SAC Witness Concedes Omission on Illicit Data

For days, Jon Horvath has testified at the insider trading trial of his former boss, a onetime top hedge fund executive, that he was pressured to obtain confidential corporate information to do his job.

But on Thursday, Mr. Horvath, a former analyst, conceded that he never explicitly told his superior, Michael S. Steinberg of SAC Capital Advisors, that the data he had obtained about Dell Inc.’s financial results in 2008 was illicit insider information.

“No, I never told Mike Steinberg explicitly that it was illegal information,” Mr. Horvath testified.

The admission came after yet another day of cross-examination in a Manhattan federal courtroom, with Mr. Steinberg’s defense lawyer again seeking to undercut the credibility of the government’s top witness.

At stake is federal prosecutors’ contention that Mr. Steinberg made about $1 million by trading on illegally obtained confidential information about Dell and the graphics chip maker Nvidia. Mr. Horvath, who is cooperating with the government in an effort to obtain a lenient sentence, has said that he conveyed ill-gotten information about the two companies to his boss to help make profitable trades in their stocks.

The trial is taking place weeks after SAC, which was founded by the billionaire Steven A. Cohen, pleaded guilty to securities fraud and agreed to pay $1.2 billion in fines and to stop managing money for outside investors. Mr. Cohen has not been charged criminally but faces a civil administrative action that accuses him of failing to properly supervise his hedge fund’s employees.

The sometimes testy exchanges on Thursday between Mr. Horvath and the main defense counsel, Barry H. Berke, often homed in on the wording of specific phrases in an array of emails. Behind the legal assault was Mr. Berke’s effort to portray Mr. Horvath as an untrustworthy character who hid the nature of his own crimes from his boss and repeatedly lied on the stand.

Mr. Horvath sometimes appeared flustered on the stand, often asking Mr. Berke to repeat questions or providing long answers to short inquiries. During one particularly tough stretch of questioning, the presiding judge, Richard J. Sullivan of the Southern District of New York, gently reminded the two that they were not holding a private conversation but an exchange before a jury.

At one point, Mr. Horvath admitted that he may not have sent one email from the living room of his vacation house in Mexico, but instead from the airport. Still, he argued, while he may not have remembered the specifics of that message, he regularly communicated with Mr. Steinberg during that trip.

Mr. Berke also pressed the witness on the wording of emails describing communications with Jesse Tortora, another hedge fund analyst who was the source of the Dell tips. The defense lawyer repeatedly argued that Mr. Horvath had tried to obscure the illicit nature of Mr. Tortora’s information, passing it off as coming from legitimate channels like the computer company’s investor relations department.

Mr. Horvath repeatedly said that he had done no such thing.

At other times, Mr. Berke tried to show that his client was not dependent solely on Mr. Horvath’s tips and analysis, reading from emails in which Mr. Steinberg wrote of seeking input from other analysts and hedge fund managers. The implication was that Mr. Steinberg had made up his own mind about how to trade Dell shares, including deciding to bet against them soon before the company reported weaker-than-expected earnings.

Mr. Berke’s cross-examination of Mr. Horvath is expected to continue for several hours on Monday before the prosecution conducts one last round of questioning. The government told Judge Sullivan it hoped to rest its case by the end of next week.

SAC Witness Concedes Omission on Illicit Data

For days, Jon Horvath has testified at the insider trading trial of his former boss, a onetime top hedge fund executive, that he was pressured to obtain confidential corporate information to do his job.

But on Thursday, Mr. Horvath, a former analyst, conceded that he never explicitly told his superior, Michael S. Steinberg of SAC Capital Advisors, that the data he had obtained about Dell Inc.’s financial results in 2008 was illicit insider information.

“No, I never told Mike Steinberg explicitly that it was illegal information,” Mr. Horvath testified.

The admission came after yet another day of cross-examination in a Manhattan federal courtroom, with Mr. Steinberg’s defense lawyer again seeking to undercut the credibility of the government’s top witness.

At stake is federal prosecutors’ contention that Mr. Steinberg made about $1 million by trading on illegally obtained confidential information about Dell and the graphics chip maker Nvidia. Mr. Horvath, who is cooperating with the government in an effort to obtain a lenient sentence, has said that he conveyed ill-gotten information about the two companies to his boss to help make profitable trades in their stocks.

The trial is taking place weeks after SAC, which was founded by the billionaire Steven A. Cohen, pleaded guilty to securities fraud and agreed to pay $1.2 billion in fines and to stop managing money for outside investors. Mr. Cohen has not been charged criminally but faces a civil administrative action that accuses him of failing to properly supervise his hedge fund’s employees.

The sometimes testy exchanges on Thursday between Mr. Horvath and the main defense counsel, Barry H. Berke, often homed in on the wording of specific phrases in an array of emails. Behind the legal assault was Mr. Berke’s effort to portray Mr. Horvath as an untrustworthy character who hid the nature of his own crimes from his boss and repeatedly lied on the stand.

Mr. Horvath sometimes appeared flustered on the stand, often asking Mr. Berke to repeat questions or providing long answers to short inquiries. During one particularly tough stretch of questioning, the presiding judge, Richard J. Sullivan of the Southern District of New York, gently reminded the two that they were not holding a private conversation but an exchange before a jury.

At one point, Mr. Horvath admitted that he may not have sent one email from the living room of his vacation house in Mexico, but instead from the airport. Still, he argued, while he may not have remembered the specifics of that message, he regularly communicated with Mr. Steinberg during that trip.

Mr. Berke also pressed the witness on the wording of emails describing communications with Jesse Tortora, another hedge fund analyst who was the source of the Dell tips. The defense lawyer repeatedly argued that Mr. Horvath had tried to obscure the illicit nature of Mr. Tortora’s information, passing it off as coming from legitimate channels like the computer company’s investor relations department.

Mr. Horvath repeatedly said that he had done no such thing.

At other times, Mr. Berke tried to show that his client was not dependent solely on Mr. Horvath’s tips and analysis, reading from emails in which Mr. Steinberg wrote of seeking input from other analysts and hedge fund managers. The implication was that Mr. Steinberg had made up his own mind about how to trade Dell shares, including deciding to bet against them soon before the company reported weaker-than-expected earnings.

Mr. Berke’s cross-examination of Mr. Horvath is expected to continue for several hours on Monday before the prosecution conducts one last round of questioning. The government told Judge Sullivan it hoped to rest its case by the end of next week.

Lively Debate on the Influence of Proxy Advisory Firms

When corporate shareholders vote on a big decision â€" be it a merger with another firm or the election of directors â€" they often take advice from so-called proxy advisory firms, independent groups that conduct analyses of such issues at companies across the country.

But companies and regulators are increasingly uncomfortable with the amount of influence these advisory firms wield. They say that the two main firms, Institutional Shareholder Services and Glass Lewis, are understaffed and often uninformed, and that the firms, which also offer consulting services to companies, are riddled with conflicts of interest.

On Thursday, the Securities and Exchange Commission hosted a round-table discussion that examined the influence of proxy advisers, potential conflicts of interest, and the transparency and accuracy of their recommendations. The agency has not proposed any rules, but it is considering if any regulation is needed.

“Proxy advisory firms clearly play an important role in the proxy process by, among other things, assisting investors in analyzing and considering how to vote their shares,” said the S.E.C. chairwoman, Mary Jo White.

But she added that as the influence of proxy advisers has grown, so have questions about the fairness of their recommendations and decision making.

“I am particularly interested in the discussion of conflicts of interest that may or may not arise in connection with the participation of proxy advisers in our system â€" what they are and views on how they should be addressed,” she said.

The issue is particularly charged right now, as activist hedge funds have become more aggressive in challenging management and nominating dissident directors to boards.

Many institutional investors like mutual funds often do not have the time and resources to analyze all of the thousands of companies in their portfolios, instead relying on firms like I.S.S. and Glass Lewis for advice. As a result, just a handful of firms have enormous influence on a wide swath of corporate America.

“The question really is whether I.S.S., which owns no stock, should have the power of a $4 trillion voter,” said Trevor Norwitz, partner at the law firm Wachtell, Lipton, Rosen & Katz, which represents many corporate clients.

One S.E.C. commissioner, Michael S. Piwowar, echoed Mr. Norwitz’s point of view in remarks that set the tone for the round table, a sometimes combative four-hour discussion at the agency’s offices in Washington.

“I have become increasingly concerned that proxy advisory firms may exercise outsized influence on shareholder voting,” Mr. Piwowar said. “As an economist, my concern is heightened by the lack of competition in the proxy advisory market, which appears to be a stable duopoly preserved by near-impenetrable barriers for new entrants.”

Some investors at the round table bristled at the suggestion that they blindly followed the advice of I.S.S. and Glass Lewis.

“The more contested the vote is, the less we are likely to be swayed one way or another by what the proxy advisory services are recommending,” said Eric Komitee, general counsel of Viking Global Investors.

And some investors said that advisory firms provided them with a valuable service, while other investors ignored them.

“Outsourcing is perfectly acceptable,” said Karen Barr, general counsel of the Investment Adviser Association, an industry trade group.

“Thousands of small investment advisory firms do not use proxy advisory services,” she added.

Yet the sheer number of stocks that mutual funds hold means that they are unable to affordably research all those companies internally, and instead rely on the advice of just two main firms.

“I see many similarities between the current situation with proxy advisory firms and the precrisis situation with credit rating agencies, including an unhealthy overreliance on their recommendations by investors,” Mr. Piwowar said.

Another criticism of I.S.S. in particular was that at the same time its institutional services arm provided advice on how investors should vote on corporate issues, it also maintained a consultancy business that advised companies on good-governance practices.

The implicit suggestion, according to some critics at the round table, is that if companies pay for the consulting services, they will receive more favorable recommendations from the institutional side of the firm.

Representatives from I.S.S. and Glass Lewis defended the integrity of their business models.

“The corporate side of the business is run completely independently from the institutional side of the business,” said Gary Retelny, president of I.S.S. “We have very strong Chinese walls.”

Katherine Rabin, chief executive of Glass Lewis, emphasized that her firm gave equal consideration to management and dissident perspectives when making a recommendation.

No formal recommendations came out of Thursday’s round table, but it is clearly on the S.E.C.’s radar. And as the agency considers whether proxy advisory firms should be regulated, it will look to balance their necessary role in the markets with their clout.

In the Murky World of Bitcoin, Fraud Is Quicker Than the Law

The call went out on Twitter: “For insane profits come and join the pump.”

It was an invitation to a penny stock-style pump-and-dump scheme â€" only this one involved Bitcoin, the soaring, slightly scary virtual currency that has beckoned and bewildered people around the world.

While such bid ’em up, sell ’em off scams are shut down in the financial markets all the time, this one and other frauds involving digital money have gone unchecked. The reason: Government authorities do not agree on which laws apply to Bitcoin â€" or even on what Bitcoin is.

The person behind the recent scheme, a trader known on Twitter as Fontas , said in a secure Internet chat that he operated with little fear of a crackdown.

For insane profits come and join the pump, there is no obligation to but it’s nice to be on the right side of a price movement

â€" Fontas (@fontase) 25 Nov 13

“For now, the lack of regulations allows everything to happen,” Fontas said in the chat, where he verified his control of the Twitter account, which has thousands of followers, but did not give his identity. He added that Bitcoin and its users would benefit when someone steps in to police this financial wild west, and would stop his schemes when they do.

Chinese authorities drew attention to the issue on Thursday when they announced that they were barring Chinese banks from making Bitcoin transactions. The same day, the Bank of France issued its own warning about the potential risks. The news sent the price of Bitcoin tumbling, but it quickly bounced back to near its all-time high of around $1,200.

Bitcoins are little more than computer code â€" created according to a set algorithm and traded between online wallets using virtual keys. Some people insist that virtual currencies could become a revolutionary new form of payment in the real world. Bank of America became the first Wall Street bank to release research about Bitcoin on Thursday, noting that it could become “a major player in both e-commerce and money transfer.”

So far, though, Bitcoin has been driven up primarily by people who are betting it will rise and rise because there is a finite supply. The initial computer program established that only 21 million Bitcoins would ever be created.

Because there are no limits on who can buy Bitcoins, they have attracted investors of all stripes. The value of all the Bitcoins in existence is now more than $12 billion after a volatile surge increased the value by more than 1,000 percent over the last month.

But the excitement over this rapid ascent has obscured the fraud, hacking and outright theft that have become an increasingly regular part of the virtual currency world â€" even for the most sophisticated, legitimate players â€" and the lack of any visible response from law enforcement agencies.

This has allowed more than 30 episodes in which at least 1,000 Bitcoins â€" or $1 million at the current rate of exchange â€" were stolen or transferred illegally, according to a frequently updated list on the most popular online forum for Bitcoin. Of those cases, 10 involved losses of more than 10,000 Bitcoins, or $10 million at the current value. The authorities have only been publicly involved in one of these cases.

This week, the virtual currency world has been abuzz over a heist in which 96,000 Bitcoins â€" currently worth about $100 million â€" were said to be taken from an online marketplace known for selling illegal drugs.

Because of the murky nature of the virtual currency, thefts can be hard to verify. But the increasing stream of episodes underscores how quickly con artists can take advantage of new forms of investing and how slow the authorities can be in responding to emerging financial risks.

The association of state securities regulators put digital money on its list of the top 10 threats to investors for the first time this year. At a hearing last month, three federal agencies said they were carefully tracking virtual currencies for illicit activity.

But Judith M. Shaw, the top securities regulator in Maine, said that it was often hard to determine which authority should be cracking down on virtual currency fraud, or even what constitutes fraud in a market that some view as a giant bubble and others as the future of money.

“The jurisdiction has not been clearly established because it’s new uncharted territory,” Ms. Shaw said. “Everyone is just trying to figure out how this is all going to play out.”

The five Chinese agencies that released a notice on Thursday, including the People’s Bank of China, said that citizens of the country would still be allowed to buy and sell digital money, but it warned that participants “assume the risks themselves.”

Authorities in the United States have cracked down on the criminal use of virtual currencies in a few cases, but those have been isolated situations in which the coins have been used for illegal purposes in the real world, like money laundering and trade in illicit goods. The owner of the Silk Road, a website where drugs and weapons could be bought with Bitcoins, was arrested earlier this year.

But for crimes contained within the Bitcoin network â€" like thefts from apparently reputable online wallets where Bitcoins are stored â€" there has been almost no accountability.

The largest Bitcoin payment processor in Europe, BIPS, said last month that it was hacked and that it lost about $1 million worth of Bitcoins, including coins that were in the personal online wallets of customers. The company, which is still in business, said this week that it would be “unable to reimburse Bitcoins lost unless the stolen coins are retrieved.”

The company said that the Danish police were examining the case but added that the authorities could “not classify this as a theft due to the current nonregulation of Bitcoin.”

“There is absolutely no consumer protection in any sector of the Bitcoin economy,” said Sarah Meiklejohn, a graduate student at the University of California, San Diego, who researches the industry.

After writing a paper on Bitcoin transactions this year, Ms. Meiklejohn said she began receiving emails almost daily from victims of theft who asked her to help track down the perpetrators. Ms. Meiklejohn said that despite the long odds of success, she had generally offered to help, knowing that the victims had nowhere else to turn.

“I figure I can at least respond to them and provide some sense they are being heard,” Ms. Meiklejohn said.

Part of the problem is that regulators have not agreed on how to classify Bitcoin. The Securities and Exchange Commission has authority to regulate securities, like stocks, in the United States. This allowed the agency to punish a Bitcoin Ponzi scheme this year because the agreement between the swindler and the victims was considered a security. But so far, the agency has not determined whether Bitcoin itself can be categorized as a security, making it hard for it to crack down on trading fraud.

Chinese authorities said on Thursday that Bitcoin was a “virtual commodity that does not share the same legal status of a currency.” In the United States, that classification is likely to put Bitcoin under the Commodity Futures Trading Commission. But that agency has not assumed responsibility. In the immediate future, the most likely source of enforcement may be the Federal Bureau of Investigation’s cybersecurity team.

“It’s becoming something of enough value that these agencies are going to wake up and want to find one of these thieves,” said Patrick Murck, the general counsel at the Bitcoin Foundation, a nonprofit group that promotes virtual currencies. “There is no way that anyone can think this is not a real thing that is not worth going after.”

Deal Lawyer Joins Willkie

For decades, attorney Kirk A. Radke has worked behind the scenes helping to arrange private equity deals. Now the noted corporate lawyer is pulling off a deal for himself with a move to law firm Willkie Farr & Gallagher after a long tenure at Kirkland & Ellis, another large law firm.

Willkie announced Mr.Radke’s move on Thursday and said he would join the firm as a partner in its private equity practice group. Mr. Radke had been at Kirkland for nearly three decades and is credited with building up that firm’s private equity practice. Willkie, in a statement said, “Kirk is recognized internationally as a thought leader in the field.”

A start date for Mr. Radke at his new firm has not yet been announced. The lawyer, who has represented both buyers and sellers of companies, could not be reached for comment.

In 2010, The Wall Street Journal, citing bankruptcy filings, reported that Mr. Radke was paid at a rate of $1,250 an hour, an indication of just how valuable some clients valued his work.

A spokesman for Kirkland & Ellis said: “We thank Kirk for his many years of service to the firm. We wish him well.”

Kozlowski’s New Job: Software Company Clerk

L. Dennis Kozlowski was once a high-flying chief executive, perched atop Tyco International.

Now, after serving prison time for fraud, he is working at a software company as a clerk.

Mr. Kozlowski, who was granted parole this week, has been working since early 2012 at a company that provides software to help veterans and ex-offenders find jobs, he said in the parole hearing on Tuesday, according to a transcript reviewed by DealBook.

“People take courses, and it helps them in the interview process and also helps them initially in their jobs,” said Mr. Kozlowski, who is currently in a work-release program.

“I’m a clerk there,” he said, but did not identify the company. “Work-release rules are somewhat limited as to what you can do, but I do anything from preparing proposals to proofreading to copying. Whatever is necessary in the course of a business day.”

A onetime multimillionaire, Mr. Kozlowski was found guilty in 2005 of grand larceny, conspiracy and fraud, earning a prison sentence of 8-1/3 to 25 years. He spent nearly seven years at a prison facility in upstate New York before moving in January 2012 to the Lincoln Correctional Facility, a minimum-security prison on the north edge of Manhattan’s Central Park.

He began working at the software company in February 2012, he said in Tuesday’s hearing. In July this year, his status was upgraded to “day reporting,” requiring him to report briefly to the minimum-security prison facility twice a week. He has been sleeping at home since then.

His sentence was reduced by about 1 year and 4 months because of good behavior. After Tuesday’s hearing, Mr. Kozlowski is scheduled to be formally released as soon as Jan. 17.

He expressed contrition during the hearing, echoing a previous and unsuccessful effort to gain parole in April 2012. In the hearing on Tuesday, Mr. Kozlowski said he felt “horrible.”

“Not a moment goes by, there’s not a day that goes by that I don’t think about my family, my friends, everybody that was ever involved,” he said on Tuesday, according to the transcript. “I was blessed. I was doing extremely well. I can’t say how sorry I am and how deeply I regret my actions many years ago.”

Though he was offered a plea bargain during his trial, he turned it down, Mr. Kozlowski said. Now, though, he admits that he and a former colleague stole $150 million from the company through unauthorized bonuses.

He did so by putting the money in a deferred-income account, Mr. Kozlowski said. “While I was stealing the money, I was not taking it out of the company,” he said.

“At that time, I unfortunately rationalized that I was not involved,” he said. “Subsequently, as I thought about it and sat in jail for a long time, I knew I was involved and I rationalized, you know, that I wasn’t, but I was involved with the crime. I stole money from Tyco, and I’m completely responsible for it.”

“I fell into what I can best describe as a C.E.O. bubble, and I rationalized that I was more valuable than I was,” Mr. Kozlowski said. “It was wrong, and I just â€" it was greed, pure and simple.”

A lawyer for Mr. Kozlowski could not immediately be reached.

Investors Pull Back From Lampert’s Fund

The storied investing empire of Edward S. Lampert is shrinking.

David Geffen, the entertainment mogul, got out in 2007. Members of the Ziff family cashed out more recently, between 2011 and earlier this year. And now more investors are heading for the exits, discouraged by the declining fortunes of Mr. Lampert’s signature stake in Sears Holdings.

Near its peak in 2006, Mr. Lampert’s hedge fund, ESL Investments, managed more than $15 billion. As recently as the end of 2011, it still managed more than $10 billion. But the disclosed total late last year was less than $6 billion.

On Tuesday, ESL Investments announced that for the second consecutive year, it had reduced the size of its stake in Sears Holdings to meet investor redemptions, dropping below 50 percent for the first time since 2008.

While Mr. Lampert is not selling any of his personal stake in the company, which he created by combining Sears, Roebuck & Company and Kmart, his firm announced that it had distributed 7.4 million shares, then worth $411 million, to investors who exited in 2013. The distribution cut his fund’s stake to 48 percent from 55 percent. The remaining Sears stake of 51.6 million shares, worth $2.9 billion, remains ESL’s largest holding.

The action is the latest sign of investor disenchantment with Mr. Lampert, who was once hailed as a canny value investor in the same league as Warren Buffett. His partnership has boasted big-name investors including Mr. Geffen, the Ziffs, and members of the Tisch family, which owns a reported 21 percent of the Loews Corporation. Thomas Tisch, who manages certain Tisch family assets, is a Sears director.

A spokesman for Mr. Lampert did not comment.

Mr. Lampert, who is 51, is a onetime protégé of financial luminaries like Robert Rubin, who once led a takeover stock trading desk where Mr. Lampert briefly worked at Goldman Sachs, and the Texas investor Richard Rainwater, who helped him start his own fund in 1988, the year he turned 26.

He gained majority control of Kmart as it emerged from bankruptcy in 2003 after investing in its debt at distress prices. With that and a minority stake in Sears, he merged the two companies in 2005. At the peak in 2007, Mr. Lampert has said, his original investment in Sears had increased 20-fold. But the price fell about 75 percent in the market-wide downturn of 2008, and after a strong two-year rebound, it has fallen back over the last three years.

The news of the ESL redemptions hit Sears stock hard Wednesday, when it fell $4.63, or 8.3 percent, to $50.92. It edged up slightly on Thursday. Both Sears and Kmart “have been deteriorating for years,” said Mary Ross Gilbert, a securities analyst at Imperial Capital in Los Angeles. In a report earlier this year, she said the retail operations had underperformed because of “the lack of a cohesive strategy, management talent and capital support.” After a succession of four other chief executives under his control, Mr. Lampert took the job himself in February.

Mr. Lampert said he remained focused on transforming Sears “into a membership-focused company and on creating long-term value for shareholders. My significant personal ownership in the company is a sign of my confidence and alignment with all shareholders.”

In recent years he has moved to break Sears into pieces, spinning off parts of its smaller Sears Hometown and Outlet Stores as well as Sears Canada; he is also considering separating its Lands’ End and auto service centers.

Although he has traded in and out of a few dozen stocks since 2007, Mr. Lampert has held onto a handful of core holdings like Sears and the car retailer AutoNation, according to a tally by Dealogic. He sold most of what had been a 41 percent stake in AutoZone, worth $3.2 billion in late 2009, between 2010 and 2012 as the stock price tripled. But he has held onto a 41 percent stake in AutoNation, worth $2.5 billion.

Some investors say Mr. Lampert has failed to deliver with Sears.

Margaret Black-Scott, president of Beverly Hills Wealth Management, which manages $500 million, said that ESL’s stake in the “big old names” of Kmart and Sears had “run up on anticipation” that Mr. Lampert’s “buy-and-hold approach would build value” similar to that created by Mr. Buffett.

Instead, she said, “you have not seen the fulfillment of what people expected. You’ve not seen the value built from their skeletons. They expected this new humongous company to be built out of what I would call yesterday’s stores. So now it’s sort of, ‘You know what? I’m out of here.’”

Some of the recent investor withdrawals may have also been influenced by the stringent “lockup” terms imposed by Mr. Lampert. When ESL raises funds from outside investors, it typically requires them to keep their money with ESL for five years.

In 2007, Goldman Sachs led a $3.5 billion investment in ESL by wealthy individuals and institutions, which included a lockup that expired at the end of 2012. Investors who wanted to keep their money in at that point had to agree to another five-year lockup.

The marquee investors who have withdrawn were reluctant to discuss their rationale.

Mr. Geffen, who founded three record companies and co-founded the film studio DreamWorks SKG and is now retired, told Fortune Magazine in 2006 that he had made more money from a $200 million investment with Mr. Lampert in 1992 than he had “from all the businesses I’ve created and sold.”

But in an email last month, he said, “I have not been an investor with ESL since 2007.” He added, “during the many years I was with Eddie he was very successful and his returns were extraordinary.” He declined to discuss why he exited, explaining that Mr. Lampert “is a friend of mine.”

Ziff Brothers Investments, a family office of three sons of the publishing billionaire William Ziff Jr., began winding down their ESL investment in late 2011 and completed it earlier this year, according to someone briefed on the move. A spokesman for Ziff declined to comment.

‘The Daily Show’ Chides Financial Journalism

Samantha Bee, a correspondent for "The Daily Show With Jon Stewart," questioned why a no-lose credit-default swaps deal by Blackstone hadn't received wider media coverage.

Gupta Suit Against Partner Is Dismissed

A federal judge in Manhattan has dismissed a lawsuit brought by Rajat Gupta, the former managing director of the consulting giant McKinsey & Company, who had accused a former longtime friend of trying to stop him from having a say over a private equity fund they started together.

In his decision on Tuesday, Judge George B. Daniels of Federal District Court in Manhattan did not address the merits of the case, but said none of the claims in Mr. Gupta’s complaint were relevant anymore.

The ruling came as Mr. Gupta, who was convicted in June 2012 on charges of tipping the hedge fund billionaire Raj Rajaratnam on boardroom secrets he gleaned while he was a director of Goldman Sachs, sits in his waterfront home in Wesport, Conn., waiting to hear the outcome of his appeal on the insider-trading charges. Arguments on the appeal were heard in late May.

The lawsuit centered on a dispute between Mr. Gupta and his business partner, Parag Saxena. The two men, whose families used to vacation together at the Palm Island Resort in Cape Haze in Florida, teamed up in 2006 to start New Silk Route, a private equity fund that invests in South Asia. But after Mr. Gupta was convicted of insider-trading charges, long-simmering tensions between the men erupted.

In February 2012, Mr. Gupta agreed to step down from New Silk Route’s two-member board after Mr. Saxena requested that he distance himself from the company while securities charges were pending. To protect his interests in the company, Mr. Gupta was allowed to designate a board member. But Mr. Gupta sued Mr. Saxena in March 2013, contending that his business partner was blocking him from appointing his representative to the board in a bid to gain control of the fund. The suit effectively ended a 25-year friendship between the men that mingled business with games of tennis and bridge.

After Mr. Gupta’s original representative was forced to step down from the board, his current representative, Greg Orman, was appointed.

In handing down his decision from the bench, Judge Daniels said that he was not ruling on the merits of the case, which he said was driven by Mr. Gupta’s fear that Mr. Saxena was maneuvering to sever his ties to the fund.

“That may or may not be the case,” Judge Daniels said. “That may or may not be their intent. But that is not what is currently before this court.” Among other things, Judge Daniels pointed to the fact that Mr. Gupta had a functioning representative on the New Silk Route board, which he said made the original complaint moot.

In his remarks in open court, Judge Daniels did little to hide his feelings about the complaint. “Quite frankly, I have a dim view of the merits of this claim,” he said in a hearing.

His ruling came after a spirited exchange between the judge and Mr. Gupta’s lawyer, Rishi Bhandari. Mr. Bhandari tried to argue that Mr. Saxena could not remove Mr. Gupta’s representative on the board simply so that he could gain control of the fund. Such a move, he said, would fundamentally undermine the purpose of the voting agreement between the two men.

“Why do you say that?” the judge asked.

“Because that was the understanding of the parties,” Mr. Bhandari replied.

“Where does it say that in the contract?” the judge asked.

“It is not in the contract,” Mr. Bhandari said, adding that the intent was implicit.

Though Judge Daniels dismissed the case, he left the door open for Mr. Gupta to bring a suit in the future if Mr. Saxena moved to deprive him of his right to name a member to the fund’s board. Mr. Bhandari declared after the hearing that the suit had already accomplished what his client had set out to do.

“The purpose of filing this action was to have a designee on the board,” Mr. Bhandari said. “If they do anything to impair Mr. Gupta’s rights, we can still sue to stop them.

Mr. Saxena’s lawyer was not available for comment.

Anita Raghavan is the author of “The Billionaire’s Apprentice: The Rise of the Indian-American Elite and the Fall of the Galleon Hedge Fund,” published June 4 by Business Plus.

Shaking the Bitcoin Believers

So much for China’s willingness to tolerate financial innovation. Regulators have barred the country’s banks from trading bitcoin, while denying the pseudo-money legal status and cracking down on anonymous users. Though China has stopped short of an outright ban, the move dashes hopes the country might allow start-up currencies to exist alongside the official renminbi.

China’s crackdown is by far the most decisive by the world’s financial regulators to date. That’s probably because enthusiasm for bitcoin appears to have been greater there than in any other single country. Data from online exchanges suggests that China has in recent weeks accounted for around a third of global trading volume. For a while, Chinese bitcoin buyers were also paying a significantly higher price for their virtual stash than users outside the Middle Kingdom.

Though China has not made bitcoin illegal, the directive from the People’s Bank of China severely limits its potential uses. It is a “virtual good” without legal status. Financial institutions are banned from trading it - a significant step in a country where banks will accept copper and rubber as collateral for loans. Moreover, the PBOC has taken steps to limit the anonymity that makes bitcoin appealing as a means of exchange in illicit deals - or as a way around China’s capital controls.

The regulatory assault undermines the narrative that bitcoin is in the vanguard of a global shift toward new, computer-generated forms of money. With that new monetary age paradigm looking shaky, the virtual asset has lost a good portion of its speculative appeal. The price of bitcoin on BTC China, the country’s leading exchange, fell by about 20 percent following the ruling.

Devotees will still insist that government restrictions cannot undermine an asset which was devised as an alternative to state-controlled fiat currencies. It also remains to be seen whether other countries will adopt the same hard line. Nevertheless, bitcoin’s true believers are having their faith tested.

Peter Thal Larsen is Asia Editor of Reuters Breakingviews. For more independent commentary and analysis, visit breakingviews.com.

Glassdoor, a Jobs Website, Raises $50 Million

For years, Glassdoor has served as a way for employees to vent about their companies and bosses. It’s become a business that investors are increasingly eager to support.

The six-year-old start-up said on Thursday that it had raised $50 million in new financing, nearly doubling its total fund-raising to $93 million. The latest round was led by Tiger Global Management and includes a new investor, Dragoneer Investment Group, and existing backers Battery Ventures, Benchmark Capital, DAG Ventures and Sutter Hill Ventures.

It’s a big move by Glassdoor, a job listings site that has gained some infamy for letting people rate their employers and leave anonymous reviews. The company promotes itself as a way for job applicants to gain insight into work conditions and salaries, though the business has also become a forum that lets workers vent about â€" or praise â€" their superiors and colleagues.

Since opening its virtual doors in 2008, the company has grown to 22 million members in 190 countries, with compound annual revenue growth of roughly 160 percent. It has also garnered corporate clients like Facebook and Nordstrom, many of whom subscribe to additional analysis and recruiting tools.

“Glassdooor has rapidly become a critical player in the global recruiting market due to its extensive content platform and data insights that benefit both job seekers and employers,” Lee Fixel, a partner at Tiger Global, said in a statement.

The new money will help Glassdoor continue to expand internationally, building on an audience that already represents a quarter of its traffic. The financing will also help add an estimated 100 new employees to the company’s existing staff of 200.

“This additional capital will allow us to further accelerate our growth and capitalize on our sweet spot at the intersection of social, mobile, and data to deliver on our mission to help people find the jobs and companies they love,” Robert Hohman, a co-founder of Glassdoor and its chief executive, said in a statement.

For Bitcoin, a Setback in China and an Endorsement on Wall Street

China has thrown some cold water on Bitcoin, the popular virtual currency that has gained many adherents in the country.

The Chinese government on Thursday moved to restrict banks from using Bitcoin in transactions, declaring that it was not a true currency at all, The New York Times reports. A notice issued by the People’s Bank of China and four other ministries and agencies said the step was needed to “protect the status of the renminbi as the statutory currency, prevent risks of money laundering and protect financial stability.”

The price of Bitcoin, which has surged in recent months and is characterized by bouts of volatility, dropped on the news. After reaching a high of $1,240, the price fell to around $1,085 on Thursday, at one point touching a low of $870, according to the Mt.Gox exchange.

The notice in China said Bitcoin was “not a currency in the real meaning of the word” but rather a “virtual commodity that does not share the same legal status of a currency. Nor can, or should, it be circulated or used in the marketplace as a currency.”

At the same time, China said that investors were free to speculate on Bitcoin at their own risk. “Ordinary members of the public have the freedom to participate in Bitcoin transactions as a kind of commodity trading activity on the Internet, provided they assume the risks themselves,” the statement said.

The announcement had outsize significance for Bitcoin fans because China has quickly become one of the hottest markets for the virtual currency.

Chinese transactions in bitcoin far outstripped activity in euros in November, even at the height of the American and European trading days, according to an analysis by a site called fiatleak. A year ago, China was barely involved in Bitcoin at all. This map helps illustrate the craze.

The venture capital firm Lightspeed Venture Partners was even betting that Beijing would endorse Bitcoin, The Financial Times’s Alphaville blog notes. Bitcoin fever was particularly intense in the city of Wenzhou.

But while hopes of a Chinese seal of approval have been dashed, Bitcoin is gaining some institutional respect in the United States. In a move that appears to be unique among Wall Street firms, Bank of America Merrill Lynch has begun to cover Bitcoin, saying in a research report on Thursday that it could be useful in e-commerce and money transfers.

“We believe Bitcoin can become a major means of payment for e-commerce and may emerge as a serious competitor to traditional money transfer providers,” said the report by Bank of America currency strategists led by David Woo. “As a medium of exchange, Bitcoin has clear potential for growth, in our view.”

The report, which offered a primer on Bitcoin and described how it is “mined,” said that a “fair value analysis” of the currency suggested a maximum value of $1,300.

At the same time, however, Bitcoin has “considerable shortcomings which we believe will ultimately hinder it from ascending to international currency status,” the report said.

“Bitcoin’s role as a store of value can compromise its viability as a medium of exchange. Its high volatility, a result of speculative activities, is hindering its general acceptance as a means of payments for online commerce,” according to the report.

The Bank of America report comes on the heels of positive comments about Bitcoin by United States government officials. Ben S. Bernanke, the Federal Reserve chairman, told Congress last month that currencies like Bitcoin “may hold long-term promise,” helping send the price higher.

Still, some monetary policy experts are skeptical. Unlike conventional currencies, Bitcoin is not backed by a central bank or government.

Nout Wellink, the former president of the Dutch Central Bank, recently told students at the University of Amsterdam that the Bitcoin craze was reminiscent of the mania over tulips that hit Amsterdam in the early 17th century, according to The Guardian.

Alan Greenspan, the former Fed chairman, was blunt in his assessment.

“It’s a bubble,” he told Bloomberg TV on Wednesday. “It has to have intrinsic value. You have to really stretch your imagination to infer what the intrinsic value of Bitcoin is. I haven’t been able to do it. Maybe somebody else can.”

For Bitcoin, a Setback in China and an Endorsement on Wall Street

China has thrown some cold water on Bitcoin, the popular virtual currency that has gained many adherents in the country.

The Chinese government on Thursday moved to restrict banks from using Bitcoin in transactions, declaring that it was not a true currency at all, The New York Times reports. A notice issued by the People’s Bank of China and four other ministries and agencies said the step was needed to “protect the status of the renminbi as the statutory currency, prevent risks of money laundering and protect financial stability.”

The price of Bitcoin, which has surged in recent months and is characterized by bouts of volatility, dropped on the news. After reaching a high of $1,240, the price fell to around $1,085 on Thursday, at one point touching a low of $870, according to the Mt.Gox exchange.

The notice in China said Bitcoin was “not a currency in the real meaning of the word” but rather a “virtual commodity that does not share the same legal status of a currency. Nor can, or should, it be circulated or used in the marketplace as a currency.”

At the same time, China said that investors were free to speculate on Bitcoin at their own risk. “Ordinary members of the public have the freedom to participate in Bitcoin transactions as a kind of commodity trading activity on the Internet, provided they assume the risks themselves,” the statement said.

The announcement had outsize significance for Bitcoin fans because China has quickly become one of the hottest markets for the virtual currency.

Chinese transactions in bitcoin far outstripped activity in euros in November, even at the height of the American and European trading days, according to an analysis by a site called fiatleak. A year ago, China was barely involved in Bitcoin at all. This map helps illustrate the craze.

The venture capital firm Lightspeed Venture Partners was even betting that Beijing would endorse Bitcoin, The Financial Times’s Alphaville blog notes. Bitcoin fever was particularly intense in the city of Wenzhou.

But while hopes of a Chinese seal of approval have been dashed, Bitcoin is gaining some institutional respect in the United States. In a move that appears to be unique among Wall Street firms, Bank of America Merrill Lynch has begun to cover Bitcoin, saying in a research report on Thursday that it could be useful in e-commerce and money transfers.

“We believe Bitcoin can become a major means of payment for e-commerce and may emerge as a serious competitor to traditional money transfer providers,” said the report by Bank of America currency strategists led by David Woo. “As a medium of exchange, Bitcoin has clear potential for growth, in our view.”

The report, which offered a primer on Bitcoin and described how it is “mined,” said that a “fair value analysis” of the currency suggested a maximum value of $1,300.

At the same time, however, Bitcoin has “considerable shortcomings which we believe will ultimately hinder it from ascending to international currency status,” the report said.

“Bitcoin’s role as a store of value can compromise its viability as a medium of exchange. Its high volatility, a result of speculative activities, is hindering its general acceptance as a means of payments for online commerce,” according to the report.

The Bank of America report comes on the heels of positive comments about Bitcoin by United States government officials. Ben S. Bernanke, the Federal Reserve chairman, told Congress last month that currencies like Bitcoin “may hold long-term promise,” helping send the price higher.

Still, some monetary policy experts are skeptical. Unlike conventional currencies, Bitcoin is not backed by a central bank or government.

Nout Wellink, the former president of the Dutch Central Bank, recently told students at the University of Amsterdam that the Bitcoin craze was reminiscent of the mania over tulips that hit Amsterdam in the early 17th century, according to The Guardian.

Alan Greenspan, the former Fed chairman, was blunt in his assessment.

“It’s a bubble,” he told Bloomberg TV on Wednesday. “It has to have intrinsic value. You have to really stretch your imagination to infer what the intrinsic value of Bitcoin is. I haven’t been able to do it. Maybe somebody else can.”

Japanese Employee at Deutsche Bank Arrested on Bribery Charges

TOKYO â€" An employee of Deutsche Bank’s Japanese brokerage unit was arrested on Thursday on suspicion of showering a local pension fund manger with expensive meals, golf outings and trips overseas in return for some 1 billion yen in investments.

Shigeru Echigo, 36, the former head of Deutsche Securities’ pension fund sales team, was arrested on bribery charges along with a former pension fund manager for a Japanese trading house, a Tokyo Metropolitan Police official said in a statement read out over the telephone.

Mr. Echigo spent at least 900,000 yen on food and drink, golf and overseas travel for Yutaka Tsurisawa, a pension fund executive for Mitsui, from April to August last year, according to the statement. The favors were meant to express thanks for some 1 billion yen in financial products Mr. Tsurisawa had purchased from Deutche Securities, and to encourage the executive to keep up those purchases, the statement said.

Deutsche Securities also spent over 5 million yen to entertain executives at two other corporate pension funds last year, Japan’s financial regulator said in a separate statement. Deutsche took executives at one of those funds out on some 40 occasions, on top of paying for overseas travel, according to the regulator, the Securities and Exchange Surveillance Commission.

The wining and dining of corporate pension fund executives had, in fact, become commonplace at Deutsche Securities, which set up shop in Tokyo in 2005, the Nikkei business daily said. In some cases, the feasting got
so out of hand that employees filed the mounting expenses over many days in a bid not to attract attention, the paper said.

The regulator advised that the government reprimand Tokyo-based Deutsche Securities over its conduct. Though entertaining clients is prevalent in the world of finance, giving out favors to clients in exchange for business violates government ordinances, it said.

In a statement, Deutsche Securities said that it was “cooperating fully with authorities” on the case. It said it took the arrest and the conduct leading up to it “very seriously.”

The pension funds sales team was dissolved in September, said a spokesman for Deutsche in Tokyo, Aston Bridgman. Mr. Echigo has been suspended from the bank and is awaiting internal disciplinary action, together with other executives at the bank, Mr. Bridgman said.

Mitsui’s pension fund, which manages about 50 billion yen in employee pension contributions, also said it was cooperating with the authorities on the case and had started its own internal investigation. Mr. Tsurisawa retired from the fund in May, said a fund official who would not give his name.

The arrests offer a peak into the sometimes murky relationships between pension fund managers and the firms that advise and handle their investments. In a high-profile pension fraud scandal last year, executives at a Tokyo money adviser were arrested on suspicion of promising inflated returns to pension fund managers, but ultimately losing most of their 109 billion yen in investments. In that case, the adviser’s securities license was revoked.

Japanese financial regulators, who came under fire for their seemingly lax oversight of pension funds, have more recently stepped up their scrutiny of fund management.

The arrests come amid continued attention on misconduct at global financial institutions. On Wednesday, the European Union fined a group of the world’s largest banks a combined 1.7 billion euros to settle charges that they colluded to fix benchmark interest rates.The largest penalty was against Deutsche Bank, which agreed to pay about $980 million.

Japanese Employee at Deutsche Bank Arrested on Bribery Charges

TOKYO â€" An employee of Deutsche Bank’s Japanese brokerage unit was arrested on Thursday on suspicion of showering a local pension fund manger with expensive meals, golf outings and trips overseas in return for some 1 billion yen in investments.

Shigeru Echigo, 36, the former head of Deutsche Securities’ pension fund sales team, was arrested on bribery charges along with a former pension fund manager for a Japanese trading house, a Tokyo Metropolitan Police official said in a statement read out over the telephone.

Mr. Echigo spent at least 900,000 yen on food and drink, golf and overseas travel for Yutaka Tsurisawa, a pension fund executive for Mitsui, from April to August last year, according to the statement. The favors were meant to express thanks for some 1 billion yen in financial products Mr. Tsurisawa had purchased from Deutche Securities, and to encourage the executive to keep up those purchases, the statement said.

Deutsche Securities also spent over 5 million yen to entertain executives at two other corporate pension funds last year, Japan’s financial regulator said in a separate statement. Deutsche took executives at one of those funds out on some 40 occasions, on top of paying for overseas travel, according to the regulator, the Securities and Exchange Surveillance Commission.

The wining and dining of corporate pension fund executives had, in fact, become commonplace at Deutsche Securities, which set up shop in Tokyo in 2005, the Nikkei business daily said. In some cases, the feasting got
so out of hand that employees filed the mounting expenses over many days in a bid not to attract attention, the paper said.

The regulator advised that the government reprimand Tokyo-based Deutsche Securities over its conduct. Though entertaining clients is prevalent in the world of finance, giving out favors to clients in exchange for business violates government ordinances, it said.

In a statement, Deutsche Securities said that it was “cooperating fully with authorities” on the case. It said it took the arrest and the conduct leading up to it “very seriously.”

The pension funds sales team was dissolved in September, said a spokesman for Deutsche in Tokyo, Aston Bridgman. Mr. Echigo has been suspended from the bank and is awaiting internal disciplinary action, together with other executives at the bank, Mr. Bridgman said.

Mitsui’s pension fund, which manages about 50 billion yen in employee pension contributions, also said it was cooperating with the authorities on the case and had started its own internal investigation. Mr. Tsurisawa retired from the fund in May, said a fund official who would not give his name.

The arrests offer a peak into the sometimes murky relationships between pension fund managers and the firms that advise and handle their investments. In a high-profile pension fraud scandal last year, executives at a Tokyo money adviser were arrested on suspicion of promising inflated returns to pension fund managers, but ultimately losing most of their 109 billion yen in investments. In that case, the adviser’s securities license was revoked.

Japanese financial regulators, who came under fire for their seemingly lax oversight of pension funds, have more recently stepped up their scrutiny of fund management.

The arrests come amid continued attention on misconduct at global financial institutions. On Wednesday, the European Union fined a group of the world’s largest banks a combined 1.7 billion euros to settle charges that they colluded to fix benchmark interest rates.The largest penalty was against Deutsche Bank, which agreed to pay about $980 million.

Homejoy Raises $38 Million in New Round

For many investors, the business of home cleaning appears to be a lucrative field.

Homejoy, a year-old start-up that connects customers with prescreened cleaners, said on Thursday that it has raised $38 million in new capital. The round’s investors included Google Ventures, Redpoint Ventures and the entrepreneur Max Levchin.

The new investments â€" which bring Homejoy’s total fund-raising to about $40 million â€" follow a $10 million round raised by a similar service, Handybook, in October.

In some ways, both represent investors’ interest in a budding category: on-demand services, a field pioneered by the likes of Uber, the car ride provider. Such companies serve as middlemen, connecting customers to a disparate array of professionals.

Home cleaning is one of the most obvious ways to apply that business model. Homejoy’s spin is that it lets customers book cleaners for a specified time, paying $20 an hour. The job assignments are bonded and insured, and if clients aren’t happy, Homejoy offers to re-clean the house without charge.

“Homejoy is at the forefront of reinventing the home cleaning industry, while creating a platform that provides access to opportunities for professional service providers who want a flexible and convenient option for themselves and their families,” Adora Cheung, Homejoy’s co-founder and chief executive, said in a statement.

Morning Agenda: Lew Sizes Up Financial Reform

TREASURY CHIEF TO DECLARE GAINS IN FINANCIAL REFORM  |  Treasury Secretary Jacob J. Lew plans to say on Thursday that the Obama administration’s overhaul of the financial system is close to accomplishing its goal of shielding society from the dangers posed by big banks, according to a draft of the speech, DealBook’s Peter Eavis reports. In a broad policy speech to be given at the Pew Charitable Trusts office in Washington, Mr. Lew will also call on overseas regulators to make their rules tougher â€" comments that will most likely upset foreign governments.

“We will press other jurisdictions to match our robust standards â€" including in Europe and across Asia,” Mr. Lew will say, according to the draft. He will also argue that, more than three years after the overhaul began, big banks are safer today. “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,” Mr. Lew will say. “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. Eavis writes: “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.”

ICAHN’S LATEST PUSH FOR AN APPLE BUYBACK  | 
Carl C. Icahn has a new platform to make his case that Apple should buy back a large amount of shares: the cover of Time magazine. The activist investor tells the magazine that he has filed an initiative to let shareholders vote on a nonbinding proposal urging Apple to use its huge cash stockpile for a big buyback. The subheadline of the article: “Why Carl Icahn Is the Most Important Investor in America.”

Mr. Icahn is taking a relatively mild approach, rather than a full-blown proxy contest, DealBook’s Michael J. de la Merced writes. He keeps his tone civil in the Time article, saying that Apple’s chief executive “is doing a good job with the business,” and adding that “I think he’s good whether he does what I want or not.” But he adds: “Apple is not a bank.”

MEMORY LAPSE FOR TOP WITNESS IN SAC CASE  | 
Jon Horvath’s memory failed him again during the insider trading trial of his former boss at SAC Capital Advisors, Michael S. Steinberg, DealBook’s Matthew Goldstein reports. In court on Wednesday, Mr. Horvath had difficulty recalling how he learned that a friend, who was an analyst at another hedge fund, was passing on illegal inside information about the computer company Dell.

“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 that Mr. Horvath’s memory failed him during cross-examination.

ON THE AGENDA  | 
The second estimate of gross domestic product in the third quarter is released at 8:30 a.m. Eastern time. Jos. A. Bank reports earnings before the market opens. The Deal holds a conference at the New York Stock Exchange on deal making and the economy. The hedge fund manager J. Kyle Bass is on Bloomberg TV at 10:30 a.m.

G.M. SAID TO PLAN SALE OF ALLY STAKE  | 
General Motors plans to sell the last of its holdings in its onetime financing arm Ally Financial through a private placement of shares, a person briefed on the matter tells DealBook’s Michael J. de la Merced. “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.” The private placement would be valued at about $900 million, according to The Wall Street Journal, which first reported the news.

Mergers & Acquisitions »

Merck to Buy British Materials Firm for $2.6 Billion  |  The pharmaceutical company Merck, which also makes liquid crystals used in television and smartphone screens, has agreed to buy AZ Electronic Materials of Britain to bolster its specialist chemicals, Reuters reports.
REUTERS

An Oral History of BlackBerry’s Rise and Fall  |  Bloomberg Businessweek has interviewed “dozens of current and former BlackBerry employees, vendors and associates” to hear their story of the smartphone maker’s trajectory.
BLOOMBERG BUSINESSWEEK

Credit Suisse Said to Be Selling German Private Bank  |  Reuters reports: “Credit Suisse is selling its business serving wealthy customers in Germany to Frankfurt-based Bethmann Bank, sources familiar with the transaction told Reuters on Wednesday.”
REUTERS

Verizon Wireless Spectrum Attracts Bidders  |  The Wall Street Journal reports: “AT&T Inc. is considering a bid for a block of spectrum licenses held by Verizon Wireless, setting up a potential contest for the airwaves with smaller rival T-Mobile US Inc., people familiar with the matter said.”
WALL STREET JOURNAL

Container Shipping Lines in Talks to Merge  |  The Financial Times reports: “Two of the world’s highest-profile container shipping lines, Germany’s Hapag-Lloyd and Chile’s CSAV, are in talks about a potential merger that would create the world’s fourth-largest container ship fleet.”
FINANCIAL TIMES

Chairman of Barrick Gold Is Stepping Down  |  Reuters reports: “Barrick Gold, facing criticism from some shareholders for a series of missteps in a tough market, said on Wednesday that its 86-year-old chairman and founder would leave the board in the spring, along with two other directors.”
REUTERS

INVESTMENT BANKING »

BNP Paribas to Take Control of Polish Unit of Rabobank  |  In a deal valued at about $1.36 billion, the Dutch lender Rabobank would sell a 98.5 percent stake in its Polish unit to the French bank BNP Paribas.
DealBook »

China Bars Banks From Using Bitcoin  |  The New York Times reports: “China moved on Thursday to restrict its banks from using Bitcoin as currency, citing concerns about money laundering and a threat to financial stability.”
NEW YORK TIMES

From Greenspan, a Dose of Skepticism on Bitcoin  |  “It’s a bubble,” the former Federal Reserve chairman, Alan Greenspan, said of Bitcoin on Bloomberg TV. “It has to have intrinsic value. You have to really stretch your imagination to infer what the intrinsic value of Bitcoin is. I haven’t been able to do it. Maybe somebody else can.”
BLOOMBERG NEWS

UBS Shuffles Executive Roles  |  UBS said that Ulrich Koerner, the bank’s operations chief, would run the asset management division when its head retires next year, and that Tom Naratil, the finance chief, would take on the operations role, Reuters reports.
REUTERS

Standard Chartered Warns on Consumer Banking Profit  |  Peter Sands, chief of the London-based bank, attributed a “double-digit drop” in the consumer banking results to unprofitable business in South Korea.
DealBook »

PRIVATE EQUITY »

From a Union, a Hat Tip for Private Equity  |  A United Steelworkers local in Philadelphia plans to honor an energy executive and a managing director of the Carlyle Group. “I suppose there’s a feel of the lions laying down with the jackals â€" natural enemies and natural predators,” said Philip Rinaldi, chief executive of Philadelphia Energy Solutions, who is one of the honorees, according to The Inquirer.
PHILADELPHIA INQUIRER

House Votes to Exempt Private Equity From New Rules  |  The bill passed by the House Representatives would largely spare private equity funds from rules requiring them to register with the Securities and Exchange Commission. But the bill is not likely to become law.
REUTERS

HEDGE FUNDS »

Hayman Capital Is Said to Build a Stake in G.M.  |  Hayman Capital, the hedge fund founded by J. Kyle Bass, “has taken a stake in General Motors Co. and believes the U.S. automaker’s stock could rise more than 40 percent over the next 12-18 months after the U.S. Treasury sells its stake in the company, a source familiar with investment said on Wednesday,” Reuters reports.
REUTERS

I.P.O./OFFERINGS »

China Cinda Said to Raise $2.5 Billion in Hong Kong I.P.O.  |  A bad bank created to absorb problem loans made by state lenders, China Cinda Asset Management on Thursday priced its shares at the top of the marketed range in Hong Kong’s biggest new listing this year.
DealBook »

AMC Singles Out Fans With Coming I.P.O.  |  Members of AMC Theaters’ loyalty rewards program will be able to participate in AMC’s initial public offering through Loyal3 Holdings, a brokerage firm that caters to smaller investors.
DealBook »

VENTURE CAPITAL »

Chinese Firm Increases Stake in Brazilian Tech Company  |  The Internet company Qihoo 360 led a funding round for a cloud-based security company, as more Chinese firms look toward Latin America.
DealBook »

Mobile Payments Catch On Among India’s Poor  |  “MoneyOnMobile, an Indian start-up, is latching on to an idea that began six years ago in Kenya of transferring money with a few taps of the keypad on an everyday cellphone,” The New York Times writes.
NEW YORK TIMES

A Look at Uber’s Internal Numbers  |  The Gawker site Valleywag writes that Uber, a car hailing service, “is making a lot more money than its investors had anticipated.”
VALLEYWAG

LEGAL/REGULATORY »

Wall Street Challenges Overseas Swaps Rules  |  The move is a response to an initiative led by the Commodities Futures Trading Commission’s chairman, Gary Gensler, to increase oversight of derivatives trading in markets like London and Hong Kong.
DealBook »

Fifth Third Bank and Executive Settle Charges With the S.E.C.  |  The case involved improper accounting for soured mortgages around the time of the financial crisis.
DealBook »

Banks Failing to Comply With Parts of Mortgage Deal, Report Says  |  The New York Times reports: “Three of the nation’s largest mortgage lenders are still failing to comply with key requirements of a national settlement over mortgage abuses, according to a new report that suggests that some borrowers are still trapped in a tangle of red tape and errors as they try to save their homes from foreclosure.”
NEW YORK TIMES

Big Companies Are Prepared to Pay Price on Carbon  |  The New York Times reports: “More than two dozen of the nation’s biggest corporations, including the five major oil companies, are planning their future growth on the expectation that the government will force them to pay a price for carbon pollution as a way to control global warming.”
NEW YORK TIMES

Libor Bank Fines Reflect Rewards of Cooperating  |  The lenient treatment of Barclays and UBS, the first banks to settle with financial agencies in the Libor case, highlights the risks in delaying settlements, Dominic Elliott and George Hay of Reuters Breakingviews write.
REUTERS BREAKINGVIEWS

2 New Co-Chiefs of European Private Equity Firm Apax

LONDON â€" The European private equity firm Apax Partners on Thursday named Andrew Sillitoe and Mitch Truwitt as co-chief executives beginning in January.

They will replace Martin Halusa, who took over as chief executive from the firm’s founder Ronald Cohen in 2003. Dr. Halusa, 58, will become the firm’s chairman and will retire at the end of the investment period for a $7.5 billion fund raised earlier this year.

“Apax’s partnership model and consensus driven approach have served the firm and all of its stakeholders extremely well over the past three decades, and I believe Andrew and Mitch are well-qualified and experienced to lead and inspire the next generation of Apax,” Dr. Halusa said.

Mr. Sillitoe, 41, is a partner in the firm’s technology and telecommunications team. A former consultant at LEK, he has been involved in a number of investments, including a deal by funds advised by Apax to acquire Orange Switzerland in 2011.

Mr. Truwit, 44, is a partner in the Apax Services team and has worked on deals, including Bankrate, which Apax took public in 2011. He was the former president and chief executive of Orbitz Worldwide and the former chief operating officer of priceline.com.

Merck to Buy Specialty Chemical Company for $2.57 Billion

LONDON â€" The German drug and chemical maker Merck has made an all-cash offer to buy the specialty chemical manufacturer AZ Electronic Materials for 1.57 billion pounds, or about $2.57 billion, the companies said on Thursday.

Under the terms of the deal, Allgemeine Beteiligungs-GmbH, an indirect, wholly owned subsidiary of Merck, would acquire all of AZ Electronic’s outstanding shares for 403.5 pence a share, representing a 53 percent premium over its closing price on Wednesday.

“With this strategic move we are strengthening the portfolio of Merck by adding a premium business to our existing business of high-margin specialty chemicals,” said Karl-Ludwig Kley, chairman of Merck’s executive board. “The combination will enable Merck to access additional growth areas in the electronics industry to benefit even better from the increasing demand for electronic devices beyond displays.”

AZ Electronic’s board believes the offer is “fair and reasonable,” the Luxembourg company said.

About 68 percent of AZ Electronic’s business is focused on the manufacture of chemicals used in the semiconductor industry, while another 30 percent is focused on chemicals used in the manufacture of flat panel displays. Apple Inc. is among its customers.

Bank of America Merrill Lynch is the financial adviser to Merck, while Rothschild was AZ Electronic’s lead financial adviser, and Goldman Sachs and UBS are acting as joint financial adviser to AZ Electronic in respect to the offer. The legal advisers are Allen & Overy for Merck and Clifford Chance for AZ Electronic.

Shares of AZ Electronic were up 51.8 percent to 399 pence in trading on Thursday morning.

BNP Paribas to Buy Stake in Rabobank

LONDON - The French bank BNP Paribas has agreed to acquire a controlling stake of the Polish unit of Rabobank Group in a deal valued at about $1.36 billion.

As part of the deal announced Thursday, the Dutch lender Rabobank would transfer to BNP Paribas a 98.5 percent stake in Bank Gospodarki Żywnościowej valued at 4.2 billion Polish zlotys. The deal is subject to regulatory approval.

It would increase the size of BNP Paribas’s Polish footprint amid a wave of consolidation in the Polish banking sector in recent years.

“The acquisition of Bank BGŻ constitutes a major step towards attaining a critical size in Poland,” said Jean-Laurent Bonnafé, BNP Paribas chief executive. “The transaction will establish the BNP Paribas Group as a reference player in Poland’s banking sector.”

In June, PKO Bank Polski, Poland’s largest bank, agreed to buy the Polish business of the Swedish lender Nordea Bank for 2.83 bilion Polish zlotys.

The Spanish lender Banco Santander acquired Kredyt Bank and merged it with its Bank Zachodni WBK unit, creating Poland’s third-largest lender in January.

The latest deal comes just over a month after Rabobank, the largest Dutch lender, admitted to criminal wrongdoing by its employees in setting global benchmark interest rates. The bank agreed to pay more than $1 billion in criminal and civil penalties to settle investigations by American, British and other authorities. Its chief executive stepped down immediately after the announcement.

Rabobank said in August that its profit declined by 14 percent to 175 million euros, or about $238.4 million, in the first half of 2013, driven by a decline in domestic spending in the Netherlands.

Shares of BNP Paribas were up 1.4 percent to €53.09 in trading Thursday morning.