China Cinda Said to Raise $2.5 Billion in Hong Kong I.P.O.

HONG KONG â€" China Cinda Asset Management, one of the biggest ‘‘bad banks’’ set up by the Chinese government to absorb deadbeat loans from the rest of the financial system, raised about $2.5 billion in a Hong Kong share sale on Thursday, according to a person familiar with the deal.

Cinda’s initial public offering is the city’s biggest so far this year. The deal priced at the top of the marketed range after receiving strong demand from both big overseas funds and individual local investors, the person said, declining to be named because the information is not yet public.

Cinda, a government agency created in 1999 to take on bad debts from state lenders and restructure deadbeat loans, sold 5.3 billion shares priced at 3.58 Hong Kong dollars apiece, raising a total of 19 billion dollars, or $2.5 billion. That compares with the marketed range of 3 dollars to 3.58 dollars per share.

So-called cornerstone investors had committed to invest $1.1 billion in the offering, accounting for 44 percent of the shares being sold and boosting the I.P.O.’s chances of success. Those investors, who agreed to hold their shares for six months, included China Life Insurance (Group) Company, the American hedge fund Och-Ziff Capital Management and the Norwegian state investor Norges Bank, among others.

In preparation for its I.P.O., Cinda in April 2012 had also sold a 16.5 percent stake to four strategic investors: China’s National Social Security Fund, UBS, Citic Capital and Standard Chartered. Those four investors acquired 5 billion shares at 2.08 renminbi, or $0.34, per share â€" meaning that as of Thursday they were sitting on combined paper profits of about $600 million.

No fewer than 18 underwriters took part in Cinda’s I.P.O., lead by Bank of America Merrill Lynch, Credit Suisse, Goldman Sachs and Morgan Stanley.

Treasury Chief to Declare Big Gains in Financial Reform

Treasury Secretary Jacob J. Lew will assert on Thursday that the Obama administration’s vast overhaul of the financial system is close to accomplishing its goal of shielding society from the dangers posed by giant banks.

In a broad policy speech intended to signal the administration’s views on financial regulations, Mr. Lew will also make it clear that more measures may be needed to strengthen the global system. In comments that will most likely upset foreign governments, he will call on overseas regulators to make their rules tougher.

“We will press other jurisdictions to match our robust standards â€" including in Europe and across Asia,” Mr. Lew will say, according to a draft of the speech, which he is scheduled to give at the Pew Charitable Trusts office in Washington.

More than three years after the overhaul began, Mr. Lew says that the largest banks are safer today, making it much less likely that taxpayers would have to bail them out in a future crisis.

“Earlier this year, I said if we could not with a straight face say we ended ‘too big to fail,’ we would have to look at other options,” he says. “Based on the totality of reforms we are putting in place, I believe we will meet that test, but to be clear, there is no precise point at which you can prove with certainty that we have done enough.”

Mr. Lew’s comments come as regulators are scheduled to meet next week to finally approve the Volcker Rule, a cornerstone of the overhaul that tries to stop banks from speculatively trading with depositors’ money and other funds. In recent months, the Treasury Department has pressed the five agencies that worked on the rule to finish it before the end of the year.

The Treasury secretary’s comments are likely to add more fuel to the debate over the adequacy of the rules that stem from the Dodd-Frank Act, which Congress passed in 2010.

Critics of the legislation say it does not solve the too-big-to-fail problem, because, they say, it does not directly limit or reduce the size of the nation’s largest lenders. To make up for this perceived shortcoming, some Republican and Democratic senators this year introduced two pieces of legislation that they said would be much more likely to constrain the biggest banks.

Against this background, Mr. Lew’s speech gives firm backing to the policies that stem from Dodd-Frank, but it also  says officials have to remain vigilant to make sure that the rules work effectively. Additional actions may also be necessary, he says. “If, in the future, we need to take further action, we will not hesitate,” he says in the draft of the speech.

Mr. Lew is pushing for new measures to reduce the risks posed by money-market mutual funds. In addition, he argues that vulnerabilities still exist in the short-term debt markets that Wall Street firms tap heavily. The Federal Reserve is expected to propose new measures soon to make these short-term markets more stable. The speech also calls on Congress to provide all regulatory agencies with enough money to enforce the new rules.

Much of the speech, however, was devoted to the progress of financial regulations overseas. Next year, the Treasury expects to focus on working with foreign regulators to devise plans for winding down a large global bank in an orderly way if it gets into trouble.

“The failure to work out such arrangements now could pose a significant future risk to our financial system,” Mr. Lew’s speech will say.

The Treasury Department also remains concerned about regulatory loopholes in overseas derivatives markets.

Federal regulators, seeking to rein in risky derivatives trading at big banks overseas, have landed in a turf battle with foreign finance ministers who are vying to limit the reach of American authorities. A deal was struck in July for a joint approach to cross-border trades. But on Wednesday, in a move that underscored the continuing challenge of carrying out Dodd-Frank, Wall Street trade groups filed a lawsuit that challenged cross-border guidelines that American regulators had put in place. Mr. Lew’s comments also suggested that the Treasury believes that foreign governments may use trade negotiations as a way to weaken financial regulations. “We will not allow these agreements to serve as an opportunity to water down domestic financial regulatory standards,” he says.

In reality, much still needs to be done in the United States. Although the Volcker Rule may be soon be finished, several complex and far-reaching requirements that arose from Dodd-Frank still have not been completed. These include crucial rules on derivatives and mortgage lending.

Mr. Lew said very little about efforts to overhaul housing finance in the United States. The taxpayer still backstops nearly every new mortgage, and the Obama administration has taken few steps to move home loans back into the private sector.

“Significant housing finance reform is still needed to add clarity to the market and attract more private capital,” Mr. Lew says.

Top Witness in SAC Case Can’t Recall Some Points

Jon Horvath’s memory failed him again during the insider trading trial of his former boss, Michael S. Steinberg, once a top trader at the hedge fund SAC Capital Advisors.

In court on Wednesday, Mr. Horvath struggled to recall how he came to learn that a friend, who was an analyst at another hedge fund, was passing on illegal inside information about Dell Inc.

“I don’t remember when I figured it out,” Mr. Horvath, 44, testified. “Clearly in 2008, I was aware I got” inside information several times, he said.

It was the second day in the Federal District Court in Lower Manhattan that Mr. Horvath’s memory failed him during cross-examination by Mr. Steinberg’s lawyer, Barry H. Berke. On Tuesday, Mr. Horvath had trouble remembering when he made a document for himself titled “Jon’s trading rules” and said that he might have been wrong on the timing of a meeting he had with Mr. Steinberg in August 2007, when he said that his boss had pressured him to get more “edgy, proprietary information” about publicly traded securities.

Mr. Horvath said that he had interpreted the message from Mr. Steinberg as a directive to “cultivate sources of nonpublic information.” But he also said that Mr. Steinberg, 41, never explicitly told him to break the law by seeking out inside information on the technology stocks he followed.

It is not clear what impact the memory lapses will have with the jury. A major component of Mr. Steinberg’s defense strategy is to poke holes in Mr. Horvath’s credibility and raise doubts about whether Mr. Steinberg knew that some of the financial information his employee was getting was obtained illegally.

Mr. Horvath, who pleaded guilty to securities fraud charges in September 2012, is testifying against his former boss in the hopes of receiving a lenient sentence or avoiding jail time altogether.

The trial comes just weeks after SAC Capital, the hedge fund founded by Steven A. Cohen, pleaded guilty to securities fraud charges, while agreeing to pay $1.2 billion in fines and restitution and to stop managing money for outside investors. Mr. Cohen has not been criminally charged but securities regulators have filed an administrative action accusing him of failing to properly supervise his employees.

Mr. Horvath received his information about Dell from a friend, Jesse Tortora, who at the time was an analyst at hedge fund Diamondback Capital Management. Mr. Horvath also received information from another technology stock, Nvidia Corporation, from others.

Mr. Horvath previously testified that his former boss was fully aware that some of the information he was getting from Mr. Tortora and others was coming from people in possession of nonpublic financial information. But during cross-examination, Mr. Berke got Mr. Horvath to acknowledge that Mr. Steinberg’s contacts with Mr. Tortora were limited at best.

Mr. Horvath said that he was not aware of Mr. Steinberg’s having any direct contact with Mr. Tortora in 2008, when the improper trading in Dell was thought to have taken place. Mr. Horvath also testified that Mr. Steinberg tried to help Mr. Tortora get a job in early 2007 largely as a favor to him.

“I thought he would make a good hedge fund analyst,” Mr. Horvath said. “That is why I asked Mike to help.”

Earlier in the trial, Mr. Tortora, who also pleaded guilty to insider trading charges, testified that he provided Mr. Horvath with inside information ahead of Dell’s August 2008 earnings report. Prosecutors say that Mr. Steinberg, relying in part on that inside information, made $1 billion by selling and short-selling Dell’s shares.

Fifth Third Bank and Executive Settle Charges With the S.E.C.

The Securities and Exchange Commission said Wednesday that it had settled with Fifth Third Bancorp and its former chief financial officer, Daniel Poston, in a case involving improper accounting for soured mortgages around the time of the financial crisis.

Fifth Third has agreed to pay $6.5 million to settle charges that the company improperly accounted for its commercial real estate loans in 2008. The error allowed Fifth Third to avoid a 132 percent increase in the company’s pretax loss in one quarter, but the S.E.C in its announcement did not accuse the bank of deliberately making an error.

Mr. Poston has agreed to pay a $100,000 penalty, and will be suspended from working as an accountant at any public company for at least one year. Neither Mr. Poston nor the bank admitted or denied any wrongdoing.

Fifth Third, a bank holding company based in Cincinnati, disclosed last month that it was in settlement talks with the S.E.C. That filing also said that Mr. Poston had moved to a strategy and administration role within the company, and that its former treasurer, Tayfun Tuzun, had succeeded him as chief financial officer.

“We’re pleased to have now finalized that settlement and to put this matter behind us,” a spokesman for Fifth Third said, adding that Mr. Poston would not be available for comment. Mr. Poston will be able to apply for reinstatement as an accountant in one year.

The bank saw a surge in “non-performing assets” as the real estate market declined in the lead-up to the 2008 economic collapse, according to the S.E.C. Fifth Third eventually decided to sell off chunks of its mortgages, but categorized them incorrectly as “held for investment” instead of “held for sale,” according to the agency.

The S.E.C. contended that Mr. Poston was familiar enough with accounting rules and should have directed the bank to classify its loans correctly. The agency also said that the executive made inaccurate statements to the company’s auditors.

“Improper accounting by Fifth Third and Poston misled investors during a time of significant upheaval and financial distress for the company,” George S. Canellos, co-director of the S.E.C.’s enforcement division, said in a statement announcing the deal on Wednesday. “It is important for investors to know the financial consequences of decisions made by management, so accounting rules that depend on management’s intent must be scrupulously observed.”

Mr. Poston will become the 68th executive to be charged by the S.E.C. with misconduct during the financial crisis, though many of them have been at smaller firms or mortgage providers.

G.M. Said to Plan Sale of Stake in Ally

General Motors plans to sell the last of its holdings in Ally Financial, its onetime financing arm, through a private placement of shares, a person briefed on the matter said on Wednesday.

The move would allow G.M. to avoid a lockup of its shares if Ally were to move forward with a long-awaited initial public offering. Such sales usually require existing stockholders to hold on to their shares for several months.

An I.P.O. would let Ally’s majority shareholder, the federal government, sell some of its 64 percent stake. The Treasury Department obtained those holdings as part of a series of bailouts, which Ally has been steadily repaying.

The timing of an I.P.O. isn’t clear, though Ally and G.M. are counting on rising investor interest in the company.

In a regulatory filing this year, Ally reported G.M.’s stake at 132,000 shares. That represents about 8.5 percent of its outstanding stock after a share sale earlier this year.

According to The Wall Street Journal, which first reported the news, the private placement would be valued at about $900 million.

Representatives for G.M. and Ally declined to comment.

Chinese Firm Increases Stake in Brazilian Tech Company

The Chinese Internet company Qihoo 360 has significantly increased its bet on a Brazilian cloud-based online security company, PSafe Tecnologia, by leading a $30 million round, the company said Wednesday.

Redpoint Ventures, Redpoint e.ventures and Pinnacle Ventures were all early investors in PSafe and also participated in the new financing round. The new investments, which closed last month, value PSafe at approximately $130 million.

Qihoo 360’s stake was not disclosed, but it becomes the largest investor in PSafe, with Redpoint right behind it. It is thought to be one of the largest investments by a Chinese firm in a Brazilian Internet start-up.

PSafe, which is part of the Rio de Janeiro-based holding company Grupo Xango, was co-founded by a former Microsoft executive, Marco De Mello.

The investment by Qihoo reflects the growing international ambitions of Chinese Internet companies, which are no longer content just to compete in the domestic online business while contending with government censorship and website blocking.

A leading Chinese Internet services company, Tencent, introduced its WeChat mobile communications platform, in Brazil in July. Baidu is testing a Portuguese version of its search engine and considering an introduction for next year, according to recent Brazilian news reports.

In China, Qihoo has been involved in legal battles with Tencent. It also recently lost out to that company in a contest to forge a partnership with the Chinese search engine firm Sogou.

Qihoo started looking at Brazil in 2010, providing a small investment to PSafe when it was founded at the suggestion of Redpoint, which had been an early investor in Qihoo. Qihoo also provided PSafe a license to use its antivirus cloud-scanning technology in Latin America.

In 2010, “we were not very clear about the future of PSafe,” said Li Tao, Qihoo’s vice president of business development and international operations. “We made that investment as a test.”

But now, it sees so much potential that it did not seek out new investors in the latest funding round.

“We decided that it is in Qihoo’s best interests to see PSafe fully develop and help it become of the best Internet security companies in Latin America,” Mr. Li said.

Jeff Brody, Redpoint’s founding partner, said that Latin America was providing a lot of opportunities for Chines firms as other markets mature. “For a lot of Chinese companies, the U.S. and Europe are tough,” he said. “Brazil and Latin America are pretty attractive and have many parallels.”

Eric Pfanner contributed reporting.

AMC Singles Out Fans with Coming I.P.O.

For serious moviegoers, the viewing experience might not be complete without popcorn, soda and now, perhaps, a share or two of stock.

AMC Entertainment Holdings, the parent company of AMC Theaters, plans to offer a small percentage of shares in its coming initial public offering to its “most loyal customers,” according to a filing the company made on Wednesday. The plan makes use of a new online equity platform that caters to individual investors.

Movie fans will be able to buy $100 to $2,500 of the AMC stock through Loyal3 Holdings, a brokerage firm that caters to smaller investors instead of larger institutions. AMC plans to to offer 21 million shares of its stock at $18 to $20 each.

AMC, which is owned by the Wanda Group, the Chinese real estate conglomerate, plans to offer 110,527 shares to fans and an additional 230,264 to employees. Individual investors will have to go through Loyal3, which will make its debut with the AMC offering.

AMC sent a letter to members of its loyalty rewards program to alert them to the plan, according to a person briefed on the matter.

This sort of direct-to-investor approach has been tried before, albeit with mixed results. Vonage, the Internet phone service provider, allowed small investors to participate in its 2006 I.P.O. Trading opened at $17 and fell 24 percent in a day. Today the stock is worth about $3.

The allotment for fans is just a small percentage of AMC’s proposed overall offering. But the company’s incentive for offering stock to loyal customers could extend beyond the trading floor.

“I would think that the company’s main motivation is a little bit of a marketing gimmick, hoping that some of the shareholders might be inclined to buy one more movie ticket a year, or if they’ve got a choice of which theater to go to, to go to an AMC theater rather than a competitor,” said Jay Ritter, a professor of finance at Cornell.

A spokeswoman for AMC declined to comment beyond the filings.

Citigroup, BofA Merrill Lynch, Barclays and Credit Suisse are running the deal.

Wall Street Trade Groups Challenge Overseas Swaps Rules

Banking trade groups, fearful of a U.S. push to scrutinize the overseas trading activities of large international banks, filed a lawsuit on Wednesday that challenges new guidelines put in place recently by the Commodities Futures Trading Commission.

The move was a response to a controversial initiative by the agency to increase oversight of derivatives trading in markets like London and Hong Kong, long one of the most profitable if not risky business areas for multinational banks like JPMorgan Chase, Barclays and Deutsche Bank.

And it underscores increasing worries by large banks in general that the raft of rules and regulations that have come in response to the recent spate of scandals and crises â€" from higher cash cushions to hiving off bank trading arms â€" will cause unneeded harm not just to the banks themselves but the broader financial climate as well.
“None of this is going to catch the next London Whale or A.I.G.,” said Stephen O’Connor, the chairman of the International Swaps and Derivatives Association, one of the three groups that brought the suit. “What we really need is a common international approach to these rules.”

At its heart, the challenge reflects a broad worry among industry activists and conservative lawmakers in Washington that the trading commission, under its aggressive and outgoing chairman Gary Gensler, has gone too far.

And that while these new rules may well be applauded by those who contend that global banks need to be reined in, the ultimate effect will be reduced trading volumes in overseas markets with the cost being borne by pension funds and multinational corporations.

“The international financial community is very upset about this and so am I,” said Judd Gregg, a former Republican Senator who heads the Securities Industry and Financial Markets Association, another party to the suit. “What you have is a chairman of a commission acting unilaterally â€" the precedent is staggering and no other agency is doing this.”

Mr. Gensler and the trading commission, however, have said that in order to effectively police the $7 trillion plus market for derivatives â€" with much of this business being transacted at a far remove from American regulators â€" banks that have a presence in the United States but do their high risk trading in London need to meet a higher standard.

Regulators point to a series of international financial scandals, such as the interest rate fixing scheme as well as the current investigation into foreign exchange trading, that supports the need for curbs on complex derivatives trading that span different continents and involve many billions of dollars.

The new rules are set to come into effect early next year. And while the banks and their lobbyists warn of dire consequences as clients move their derivatives trades from the likes of Citigroup to smaller banks in Europe that do not have a U.S. footprint, they have not furnished actual estimates in terms how much global trading volumes will suffer.

It remains unclear as well as to how the United States District Court in Washington will respond to the legal sally.

Some challenges to Dodd-Frank rulings have been successful while others have not.

In Time, Icahn Discloses Latest Push for an Apple Buyback

Carl C. Icahn hasn’t exactly been quiet about his efforts to persuade Apple of the wisdom of a giant share buyback. Now, he’s on the cover of Time magazine pressing his case.

In an article for the magazine â€" bearing the subheadline “Why Carl Icahn is the Most Important Investor in America” â€" the veteran activist shareholder said that he has filed what’s known as a “precatory proposal” with the company to strengthen his cause. That fancily named initiative essentially lets shareholders vote on a nonbinding proposal advocating a big buyback.

That Mr. Icahn has gone forward with a relatively mild approach, rather than a full-blown proxy contest, signals that he’s still unwilling to unleash the kind of vitriol that has marked scores of his campaigns over the years. (During his fight over Dell Inc.‘s proposed leveraged buyout, the septuagenarian activist asked in one letter, “What’s the difference between Dell and a dictatorship?”)

Instead, he has kept the tone civil. From the Time article:

For his part, Icahn says he doesn’t consider his proposal an indictment of Apple CEO Tim Cook, or the company’s management, per se. “Tim Cook is doing a good job with the business,” Icahn tells TIME. “I think he’s good whether he does what I want or not.” But, says Icahn, referring to the company’s huge cash stockpile, “Apple is not a bank.”

and:

Shareholders, say Icahn, deserve a bigger share. And Cook, he says, has been willing to consider his views. Icahn told TIME: “We’ve discussed a lot of things, and he asked a lot of questions, and really listened.” Icahn says his most recent conversation with Cook was a 20-minute phone call Nov. 21 â€" which Cook’s assistant initially tried to schedule at 5 a.m. Pacific Time. “That’s usually when I go to bed! This guy’s tougher to get than the President,” laughs Icahn.

And on Twitter, Mr. Icahn admitted that he was no longer seeking a buyback of $150 billion, but some unspecified increase.

Gave $AAPL notice we’ll be making a precatory proposal to call for vote to increase buyback program, although not at $150 billion level.

â€" Carl Icahn (@Carl_C_Icahn) 4 Dec 13

For its part, Apple has been polite, if noncommittal. A spokesman for the iPhone maker told the magazine that it’s still reviewing its shareholder buyback program and would announce any changes sometime early next year.

Libor Bank Fines Reflect Rewards of Cooperating

The rewards of early settlement in the scandal involving manipulation of the London Interbank Offered Rate, or Libor, are becoming more obvious.

Barclays and UBS, the first banks to settle with financial agencies over allegations of rigging Libor, have just saved $930 million and $3.4 billion respectively in trust-busting fines after blowing the whistle on other miscreants to the European Commission. Their lenient treatment highlights the risks in delaying settlements, and the potentially extreme penalties when wrongdoing is categorized as anticompetitive.

The other five banks and one broker involved in the settlement with the European antitrust authorities did receive reduced fines for cooperation. But the financial hit was still significant. Deutsche Bank’s was $980 million, cut from $1.3 billion. The size reflects its large market share in interest rate derivatives, which is one of the multipliers used by the European Commission in setting penalties.

The soft treatment of Barclays and UBS may seem unfair, but regulators won’t mind. Barclays seemed to have made a tactical error when it was first to come clean on attempted Libor-rigging last year. That was a possible disincentive to firms to take the lead in coming clean with the authorities, and implicating rivals. But there are now clear financial benefits to stepping forward. That will focus management attention when the European Commission is also examining the possible existence of similar cartels in areas including foreign exchange and credit default swaps.

Without the various reductions for good behavior, the total fines levied on Dec. 4 would have been $7.4 billion â€" more than three times what was actually imposed. That raises the stakes for Deutsche, Société Générale, JPMorgan and Citigroup, all of which are yet to conclude rate-rigging investigations.

The three banks holding out on European Commission settlements â€" JPMorgan Chase, Crédit Agricole and HSBC â€" may be doing so for principled reasons, but they are taking a risk. The European Commission’s methodology fines cartel participants based on their market position in the rigged products, multiplied by the seriousness of misbehavior. That means long-lasting wrongdoing by one individual in partnership with another in a rival firm could generate crippling fines â€" potentially 10 percent of global revenue. For now, the commission has shifted the balance of financial pain in the Libor scandal back in the whistle-blowers’ favor.

Dominic Elliott and George Hay are columnists at Reuters Breakingviews. For more independent commentary and analysis, visit breakingviews.com.

Standard Chartered Warns on Consumer Banking Profit

LONDON - Standard Chartered, the British bank that generates most of its earnings in Asia, warned on Wednesday that operating profit at its consumer banking unit would fall this year for the first time in a decade.

The London-based bank, whose large business in Asia helped it fare better than other European banks during the financial crisis, said a “double-digit drop” in the consumer banking results was due to its unprofitable business in South Korea. Revenue for the entire bank is expected to be unchanged this year from $19 billion last year, Standard Chartered said in a statement.

“We are responding to near-term challenges to ensure we strike the right balance between growth and returns, and have successfully managed costs tightly in light of the pressures on income,” Peter Sands, the chief executive, said in the statement. Shares in Standard Chartered were down 6.3 percent midday in London.

After attracting investors during the financial crisis because of its large operations in faster-growing economies in Asia, Standard Chartered started to face some difficulties earlier this year. The bank’s income suffered from a weakness in currencies in emerging markets and its management abandoned a 10 percent revenue growth target for the full year. Some analysts have raised concerns about the growth prospects for the bank as economies in Asia slowed while costs to comply with stricter financial regulation increased.

Troubles at its South Korean unit, which mainly includes a dispute with regulators and a reduction in its branch network there, led to a write-down of $1 billion on the value of the business in the first six months.

Standard Chartered said Wednesday that it expected an operating loss of $200 million at the South Korean unit. Excluding the unit, consumer banking earnings are expected to increase by more than 5 percent.

The 150-year old bank has been cutting jobs and seeking to streamline operations to cope with what it has been calling temporary challenges. Standard Chartered a year ago reached a deal with federal and state prosecutors in the United States over accusations that it had illegally funneled money for Iranian banks and corporations. It agreed to pay $327 million as part of a settlement.

Morning Agenda: European Union Imposes Fines for Rate-Fixing

E.U. IMPOSES FINES FOR RATE-FIXING  |  The European Union has fined a group of global financial institutions a combined 1.7 billion euros ($2.3 billion) in a landmark accord over alleged collusion to fix two benchmark interest rates, The New York Times reports. The agreement, announced by European Union antitrust officials on Wednesday, relates to actions by traders at some of the world’s largest banks, including Citigroup, Royal Bank of Scotland and Deutsche Bank, who were accused of fixing rates for the London interbank offered rate, or Libor, as it relates to the Japanese yen and the euro interbank offered rate, or Euribor.

AN UNEXPECTED APOLOGY STOKES A FEUD  |  A major grudge match on Wall Street flared up recently â€" after an emailed apology from one of the parties, DealBook’s Susanne Craig reports. The grudge originated two years ago, when Sean Egan, the managing director of the upstart credit ratings agency Egan-Jones, cut the rating on the investment bank Jefferies and criticized the firm on television, sending its stock into a tailspin. Wall Street was already on edge at the time, with MF Global, the commodities brokerage firm, having just filed for bankruptcy.

Richard B. Handler, the chief executive of Jefferies, went on the counterattack, arguing that the analyst’s report was littered with inaccuracies. In particular, Mr. Handler noted that the report said 77 percent of the firm’s shareholder equity was invested in the same bonds that took down MF Global while failing to mention that Jefferies had hedged the position, which more than offset its exposure. Jefferies stock eventually rebounded and Mr. Handler thought he had seen the last of Mr. Egan. But a few weeks ago, he got a surprising email.

“I would like to apologize for harm caused to you,” Mr. Egan wrote.

Ms. Craig writes: “Reconciliation can be difficult on Wall Street, a pressure cooker where big egos and long memories can nurse feuds and fuel animosity for years. In this case, it wasn’t made easier by the fact that Mr. Egan, 56, is something of an outsider on Wall Street, while Mr. Handler, 52, a former trader at the bond powerhouse Drexel Burnham Lambert, is one of its longest-serving players. This account is based on the exchange of emails, and interviews with a number of people at the two firms.”

VOLCKER RULE APPROACHES FINISH LINE  |  “Federal regulators have reached a tentative agreement to complete a rule aimed at Wall Street risk-taking, federal officials said on Tuesday, overcoming internal squabbling and an onslaught of Wall Street lobbying that stymied them for years,” DealBook’s Ben Protess reports.

“Five federal agencies plan to approve a tougher-than-expected version of the so-called Volcker Rule next week, eking out passage before the year is up and providing Wall Street with some much-sought clarity. While the vote for the complex rule will come more than a year after a congressional deadline passed, it still will meet the recommendation of Treasury Secretary Jacob J. Lew, who urged the federal agencies to finish writing the rule in 2013.

“The Commodity Futures Trading Commission, one of the five agencies, announced on Tuesday that it would vote on Dec. 10. Three other agencies â€" the Federal Reserve, the Federal Deposit Insurance Corporation and the Office of the Comptroller of the Currency â€" also announced plans to approve the rule on Dec. 10. The final agency involved in the rule, the Securities and Exchange Commission, has said it will vote on or about that date.”

USING A LEGAL LOOPHOLE IN BID TO CONTROL A RIVAL  |  Charles W. Ergen, in his quest to take over LightSquared, “has once again shown that sometimes money and smarts can run circles around the letter if not the spirit of the law,” Steven M. Davidoff writes in the Deal Professor column.

LightSquared, the broadband wireless company controlled by Philip Falcone’s hedge fund, Harbinger Capital Partners, faltered when the Federal Communications Commission stymied its effort to beam fourth-generation wireless Internet access across America. That was when Mr. Ergen and his satellite television company, Dish Network, pounced, having noticed a flaw in LightSquared’s debt documents. “The documents were written to prevent a ‘direct competitor’ of the company from acquiring its debt. This meant that Dish could not buy up the debt, but whoever controlled the debt would be in prime position to acquire the company if LightSquared filed for bankruptcy,” Mr. Davidoff writes.

“So Mr. Ergen, a former poker player, had his hedge fund, Sound Point Capital Management, arrange for a second company he owns to acquire roughly $1 billion worth of LightSquared’s $1.75 billion in outstanding debt.”

ON THE AGENDA  |  Data on new home sales in October is released at 10 a.m. The I.S.M. nonmanufacturing index for November is out at 10 a.m. Guess and Aéropostale report earnings after the market closes. Stephen M. Case, the investor and AOL co-founder, is on CNBC at 10:10 a.m.

KOZLOWSKI IS GRANTED PAROLE  |  L. Dennis Kozlowski, the former chief executive of Tyco International, is nearing the end of his long tenure in New York State’s penitentiary system, DealBook’s Michael J. de la Merced reports. The state’s Board of Parole granted parole to Mr. Kozlowski after an interview on Tuesday morning, a spokeswoman for the corrections department said. He will be formally released as soon as Jan. 17. In a statement, a lawyer for Mr. Kozlowski said his client was “grateful” to the parole board.

This was Mr. Kozlowski’s second attempt to win parole, after the state board denied his first application in April of last year, deeming his release not “compatible with the welfare of society at large.” He will now take another step toward freedom, more than eight years after he was found guilty of essentially using Tyco as his own piggy bank.

Mergers & Acquisitions »

Google’s Robotics Man  |  The New York Times writes: “Over the last half-year, Google has quietly acquired seven technology companies in an effort to create a new generation of robots. And the engineer heading the effort is Andy Rubin, the man who built Google’s Android software into the world’s dominant force in smartphones.”
NEW YORK TIMES

Before Apple Bought It, Topsy Had Another Suitor  |  “According to sources familiar with the matter, Twitter considered buying Topsy a number of times throughout the company’s six-year history,” AllThingsD reports.
ALLTHINGSD

Newsweek Plans to Revive Print Edition  |  The New York Times reports: “The magazine expects to begin a 64-page weekly edition in January or February, said Jim Impoco, Newsweek’s editor in chief. Mr. Impoco said in an interview that Newsweek would depend more heavily on subscribers than advertisers to pay its bills â€" and that readers would pay more than in the past.”
NEW YORK TIMES

Barrick Gold Is Expected to Announce Leadership Changes  |  The gold mining company Barrick Gold “is set to announce the appointment of well-known Canadian investor Ned Goodman to its board Wednesday, and will hire Jim Gowans as its chief operating officer, according to a person familiar with the matter,” The Wall Street Journal reports.
WALL STREET JOURNAL

Versace Valuation May Be as Over the Top as Its Clothes  |  The Italian fashion house reckons it is worth more than 1 billion euros, or $1.36 billion, and could triple in value in three years. That’s a big price tag for a skimpy minority stake next to a powerful family, Quentin Webb of Reuters Breakingviews writes.
REUTERS BREAKINGVIEWS

INVESTMENT BANKING »

Microsoft Raises $8 Billion From Debt Investors  |  Microsoft “sold $8 billion of debt in the largest combined dollar- and euro-denominated investment-grade corporate bond deal in more than a decade, according to data provider Dealogic,” The Wall Street Journal reports.
WALL STREET JOURNAL

Many Bank Tellers Rely on Public Support, Report Finds  |  “Almost a third of the country’s half-million bank tellers rely on some form of public assistance to get by, according to a report due out Wednesday,” The Washington Post reports. “Researchers say taxpayers are doling out nearly $900 million a year to supplement the wages of bank tellers, which amounts to a public subsidy for multibillion-dollar banks.”
WASHINGTON POST

Deutsche Bank Bans Online Chats for Some Staff  |  Reuters reports: “Deutsche Bank has prohibited its foreign exchange and fixed income staff from using online chat rooms, joining a growing band of lenders who have halted the use of such forums over concerns of mounting scrutiny from regulators.”
REUTERS

Wall Street Toasts Blankfein and Judaism at UJA-Federation Dinner  |  The UJA-Federation’s annual Wall Street event honored Lloyd C. Blankfein of Goldman and David K. Wassong of Soros Fund Management, while raising more than $26 million.
DealBook »

PRIVATE EQUITY »

How Carlyle Plans to Invest Its New Fund  |  In a podcast, the two co-chiefs of the United States buyout team at the Carlyle Group discuss how they plan to invest a $13 billion fund recently raised by the private equity firm.
CARLYLE GROUP

Warburg Pincus Managing Director Steps Down  |  “Rosanne Zimmerman has stepped down as a managing director with private equity firm Warburg Pincus,” Fortune reports.
FORTUNE

HEDGE FUNDS »

Lampert’s Firm Cuts Its Stake in Sears  |  Edward Lampert says that his hedge fund distributed 7.4 million shares in Sears to investors who wanted to withdraw money from his firm. Mr. Lampert added that he had not sold any of his personal holdings.
DealBook »

Activist Fund Seeks Change at the Top of Abercrombie  |  Engaged Capital publicly urged Abercrombie & Fitch on Tuesday to replace its chief executive, Michael S. Jeffries, after his contract expires in February.
DealBook »

Taconic Capital Co-Founder to Retire  |  Kenneth D. Brody, who turned 70 this year, will remain a principal and an adviser at the firm, as well as a “significant investor,” he said in a letter.
DealBook »

A Surfer Stars in a Hedge Fund Ad  |  An advertisement from TopTurn Capital “appears to be the first of its kind in the industry,” BuzzFeed writes.
BUZZFEED

I.P.O./OFFERINGS »

When Capital Markets Bankers Take Their Rest  |  In a blog post at Reuters, Ben Walsh uses initial public offering data to create “an I.P.O. vacation calendar.”
REUTERS

VENTURE CAPITAL »

Revolution Fund Invests in Sweetgreen Salad Chain  |  Stephen M. Case, the investor who co-founded AOL, is betting that the “farm-to-table” salad chain has the potential to become an iconic brand in the healthy dining category.
DealBook »

Snapchat Hires an Instagram Executive as Operating Chief  |  AllThingsD reports: “Emily White, the Facebook executive in charge of bringing advertising to its Instagram photo-sharing unit, is leaving to become C.O.O. of Snapchat.”
ALLTHINGSD

LEGAL/REGULATORY »

Judge Allows Detroit Bankruptcy to Go Forward  |  Overwhelmed by debt and groping for a path forward, Detroit on Tuesday became the largest American city ever to qualify for bankruptcy protection, reports Bill Vlasic and Monica Davey for The New York Times.
DealBook »

What Bankruptcy Means for Detroit  |  City officials hope a judge’s ruling allowing bankruptcy will release Detroit from the grip of creditors and move it toward recovery.
DealBook »

Trader’s Defense Lawyer Challenges Memory of a Crucial Witness  |  Prosecutors have built their insider trading case against Michael S. Steinberg around the analyst Jon Horvath, but he struggled under cross-examination.
DealBook »

British Lawmaker Critical of JPMorgan Fees on Co-op Deal  |  The chairman of the Treasury Select Committee called for a review of fees paid to advisers on mergers after it emerged that the bank had a financial incentive for the Co-operative Bank’s ill-fated 2009 takeover of Britannia to proceed, Reuters reported.
DealBook »

E.U. Imposes 1.7 Billion Euros in Fines Over Rate-Rigging Scandal

The European Union has fined a group of global financial institutions, including for the first time two American banks, a combined 1.7 billion euros to settle charges they colluded to fix two benchmark interest rates.

The settlement, worth about $2.3 billion and announced by European Union antitrust officials on Wednesday, relates to actions by traders at some of the world’s largest banks, including Citigroup, Royal Bank of Scotland and Deutsche Bank. The banks were accused of fixing rates for the London interbank offered rate, or Libor, as it relates to the Japanese yen and the euro interbank offered rate, or Euribor.

“The commission is determined to fight these cartels in the financial sector,” Joaquín Almunia, the European Union’s competition commissioner, said at a news conference in Brussels.

The penalties come after five financial institutions, including Barclays, R.B.S. and UBS, previously admitted wrongdoing and agreed to pay more than $3 billion combined to regulators in the United States, Britain and Switzerland over collusion to fix the Libor rate.

European Union antitrust authorities were not part of those previous settlements and conducted their own investigation.

The agreement marks the first time that two American institutions, Citigroup and JPMorgan Chase, will pay penalties in the rate-fixing investigations.

Barclays and UBS, which alerted European Union officials to the improper practices, will avoid fines as part of the settlement. Citigroup, which will pay a total of €70 million in fines, avoided an additional €55 million penalty by cooperating with investigators.

The banks that agreed to settle received a 10 percent reduction in the total amount of fines they could have faced, European Union officials said.

“Those who have settled today have recognized their wrongdoing,” Mr. Almunia said. “Those who have not settled are not ignorant to what we know. It’s up to them to decide what to do.”

The penalty exceeds a €1.47 billion fine levied last year against seven companies for collusion in the manufacturing of cathode-ray tubes for computer monitors and televisions.

The banks that reached settlements related to Euribor are: Barclays, Deutsche Bank, R.B.S. and Société Générale. The improper activity took place from September 2005 to May 2008, officials said.

Mr. Almunia said that the antitrust regulators had opened investigations of HSBC, JPMorgan and Crédit Agricole related to Euribor.

The banks that reached settlements related to yen Libor are: UBS, R.B.S., Deutsche Bank, JPMorgan and Citigroup. The British broker RP Martin Holdings also agreed to a fine over yen Libor. The improper activity took place from 2007 to 2010, officials said.

The European Union has also opened an investigation regarding yen Libor against the British financial firm ICAP, which has already agreed to pay British and American authorities $87 million related to the Libor rate fixing.

To set the Libor and Euribor rates, banks submit the rates at which they would be prepared to lend money to each other, on an unsecured basis, in various currencies and varying maturities. Those rates are averaged, after the highest and lowest ones are eliminated, and that becomes that day’s rate.

R.B.S. said on Wednesday that it had undertaken efforts, since it first became aware in 2011 of the improper conduct, to improve its systems and controls regarding Libor and other benchmark rates.

“We acknowledged back in February that there were serious shortcomings in our systems and controls on this issue, but also in the integrity of a very small number of our employees,” said Philip Hampton, R.B.S. chairman.

“Today is another sobering reminder of those past failings and nobody should be in any doubt about how seriously we have taken this issue,” Mr. Hampton said. “The R.B.S. board and new management team condemn the behavior of the individuals who were involved in these activities. There is no place for it at R.B.S.”

Jürgen Fitschen and Anshu Jain, the co-chief executives of Deutsche Bank, said in a statement: “The settlement relates to past practices of individuals which were in gross violation of Deutsche Bank’s values and beliefs.”

HSBC declined to comment. Société Générale, Crédit Agricole, RP Martin and ICAP didn’t immediately respond to requests for comment on Wednesday.

“We are pleased to resolve this matter with the European Commission and to put this investigation behind us,” Citigroup said in a statement. “Citi continues to cooperate with other regulators in connection with investigations and inquiries related to various interbank offered rates and other benchmark rates.”

This post has been revised to reflect the following correction:

Correction: December 4, 2013

An earlier version of this article and its headline misstated the number of banks fined by the European Commission in connection with an interest rate-rigging settlement. The commission settled with eight financial institutions, seven of them banks, not eight banks.