Weekend Reading: JPMorgan Settlement in Sight

After another week of intense negotiations, the Justice Department and JPMorgan Chase continue to inch closer to a multibillion-dollar accord over questionable mortgage practices. No one can be certain how much the bank will have to pay, but everyone seems to have an opinion.

On Monday, DealBook reported that a proposed settlement figure of about $20 billion was once discussed at the bank. On Tuesday, proposals emerged that ranged from $3 billion to about $7 billion. On Thursday, DealBook reported that JPMorgan raised its total offer to $11 billion earlier in the week.

But it isn’t all about the money, insists the investment bank. Ben Protess and Jessica Silver-Greenberg reported:

“The size of the fine is not the central negotiating point for the bank: JPMorgan is instead focused on using the wide-ranging pact to resolve many of the mortgage-related investigations it faces. Most important, the bank is asking that prosecutors in California drop a criminal investigation into the bank’s mortgage practices â€" a request that the Justice Department has yet to meet.”

If money isn’t the sticking point, there were plenty of other suggestions for a deal.

A DealBook reader in New York asked “What type of activity can be considered so egregious that it justifies an 11 billion dollar fine yet not one individual is personally liable for it?”

The Trade columnist, Jesse Eisinger of ProPublica, said that top JPMorgan executives should have been charged with misleading disclosure in the $6 billion London Whale trading loss.

And LeRoy Ward of Manhattan, commenting on the photograph of Mr. Dimon showing his ID at the Justice Department, wondered if JPMorgan could “donate money to the DMV to upgrade these worthless pieces of plastic?”

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

FRIDAY, SEPT. 27

Headphones Maker Finds Fans in Private Equity | Beats Electronics has secured a $500 million minority investment from the Carlyle Group. The electronics maker will also buy back a 25 percent stake held by HTC. DealBook »

British Postal Service Valued at $5.3 Billion in I.P.O. | “This will give Royal Mail access to the private capital it needs to modernize,” Vince Cable, the business secretary, said. DealBook »

THURSDAY, SEPT. 26

JPMorgan Urged to Pay More in Mortgage Deal | The bank’s chief executive took the rare step of meeting with Attorney General Eric H. Holder Jr. in Washington to discuss the deal. DealBook »

A Proposal to Freeze Pensions in Detroit | Mounting evidence shows that the city’s pension system for public workers was operated in an unsound manner for many years. DealBook »

Accountant Who Worked With Madoff for Years Is Indicted in Fraud | Federal authorities, broadening their investigation of Bernard L. Madoff’s multibillion-dollar Ponzi scheme five years after the fraud was uncovered, unveiled criminal charges against Paul J. Konigsberg. DealBook »

Company Looted, S.E.C. Sues Its Former Chairman | The Securities and Exchange Commission accused Chan Tze Ngon of the American-listed ChinaCast Education Corporation of stealing $41 million from investors. DealBook »

In This Battle Arena, Warriors Are Armed With Algorithms | BattleFin, a recruitment firm for hedge funds, stages tournaments to find math whizzes who can apply their knowledge of other fields to the financial world. DealBook »

WEDNESDAY, SEPT. 25

Detroit Spent Billions Extra From Pensions | Detroit’s municipal pension fund made payments for decades to retirees, active workers and others above and beyond normal benefits, costing the struggling city billions of dollars and helping push it into bankruptcy. DealBook »

Fund to Let Investors Bet on Price of Bitcoins | SecondMarket began raising money for an investment fund â€" the first of its kind in the United States â€" that will hold only bitcoins. DealBook »

Alibaba, Giant of China’s Internet, Will Issue Its I.P.O. in New York | The offering could value Alibaba at more than $75 billion, slightly bigger than eBay and more than twice as large as Yahoo. DealBook »

U.S. and British Officials Fine Firm in Libor Case | Regulators said that ICAP’s employees had altered the reported figures from which Libor is compiled, in exchange for promises of curry meals, steaks, a Ferrari and financial payments. DealBook »

Britain Sues to Stop Cap on Bonuses for Bankers | The step is the latest in Britain’s campaign against a decision by European lawmakers this year to limit bonus payments at Europe’s largest financial institutions to one year’s base salary. DealBook »

The Trade: In JPMorgan Chase Case, a Missed Opportunity to Charge Its Executives | The Securities and Exchange Commission wrung an admission of wrongdoing out of the bank, but it did not charge any top executives with misleading disclosure, says Jesse Eisinger of ProPublica. DealBook »

TUESDAY, SEPT. 24

SAC Is Said to Negotiate Settlement of Charges | The government is seeking a guilty plea from SAC and a financial penalty of as much as $2 billion. DealBook »

JPMorgan May Settle With Group of Agencies | Although the ultimate amount is still in flux, it is clear that any deal would dwarf the size of other settlements the bank has reached to resolve separate regulatory issues. DealBook »

2 Rivals in Equipment for Making Chips in Deal | With the chip-manufacturing industry facing more pressure, Applied Materials is aiming to shore up its business in a big way by striking a big takeover of a Japanese company. DealBook »

A Fund Manager Awaits a Market Fall | Mark Spitznagel of Universa Investments is forecasting a steep market drop: until that happens, he is shorting the market and losing money. DealBook »

Tougher Laws Sought on High-Tech Theft | New York’s penal laws have changed little since 1965, according to a report by the Manhattan district attorney, leaving laws against electronic crimes outmoded. DealBook »

Deal Professor: Lax Rules Give U.S. Upper Hand in Tussle Over Alibaba I.P.O. | Deregulation has helped the United States maintain its pre-eminence in the competition for global I.P.O.’s, but perhaps at a price, says Steven M. Davidoff. DealBook »

MONDAY, SEPT. 23

BlackBerry Buyout Offer Raises Array of Questions | Not only are there questions about the $4.7 billion offer, several analysts say it is not clear how the Fairfax group could stem BlackBerry’s rapid decline or stabilize the company. DealBook »

JPMorgan’s Legal Hurdles Expected to Multiply | JPMorgan Chase paid $1 billion to resolve an array of government investigations last week. But its biggest battles with federal authorities may still lie ahead. DealBook »

DealBook Column: As JPMorgan Settles Up, Shareholders Are Hit Anew | The $920 million JPMorgan Chase agreed to pay to settle S.E.C. civil allegations sounded like a lot, but the money is actually coming from the firm’s shareholders, who already took a $6 billion hit, says Andrew Ross Sorkin. DealBook »

Union Push for I.P.O. Forces Filing at Chrysler | Chrysler filed for a public stock offering, acting only under pressure from its second-largest shareholder, a trust set up to provide medical coverage for 115,000 retired autoworkers and their relatives. DealBook »

Detroit’s Casino-Tax Dollars Become Big Issue in Bankruptcy Case | An insurer has filed a lawsuit, trying to block a deal Detroit reached over interest-rate swaps. DealBook »

Arguments Begin in a Bitter Family Brawl Over a Media Mogul’s Estate | Samantha Perelman is suing her uncle, the head of the Hudson Media empire, over what she says is her rightful $700 million share in her grandfather’s fortune. DealBook »

Concessions From Trust Don’t Placate All Investors | Activist investors say CommonWealth excessively rewards the embattled father and son team of Barry M. and Adam D. Portnoy at the expense of shareholders. DealBook »

In Latin America, Brazilian Banks Fill Void Left by Global Giants | As the big international investment banks pull back from Latin America, BTG Pactual and Itaú BBA are expanding there. DealBook »

WEEK IN VERSE

‘I Can’t Drive 55’ | What do investment bankers listen to while flying to Washington to meet with the Justice Department? YouTube »

‘Highway to Hell’ | What does DealBook listen to while taking Amtrak to Washington to cover another regulatory hearing? YouTube »

J.C. Penney’s Troubling Stock Sale

J.C. Penney’s stock sale reflects a particular sort of dimness about discounts. The troubled U.S. retailer is struggling to get prices right in its stores and isn’t faring any better in the markets. It is selling over $900 million of shares at $9.65 each, after spending a similar sum to buy them back two years ago while paying nearly $37 apiece. Capital misallocation is a new bad sign for J.C. Penney.

Buying high and selling low is unfortunately an all-too-common phenomenon. Corporate boards tend to authorize share repurchases in good times when coffers are full and then scramble to hang onto capital when the going gets tough. In the second quarter of this year, S&P 500 companies bought back $118 billion of stock. By comparison, in the second quarter of 2009, at the height of the financial panic when the index was about 50 percent lower, they repurchased shares worth just $8.9 billion.

J.C. Penney didn’t just leave money on the table. Rather, it actively damaged its balance sheet with a $900 million buyback in 2011. Its subsequent attempt to pare back on discounts and rebrand under a new chief executive recruited by activist investor William A. Ackman was a fiasco. Sales tumbled 25 percent last year, and are continuing to shrink. To reassure vendors they’d get paid during the all-important holiday season, the company needed cash, so went cap in hand to the market on Friday, diluting shareholders by up to 44 percent in the process.

So much has gone wrong at J.C. Penney - its shares have plummeted by half this year - that its latest misjudgment hardly qualifies as a surprise. What’s more shocking is that so few companies will learn from the retailer’s mistake - and either work harder to get the timing right on buybacks or, better yet, put a bigger emphasis on dividends when they’re ready to return cash to investors.

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

What We Resist Persists

The comedian Louis C.K. on Conan O’Brien’s talk show.

A few days ago, it dawned on me that for the past several weeks I had been feeling vaguely anxious, uneasy and sad.

I hate saying that. It’s not how I want to see myself. It’s not how I want others, especially those I lead, to view me.

All this came clear after a friend sent me a clip of the comedian Louis C.K. making a appearance on Conan O’Brien last week. Talk show banter is nothing if not trivial. This was one of those rare moments in which something profound slips through all the glibness and joking.

Louis C.K. got on a riff - take a look for yourself - which was ostensibly about the dangers of texting while driving. Why is it, he mused, that we’re so glued to our digital devices? Unexpectedly, he wandered into deeper waters and began talking about how we’re addicted to our digital lives in order to avoid the feelings that might otherwise rise up in our quiet moments.

“You’re in your car,” he went on to say, “and you start going, ‘Oh no, here it comes … I’m alone’ … It starts to visit on you, this sadness … That’s why we text and drive. I look around, and pretty much 100 percent of people are texting … People are willing to risk taking a life and ruining their own because they don’t want to be alone, because it’s so hard.”

No wonder I’d been resisting acknowledging my own uncomfortable feelings. They just didn’t square with my self-image, and especially not with my sense of myself as a leader. Think about the virtues we’ve traditionally admired in our (mostly male) leaders: optimism, confidence, strength, decisiveness and self-control. And how much we disparage their negative opposites: pessimism, self-doubt, weakness, indecisiveness and over-sharing.

I understand that writing about this subject is risky, and that it’s easy to dismiss this topic as touchy-feely and self-indulgent. But I also believe these conversations don’t happen nearly enough in the workplace. Pushing negative feelings away doesn’t make them disappear, and they often end up wreaking havoc.

When the world feels threatening, I tend to move to “fight” mode. Fortunately, it doesn’t happen often. But over the past several weeks, I’ve been defending against feelings of vulnerability by defaulting to fight: demanding more of others, getting impatient and irritable more quickly and finding fault with people for small stuff.

And then along comes Louis C.K. to point this out to me. Just becoming aware of what I’d been doing and why by acknowledging it to myself allowed me to feel the vulnerability more directly. I started to sit with it, instead of fighting it. And nothing terrible happened. Instead, I felt lighter.

Just when I was beginning to feel better, one of the senior executives at my company came to see me. He was angry and said that I hadn’t treated him well in several interactions over the past couple of weeks. As he said it, I knew he was right. I felt bad, but not defensive. When he finished, I simply apologized. We talked about how to avoid letting it get to that point again. I felt the tension between us seep away.

We all have our internal struggles, and they affect those around us, whether we acknowledge what’s going on. I see this every day in the work I do in organizations. The tensions that leaders feel are mostly unacknowledged, but they take a silent toll in the workplace.

Paradoxically, our inclination to push away uncomfortable feelings gives them more power over us. Conversely, what we’re willing to see, we have the power to influence.

We also do ourselves no favors by choosing sides between virtues. Optimism, confidence, strength, decisiveness and self-control are undeniably important qualities for leaders. But so are their positive opposites: realism, humility, vulnerability, flexibility and openness.

The best leaders - the leaders we need most - learn to balance those virtues.

Louis C.K. understands what it means to hold those opposites. “Sadness is poetic,” he went on to say. “You’re lucky to live sad moments. Then I had happy feelings, because when you let yourself feel sad, your body has antibodies, it has happiness that comes rushing in to meet the sadness.”

I had defaulted into “strength” the past several weeks, not just to protect myself from feeling weak, but also, unwittingly, to convince those in my company that I had everything under control. I would have done better to balance my assertiveness with vulnerability - to be more real. That, after all, is what really makes other people feel truly safe.

About the Author

Tony Schwartz is the chief executive of the Energy Project and the author, most recently, of “Be Excellent at Anything: The Four Keys to Transforming the Way We Work and Live.” Twitter: @tonyschwartz

Ex-Bear Chief Questions JPMorgan’s Mortgage Deal

Alan D. Schwartz, the former chief of Bear Stearns when it collapsed in 2008 and was absorbed by JPMorgan Chase, told Andrew Ross Sorkin that a proposed $11 billion settlement with the Justice Department “doesn’t feel like it makes sense, but it makes good headlines.” Read more »

R.B.S. to Sell Stake in Bank Branch Network

LONDON - The Royal Bank of Scotland agreed on Friday to sell a stake in its branch network for £600 million, or $966 million, to a consortium of investors led by Corsair Capital and Centrebridge Partners.

The bank, which is 81 percent owned by taxpayers after receiving a multibillion-dollar bailout during the financial crisis, has been ordered to sell 314 of its branches to satisfy European rules over state aid.

The branch network, which is expected to be listed on the London Stock Exchange under the name Williams & Glyn’s after an initial public offering, has garnered attention from several investment groups looking to take advantage of increased lending in Britain’s rebounding economy.

After a series of rounds, the consortium led by Corsair and Centrebridge, which also includes the Church of England’s investment fund and RIT Capital Partners, prevailed over a rival offer led by Blackstone and AnaCap Financial Partners, as well as one from W&G Investments, a group of British investors.

Under the terms of the deal, Corsair, Centrebridge and its partners will pay £600 million for up to a 49 percent stake in Williams & Glyn’s after its I.P.O., whose timing has not been determined. The investment comes in the form of a bond that will be exchanged for shares when the I.P.O. is completed. Royal Bank decided to spin off Williams & Glyn’s after the Spanish financial giant Santander pulled back from buying the branches last year.

“This deal concludes what has been a very competitive process, with several highly credible bidders,” Royal Bank of Scotland’s chief finance director, Bruce Van Saun, said in a statement. “We believe this transaction demonstrates that Williams & Glyn’s is a viable and attractive business which will be positioned as a strong, customer-focused challenger bank.”

Shares of Royal Bank fell 1.5 percent in afternoon trading in London on Friday. The bank’s stock has risen 43 percent over the last 12 months.

Despite Europe’s continuing financial difficulties, the British economy is starting to show signs of recovery, and analysts say that investors are eager to back the country’s banking as it rebuilds from the financial crisis.

Earlier this month, the Lloyds Banking Group, which also received financial aid from the British government, announced that lawmakers had sold a 6 percent stake in the bank for $5.1 billion. The share sale reduced taxpayers’ ownership to 33 percent.

While the fortunes of Lloyds have recovered through a reduction in its balance sheet and other cost-saving steps, Royal Bank continues to be weighed down by billions of dollars of so-called noncore assets.

By spinning off the 314 branches, the bank, based in Edinburgh, is shedding a large lending business focused on British small businesses. The network has about 1.7 million customers with outstanding loans of £19.7 billion and customer deposits totaling £22.2 billion.

As part of the deal announced on Friday, John Maltby, Lloyds’s former head of commercial banking, will become chief executive when Williams & Glyn’s completes its I.P.O.

“We have built the foundations of a strong partnership with Royal Bank of Scotland and are thrilled to continue working together to deliver this new bank,” Centerbridge’s chief executive, Lance West, said in a statement on Friday.

Morning Agenda: Carlyle Takes Stake in Beats

CARLYLE INVESTS IN BEATS  |  Beats Electronics, which has drawn in many fans of its colorful, expensive headphones, has now attracted the support of the Carlyle Group, a top private equity firm, DealBook’s Michael J. de la Merced reports.

Beats, which was founded by the music impresarios Dr. Dre and Jimmy Iovine, said on Friday that it secured a minority investment from Carlyle to help finance growth. Carlyle is paying $500 million, according to a person briefed on the matter, valuing the music company at more than $1 billion, Mr. de la Merced reports. The firm will also take two of six seats on Beats’ board. In addition, the audio company will buy back the 25 percent stake in itself held by HTC, the Taiwanese smartphone company.

JPMORGAN IS URGED TO PAY MORE IN MORTGAGE DEAL  |  JPMorgan Chase is moving closer to reaching a multibillion-dollar settlement with the Justice Department over questionable mortgage practices, after authorities urged the bank to raise its offer and the bank’s chief executive took the unusual step of meeting with Attorney General Eric H. Holder Jr. in Washington, Ben Protess and Jessica Silver-Greenberg report in DealBook.

“Mr. Holder’s nearly hourlong meeting on Thursday with the chief executive, Jamie Dimon, followed days of intense negotiations during which JPMorgan ultimately offered to pay a roughly $7 billion fine and provide $4 billion in relief for struggling homeowners, according to people briefed on the talks,” DealBook reports. “While the Justice Department has largely agreed to the $4 billion in relief, which requires the bank to reduce the size of certain mortgages and refinance others, it seeks more than the proposed $7 billion in penalties and is now waiting for JPMorgan to prepare a new, larger settlement offer, the people said.

“The latest push on the size of the penalties indicates that the talks are entering their final stages. After JPMorgan raised its total offer to $11 billion earlier in the week, the disparity in negotiating positions narrowed significantly. And the size of the fine is not the central negotiating point for the bank: JPMorgan is instead focused on using the wide-ranging pact to resolve many of the mortgage-related investigations it faces. Most important, the bank is asking that prosecutors in California drop a criminal investigation into the bank’s mortgage practices â€" a request that the Justice Department has yet to meet.”

J.C. PENNEY TO RAISE CASH IN SHARE OFFERING  |  Amid mounting concerns over its business, J.C. Penney said Thursday evening that it planned to sell 84 million shares in a stock offering to raise cash. The underwriters will have a 30-day option to buy up to 12.6 million additional shares, to bring the total to 96.6 million shares. Goldman Sachs is handling the offering.

The retailer’s shares fell about 5 percent in after-hours trading on Thursday. The stock had already taken a beating after Goldman Sachs and Citigroup released negative reports on the company this week, arguing that its financial situation was deteriorating after a long period of disappointing sales. But before announcing its plans to raise money on Thursday, Penney itself struck an upbeat tone, saying it was “pleased with its progress” in its “turnaround efforts.”

ON THE AGENDA  |  Robert E. Diamond Jr., the former chief executive of Barclays, is on CNBC at 7 a.m. Stephen A. Schwarzman, chief executive of the Blackstone Group, is on Bloomberg TV at 8:15 a.m. Data on personal income and spending in August is released at 8:30 a.m. The Reuters/University of Michigan consumer sentiment index for September is released at 9:55 a.m.

CHRYSLER’S UNUSUAL I.P.O.  |  “What do you call the man who is trying to sabotage Chrysler’s initial public offering by threatening to harm the company, perhaps fatally, if the offering is completed? You call him Chrysler’s chief executive,” Floyd Norris writes in the High & Low Finance column in The New York Times. “There has never been a proposed I.P.O. like Chrysler’s.”

In a typical I.P.O. prospectus, the writers, within the bounds of securities laws, try to attract investors. “Chrysler’s, within the same bounds, is clearly aimed at alienating investors,” Mr. Norris writes. “As such, it may become something of a collector’s item. A game of chicken between Chrysler’s two owners â€" Fiat, the Italian automaker, and a trust that provides benefits to Chrysler’s retirees â€" has burst into the open.”

Mergers & Acquisitions »

K.K.R. to Buy Panasonic Healthcare for $1.67 Billion  |  Kohlberg Kravis Roberts has agreed to buy the health care unit of Panasonic for 165 billion yen, or $1.67 billion, as the Japanese company attempts to streamline its operations after two years of losses.
DealBook »

K.K.R. Said to Pull Out of Auction for Jones Group  |  The private equity firm, in partnership with Sycamore Partners, had been the only party looking to buy the entirety of the Jones Group, a fashion and footwear company, Reuters reports, citing two unidentified people familiar with the matter.
REUTERS

Despite Big Verizon Deal, M.&A. Is Essentially Flat This Year  |  “Between increased rates, and, at times, unpredictable deal-approval regulatory framework, and continued debt ceiling issues, we’re back in the annual dance of uncertainty,” Paul Parker, head of global corporate finance and mergers and acquisitions at Barclays, told Reuters.
REUTERS

Nestle Said to Consider Sale of PowerBar  |  Nestle “is looking to divest its PowerBar energy bars, a pioneer of sports nutrition products, according to four people familiar with the matter,” Reuters reports, adding that a sale “could fetch several hundred million dollars.”
REUTERS

EBay to Acquire Payments Start-Up  |  EBay is acquiring Braintree, a Chicago payments start-up whose clients include Rovio, Uber, OpenTable, Fab and Airbnb, for $800 million in cash, Jenna Wortham reports on the Bits blog. EBay plans to merge the business with PayPal.
NEW YORK TIMES BITS

INVESTMENT BANKING »

A Computer Error Hits BATS Exchange  |  The BYX Exchange of BATS Global Markets was able to reopen using a backup site after a computer problem forced it to close for three hours on Thursday, Bloomberg News reports.
BLOOMBERG NEWS

S.E.C. Said to Be Near Settlement Over Knight Capital Glitch  |  KCG Holdings, the successor company to the Knight Capital Group, “is near a settlement of around $12 million with the U.S. Securities and Exchange Commission related to last year’s trading glitch,” Reuters reports, citing two unidentified people.
REUTERS

Goldman Sachs Weighs In on Youth Shopping  |  Goldman issued a research report called “Millennials: Coming of Age in Retail,” which described the young generation’s “strikingly unique economic, technological, and behavioral characteristics,” according to BuzzFeed.
BUZZFEED

Create a Caption: Mr. Dimon Goes to Washington  |  What did Jamie Dimon and a Justice Department security guard discuss ahead of settlement talks between JPMorgan Chase and federal agencies? We turned to Twitter for the answer.
DealBook »

Strauss-Kahn Joins Investment Firm  |  Dominique Strauss-Kahn, the former head of the International Monetary Fund whose career was damaged by a series of sexual scandals, will join an investment banking boutique based in Luxembourg.
DealBook »

PRIVATE EQUITY »

First-Round Bidding to Begin in Auction of IMG Talent Agency  |  First round bids for IMG, which represents athletes and entertainers including Peyton Manning and Justin Timberlake, are due on Monday, according to people familiar with the matter.
DealBook »

HEDGE FUNDS »

In This Battle Arena, Warriors Are Armed With Algorithms  |  BattleFin, a recruitment firm for hedge funds, stages tournaments to find math whizzes who can apply their knowledge of other fields to the financial world.
DealBook »

Under Pressure From Ackman, Air Products Shakes Up Board  |  Air Products and Chemicals, a producer of industrial gases, is adding three new directors to its board and beginning a search for a new chief executive, changes supported by the activist investor William A. Ackman.
DealBook »

A Promising Start at Air Products  |  William A. Ackman has dislodged the company’s underperforming boss. For bigger, more lasting success, however, a painstaking transformation of Air Products and Chemicals is now needed, Christopher Swann of Reuters Breakingviews writes.
REUTERS BREAKINGVIEWS

I.P.O./OFFERINGS »

British Postal Service Valued at $5.3 Billion in I.P.O.  |  Royal Mail, Britain’s 360-year-old postal service, is to be valued as much as $5.3 billion in its initial public share sale scheduled for next month, the government said on Friday.
DealBook »

VENTURE CAPITAL »

Jack Ma to Join Tech Moguls in Backing Medical Research Prize  |  Jack Ma, the executive chairman of the Internet giant Alibaba, and his wife, Cathy Zhang, are joining some of Silicon Valley’s biggest names as sponsors of the world’s richest prize for medicine and biology.
DealBook »

Partner at Andreessen Horowitz Said to Depart  |  Ronny Conway, the son of the prominent investor Ron Conway, is leaving his role as a partner at the venture capital firm Andreessen Horowitz to begin raising his own fund for early-stage investments, Fortune reports.
FORTUNE

LEGAL/REGULATORY »

A $300 Million Aid Package for Detroit, but No Bailout  |  Obama administration officials will be in Detroit on Friday to propose nearly $300 million in combined federal and private aid toward a comeback of the city, which filed for bankruptcy two months ago. The amount is only a fraction of the billions the city owes, The New York Times writes.
NEW YORK TIMES

Detroit Manager Seeks to Freeze Pension Plan  |  Detroit’s emergency manager wants to freeze the city’s pension system for public workers, in light of evidence it was operated in an unsound manner for many years, contributing to the city’s financial downfall.
DealBook » | DealBook: Detroit Spent Billions Extra on Pensions

Poll Finds Disapproval of Wall Street Bailout  |  Nearly 6 in 10 Americans express disapproval of the 2008 bailout, and only about a third approve, according to the latest New York Times/CBS News poll, the Economix blog reports.
NEW YORK TIMES ECONOMIX

Accountant Who Worked With Madoff for Years Is Indicted in Pyramid Scheme  |  The arrest of Paul J. Konigsberg, a longtime accountant in Bernard L. Madoff’s inner circle, represents a deepening of the federal criminal investigation of Mr. Madoff’s multibillion-dollar Ponzi scheme.
DealBook »

S.E.C. Sues Former Chairman in Looting of Educational Company  |  The Securities and Exchange Commission has accused the former chairman and chief executive of the ChinaCast Education Corporation of stealing $41 million in company funds.
DealBook »

Companies Admit to Fixing Prices of Car Parts  |  The New York Times reports: “In an expanding global antitrust investigation, nine Japanese automotive suppliers, along with two former executives, have agreed to plead guilty to conspiracy and pay more than $740 million in criminal fines for fixing the price of auto parts sold in the United States and abroad, the Justice Department said Thursday.”
NEW YORK TIMES

K.K.R. to Buy Panasonic Healthcare for $1.67 Billion

TOKYO - Kohlberg Kravis Roberts agreed on Friday to buy the health care unit of Panasonic for 165 billion yen, or $1.67 billion, as the Japanese company attempts to streamline its operations after two years of losses.

After the deal, New York-based K.K.R. will own 80 percent of Panasonic Healthcare, while Panasonic will retain 20 percent, according to a joint statement. Panasonic said it would cooperate with K.K.R. in managing the health care business.

Panasonic Healthcare manufactures and sells blood glucose monitoring meters and sensors for diabetics. It also produces I.T. equipment for medical clinics, as well as biomedical laboratory equipment like low-temperature freezers.

Panasonic, the Japanese electronics giant that has lost more than $7 billion for two years running, is in the midst of divesting units to focus on its core businesses of electronic appliances, car components and machinery.

On Thursday, Panasonic, which is based in Osaka, said that it would stop the development of smartphones and reallocate its resources.

Panasonic said on Friday it would post an extraordinary gain of 75 billion yen from the sale of the health care unit and reinvest those funds into what it described as growth areas.

‘‘We believe that partnering with K.K.R. will also allow us to learn from K.K.R.’s global operational and business management expertise as we pursue the next stage of growth for Panasonic,’’ the company’s chief executive, Kazuhiro Tsuga, said in a statement on Friday.

K.K.R.’s founder, Henry Kravis, said in a statement that Japan was ‘‘a very important and attractive market for K.K.R., and our experienced team on the ground in Japan looks forward to leveraging KKR’s global expertise and experience.’’

The companies expect the deal to be completed by the end of March 2014.

Beats Secures Investment From Carlyle and Buys Out HTC

Beats Electronics has already drawn in huge numbers of fans of its colorful, pricey headphones. Now the audio company, founded by music impresarios Dr. Dre and Jimmy Iovine, has attracted the support of a top private equity firm.

Beats said on Friday that it has secured a minority investment from the Carlyle Group to help finance growth. Carlyle is paying $500 million, according to a person briefed on the matter, valuing the music company at more than $1 billion. It will also take two of six seats on Beats’ board.

The electronics maker will also buy back the 25 percent stake in itself held by HTC, the Taiwanese smartphone company. While Beats did not disclose how much it paid, the person briefed on the matter said it was $265 million. Beats is also repaying a $150 million note held by HTC.

The investment by Carlyle will provide one of the biggest boosts yet to Beats, whose signature Beats by Dr. Dre headphones have seized a huge portion of the premium headphone market. The company now claims about 56 percent of the market for headphones costing more than $100, according to the NPD Group.

But the company has moved into new businesses, from speakers to sound systems for Hewlett-Packard computers and HTC phones. Last year, Beats bought the online music streaming service Mog for more than $14 million.

“These transactions represent the evolution of the financial strength and significant growth prospects of Beats,” Mr. Iovine, the company’s chief executive, said in a statement.

The deal is the latest milestone for Beats, which was founded seven years ago after Mr. Iovine told his friend, in slightly cruder terms, that selling speakers would make more money than hawking sneakers.

The two began with instantly recognizable bulky headphones that became fashion statements as well as earpieces. They also deployed their star wattage â€" Dr. Dre as a legendary hip-hop producer, Mr. Iovine as a longtime record executive â€" and connections within the industry, securing product placements and endorsements by celebrities. Earlier this year, for example, the Beats Pill line of wireless speakers featured prominently in Miley Cyrus‘s “We Can’t Stop” music video and a Radio Shack ad built around Robin Thicke’s racy hit “Blurred Lines.”

Now with Carlyle’s help, Beats will move to take more control of its destiny, including by severing its ties to HTC.

The Asian cellphone maker bought half of Beats three years ago for about $309 million, and soon afterward began putting Beats sound systems in some of its phones.

But as HTC has struggled in the smartphone business, slipping far behind Samsung, it has moved to sell down its holdings in its partner. Last year, the Taiwanese company sold about half of its stake, or 25 percent of Beats, back to the company for $150 million.

Now Beats is allying itself with Carlyle, which is betting on the continued success of mobile devices â€" and of Dr. Dre and Mr. Iovine.

“We are confident that Beats will continue to drive innovation and growth in the premium audio accessory market, particularly as the proliferation of smart phones and tablets stimulate increased consumption of digital media,” Sandra Horbach, Carlyle’s head of consumer and retail, said in a statement.

Mr. Lovine added, “Carlyle is a fantastic investment partner and we look forward to building the next chapter of Beats.”

British Postal Service Valued at $5.3 Billion in I.P.O.

LONDON - Royal Mail, Britain’s 360-year-old postal service, is to be valued as much as $5.3 billion in its initial public share sale scheduled for next month, the government said on Friday.

After deciding to go ahead with the privatization of the service earlier this month, the British government said that shares would be priced between £2.60, or $4.20, and £3.30, valuing the group at between £2.6 billion and £3.3 billion. The shares are to start trading in London on Oct. 11.

‘‘This will give Royal Mail access to the private capital it needs to modernize,’’ Vince Cable, the business secretary, said in a statement on Friday. ‘‘We are encouraged by the interest shown by potential investors so far.’’

The initial public offering would be the largest privatization in Britain since British Rail in the 1990s.

As part of the sale, Royal Mail employees are to receive shares worth 10 percent of the company, which is among Britain’s largest employers, for free. About 150,000 Royal Mail staff members will be eligible for free shares, the government said.

The government plans to keep about 37.8 percent to 49.9 percent of Royal Mail stock after the sale.

A partial sale of the mail service has been discussed in Parliament for years. Previous governments shied away from the idea, partly because of strong union opposition but efforts to make the business more profitable were already under way.

As the British government prepares for the share sale, the Communication Workers Union, which represents some Royal Mail staff, said it was sending out ballot papers for a vote on strike action.

‘‘Royal Mail is profitable and can continue to be successful in the public sector,’’ Billy Hayes, the union’s general secretary, said in a statement. ‘‘The sale is driven by political dogma, not economic necessity.’’ The results on the vote are due on Oct. 16 and the earliest a strike could take place is Oct. 23, he said.

Moya Greene, chief executive of Royal Mail, said on Friday that the initial share sale would make the company able to better ‘‘compete in what is a fast changing and intensely competitive market.’’

Royal Mail’s roots date back to the court of Henry VIII in the 16th century. The company has been expanding its packaging services and was able to benefit from an increase in demand as more people buy goods online and get them delivered at home.