Secretive Apple Squirms in Gaze of U.S. Monitor

Most companies are reluctant to open themselves to outside inspection. Yet Apple is even resisting someone who was appointed by a court to do exactly that, leading to an unusual public feud between the world’s biggest technology company and the Justice Department.

In recent weeks, Apple has been campaigning aggressively against Michael R. Bromwich, a Washington lawyer who was appointed by a federal judge in October. His task was to make sure that Apple complied with antitrust laws after the company was found last summer to have conspired with five publishers to fix prices for e-books.

Apple argues that Mr. Bromwich is intruding with its daily operations by demanding interviews with board members and with senior executives, even the chief executive, Tim Cook. Apple’s court papers compare the monitor with an unchecked “independent prosecutor.”

And it says that Mr. Bromwich, who is charging $1,100 an hour for his services, is using his appointment to embark on an inquisition to generate high fees for himself and his Washington consulting firm.

The monitor, Apple says, will get in the way of the company’s ability to innovate and develop new technologies.

Such resistance is not completely surprising. Silicon Valley technology companies routinely keep a tight wrap on their products and operations. But even among its peers, Apple, whose best-known products are the iPhone and the iPad, stands out for its level of secrecy.

At Apple headquarters, some unreleased products are kept draped in black cloth. And employees are prohibited from sharing details about the products they are working on with anyone outside their own team. Even their own family members can’t know. Those caught leaking information about Apple’s plans have been fired. But the judge who appointed the monitor has now taken issue with Apple’s arguments.

At a hearing Monday afternoon in United States District Court in Lower Manhattan, the judge, Denise Cote, told Apple and its lawyers to stop wasting time and start cooperating with the monitor. She said if there were problems with Mr. Bromwich, the company needed to work them out with the monitor and lawyers from the Justice Department, which sued Apple in 2012, accusing the company of price-fixing in the market for e-books.

The judge said that after several months of delay and objections to Mr. Bromwich’s requests for interviews and documents to review, Apple needed to “restart” its relationship with the monitor.

That is not likely to happen anytime soon, however. The hearing ended with Apple’s lawyer telling Judge Cote that the company intended to continue its fight to unseat Mr. Bromwich with an appellate court.

The appointment of monitors is not uncommon in litigation that results in rulings that are intended to change a company’s behavior. In pleading guilty to securities fraud charges last November, for example, the hedge fund SAC Capital Advisors is being required to hire an outside monitor to oversee some of its operations for a period of time.

In the case of Apple, the very arrangement of a monitor is at issue. The company contends that it should not be forced to open its door to a court-appointed monitor as a way of proving to Judge Cote that it is changing its ways.

On Monday, the judge said she had been reluctant to appoint a monitor but decided it was necessary to make sure the company did not engage in price fixing again. The judge said she was sensitive to not interfering with Apple’s business, which is why she rejected the Justice Department’s request to put a monitor in place for 10 years. But she said the move was already having a positive impact, noting that Apple has retained outside lawyers to put in place procedures for ensuring the company complies with antitrust principles.

Judge Cote reminded Apple and its lawyers that it did not have much bargaining room when it came to the role of the monitor.

“Apple is no position to define the scope of the monitor’s duties,” said Judge Cote, who said she would soon issue a written decision that would amplify on her ruling at the hearing. “I want the monitorship to be a success for Apple.”

It is not clear how Apple will fare at the appellate level. The company is not only appealing the judge’s decision to appoint Mr. Bromwich, it also seeks to stop him or any other monitor from doing any work until the appeal on the legality of Judge Cote’s decision is determined.

Apple contends that given the length of time it can take an appellate court to rule, it is unfair for the company to continue to pay Mr. Bromwich’s salary and make its executives and board members available for interview with him during that time.

In court filings, Apple has made much of the $1,100 hourly fee charged by Mr. Bromwich, who runs his own consulting firm and is also a litigation partner with Goodwin Procter.

The company points to the $138,432 legal bill Mr. Bromwich submitted for his first two weeks of work as evidence he is using his appointment to run an unwieldy and unfair investigation. The company notes that because Mr. Bromwich’s consulting firm is separate from Goodwin Procter, he has to hire lawyers from other firms to work with him and also charge a 15 percent administrative fee for his services.

But Judge Cote observed on Monday that “lawyers get paid a lot of money.”

She also pointed to a recent article in The National Law Journal that said it was not uncommon for top lawyers at a large law firm to bill clients at a rate of $1,000 an hour. Judge Cote noted that one lawyer at Gibson Dunn, one of the firms representing Apple, billed at a rate of $1,800 an hour.

In an attempt to resolve the fee dispute, she directed Apple and lawyers with the Justice Department to mediate the issue with a United States magistrate.

The company especially took issue with Mr. Bromwich, a former federal prosecutor who has served as court appointed monitor on three previous occasions, with moving too quickly to request interviews and meeting with some of Apple’s board members and senior executives. The company pointed to his repeated insistence on interviewing former Vice President Al Gore, an Apple board member. The company argued that board members like Mr. Gore had little involvement with the company’s pricing policies.

Apple’s lawyers argue that Mr. Bromwich continues to press for the meetings even after he was told that some of the people the monitor wanted to meet with had nothing to do with the antitrust procedures.

For his part, Mr. Bromwich said in a court filing that Apple was providing him with “far less access” and cooperation than he had received in previous monitoring experiences.

Mr. Bromwich, who has a son who is a news assistant with The New York Times, was not available for comment and did not attend Monday’s hearing.

Apple had argued the court filing by Mr. Bromwich should disqualify him from serving as monitor because he displayed a bias by disputing some of Apple’s complaints about his activities. But Judge Cote rejected that line of argument.

Earlier in the proceeding, Lawrence Buterman, a Justice Department lawyer, told Judge Cote that Apple’s attacks on Mr. Bromwich were consistent with the company not wanting to work with any monitor.

“They don’t want anyone checking their work,” Mr. Buterman said.

The Man Behind Alibaba’s Eventual I.P.O.

JPMorgan Chase has called. So has Goldman Sachs and Morgan Stanley. Joe Tsai’s phone is ringing off the hook these days, and you would be forgiven if you have never heard of him.

Mr. Tsai is not even a chief executive, but he has become arguably the most sought-after executive in the world by Wall Street for one reason: He holds the keys to what will most likely be the largest initial public offering of this generation â€" Alibaba, the Chinese e-commerce giant.

Alibaba dwarfs Amazon.com by sales volume â€" $160 billion in 2012 compared with $86 billion for Amazon, according to RetailNet Group. Its I.P.O. could value the company at more than $150 billion, more than the I.P.O. value of either Facebook or Google. Along with that â€" and this is where Wall Street comes in â€" will come billions of dollars in fees for the lucky underwriters.

It is Mr. Tsai, a Taiwanese-born former lawyer who was educated at Yale, and not Alibaba’s more famous founder, Jack Ma, who is making the big decisions on the I.P.O. And that has made him Mr. Popularity among the investment banking elite.

“Well, it always feels very good when people say that they love you and they want to talk to you,” Mr. Tsai, who is executive vice chairman, said in a rare interview. Still, he tried to play down the offering. “The I.P.O. is just one milestone and the company continues. There’s a lot of life after an I.P.O.”

Alibaba’s I.P.O. is seen as a crucial inflection point for homegrown innovation in China and could presage a wave of new attention on China’s other technology companies, like Tencent.

To put Alibaba’s size in perspective, consider a huge shopping day in November: More than 300 million people visited Alibaba’s websites, and 50 million of them made a purchase. When all was said and done, that day generated 158 million packages to be delivered.

Strangely enough, the I.P.O. is critical to the future success or failure of Yahoo and its chief executive, Marissa Mayer. Yahoo owns 24 percent of Alibaba, a stake it bought in 2005 under Jerry Yang, the company’s founder. Yahoo’s shares have risen 107 percent over the last year in large part because Alibaba’s valuation has skyrocketed.

The I.P.O. is also important to Mr. Tsai personally; his shares in the company make him worth nearly $2 billion on paper.

It is a long way from when Mr. Ma first offered him the job in 1999. “I can only pay you $50 a month. Will you still join me?” Mr. Ma recalled about that meeting. “When he said he wanted to join us, I was very surprised.”

Mr. Tsai, who turns 50 this month, had worked as an associate at Sullivan & Cromwell in the early 1990s and then became a private-equity investor at the Swedish investment company Investor. Mr. Ma told him to think the job over and invited him on a trip.

“We went to Silicon Valley for a week. We were rejected by all of the venture capitalists,” Mr. Ma said. “I asked, ‘You still want to join?’ ”

Mr. Ma said Mr. Tsai’s wife, Clara, who was pregnant at the time, asked to visit the company in Hangzhou before her husband committed. Mr. Ma said she told him: “I want to see it because my husband is crazy. If I agree with him, then I am crazy. But if I don’t agree, he will hate me his whole life.”

It was the lottery ticket of a lifetime. Mr. Tsai, who is the detail man to Mr. Ma’s vision, helped broker a series of transactions that turned the company into a juggernaut. Mr. Ma explained their partnership: “We are very different people. I am a grass-roots person, and he’s well-trained, disciplined and very smart.”

Mr. Tsai said he was inspired to leave the staid legal world and pursue investing and entrepreneurship after a meeting with some Goldman Sachs bankers when he was a lawyer at Sullivan & Cromwell.

“I went to a meeting â€" this is during a time when a Goldman partnership still meant something real before the I.P.O. â€" and Goldman was setting up an offshore partnership,” he explained. “For tax reasons, it had to be set up in the Cayman Islands,” he continued.

The Goldman bankers were instructed that they needed to have a real operation in the Caymans to make the deal work, he said. There was “this young guy in the corner, he’s kind of slouched over in his chair. He’s like, ‘Yeah, I guess I’ll be moving to the Caymans to run this thing.’ He’s like a 27-year-old, and I was 27 or 28 at the time.” The lead lawyer, he said, told them, “We need to have some more senior people.” Mr. Tsai continued with the punch line, “The guy is like, ‘I’m a partner.’ It’s the 27-year-old guy. That kind of struck me.”

Now, of course, Goldman is calling him. But part of Mr. Tsai’s job is to keep the hype of an I.P.O. from warping the company’s culture.

“Everybody’s personal financial economics are tied up in the company, so obviously everybody will do the math in their head and say, ‘I own this many shares,’ ” he said. “Nothing makes me more happy than seeing our employees improving their own personal situation, because that’s why you come to work every day. The negative part of it is people become a little bit complacent.”

He is also trying to keep all the bankers in check. When he helped take a subsidiary public a couple of years ago, “I said to the bankers, ‘You all have to cooperate and work with each other.’ I don’t want to have an I.P.O. where bankers are trying to stab each other in the back, which they tend to do. And the second thing is no disruption to the business because we don’t want people to obsess over an I.P.O.”

At the moment, it is unclear when Alibaba’s offering may come. Mr. Tsai said that while he worked on it for much of 2013, the company had hit the pause button, and the I.P.O. might not happen as quickly as some might expect this year. “We didn’t formally kick off any process,” he said, continuing the speculation that the banks and exchanges are playing.

One reason for the delay is that last fall, the Hong Kong Stock Exchange turned down Alibaba’s plan to list the company there. Its rules prohibit corporate structures that let minority shareholders preserve control of companies, and Alibaba’s founders want to remain in control of the company. Their proposed structure, while unusual in Hong Kong, was an effort to model the company after rivals like Google and Facebook, which remain tightly controlled by their founders.

The deal’s rejection has become a flash point for a global competition among stock exchanges and countries.

Mr. Tsai believes that the board of the Hong Kong exchange turned down the offering with a “moral” argument that Alibaba’s structure wasn’t democratic enough.

“Nothing can be more commercial than an I.P.O. This is not a time or a place to really talk about morality,” he said. “We simply asked for a structure where a group of management that we call the partners have a high degree of influence over the board, and that’s not unusual in other places.”

Indeed, in the United States, such structures have become the norm, though some investors have criticized the practice of special shares.

Mr. Tsai said he was worried that Hong Kong was falling behind the rest of the world and what it might mean for its future.

“I think for the whole Hong Kong economy to kind of reshape itself, they really need to refocus on technology, on what’s new,” he said.

For now, however, Mr. Tsai dismisses all the hype around the potential offering with a telling smile. “Nobody really is obsessed with an I.P.O.”

But that’s not going to stop the parlor game.

Andrew Ross Sorkin is the editor at large of DealBook. Twitter: @andrewrsorkin

This post has been revised to reflect the following correction:

Correction: January 14, 2014

An earlier version of this article misstated the name of the wife of Joe Tsai, the executive vice chairman of Alibaba. It is Clara, not Clare.

Target’s Woes May Be a Boon for Security Firms

Target’s security breach isn’t bad news for everyone.

One company that stands to benefit: Experian, a credit data company whose investors include BlackRock and Artisan Partners Holdings.

On Monday, Target announced it had hired Experian to provide customers with a free year of credit-monitoring in the wake of a security breach that left at least 70 million people vulnerable to identity theft. Consumers have until April 23 to sign up for the service, which will entitle them to a free copy of their credit report and daily credit monitoring.

Experian and Target declined to comment on how much Target would pay for the service. Experian will be providing Target customers with its ProtectMyID alert product, which typically costs $15.95 a month and $159.95 for the full year.

On Friday, Target raised the number of people it said may have been affected by the security breach to 70 million to 110 million customers. The stolen credit card and other private information represents one of the largest retail data thefts in history.

Target has also hired security firms including Mandiant, which was recently acquired by the security software company FireEye for $1 billion, to help with its internal investigation into the breach. Mandiant declined to comment on the companies’ payment arrangement, but comparable services could cost anywhere from $200,000 to more than a million dollars.

Manufacturers of security chips used in credit cards, a standard known as E.M.V. (for Europay, MasterCard and Visa) could also stand to benefit. The United States has been slow to adopt the chips, which are widely used across Europe. Brandon Kuehl, the product manager at the Members Group, a card processing and payment solutions company, estimated that perhaps 5 percent of all American credit cards are equipped with the technology, which makes it harder to use credit card information after it’s been stolen.

Credit card issuers and their affiliated companies have entrenched payment infrastructure systems in place, and putting E.M.V. chips on every card could be expensive. But in the wake of a major identity theft, consumers could put more pressure on banks and other credit card companies to institute a change.

“You kind of need everybody to collectively get their act together before you’ll see real full penetration in this area,” said Justin Cappos, a computer security expert at New York University’s Polytechnic School of Engineering. “But judging by the number of high-profile breaches we’ve had in the past couple of years, I would think there might be some momentum building to make a change.”

Additionally, Visa, MasterCard and other credit card companies have warned that card issuers, merchants and processors could be liable for security breaches if they aren’t equipped with E.M.V. protections by 2015.

“We’re still a long way away from that,” Mr. Kuehl said. “Even on that date we only anticipate that 60 percent of both issuers and merchants will be E.M.V. capable.”

Europeans Struggle to Set Derivatives Rules

Faced with intense lobbying from the oil and commodity industries, the European Union plans what could be a last-ditch effort on Tuesday to reach agreement on one of the biggest issues to come out of the 2008 financial crisis: how to rein in trading of derivatives and other complex instruments.

The goal is to bring greater transparency to the market in sometimes opaque or exotic securities and reduce the risk of the sort of unexpected calamities that brought the global financial market to its knees.

A meeting of European Union officials on Tuesday will be the first since talks unraveled last month, leading to an unusual flurry of sometimes caustic posts on Twitter among the participants. If new rules are not adopted soon, the whole process could be set aside as the union prepares for its spring parliamentary elections, after which any unfinished business would have to be taken up anew.

“It will either get done, or it will get abandoned,” Sharon Bowles, a blunt-spoken British lawmaker who leads the European Parliament’s Economic and Monetary Affairs Committee, said in an interview.

The difficulty of the negotiations has shown that Europe is having many of the same problems the United States had in erecting a firewall against future financial crises â€" but with an even slower and more cumbersome political process. The proposed overhaul stems from commitments made by the nations in the Group of 20 after the financial crisis, and many similar measures have already been put in place by United States lawmakers and regulators.

The negotiations in Europe are also unfolding months â€" and in some cases years â€" after regulators in Washington completed their own set of parallel rules under the Dodd-Frank Act of 2010.

The European authorities and Washington regulators have clashed over just how far to go in overhauling financial regulations. The Commodity Futures Trading Commission, the main United States regulator that oversees derivatives trading on Wall Street, has adopted a plan to regulate European branches and affiliates of American banks if the European Union’s rules are not “comparable” to and as “comprehensive” as its own.

Several rules are at issue in the Brussels talks. But the main one is known as the Market in Financial Instruments Directive, whose scope would reach well beyond the financial sector.

Many big corporations outside the financial sector use derivatives to hedge their risks, which is among the reasons a wide range of companies â€" including the cosmetics giant L’Oréal, the news and information provider Thomson Reuters and the oil giant Exxon Mobil â€" have voiced concerns about how the proposed rules could impinge on their operations.

The new rules cover a broad range of financial activities, including restrictions on high-frequency trading, limits on traders’ ability to corner markets in commodities like grain or corn, and greater transparency on trading activity that is not currently public.

Oil and commodities firms have been making a quiet, 11th-hour push to scale back the scope of the rules. Their effort has been led by industry groups like the Commodity Markets Council, based in Washington. That group’s European arm, which includes oil and agriculture companies, recently circulated an appeal to policy makers, urging them to exclude a broad swath of widely used contracts from the regulatory scheme.

But the European Commission, the government’s executive branch, has resisted any such exemptions.

The issue came to the fore on Dec. 18, when officials assembled in Brussels from the three branches of European Union government â€" the Parliament, the European Commission and the Council of the European Union, which represents the leaders of the 28 individual member countries. Such three-sided negotiations are typically known as a trialogue. But the session became so acrimonious and unexpectedly public that one Brussels watcher called it a “tweet-a-logue.”

The crux of their disagreement centered on a crucial sliver of the proposal that defines the term “financial instrument.” Commodity firms and oil companies are particularly concerned about the treatment of so-called forward contracts, which are used to promise the delivery of various commodities â€" whether oil or pork bellies â€" at a future date at an agreed-upon price.

While such contracts are often used to hedge risk or to engage in market speculation, lobbyists have raised concerns about what happens to firms that actually physically settle these forward contracts.

The Commodity Markets Council, in a recent memo, contended that subjecting such contracts to the same regulations as derivatives â€" instruments based on some form of underlying financial security â€" would require some companies to restructure their business models and potentially force them to be regulated like investment firms.

That could sap the profitability of nonfinancial businesses like “a company in Germany that buys and sells barge-borne cargoes of petroleum products,” the group wrote, or “an independent U.K. power generator that sells electricity but engages in no financial trading.”

David Reed, a partner here in Brussels at the lobbying firm Kreab Gavin Anderson, whose clients include finance and energy companies, said, “Particular attention should be paid to energy products in order to avoid unintended consequences” â€" particularly subjecting them to trading costs that could drive up energy prices for consumers.

Such arguments have held sway with the Council of the European Union. At the meeting last month, the council proposed to exempt many types of oil and energy contracts from the new regulations, according to accounts of people who attended.

Ms. Bowles sided with the council. Regulating physically settled forward contracts, she said, “would add to energy costs but for no purpose.”

But the European Commission balked at that idea last month. It argued at the December meeting that such products should not be left unregulated and should be exempted only if they were subject to a separate European regulation related to gas and electricity contracts.

“The commission believes physically settled forwards should be subject to the same regulatory standards as other similar instruments,” Michel Barnier, a Frenchman who is the top commission official overseeing the issue, said in a statement on Monday. He said he was “confident and hopeful” that an agreement would be reached on Tuesday, adding that it would “represent a key step toward establishing a safer, sounder and more responsible financial system and restoring investor confidence.”

At the Dec. 18 meeting, as negotiations stretched late into the night, signs of frustration became evident.

Tweets by Ms. Bowles became increasingly acerbic. “Everyone back in the room, but still four different conversations going on,” read one. Later, referring to nongovernmental organizations, she wrote, “Compromises won’t happen, fear of N.G.O.’s berating even tentative deals. So will end up with nothing.”

And then, as often happens in European negotiations, fissures among the chief nations emerged. Ms. Bowles tweeted, “Strangely the only things introduced by the commission appear to be French concerns …”

In a retort to Ms. Bowles, Mr. Barnier wrote in his own tweet that he was concerned with “Transparency, access & fair competition” and that the “commission wants fair deal 4 investors & consumers.”

On Tuesday, one key dynamic will be different â€" the council’s presidency has rotated from the Lithuanians to the Greeks. And the new temporary Greek leadership has been trying to broker a complex compromise in recent days. Among other things, Greek officials are proposing to waive clearing obligations for the kinds of contracts that are in dispute, which could prevent them from incurring new trading costs.

It was unclear, however, whether the latest proposal would be acceptable to all sides.

As Sven Giegold of Germany, a Green Party member who was at the December meeting, put it, “This question is now the deal breaker.”

Ben Protess contributed reporting from New York.

Stung by Scandal, Giant Pension Fund Tries to Make It Right

After a pay-for-play scandal tarnished its reputation, the nation’s largest public pension fund turned to a courtly native of Quebec to help it restore order and improve performance in a crucial investment sector.

One of the main tasks for Réal Desrochers, the Quebecer who has been head of private equity investments at the pension fund, the California Public Employees’ Retirement System, since 2011, is to reduce the number of outside management firms,, which now stands at 389. The portfolio is “overdiversified,” hurting its ability to generate above-average returns, he told fund board members last month.

In an effort to achieve returns that exceed those of the overall stock and bond markets, many large public pension funds like California’s, which is known as Calpers, turn to so-called alternative investments like private equity, real estate and hedge funds. Private equity firms, for example, acquire companies, make changes outside the spotlight of public ownership and then profit by either selling them or selling shares of their stock to the public. While such investments usually carry higher fees and may often be less liquid, their long-term returns can be lofty.

Because Calpers uses stock index funds, which aim to mirror overall market performance, for more than one-third of its investments, it depends all the more on alternatives like private equity, which accounted for $31.2 billion, or 11 percent, of the fund’s $272 billion in assets as of Sept. 30. That percentage has more than doubled in the last decade.

Calpers aims for the private equity category to beat stock market returns by three percentage points annually. For the 10 years that ended Sept. 30, the category returned 12.9 percent a year. While that was well above the stock market’s performance of 8.5 percent, it still slightly trailed a custom Calpers benchmark that changed twice during the period.

In a progress report to the investment committee of the Calpers board on Dec. 16, Mr. Desrochers (pronounced day-row-SHAY) said the fund should have only 100 to 120 private equity managers, implying drastic plans to cut the number by two-thirds or more. But winnowing the field takes time because, as he noted, private equity funds typically have a life of 10 years, often with extensions of two to three years. The plan to cut managers was first reported by the publication Pensions & Investments.

Mr. Desrochers, 66, previously was the head of private equity investments at the California State Teachers Retirement System and also managed private equity at Caisse de Dépôt et Placement du Québec, a giant Canadian pension fund manager. He joined Calpers in the wake of a scandal over fees paid to placement agents for certain private equity investments.

In May 2010, the California attorney general brought a civil fraud case against Calpers’s former top executive, Federico R. Buenrostro, and a former board member, Alfred J. Villalobos, accusing them of sharing in more than $47 million in undisclosed fees. The Securities and Exchange Commission filed a related case in 2012.

Last March, the United States attorney in San Francisco charged the two men with criminal fraud, accusing them of falsifying documents for $14 million in fees paid by one of Calpers’s private equity managers, Apollo Global Management. Apollo was not accused of any wrongdoing. All three cases are pending, with a trial set for March in the federal criminal case.

Mr. Desrochers’s predecessor at Calpers, Leon Shahinian, resigned in August 2010 after it emerged that, in connection with a Calpers business trip, he had accepted travel on a private jet and perks including attendance at a black-tie event honoring Apollo’s founder, Leon Black, according to a report on the placement agent issue by a Calpers outside counsel, Steptoe & Johnson.

In all, four private equity managers, including Apollo, agreed in 2010 to cut their fees for Calpers by $215 million over five years as part of the Steptoe legal review. Without going into detail, Mr. Desrochers says his own restructuring program has saved fees of $90 million to $250 million.

Joseph A. Dear, Calpers’s chief investment officer since 2009, said that the placement agent imbroglio had injected “undue influence into the investment decision process” without necessarily affecting the outcomes and that the large number of managers had tended to drive performance “toward the median.” (Mr. Dear announced last week that he was taking a new medical leave to battle a previously disclosed prostate condition.) Mr. Desrochers has also had to contend with political pressure to hire “emerging managers,” which include many firms owned by minorities and women, as well as managers who invest partly to create jobs and promote economic development in “underserved” California areas.

“When you have that many managers, you’re going to wind up with average performance,” said J. J. Jelincic, a Calpers board member elected by the pension plan’s participants. Calpers has a stake in 741 private equity funds. Generally speaking, if each fund had investments in 20 companies on average, the resulting stakes in more than 14,000 companies would “act like an index fund,” and each individual commitment “wouldn’t move the dial” in delivering outperformance, said Michael McCabe, a pension fund consultant at the firm StepStone in New York.

Other big public funds have also sought to cut manager head counts for similar reasons. Lawrence Schloss, former chief investment officer of the $148 billion New York City Employees’ Retirement Systems, said he tried to trim the manager ranks during his nearly four years at the fund. Results for smaller commitments of $100 million or less “really have no impact on a fund that size,” said Mr. Schloss, who is now president of Angelo, Gordon, an alternative investment firm.

In his December report, Mr. Desrochers made several comments that seemed to point to a few underperforming areas where some managers may be cut. One is in so-called funds of funds, which make dozens of smaller investments that drive up the manager head count. Another is venture capital, where fund sizes may be too small to move the needle on returns.

Funds of funds are expensive because they charge two layers of fees but do not outperform, Mr. Desrochers said, and do take control of manager selection away from Calpers’s own staff. With long-term annual returns of just 4.1 percent, he called them “a drag on the portfolio.” The dozen funds of funds listed on the Calpers roster have among them more than 200 different managers, so eliminating them could trim the managerial ranks by more than half.

Many of the funds of funds managers are in venture capital. Calpers has already mapped plans to cut its venture allocation to 1 percent of the portfolio from the current 5.4 percent. Venture returns have also lagged, at 4.3 percent annually over 10 years. By comparison, buyouts, which represent three-fifths of the portfolio, have returned 17.2 percent.

While the going may be slow so far for Mr. Desrochers, he “is doing a good job getting hold of a program that is quite frankly out of control,” Mr. Jelincic, the Calpers board member, said.

Three Former Rabobank Traders Charged in Libor Case

The Justice Department filed criminal charges on Monday against three former traders from the Dutch lender Rabobank, the latest step in the wide-ranging investigation into the banking industry’s manipulation of interest rates.

In a criminal compliant filed with the Federal District Court in Manhattan, the Justice Department accused Paul Robson, Paul Thompson and Tetsuya Motomura with wire fraud and conspiracy to commit wire fraud and bank fraud for their supposed role in the rate-rigging scandal. The traders are cited for submitting false estimates of interest rates to benefit their own trading positions â€" a scheme that became commonplace on Wall Street amid the 2008 financial crisis.

The charges come on the heels of Rabobank itself striking deals with government authorities across the globe, agreeing to pay more than $1 billion in criminal and civil penalties. Rabobank, whose chief executive stepped down when the deal came to light, was the fifth financial firm to settle accusations that its employees manipulated the London interbank offered rate, or Libor, following such global banking giants as Barclays and UBS.

And with the charges on Monday, the Justice Department has now taken aim at eight individual employees at some of those firms. The actions represent a shift for the Justice Department, which has come under fire for not charging individual employees tied to financial crimes.

“These cases we’ve brought in the Libor investigation show how important it is not only to charge the institutions but also the individuals responsible for the misconduct,” Mythili Raman, the acting assistant Attorney General for the Justice Department’s Criminal Division, said in an interview.

But the Justice Department’s charges come with limitations. Of the eight individuals charged, none was an American citizen, undercutting the chance of a trial. Mr. Robson resides in London, while Mr. Thompson lives in Australia and Mr. Motomura lives in Tokyo. It is unlikely that they will face extradition.

Still, the Libor scandal breathed new life into the government’s enforcement of financial fraud in the aftermath of the crisis. The investigations, led by the Commodity Futures Trading Commission in Washington, also put Wall Street on high alert.

Most of the world’s biggest banks submit estimates to form the daily Libor rate, which serves as a benchmark for trillions of dollars in loans and other financial products. Some banks, seeking to profit from slight shifts in Libor, would low-ball or overstate their submissions on a regular basis.

The complaint filed on Monday shined a light on the overt way in which the traders carried out the scheme. One day in August 2008, for example, Mr. Motomura asked Mr. Robson to “Please set today’s 6mth LIBOR at 0.96 I have chunky fixing.” Mr. Robson, who was both a derivatives trader and a submitter of Libor, responded, “no worries mate.”

The activity went on for years, with some submissions coming in too high and others too low. In an e-mail exchange from May 2006, Mr. Robson acknowledged that “it must be pretty embarrassing to set such a low libor.”

He also submitted rates described as “ridiculously high” and “obscenely high.”

Fifth & Pacific Discloses Executive Compensation

The Fifth & Pacific Companies, which used to be known as Liz Claiborne and will now be known as Kate Spade & Company, announced several management changes last week. In a regulatory filing on Monday, the company provided details about compensation.

Craig Leavitt, the incoming chief executive, will be paid $1.5 million and Deborah Lloyd, the incoming chief creative officer, will be paid $1.9 million. Both Mr. Leavitt and Ms. Lloyd had those titles at Kate Spade L.L.C. Beyond the salary, the company is throwing in some sweeteners in the form of options. Both executives will receive $9 million in market share units, which the company describes in the filing as a “staking grant.”

In addition, Mr. Leavitt will receive $5 million as part of a long-term incentive award and Ms. Lloyd will receive $3.275 million. The two will also receive a “prorated portion” of $4.5 million once the previously announced sale of Lucky Brand Jeans closes, though whether that amount would be split is not clear from the filing.

William L. McComb, who will step down as chief executive at the end of February, will receive $6.5 million. In the filing, the company said that represented two times his base salary and bonus, plus insurance and health coverage for two years. Fifth & Pacific’s board also approved continued vesting of 855,000 options at prices ranging from $4.97 to $21.20. On Monday, shares of Fifth & Pacific closed at $30.85, down 70 cents.

A spokeswoman for the company could not be reached for comment on Monday afternoon. Because neither Mr. Leavitt nor Ms. Lloyd were named executives, there is no publicly available information about their previous compensation.

Michelle Leder is the editor of footnoted.com, a Web site that takes a closer look at things that companies try to bury in their routine regulatory filings.

Treasury Department’s Alcohol Shopping List

The Treasury Department is requesting a list of every alcoholic beverage that’s being sold at every store and online retailer.

As Suntory, maker of Japan’s first whiskey, and Jim Beam announced on Monday a $13.6 billion corporate marriage, further consolidating the liquor business, a little-known entity in the Treasury Department that both taxes and regulates alcohol was on a hunt for data.

An advertisement posted by the Treasury Department said the Alcohol and Tobacco Tax and Trade Bureau is looking for a comprehensive list of alcoholic beverages â€" both domestic and imported â€" sold on retail websites and at grocery stores, wineries and other markets where the drinks would not be consumed on the premises. With a full list, the bureau can then use the information to determine what alcoholic beverages it needs to test.

Each year, the office purchases a random sample of beverages â€" wine, malt liquors, distilled spirits, etc. â€" and brings them back to its office for testing to make sure that labels on the drinks do not mislead consumers.

The bureau is the only government agency where an employee may be testing the shimmering flecks in Goldschlager to determine whether they are made of real gold, or pondering whether a bottle of snake wine has enough liquid in it to qualify as a drink â€" and not a snack.

The Associated Press wrote about the bureau last year, calling it “a regulator that protects its industry from rules it deems unfair, a tax collector that sometimes cuts its companies a break.” The United States is the only country with an alcohol regulator based in its Treasury Department.

“Some of its decisions are open to negotiation,” the reporter, Daniel Wagner, who is now at the Center for Public Integrity, wrote in the article. “A tequila-like liquor with a scorpion floating in it made scientists balk until the producer convinced them that the scorpions are farm-raised and non-toxic. In other words, this may be the only federal agency that responds favorably to receiving scorpion candy in the mail.”

Credit Suisse Tells Junior Bankers to Take Saturdays Off

Updated, 5:52 p.m. |

Credit Suisse is making an effort to improve working conditions for junior bankers, following similar moves from leading investment banks.

The Swiss bank, which has a major presence on Wall Street, said in an internal memo on Monday that it was issuing new guidelines to discourage analysts and associates â€" the two lowest employee levels â€" from working in the office on Saturdays. The bank said the new policies, covering junior bankers in the Americas, would take effect this week.

The initiative is the latest attempt by a major investment bank to alter the hard-charging culture of its entry-level jobs, which are often seen as a steppingstones to higher-ranking positions. For analysts across Wall Street, working into the wee hours or even pulling all-nighters is an unwritten expectation of the job, and weekend work is common.

Bank of America Merrill Lynch reviewed the working conditions of its junior bankers after a 21-year-old intern died last summer in the company’s London office. On Friday, the investment banking unit announced internally that junior bankers should take four days off a month, on the weekends.

Goldman Sachs last year recommended that analysts should be able to take weekends off whenever possible. JPMorgan Chase plans this year to increase its staff of junior bankers to help spread out the workload, in addition to ensuring that its young employees have one “protected weekend” set aside for rest each month.

On Monday, Credit Suisse said internally that its analysts and associates should not be in the office from 6 p.m. on Fridays though 10 a.m. on Sundays.

In addition, conference calls should be avoided on Saturdays but are permitted early on Sunday mornings, the memo said. The rules don’t apply to “live deals,” which require analysts’ immediate attention.

A Credit Suisse spokesman said that a live deal was “a deal that is actively being put together.”

“I thank you in advance for supporting this initiative and look forward to launching new programs in the future as we strive to improve the junior banker experience,” James L. Amine, global head of the investment banking department at Credit Suisse, said in the memo, which was reviewed by DealBook.

The work schedule at Credit Suisse is as grueling as any on Wall Street. One investment banking analyst there, who spoke on the condition of anonymity because of company rules against speaking to the media, said that Sundays “can feel like a sixth day of the workweek.” Saturdays typically involve work as well.

Some weeks, the analyst said, he had worked as many as 110 hours. On a “light week,” he might work 70 hours, he said.

After reading the memo on Monday, the analyst wondered how closely the rules would be followed.

“How much of a bright line will there be between a live deal and just an important pitch? There can be a gray area sometimes between what is live and what isn’t,” he said. “The enforcement mechanism is what people will be really looking at.”

The initiative Credit Suisse announced on Monday is part of a series of efforts that the bank began to introduce last August, including a mentoring program and a “fast track” that allows standout analysts to be promoted more quickly.

Credit Suisse emphasized in the memo that, for live deals, “junior bankers in all relevant groups must be in the office to work together.”

And yet, even when these bankers get to stay home, work is never far away.

“Junior bankers are expected to reply to emails in a timely manner throughout the weekend,” the memo said.

Burton Lifland, Judge Who Oversaw Madoff Bankruptcy, Dies at 84

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Bloomberg Gets a Royal Welcome at His Company

Bloomberg L.P., the financial news and data company, has rolled out the red carpet for its owner and founder, Michael R. Bloomberg.

After 12 years as mayor of New York and a vacation last week, Mr. Bloomberg reported to work on Monday at his company’s headquarters at 731 Lexington Avenue in Manhattan. He received an enthusiastic welcome from Daniel L. Doctoroff, the company’s chief executive.

“I’m thrilled to tell you that we’ll be seeing more of him at 731 Lexington and our offices around the world,” Mr. Doctoroff said in a memo to employees that was reviewed by DealBook. “When he’s in New York, Mike will most likely spend a few hours a day working from his new desk on the fifth floor. I know I speak for all of us when I say how excited we are to welcome him home.”

The memo was reported earlier by Capital New York.

Homecoming that it may be, the new job is with a company that has changed greatly since Mr. Bloomberg last worked there full time. For one thing, the current headquarters, known as the Bloomberg Tower, did not open until 2004, while Mr. Bloomberg was working at City Hall.

The company â€" whose data terminals sit on desks across Wall Street â€" found itself in an uncomfortable spotlight last year after revelations that its journalists had access to private data about its clients through channels that the clients did not know about. Bloomberg L.P. commissioned an investigation and vowed to make changes to its news operation.

At the same time, the newsroom faces skepticism from the business side that investigative journalism might not be worth the potential problems it could create for terminal sales, The New York Times reported in November. In China, where sales have dropped recently, tough reporting by Bloomberg News in 2012 prompted officials to cancel terminal subscriptions.

And yet, the transition for Mr. Bloomberg should be a smooth one. The former mayor is expected to work on philanthropy while at the company. He has a visit to South Africa scheduled for early February to attend a gathering of officials from cities around the globe.

Mr. Doctoroff, a former deputy mayor, recalled joining Bloomberg L.P. in 2008.

“When I worked in City Hall, Mike Bloomberg was never more than a chair swivel away. So when I came to the company, I was naturally worried about going through withdrawal,” he said. “But I discovered on my very first day here â€" as I’m sure we all have â€" that Mike’s DNA is deeply embedded in our culture.”

“Even though he’s been ‘on hiatus’ for the past 12 years, his world view and work ethic have been very much present,” Mr. Doctoroff continued.

That work ethic was on display Monday morning. According to a person briefed on the matter, Mr. Bloomberg arrived at the office bright and early â€" at 7 a.m.

Time Warner Cable Gets $61.3 Billion Offer

Charter Communications has offered to buy Time Warner Cable, the nation’s third largest cable operator, for $132.50 a share, according to people briefed on the matter.

The offer values Time Warner Cable at $61.3 billion, and kicks off a potential round of consolidation in the cable television industry.

Charter, backed by John Malone’s Liberty Media, has been courting Time Warner Cable for months. But people familiar with Charter’s efforts say Time Warner Cable management has refused in discussions about a deal.

So instead of pursue negotiations, Charter is taking its case to shareholders. It will begin courting major holders of Time Warner Stock, seeking to persuade them to vote for a deal.

Charter has a high bar to clear however. Its offer of $132.50 is only cents above Monday’s closing price of $132.40. In after-hours trading, Time Warner Cable stock was already trading above Charter’s offer price.

Google to Buy Nest Labs for $3.2 Billion

Tony Fadell, the founder and chief executive of Nest, holding up his company's Protect smoke alarm. Peter DaSilva for The New York Times

Google agreed to buy Nest Labs on Monday, in a $3.2 billion deal that will expand the technology giant’s portfolio of consumer goods.

Nest Labs, a start-up led by former Apple engineers, has been aiming to reinvent common household devices like thermostats and smoke alarms.

“Nest’s founders, Tony Fadell and Matt Rogers, have built a tremendous team that we are excited to welcome into the Google family,” said Larry Page, the chief executive of Google. “They’re already delivering amazing products you can buy right now â€" thermostats that save energy and smoke/CO alarms that can help keep your family safe.”

A Bold Move by Suntory

For a Japanese corporation, Suntory Holdings has an especially aggressive corporate slogan: “Yatte Minahare,” which roughly translates as “Go for it.”

That sums up Suntory’s willingness to pay $16 billion, including the assumption of debt, or a hefty 20 times earnings before interest, taxes, depreciation and amortization, or Ebitda, for the distiller of Jim Beam, Maker’s Mark and other tipples. That number won’t be lost in translation for Diageo, Pernod Ricard or others who might also covet Beam.

Ever since Beam was spun out of the showers-to-golfballs-and-Scotch conglomerate Fortune Brands, its independence has been in doubt. Beam’s primary allure lay in its bourbons, which also include Knob Creek, particularly given the absence of a global brown spirit brand in the portfolios of international liquor companies, chiefly Diageo.

While Suntory’s swoop for the whole of Beam’s shelf comes out of the blue, it’s not so surprising. The strategic imperative is clear, as it is for just about any consumer goods company in the incredibly shrinking Japan. As Suntory noted in its 2014 outlook, its total existing market is forecast to shrivel 1 percent from the year before.

The Osaka-based Suntory also gave some clues along the way. Amid the Abenomics-fueled stock market rally last year, the company listed its food and beverages division, raising some $4 billion that could be used for acquisitions. That unit has been particularly aggressive, most recently buying the Lucozade and Ribena soft drink brands from Glaxo.

Now, it is the parent company’s turn to be bold - and bold it is. Single brands - such as Pinnacle and Absolut vodkas - have sold at close to 20 times Ebitda. But comparable collections of liquor brands have gone for much less. Pernod paid about 14.7 times for Allied Domecq, according to Bank of America Merrill Lynch research. And in the carve-up of Seagram, Pernod paid 9.8 times for its assets, Diageo 12.9 times. In these cases, moreover, there were ample synergies for the buyers to distill. There are precious few of these in this Suntory deal.

Diageo or Pernod might be able to raise the money to buy Beam. If Diageo, for example, levered up its balance sheet to four times Ebitda, it could raise more than $10 billion, and its new chief executive, Ivan Menezes, could pass the cap around to shareholders. But it would be a stretch. Suntory doesn’t have public shareholders, so it can get away with a deal with a 3 percent return. Yatte Minahare indeed.

Rob Cox is editor of Reuters Breakingviews. For more independent commentary and analysis, visit breakingviews.com.

McKesson Comes Up Short on Celesio Tender Offer

LONDON â€" The McKesson Corporation said on Monday that it had failed to receive the minimum shareholder support needed for its $8.3 billion acquisition of the German pharmaceutical wholesaler Celesio, despite a sweetened tender offer last week.

In October, McKesson, a health care services company based in San Francisco, announced that it had acquired a controlling stake in Celesio from Franz Haniel & Cie., the majority shareholder, and planned to start a tender offer for the remaining shares. But the transaction called for at least 75 percent of the company’s outstanding shares and convertible bonds to be tendered.

Last week, McKesson increased its tender offer for Celesio at the last minute after weeks of vocal criticism of the offer by Elliott Management, a hedge fund in New York founded by Paul Singer.

The hedge fund, which has an economic interest of more than 25 percent in Celesio, announced on Thursday that it had accepted the McKesson’s “best and final” offer and would tender its shares. The deadline to tender shares was midnight on Thursday.

“While we are disappointed that we were not successful in completing our offers for Celesio, we have a track record of great performance, a strong balance sheet and demonstrated leadership and scale across our markets,” said John H. Hammergren, McKesson’s chairman and chief executive. “We are well positioned and will continue to explore and evaluate opportunities to further strengthen our businesses through our disciplined approach to capital allocation.”

McKesson didn’t say on Monday whether it would continue with its bid to acquire Celesio.

The McKesson-Celesio deal would have created one of the world’s largest pharmaceutical wholesalers and providers of logistics and services in the health care sector, with annual revenue of more than $150 billion and about 81,500 employees worldwide. The combined company would have operated in 20 countries.

Both companies act as distributors that provide prescription and over-the-counter drugs to pharmacy chains, independent pharmacists and institutions like hospitals. Celesio also operates Lloyds, a British pharmacy chain.

The deal would have been subject to regulatory approval by German financial authorities, as well as competition regulators in three countries: Austria, Ireland and Slovenia.

Elliott, the activist fund, engaged in a game of brinkmanship, insisting repeatedly that McKesson could afford to pay a “fairer” price to shareholders and bondholders and still end up with a deal that would greatly increase earnings per share as early as the first year of operations for the combined company.

The hedge fund insisted as recently as Dec. 23 that it wouldn’t tender its shares, but changed its tune on Thursday when McKesson increased its offer to 23.50 euros, or about $32.08, a share. Its original offer was 23 euros, or $31.76, a share,

Shares of McKesson were down 6.8 percent to 168.64 in trading in New York on Monday afternoon.

Push to Combat Insider Trading May Go Too Far

Last week, BlackRock, the asset management giant, agreed to a settlement with New York State to stop conducting surveys of investment analysts.

The state’s attorney general, Eric T. Schneiderman, cited the settlement as a wider effort to crack down on what he called “insider trading 2.0.” His focus is on those who might be getting a peek at market-moving information before it reaches the rest of the investment world.

Mr. Schneiderman is pushing to expand what can be considered insider trading subject to prosecution to reach what he called in a September speech “road-rigging, market-manipulating” conduct. But this effort may also end up blurring the already thin line between permissible securities analysis and illegal conduct.

BlackRock had regularly conducted a survey of analysts at brokerage firms to gauge their views on companies they followed. The firm then pooled the information to ascertain whether this information generated any signals about the direction of stock prices. In effect, it was analyzing the analysts, much as the FiveThirtyEight blog looks at many different polls to make its own forecast of election results.

Gathering information from others and then aggregating it to estimate how a company’s stock might perform is proper, and something a good analyst should do. A BlackRock document quoted in the settlement stated that it was “only interested in public information” as part of its survey, which showed that it was not the firm’s intention to obtain confidential information.

But Mr. Schneiderman’s investigation also revealed that “the survey program’s design allowed it to capture more than previously published analyst views, including nonpublic analyst sentiment that could be used to trade ahead of the market reaction to upcoming analyst reports.” So while it was intended to pull together only the public views of analysts, it also might have given BlackRock access to a bit more information that was not publicly available.

Still, even that might not constitute traditional insider trading. Just gleaning a tidbit of information regarding possible changes in an analyst’s sentiment about a company might not rise to the level of being material, another requirement for proving a violation. Materiality means that information would be considered important by an investor, and a single analyst’s potential shift in outlook might not be enough.

The settlement does not identify any specific instances when BlackRock misused information from it survey to its benefit, and the firm did not admit or deny any violations. The order found that the survey obtained only information “that could reveal forthcoming revisions” by analysts.

The real concern appears to be that BlackRock took advantage of its powerful position as the largest asset manager in the world to entice analysts to respond to its survey, gathering information that a much smaller player in the market might not be able to obtain. The settlement notes that its size helped “ensure that brokerage firms would respond to the survey program.”

That has nothing to do with insider trading, but the new approach advocated by Mr. Schneiderman is putting an emphasis on informational advantages and not just buying and selling based on material nonpublic information. A settlement last July with Thomson Reuters takes the same approach by prohibiting the company from selling early access to one of its economic indicator to high frequency trading firms two seconds before other subscribers.

Is the prohibition on insider trading really concerned about the misuse of information? Or is it trying to create an equitable market, the so-called level playing field, so that one investor does not have an impermissible advantage over others?

There are many advantages that are not improper, even if they give some investors a chance to profit on information not available to others. Warren E. Buffett certainly has an advantage over other investors - his decision to buy a company’s shares usually drives up its price once his trading is revealed, but no one would claim he acted improperly.

The traditional view of insider trading focuses on the impropriety of obtaining material nonpublic information and then trading on it, or tipping another person, in breach of a duty of trust and confidence. Mr. Schneiderman’s new approach raises the question whether it should also include some trading by those who create confidential information and then use it to their own economic advantage.

The difference between “obtaining” and “creating” is crucial because market analysts are in the business of generating information about companies that allows their clients to trade profitably based on it. So at what point might the creation and use of one’s own information be considered wrongful?

The Supreme Court recognized the importance of stock analysis in Dirks v. S.E.C., pointing out the role that “analysts in general can play in revealing information that corporations may have reason to withhold from the public,” which it said was “an important one.” The Securities and Exchange Commission had adopted rules to limit potential conflicts of interest among analysts to prevent bias from creeping into their reports so that the markets obtain a fair assessment of companies.

Analysts are certainly not immune to insider trading charges. The recent spate of prosecutions of hedge funds that conducted extensive analysis of companies that included inside information to gain an “edge” shows that a violation occurs when nonpublic information is used as part of that process.

For example, the former hedge fund billionaire Raj Rajaratnam offered the defense of the “mosaic theory” at his trial on insider trading charges to argue that any nonpublic information he might have received was just one small piece of his hedge fund’s analysis of a company’s prospects. The jury rejected that argument in convicting him, and he is serving an 11-year sentence.

Gathering public information to generate an analysis of a company is not insider trading, at least as long as any report is not improperly leaked to others so that they can take advantage of it. But if the analyst obtains confidential information, then the line for insider trading may have been crossed.

BlackRock did not engage in traditional insider trading because it is unclear whether it ever knowingly obtained confidential information through its survey. The fact that analysts might be willing to share their private sentiments regarding a company comes closer to the line, but does not appear to have crossed it.

Mr. Schneiderman’s focus on those who create information and then use it to get ahead of the market may be an effort to move the line for what constitutes insider trading to capture more conduct that gives some traders an advantage. But unlike improperly obtaining confidential information and then using it to trade, this approach may create even more uncertainty for analysts and investment firms that are trying to figure out what is permissible research and what is “insider trading 2.0.”

After Beam Deal, Few Big Liquor Mergers Left

A big whiskey acquisition is a shot in the arm for the global spirits industry, but there may not be many more substantial liquor deals to strike.

By agreeing to acquire Jim Beam for $13.6 billion on Monday, Suntory, a privately held Japanese food and beverage producer, snatched up one of the most attractive targets left on the market, and will assume the mantle of the third-largest distiller globally.

With brands including Maker’s Mark and Jim Beam bourbon, Beam had been riding high in recent years.

“It’s a good deal for Beam shareholders,” said John Faucher, JPMorgan analyst. “Looking at the rapid growth we’ve seen in bourbon over the recent years, Beam is doing good job seizing the moment, striking while the iron is hot.”

But Beam is a company at least two other global spirits groups would have liked to own.

Diageo, the largest distiller in the world, explored a bid for Beam in 2012. An offer was never made, however, and analysts believe it would have been hard to get the approval of antitrust regulators. The consensus among industry watches is that Diageo, with brands including Johnnie Walker, Crown Royal, Smirnoff and Tanqueray, will be hard pressed to add many more premium brands in the United States, the world’s largest liquor market.

Pernod Ricard, the second-largest global distiller, was another potential acquirer of Beam. With brands including Chivas Regal, Jameson and Absolut, buying Beam would have given the company additional market share in the United States. But Pernod is constrained for its own reasons. Controlled by a French family, Pernod is seen as lacking the balance sheet or the maneuverability to pay a premium for Beam that could match the 25 percent offered by Suntory. And it was only in 2008 that Pernod bought Sweden’s Vin & Sprit, maker of Absolut, for $8.9 billion.

Following Suntory, which will become the third-largest distiller with the deal for Beam, is Brown-Forman, a public group that owns brands including Jack Daniel’s, Southern Comfort and Woodford Reserve. With a market capitalization of about $16.7 billion, Brown-Forman also lacked the scale to pursue an acquisition of Beam. Brown-Forman is also family-controlled, giving outside shareholders limited influence.

This ranking â€" Diageo, Pernod, Suntory and Brown-Forman â€" could be the status quo for some years to come. In recent decades, most of the big global liquor brands have been absorbed by one of these groups, leaving little room for further consolidation. “Those four big player are unlikely to be purchased themselves,” said Jeremy Edwards, lead analyst at IBIS, a research firm.

Instead, the most attractive acquisition targets could be two smaller, boutique spirits groups.

Campari, a private, family controlled group, owns Skyy Vodka and Wild Turkey, in addition to its marquee brand. And Bacardi, another private group, owns Dewar’s, Grey Goose and Bombay Sapphire. Both companies could be targets for the bigger groups.

“Bacardi especially could be targeted in the future,” Mr. Edwards said. But the same issues that constrained Diageo and Pernod from pursuing Beam â€" dominant market share on the one hand, and limited flexibility on the other â€" could pose challenges to any such deal.

“The landscape is getting relatively settled,” Mr. Faucher said. “If you look at Pernod, Bacardi and Brown-Forman, there is a heavily family ownership component to each of these companies that makes further consolidation tricky. The question is, at some point do these smaller family owned companies feel the need to consolidate?”

In lieu of any more big deals, other likely targets include any brands or groups that are present in China or India, two of the fastest growing spirits markets. Diageo is in the middle of a messy attempted acquisition of India’s United Spirits, and analysts expect more international deals to come.

“I think there will definitely be further consolidation in the industry, both in the U.S. and globally,” Mr. Edwards said.

Beyond that, there is a long tail of smaller distillery groups, such as Buffalo Trace Distillers, maker of Eagle Rare bourbon and Pappy Van Winkle, which could be attractive targets for big groups looking for growth. However, given the nuances of the spirits market â€" scale does not always result in substantially higher profit margins â€" many of these distillers may be content to remain small and privately held.

“These smaller companies can be very successful on their own as long as they’ve got the core brands consumers are looking for,” Mr. Faucher said.

Suntory and Beam have both agreed to the deal, but there is still a chance a rival could spoil the party. Mr. Faucher said that Beam did not appear to fully shop itself around, given that is has a relatively low termination fee, and because the deal came together quickly. “A competing bid is unlikely, but we think speculation will continue for some time,” he said.

Michael J. Branca, an analyst at Barclays, also raised the prospect of a rival bid in a note. “Certainly, now some will wonder if other large spirits players, such as Pernod Ricard and Diageo, will become involved, following a long run of press reports of their interest in acquiring Beam,” Mr. Branca said.

But Mr. Branca also highlighted the obstacles. “The two largest spirits companies likely would have significant brand/category/country overlap with Beam - perhaps suggesting the need for a consortium bid,” he continued. “This, in and of itself, would present a far more complex scenario and, accordingly, significantly increase the risk associated with any related action - compared to a seemingly more straightforward and lower risk agreement on the table already with Suntory.”

Assuming Suntory’s deal for Beam gets done, it could be the last big liquor deal for awhile.

Skeptical of Facebook, Until the Checkbook Came Out

A year ago, Josh Miller said that Facebook “may have an irreversibly bad brand.” Soon after, Mr. Miller, a co-founder of a start-up called Branch Media, was giving Facebook some unsolicited advice, suggesting that it “turn to Nike for strategic inspiration.”

But on Monday, Mr. Miller announced that he had accepted a buyout offer from the onetime target of his skepticism. Facebook is buying Branch and a related mobile app, Potluck, two services that allow groups of people to hold discussions and share links.

The price was not disclosed, but, according to The Verge, it is about $15 million. An email to the Facebook media office was not immediately returned.

“After two years building Branch and Potluck, I am thrilled to announce that we will be continuing our mission at Facebook!” Mr. Miller wrote in a post on Facebook on Monday.

He said he would be forming a group within Facebook called Conversations, based in New York, “with the goal of helping people connect with others around their interests.” Branch and Potluck, he added, “will live on outside of Facebook.”

So has Mr. Miller changed his assessment of Facebook? He was fairly skeptical of the company last January, when he described a conversation with his 15-year-old sister. “She mentioned that she tries to visit Facebook as infrequently as possible,” Mr. Miller wrote in an essay on the website Medium.

“Facebook is clearly doing a good job delivering relevant content, yet its users (at least this one) feel poorly when they use the service,” he continued.

When Mr. Miller said on Monday that he would join Facebook, bloggers latched on to his past statements.

“You can’t really blame Miller for changing his tune,” Kevin Roose wrote at New York magazine. “Still, awkward first day at the office!”

Though the deal is on the small side, it comes less than a week after Facebook bought an Indian mobile analytics start-up, Little Eye Labs, for a reported price of $10 million to $15 million. That acquisition was intended to help drive Facebook’s mobile strategy.

Branch is backed by some prominent technology investors, including Evan Williams and Biz Stone, two co-founders of Twitter. Jonah Peretti, the chief executive of BuzzFeed, and Lerer Ventures â€" a firm that was profiled in New York magazine this week â€" are also backing the company.

“CONGRATS!!!! SO COOL!” Mr. Peretti wrote in response to Mr. Miller’s Facebook post. “Love Branch and love Facebook so this will be very fun to watch!”

Pawnbrokers for the Bentley-Owning Set

Suttons & Robertsons is among a growing number of businesses offering high-end pawn services. Tina Fineberg for The New York Times

Walk into the Suttons & Robertsons showroom on the East Side of Manhattan and it looks like any high-end retailer or auction house: necklaces glittering with diamonds, sapphires and emeralds fill the display cases, and sterling silver knives, forks and spoons sit on a wooden table fit for a monarch. In the private room in back are bigger, shinier versions of the jewels out front.

High on the wall is a royal-looking coat of arms bearing the likenesses of two lions, with the date of the company’s founding underneath: 1770. Only on closer inspection does it become clear that between the lions are three balls dangling from a hook â€" the international symbol for a pawnbroker.

Far from the crusty characters seen in reality shows like Hardcore Pawn and Pawn Stars, this English company has another clientele in mind.

“We focus on the blue-chip, wealthy crowd,” said Jeffrey A. Weiss, chief executive of Suttons & Robertsons, which is preparing to open its first New York store this month.

Mr. Weiss Tina Fineberg for The New York Times

With almost 250 years of experience in the exclusive world of high-end pawn, Suttons & Robertsons has come to the United States to fill what it believes is a growing need among wealthy Americans who have spent beyond their means and need a quick â€" and quiet â€" infusion of cash in exchange for a few cherished baubles they are willing, at least temporarily, to live without.

“There are more and more people who are asset rich and have a temporary liquidity problem,” said Mr. Weiss, who at 70 retains the soft Brooklyn accent of his youth. “They’re cash constrained. We have the capital to lend up to and beyond $1 million.”

Suttons & Robertsons is not alone in the high-value niche of the pawn business.

Websites like Pawngo and Borro sprang up after the financial crash, offering to lend against jewelry, watches and pretty much any expensive item that could be shipped via FedEx. Other sites like Ultrapawn and iPawn came later with the idea of making larger loans, secured by fancy cars, art and gems. Recently, the Beverly Loan Company, a Beverly Hills pawnshop that has been family owned since 1938, opened a second location called the New York Loan Company in Manhattan’s diamond district.

Mr. Weiss made a fortune running DFC Global, which operates chains of payday lenders and pawnshops in 10 countries. In the United States, it does business as Money Mart and the Check Cashing Store.

Tight credit makes the timing right for the New York move, he said.

“Certainly conventional lenders over the past five to six years have become increasingly reluctant to advance credit on all fronts,” he said. “The time it takes those institutions to make decisions has lengthened as their appetite has shrunk. You can walk into our location in New York and walk out with your funds in a hour or two.”

For a fee â€" a high one â€" of course. For those who borrow a couple of thousand dollars against, say, a Rolex watch â€" which seems to be one of the most popular items to pawn â€" the rates range from 12 percent to more than 60 percent on an annualized basis for online pawnshops and into triple digits for brick-and-mortar operations throughout the country.

The high rates are not high enough to deter clients like Mike Walsh, who buys, renovates and sells homes in the Chicago area. He said he had gone to his bank for loans until 2008 when the process for obtaining one became onerous. After missing out on several houses, he said, he took a couple of his Rolex watches and put them up as collateral for a loan from Ultrapawn. He said the money arrived the next day. Diamonds and other jewelry held at Suttons & Robertsons. Tina Fineberg for The New York Times

The first loans, he said, were at a rate of 5 percent a month, but more recent ones have been for 3 percent â€" or 36 percent a year. But to him, it is better than a typical pawn loan. “Instead of paying $1,800 a month for a $10,000 loan I’m paying $300 a month,” he said.

That pawnshops exist to lend money to those who fall on hard times is either a necessary or unfortunate facet of life, depending on one’s point of view. But how does someone who once had enough money to buy a $450,000 Mercedes McLaren end up pledging it as collateral for a $190,000 pawn loan at a monthly interest rate of 2.5 to4 percent, as one Borro customer did?

Typically, a person pawning an item will have to leave it with the pawnshop and make the monthly interest payments to keep the loan current. To get the item back, the customer must pay the principal and all the interest. Customers missing any interest payments could forfeit the item.

The new wave of pawn brokers, or collateralized lenders, as they like to be known, isn’t just betting that people will pledge cars, planes, or, in the case of one Ultrapawn customer, an earth mover. They are also betting that as long as traditional bank lending remains tight for individuals, there will be repeat customers.

George Souri, a principal ! at the Atria Group, a private equity firm that invested in Ultrapawn, said his group looked at affluent people as if they were little companies. “When a business needs liquidity to fund operations or growth, they’re able to go to the capital markets and use business assets to obtain loans,” he said. “The high-end consumer does not have that option. And most consumers in that bracket wouldn’t be caught dead in a pawnshop.”

Mr. Souri said he had a client with homes in Chicago and Marco Island, Fla., and a Bentley Continental GT for both locations. The client pledged one of the cars, which are worth $250,000 each, to buy a boat for his Marco Island home because he was confident that the cash flow from his other investments would pay off the loan.

In other cases, people simply ave too much money locked up in luxury items and not enough cash to pay for things like private school fees or divorce proceedings, both popular uses of high-end pawn loans. One concern among the customers is whether what is being put up is going to be secure, particularly when it comes to pawn websites where goods are shipped across the country.

Todd Hills, founder of Pawngo, says his company, like other online pawnshops, pays to ship and insure the items and that since it is wiring money to someone’s bank account, it believes it can confirm the person’s identity â€" to establish ownership just as reliably as someone checking a driver’s license in a store.

The high-end portion of the industry is betting that with comparatively lower pawn rates and an ability to fulfill ev! en large ! loan requests in a day or two, it will be able to build its business on happy repeat customers. Paul Aitken, founder and chief executive of Borro, said he attributed repeat business to the human desire to spend today without thinking about tomorrow.

“Entrepreneurial people like to do things on the spur of the moment, and they’re probably not the best planners,” he said. “When they have money in their pocket, they like to buy luxury goods. When they don’t, they like to use those goods to get money for their next venture.”

And that is how he ends up taking a Mercedes McLaren in as collateral for a loan.

Across Wall Street, Efforts to Revise a Hard-Charging Culture

The high-achieving college students bound for Wall Street jobs have heard the stories of long nights and weekends spent at the office, a grueling schedule etched into big bank culture.

But this year, many of the fresh recruits will encounter a new, unfamiliar reality: mandatory time off.

The leading Wall Street banks are taking a close look at the work environment of their interns and junior bankers, known as analysts and associates, after the death of an intern at Bank of America Merrill Lynch in London last summer. In an internal memo on Friday, Bank of America Merrill Lynch said analysts and associates should spend four weekend days away from the office each month, part of a broader effort to improve working conditions.

It remains to be seen whether this guideline and others being implemented at other firms will significantly alter the hard-charging culture of these highly coveted and intensely demanding jobs. But in any event, 2014 will probably be remembered as the year Wall Street tried to offer some relief to the grunts who work behind the scenes â€" tweaking spreadsheets and preparing presentations â€" to help the bank run.

In addition to Bank of America Merrill Lynch, several other large banks are thinking hard about the workload of their junior employees.

Morgan Stanley has formed a committee to look at broader issues around career development and training for those lowest on the totem pole, according to a person briefed on the matter who was not authorized to discuss it publicly. The Wall Street Journal reported the existence of the committee earlier.

JPMorgan Chase plans to increase its number of junior bankers by 10 percent this year, a person briefed on the matter said. The plans, announced internally in December, also include providing analysts and associates with one “protected weekend” set aside for rest each month.

Goldman Sachs was the first of the major banks to alert its junior employees of plans to improve their working conditions. After forming a “junior banker task force” last year, Goldman said internally in October that analysts should be able to take weekends off whenever possible. The firm also said it would hire more analysts and introduce new technology to make the work process more efficient.

Making these changes may seem like a no-brainer to workers in other industries. But on Wall Street, where an intense work schedule can be a badge of pride, the moves are being met in some quarters with skepticism. An article published on Saturday that described the plans at Bank of America Merrill Lynch generated a lively discussion online.

One unidentified commenter said: “Many years ago, as a 29-year-old in finance, I had the pleasure of working 70 days in a row, including Thanksgiving morning and Thanksgiving evening (I had that one afternoon off). It was a particularly important project that ended up being an important building block in my career. No regrets.”

“My income now is in the top 1/5th of 1 percent or so,” the person continued, adding later: “Life has been great and I am thankful that I have been given the opportunity to work ridiculously hard to gain the flexibility I have in my life.”

Another commenter, identified as Mark from London, struck a sarcastic tone: “I can imagine the reaction” from the vice president or managing director “who is working on the $1 billion deal when his analyst turns around and says, ‘sorry but that presentation you want, it will have to wait till Monday as I haven’t taken off my four weekend days this month…’ Best of luck with that.”

The comment points to a deeper question: Are banks’ best efforts enough to alter this hallmark of Wall Street culture? Adam Zoia, the chief executive of Glocap, an executive search firm focused on the investment management industry, said in an interview on Friday that the “perfect analogy” for the culture of grueling work was “a fraternity rush.”

“I suffered, therefore you newbies are going to suffer, too,” Mr. Zoia said in summarizing that view.

To outsiders, that may seem strange. Chuck Wiatrowski of San Antonio responded to the commenter who claimed to have worked 70 days in a row.

“Your comment actually saddened me a bit,” Mr. Wiatrowski said. “What was the real cost of your work? I wonder how well you really know your children or wife. Are your children really doing things that they want to do or are they just extensions of your goals?”

Elliott Turns Its Attention to Juniper Networks

Days after throwing its weight around at Riverbed Technology and Celesio, the hedge fund Elliott Management has begun a campaign for change at Juniper Networks, the networking equipment company.

Elliott, the hedge fund run by Paul Singer, wants Juniper to cut costs, return money to shareholders and streamline its product offerings, according to a 21-page presentation. The move sent Juniper’s share price up 10 percent, to $25.90, in morning trading on Monday.

These “much-requested” suggestions would help to lift the share price to $35 to $40 a share, according to Elliott, which has has requested to meet with management. The hedge fund’s investment in Juniper â€" a 6.2 percent stake â€" is one of its biggest activist positions to date.

The move from Elliott comes just a few weeks after Shaygan Kheradpir took over as Juniper’s chief executive after the retirement of Kevin Johnson. He was previously the chief technology officer at Barclays.

Juniper, which is based in Sunnyvale, Calif., was founded by Pradeep Sindhu, the top scientist at Xerox’s Palo Alto Research Center. It has a market value of $13 billion.

The hedge fund and its top technology portfolio manager, Jesse Cohn, publicly announced their proposals in an effort to steer Mr. Kheradpir’s thinking about Juniper’s strategy, according to people briefed on the matter. Elliott believes that its suggestions are in line with what Wall Street analysts and investors have advocated for years.

“It’s a chance to reframe the story,” one of these people said.