Troubled Texas Utility Said to Lean Toward Debt Payment

The day of reckoning for Energy Future Holdings â€" the troubled Texas utility haunted by a huge private-equity buyout  - may be delayed by a few more months.

The company is currently inclined to make a $270 million interest payment to bondholders at an unregulated wholesale power subsidiary known as Texas Competitive Electric Holdings, people briefed on the matter said on Wednesday. The payment is due on Friday.

By paying the interest, Energy Future Holdings will stave off a Chapter 11 filing, delaying for now what experts in the bankruptcy world expect to be one of the messiest cases in years. The company, formerly known as TXU, was taken private in 2007 for $45 billion at the height of the credit boom, adding tens of billions of dollars in debt.

While the deal by Kohlberg Kravis Roberts, TPG and the private equity arm of Goldman Sachs set a record for biggest-ever leveraged buyout, it saddled the company with what is now more than $40 billion in debt. And the premise of the deal â€" that the utility would be able to pay down the debt as natural gas prices rose â€" quickly faltered as prices instead fell, leading to a steep drop in revenues and 10 consecutive quarters of net losses.

Those private equity firms are now grappling with several classes of creditors, largely comprised of hedge funds and debt investors, over a prearranged restructuring plan that would shorten Energy Future’s stay in Chapter 11.

For now, the company can continue operating normally. It has disclosed that it possesses more than $1.3 billion in cash and available credit, and the next significant debt payment isn’t due until next fall. But a decision to pay the interest due on Friday could strain Energy Future’s attempt to reach an agreement over a bankruptcy roadmap.

A group of senior lenders to Texas Competitive Electric, which says it is owed roughly $26 billion, has opposed paying the $270 million interest payment. Their argument: the money would be going to creditors who are supposed to be paid after the senior lenders in a bankruptcy filing.

Energy Future and its various creditors remain substantially far from agreement on a prearranged bankruptcy plan, according to people briefed on the negotiations.

News of the company’s inclination to make the interest payment was reported earlier by The Wall Street Journal.

Alrosa, a Russian Rival to De Beers, Enters Public Trading

Investors now have an opportunity to bet directly on diamond mining, as the Russian government moves to spin off a 16 percent stake in Alrosa.

When shares start trading Thursday afternoon on the Micex stock exchange in Russia, it will provide an opening to a long-cloistered and once highly secretive business.

It will also test an old axiom in the diamond business: that the gems are more plentiful in the earth than their price would suggest, and that a cartel is needed to maintain scarcity.

For decades, in a hushed arrangement that began during the Cold War, Alrosa and its principal competitor, De Beers, the diamond company with roots in South Africa, set prices through joint sales agreements. The arrangement ended in 2008, when European Union regulators broke up the global diamond cartel, starting a new era for the industry.

Although per-carat prices vary greatly, overall diamond prices have more than doubled since 2009, according to an index at RoughPrices.com. In this new environment, Alrosa, which mines from large and rich gem deposits in Siberia, hopes to attract private investors, as the only large pure-play diamond business. De Beers is now a majority-owned subsidiary of Anglo American, a diversified mining company engaged in many sectors.

“Our company has a unique position on the market,” Yevgenia Kozenko, a spokeswoman for Alrosa, said by telephone before the stock placement. Alrosa priced the shares at 35 rubles, or about $1.09, per common share on Monday, at the bottom of its estimated ruble range.

The issue raised a total of $1.3 billion. Although it is not Alrosa’s first offering, it is expected to garner greater attention. Only a tiny number of shares have traded since Alrosa’s initial public offering in 2011, and the volumes have been thin.

Alrosa has long been a mysterious enterprise. For decades it mined a gigantic pit deep in the Arctic that was so rich with gems that at one time it was the single source of about a quarter of all the world’s diamonds. These days, Alrosa mines about 34 million carats a year, a volume that only De Beers can rival. De Beers mined fewer carats in 2012, but it still beat Alrosa on revenue, as De Beers’s mines yield higher-grade gems.

Ms. Kozenko said a cartel would not be necessary to support diamond prices, given the changing industry dynamics. “We have lot of hope on India and China, where the middle class is growing and will buy diamonds,” she said.

On the supply side, she added, the rising costs of mining â€" the barrels of diesel, the gigantic trucks and the salaries for the rough-hewed workers in the Arctic, which are all necessary for finding and extracting the gems â€" will prevent the market from becoming flooded. “The reserves are declining,” she said.

But mining analysts say that new technology tends to make everything that comes out of the ground, whether oil or iron ore or gemstones, more plentiful, not more scarce. Over time, they say, that poses a risk to the scarcity notion that underpins diamond prices. Alrosa now mines below the surface and at other, even more remote open-pit sites, which it says highlights its point about rigor and scarcity.

But Sergei Donskoy, a mining analyst at Société Générale in Moscow, said, “This argument suggests that every mining company is subjected to the same cost pressures as Alrosa,” adding there was always a chance that the discovery of a major new deposit of diamonds could add to the global supply.

Analysts’ forecasts suggest that diamond extraction will grow at a single-digit pace over the next decade, which would approximately balance the expected new demand from a rising Asian middle class. Contrary to stereotypes, middle-class buyers underpin the business.

“The majority of stones found every year are not those that end up in the crowns of the nobility,” Mr. Donskoy said, but rather the small gems found by the thousands that wind up on the engagement rings of the working-class women of the United States and Europe.

Smaller stones found in abundance provide most of the profits from a diamond mine.

With this in mind, Charles Wyndham, the founder of Polished Prices, a company that publishes wholesale polished diamond prices, said by telephone from London, “Our view is that long-term prices remain very positive.”

From Anonymity to Scourge of Wall Street

The architect of a recent legal crackdown on Wall Street’s dubious mortgage practices was not the attorney general, a United States attorney or a rising star in the Justice Department. Instead, it was Leon W. Weidman, an unassuming 69-year-old career prosecutor, toiling away in anonymity 3,000 miles from Washington.

For much of his 43 years as a government lawyer, Mr. Weidman led a small group of federal prosecutors in Los Angeles. In the 1990s and 2000s, he and his team brought nearly 200 civil fraud lawsuits against two-bit mortgage crooks and small-business cheats, using an obscure federal law created in the aftermath of the savings and loan crisis a quarter century ago.

Now the work of Mr. Weidman, a onetime engineer who earned his law degree at night, has leapt to a bigger stage: the government’s campaign to punish Wall Street for the financial crisis.

His pioneering use of the law â€" the Financial Institutions Reform, Recovery, and Enforcement Act of 1989, or Firrea â€" underpinned the Justice Department’s tentative $13 billion settlement with JPMorgan Chase. The United States attorney in Manhattan, Preet Bharara, has deployed the statute most often, filing civil fraud actions against Wells Fargo, BNY Mellon and Bank of America, among others. A jury found Bank of America liable in that case last week.

The wave of cases has ignited a legal controversy, raising the question of whether federal prosecutors, in dusting off an old statute, are misapplying the law. So far, judges have blessed the government’s tactics.

“It’s been an extremely effective tool,” said Mr. Weidman, who lives in West Los Angeles with his wife, an artist, and their 95-pound Labradoodle.

While Mr. Weidman, who is known as Lee, sought to play down his role, numerous senior Justice Department officials singled him out.

“I can’t emphasize enough how significant Lee was to these lawsuits,” said Thomas J. Perrelli, a partner at Jenner & Block who was the associate attorney general overseeing many of these cases. “He was the one person who developed the theory that laid the foundation for the financial crisis cases.”

Mr. Weidman’s work came into focus in 2009 with the economy reeling and the Obama administration under fire for not holding Wall Street banks accountable. As the Justice Department searched for new prosecutorial methods, Mr. Weidman became an overnight sensation within the agency.

Federal prosecutors flew out to California to pick his brain. He held training sessions across the country. The Justice Department assigned him to one of its most promising investigations, a civil action against the credit-rating agency Standard & Poor’s.

That case hinged on Firrea. Enacted in the late 1980s after risky lending practices imperiled the savings and loan industry, the law created a powerful tool to punish fraud committed by banks and their executives.

Firrea is unusually crafted, as it requires a criminal violation like wire fraud or mail fraud to set off the law’s penalties. But because it is a civil statute, it requires a lower burden of proof than criminal charges â€" finding guilt by a preponderance of the evidence versus beyond a reasonable doubt.

That broad authority has alarmed some defense lawyers, who have argued that the Justice Department has stretched the application of Firrea far beyond its original intent. Bank of America, in a motion to dismiss its case, described the prosecution as having “a wildly expansive reading” of the law.

Other critics question whether the government is overcompensating for the lack of criminal cases against Wall Street. Firrea’s civil actions are a cop-out, the critics say, since not one senior Wall Street executive has been charged criminally for a role in the crisis. The same office that employs Mr. Weidman â€" the United States attorney’s office in Los Angeles â€" has come under fire for dropping a criminal investigation of Angelo Mozilo, the former chief executive of Countrywide Financial, one of the biggest mortgage lenders before the financial crisis.

Some investigators at the Securities and Exchange Commission, which file civil cases against big banks, have also raised objections. Federal prosecutors, the S.E.C. officials privately grouse, are encroaching on their turf.

“Realistically, for the Justice Department, the civil cases are a Plan B,” said Stavros Gadinis, a professor at the University of California, Berkley, law school who focuses on financial regulation.

The federal government’s deployment of the little-used law has inspired comparisons to Eliot Spitzer’s novel use of the Martin Act as a cudgel against fraud. As New York’s attorney general, Mr. Spitzer harnessed the powerful 1921 state law to pursue suspected wrongdoing at large Wall Street firms like Merrill Lynch.

Firrea carries similar potency. In addition to the lower burden of proof, it allows prosecutors to bring cases that take aim at misconduct as far back as 10 years â€" a generous statute of limitations compared with five years for criminal securities fraud. And in pursuing a Firrea lawsuit, prosecutors are allowed not only to issue subpoenas, but also to take the sworn testimony of individuals.

It also provides for hefty fines. The Justice Department used the law to sue S.& P. for more than $5 billion, accusing it of knowingly issuing misleading ratings on mortgage-backed securities. JPMorgan’s tentative $13 billion settlement over its sale of shoddy mortgage securities would be a record â€" a single company has never before paid that much to the government.

Defense lawyers say that Firrea gives the government a game-changing weapon in pursuing civil cases against banks.

“In retrospect, it’s surprising that prosecutors have waited so long to happen upon such a powerful statute,” said Susan E. Brune, a former federal prosecutor and now a partner at Brune & Richard.

Mr. Weidman discovered Firrea in the early 1990s while thumbing through materials in his office’s law library. He briefly formed a “Firrea unit,” but disbanded it when the caseload sank.

The financial crisis ignited new interest in the law. With criminal investigations of banks facing an uncertain future, the attorney general, Eric H. Holder Jr., instructed Tony West, who at the time ran the Justice Department’s civil division in Washington, to pursue his own cases. Mr. Perrelli, then a top government lawyer, thought of Mr. Weidman.

At a legal conference in South Carolina, Mr. West and Mr. Weidman met to discuss Firrea. Soon after, in late 2009, the Justice Department issued a subpoena to S.&. P. based on Firrea. And in May 2010, one official said, Mr. West circulated a three-page memo to every United States attorney in the country, urging broader use of Firrea. Citing the “potential deterrent effect,” Mr. West outlined the Justice Department’s “guidelines for approval” of cases under Firrea.

That same month, the Justice Department published a “white paper” by Mr. Weidman explaining Firrea’s benefits. He noted that the number of reported mortgage frauds had been growing astronomically, rising more than 272 percent from 2004 to 2008, citing an F.B.I. report.

In lectures, Mr. Weidman reminded prosecutors that banks, unlike people, cannot go to jail. Flashing a picture of Alcatraz prison, and noting that a company could never land there, Mr. Weidman argued that Firrea and its fines were the strongest tool at the government’s disposal.

Federal prosecutors in Manhattan were among the first to seize on Mr. Weidman’s work. In 2009, Mr. Bharara, the United States attorney in Manhattan, made it a priority to beef up his office’s civil division. He recruited Andrew W. Schilling, a former prosecutor who had left for private practice, to return to government and run the unit.

The office soon sent several prosecutors on a fact-finding mission to Los Angeles, where they met with Mr. Weidman to discuss the law. As they learned more, they decided to put Firrea to work on a grander scale, using it to bring cases against some of the country’s largest banks, including Bank of America, Wells Fargo, BNY Mellon and Citigroup.

“No one had ever brought cases like this before, but no one had ever seen conduct like this before,” Mr. Bharara said in a recent interview at his office in Lower Manhattan.

Banks have challenged the government’s cases, but at least four federal judges have denied the banks’ motions to dismiss these cases, lending credibility to Mr. Weidman’s strategy.

Born in Chicago, Mr. Weidman received his undergraduate degree in physics from the University of California, Los Angeles. He then moved to Pittsburgh, where he worked as a project engineer for Westinghouse’s nuclear division and earned his law degree from Duquesne University.

Mr. Weidman the Justice Department in Philadelphia straight out of law school and moved to Los Angeles a few years later, working on antitrust and white collar fraud cases before being named head of the office’s civil division in 1990.

In an era when lawyers routinely shuttle between the Justice Department and lucrative law firm partnerships, Mr. Weidman is something of a relic. Earning a government salary of $155,000 a year, he says he has no plans to spin his recent success into a seven-figure salary.

“I’m not going anywhere,” he said. “There’s plenty of work left to do.”

U.S. Attorney to Recommend Lawsuit Against Bank of America Over Mortgages

The staff of a United States attorney’s office plans to recommend that the Justice Department sue Bank of America over the packaging and selling of mortgage-related investments before the financial crisis of 2008, the firm disclosed in a regulatory filing on Wednesday.

In its latest quarterly report, Bank of America also said that the staff of New York’s attorney general, Eric Schneiderman, has indicated that it will also file suit against the firm’s Merrill Lynch subsidiary as part of an investigation into the securitization of home loans.

The bank said that it had increased its estimate of potential losses from lawsuits and regulatory matters to $5.1 billion, up from $2.8 billion last quarter.

A spokesman for Bank of America declined to comment.

The looming threat against Bank of America comes as another firm, JPMorgan Chase, is poised to strike a settlement with the Justice Department over its mortgages practices. On Friday, JPMorgan worked out a separate deal with the Federal Housing Finance Agency that will allow the bank to move beyond one of its costliest mortgage-related headaches.

In the agreement with the housing regulator, which oversees Fannie Mae and Freddie Mac, JPMorgan agreed to pay $5.1 billion.

At issue in that case was whether JPMorgan misled the housing regulator about the riskiness of mortgages sold in the run-up to the financial crisis.

The $13 billion deal with JPMorgan with the Justice Department could embolden the agency as it pursues other banks over dubious mortgage practices. The case against JPMorgan is centered on a law that extends the deadline for filing certain financial fraud cases to 10 years from five.

Under the same law, a federal jury found Bank of American liable in a mortgage case last week.

In that case, federal prosecutors in Manhattan accused Bank of America of selling defective mortgages, part of a broader effort by the government to hold banks accountable for their role in the financial crisis, which plunged the housing market to its lowest depths since the Great Depression.

Much of Bank of America’s headaches arise from Countrywide Financial, the troubled lender that the firm bought in 2008 for $4 billion. Since purchasing the business, the bank has paid nearly $50 billion in fines and settlements, according to analysts estimates.

The bank is also facing a raft of investigations into its mortgage practices. In August, federal prosecutors in North Carolina sued Bank of America, accusing it of understating the risks of the mortgages underpinning some $850 million in securities.

House Passes Bill on Derivatives

WASHINGTON â€" The House of Representatives, with bipartisan support, passed legislation on Wednesday that would roll back a major element of the 2010 law intended to strengthen the nation’s financial regulations by allowing big banks like Citigroup and JP Morgan Chase to continue to handle most types of derivatives trades in house.

The bill, which passed Wednesday by a 292-122 vote, would repeal a requirement in the Dodd Frank law that big banks “push out” some derivatives trading into separate units that are not backed by the government’s insurance fund.

But the debate Wednesday regarding this decidedly technical matter quickly turned into an impassioned dispute over the role the federal government has played since the end of the recession in regulating the nation’s financial markets. Advocates of the legislation argued on the House floor that the federal government is in part responsible for the slow rate of economic growth, by imposing excessive new regulations.

“America’s economy remains stuck in the slowest, weakest non-recovery recovery of all times,” said Representative Jeb Hensarling, Republican of Texas, the chairman of the House Financial Services Committee. “Those who create jobs for America are drowning in a sea of red tape preventing them.”

But opponents of the measure said that reckless activity by banks like JP Morgan Chase, where a group of traders in London ran up to $6 billion in losses in 2011, demonstrate that the tough requirements contained in the Dodd Frank law, passed in 2010, should not be weakened.

“It is clear that Wall Street has not learned its lesson,” Representative Collin Peterson, Democrat of Minnesota during the debate. “This bill would effectively gut important financial reforms and put taxpayers potentially on the hook for big banks’ risky behavior.”

The House legislation, formally known as the Swaps Regulatory Improvement Act, has little chance of becoming law, as the Senate has so far not moved ahead with its own version of the legislation, and the Obama administration has spoken up in opposition to it, arguing that regulators should be given a chance to adopt various Dodd-Frank related regulations before the law is revised.

But the vote Wednesday, which included the support of 70 House Democrats, followed months of intense lobbying by Wall Street banks, as both the banks and lawmakers who support the proposal clearly hope that the bipartisan support the bill received in the House will send a strong message to the Obama administration to tread carefully as it drafts the remaining regulations necessary to fully enforce the Dodd Frank law.

In fact, emails reviewed by The New York Times show that Citigroup lobbyists drafted more than 70 of the 85 lines of the House bill, as they attempted to come up with language that both Democrats and Republicans on the Financial Services Committee could support.

A main culprit in the 2008 financial crisis, derivatives are contracts that allow companies to either speculate in the markets or protect against risk. Credit derivatives helped push the insurance giant American International Group to the brink of collapse in 2008.

But lawmakers supporting the legislation Wednesday said that the types of derivatives trades that major banks would be allowed to still handle would not put them at any greater risk, and they noted that the legislation explicitly states that federal insurance could not be used to bail out banks based on losses involving these trades.

Instead, they said, by allowing banks to handle a broader array of derivatives trades, it will lower costs for businesses nationwide that rely on these financial instruments.

“Many Americans may not realize it but farmers, ranchers, manufacturers, and other employees use a financial product called a derivative to manage risk and protect themselves from extreme fluctuations in the price of things like fuel, fertilizers, and commodities,” Mr. Hensarling said. ” And that derivative is directly linked to the cost of that tractor for my constituent.”

Mr. Hensarling’s remarks were echoed by several Democrats, such as Representative Jim Himes of Connecticut, who spoke on the House floor in favor of the measure.

But other Democrats, including Representative Maxine Waters of California, the ranking member of Financial Services, said that the nation cannot afford to expose its financial system to greater risks.

“The financial crisis of 2008 wreaked untold havoc on the U.S. Economy,” she said. “This disaster which was intensified by the use of derivatives set back hardworking Americans for generations.”
With Wednesday’s vote, the House this year has passed eight bills that would roll back different provisions of the Dodd-Frank law.

On Tuesday, by a 254â€"166 vote, which also included 30 Democrats voting in favor, the House separately passed legislation that would make it harder for the Department of Labor to issue a rule that ensures investment advisors and brokers have the “fiduciary” interest of their clients in mind when they attempt to sell them life insurance policies and other services.

Sanford Weill Lures Philharmonic Ex-Chief to Sonoma

Zarin Mehta Is to Oversee a California Concert Hall

Sanford Weill Lures Philharmonic Ex-Chief to Green Center

When Sanford I. Weill bought a 360-acre estate in California wine country three years ago, the area had plenty of attractions â€" gourmet cuisine, fine hotels, a beautiful climate â€" everything but a major concert hall for the culturally inclined Mr. Weill. Fund-raising problems and the economic downturn had stalled the completion of the nearby Green Music Center’s auditorium at Sonoma State University.

Sanford I. Weill is the chairman of the Green Music Center at Sonoma State University.

Zarin Mehta will be an executive director at the Green Music Center.

So in 2011, Mr. Weill, the former Citigroup chief executive and longtime chairman of Carnegie Hall, and his wife, Joan, donated $12 million to finish the hall, and Mr. Weill became chairman of the center. Now he is bringing in his own man to run it, putting up the money to hire Zarin Mehta, the former president of the New York Philharmonic.

The university planned to announce on Thursday that Mr. Mehta will take on the title of executive director, which he will share with Larry Furukawa-Schlereth, the university’s chief financial officer.

Mr. Mehta “can build this place to be something unique and make it well known on a global basis,” Mr. Weill said in an interview.

The Weills will pay 80 percent of Mr. Mehta’s $300,000 annual salary to the university, which will cover the rest â€" an unconventional arrangement for an arts organization. What’s also unusual is that Mr. Mehta does not plan to move to California.

These and other factors raise questions about just how the whole thing is actually going to work. It’s unclear whether Mr. Mehta can run the center from afar; whether the center’s current operating budget of about $9 million will continue to cover the cost of top-tier talent (the Philharmonic’s budget is $73 million by comparison); and whether Mr. Zarin and Mr. Furukawa-Schlereth will comfortably share power. The scale of Mr. Weill’s effort and investment speaks to his ambitions for the hall, in Rohnert Park, Calif., and to the level of his influence. In its first year the center â€" which will ultimately cost a total of $150 million â€" has attracted prominent names in classical music. (It also presents opera, world music and jazz; Lyle Lovett is performing next month.) The pianist Lang Lang gave the first performance at the hall in September 2012, the soprano Rnée Fleming opened this year’s season, and the cellist Yo-Yo Ma performed in January. Each season will also include regular performances by the San Francisco Symphony and the Santa Rosa Symphony.

In its first season, the 1,400-seat hall was the site of 32 concerts, which sold at about 80 percent capacity. The center’s Joan and Sanford I. Weill Hall, as it is now called, was designed by William Rawn and was modeled after Mr. Rawn’s Seiji Ozawa Hall at Tanglewood, with a back wall that can open onto the landscaped Weill Lawn.

Mr. Mehta says it was the high aspirations for the center and encouragement from Mr. Lang that prompted him to take the job, although he didn’t really need a new full-time gig; at 75, he was enjoying being close to his family and being a consultant to music groups in Chicago, to which he returned in 2012 after 12 years at the Philharmonic. Before coming to New York, he was president and chief executive of the Ravinia Festival, in suburban Chicago, where he is a lifetime trustee.

“It’s the opportunity to create a public, to create culture,” Mr. Mehta said in an interview. “I will be there as long as it takes to make this thing a huge success, because the people merit it.” His portfolio at the center will include artistic issues, sales, marketing and development.

Mr. Furukawa-Schlereth said he felt fortunate to have Mr. Mehta as a partner. “I never thought we’d able to find someone of his extraordinary talent and intelligence and experience to come work with us in this brand-new venture,” he said.

Mr. Weill said he was unconcerned about the potential geographical hurdles facing Mr. Mehta. “The best managers travel,” he said. “Music is a global business with people all over the place. He will be out there as much as he absolutely has to be â€" whether it’s 110 percent of the time or 50 percent of the time.”

In addition to Weill Hall, the music center includes the 250-seat Schroeder Hall, which is expected to open next year. Still to be raised is $2.5 million for the MasterCard Performing Arts Pavilion, an open-air space scheduled to open in 2015 to which the credit card company contributed $15 million.

The music center supports itself through ticket sales, board contributions and annual giving, Mr. Furukawa-Schlereth said; the university pays for utilities and maintenance. Mr. Weill said he hoped to expand the board to 50 from 27 with people from the North Bay area, San Francisco and Silicon Valley. Most board members are expected to contribute $50,000 a year each.

As to whether the Green Center will compete with Carnegie Hall for Mr. Weill’s attentions â€" and pocketbook â€" Mr. Weill said: “We’re 3,000 miles apart. I think they can enhance each other.”

The Green Center is already collaborating on educational programs with the Weill Music Institute at Carnegie Hall.

Despite his role as the driving force behind the center, Mr. Weill said its success would not depend on him. “That wouldn’t be a good business model,” he said. “I really believe in leading by example.”

A version of this article appears in print on October 31, 2013, on page C1 of the New York edition with the headline: Zarin Mehta Is to Oversee A California Concert Hall .

Sanford Weill Lures Philharmonic Ex-Chief to Sonoma

Zarin Mehta Is to Oversee a California Concert Hall

Sanford Weill Lures Philharmonic Ex-Chief to Green Center

When Sanford I. Weill bought a 360-acre estate in California wine country three years ago, the area had plenty of attractions â€" gourmet cuisine, fine hotels, a beautiful climate â€" everything but a major concert hall for the culturally inclined Mr. Weill. Fund-raising problems and the economic downturn had stalled the completion of the nearby Green Music Center’s auditorium at Sonoma State University.

Sanford I. Weill is the chairman of the Green Music Center at Sonoma State University.

Zarin Mehta will be an executive director at the Green Music Center.

So in 2011, Mr. Weill, the former Citigroup chief executive and longtime chairman of Carnegie Hall, and his wife, Joan, donated $12 million to finish the hall, and Mr. Weill became chairman of the center. Now he is bringing in his own man to run it, putting up the money to hire Zarin Mehta, the former president of the New York Philharmonic.

The university planned to announce on Thursday that Mr. Mehta will take on the title of executive director, which he will share with Larry Furukawa-Schlereth, the university’s chief financial officer.

Mr. Mehta “can build this place to be something unique and make it well known on a global basis,” Mr. Weill said in an interview.

The Weills will pay 80 percent of Mr. Mehta’s $300,000 annual salary to the university, which will cover the rest â€" an unconventional arrangement for an arts organization. What’s also unusual is that Mr. Mehta does not plan to move to California.

These and other factors raise questions about just how the whole thing is actually going to work. It’s unclear whether Mr. Mehta can run the center from afar; whether the center’s current operating budget of about $9 million will continue to cover the cost of top-tier talent (the Philharmonic’s budget is $73 million by comparison); and whether Mr. Zarin and Mr. Furukawa-Schlereth will comfortably share power. The scale of Mr. Weill’s effort and investment speaks to his ambitions for the hall, in Rohnert Park, Calif., and to the level of his influence. In its first year the center â€" which will ultimately cost a total of $150 million â€" has attracted prominent names in classical music. (It also presents opera, world music and jazz; Lyle Lovett is performing next month.) The pianist Lang Lang gave the first performance at the hall in September 2012, the soprano Rnée Fleming opened this year’s season, and the cellist Yo-Yo Ma performed in January. Each season will also include regular performances by the San Francisco Symphony and the Santa Rosa Symphony.

In its first season, the 1,400-seat hall was the site of 32 concerts, which sold at about 80 percent capacity. The center’s Joan and Sanford I. Weill Hall, as it is now called, was designed by William Rawn and was modeled after Mr. Rawn’s Seiji Ozawa Hall at Tanglewood, with a back wall that can open onto the landscaped Weill Lawn.

Mr. Mehta says it was the high aspirations for the center and encouragement from Mr. Lang that prompted him to take the job, although he didn’t really need a new full-time gig; at 75, he was enjoying being close to his family and being a consultant to music groups in Chicago, to which he returned in 2012 after 12 years at the Philharmonic. Before coming to New York, he was president and chief executive of the Ravinia Festival, in suburban Chicago, where he is a lifetime trustee.

“It’s the opportunity to create a public, to create culture,” Mr. Mehta said in an interview. “I will be there as long as it takes to make this thing a huge success, because the people merit it.” His portfolio at the center will include artistic issues, sales, marketing and development.

Mr. Furukawa-Schlereth said he felt fortunate to have Mr. Mehta as a partner. “I never thought we’d able to find someone of his extraordinary talent and intelligence and experience to come work with us in this brand-new venture,” he said.

Mr. Weill said he was unconcerned about the potential geographical hurdles facing Mr. Mehta. “The best managers travel,” he said. “Music is a global business with people all over the place. He will be out there as much as he absolutely has to be â€" whether it’s 110 percent of the time or 50 percent of the time.”

In addition to Weill Hall, the music center includes the 250-seat Schroeder Hall, which is expected to open next year. Still to be raised is $2.5 million for the MasterCard Performing Arts Pavilion, an open-air space scheduled to open in 2015 to which the credit card company contributed $15 million.

The music center supports itself through ticket sales, board contributions and annual giving, Mr. Furukawa-Schlereth said; the university pays for utilities and maintenance. Mr. Weill said he hoped to expand the board to 50 from 27 with people from the North Bay area, San Francisco and Silicon Valley. Most board members are expected to contribute $50,000 a year each.

As to whether the Green Center will compete with Carnegie Hall for Mr. Weill’s attentions â€" and pocketbook â€" Mr. Weill said: “We’re 3,000 miles apart. I think they can enhance each other.”

The Green Center is already collaborating on educational programs with the Weill Music Institute at Carnegie Hall.

Despite his role as the driving force behind the center, Mr. Weill said its success would not depend on him. “That wouldn’t be a good business model,” he said. “I really believe in leading by example.”

A version of this article appears in print on October 31, 2013, on page C1 of the New York edition with the headline: Zarin Mehta Is to Oversee A California Concert Hall .

For a High-Powered Career, It’s Finance vs. Tech

Wall Street or Silicon Valley? That’s the choice facing many ambitious students across the United States looking to gain a toehold in a powerful industry upon graduation.

While finance was for years the natural path for a certain type of go-getter, a number of would-be bankers are finding themselves tempted by the tech industry’s allure, including the lofty valuations commanded by fledgling start-ups. Skilled programmers, too, are being courted both by technology companies and big banks.

The issue was put to a debate at a conference on Wednesday, with two academics squaring off over which industry would be more attractive to top talent. Robert J. Shiller, the Yale economist who was recently awarded the Nobel prize, found himself defending basic financial products like mortgages against the attacks of Vivek Wadhwa, vice president of innovation and research at Singularity University.

Wall Street’s major achievement in recent years was “cooking the system,” Mr. Wadhwa said at the Buttonwood Gathering, which is sponsored by The Economist.

As for world-changing financial innovation? That amounts to “world-changing financial skimming,” he said.

“I can’t believe I’m even having this debate,” he added.

Mr. Wadhwa praised Google and its self-driving cars, and he asked the audience to imagine a future in which 3-D printers performed important tasks and water was unlimited. He hailed crowdfunding as “transformative.”

His sparring partner took a different approach. Mr. Shiller, put on the defensive, tried to find common ground.

“We need more engineers than we need finance people. But we need finance people to provide the resources for them to do these things,” Mr. Shiller said. “It’s not a choice between Google and Goldman.”

Financial engineering, Mr. Shiller said, is neither evil nor new, pointing to mortgages as one example. As for Goldman, Mr. Shiller said the firm has long put an emphasis on its culture, dating to the business principles introduced in 1979 by John C. Whitehead, a former co-head of the firm.

This year, Goldman has also put an emphasis on improving the working environment for its entry-level recruits. The firm created a “junior banker task force,” composed of senior staff from different units, which made recommendations that the firm is implementing.

Though grueling hours are the norm for young bankers, the task force said that these junior employees, known as analysts, should be able to take weekends off whenever possible. The recommendations also included hiring more analysts and introducing new technology to make the work process more efficient.

To help retain employees, Goldman changed its analyst program last year so that analysts are now hired full-time on day one, rather than for a two-year period. “This is a marathon, not a sprint,” David Solomon, the co-head of investment banking at Goldman, said in a statement.

And yet, the industry continues to face an image problem - as Mr. Wadhwa’s attacks demonstrated. Mr. Shiller acknowledged as much.

“Anyone who lends money and asks for it back is going to look greedy,” Mr. Shiller said. “You’ll never be loved the way Mother Teresa was. But you’ll know inside you’re a good person.”

Why Chrysler Needs an $18 Billion Valuation to Justify an I.P.O.

Chrysler’s valuation needs to hit $18 billion to justify an initial public offering. That’s the point where the union trust fund that owns 41.5 percent of the automaker would reap more than it could get from controlling shareholder Fiat. But it’s also way more than either owner has ever considered to be a reasonable price.

The two have been at loggerheads over price for more than a year, ever since Fiat’s offer for an additional 3.3 percent stake valued the company at $4.2 billion - $6 billion when higher offers for two more 3.3 percent slugs are included. The trust fund pegged the value at $10.3 billion.

The gap spawned a still-unresolved lawsuit and a later attempt by Fiat and Chrysler’s chief executive, Sergio Marchionne, to strike a deal for the trust fund’s entire stake. A 2009 agreement divvying the company up after its bankruptcy set the maximum amount the Italian automaker would pay at $4.25 billion, plus compound interest of 9 percent starting in 2010.

The tally, including interest, now stands at $6 billion, effectively valuing Chrysler at $14.5 billion. The cost to Fiat would be $750 million less, though, as it could keep the union’s share of undistributed dividends, according to Bernstein research. Mr. Marchionne says he won’t pay that much, quipping last month the union should “buy a lottery ticket” instead.

He may be bluffing. But the problem for the trust fund, assuming it’s set on getting $6 billion for its holdings, is that going ahead with an I.P.O. makes its task harder. That’s because the three slugs accounting for the 9.9 percent the two are already haggling over remain subject to a court battle going Fiat’s way.

Stripping out those slugs means the fund still needs to get $5.4 billion for 31.5 percent of the company. That requires a $17.2 billion company valuation, on top of which the fund would have to give up as much as $900 million in dividends over the next two years due to its lower holdings.

It’s not impossible. Mr. Marchionne reckons Chrysler’s pre-tax margin could hit 8 percent in 2015, close to what General Motors makes now. That could mean a $4 billion profit, assuming revenue increases 5 percent. Pop that on a multiple of five times earnings, a discount to where G.M. currently trades, and the union may be in luck.

It’s a gamble, though, and not just because of earnings. The 2009 agreement also implies Fiat might be able to claw back anything the union gets for its shares above the maximum amount - though the I.P.O. might nullify that, according to Bernstein.

That means the stock offering could end up being a lot of work for nothing. The negotiating table may be more palatable.

Antony Currie is an associate editor at Reuters Breakingviews. For more independent commentary and analysis, visit breakingviews.com.

Why Chrysler Needs an $18 Billion Valuation to Justify an I.P.O.

Chrysler’s valuation needs to hit $18 billion to justify an initial public offering. That’s the point where the union trust fund that owns 41.5 percent of the automaker would reap more than it could get from controlling shareholder Fiat. But it’s also way more than either owner has ever considered to be a reasonable price.

The two have been at loggerheads over price for more than a year, ever since Fiat’s offer for an additional 3.3 percent stake valued the company at $4.2 billion - $6 billion when higher offers for two more 3.3 percent slugs are included. The trust fund pegged the value at $10.3 billion.

The gap spawned a still-unresolved lawsuit and a later attempt by Fiat and Chrysler’s chief executive, Sergio Marchionne, to strike a deal for the trust fund’s entire stake. A 2009 agreement divvying the company up after its bankruptcy set the maximum amount the Italian automaker would pay at $4.25 billion, plus compound interest of 9 percent starting in 2010.

The tally, including interest, now stands at $6 billion, effectively valuing Chrysler at $14.5 billion. The cost to Fiat would be $750 million less, though, as it could keep the union’s share of undistributed dividends, according to Bernstein research. Mr. Marchionne says he won’t pay that much, quipping last month the union should “buy a lottery ticket” instead.

He may be bluffing. But the problem for the trust fund, assuming it’s set on getting $6 billion for its holdings, is that going ahead with an I.P.O. makes its task harder. That’s because the three slugs accounting for the 9.9 percent the two are already haggling over remain subject to a court battle going Fiat’s way.

Stripping out those slugs means the fund still needs to get $5.4 billion for 31.5 percent of the company. That requires a $17.2 billion company valuation, on top of which the fund would have to give up as much as $900 million in dividends over the next two years due to its lower holdings.

It’s not impossible. Mr. Marchionne reckons Chrysler’s pre-tax margin could hit 8 percent in 2015, close to what General Motors makes now. That could mean a $4 billion profit, assuming revenue increases 5 percent. Pop that on a multiple of five times earnings, a discount to where G.M. currently trades, and the union may be in luck.

It’s a gamble, though, and not just because of earnings. The 2009 agreement also implies Fiat might be able to claw back anything the union gets for its shares above the maximum amount - though the I.P.O. might nullify that, according to Bernstein.

That means the stock offering could end up being a lot of work for nothing. The negotiating table may be more palatable.

Antony Currie is an associate editor at Reuters Breakingviews. For more independent commentary and analysis, visit breakingviews.com.

Brazilian Energy Company OGX Files for Bankruptcy Protection

SÃO PAULO, Brazil â€" The flagship company of the Brazilian entrepreneur Eike Batista, the petroleum company OGX, filed for bankruptcy on Wednesday via a court-supervised restructuring.

The filing was a stunning fall for Mr. Batista, who was once a symbol of Brazil’s rapid rise as a global economic power. The move became nearly certain after OGX missed a $45 million bond payment on Oct. 1. As of that date, OGX had 30 days to negotiate with creditors.

According to papers filed with the Court of Justice of Rio de Janeiro, the company’s total debt is 11.2 billion reais ($5.1 billion), making this filing the largest corporate default in the history of Latin America.

The company owes $3.6 billion to bondholders, most of whom are foreign, with the rest of the debt to suppliers and banks.

Pimco, the world’s largest bond investor, and BlackRock, the world’s largest asset manager, both invested in OGX and stand to lose from any bankruptcy filing.

Even after a filing, the process could be long and tortuous. Of the approximately 4,000 companies that have entered court-supervised restructuring since the procedure was established in Brazil in 2005, only about 1 percent have successfully left the bankruptcy court’s supervision, according to a study by the newspaper O Estado de São Paulo.

Only 23 percent even managed the first step, which is to have a creditors’ assembly approve the restructuring plan. Many cases are fought over in Brazil’s notoriously slow justice system, where appeals can drag on for years.

OGX has pursued many active discussions to try to stave off bankruptcy. Rumors have swirled about possible new investors in the company, especially after the firm dismissed its chief executive officer and chief legal counsel on Oct. 15.

OGX confirmed on Oct. 17 that it was talking to the Brazilian investment firm Vinci Partners and other firms about restructuring options, but no deal has yet been reached.

Its sister company OSX, whose primary business is building ships and marine architecture for OGX’s petroleum exploration operations, said earlier this week in a note that it does not expect to seek a bankruptcy court’s protection “at this moment.” OSX’s debts were listed in its balance sheet at $2.4 billion at the end of the second quarter, and it, too, has little cash flow. But unlike its sister company, OSX has easily marketable assets including oil rigs, and most of its short-term debts are with government-controlled banks that have already agreed to reschedule some payments.

Thomas Felsberg, a bankruptcy lawyer in São Paulo, said Brazilian bankruptcy courts almost always approve a company’s initial request for protection, as long as the documents are in order, and such approval does not contain any judgment about a company’s chances of emerging from bankruptcy.

If the request is approved, the company has a 180-day stay period in which it is protected from creditors’ demands.

Documents released on Tuesday on OGX’s website indicate that the company will run out of cash in December and needs $250 million in new funds to continue operations through April 2014.

These funds could come from selling its natural gas subsidiary OGX Maranhão, and from a possible investment by the Malaysian petroleum company Petronas in one of OGX’s offshore petroleum blocks, the company’s documents said.

Mr. Batista won international fame for his plans to build an empire of energy, mining, and logistics companies. For several years OGX announced one petroleum find after another, and all six of his publicly traded companies saw their share prices soar on the São Paulo stock exchange. But none of the companies managed to become profitable in time to service their billions in debt.

Mr. Batista’s personal worth, which at one point last year exceeded $30 billion, is now estimated at well under $1 billion. Minority shareholders in OGX are suing both the company and Mr. Batista for what may have been misleading statements about OGX’s supposed petroleum finds and for possible instances of insider trading.

Brazil’s securities regulator, known as the CVM, announced in September that it was investigating Mr. Batista and other senior managers of OGX for possible violations of disclosure rules.

Marcus Sequeira, Latin America petroleum analyst for Deutsche Bank, said that it was clear several years ago that OGX was not going to be as successful as hoped.

The company issued in April 2011 a report in which it claimed over 10 billion barrels in reserves. But to reach that number the company added together different kinds of reserves, most merely possible rather than confirmed or even probable.

Although this discrepancy was in the 2011 report for anyone to see, few paid attention to it, Mr. Sequeira said. “It is the same in every bubble. At some point everyone only wants to hear the good news.”

Looking forward, Mr. Sequeira said he was “not optimistic” about OGX’s fate, since “the resource base is clearly not as big as the company was saying.”

But since there is some oil in OGX’s fields, Mr. Sequeira said it might be possible, if a new investor is found, for production to resume and bondholders eventually to get a portion of their money back, though shareholders would probably be wiped out.

Submit Your Questions for DealBook’s Nov. 12 Conference

Our annual DealBook conference provides a platform for readers to discuss the intersection of finance, technology and the corporate sector with top executives, investors and policy makers. Whether or not you attend the Nov. 12 conference at our headquarters in New York, you can submit questions below for the panel.

More information is available at the conference website. The list of speakers is still expanding, but includes the following boldface names:

Neil M. Barofsky The former prosecutor, who brought transparency and accountability to the federal government’s 2008 bank bailout program as its first special inspector general, recently joined a law firm based in Chicago. His reports on the program questioned Treasury officials’ claims of its effectiveness. Read more »

Preet Bharara The United States attorney for the Southern District of New York has become a media darling for his relentless focus on insider trading on Wall Street. In July, he brought what some experts say could be the case of his career â€" criminal charges against SAC Capital Advisors. Read more »

David Bonderman The private equity titan runs the buyout firm TPG. Many say TGP has a question mark hovering over it. Its fifth fund, a $15 billion behemoth that started investing in 2006, is flat. Its sixth fund, a $19 billion pool, had an annual return of 8.6 percent, after fees, at the end of June. Read more »

Ray Dalio The founder of Bridgewater Associates, a colorful hedge fund manager whose “Principles” manifesto discusses the virtues of hyenas’ killing wildebeests, could not quite beat the market in 2012. Yet he ended the year $1.7 billion richer. Read more »

Barry Diller The founder of IAC and chairman of Expedia cut a swath through the media and Internet worlds by racking up a string of prominent acquisitions. Mr. Diller started off in the mail room of the William Morris Agency and would go on to run ABC, then Paramount and, later, Fox. Read more »

Laurence D. Fink BlackRock’s chief executive is regarded for his risk management expertise. In 2007, The New York Times called him the king of the C.E.O. short list on Wall Street. With $4 trillion under management, BlackRock is the largest shareholder in one of every five United States companies. Read more »

David Geffen Early in his career, the media mogul twice founded and sold record labels. In the mid-1990s, he helped organize the film studio Dreamworks SKG. He has previously expressed interest in buying The New York Times. Read more »

Austan Goolsbee The longtime adviser to President Obama left as chairman of the Council of Economic Advisers in 2011, to return to the University of Chicago. The left-of-center economist has advised Mr. Obama since the president was a state senator. Read more »

Kenneth C. Griffin The head of Citadel, a hedge fund based in Chicago, has had two strong years after his two biggest funds nearly collapsed in the market rout of 2008. Mr. Griffin started trading convertible bonds in his dorm room at Harvard. Read more »

Glenn Hubbard The dean of the Columbia Business School was a former chairman of President George W. Bush’s Council of Economic Advisers and a top adviser to Mitt Romney. He was known as the principal architect of the Bush tax cuts. Read more »

David Karp The 27-year-old founder of Tumblr sold his popular blogging service to Yahoo for $1.1 billion. Admired for his design acumen, he has been a polarizing figure in New York tech circles because he has often blogged about his personal life. Read more »

Ben Kaufman The 26-year-old chief of Quirky, a start-up that makes products developed with its online community, has already raised $91 million from venture capitalists. In high school, he founded a manufacturer of iPod accessories that sold for $150 million. Read more »

Sal Khan The former hedge fund manager quit his job in 2009 to found the Khan Academy, a nonprofit organization that produces free 10-minute educational videos for children in grades K-12. His tutorials have been watched by more than 200 million people. Read more »

Carl Levin The liberal fixture in the Senate “has done more than anyone to expose the scams, the conflicts, the wrongdoing and the sheer idiocy of the financial industry from the run-up to the financial crisis to the present day,” writes Joe Nocera of The New York Times. Read more »

Daniel Loeb The activist investor behind the hedge fund Third Point is as famous for his poison pen as for his investment performance. His firm’s assets under management have grown to $14 billion. Mr. Loeb was one of Mr. Obama’s biggest backers in the 2008, before switching to Mr. Romney. Read more »

Elon Musk The serial entrepreneur is a co-founder of PayPal and the electric car company Tesla Motors and the chief of SpaceX, which aims to take space travel private. He most recently proposed a high-speed hyperloop train. Andrew Ross Sorkin wrote that the rocket scientist reminds “you of Tony Stark. Minus the Iron Man suit.” Read more »

Paul Piff A study by the social psychologist at the University of California, Berkeley, found that lower-income people were more generous, charitable, trusting and helpful to others than were those with more wealth. They were more attuned to the needs of others and more committed generally to the values of egalitarianism. Read more »

Ruth Porat The chief financial officer of Morgan Stanley is among the highest-ranking women on Wall Street. During the Internet boom, she was a technology banker. When that sector blew up, she reinvented herself, eventually becoming a financial services banker. Read more »

Wilbur L. Ross Jr. The 75-year-old buyout specialist oversees a private equity empire. He has made billions of dollars by buying unloved companies in unwanted industries, like steel, coal and banks, and fixing them to sell for profit. In 2012, he struggled to raise a new fund. Read more »

David M. Rubenstein The billionaire co-founder of Carlyle took his private equity firm public last year. While the company is flush with cash, its buyout activity has slowed from 2012. A former aide in the Carter White House, he is chairman of the John F. Kennedy Center for the Performing Arts in Washington. Read more »

Bijan Sabet The general partner at the East Coast venture capital firm Spark Capital was an early investor in Twitter. He left the social media company’s board in 2011. Read more »

Faiza Saeed One of the top deal lawyers at Cravath, Swaine & Moore, which has long been a top legal presence in the deal-making league tables. Read more »

Peter Weinberg The scion of a legendary Goldman Sachs family co-founded the boutique investment bank Perella Weinberg Partners. His grandfather, Sidney Weinberg, is often referred to as the father of the modern Goldman. Read more »

Cameron and Tyler Winklevoss The twins best known for their part in the history of Facebook are promoting an exchange traded fund for the alternative crypto-currency Bitcoin. Read more »

Other speakers at the conference will include The New York Times reporters Peter Lattman and Annie Lowrey and the columnists Mr. Nocera and Mr. Sorkin.

When submitting comments for the panel below, please indicate to whom you would like your question directed. Video of our 2012 conference is available below.

Shares of Blackstone-Backed Real Estate Trust Rise in Debut

Stock market investors continue to show an appetite for real estate.

The Brixmor Property Group, a real estate investment trust owned by the Blackstone Group, sold more shares than it had expected in its initial public offering on Tuesday evening, reflecting strong demand from investors. The shares were priced at $20 each, the middle of an expected range, raising $825 million and giving the company a market value of about $4.4 billion.

The stock rose on Wednesday in the company’s trading debut on the New York Stock Exchange. After opening at $20.65, shares of Brixmor were up as much as 4 percent during the day.

“Our story really resonated with investors, and that led to more demand that allowed us to upsize,” Michael A. Carroll, the chief executive of Brixmor, said in an interview.

Investors are looking to gain exposure to the strengthening commercial real estate market in the United States. Vacancy rates are expected to decline for commercial properties and rents are expected to grow modestly, the National Association of Realtors said in a forecast released in August.

In October, the Empire State Realty Trust raised $929.5 million in an initial public offering. Its shares, through Tuesday, have risen 9 percent from the I.P.O. price.

Investors are betting that Brixmor, which has 522 shopping centers across the country, is poised to benefit from the improving property market. The company says it has the nation’s largest wholly owned portfolio of shopping centers anchored by grocery stores.

The company, formerly known as the Centro Properties Group, was in need of capital before Blackstone bought it in 2011. Since then, Brixmor has invested $339 million to improve its assets, the company said in a regulatory filing.

Brixmor said it planned to use the proceeds from the offering to reduce its debt. As of June 30, its total debt was about $6.7 billion, according to the filing.

The company sold 41.3 million shares in the offering, more than the 37.5 million shares it had expected to sell. The deal’s underwriters have the option to purchase an additional 6.2 million shares.

Blackstone will remain the majority owner, with about 73 percent of the company’s shares, according to a filing.

The offering was led by Bank of America Merrill Lynch, Citigroup, JPMorgan Chase and Wells Fargo Securities.

Questions Remain About Unwinding Failing Financial Giants

At a Federal Reserve conference last week, I was once again contemplating orderly liquidation authority and how it has changed under the Federal Deposit Insurance Corporation’s “single point of entry” proposal, which would put the holding company of a failing financial giant into into receivership, but its operating subsidiaries would still operate.

Much optimism was expressed at the conference that orderly liquidation authority now or soon will work wonderfully. Less optimism was expressed about Chapter 11 as a tool to resolve financial institutions, which starts of my list of things I’m still wondering about:

First, what about the fact that the bankruptcy code is supposed to be the first line of defense? Indeed, under Dodd-Frank all-the-too-big-to-fail entities are busy preparing resolution plans (otherwise known as living wills) that outline how they would be fair in a bankruptcy case. But little has been done to address a bankruptcy code that was seen as unable to handle American International Group in 2008.

Second, those living wills are supposed to present a credible resolution plan under the bankruptcy code. I have heard from lots of law firms that bankruptcy partners have been heavily involved in the process. But what about the regulatory side? Best I know, the F.D.I.C. does not have a lot of in-house Chapter 11 experience. How are they determining that these plans represent a realistic bankruptcy approach?

Third, can the F.D.I.C. replace the Fed of old when lending under Dodd-Frank, or is its role more like that of a traditional debtor-in-possession lender? Too often industry types want to have it both ways. If the F.D.I.C. is simply a D.I.P. lender, then it can only lend based on the current value of the failed institution’s assets.

If it acts like the Fed, then it could lend against “real” or post-crisis value. But that second approach, however practical, starts to look awfully like a bailout. No other distressed borrower gets to tell its lender “trust us, these assets are worth more than it currently appears.”

Fourth, are all of the operating subsidiaries going to be saved under single point of entry, or just the “good” ones? If the latter, how is that going to be decided? And doesn’t any effect on the operating subsidiaries undermine the key benefits of a single-point-of-entry approach?

As I understand it, the proposal overcomes the obvious problems with orderly liquidation authority - it’s crazy complicated to apply to the whole firm, and limited geographically to the United States when no real systemically important financial institution is so limited - by only addressing the holding company. Once we deviate from that model, the risk of a more generalized panic comes to the fore.

But how precisely would A.I.G. have been handled under single point of entry? Could any parent company every realistically prop such a black hole of a subsidiary?

I could go on but I’ll save my additional points for a future time. Question No. 1 alone seems to represent a big issue, and thus far most of the work has been done only by the Hoover Institute people, who obviously bring their own agenda to the project.

Stephen J. Lubben is the Harvey Washington Wiley Chair in corporate governance and business ethics at Seton Hall Law School and an expert on bankruptcy.

C.F.T.C. Approves New Rules for Futures Industry

In October 2011, as the futures broker MF Global teetered on the brink of collapse, employees reached into client accounts in a last-ditch attempt to avert bankruptcy.

But their actions failed to save the broker, and its implosion left thousands of clients short $1.6 billion of their money.

Two years after MF Global’s prominent bankruptcy, regulators have sought to restore confidence in the industry, tightening rules that force brokerage firms to better safeguard client money.

The Commodity Futures Trading Commission voted 3 to 1 on Wednesday to finalize rules proposed a year ago to protect customers, including measures to close loopholes, reinforce internal risk controls and force brokers to provide more information to clients.

“This new information is critical in today’s world of high-frequency trading,” said Gary Gensler, chairman of the C.F.T.C. “Thus, with these reforms, the commission will get additional tools to oversee the markets’ largest day traders and high-frequency traders.”

The new rules are part of a wider shift in policy to better regulate the futures industry after years of lighter-touch policy.

“It’s really pretty clear that we are supposed to protect customer funds all the time,” said Bart Chilton, a member of the commission. “In fairness, we haven’t done as well, if you look at the history, as I think we should have.This rule gets to where we need to be.”

When MF Global declared bankruptcy on Oct. 31, 2011, it sent ripples through the futures industry and prompted several federal investigations and congressional hearings. Less than a year later, another futures brokerage firm, the Peregrine Financial Group, buckled after funneling $215 million out of client accounts.

With the new rules, the C.T.F.C. aims to shine a light on how brokers maintain their clients’ accounts and outlines limitations of when they can move their money around.

Brokers will be subject to tougher auditing standards and will be required to provide daily reports that include details of each separate client account. These reports will be filed electronically. Mr. Gensler said this step was “the right place to be in the 21st century.”

The commission also voted to close a loophole that allowed brokerage firms to use money from client accounts that traded overseas under an exemption called the “alternative calculation.”

The most controversial of the new proposed rules will change how brokers keep collateral and make margin calls to ensure a client default is limited. Brokers, who are required to provide a buffer in client accounts, will be required to make clients pay several days earlier.

Some brokers have said these changes could put them out of business because it would require them to hold more capital in client accounts, while agricultural groups have raised concerns that some farmers would be forced out of the market if they had to make payments on their trades sooner.

Scott O’Malia, another member of the commission, was the dissenting vote.

“Instead of mitigating customer risk, the rules create a false sense of security by imposing broad and ambiguous requirements and introducing another layer of governmental oversight,” he said in a statement after the meeting.

During the meeting, Mr. O’Malia proposed an amendment to the new payment timeline requirements, hoping to leave open a final decision for five years.

Mr. Gensler, the commissioners and members of C.F.T.C. oversight teams spent more than an hour debating the effect of the new requirements. The commission rejected the amendment 3 to 1.

As the second anniversary of MF Global’s bankruptcy approaches, clients whose money went missing are closer to getting it back. James W. Giddens, the trustee who has been assigned the task of finding the money and returning it to customers, has recovered nearly all the funds.

Two Financial Advisers Accuse Twitter of Secondary Market Fraud

The secondary market for private company stock is a shadowy world, where ownership is often unclear, paper fortunes trade hands with ease and valuations can soar as demand for hot private stock outstrips supply.

On Wednesday, Twitter became ensnared in this web. Two investment advisers sued the company ahead of its initial public offering, contending that it promised them up to $278 million worth of shares through a third firm, GSV Capital, in an effort to test the market and increase its secondary market valuation.

Coming ahead of Twitter’s public debut next week, the lawsuit, filed in Federal District Court in Manhattan, could be an unwelcome distraction for the company, which is on a roadshow marketing its stock to institutional investors.

Yet the suit is bound to raise eyebrows as well. The plaintiffs, Continental Advisors and the Precedo Capital Group, are suing Twitter, not GSV Capital, despite the fact that they communicated only with GSV and never with Twitter. Moreover, given that the suit contends the fraud took place more than a year ago, the timing of the filing may strike some as deeply opportunistic.

Continental and Precedo contend that they were contacted in March 2012 by Matthew Hanson of GSV about an arrangement in which GSV would provide them with shares to market to other accredited investors. Continental and Precedo contend that GSV said both Twitter and its counsel, Wilson Sonsini Goodrich & Rosati, approved of the deal.

Eager to earn the hefty commission promised to them, Continental and Precedo conducted a roadshow of their own, with Continental marketing private Twitter shares to investors in Europe and Asia and Precedo presenting to broker-dealers in the United States. At one meeting in Scottsdale, Ariz., Precedo contends, GSV’s chief executive, Michael T. Moe, participated in the presentation to investors.

The companies contend that they took hundreds of millions of orders from investors around the globe who wanted exposure to Twitter’s pre-I.P.O. stock and collected more than $4 million, which was put in an escrow account.

But Continental and Precedo say that before they could accept payments, Twitter instructed GSV to cancel the offering, costing the plaintiffs millions in lost fees and reputational damage.

Though GSV canceled the offering, Continental and Precedo contend that Twitter was calling the shots and that it subsequently said GSV was never authorized to offer shares for resale. They say Twitter never intended to sell the shares and instead just wanted to test the appetite for its stock and establish a high secondary market valuation.

“Twitter intended to support a market price of Twitter stock by using plaintiffs to secure high net worth and institutional investors to determine what the interest was in purchasing Twitter stock,” the companies say in the suit. “Twitter’s intention was never to sell the stockholders’ shares that it controlled.”

In a statement, Twitter said: “We’ve never had a relationship with these plaintiffs. Their claim is completely without merit.” GSV was not immediately available for comment.

The plaintiffs are asking the court to award it damages of $24.2 million, the cost of lost fees and expenses. Yet proving that Twitter should be responsible for this bill may be a challenge in court.

In an interview, Andreea Porcelli, managing partner at Continental Advisors, declined to explain why the plaintiffs were singling out Twitter and not GSV. However, she said that her firm was unable to get in touch with Twitter and had finally decided to sue.

“We have actually been trying to contact Twitter for quite a while,” Ms. Porcelli said. “This is our last stand.”

Vanity Fair Profile’s ‘Little Big Man’ Loeb

Billionaire hedge-fund manager Dan Loeb calls himself an “activist investor,” but even in the rough-and-tumble financial world, his tacticsâ€"nasty, personal attacks on C.E.O.’s and colleaguesâ€"are considered extreme. After nearly losing his Third Point fund, in 2008, Loeb has come roaring back, hunting such big game as Yahoo, Sony, Morgan Stanley, and Sotheby’s. From Wall Street to Hollywood, everyone is crying foul, but as William D. Cohan reports, Loeb’s ultimate weapon may be that he doesn’t give a damn.

READ Bill Ackman, Dan Loeb, Carl Icahn, and Herbalife: The Big Short War

ARCH ENEMIES Dan Loeb and his current antagonists: from left, George Clooney (who called Loeb a Hollywood “carpetbagger”), hedge-fund manager Bill Ackman, Sotheby’s C.E.O. William Ruprecht, and Sony C.E.O. Kazuo Hirai.

Once again, in October, Dan Loeb was lobbing grenades. This time his target was Sotheby’s, the international auction house, founded in 1744, that, along with chief rival Christie’s, owns the high-end business of reselling the art, real estate, jewelry, furniture, and other knickknacks of the wealthy. Loeb, the 51-year-old founder and principal owner of the hedge fund Third Point L.L.C., is famous, or rather infamous, for such bomb throwing. Packaging them in the form of letters to corporate C.E.O.’s (and sometimes to his hedge-fund colleagues), Loeb excoriates his targets publicly, not only for their professional performance but also often for their personal behavior. The idea is to humiliate the C.E.O.’s, causing them to quit or to get fired, so Loeb can unleash his strategies for “unlocking shareholder value,” as they say in the hedge-fund world. Other hedge-funders send such letters, but most agree that Loeb’s are the nastiest and most florid.

After Thir Point had become the company’s largest shareholder, Loeb sent his Sotheby’s letter on October 2 to William F. Ruprecht, the widely respected chairman and chief executive officer, who has been at the auction house for 33 years. Arguing that Sotheby’s suffered from “a lack of leadership and strategic vision at its highest levels,” Loeb then blasted Ruprecht for his 2012 compensation of $6.3 million, as well as any number of perksâ€"memberships in “elite country clubs,” car allowances, and tax-preparation servicesâ€"that invoked “the long-gone era of imperial CEOs.” He also relayed the “story” of an “extravagant lunch and dinner” at Blue Hill restaurant, in Manhattan, where, he said, Sotheby’s management “feasted on organic delicacies and imbibed vintage wines at a cost to shareholders of multiple hundreds of thousands of dollars.” Loeb demanded Ruprecht’s resignation and wrote that he would like to join the board “immediately” to begin a search for a new C.E.O. In! credibly, he wrote that he had already identified two internal candidates who could succeed Ruprecht and had begun “informal discussions” with outside candidates as well.

In response, Sotheby’s cited Loeb’s “incendiary and baseless comments.” An unnamed source, speaking to The Wall Street Journal, said Loeb had exaggerated the size of the restaurant tab, which had covered 50 of the firm’s top producers. The company also adopted a so-called “poison pill,” forcing anyone who acquires 10 percent or more of the company’s stock to negotiate with the board of directors to buy the companyâ€"a path the activist Loeb is unlikely to pursue. (Ruprecht declined a request for an interview.)

For most of his career Loeb has gone after obscure smaller companies, but the $14 billion war chest he has assembled of his and other people’s money in the last few years has inspired him to pursue bigger gameâ€"among them Sony, Yahoo, Morgan Stanley, Apple, Disneyâ€"nd has attracted unwanted attention to his scorched-earth tactics. Last August, George Clooney, one of Hollywood’s smartest and most genial figures, went ballistic on Loeb, who had bought more than a billion dollars’ worth of Sony stock, and then followed it up with a pair of letters to Sony C.E.O. Kazuo Hirai, claiming that the company’s entertainment division lacked the “discipline and accountability that exist at many of its competitors.” Loeb concluded by assuring Hirai that he “would gladly accept a seat on Sony’s Board of Directors.”

Clooney, after pointing out that he has no particular love for Hollywood executives, rallied to their defense. “I’ve been reading a lot about Daniel Loeb, a hedge fund guy who describes himself as an activist but who knows nothing about our business, and he is looking to take scalps at Sony,” Clooney vented in August to the entertainment-news Web site Deadline Hollywood. “It makes me crazy A guy from a hedge fund entity is the single ! least qua! lified person to be making these kinds of judgments, and he is dangerous to our industry What he’s doing is scaring studios and pushing them to make decisions from a place of fear To have this guy portraying it that Sony management is the bad stepchild and doesn’t know what it is doing and he’s going to fix it? That is like Walmart saying, let me fix your town, putting in their store, strangling all the small shops and getting everyone who worked in them to work for minimum wage with no health insurance.”

Loeb followed his Sony investment with a relatively small $115 million stake in Disney (which has a market value of around $117 billion). What he hoped to accomplish with such a small stake is a bit of a head-scratcher. According to an insider, “Hollywood is used to seeing these people [like Loeb] come in, make a buck, and leave. In that sense, everybody is just kind of rolling [their] eyes. But [Loeb’s targeting of Sony] is unfair because Sony has been one of the most stable and successul studios.”

Clooney’s broadside was all the more surprising in that, at first glance, you’d think that Loeb would be just Hollywood’s kind of hedge-fund guy. With the laid-back affect of the California surfer dude that he once was, he’s compact, athletic, and rakishly handsome, with close-cropped brown hair and a wry smile. He made skateboards for himself and his friends when he was 12, worked for Island Records after graduating from college, and hung out in New York with rapper Fab 5 Freddy during the mid-80s heyday of Bright Lights, Big City. Looking much younger than his age, thanks to some seriously healthy living, he for many years practiced Ashtanga, the rigorous, contortionist form of yoga favored by 20-year-old actresses and ballerinas, and then moved on to compete in triathlons and marathons, where he is a middle-of-the-pack guy but gets big points for participating.

Works by such major contemporary artists as Jean-Michel Basquiat, Rich! ard Princ! e, Cindy Sherman, Andy Warhol, and Mike Kelley line his spectacular homes and his swanky Lever House office, on Park Avenue. He thinks nothing of hopping on his Gulfstream IV (recently upgraded to a newer model, friends say) to jet to the Mentawai Islands, in Indonesia, to go surfing. He studied Torah for six years with Rabbi Heshy Blumstein, who presided over his July 4, 2004, marriage to Margaret Munzer, then a yoga instructor. (They have three children.) He even wears custom-made Tom Ford suits.

Some people believe that Loeb’s yoga practice and Torah studies are just an elaborate means of atonement. “I’ve heard it said that yoga is Dan’s form of paying penance for what he does while outside the home, whether it be the office or elsewhere,” says Robert Chapman Jr., a hedge-fund manager in California. “It’s like his way of self-purging.” Chapman and Loeb were once friends who occasionally invested together on deals.

Adds a competitor who knows him well, “I think Loeb has gotan enormous ego. I think he’s got a bit of a Napoleonic thing. And I think he’s a very calculating, Machiavellian guy What happens to some people when they make a ton of money is they get this feeling of invulnerability, and I can do anything, say anything, behave any way I want, and I can get away with it.”

A Wall Streeter who has known Loeb since his early days in New York describes how Loeb climbed to the pinnacle of hedge-fund success: He started out “a little bit like J.P.â€"John Paulson [founder and president of the hedge fund Paulson & Co.]. He was doing O.K. No one took him terribly seriously. And then he kind of figured out his niche. We all know what his niche is: He is just long and loud. He took a position and then started screaming and trying to force some change. He was smart to occupy a place that was really left vacant: All the private-equity funds and the banks had to get out of [doing] hostile deals, and it was left to the guys who didn’t give a crap, knew how to do! it, and ! had nothing that they were compromising or putting in jeopardy by taking on those powers. Carl Icahn didn’t give a fuck. Dan Loeb didn’t give a fuck. I don’t think anyone’s ever said Dan’s a really, really brilliant guy, but this is what the hedge-fund world allows you to be if you’re massively ambitious and you’re kind of really, really, really focused. You’ll probably get there.”

Some people think Loeb’s hostile behavior may derive from feelings of insecurity. “Given Dan’s extraordinary success, his behavior can be extraordinarily odd, and coming from me that says something,” says Chapman. “If I had to guess, he sees himself as a phenomenal filterer of other people’s investment ideas, and maybe that’s the source of a behavior normally attendant on someone hopelessly insecure.”

Pricewaterhouse to Buy Booz Consulting Firm

PricewaterhouseCoopers said on Wednesday that it had agreed to buy the consulting firm Booz & Company, bolstering its advisory business.

Financial terms of the transaction were not disclosed, though Booz & Company is expected to be PricewaterhouseCoopers’s biggest acquisition in several years.

Still, the union of the two firms is likely to bring scrutiny from regulatory agencies around the world as it again raises the issue of an accounting firm’s buildup of consulting businesses that could pose conflicts of interest.

PricewaterhouseCoopers and Booz & Company have taken steps to quell any concerns, according to people briefed on the matter. The two companies are expected to review client matters, with Booz partners expected to drop consulting assignments that conflict with existing auditing clients.

Booz & Company partners are expected to vote on the deal in December, with an update on the merger to come by the end of the year. The people briefed on the matter added that they expected PricewaterhouseCoopers to retain the vast majority of Booz’s partners.

Both companies are expected to position the deal as a merger of two global players, with each operating on multiple continents. But PricewaterhouseCoopers reported more than $32 billion in revenue during its 2013 fiscal year, while analysts estimate Booz & Company’s revenue at about $1 billion.

By purchasing the smaller firm, PricewaterhouseCoopers will hope to strengthen one of its faster-growing operations. While the firm’s assurance arm, including its core auditing business, has reported relatively flat revenue over the last three years, its advisory arm has grown about 23 percent during the same period.

PricewaterhouseCoopers has been rebuilding its consulting arm over the last decade after having sold a previous version of the business to IBM for $3.5 billion in 2002.

Its assurance business now produces less than half of the firm’s business, with tax and consulting work each providing slightly more than a quarter of the revenue.

“One of the real strengths of PwC is the scope and quality of our services, giving us the ability to work with a wide range of stakeholders to build trust and solve important problems,” Dennis Nally, the chairman of PricewaterhouseCoopers International, said in a statement. “Today’s proposed merger would only add to that strength.”

At the same time, PricewaterhouseCoopers expects to use elements of the consulting business â€" its strengths in cybersecurity and data analysis, for example â€" to bolster its auditing operations as well.

The move comes amid what many in the consulting industry expect to be a growing wave of consolidation. Booz & Company had received several expressions of interest from potential buyers over the last year, according to a person briefed on the approaches. But the firm ultimately concluded that PricewaterhouseCoopers provided the right cultural and strategic fit.

“Our goal is to help clients identify and build the differentiating capabilities they need to win,” Cesare R. Mainardi, Booz & Company’s chief executive, said in a statement. “This potential combination would not only deliver on this innovative value proposition but would also help reinvent management consulting for the next century.”

The deal will unite two of the oldest names in their respective businesses. PricewaterhouseCoopers traces its roots back to two London accounting firms founded in the middle of the 19th century, while Booz & Company was founded in 1914 as the progenitor of the management consulting industry.

The latter eventually grew into Booz Allen Hamilton, the government consulting giant that once employed Edward Snowden, the former government contractor who leaked classified data about national surveillance initiatives. Its corporate consulting arm was spun off as Booz & Company in 2008 after Booz Allen sold itself to the Carlyle Group, and the two no longer have any connection.

Still, both Booz & Company and Booz Allen Hamilton have increasingly stepped into each other’s businesses over the last two years after a noncompete agreement expired.

PricewaterhouseCoopers and Booz & Company declined to give details on how the deal would be structured. But they indicated that various PricewaterhouseCoopers partnerships around the world would have stakes in Booz.

Accounting firms use similar names around the world but are legally separate partnerships in each country, an arrangement that helps them deal with varying national laws regarding firm ownership â€" and that they cite to avoid liability for the rest of the firms if one of the partnerships is sued because of a failed audit.