot-com boom was fading.

Movements in the bond markets were much more extreme. The price of the Treasury’s 10-year note jumped 1 11/32, to 98 11/32, while its yield dropped to 2.69 percent, from 2.85 percent late Tuesday.

Investors also bought mortgage bonds, paving the way for a reversal in the recent rise in mortgage rates. This helped bolster the shares of home builders like KB Home, which soared 8.2 percent, and DR Horton, up 6.9 percent.

Gold prices rose more than 4 percent.

On Wednesday, Mr. Bernanke still suggested that a pullback could begin later this year, but he said that Fed officials had determined that the economy was not on strong enough footing to begin adjusting its stimulus programs this month.

In his news conference after the Fed’s statement, Mr. Bernanke appeared to acknowledge that the central bank had gone against the expectations of the market. Mr. Bernanke said that part of the problem was the sheer complexity of the stimulus programs, which made it hard to predict future policy.

“We are dealing with tools that are less familiar and harder to communicate about,” he said.

But Mr. Bernanke suggested that some investors were not paying sufficient attention, pointing to his past promises not to change policy until economic data, and particularly unemployment numbers, showed significant improvement.

”Asset purchases are not on a preset course,” he said with audible frustration. “They’ve always been conditional on the data.”

On Wall Street, there were many competing theories about why the Fed had defied expectations.

Michael Gapen, the chief United States economist at Barclays, said on Wednesday that he believed the Fed had purposely misled investors to push up interest rates and knock out speculation in risky financial products.

Mr. Bernanke gave some fuel to this argument when he said on Wednesday that he had been gratified to see the sell-off over the summer in more speculative products like junk bonds. But he also said that he was unhappy with the broader rise in interest rates, which had pushed up prices for mortgages and other consumer loans.

Most economists said on Wednesday that the disconnect between the Fed and Wall Street was more likely a result of unintentional flaws in the Fed’s analysis and communications.

Paul Ashworth, the chief United States economist at Capital Economics, said that recent speeches by Fed officials had displayed a significant amount of disagreement at the central bank about how to move forward.

“They don’t even appear to be able to agree on it themselves, internally, “ he said.

But Mr. Ashworth said that even if there was division within the Fed, Mr. Bernanke and the other officials could have been more clear about what economic indicators they were looking at to make their decisions.

“The onus should always be on the Fed to explain what it is doing,” he said.

Eric Green, the global head of research at TD Securities, said that for the Fed “it’s tough for them not to lose credibility on this.”

“You set the whole world up for something and then you backed away,” he said.

Mr. Hanson, one of the few strategists to have predicted the Fed’s decision, said that at least some of the fault lay in Wall Street’s inability to hear the nuance in Mr. Bernanke’s past statements, and to leave open the possibility that Fed officials could change their mind.

“The Fed told us what they were looking for, and we were not seeing it,” Mr. Hanson said. “The market didn’t appreciate just how data dependent the Fed would be.”

JPMorgan Set to Pay More Than $900 Million in Fines

JPMorgan Chase is expected to pay more than $900 million in fines on Thursday and make an unprecedented admission of wrongdoing to government authorities in Washington and London, a pact that will settle a range of investigations over a multibillion trading blunder the bank suffered last year, according to people briefed on the matter.

The settlements with the government authorities â€" the Securities and Exchange Commission, the Office of the Comptroller of the Currency, the Federal Reserve and the Financial Conduct Authority in London â€" will be a pivotal moment for the nation’s largest bank as it works to move past the $6 billion trading loss.

That loss, which stemmed from outsize derivatives wagers made by traders at JPMorgan’s chief investment office in London, thrust JPMorgan into unfamiliar territory, staining the reputation of a bank long known for its risk prowess, claiming the jobs of top bank executives and triggering a flurry of investigations.

At the center of the investigations was the question of whether weak controls at JPMorgan allowed the London traders to cloak the losses. The bank, the people said, will acknowledge that it had lax controls and should have caught the problem faster. No senior executives are expected to be faulted in the settlement.

Still, JPMorgan will have to pay more than $900 million, according to the people briefed on the matter. JPMorgan will dole out roughly $300 million to the Comptroller’s office, and about $200 million to each of the other agencies.

The Commodity Futures Trading Commission is still negotiating with the bank, the people said, and is expected to levy additional fines against JPMorgan later this year.

In August, two of the traders â€" Javier Martin-Artajo, a bank manager who oversaw the trading strategy, and Julien Grout, a low-level traders who marked the books â€" were criminally charged. They were accused by federal prosecutors in Manhattan of wire fraud, falsifying bank records and contributing to false regulatory filings.

A spokesman for JPMorgan declined to comment.

In Surprise, Fed Decides Not to Curtail Stimulus Effort

Doug Mills/The New York Times

Ben S. Bernanke, the Federal Reserve chief, spoke after the Fed's announcement on Wednesday.

WASHINGTON â€" The Federal Reserve postponed any retreat from its long-running stimulus campaign Wednesday, saying that it would continue to buy $85 billion a month in bonds to encourage job creation and economic growth.

As Congressional Republicans and the White House hurtle toward another showdown over federal spending, the Fed said it was concerned that fiscal policy once again “is restraining economic growth,” threatening to undermine what the Fed had described just months ago as a recovery gaining strength.

Stock markets jumped after the 2 p.m. announcement, with the Standard & Poor’s 500-stock index touching a record high and the Dow Jones industrial average ahead more than 150 points.

The Fed’s decision also may reflect the consequences of yet another premature retreat from its own policies. Mortgage rates have climbed and other financial conditions have tightened since the Fed signaled in June that it intended to reduce its asset purchases by the end of the year, the Fed noted Wednesday.

“The tightening of financial conditions observed in recent months, if sustained, could slow the pace of improvement in the economy and the labor market,” it said in a statement released after a regular two-day meeting of its policy-making committee.

The decision, an apparent victory for the Fed’s chairman, Ben S. Bernanke, and his allies who have argued for the benefits of asset purchases, was supported by all but one member of the Federal Open Market Committee. Esther George, president of the Federal Reserve Bank of Kansas City, dissented as she has at each previous meeting this year, citing concerns about inflation and financial stability.

The Fed may still begin to reduce asset purchases by the end of the year, consistent with its previous statements. The Fed also refrained from any change in its stated intention to hold short-term interest rates near zero at least as long as the unemployment rate remains above 6.5 percent.

The statement said the committee sees recent economic data “as consistent with growing underlying strength in the broader economy.” However, the statement continued, “The committee decided to await more evidence that progress will be sustained before adjusting the pace of its purchases.”

In their economic forecasts, also published Wednesday, Fed officials once again retreated from overly optimistic predictions about the pace of growth over the next several years.

The aggregation of forecasts by the 17 officials who participate in policy-making showed that Fed officials expect growth to remain sluggish for years to come, with persistent unemployment and little inflation, suggesting that the dismantling of the Fed’s stimulus campaign will remain slow and cautious.

The middle of the forecast range for economic growth this year was 2 percent to 2.3 percent, down from June predictions of growth between 2.3 percent and 2.6 percent. For 2013, Fed officials forecast growth between 2.9 percent and 3.1 percent, down from a range of 3 percent to 3.5 percent in June.

The Fed unrolled an aggressive combination of new policies last year in an effort to increase the pace of job creation. It started adding $85 billion a month to its holdings of Treasuries and mortgage bonds, and said it planned to keep buying until the outlook for the labor market improved substantially. The Fed also said that it would keep short-term rates near zero for even longer - at least as long as the unemployment rate remained above 6.5 percent.

Half a year later, in June, Mr. Bernanke, surprised many investors by announcing that the Fed intended to cut back on those asset purchases by the end of the year, an intention the Fed affirmed in July.

Critics had warned that the Fed would be pulling back too soon if it acted Wednesday. Economic growth remains sluggish and job creation is barely outpacing population growth. Roughly half the decline in the unemployment rate over the last year is because fewer people are looking for work, not because more are finding jobs.

Jack Ewing contributed reporting from Frankfurt.

In Surprise, Fed Decides Not to Curtail Stimulus Effort

Doug Mills/The New York Times

Ben S. Bernanke, the Federal Reserve chief, spoke after the Fed's announcement on Wednesday.

WASHINGTON â€" The Federal Reserve postponed any retreat from its long-running stimulus campaign Wednesday, saying that it would continue to buy $85 billion a month in bonds to encourage job creation and economic growth.

As Congressional Republicans and the White House hurtle toward another showdown over federal spending, the Fed said it was concerned that fiscal policy once again “is restraining economic growth,” threatening to undermine what the Fed had described just months ago as a recovery gaining strength.

Stock markets jumped after the 2 p.m. announcement, with the Standard & Poor’s 500-stock index touching a record high and the Dow Jones industrial average ahead more than 150 points.

The Fed’s decision also may reflect the consequences of yet another premature retreat from its own policies. Mortgage rates have climbed and other financial conditions have tightened since the Fed signaled in June that it intended to reduce its asset purchases by the end of the year, the Fed noted Wednesday.

“The tightening of financial conditions observed in recent months, if sustained, could slow the pace of improvement in the economy and the labor market,” it said in a statement released after a regular two-day meeting of its policy-making committee.

The decision, an apparent victory for the Fed’s chairman, Ben S. Bernanke, and his allies who have argued for the benefits of asset purchases, was supported by all but one member of the Federal Open Market Committee. Esther George, president of the Federal Reserve Bank of Kansas City, dissented as she has at each previous meeting this year, citing concerns about inflation and financial stability.

The Fed may still begin to reduce asset purchases by the end of the year, consistent with its previous statements. The Fed also refrained from any change in its stated intention to hold short-term interest rates near zero at least as long as the unemployment rate remains above 6.5 percent.

The statement said the committee sees recent economic data “as consistent with growing underlying strength in the broader economy.” However, the statement continued, “The committee decided to await more evidence that progress will be sustained before adjusting the pace of its purchases.”

In their economic forecasts, also published Wednesday, Fed officials once again retreated from overly optimistic predictions about the pace of growth over the next several years.

The aggregation of forecasts by the 17 officials who participate in policy-making showed that Fed officials expect growth to remain sluggish for years to come, with persistent unemployment and little inflation, suggesting that the dismantling of the Fed’s stimulus campaign will remain slow and cautious.

The middle of the forecast range for economic growth this year was 2 percent to 2.3 percent, down from June predictions of growth between 2.3 percent and 2.6 percent. For 2013, Fed officials forecast growth between 2.9 percent and 3.1 percent, down from a range of 3 percent to 3.5 percent in June.

The Fed unrolled an aggressive combination of new policies last year in an effort to increase the pace of job creation. It started adding $85 billion a month to its holdings of Treasuries and mortgage bonds, and said it planned to keep buying until the outlook for the labor market improved substantially. The Fed also said that it would keep short-term rates near zero for even longer - at least as long as the unemployment rate remained above 6.5 percent.

Half a year later, in June, Mr. Bernanke, surprised many investors by announcing that the Fed intended to cut back on those asset purchases by the end of the year, an intention the Fed affirmed in July.

Critics had warned that the Fed would be pulling back too soon if it acted Wednesday. Economic growth remains sluggish and job creation is barely outpacing population growth. Roughly half the decline in the unemployment rate over the last year is because fewer people are looking for work, not because more are finding jobs.

Jack Ewing contributed reporting from Frankfurt.

Jefferies’ Results Reflect the Hazards of Fixed Income

The revenue that the investment bank Jefferies Group generated from trading bonds, currencies and commodities slumped 85 percent in the three months before September, a far bigger drop than its larger rivals across Wall Street are expecting.

Blankfein Discusses Goldman’s Support of SAC Capital

Just a few days after the indictment of the hedge fund SAC Capital Advisors on insider trading charges, Gary Cohn, the president of Goldman Sachs, appeared on CNBC and issued a public statement of support for the firm.

“They’re an important client to us; they have been an important client to us,” Mr. Cohn said in late July. “We continue to trade with them, and they’re a great counterparty.”

Though virtually all of SAC’s clients have asked to withdraw their money from the fund, the firm has survived for two main reasons. First, nearly two-thirds of the $15 billion that the firm had at the start of the year â€" about $9 billion â€" belongs to Steven A. Cohen, the owner of SAC, and his employees. And second, Wall Street banks have all continued to trade with SAC and finance its operations.

On Wednesday morning, Andrew Ross Sorkin interviewed Goldman’s chief executive, Lloyd Blankfein, and asked him about the decision to keep SAC as a client.

“Well, they’ve been indicted, they haven’t been convicted,” said Mr. Blankfein, a Harvard Law School graduate who practiced law for several years before pursuing a career on Wall Street.

He added that if Goldman and the other banks had withdrawn their support, it would have destroyed the firm. And the Justice Department did not want that to happen, Mr. Blankfein said.

“The government wouldn’t want us to withdraw,” he said. ” Because if everybody withdrew liquidity you would vaporize a firm.”

Mr. Blankfein then cited the Arthur Andersen case as a cautionary tale for the government. After the Justice Department indicted the accounting firm on charges related to the Enron scandal, it was forced to close and 28,000 jobs were lost.

“I think the government would be reluctant to bring charges if they knew the moment they brought a charge you’d actually be the executioner,” Mr. Blankfein said. “The government did come back and encourage firms like ours to continue to deal with SAC.”

Mr. Sorkin then cited the collapse of the investment banking firm Drexel Burnham in 1990 as another example of a company destroyed by an indictment. He asked Mr. Blankfein if the government’s treatment of SAC represented a changed approach in bringing criminal charges against financial firms, and companies more broadly.

“I think the world appreciated what happened,” he said. “Look, after those cases, what happened was the government could never prosecute a financial firm. And so you ended up with non-prosecutions, and the world didn’t like that. And they said, ‘Why are you doing deferred prosecutions?’”

The government became loath to indict companies because “there was only a nuclear option,” he said.

“The fact they’re getting people to cooperate and still support during the trial actually means it’s not an on/off switch,” Mr. Blankfein said. “You have something in between doing nothing and a nuclear option. So I think the government is supportive of maintaining relationships with these firms pending a trial.”

S.E.C. Proposes New Rule on Pay Disclosure

Regulators proposed a rule on Wednesday that would require publicly traded companies to disclose the difference between the pay of chief executives and their employees, an effort to make compensation more transparent that has generated controversy and confusion.

Three of the five members of the Securities and Exchange Commission voted on Wednesday in favor of a proposal that would require public companies to disclose the ratio of top executive compensation to the median compensation of their employees. Median pay is the point at which half the employees earn more and half earn less.

The proposal is part of the Dodd-Frank financial overhaul legislation, which requires the S.E.C. to amend existing rules on pay disclosure. Publicly listed companies are now required to disclose the compensation of their chief executives but not pay for other employees.

The commission has proposed that companies disclose two additional data points in their filings. These include the median of the total compensation for all employees excluding the chief executive, and the ratio between that number and the chief’s annual total compensation.

The S.E.C. declined to provide a formula for calculating the ratio, saying companies could choose their own methods.

Public scrutiny over outsize pay packages at some of the country’s biggest companies has intensified since the financial crisis and the S.E.C. has received more than 20,000 public letters in support and against its new proposals.

Proponents of the new rules praise the move as progress toward more transparency and increased information for investors, while critics complain that the method for determining median income is too complex, time consuming and costly.

Addressing some of these concerns, the S.E.C.’s chairwoman, Mary Jo White, emphasized on Wednesday that the agency would provide companies some flexibility in complying with the rules. This would include allowing them to determine the median pay of their employees by using a statistical sample.

In the wake of scrutiny on executive compensation from shareholders and the general public, companies have included less cash in compensation packages and more in restricted stock. But even with this trend, the compensation of top executives has grown exponentially over the last few decades.

Executive pay is now more than 277 times an average worker’s pay compared with just 20 times in 1965, according to the Economic Policy Institute.

“Clearly we have a steep uptrend,” said Luis A. Aguilar, an S.E.C. commissioner, citing this data.

Mr. Aguilar, Ms. White and Kara M. Stein all voted for the proposal. Daniel M. Gallagher and Michael S. Piwowar voted against the proposal.

Mr. Gallagher called it a “rotten mandate” and said it brought no economic benefit. Mr. Piwowar said the proposal would “unambiguously harm investors.”

Catterton, a Private Equity Firm, Closes Two Funds at $2.1 Billion

Catterton Partners, a private equity firm focused on consumer companies like Restoration Hardware, said on Wednesday that it had closed on its latest two funds after having raised $2.1 billion.

With the closing of the two funds â€" Catterton Partners VII, aimed at general leveraged buyouts, and Catterton Growth Partners II, aimed at late-stage investments â€" the firm now manages about $4 billion.

“Our ability to close these funds in a short period of time is a testament to our strategy and solidifies our leadership in consumer-focused investing,” J. Michael Chu, a co-managing partner of the firm, said in a statement. “We look forward to continuing to leverage our expertise to help high-growth consumer companies realize their full potential.”

Catterton has already made some investments from the general buyout fund, including in Primanti Brothers, the Pittsburgh-based sandwich chain, and CorePower Yoga.

The firm’s other investments have included Bloomin’ Brands, the parent of Outback Steakhouse, and O.N.E. Coconut Water.

Catterton, a Private Equity Firm, Closes Two Funds at $2.1 Billion

Catterton Partners, a private equity firm focused on consumer companies like Restoration Hardware, said on Wednesday that it had closed on its latest two funds after having raised $2.1 billion.

With the closing of the two funds â€" Catterton Partners VII, aimed at general leveraged buyouts, and Catterton Growth Partners II, aimed at late-stage investments â€" the firm now manages about $4 billion.

“Our ability to close these funds in a short period of time is a testament to our strategy and solidifies our leadership in consumer-focused investing,” J. Michael Chu, a co-managing partner of the firm, said in a statement. “We look forward to continuing to leverage our expertise to help high-growth consumer companies realize their full potential.”

Catterton has already made some investments from the general buyout fund, including in Primanti Brothers, the Pittsburgh-based sandwich chain, and CorePower Yoga.

The firm’s other investments have included Bloomin’ Brands, the parent of Outback Steakhouse, and O.N.E. Coconut Water.

Blankfein Says Fed Should Ease Stimulus

Lloyd C. Blankfein, the chief executive of Goldman Sachs, said on Wednesday that the Federal Reserve should being scaling back its huge economic stimulus efforts.

The Fed is buying $85 billion a month of government bonds and mortgage securities. Mr. Blankfein, attending a conference in Chicago, told Andrew Ross Sorkin that Wall Street would be “happy” with the Federal Open Market Committee easing the program back by $10 billion, but would be “sad” with anything more. The Fed will announce its plans at 2 p.m. today.

Blankfein Says Fed Should Ease Stimulus

Lloyd C. Blankfein, the chief executive of Goldman Sachs, said on Wednesday that the Federal Reserve should being scaling back its huge economic stimulus efforts.

The Fed is buying $85 billion a month of government bonds and mortgage securities. Mr. Blankfein, attending a conference in Chicago, told Andrew Ross Sorkin that Wall Street would be “happy” with the Federal Open Market Committee easing the program back by $10 billion, but would be “sad” with anything more. The Fed will announce its plans at 2 p.m. today.

Celebrating the Top Women in Banking, but Noting a Lack

American Banker Magazine released on Wednesday its annual ranking of the most powerful women in banking. But the list, even as it celebrated the accomplishments of the honorees, revealed a lack of women in top jobs.

Only three of the 25 honorees are at the very top of their companies. Two more have the chief executive title, though they run large subsidiaries. On another list released by the magazine, the most powerful women in finance, the number of top C.E.O.’s is zero.

“I’m always surprised that there aren’t more women in the actual C.E.O. slot,” Heather Landy, the editor in chief of the magazine, said in an interview. “There are many women on our rankings who are very close to that role and work closely with the C.E.O.’s of their institutions, but I would have thought by now that there would be more women in actual C.E.O. roles to put on this list.”

The magazine doesn’t shy away from this uncomfortable observation. The issue’s cover article, titled “Pathways to Power,” includes an image of an empty tufted black leather chair with text that reads: “The pipeline of women in banking is strong. Until you get here.”

The rankings, now in their 11th year, include a list of powerful women in finance â€" as distinguished from banking â€" and a list of women to watch. The top spot on the banking list went to Beth Mooney, the chairwoman and chief executive of KeyCorp. Mary Callahan Erdoes, the chief executive of JPMorgan Asset Management, was named the most powerful woman in finance.

In addition to Ms. Mooney, two women on the banking list â€" Dorothy Savarese, the president and chief executive of the Cape Cod Five Cents Savings Bank, and Melanie Dressel, the president and chief executive of the Columbia Banking System â€" are in the top jobs at their companies. Two others are chief executives of significant divisions: Irene Dorner, the head of HSBC USA, who was in the No. 1 slot on last year’s list, and Barbara Yastine, the chairman, president and chief executive of Ally Bank.

In its coverage of the powerful women, the magazine examines how others can rise to senior roles. Many of this year’s honorees are making efforts to help other women advance, and many are frustrated by the lack of progress, Ms. Landy said.

“For many years, the focus seemed to be on filling the pipeline with women â€" making sure that women were being recruited,” Ms. Landy said. “Well, the pipeline is really full now. At the entry level at most of the big banks, it’s at least half women. The problem and the frustration is that women in the pipeline are either exiting early or just getting stuck in it.”

The honorees will be celebrated at an awards dinner on Oct. 10 in New York.

Morning Agenda: Associates of Madoff May Face Charges

ASSOCIATES OF MADOFF MAY FACE CHARGES  |  Federal prosecutors in Manhattan, facing a December deadline to bring additional charges connected to Bernard L. Madoff’s Ponzi scheme, are considering criminal charges against several people connected to the case, DealBook’s Peter Lattman reports. Among those under scrutiny are Shana Madoff Swanson, a senior executive at the firm, and Paul J. Konigsberg, a longtime accountant in Mr. Madoff’s inner circle.

When Mr. Madoff confessed in December 2008, that started the clock on a five-year statute of limitations to bring securities fraud charges. Any new charges would come just weeks before a criminal trial on Oct. 7, when five former employees of Bernard L. Madoff Investment Securities â€" Daniel Bonventre, Annette Bongiorno, Joann Crupi, Jerome O’Hara and George Perez â€" are scheduled to stand trial in Federal District Court in Manhattan on charges they aided the fraud. The defendants are expected to argue that they had no idea their boss was a crook, Mr. Lattman writes.

S.&P. BOND DEALS ON THE RISE WITH RELAXED CRITERIA  |  Standard & Poor’s was hesitant in the wake of the financial crisis to rate most of the new bonds tied to residential mortgages. But last year, as banks began reviving the market for bonds, S.& P.’s tough stance was hurting the bottom line, Nathaniel Popper reports in DealBook.

At a meeting in the summer of 2012, analysts responsible for rating bonds tied to home loans were informed that their unit had sustained big losses in the previous quarter, Mr. Popper reports. The analysts were not told explicitly to relax their standards to win back business, according to an employee at the meeting who spoke on the condition of anonymity. But this person said the numbers made it clear that if the division wanted to stay afloat, the analysts would have to make changes.

A few months later, they did exactly that, and the changes seemed to work. More banks started choosing S.&P., and the ratings agency in turn faced criticism from industry participants. “It kind of blindsided all of us,” said one banker involved in the deals at the time, who was not authorized to speak publicly. “It turns out you could water these down and have them rated by S.& P.”

DIMON VOWS TO FIX COMPLIANCE PROBLEMS  |  With JPMorgan Chase poised to pay roughly $800 million to a host of government agencies over its multibillion-dollar trading loss last year, Jamie Dimon, the bank’s chief executive, offered an unvarnished message to employees on Tuesday, Jessica Silver-Greenberg reports in DealBook. He said in a companywide memo that JPMorgan is working to “face our issues, roll up our sleeves, and fix” the compliance and control problems throughout the bank.

Mr. Dimon said that “we are aggressively tackling these challenges.” He explained the contours of that strategy in his memo, including how the bank “deployed massive new resources and refocused critical managerial time” on the effort.

ON THE AGENDA  |  With questions swirling about the next Federal Reserve chairman, the central bank is set to release a statement about monetary policy and announce economic projections at 2 p.m. Ben S. Bernanke, the Fed chairman, holds a press conference at 2:30 p.m. FedEx announces earnings before the market opens, and Oracle announces earnings this evening. Lloyd C. Blankfein, the chief executive of Goldman Sachs, is on CNBC at 8:30 a.m.

DOLE BUYOUT HAS FAMILIAR FLAVOR  |  “Once is apparently not enough for David H. Murdock, the chief executive of the Dole Food Company,” Steven M. Davidoff writes in the Deal Professor column. Mr. Murdock, who has offered to acquire the fruit company for $13.50 a share in a buyout that has been approved by the board, has done this before, in 2003. “But a lawsuit brought by some shareholders in the Delaware Chancery Court is challenging the deal, contending that it is rife with conflicts as Mr. Murdock uses his previous experience at taking Dole private to his advantage.”

Mergers & Acquisitions »

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NEW YORK TIMES

Onex Said to Plan a Sale of the Warranty Group  |  The Canadian private equity firm Onex “is preparing to sell the Warranty Group, a provider of extended warranty contracts, which is expected to fetch more than $1 billion, two people familiar with the matter said this week,” Reuters reports.
REUTERS

The Sound of Consolidation  |  Pandora’s stock sale will give it a war chest of more than $200 million to pursue smaller rivals, Robert Cyran of Reuters Breakingviews writes.
REUTERS BREAKINGVIEWS

Microsoft Increases Its Quarterly Dividend  |  Microsoft said its board approved a 22 percent increase in the quarterly dividend in addition to a new $40 billion stock buyback program.
ASSOCIATED PRESS

China Internet Giant Buys Stake in Search Engine  |  Tencent Holdings, China’s biggest Internet company, invested $448 million for a 36.5 percent stake in Sogou, helping the company keep pace with its rivals, Alibaba and Baidu.
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INVESTMENT BANKING »

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After Lehman, Getting the Band Back Together  |  Three former “house bands” from Lehman Brothers planned to rock out Tuesday evening at an event to commemorate the five-year anniversary of the firm’s collapse.
WALL STREET JOURNAL

To Buff Its Image, A.I.G. Hires Marketing Officer From Goldman  |  After 17 years at Goldman Sachs, David May is headed to the American International Group to be the insurer’s chief marketing officer, Bloomberg News reports.
BLOOMBERG NEWS

Versace Mansion Sells for $41.5 Million  |  Casa Casuarina, the mansion in Miami Beach where the fashion designer Gianni Versace was killed, sold at auction on Tuesday to a group that includes the owners of Jordache Enterprises, Bloomberg News reports.
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PRIVATE EQUITY »

Inspired by Professor, Investor Makes Big Gift for Black Studies  |  Glenn Hutchins is expected to announce the gift on Wednesday to create the Hutchins Center for African and African-American Research at Harvard.
DealBook »

Talks to Begin Over Energy Future Holdings  |  Groups of creditors and other investors are clashing over a possible bankruptcy filing for Energy Future Holdings, the company that was taken private in the biggest leveraged buyout ever. The creditor camps plan to meet on Friday for talks, The Wall Street Journal reports.
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HEDGE FUNDS »

Safeway Puts Up Defense After Hedge Fund Amasses Stake  |  The $6 billion hedge fund Jana Partners has disclosed a 6.2 percent stake in Safeway and has begun agitating for changes at the grocer.
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Dutch Fund Calls for Change at Barrick Gold  |  The Wall Street Journal reports: “A Dutch pension giant is leading the call from a group of European fund managers pressing for governance changes at Barrick Gold Corp., including a speedier boardroom shake-up and a succession plan for founder Peter Munk.”
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I.P.O./OFFERINGS »

Two Senior Employees to Leave Facebook  |  Justin Shaffer, a product manager, and Ashley Zandy, a manager on the corporate communications team, are leaving Facebook, in “the latest exits for the still rapidly growing company,” The Wall Street Journal reports.
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VENTURE CAPITAL »

J. Crew Chief to Join Warby Parker’s Board  |  Warby Parker, the three-year-old start-up that is the purveyor of fashionable eyeglasses, plans to announce on Tuesday that it has named Millard S. Drexler, the chief executive of J. Crew, as a director.
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An Advertising Innovator Has Seed Money for New Ones  |  Alex Bogusky could be called the Johnny Appleseed of advertising, Stuart Elliott writes in the Advertising column in The New York Times.
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LEGAL/REGULATORY »

Ex-JPMorgan Trader Slams Government’s Case  |  A lawyer for Julien Grout, a former JPMorgan Chase trader indicted on charges that he hid losses to protect his bonus, contends his client is being used as a scapegoat.
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22 Hedge Funds Settle S.E.C. Market Manipulation Charges  |  D.E. Shaw and Deerfield Management were among the firms that have agreed to pay a total of $14.4 million to the agency.
DealBook » | DealBook: Wielding Broader Powers, S.E.C. Visits Hedge Funds in London

Wielding Broader Powers, S.E.C. Examines Hedge Funds in London  |  The Securities and Exchange Commission is expanding its influence in Britain, but the scrutiny is causing consternation among London money managers.
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Maker of Electric Car Charging Stations Files for Bankruptcy  |  Ecotality, which won a $99.8 million grant from the Department of Energy four years ago, has filed for bankruptcy protection with plans to auction its assets, Reuters reports.
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Former Broker Pleads Guilty to Wire Fraud  |  Reuters reports: “A former broker for Wells Fargo and Morgan Stanley has pleaded guilty to wire fraud over what federal prosecutors called a $1.8 million check fraud scheme that cheated a widowed client in her 80s.”
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