New York Subpoenas Websites in an Effort to Curb Payday Lenders

Government authorities are trying to choke off the supply of borrowers to online lenders that offer short-term loans with annual interest rates of more than 400 percent, the latest development in a broader crackdown on the payday lending industry.

New York State’s financial regulator, Benjamin M. Lawsky, sent subpoenas last week to 16 so-called lead generator websites, which sell reams of sensitive consumer data to payday lenders, according to a copy of the confidential document reviewed by The New York Times. The subpoenas seek information about the websites’ practices and their links to the lenders.

The move is part of an evolving push by state and federal officials to curb payday lenders and their practice of offering fast money tied to borrowers’ paychecks. In August, Mr. Lawsky sent cease-and-desist letters to 35 online lenders ordering them to stop providing loans that violate state usury caps to New Yorkers.

Short-term lenders argue that when used responsibly, their loans can be a valuable tool for customers who might not otherwise have access to traditional banking services. The Online Lenders Alliance, a trade group, added that its members abided by all applicable laws.

Still, for payday lenders, the lead generator websites are a critical link, according to state officials. At first glance, the sites appear to be online lenders, prompting customers to enter their private financial data in applications.

To lure customers, the sites advertise fast cash, flash $100 bills and feature photos of smiling families, according to a review of the companies’ websites. MoneyMutual, one of the websites subpoenaed by Mr. Lawsky, promotes the talk show host Montel Williams as its spokesman. A recording of Mr. Williams greets callers to the company’s toll-free number.

A spokesman for Mr. Williams said that while his role is limited to being the company’s public face, “Mr. Williams is concerned any time a consumer has a bad experience with any product or service with which he is involved.”

Charles Goodyear, a spokesman for MoneyMutual, said, “Our lenders attest via their contracts with MoneyMutual that they operate within applicable federal or state law.”

None of the other lead generators contacted returned requests for comment.

Lead generator websites function as a middleman, ultimately selling the information, or “leads,” to the lenders.

With that financial information, the payday lenders can gain lucrative access to New Yorkers and make loans that exceed the state’s usury cap of 25 percent annual interest.

But such state interest rate caps can prove tough to police. Even as New York and 14 other states have imposed caps on interest rates in recent years, lenders have become nimble, moving from storefronts to websites. From that perch, where they find consumers across the country, the lenders can dodge individual state laws. With the help of the lead generators, the lenders have even greater access to reach borrowers â€" even in states where the loans are illegal.

Beyond their role in fueling the lenders, the lead generators, according to state officials, pass on customer information to other types of financial schemers. Regulators are increasing their scrutiny of how these sites function in the online lending ecosystem â€" an issue that has gained urgency with the proliferation of online lenders.

The administration of Gov. Andrew Cuomo of New York has also broadened its scrutiny in recent months to include the banks that enable lenders to withdraw money from customers’ bank accounts. Along with the lead generators, the banks are a crucial pipeline between consumers and payday lenders. Through an electronic transfer system known as A.C.H., or Automated Clearing House, the lenders can automatically withdraw loan payments from borrowers’ checking accounts.

Some state and federal authorities say the companies, including the lead generator websites, have frustrated government efforts to protect people from predatory loans, an issue that has gathered even more urgency after reckless mortgage lending helped precipitate the 2008 financial crisis.

Payday loans can come with annual interest rates that exceed 400 percent, according to an October summary from the Pew Charitable Trusts. For borrowers already on shaky footing, a single missed payment can lead to an even higher interest rate. On a $375 loan, a borrower can pay $520 in interest alone, according to the report. At the extreme, customers say their interest rates can soar beyond 1,000 percent.

Mr. Lawsky’s office is concerned that consumer information is also getting into the hands of swindlers. His office received complaints from consumers who said that they were inundated with calls after applying for an online payday loan.

When Myra Thomas, 42, received a call offering her a $1,000 loan from Capital Bank after she applied through a lead generator, she was pleased because she needed the money for a coming move. Money has been short for Ms. Thomas, a former truck driver who had to stop working because of illnesses.

To receive the loan, though, Ms. Thomas had to send $375 to the company â€" money she says vanished. Ms. Thomas never received the loan or her $375 back. The website she used to apply for the loan is one of the lead generators subpoenaed by Mr. Lawsky.

The Online Lenders Alliance said that its members, which include some of the lead generators, vigilantly guard customers’ personal information to prevent fraud.

“Unfortunately there are bad actors who fraudulently misrepresent themselves as legitimate companies, in some cases by duplicating website branding to deceive consumers,” Peter Barden, a spokesman for the group, added.

Mr. Barden said the group reported all instances of fraud to the Federal Trade Commission and other law enforcement agencies.

But, for Ms. Thomas, one experience of fraud is more than enough to turn her off payday loans entirely.

“I won’t do it again,” she said. “I’m just going to have to figure out something else.”

Witness Tells of Pressure From SAC Trader to Get More Insider Data

Between 2007 and 2009, Jon Horvath developed a regular routine as a trader at SAC Capital Advisors: obtaining confidential information about Dell Inc.’s financial results well before the computer company’s quarterly disclosures.

And those efforts, Mr. Horvath detailed for a jury on Monday in a Manhattan federal district courtroom, were made with the full knowledge of his boss, Michael S. Steinberg.

During his third day of testimony as a prosecution witness in Mr. Steinberg’s insider trading trial, Mr. Horvath described repeatedly gleaning early peeks into Dell’s sales. Knowing that information well before the market gave SAC an edge in betting against the company’s stock. That helped the hedge fund, particularly in the summer of 2008.

“Nice job on Dell,” Steven A. Cohen, SAC’s billionaire founder, wrote in an email to Mr. Steinberg and Mr. Horvath in late August that year.

The lengthy testimony is meant to buttress federal prosecutors’ contentions that Mr. Steinberg repeatedly encouraged Mr. Horvath to cross legal lines in pursuit of information with an edge. Mr. Horvath previously said in court that he did so to save his job. The trial is taking place just a few weeks after the firm pleaded guilty to criminal insider trading charges.

Mr. Horvath has pleaded guilty to insider trading and is aiding prosecutors in their pursuit of Mr. Steinberg, one of SAC’s earliest employees and most senior traders. The defense team has not yet had its opportunity to cross-examine Mr. Horvath, but is likely to seek to discount his testimony.

Throughout much of Monday, Mr. Horvath described months of conversations that he had with Jesse Tortora, a friend at another hedge fund who supplied the Dell information. Prosecutors repeatedly showed the jury emails between Mr. Horvath and Mr. Steinberg recounting the specific guidance about how Dell was performing in the quarter and how to tailor their trading strategy in light of the news.

“Sure, this data is secondhand but this contact was correct in the last two quarters,” Mr. Horvath wrote in one message on Aug. 25, 2008.

Mr. Horvath also developed a relationship with Danny Kuo, an analyst at another hedge fund who had gained access to someone in the accounting department at the graphics chip company Nvidia. The initial leaks from Mr. Kuo proved decent, but without the specifics that SAC wanted to gain a real advantage.

“Now we are going into this print with zero edge,” Mr. Horvath wrote in an email to Mr. Steinberg in early February of 2009, complaining that the first financial figures lacked specifics into Nvidia’s coming earnings report.

More numbers followed, however, and such was the precision provided by Mr. Kuo that some performance figures were enumerated to fractions of a percent.

In court, Mr. Horvath admitted that he knew that the Nvidia data he was receiving was coming from “clearly an improper source of information.”

Yet the efforts to obtain the financial information from both Dell and Nvidia lasted for several quarters under Mr. Steinberg’s watch. Apparently irked that a previous trade built on advance knowledge of Dell’s results led to a loss because of market movements, the senior SAC trader ordered his underling in February of 2009 to “tell your boy to keep quiet.”

Later that month, Mr. Steinberg nonetheless praised Mr. Horvath’s efforts.

“A solid Dell call by you,” he wrote in an email. “We did pretty much as best we could.”

But defense lawyers, led by Barry H. Berke, are expected to press Mr. Horvath later this week on the details of the Dell and Nvidia leaks. Among the matters that Mr. Berke will most likely pursue is whether Mr. Steinberg actually knew that the information was obtained illegally, because his client was the last in a chain of those who were tipped off ahead of the earnings report.

Throughout much of Monday’s proceedings, Mr. Steinberg quietly watched his former trader testify, occasionally peering at documents displayed on a Dell laptop in front of him.

Witness Tells of Pressure From SAC Trader to Get More Insider Data

Between 2007 and 2009, Jon Horvath developed a regular routine as a trader at SAC Capital Advisors: obtaining confidential information about Dell Inc.’s financial results well before the computer company’s quarterly disclosures.

And those efforts, Mr. Horvath detailed for a jury on Monday in a Manhattan federal district courtroom, were made with the full knowledge of his boss, Michael S. Steinberg.

During his third day of testimony as a prosecution witness in Mr. Steinberg’s insider trading trial, Mr. Horvath described repeatedly gleaning early peeks into Dell’s sales. Knowing that information well before the market gave SAC an edge in betting against the company’s stock. That helped the hedge fund, particularly in the summer of 2008.

“Nice job on Dell,” Steven A. Cohen, SAC’s billionaire founder, wrote in an email to Mr. Steinberg and Mr. Horvath in late August that year.

The lengthy testimony is meant to buttress federal prosecutors’ contentions that Mr. Steinberg repeatedly encouraged Mr. Horvath to cross legal lines in pursuit of information with an edge. Mr. Horvath previously said in court that he did so to save his job. The trial is taking place just a few weeks after the firm pleaded guilty to criminal insider trading charges.

Mr. Horvath has pleaded guilty to insider trading and is aiding prosecutors in their pursuit of Mr. Steinberg, one of SAC’s earliest employees and most senior traders. The defense team has not yet had its opportunity to cross-examine Mr. Horvath, but is likely to seek to discount his testimony.

Throughout much of Monday, Mr. Horvath described months of conversations that he had with Jesse Tortora, a friend at another hedge fund who supplied the Dell information. Prosecutors repeatedly showed the jury emails between Mr. Horvath and Mr. Steinberg recounting the specific guidance about how Dell was performing in the quarter and how to tailor their trading strategy in light of the news.

“Sure, this data is secondhand but this contact was correct in the last two quarters,” Mr. Horvath wrote in one message on Aug. 25, 2008.

Mr. Horvath also developed a relationship with Danny Kuo, an analyst at another hedge fund who had gained access to someone in the accounting department at the graphics chip company Nvidia. The initial leaks from Mr. Kuo proved decent, but without the specifics that SAC wanted to gain a real advantage.

“Now we are going into this print with zero edge,” Mr. Horvath wrote in an email to Mr. Steinberg in early February of 2009, complaining that the first financial figures lacked specifics into Nvidia’s coming earnings report.

More numbers followed, however, and such was the precision provided by Mr. Kuo that some performance figures were enumerated to fractions of a percent.

In court, Mr. Horvath admitted that he knew that the Nvidia data he was receiving was coming from “clearly an improper source of information.”

Yet the efforts to obtain the financial information from both Dell and Nvidia lasted for several quarters under Mr. Steinberg’s watch. Apparently irked that a previous trade built on advance knowledge of Dell’s results led to a loss because of market movements, the senior SAC trader ordered his underling in February of 2009 to “tell your boy to keep quiet.”

Later that month, Mr. Steinberg nonetheless praised Mr. Horvath’s efforts.

“A solid Dell call by you,” he wrote in an email. “We did pretty much as best we could.”

But defense lawyers, led by Barry H. Berke, are expected to press Mr. Horvath later this week on the details of the Dell and Nvidia leaks. Among the matters that Mr. Berke will most likely pursue is whether Mr. Steinberg actually knew that the information was obtained illegally, because his client was the last in a chain of those who were tipped off ahead of the earnings report.

Throughout much of Monday’s proceedings, Mr. Steinberg quietly watched his former trader testify, occasionally peering at documents displayed on a Dell laptop in front of him.

Chernin Invests in Anime Streaming Company

Peter Chernin, the former News Corporation executive who now runs his own media investment firm, has proved to be an astute investor, putting money to work in high-flying start-ups like Pandora, Tumblr and Flipboard.

Add to that list a lesser-known business: Crunchyroll.

On Monday, the Chernin Group acquired a majority stake in Crunchyroll, a San Francisco-based company that streams Japanese anime over the Internet. Terms of the deal were not announced, but a person briefed on the matter said the investment was worth a little less than $100 million. Existing management and TV Tokyo, another investor in Crunchyroll, will remain involved.

Though Japanese anime is not mainstream fare, enthusiasts of the genre tend to be passionate about it. Crunchyroll has established itself as a destination site for anime fans, with free and ad-supported offerings plus a successful subscription service.

“This deal is about two things,” Mr. Chernin said in an interview. “They have built an extremely impressive anime offering. Hardcore anime fans love it. At the same time, they deserve credit for building a great subscription video platform.”

Mr. Chernin said Crunchyroll was profitable and had doubled users in each of the last three years. People briefed on the matter said the company had more than 300,000 subscribers paying about $7 a month and that revenue was more than $25 million a year.

“Anime is at the heart of our company - We love anime, supporting the growing anime community and working to provide the best entertainment to its fans,” Kun Gao, Crunchyroll’s founder and chief executive, said in a statement. “This investment from T.C.G. will allow us to provide an even better experience and service for anime producers and fans worldwide.”

But the investment in Crunchyroll is about more than anime for the Chernin Group.

Gaining a foothold in the emerging online video sector has emerged as a priority for Mr. Chernin. Over the summer, the group made what Mr. Chernin described as an “ill-fated attempt” to acquire Hulu, the online video service that he helped establish while at News Corp. Hulu’s owners ultimately decided not to sell. The Chernin Group is also an investor in Base79, which produces content for YouTube channels.

Mr. Chernin said that Crunchyroll had set itself apart by creating a profitable subscription video service that operates in more than 160 countries, all while excelling at the coding, streaming, subscription-management services and monetization strategies needed to make it work.

“We looked at this as an exciting standalone business, but also as a platform that’s capable of delivering a range of content experiences,” he said, adding that the company planned to expand into content areas beyond anime in the months to come.

Though Mr. Chernin did not elaborate, he said that “they may range from sports, to foreign language content, to specific entertainment genres.”

“More than anything, what’s going to drive subscription services in this space are things that people are deeply passionate about, and things that have global interest,” he said.

For now, that means anime. It remains to be seen what other types of popular entertainment Mr. Chernin believes can be served up through Crunchyroll.

After Ouster, a Second Act for a Top Wall Street Strategist

J. Tomilson Hill was a well-known Wall Street deal maker in the 1980s, a skilled merger tactician whose work on the bidding war for RJR Nabisco earned him a role in the book “Barbarians at the Gate,” which memorably said he came across to enemies as “an oiled-back Gordon Gekko haircut atop 5 feet, 10 inches of icy Protestant reserve.”

But in 1993, Mr. Hill’s climb up the ladder at Lehman Brothers ended when he was ousted as co-chief executive, and he spent the next seven years of his career in less prominent roles at the Blackstone Group, the private equity firm.

But Mr. Hill has reinvented himself by applying his deal-making skills to a different business. Since 2000, he has taken Blackstone’s hedge-fund-of-funds business from barely a blip on the radar screen to the No. 1 spot. Its $53 billion in assets are more than double its nearest competitor’s.

At a presentation for analysts in May 2012, Mr. Hill described his business as “the largest investor in hedge funds in the world.” A typical Blackstone fund may be subdivided among a dozen or more hedge fund managers, like William A. Ackman of Pershing Square Capital Management, Paul Singer of Elliott Associates or Andrew Hall, the former Citigroup oil trader. Mr. Hill has succeeded not by posting titanic returns but by offering the funds to institutions like public pension funds as a safer alternative to stocks without as much volatility. Its $8 billion flagship Blackstone Partners Offshore Fund returned 6.3 percent annually from 2000 through 2012, according a Blackstone presentaion in mid-2013 obtained from another investor.

While it may look unexciting, that return beat global stock markets, as measured by the MSCI World Index, which returned 1.9 percent annually in the same period. The reason: The Blackstone fund posted healthy gains when markets tumbled in 2000-02, and its 15.6 percent drop in 2008 was less than half the 40.3 percent market decline.

Building this business organically has left some of Blackstone’s rivals like Kohlberg Kravis Roberts & Company, the Carlyle Group and Apollo Global Management trying to compete through acquisitions or hiring teams, said Marc Irizarry, who follows money management firms for Goldman Sachs. Carlyle announced such an acquisition last week. The division now accounts for more than one-fifth of Blackstone’s total assets under management.

This year, Blackstone has focused on the market for individual investors who may want such hedge fund vehicles in their portfolios. In August, it started a $1 billion mutual fund for wealthy clients of Fidelity Investments. Institutions have 25 percent of their assets in alternatives to stocks and bonds, like private equity, hedge funds and real estate, but individuals have only 2 percent, which Blackstone’s president, Hamilton E. James, says “shows you the massive potential that retail has.”

The second act for Mr. Hill, who is 65, has helped him become Blackstone’s third-highest-paid executive officer, with 2012 compensation of $13.7 million. He also owns $506 million worth of Blackstone stock and has sold $45 million worth since the firm went public in 2007, according to InsiderScore, which tracks such sales.

He has homes in Manhattan, East Hampton, Paris, and Telluride, Colo., where he likes to ski. He also has a growing art collection including works by Andy Warhol, Francis Bacon and Brice Marden. His 32 Renaissance and Baroque bronzes will be featured in an exhibition that opens in January at the Frick Collection. Mr. Hill’s contributions to the local arts scene include service as chairman of the board of Lincoln Center Theater and a trustee at the a href="http://topics.nytimes.com/top/reference/timestopics/organizations/m/metropolitan_museum_of_art/index.html?inline=nyt-org" class="tickerized" title="More articles about the Metropolitan Museum of Art.">Metropolitan Museum of Art. Still, there are limits. When a museum assembled a Bacon show in 2008, Mr. Hill was asked to lend three of the four Bacons he owns, but he drew the line at two.

The son of a corporate lawyer at a large New York firm, Mr. Hill grew up on Park Avenue, attending the preppy bastions Buckley School and Milton Academy, where he was a varsity wrestler, before attending Harvard and Harvard Business School.

He joined the merger department of First Boston in 1973 and left six years later to become head of mergers at Smith Barney, Harris Upham. Mr. Hill joined Lehman in 1982, where he worked briefly with Peter G. Peterson and Stephen A. Schwarzman before they left to found Blackstone in 1985 after Lehman was sold to American Express.

At Lehman, with the 1980s merger mania in full swing, one former banker recalls that the hypercompetitive Mr. Hill would know exactly how much he weighed before and after workouts in the firm’s gym, where he would sometimes do situps nonstop for 15 minutes. But after three years as co-chief executive alongside Richard S. Fuld Jr., Mr. Hill was ousted by Harvey Golub, the chief executive of American Express.

His front-page ouster from Lehman “was a very jarring experience,” Mr. Hill recalled. “It was very hurtful as well because I thought I had done a good job” engineering merchant banking buyouts that helped the firm’s profits for the next few years. “You deal with the reality of trying to reinvent yourself, and the test of anybody is how they do in adversity.”

“Any normal person would be set back and quizzical about it,” Mr. Schwarzman said. “I don’t think he was in any way a broken person, but he was clearly reflective, and appropriately so.” At Blackstone, Mr. Schwarzman continued, “he sort of sat around, and eventually somebody called him to do something, he did it, and then someone else called, and he sort of got his sea legs back.”

When Mr. Hill took over the fund-of-funds business in 2000, it managed $1.3 billion, one quarter of it for the firm itself and its partners. Referring to his days as a mergers-and-acquisitions banker, Mr. Hill said he used “an M.&A. approach instead of a product approach,” building the business by asking clients what they needed “and not trying to sell them something.”

One of his first big clients, the Pennsylvania State Employees’ Retirement System, asked Blackstone to create a market-neutral fund in 2001, and eventually invested $1.3 billion in it. Five years later, the retirement fund’s chief investment officer, Peter Gilbert, told Mr. Hill at an investors’ meeting of a problem the retirement fund was encountering in investing in a well-known commodity index, as an inflation hedge, because of differences between futures and spot prices.

Mr. Hill was able to find traders who could match or beat the index, including Mr. Hall, who was working then at the Phibro trading unit of Citigroup. “It didn’t just solve our problem, it created a new business line for them,” Mr. Gilbert said.

At the start of 2007, Blackstone ranked No. 14 among fund of funds, according to one industry tally. But during the financial crisis, some competitors imposed delays or “gates” limiting investor withdrawals. Worse, other competitors had exposure to Bernard L. Madoff’s Ponzi scheme. Blackstone, which prides itself on intensive manager research, had avoided Mr. Madoff.

With its network of outside managers and its own private equity team, Blackstone seeks to exploit unusual market moves. When the hedge fund manager John Paulson sold Lehman bankruptcy claims in 2011 amid speculation about redemptions by his investors, Blackstone got one of its managers to spend $600 million buying claims amid a market dislocation. Mr. Hill said the strategy returned more than 30 percent on an annual basis after fees.

The fees are hefty. Blackstone says it often negotiates fee discounts from its managers, but won’t provide details. The mutual fund for Fidelity charges total annual fees of 3.25 percent, with a waiver reducing the total to 2.4 percent â€" still more than double the average mutual fund. Since it started trading in early August, the fund has gained 3.6 percent after fees.

But the fund-of-funds business is facing pressure as stocks have taken off after the 2008 meltdown. Blackstone’s flagship fund is no exception, trailing the global market’s strong 12.9 percent annual returns from 2009 to 2012 by 5.6 percentage points.

As for his hair, Mr. Hill said he wore it parted in high school but switched to a straight-back style when he grew it longer during the student-protest era when he wrote for The Harvard Lampoon. (That was “back when I had a sense of humor,” he noted.) But he scoffs at the loose talk he has heard over the years that Oliver Stone, the “Wall Street” director, might have modeled Gordon Gekko’s hair on his. “Oliver Stone never met me,” Mr. Hill said. “I don’t think Oliver Stone knows who I am.”

Goldman and JPMorgan’s New Capital Plans Satisfy Regulator

Goldman Sachs and JPMorgan Chase have finally overcome a regulatory rebuke that had been hanging over both banks since the Federal Reserve performed stress tests this year on large financial firms.

In March, Goldman and JPMorgan passed the tests, which are held annually and are designed to assess whether banks have the financial strength to get through sharp downturns in the economy and the markets. But in an unexpected reproach, the Fed said that it had identified significant weaknesses in the plans that JPMorgan and Goldman had submitted to show what might happen to their capital during periods of stress.

The regulator told Goldman and JPMorgan to come up with improved capital plans, and it threatened to stop the banks from paying out dividends and performing stock buybacks if the perceived flaws were not addressed.

On Monday, the two banks effectively put the matter behind them when the Fed announced that it did not object to plans that the firms had resubmitted.

In a statement, Jamie Dimon, the chief executive of JPMorgan, said the bank was pleased that its resubmitted plan had met the Fed’s expectations. Goldman had no comment other than a statement saying that the Fed had not objected to its plan.

The Fed’s dissatisfaction over the capital plans of Goldman and JPMorgan was a shock at the time, because both firms were expected to pass the tests without any problems. Some of their rivals passed the tests without hitch, including Bank of America and Citigroup, which both stumbled badly during the 2008 financial crisis.

When it came to JPMorgan and Goldman, the Fed had some concerns about the banks’ forecasts for losses and revenues in a crisis scenario, said a senior official at the Fed who spoke at the time under the condition of anonymity.

The stress tests were instituted by the Dodd-Frank Act of 2010, which requires regulators to take far-reaching steps to make the financial sector stronger and fairer. The stress tests focus on capital because it is the financial buffer that banks maintain to absorb losses that might result from loan defaults and plunging bond prices.

When performing the stress tests, banks have to work out how much capital they would have left after projecting the losses they might suffer during a deep recession. Dividend payments and stock buybacks also erode capital. As a result, banks have to assess their impact, too, in the capital calculations.

In March, the Fed turned down the capital plans of two smaller banks, Ally Bank and BB&T. The Fed prevented both from carrying out their plans to distribute capital until their plans had been fixed. The regulator approved BB&T’s resubmitted plan in August and Ally’s in November.

Sale to NCR Is a Quick, Profitable Flip for a Private Equity Firm

It was only in August that Thoma Bravo, the private equity firm, completed its acquisition of Digital Insight, a company that processes payments for financial institutions. The seller was Intuit, the financial software company, and the price was $1.025 billion.

On Monday, just 124 days after completing the deal and boasting about the longterm potential for growth at Digital Insight, Thoma Bravo turned around and sold the company. The buyer is NCR, one of Intuit’s main rivals, and the price is $1.65 billion.

The quick turnaround marks a big win for Thoma Bravo. By flipping the company for more than a half billion dollars in less than half a year, the company looks like an incredibly savvy buyer and seller. Given the price differential and the timing of the two deals, it appears that Thoma Bravo added $5 million to the value of the company during each day of its ownership.

The deal also raises sticky questions about why NCR wound up paying such a premium just four months after Digital Insight changed hands. As Dan Primack wondered, “So would Intuit just not sell the unit to NCR, or did NCR drop the ball?

It’s unclear whether Thoma Bravo always intended to sell Digital Insight so quickly. When the deal closed in August, Orlando Bravo, a managing partner at the firm, said:

“We look forward to working with the Digital Insight management team to . . . grow the business organically and through strategic acquisitions. As a stand-alone company, Digital Insight will be able to focus on providing an innovative digital banking platform and aggressively expand its customer base.”

On Monday, Mr. Bravo gave no indication of whether a quick sale was the plan all along, instead content to rest on one of the greatest quick flips in recent memory.

“Thoma Bravo was able to establish Digital Insight as a standalone company following our acquisition from Intuit in August, while also offering Intuit a successful and efficient outcome,” he said in a statement. “Digital Insight has attracted interest from NCR with its strong set of online and mobile banking products, rich client list, and accomplished employees.”

Thoma Bravo declined to comment further on Monday.

Amazon’s Blue-Sky Thinking

Amazon is promising yet more jam tomorrow - this time from drone deliveries. Jeff Bezos, the online retailer’s chief executive, expects to be able to use unmanned aircraft to deliver small packages within a few years. It’s a striking vision, but it seems as overly optimistic as investors’ expectations of the company overall. Amazon’s market value has ballooned to $180 billion despite big profits always hovering in the future.

Drone technology has advanced tremendously over the past decade because of improvements in software, robotics and networking. The use of these unmanned vehicles is already common in the military, and cheap, fast and automated shipping could benefit all kinds of businesses. Mr. Bezos says Amazon could use drones within four or five years, delivering goods weighing less than five pounds inside 30 minutes.

It’s perhaps fitting that a long-term thinker like Mr. Bezos should be testing the boundaries of what’s possible. But at best it’s a very long way off. The Federal Aviation Administration may start allowing commercial drones to operate in 2015, but widespread use is likely to come only many years later. Letting robots fly freely in densely populated areas poses all kinds of safety, security and privacy questions - never mind logistical challenges and concerns that hackers or old-fashioned villains might intercept the vehicles or the packages they carry.

Mr. Bezos has always made clear that he runs Amazon with the goal of rapid growth while maximizing profit over the long run. Getting everyone to talk about his company on Cyber Monday, the most important day of the year for online shopping, will help accomplish the former. Analysts expect Amazon’s revenue to be around $75 billion this year, 23 percent more than last.

But it’s still not clear when Amazon will deliver normal, never mind supernormal, profitability. The company expects that it will roughly break even again this holiday quarter. Based on estimates compiled by Thomson Reuters, Amazon trades at a valuation of 165 times the coming 12 months of earnings, against 15 times for its peer group.

Like a drone delivering trinkets any time soon, that’s a triumph of investor hope over experience.

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

Amazon’s Blue-Sky Thinking

Amazon is promising yet more jam tomorrow - this time from drone deliveries. Jeff Bezos, the online retailer’s chief executive, expects to be able to use unmanned aircraft to deliver small packages within a few years. It’s a striking vision, but it seems as overly optimistic as investors’ expectations of the company overall. Amazon’s market value has ballooned to $180 billion despite big profits always hovering in the future.

Drone technology has advanced tremendously over the past decade because of improvements in software, robotics and networking. The use of these unmanned vehicles is already common in the military, and cheap, fast and automated shipping could benefit all kinds of businesses. Mr. Bezos says Amazon could use drones within four or five years, delivering goods weighing less than five pounds inside 30 minutes.

It’s perhaps fitting that a long-term thinker like Mr. Bezos should be testing the boundaries of what’s possible. But at best it’s a very long way off. The Federal Aviation Administration may start allowing commercial drones to operate in 2015, but widespread use is likely to come only many years later. Letting robots fly freely in densely populated areas poses all kinds of safety, security and privacy questions - never mind logistical challenges and concerns that hackers or old-fashioned villains might intercept the vehicles or the packages they carry.

Mr. Bezos has always made clear that he runs Amazon with the goal of rapid growth while maximizing profit over the long run. Getting everyone to talk about his company on Cyber Monday, the most important day of the year for online shopping, will help accomplish the former. Analysts expect Amazon’s revenue to be around $75 billion this year, 23 percent more than last.

But it’s still not clear when Amazon will deliver normal, never mind supernormal, profitability. The company expects that it will roughly break even again this holiday quarter. Based on estimates compiled by Thomson Reuters, Amazon trades at a valuation of 165 times the coming 12 months of earnings, against 15 times for its peer group.

Like a drone delivering trinkets any time soon, that’s a triumph of investor hope over experience.

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

European Watchdog Warns of Possible Action Against Ratings Agencies

LONDON - A European financial watchdog on Monday left open the door for regulatory action after it said it discovered a series of “shortcomings” in how the major rating agencies assess risk to sovereign debt.

The European Securities and Markets Authority said in a report on Monday that its investigation into Fitch, Moody’s and Standard & Poor’s revealed issues in the sovereign rating processes, which “could pose risks to the quality, independence and integrity of the ratings.” The investigation took place between February and October of this year.

The major rating agencies have faced criticism from European political leaders in recent years over the timing of their actions regarding the creditworthiness of European nations, including so-called bulk rating changes of several countries at once. Some critics have argued sovereign rating changes helped exacerbate the financial crisis.

“The impact which changes in these ratings can have on financial markets, and sovereign states, can be significant,” said Steven Maijoor, the chairman of the authority. “Therefore, it is imperative that users can have confidence that the [credit ratings agencies] have adequate systems and controls in place to ensure that ratings are rigorous, free from conflicts of interest and timely.”

The European watchdog said it hadn’t determined whether any of its findings were violations of European financial regulations and “may take action as appropriate in due course.”

A Fitch spokeswoman said the firm was confident its policies met regulatory standard, but it was “moving swiftly to address any issues identified in the report.” Daniel Piels, a Moody’s spokesman, said, “Moody’s is committed to complying with the European regulation and effectively managing any potential conflicts of interest as we continue to enhance the performance, processes and transparency that underpin our ratings.”

An S.&P. spokesman said the company is “committed to the highest standards in our ratings activities” and enhancing its and operations with that in mind.”

In its report, the watchdog said it was concerned by the involvement of senior management and directors of rating agencies in some instances in the decision-making process regarding rating changes to a nation’s creditworthiness. European regulations require that rating agencies ensure the independence of persons involved in the rating process.

ESMA also expressed concerns about how the appeals process is carried out for sovereign rating changes and whether specific protocols are in place at the agencies to ensure that ratings changes are kept confidential until they are released publicly, as well as the timing of how those changes are released.

The regulator said it has asked the agencies to take remedial actions to address its concerns.

A Fine, Without Explaining How It Was Calculated

A standard part of enforcement actions against companies these days is the multimillion â€" or even multibillion â€" dollar penalty. What can be perplexing is figuring out how those penalties were determined, and whether they have much if any direct relationship to either the gains realized from the violations or the harm inflicted.

Recent settlements by JPMorgan Chase are a good example of the significant payments required as part of the atonement for misdeeds. The bank paid a $200 million civil penalty to the Securities and Exchange Commission for violations related to its internal controls in the “London whale” trading loss, and $2 billion to the Justice Department as part of the broad settlement over sales of mortgage securities.

How did the cases result in such nice round figures for the penalty? The answer appears to be only vaguely connected to the statutes authorizing civil penalties for the violations involved.

The $2 billion civil penalty in the mortgage securities case is based on a provision of the Financial Institution Reform, Recovery and Enforcement Act that permits the government to pursue mail and wire fraud violations that affect a financial institution. The law limits the penalty to the amount of the loss from the misconduct if it is greater than $1 million, or $5 million for a continuing violation.

There is a great deal of flexibility in determining the penalty because each mailing or wire transmission can be the basis for a separate claim. JPMorgan could theoretically have been held liable for thousands of communications in connection with the issuance of the mortgage securities, so the $2 billion payment does not exceed what the statute authorizes.

Yet the settlement agreement does not quantify the losses that form the basis for the civil penalty, or even provide an indication of how many violations the government determined occurred in connection with the issuance of the mortgage securities. The final amount looks to be the product of negotiations between the Justice Department and JPMorgan rather than an assessment for particular violations.

For violations of securities laws, the S.E.C. can impose three tiers of penalties depending on the seriousness of the misconduct. They can reach as high as $160,000 for individuals and $775,000 for companies that engage in fraud that results in substantial gains or losses. A recent decision by the United States Court of Appeals in Washington sheds some light on how much flexibility the S.E.C. has in determining the amount of a civil penalty.

In S.E.C. v. Collins, the appeals court upheld a $310,000 penalty for an individual who failed to supervise a broker selling inappropriate investments to elderly customers. In reviewing the penalty, the court looked at whether the agency was “arbitrary and capricious” in reaching its decision.

The S.E.C. ordered repayment of $2,915 in commissions from the transactions, and the defendant argued that a civil penalty more than 100 times the amount of the improper gains was disproportionate. The appeals court noted that “if we focus solely on the disgorgement amount, the civil penalty here looks high relative to S.E.C. precedents.” In those instances, the agency had imposed penalties ranging from one-half to 25 times the amount a defendant had to repay.

But it rejected a mechanical approach to measuring the appropriate penalty because “the relation between the civil penalty and disgorgement (and other measures of injury) is informative, particularly in comparison with other cases, but hardly decisive.” In assessing the fairness of a penalty, the S.E.C. can look at factors beyond just the amount involved by considering harm to others, the need for deterrence and, in a nice catchall, “such other matters as justice may require.”

There is also a constitutional limitation on how much of a penalty an administrative agency can impose. The Eighth Amendment prohibits “excessive fines,” which the Supreme Court said in United States v. Bajakajian is one that “would be grossly disproportional to the gravity of” the offense.

The District of Columbia Circuit Court, however, did not find such a violation in the $310,000 penalty in the case of the individual who failed to supervise a broker because the constitutional limitation is only available in rare cases. The appeals court noted that there are only two decisions striking down extremely large penalties for minor misconduct, and that “the Commission’s penalty here does not belong in that small club.”

For an individual, it is difficult to resist the broad authority granted to the S.E.C. to impose significant monetary penalties. For companies, the civil penalty is more a matter of how much they are willing to pay because limitations on the amount of a penalty seem to be largely irrelevant to the final settlement.

When JPMorgan paid a $200 million penalty to settle the S.E.C. case related to the “London whale” trading, it acknowledged violating the books-and-records provisions of the securities laws by not properly reporting the losses in its chief investment office. The bank lost over $6 billion from the transactions, something shareholders had to bear on top of the civil penalty.

It is difficult to see how the penalty relates to the statute authorizing a maximum penalty of $800,000 for each violation, especially when the case did not involve any claim of fraud or reckless conduct. JPMorgan was unwilling to fight the S.E.C., which described only a limited set of violations but still extracted a substantial penalty.

When the government agrees to a settlement imposing civil penalties on a company, the amount appears to have been reached through negotiation without any effort to explain how the payment was calculated. Of course, the beneficiary is often the United States Treasury because some penalties, like the $2 billion for the mortgage securities settlement, go straight to the government’s coffers.

European Watchdog Warns of Possible Action Against Ratings Agencies

LONDON - A European financial watchdog on Monday left open the door for regulatory action after it said it discovered a series of “shortcomings” in how the major rating agencies assess risk to sovereign debt.

The European Securities and Markets Authority said in a report on Monday that its investigation into Fitch, Moody’s and Standard & Poor’s revealed issues in the sovereign rating processes, which “could pose risks to the quality, independence and integrity of the ratings.” The investigation took place between February and October of this year.

The major rating agencies have faced criticism from European political leaders in recent years over the timing of their actions regarding the creditworthiness of European nations, including so-called bulk rating changes of several countries at once. Some critics have argued sovereign rating changes helped exacerbate the financial crisis.

“The impact which changes in these ratings can have on financial markets, and sovereign states, can be significant,” said Steven Maijoor, the chairman of the authority. “Therefore, it is imperative that users can have confidence that the [credit ratings agencies] have adequate systems and controls in place to ensure that ratings are rigorous, free from conflicts of interest and timely.”

The European watchdog said it hadn’t determined whether any of its findings were violations of European financial regulations and “may take action as appropriate in due course.”

A Fitch spokeswoman said the firm was confident its policies met regulatory standard, but it was “moving swiftly to address any issues identified in the report.” Daniel Piels, a Moody’s spokesman, said, “Moody’s is committed to complying with the European regulation and effectively managing any potential conflicts of interest as we continue to enhance the performance, processes and transparency that underpin our ratings.”

An S.&P. spokesman said the company is “committed to the highest standards in our ratings activities” and enhancing its and operations with that in mind.”

In its report, the watchdog said it was concerned by the involvement of senior management and directors of rating agencies in some instances in the decision-making process regarding rating changes to a nation’s creditworthiness. European regulations require that rating agencies ensure the independence of persons involved in the rating process.

ESMA also expressed concerns about how the appeals process is carried out for sovereign rating changes and whether specific protocols are in place at the agencies to ensure that ratings changes are kept confidential until they are released publicly, as well as the timing of how those changes are released.

The regulator said it has asked the agencies to take remedial actions to address its concerns.

A Fine, Without Explaining How It Was Calculated

A standard part of enforcement actions against companies these days is the multimillion â€" or even multibillion â€" dollar penalty. What can be perplexing is figuring out how those penalties were determined, and whether they have much if any direct relationship to either the gains realized from the violations or the harm inflicted.

Recent settlements by JPMorgan Chase are a good example of the significant payments required as part of the atonement for misdeeds. The bank paid a $200 million civil penalty to the Securities and Exchange Commission for violations related to its internal controls in the “London whale” trading loss, and $2 billion to the Justice Department as part of the broad settlement over sales of mortgage securities.

How did the cases result in such nice round figures for the penalty? The answer appears to be only vaguely connected to the statutes authorizing civil penalties for the violations involved.

The $2 billion civil penalty in the mortgage securities case is based on a provision of the Financial Institution Reform, Recovery and Enforcement Act that permits the government to pursue mail and wire fraud violations that affect a financial institution. The law limits the penalty to the amount of the loss from the misconduct if it is greater than $1 million, or $5 million for a continuing violation.

There is a great deal of flexibility in determining the penalty because each mailing or wire transmission can be the basis for a separate claim. JPMorgan could theoretically have been held liable for thousands of communications in connection with the issuance of the mortgage securities, so the $2 billion payment does not exceed what the statute authorizes.

Yet the settlement agreement does not quantify the losses that form the basis for the civil penalty, or even provide an indication of how many violations the government determined occurred in connection with the issuance of the mortgage securities. The final amount looks to be the product of negotiations between the Justice Department and JPMorgan rather than an assessment for particular violations.

For violations of securities laws, the S.E.C. can impose three tiers of penalties depending on the seriousness of the misconduct. They can reach as high as $160,000 for individuals and $775,000 for companies that engage in fraud that results in substantial gains or losses. A recent decision by the United States Court of Appeals in Washington sheds some light on how much flexibility the S.E.C. has in determining the amount of a civil penalty.

In S.E.C. v. Collins, the appeals court upheld a $310,000 penalty for an individual who failed to supervise a broker selling inappropriate investments to elderly customers. In reviewing the penalty, the court looked at whether the agency was “arbitrary and capricious” in reaching its decision.

The S.E.C. ordered repayment of $2,915 in commissions from the transactions, and the defendant argued that a civil penalty more than 100 times the amount of the improper gains was disproportionate. The appeals court noted that “if we focus solely on the disgorgement amount, the civil penalty here looks high relative to S.E.C. precedents.” In those instances, the agency had imposed penalties ranging from one-half to 25 times the amount a defendant had to repay.

But it rejected a mechanical approach to measuring the appropriate penalty because “the relation between the civil penalty and disgorgement (and other measures of injury) is informative, particularly in comparison with other cases, but hardly decisive.” In assessing the fairness of a penalty, the S.E.C. can look at factors beyond just the amount involved by considering harm to others, the need for deterrence and, in a nice catchall, “such other matters as justice may require.”

There is also a constitutional limitation on how much of a penalty an administrative agency can impose. The Eighth Amendment prohibits “excessive fines,” which the Supreme Court said in United States v. Bajakajian is one that “would be grossly disproportional to the gravity of” the offense.

The District of Columbia Circuit Court, however, did not find such a violation in the $310,000 penalty in the case of the individual who failed to supervise a broker because the constitutional limitation is only available in rare cases. The appeals court noted that there are only two decisions striking down extremely large penalties for minor misconduct, and that “the Commission’s penalty here does not belong in that small club.”

For an individual, it is difficult to resist the broad authority granted to the S.E.C. to impose significant monetary penalties. For companies, the civil penalty is more a matter of how much they are willing to pay because limitations on the amount of a penalty seem to be largely irrelevant to the final settlement.

When JPMorgan paid a $200 million penalty to settle the S.E.C. case related to the “London whale” trading, it acknowledged violating the books-and-records provisions of the securities laws by not properly reporting the losses in its chief investment office. The bank lost over $6 billion from the transactions, something shareholders had to bear on top of the civil penalty.

It is difficult to see how the penalty relates to the statute authorizing a maximum penalty of $800,000 for each violation, especially when the case did not involve any claim of fraud or reckless conduct. JPMorgan was unwilling to fight the S.E.C., which described only a limited set of violations but still extracted a substantial penalty.

When the government agrees to a settlement imposing civil penalties on a company, the amount appears to have been reached through negotiation without any effort to explain how the payment was calculated. Of course, the beneficiary is often the United States Treasury because some penalties, like the $2 billion for the mortgage securities settlement, go straight to the government’s coffers.

Dow Chemical Plans to Shed $5 Billion of Assets

Dow Chemical said on Monday that it would shed about $5 billion worth of assets, making it the latest large industrial group to try and streamline itself.

The company, based in Midland, Mich., has not determined whether it will spin or sell the assets, which include chlorine production facilities, epoxy businesses,and brine operations. But Dow said it had hired advisers to begin the disposal process.

In October, Dow’s chief executive, Andrew N. Liveris said the company was planning $3 billion to $4 billion in disposals. At the time, analysts said that they expected that number could grow, and it did.

“Today’s announcement represents a continuation of the shift of our company toward downstream high-margin products and technologies that customers value, and generate consistently higher returns than cyclical commodity products,” Mr. Liveris said. “We are committed to prioritize our resources such that we maximize total shareholder return.”

In the past year, Dow took the first steps toward creating a simpler company with fewer business units. It recently sold its global polypropylene licensing and catalysts business, part of about $700 million worth of divestitures over the past 12 months.

But the sale of chlorine, epoxy and brine businesses mark the company’s most substantial moves to shed assets to date.

Dow shares are up 21 percent this year, buoyed by the broader market rally, giving it a market capitalization of $47.4 billion.

But Dow has been outperformed by its rival DuPont, another large industrial conglomerate that is also working to streamline itself.

DuPont, under pressure from activist investor Nelson Peltz, has seen its stock rise 36 percent this year. After selling its performance coatings business for $4.9 billion last year, DuPont in October said it would spin off its performance chemicals unit into a new publicly traded company.

Though no activist has targeted Dow publicly, analysts have speculated that the company would be vulnerable to pressure should

Even after the business units are sold, Dow expects to continue doing business with the buyers or newly public companies.

“We anticipate that any related transaction or transactions will include supply and purchase agreements between these units and the company to support downstream products aligned with Dow’s strategic market focus” said Jim Fitterling, executive vice president at Dow, who will oversee the disposals.

The company says it expects the disposals to be completed within two years, and that the sales could happen in one fell swoop or in parts.

Lloyds Names New Chairman

LONDON - Lloyds Banking Group, the bailed-out British bank, said Monday that Norman Blackwell would become its chairman next year, replacing Winfried Bischoff, who is scheduled to retire in April.

Mr. Blackwell, 61, has been a director of Lloyds since June 2012 and is a member of its audit and risk committees. He is chairman of Scottish Widows, Lloyds’ insurance business, and Interserve, a British construction and support services company.

“I am honored to have been asked to become chairman of Lloyds Banking Group,” Mr. Blackwell said. “I would like to thank Win for the outstanding job he has done in steering the bank through a tremendous turnaround. This is a great opportunity to be part of helping the bank go even further in serving customers and supporting the U.K. economic recovery as it returns to full private ownership.”

Mr. Bischoff, 72, has been Lloyds chairman since September 2009 and was previously chairman of Citigroup.

The British government pumped billions of pounds into Lloyds during the financial crisis and continues to own about 33 percent of the bank. The government sold a 6 percent stake in the bank for 3.2 billion pounds, or about $5.2 billion, earlier this year.

Mr. Blackwell spent 15 years as a management consultant with McKinsey & Company was group development director at Royal Bank of Scotland unit NatWest and was a director of Scottish life insurance and pension provider Standard Life until last year.

He headed the prime minister’s policy unit under John Major from 1995 to 1997 and was a member of the unit under Margaret Thatcher from 1986 to 1987.

“Our desire was to find someone with deep financial services experience who would also have credibility with our key stakeholders,” said Anthony Watson, a Lloyds director who headed the process to select a new chairman. Mr. Blackwell was the board’s unanimous choice, he said.

UBS to Buy Back Bonds to Reduce Balance Sheet and Expenses

LONDON â€" The Swiss bank UBS said Monday that it plans to buy back 1.75 billion euros, or about $2.37 billion, in bonds as it seeks to reduce the size of its balance sheet and its future interest expense.

The tender offer relates to five subordinated bonds in Swiss francs, euros or pounds and six senior unsecured bonds in Swiss franc, euro, Italian lira or pounds. The tender offer is set to expire on Dec. 13.

“This transaction is consistent with our proactive approach to reducing our balance sheet and future interest expense while maintaining our strong liquidity, funding and capital position,” UBS said.

In February, UBS announced plans to buy back 5 billion Swiss francs, or about $5.6 billion, of its bonds as part of a ongoing effort to reduce its balance sheet and interest costs. The bank, Switzerland’s largest, has been under pressure from regulators to increase the amount of cash it has available to deal with legal and compliance issues.

UBS said Monday that it expected to incur a small loss on the latest buyback, but believed that would be offset by a decrease in its future interest expense.

The transaction is expected to reduce its capital ratio by 0.2 percent to 0.5 percent.

Citigroup’s Low-Key Chief

Michael L. Corbat has kept a relatively low profile since taking the helm of Citigroup in October 2012. And that appears to be just fine with the bank he runs, Susanne Craig and Jessica Silver-Greenberg report in DealBook.

“To be a prominent face of Wall Street at a time when banks are feeling the heat from federal authorities on a number of fronts clearly has its drawbacks. Mr. Corbat’s counterpart at rival JPMorgan Chase, Jamie Dimon, has been widely viewed as the point man for the bank as it wrestles with investigations by at least seven federal agencies, several state regulators and two foreign nations. And under Mr. Dimon, JPMorgan has in just a few years gone from a Washington favorite to a magnet for government scrutiny.

“The low-key approach taken by Citigroup â€" which faces a number of investigations of its own â€" has not gone unnoticed inside JPMorgan. Some board members and executives there have recently pointed to Mr. Corbat in privately discussing the apparent advantages of a more self-effacing approach in a chief executive. The perks of a lower profile have become clear to Mr. Dimon, too, according to people close to him who note he has recently refrained from giving interviews to focus, in part, on client meetings.

“JPMorgan’s board, of course, remains solidly behind Mr. Dimon. But at least two directors, people close to the board say, have also privately acknowledged that Mr. Dimon’s previous offhandedness toward authorities â€" including his referring several years ago to the former Treasury Secretary Timothy F. Geithner as “Timmy” â€" at times rankled regulators, adding to the steep challenge the bank faces as it now tries to mend those frayed relationships.”

A STRONG MONTH FOR HEDGE FUNDS  |  November is shaping up to be the month that puts many hedge funds solidly in the black for the year, at least judging by the performance of two closely watched portfolios, Matthew Goldstein reports in DealBook.

David Einhorn’s Greenlight Capital reported a 4.7 percent gain for the month, putting the firm’s flagship fund up about 19.1 percent for the year, according to an investor with knowledge of the matter. Another firm that reported early, Daniel Loeb’s Third Point, also had a strong November, Mr. Goldstein reports. Its flagship fund, Third Point Partners, was up 2.7 percent for November and is now up 23.2 percent for the year, while the more leveraged Third Point Ultra fund is now up 33.4 percent for the year, after rising 3.6 percent in November.

T-MOBILE’S BRASH C.E.O. KEEPS RIVALS OFF BALANCE  |  T-Mobile had all but been given up for dead two years ago, when its owner, Deutsche Telekom, agreed to sell it to AT&T and was already describing the business as a “discontinued” operation in its financial statements. But then came John J. Legere. Named chief executive of T-Mobile in September 2012, after the antitrust division of the Justice Department sued to block the proposed merger and AT&T threw in the towel, Mr. Legere quickly started shaking up the industry, James B. Stewart writes in the Common Sense column in The New York Times.

“Mr. Legere not only looked but also acted the part of the ‘disruptive’ competitor beloved by antitrust regulators but all too rare in most concentrated industries (there are just four major cellular carriers). He branded T-Mobile the ‘Un-carrier’ and took square aim at the staid giants of the industry, AT&T and Verizon, publicly describing them with language that can’t be printed in this newspaper,” Mr. Stewart writes. “This might have been dismissed as little more than a colorful stunt, given the depth of T-Mobile’s problems. But then the results started rolling in.”

How did he do it? When he joined T-Mobile, “We had a limited time window and a sense of urgency,” Mr. Legere told Mr. Stewart. “We were losing over two million customers a year. So we moved as fast as we humanly could. My board wondered if we were doing too much. But the fact is, speed has become one of our biggest weapons. The current industry is arrogant, stupid and slow, which gives companies like T-Mobile a real competitive advantage.”

DELIVERY BY DRONE?  |  If Jeff Bezos has his way, Amazon’s future delivery system will run on drones. On “60 Minutes” on Sunday night, Mr. Bezos, the Amazon founder, floated the notion of using drones to deliver packages, showing Charlie Rose a video of a tiny helicopter seizing a package from a warehouse and airlifting it to a house. “I know this looks like science fiction. It’s not,” Mr. Bezos said. Still, he cautioned that there were “years of additional work from this point.” The hardest challenge, he said, would be convincing the Federal Aviation Administration that this is a good idea.

ON THE AGENDA  |  The ISM manufacturing index for November is released at 10 a.m. The restructuring expert James E. Millstein is on Bloomberg TV at 10:30 a.m. Claudio Del Vecchio, the owner of Brooks Brothers, is on Bloomberg TV at 3:30 p.m.

SCORSESE’S WALL STREET EPIC  |  Martin Scorsese’s new movie, “The Wolf of Wall Street,” is the last of the Oscar season movies to surface, Michael Cieply and Brooks Barnes report in The New York Times. Completed just last Wednesday and scheduled for release on Christmas Day, the two-hour, 59-minute cinematic romp through the securities business is Mr. Scorsese’s longest film ever.

Will the picture do for crooked stock traders what Mr. Scorsese’s “Goodfellas” did for the mob, or will it become a problem for the executives at Paramount? “For Paramount, the stakes are not inconsiderable. Though the Viacom-owned studio had spring-summer hits in ‘Star Trek Into Darkness’ and ‘World War Z,’ it is running last among the major studios, with only about $823 million in domestic ticket sales, roughly half those of first-place Warner Brothers,” The Times writes.

Mergers & Acquisitions »

Akamai Technologies to Buy Cybersecurity Firm  |  Akamai Technologies said it would buy Prolexic Technologies, a cloud-based cybersecurity provider, for about $370 million. REUTERS

Pearson to Sell Financial News Group for $623 Million  |  Pearson, the publisher of The Financial Times, put Mergermarket up for sale earlier this year, and the private equity firm BC Partners emerged as the buyer. DealBook »

Australia Blocks A.D.M.’s $2.7 Billion Bid for GrainCorp  |  The rejection of the takeover by the American agribusiness giant raised doubts about the coalition government’s pro-business pledges. DealBook »

American-US Airways Merger Cleared  |  The merger of American Airlines and US Airways has cleared its final hurdle as a federal bankruptcy judge approves American’s reorganization plan, reports Jad Mouawad of The New York Times. DealBook »

Orange to Sell Dominican Telecom Business  |  Orange, the French telecommunications company, will sell its Dominican unit for $1.4 billion to Altice, a Luxembourg cable and broadband provider that is expanding its presence in the Caribbean. DealBook »

CVS Caremark to Buy Infusion Business  |  The $2.1 billion acquisition of Coram will not affect CVS Caremark’s financial results in 2014 but is expected to add 3 to 5 cents to adjusted earnings per share in 2015. DealBook »

INVESTMENT BANKING »

Commuter Train Accident in the Bronx Kills 4 and Injures Dozens  |  More than 60 passengers were injured, 11 critically, after all eight cars of a Metro-North train from Poughkeepsie veered off the tracks on Sunday near the Spuyten Duyvil station along the Hudson River, officials said. NEW YORK TIMES

Commercial Mortgage Securities Make a Comeback  |  The Financial Times reports: “Worldwide issuance of securities backed by revenues from commercial mortgages has nearly doubled this year to the highest level since 2007 as U.S. and European banks pile back into property lending.” FINANCIAL TIMES

UBS Consolidates in Effort to Shrink Its Investment Bank  |  The Swiss bank is combining its currency, interest rates and credit trading businesses into one unit. DealBook »

Wall Street’s Need for Speed Approaches a Natural Limit  |  Strike Technologies, a company racing to build networks of microwave radio transmitters linking financial hubs around the world, says its technology can beam market data at about 95 percent of the theoretical speed of light, The Los Angeles Times reports. LOS ANGELES TIMES

The Overlooked Secret to Great Performance  |  Few companies or leaders systematically focus on, and invest in, how their employees feel, even though doing so would serve their bottom line, Tony Schwartz writes in the Life@Work column. DealBook »

PRIVATE EQUITY »

Hilton Aims to Raise Up to $2.37 Billion in I.P.O.  |  Hilton Worldwide, which is owned by the Blackstone Group, said in a filing on Monday that it planned to price an offering of 112.8 million shares at $18 to $21 a share. REUTERS

Private Equity Transaction Fees Under Fire  |  An unidentified “senior private equity insider” has filed a whistle-blower complaint with the Securities and Exchange Commission to take aim at “transaction fees” collected by private equity firms, Crain’s New York Business reports. CRAIN’S NEW YORK BUSINESS

HEDGE FUNDS »

Some Big Public Pension Funds Are Behaving Like Activist Investors  |  Some of the biggest public pension funds are engaging with, and sometimes seeking to oust, directors of companies whose stock they own. DealBook »

Analyst Says SAC Trader Sought ‘Edgy’ Information  |  Jon Horvath, the federal government’s star witness in an insider trading case, said his former boss, Michael S. Steinberg, wanted him to cross a legal line. DealBook »

I.P.O./OFFERINGS »

Markit May Add New Directors Ahead of Possible I.P.O.  |  Financial News reports: “Markit Group, the 10-year-old financial information provider now worth an estimated $5 billion, is this week expected to appoint a majority-independent board for the first time in the latest sign it may pursue a public listing next year.” FINANCIAL NEWS

A Backlog of I.P.O.’s in China  |  Stocks fell after China’s securities regulator announced plans to lift a 13-month moratorium on initial public offerings in January, as investors pondered the glut of 760 firms waiting to go public, Quartz writes. QUARTZ

Moncler Sets Price Range for Public Offering  |  The Italian maker of luxury winter jackets plans to raise as much as $1.1 billion in its initial public offering on the Milan stock exchange. DealBook »

VENTURE CAPITAL »

A Prediction: Bitcoin Is Doomed to Fail  |  The web currency appeals to right-wing thinkers. But private sector money is a fantasy. Currencies need political authority to raise taxes or to pass laws to unwind monetary excesses, Edward Hadas of Reuters Breakingviews writes. REUTERS BREAKINGVIEWS

LEGAL/REGULATORY »

Fed Zeroes In on a Weak Link in Finance  |  “Regulators have spent the past five years trying to siphon risk out of the financial system, but the Federal Reserve sees one major piece of unfinished business: short-term funding,” The Wall Street Journal writes. WALL STREET JOURNAL

Mortgages Without Risk, at Least for the Banks  |  A part of the Dodd-Frank financial overhaul law is being challenged by a coalition that wants to drop risk retention for mortgage loans, Floyd Norris writes in his column for The New York Times. DealBook »

Turning the Wheels of Justice, and Making Room for Springsteen  |  Preet Bharara, the United States attorney in Manhattan, has an office with official portraits, plaques and seals adorning the walls â€" but also the constant sound of music filling the air. An interview with Edward Lewine for the Workspace column in The New York Times. DealBook »

A Trusting Couple Thrown for Two Loops  |  The lawyer for a Miami Beach couple says their names were forged on mortgage documents, Gretchen Morgenson writes in the Fair Game column in The New York Times. And now the title insurer has refused to make a settlement on most of the properties involved. NEW YORK TIMES

Brazil High Court Puts Off Depositor Ruling Until 2014  |  Multiple class-action lawsuits over more than two-decade-old policies could together cost Brazil’s $64.8 billion â€" more than a quarter of the banking system’s equity. DealBook »

Hilton Says It Plans to Raise Up to $2.4 Billion in I.P.O.

Hilton Worldwide disclosed on Monday that it plans to raise up to $2.4 billion in its upcoming initial public offering, in what would be one of the biggest stock sales of the year.

The hotel operator said in an amended prospectus that it plans to sell its shares at $18 to $21 each. At the midpoint of that range, the company would be valued at about $19.2 billion.

Should Hilton raise the maximum amount, it would claim the title for second-biggest I.P.O. of 2013, trailing only the energy company Plains GP Holdings. Twitter, whose market debut drew an enormous amount of coverage and interest from potential investors, raised about $1.8 billion.

If completed, Hilton’s stock sale would mark yet another instance of a private equity firm taking one of its investments back to the public markets to generate a return. The Blackstone Group, a private equity firm that announced its $26 billion takeover of Hilton in the summer of 2007, has steadily sold off many of its holding companies to cash in, seizing on the high valuations of the stock markets.

Blackstone plans to sell 48.7 million shares in the offering, while the company itself is selling 64.1 million shares. Hilton expects to use its cut of the proceeds to pay down debt.

The hotelier plans to be listed on the New York Stock Exchange under the ticker symbol “HLT.”

The banks advising on the I.P.O. are led by Deutsche Bank, Goldman Sachs, Bank of America Merrill Lynch, Morgan Stanley, JPMorgan Chase and Wells Fargo.