Securities Class-Action Suits Up Slightly in 2013

Angry investors filed more federal class-action securities lawsuits last year than in 2012. But investors have been angrier.

Plaintiffs filed 166 suits in 2013, up 9 percent when compared with the 152 suits filed in 2012, according to a new study from Cornerstone Research, a financial and economic consulting firm, and Stanford Law School. But that’s still 13 percent lower than the historical average of 191 filings annually since 1997.

One possible explanation? Fewer companies on the New York Stock Exchange and the NASDAQ mean fewer companies to target, researchers suggest. Companies on both exchanges have decreased by 46 percent since 1998.

But not everyone agrees with the theory.

“If there’s fraud, if you see stocks drop precipitously, there’ll be cases,” said Jacob Zamansky, a plaintiffs’ securities lawyer. “So I don’t think the number of listings makes any difference.”

Securities class-action lawsuits are filed on behalf of a large group of investors accusing a public company of making false and misleading statements, a violation of securities laws. It’s one reason financial statements include heavily lawyered warnings about how “forward-looking statements” are often subject to change based on market conditions and other factors.

While the amount of cases increases slightly last year, the amount of money at stake shrank drastically. In 2013, Cornerstone estimated that all the suits combined could award as much as $279 billion to plaintiffs, the lowest level since 1998. That represents a 31 percent drop from 2012 levels, and a 57 percent drop from the historical average.

The decrease could have had something to do with the fact that stock prices were up significantly in 2013. The Standard & Poor’s 500-stock index closed 2013 up 29.6 percent, its best advance since 1997, and the Dow Jones industrial average added 26.5 percent for the year, its strongest since 1996. The Nasdaq composite gained 38.3 percent.

“In a rising market, you simply don’t have losses that are as large,” said Joe Grundfest, a professor at Stanford Law School.

But investor accusations in suits have pretty much mirrored the claims of years past. Nearly every complaint accused the company in question of misrepresenting financial documents. More than half said that firms issued false forward-looking statements, according to the report.

Securities fraud litigation has been a big business over the years. Between 1997 to 2013, investors filed more than 3,000 securities litigation cases, resulting in more than $73 billion in judgments and settlements and nearly $17 billion in fees, according to Cornerstone’s research.

Securities Class-Action Suits Up Slightly in 2013

Angry investors filed more federal class-action securities lawsuits last year than in 2012. But investors have been angrier.

Plaintiffs filed 166 suits in 2013, up 9 percent when compared with the 152 suits filed in 2012, according to a new study from Cornerstone Research, a financial and economic consulting firm, and Stanford Law School. But that’s still 13 percent lower than the historical average of 191 filings annually since 1997.

One possible explanation? Fewer companies on the New York Stock Exchange and the NASDAQ mean fewer companies to target, researchers suggest. Companies on both exchanges have decreased by 46 percent since 1998.

But not everyone agrees with the theory.

“If there’s fraud, if you see stocks drop precipitously, there’ll be cases,” said Jacob Zamansky, a plaintiffs’ securities lawyer. “So I don’t think the number of listings makes any difference.”

Securities class-action lawsuits are filed on behalf of a large group of investors accusing a public company of making false and misleading statements, a violation of securities laws. It’s one reason financial statements include heavily lawyered warnings about how “forward-looking statements” are often subject to change based on market conditions and other factors.

While the amount of cases increases slightly last year, the amount of money at stake shrank drastically. In 2013, Cornerstone estimated that all the suits combined could award as much as $279 billion to plaintiffs, the lowest level since 1998. That represents a 31 percent drop from 2012 levels, and a 57 percent drop from the historical average.

The decrease could have had something to do with the fact that stock prices were up significantly in 2013. The Standard & Poor’s 500-stock index closed 2013 up 29.6 percent, its best advance since 1997, and the Dow Jones industrial average added 26.5 percent for the year, its strongest since 1996. The Nasdaq composite gained 38.3 percent.

“In a rising market, you simply don’t have losses that are as large,” said Joe Grundfest, a professor at Stanford Law School.

But investor accusations in suits have pretty much mirrored the claims of years past. Nearly every complaint accused the company in question of misrepresenting financial documents. More than half said that firms issued false forward-looking statements, according to the report.

Securities fraud litigation has been a big business over the years. Between 1997 to 2013, investors filed more than 3,000 securities litigation cases, resulting in more than $73 billion in judgments and settlements and nearly $17 billion in fees, according to Cornerstone’s research.

Anxiety Rising Over Relations Between Japan and China

DAVOS, Switzerland â€" Even with all the optimism about the global economy here last week at the annual meeting of the World Economic Forum, there was a remarkable economic and political risk that appeared to have been largely overlooked: The long-simmering battle between China and Japan may be close to boiling over. One top executive went so far as to describe the nations’ relationship as a “stealth war.”

The implications for the global economy â€" and some of the largest multinational companies â€" are profound. China and Japan represent the second- and third-largest economies in the world, after the United States, and they are among each other’s largest trade partners. General Motors, Microsoft, Boeing, Nike, Coca-Cola and Procter & Gamble, among others, have huge businesses in both countries.

“I probably spoke to no less than 40 U.S. C.E.O.’s here and I would say this issue came up in more than half of those conversations,” said Ian Bremmer, the political scientist who founded the Eurasia Group, the political risk consulting firm. “This week at Davos, for me, the big takeaway was that China-Japan was much more problematic than we thought. The possibility that you get anti-Japanese sentiment in a big way and it causes real disruption on trades and hurting both economies is real.”

If you need evidence of the significance of this geopolitical clash, look no further than the surprising comment made here by Prime Minister Shinzo Abe of Japan, who said his country’s relationship with China was in a “similar situation” to the one between Germany and Britain before World War I.

Mr. Abe was trumped by Wu Xinbo, a Chinese university dean who is considered close to China’s leadership, when he described Mr. Abe as a “troublemaker” and, at one point, compared him, somewhat obliquely, to Kim Jong-un, the North Korean dictator.

“I have to say that the political trust between the two countries now is very low,” Mr. Wu said, suggesting that he expects “political relations between our two countries will stay very cool, even frozen, for the remaining years of the Abe administration in Japan.”

Problems between China and Japan have long been festering, especially as Mr. Abe has sought to rewrite the country’s Constitution and build the country’s military, which has long been considered only defensive.

Tensions rose when China angered Japan last November when it claimed an air defense identification zone over a chain of islands in the East China Sea that the countries have disputed claims over. The conflict increased after Mr. Abe visited the Yasukuni Shrine, where Japanese war dead are commemorated, including several war criminals who were executed after Japan’s defeat in World War II. The trip offended many Chinese, and the Obama administration had warned Mr. Abe not to visit the shrine.

China-Japan political relations have been strained since the end of World War II. Previous visits by Japanese politicians have angered China and South Korea, which both suffered greatly under Japan’s empire-building efforts then. And the Japanese citizenry has often sought to distance itself from its imperialist past, preferring instead to highlight the nation’s economic progress and prowess.

Yet now, the intensity of the feelings of mutual distrust is striking. According to Pew Research, just 1 in 20 Japanese “have a favorable attitude toward China” and “anti-Japan sentiment is quite strong in China, where 90 percent of the public has an unfavorable opinion of Japan.”

The latest tensions are having a direct economic impact; the Japanese, for example, are investing less in China.

Mr. Bremmer, of the Eurasia Group, put it bluntly: “The Chinese have written off Shinzo Abe as someone they can potentially work with. They mistrust him completely. They believe he is belligerent toward them and believe an escalatory policy is the appropriate one to pursue.”

After Mr. Abe made his comment comparing his country’s relationship as being similar to Britain and Germany in 1914, when the two countries were major trading partners, China’s leaders made their own attacks. “Rather than using pre-World War I Anglo-German relations, why don’t you deeply examine your mistakes during the First Sino-Japanese War, the Japanese colonial rule of the Korean Peninsula and the fascist war that Japan launched on victim countries in World War II?” Qin Gang, a spokesman for China’s foreign ministry, asked of Mr. Abe.

Mr. Abe, in fairness, did try to play down any hints that the simmering tensions would lead to a prolonged military conflict.

“Japan has sworn an oath to never again wage a war,” Mr. Abe said in his speech. “We have never stopped, and will continue to be wishing for the world to be at peace.”

But that’s not what many of the executives and regulators I spoke to after his presentation took away from his comments. “I’m going to be asking our teams in China and Japan to do a full analysis of the risks to our business when I get home,” one Fortune 500 C.E.O. told me, seeming anxious. “Maybe this should have been on my radar before, but it is now.”

So what’s the biggest risk?

“The possibility of a mistake where someone gets killed is going up,” Mr. Bremmer said. “They are scrambling their fighters in the East China Sea every day.”

And the misunderstandings could deepen. “More problematically, the aftermath of a mistake will have both countries actively mistrusting the intentions of each other without a mechanism to really talk to each other and without the Americans acting as an interlocutor,” Mr. Bremmer said.

Mr. Wu said that the possibility of war was overstating the case: “China doesn’t want to fight a war.”

One of the greatest challenges multinational companies doing business in the region may face is that the United States government may not be positioned to step into the middle of the debate. Many of the American officials who were closest to Japan have left the Obama administration. Hillary Rodham Clinton, Kurt Campbell and Tom Donilon â€" all known for being the architects of President Obama’s “pivot” toward Asia â€" are no longer there, nor is Timothy F. Geithner, who worked in Japan in the 1990s and had close relationships with many senior leaders.

“Kerry doesn’t really do Asia,” Mr. Bremmer said about Secretary of State John Kerry, who would most likely take umbrage at that assertion. “Susan Rice? No,” he said of the United States ambassador to the United Nations.

“Who is paying attention to foreign policy in Obama-land or in Congress? Nobody.” Whether that is true or not, it is clear that China, long seen as a fast-growing economy, and Japan, which has experienced a rebound in the last year, now should be added to the list of political and economic risks that businesses should consider in 2014.

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

Tom Perkins Again Discusses Nazis, Class Warfare and Now, Watches

Tom Perkins certainly has taken heat for his recent letter to the editor in The Wall Street Journal. If he was trying to turn down the temperature, however, his interview with Bloomberg Television on Monday wouldn’t quite cut it.

The interview, conducted by the host of the program “Bloomberg West,” Emily Chang, entered a bizarre new dimension of television.

Where to begin? Mr. Perkins apologized for his comparison of attacks on San Francisco’s wealthy to Kristallnacht. After all, he spoke with Abe Foxman, the head of the Anti-Defamation League, and repeatedly acknowledged that his use of the “awful” comparison was inappropriate.

But he then resolutely stood by his point: that a majority was intimidating a minority. He added that his late partner Eugene Kleiner, a refugee from Nazi Germany, would have agreed with the letter to the editor.

“When you start to use hatred against a minority, it doesn’t go well,” he said on the program.

Mr. Perkins doesn’t count himself among the richest Americans. He noted that he’s not a billionaire, only a multimillionaire. But he defended the wealthy as helping to lift the so-called 99 percent. Recent targets of class criticism, including high-rise buildings in San Francisco and Google’s shuttles, are actually part of the solution to helping spur the economy.

“I don’t feel personally threatened,” he said. “But I feel that an important part of America, namely the creative 1 percent, are threatened.”

He later added: “It’s absurd to demonize the rich for being rich and doing what the rich do, which is get richer by creating opportunities for others.”

Not even his old firm avoided criticism. When asked how he felt about Kleiner Perkins Caufield & Byers’s efforts to distance itself from the affair, the investor noted that he didn’t bring the investment shop into the equation. Then he added: “They didn’t need to say anything, but I guess they chose to throw me under the bus.”

He also added that since he left full-time work at the firm that bears his name several a while ago, the venture capital concern has suffered a decline. (His last investment at the firm was made in the 1990s).

Should Kleiner Perkins change its name to avoid any further association with him? “I think that’s a real issue for them to decide,” he said. (The firm already calls itself “KPCB” on second reference in its press materials.)

Mr. Perkins said that he didn’t come from wealth, and noted that some members of his family, but not close relatives, live in trailer parks. But he resolutely didn’t apologize for being rich, a conviction he demonstrated in sometimes strange ways. When Ms. Chang asked if the venture capitalist was wearing a Rolex, he responded:

“This isn’t a Rolex. I could buy a six-pack of Rolexes for this.”

In defending his ex-wife, the novelist Danielle Steel, Mr. Perkins said that he was sometimes a little zealous in his chivalry, a condition perhaps intensified by his awards.

“I’m a literal knight of the kingdom of Norway,” he said. (According to this piece in The San Francisco Chronicle, he was indeed knighted for his philanthropy in that country.)

Though Mr. Perkins was dropping truth bombs for most of the 45 minutes that he was on, he didn’t appreciate others providing similar candor. When asked about Marc Andreessen, the founder of a rival venture capital firm, criticized him in language unsuitable for this family publication, he responded: “I don’t think he’s entitled to his opinion.”

Mr. Perkins said that he acknowledged much of the pain of the less wealthy, thought he blamed overly oppressive regulations and taxes. But does he think he’s connected to reality?

His response: “Yeah, I think I’m connected to reality.”

Despite Spate of Deals, Vodafone Faces an Uncertain Future

The British telecommunications giant Vodafone is at a crossroads.

On Tuesday, investors will gather in a luxury hotel in central London to approve the $130 billion sale of Vodafone’s 45 percent stake in Verizon Wireless to Verizon Communications. The deal â€" the largest last year â€" signals the end of a foray into the United States that lasted for more than a decade. It also raises questions about the future of Vodafone, which remains one of the world’s biggest cellphone operators.

As Europe’s telecommunications sector faces regulatory uncertainty while continuing to consolidate, analysts are divided over whether Vodafone can prosper on its own or whether it would be better off as a takeover target.

That speculation was fueled on Monday after AT&T announced that it was not in talks to buy Vodafone, valued at more than $100 billion.

The rumors had been spurred by a meeting last week between AT&T’s chief executive, Randall L. Stephenson, and Neelie Kroes, the European commissioner who oversees the Continent’s telecommunications sector, during the World Economic Forum in Davos, Switzerland.

The two discussed AT&T’s prospects in Europe, but the meeting also included broader issues like data privacy and the recent revelations in government surveillance, according to a person briefed on the matter, who spoke on the condition of anonymity because he was not authorized to speak publicly.

Vodafone’s shares fell nearly 4 percent in trading in London on Monday after AT&T’s announcement. Spokesmen for Vodafone and AT&T declined to comment.

In a brief statement, AT&T added, however, that it reserved the right to make an offer in the future. Under British takeover rules, AT&T, having announced its intentions not to pursue Vodafone, must wait at least six months before announcing any new move.

“If an international telecoms company wants to buy anything big in Europe, Vodafone remains the most likely option,” said Robert Grindle, an analyst at Espírito Santo in London.

Mr. Grindle said that Europe’s other large carriers, like Orange of France, were partly owned by governments that were not likely to be supportive of a takeover by an international rival.

Vodafone shareholders will soon get a glimpse of the company’s plans after completing the sale of its stake in Verizon Wireless.

As part of the deal, Vodafone has announced that it will return about $84 billion to investors as well as spend roughly $11.5 billion on upgrades to its equipment over the next two years.

After outpacing the United States on high-speed mobile networks, Europe has fallen behind the United States over the last five years as large carriers like Verizon and AT&T have invested billions of dollars in so-called fourth-generation wireless infrastructure.

In a report last year, GSMA, a telecommunications industry body, said about 20 percent of United States cellphone traffic would be powered by these high-speed networks by the end of 2013, compared with about 2 percent for the European Union.

That comes despite consumers’ increasing use of their smartphones and other connected devices to gain access to data over carriers’ networks.

“Growth in data is putting more demands on companies to invest,” said Tom Phillips, GSMA’s chief regulatory officer.

In response to customers’ appetite for telecommunications services and stiff competition from rival European operators, Vodafone has increased its deal-making to expand its operations into fixed-line and cable services.

Last year, Vodafone bought Kabel Deutschland, Germany’s largest cable operator, for 7.7 billion euros, or $10.5 billion, to bolster its offerings in the country, which has Europe’s largest economy, and compete against rivals like Deutsche Telekom.

Vodafone is also in early discussions to acquire the Spanish cable operator ONO, which is considering an initial public offering, according to a person briefed on the matter, who spoke on the condition of anonymity because he was not authorized to speak publicly.

Analysts said the deal could be worth about $10 billion, though discussions between Vodafone and ONO might not necessarily lead to a deal, the person added.

By adding cable to its existing cellphone and fixed-line services, Vodafone is joining other European telecommunications companies in adding complementary offerings to their traditional mobile operations, analysts say.

The companies hope that these additional services will keep customers satisfied so that they do not move to competitors that can offer extras like pay-TV and high-speed broadband.

“The more services people purchase from a company, the less likely customers will leave for a rival,” said Steven Hartley, who runs the industry, communications and broadband team at the consulting firm Ovum in London. “Vodafone’s legacy has been in mobile, so it’s playing catch-up with television and fixed-line services.”

European regulators also have called on the Continent’s carriers to improve their equipment to jump-start domestic economies, though antitrust authorities have voiced concern that deal-making in the sector may lead to less competition and higher prices for local consumers.

Despite the recent takeovers to expand its footprint, Vodafone remains highly dependent on European markets that have yet to rebound from the recent economic crisis, according to industry analysts.

After selling its stake in Verizon Wireless, the company also has operations in emerging markets like India and the Middle East. But its core European business still represented almost 70 percent of the company’s revenue in the six months through Sept. 30, the latest figures available.

That reliance on sluggish European economies has led analysts and investors to speculate that the company may be open to a takeover approach from a large international rival that would add Vodafone’s European and developing markets operations to its existing global business.

“Vodafone is working in a much tougher operational environment,” said Mr. Grindle of Espírito Santo. “They have found their deal mojo, but only time will tell if the company can survive as an independent entity.”

Distressed Debt Hedge Fund Commits $530 Million to Europe

Marathon Asset Management has gained a reputation for being a rag-and-bone picker, finding opportunities in the aftermath of financial disaster.

Marathon, a $11 billion hedge fund, is going scavenging in Europe with a new fund dedicated to distressed debt on the Continent, hoping to profit from improving economic prospects in the region.

The $530 million fund was opened on Jan. 15 and will start with investments in Spain, Germany and Ireland, according to someone familiar with the fund’s strategy.

The move comes as European banks continue to offload unwanted assets amid a new regulatory landscape that has required banks to hold more cash on their balance sheets. It also follows a handful of hedge funds and private equity firms that piled into the region last year.

The private equity firms Apollo Global Management and the Blackstone Group have been fighting over assets in Spain, while hedge funds like John Paulson’s Paulson & Company and Daniel Loeb’s Third Point have been circling assets in Greece.

“The recovery and stabilization of European sovereign credits, financial institutions and its economy dovetails with bank deleveraging and asset sales which is taking place,” said Andrew Rabinowitz, chief operating officer at Marathon.

Marathon plans to buy nonperforming loans from local banks, distressed real estate loans and mortgage-backed securities. It is the hedge fund’s second Europe-focused portfolio: it opened its first Europe fund in 2011 with $1 billion in assets.

That first Europe fund returned 22 percent to investors in its first year and 11 percent last year.

Herbalife Shares Rise After Bullish Analyst Takes New Job

Shares of Herbalife rose 6.7 percent on Monday after a report that an analyst covering the stock had gone to work for a major shareholder.

Timothy Ramey has resigned from his job as an analyst at D.A. Davidson, according to John Rogers, the head of institutional equity research at the brokerage firm. The move was announced internally on Monday.

His next job is with Post Holdings, the parent company of the maker of cereals and other foods, as director of strategic ventures on a consulting basis, Bloomberg News reported. The chairman and chief executive of Post, William P. Stiritz, is the fourth-largest shareholder of Herbalife, with a roughly 6.4 percent stake as of Nov. 18.

Details of Mr. Ramey’s new role were not clear. A staunch defender of the company, Mr. Ramey has been critical of William A. Ackman, the hedge fund manager who has bet $1 billion that the stock is worthless. Herbalife has denied Mr. Ackman’s contention that the company is an abusive pyramid scheme.

Herbalife shares closed at $64.06 on Monday. The stock fell last week after Senator Edward J. Markey, Democrat of Massachusetts, asked regulators to look into the company’s business.

Mr. Ramey has called Herbalife his “single best idea of 2014.” In a research note on Jan. 16, he discussed allegations made by a “now-infamous short-seller.”

“Perversely, the inquisition that Herbalife has endured for the past year has made the company better with a few ‘raising the bar’ policy tweaks,” Mr. Ramey wrote. “But it is the depth of the research by both longs and shorts that has clearly vindicated the Herbalife MLM model,” he said, using the shorthand for multilevel marketing company.

A representative of Post Holdings did not respond to requests for comment. A message left at Mr. Ramey’s family vineyard was not returned.

As Loehmann’s Liquidates, Bargains Get Bigger as Shelves Get Emptier

The Bronx-based department store Loehmann’s may be in the process of a fire sale, but when, oh when, will the deep discounts begin?

Loehmann’s, which filed for bankruptcy last year, began liquidating its collection of discount clothes and other merchandise earlier this month. But some customers expecting a going-out-of-business fire sale may have been dismayed to see markdowns that averaged just 30 percent.

“It all has to do with how customers react to a sale,” said Michael McGrail, the chief operating officer of Tiger Capital, one of the liquidation firms handling Loehmann’s 39 stores, five of which have already closed. “At the end of the day, the customer dictates the value.”

Discounts get steeper the longer the liquidation process goes on, and the liquidators monitor sales daily. When clothes don’t fly off the hangers fast enough, the discounts go up.

Firms like Tiger Capital will take the merchandise’s condition and freshness into account. They’ll run comparisons with comparable stores, and look at what kinds of discounts the retailer typically offered before it went into bankruptcy. Ten percent off, for example, might entice customers to gobble up rarely discounted luxury items like Chanel, for example, but stores that offer discounts more often need bigger incentives.

The liquidation process typically lasts about eight weeks, according to Mr. McGrail, who said that Loehmann’s merchandise is currently marked down 30 percent to 70 percent or 40 to 80 percent, depending on the location. Eventually, merchandise could be marked down as much as 80 to 90 percent - or higher. Loehmann’s liquidation will end March 31, at the latest, but more stores will be closed before then, according to Melissa Krantz, a spokeswoman for the retailer.

“Everything is sold in the stores,” said Mr. McGrail of the increasing discounts. “That’s why it has to go up.”

Hence the shopper’s perennial dilemma: Buy a coveted item now or wait for it to become cheaper â€" and it likely will, if no one else covets it enough to buy it.

“You have to go in daily and look at the merchandise,” Mr. McGrail said. “If you go in and find something you really like, I can tell you, it’s not going to be there.”

This post has been revised to reflect the following correction:

Correction: January 27, 2014

In a previous version of this article, the name of the department store that has been liquidating its merchandise was misspelled in the headline. It is Loehmann’s, not Loemann’s.

Martin Marietta Materials Reaches Deal to Acquire Texas Industries

Martin Marietta Materials has agreed to acquire Texas Industries in an all stock deal worth more than $2 billion, according to people familiar with the matter.

The deal will see Martin Marietta exchange seven-tenths of one of its shares, worth about $72, for each Texas Instrument share. A deal is expected to be announced shortly.

Martin Marietta is a big producer of sand and gravel, and acquiring Texas Industries, a construction supplies company, will expand its range of offerings.

The two companies began merger talks last year but couldn’t agree on a deal. Talks restarted recently, and proceeded over the weekend.

Shares of Martin Marietta, which has a market value of about $4.8 billion, were down 4.4 percent on news of the potential acquisition, suggesting some investor skepticism for such a deal.

Martin Marietta shares were down 1.5 percent on Monday after falling more than 4 percent on Friday.

The deal will be significant for the two shareholders that control more than 50 percent of Texas Industries’ stock. Southeastern Asset Management, the money manager that opposed the Dell buyout, owns about 28 percent of shares, and NNS, a group controlled by Egyptian billionaire Nassef Sawiris, owns 23 per cent.

Acquiring Texas Industries will allow Martin Marietta to move past its failed bid for rival Vulcan Materials two years ago. That deal led to a messy legal dispute, but since then Martin Marietta shares have risen steadily.

Former JPMorgan Executive Said to Settle Hiring Dispute

JPMorgan Chase appears to have settled a dispute with a former close confidant of its chairman, Jamie Dimon, the latest reminder that the inner circle that helped the bank weather the financial crisis is no more.

Frank Bisignano, once the bank’s co-chief operating officer, departed last year to become the chief executive of First Data Corporation, a payment processing firm.

After he left, however, Mr. Bisignano lured away several other JPMorgan employees, including its former chief information officer Guy Chiarello, violating the terms of Mr. Bisignano’s exit agreement, according to an article in The Wall Street Journal on Monday.

JPMorgan, First Data and Kohlberg Kravis Roberts, the private equity firm that owns First Data, all declined to comment.

To stop the bank from challenging his hires, First Data agreed to pay JPMorgan under $10 million, according to the story.

Mr. Bisignano was one of a key group of executives who helped Mr. Dimon steer the bank during and after the financial collapse of 2008. Mr. Bisignano’s reputation as a Mr. Fix-it was not blemished by the London Whale trading blowup that cost the bank $6.2 billion.

Mr. Dimon’s inner circle, once hailed as “The Survivors” on the cover of Fortune magazine in 2008, has long since thinned. Most of the 15 executives profiled in the article have departed.

Ina R. Drew, who ran the division at the center of the trading loss, resigned shortly afterward. Last year James E. Staley, the chief of asset management, joined BlueMountain Capital Management, one of the hedge funds that profited from the London Whale trade.

Heidi Miller, who ran the treasury and securities service, retired in 2012. William T. Winters, another senior executive, left to start his own asset management and advisory firm in in 2011.

Charles W. Scharf, who ran the bank’s retail arm, departed in 2012 after being reassigned to an internal private equity group, a move that many saw as a demotion despite Mr. Dimon’s expressions otherwise.

Jay Mandelbaum, the former head of strategy and business development, Barry L. Zubrow, the chief risk officer from 2007 to 2012, and Steven D. Black, an architect of JPMorgan’s acquisition of the broker Bear Stearns, have also departed.

Others, however, remain. Michael J. Cavanagh was promoted to co-chief executive of JPMorgan’s corporate and investment bank in 2012.

S. Todd Maclin moved to Texas to run the consumer and commercial bank, although some inside the bank saw the move as a demotion from Mr. Maclin’s spot on JPMorgan’s management committee. Gordon A. Smith now runs consumer and community banking.

Judge Throws Out Racketeering Claims Filed by Cohen’s Ex-Wife

A legal battle between the billionaire investor Steven A. Cohen and his ex-wife, Patricia, will continue for a while longer, but a federal judge considerably narrowed the scope of a civil lawsuit filed by the former Mrs. Cohen, who is seeking millions of dollars in damages.

In a court ruling on Monday, the judge, William H. Pauley III of United States District Court for the Southern District of New York, observed that the litigation between the former spouses was notable for the “seemingly inexhaustible legal resources each side has brought to bear.” The judge added that given the parties divorced in 1990 after 11 years of marriage, the current legal squabbling restores “faith in the old-fashioned idea that divorce is something that lasts forever.”

The judge granted a motion by Mr. Cohen dismissing a civil racketeering claim that would have enabled his ex-wife to collect treble damages. Judge Pauley said that he found no evidence Mr. Cohen had used his SAC Capital Advisors hedge fund to conceal a nearly three-decade-old settlement from her. The judge also rejected the notion that the federal government’s insider trading investigation of SAC and Mr. Cohen had anything to do with Mrs. Cohen’s civil claims filed under the Racketeer Influenced Corrupt Organizations, or RICO, statute.

“Patricia Cohen cannot take on the mantel of a private attorney general just because her ex-husband is a public figure and SAC is in prosecutors’ cross hairs,” the judge wrote. He continued, that allegations of RICO and a failed marriage “don’t go together like a horse and carriage.”

But Judge Pauley let stand claims that Mr. Cohen breached a fiduciary duty to his ex-wife and potentially defrauded the her out of her right to some of the proceeds of a nearly three-decade-old settlement.

“We are pleased that the court threw out Mrs. Cohen’s RICO claims,” said Jonathan Gasthalter, a spokesman for Mr. Cohen. “We will continue to defend against her equally specious fraud and breach of fiduciary duty claims.”

The lawsuit arises from a claim that Mr. Cohen concealed from his ex-wife that he had reached a $5.5 million settlement with a former business party during the time the couple was separated and preparing to divorce. Mr. Cohen’s ex-wife has said she didn’t learn of the settlement until 2006.

In 2009, she filed a civil racketeering lawsuit, claiming she was entitled to some of Mr. Cohen’s personal fortune because his firm was a “racketeering scheme” that engaged in insider trading and other crimes. She later amended her suit in 2010, removing accusations that SAC committed various crimes, but said that she was still entitled to $10 million, saying that the proceeds from that undisclosed settlement were used to helped start his SAC hedge fund in 1991. That lawsuit was dismissed, but an appellate court last year allowed Mrs. Cohen to refile her claims, including her civil RICO claim.

The legal battling with his ex-wife has taken a backseat to Mr. Cohen’s battles with federal prosecutors. In November, his hedge fund pleaded guilty to securities fraud charges and agreed to pay a $1.2 billion penalty.

And while prosecutors have not charged Mr. Cohen with any wrongdoing, federal authorities insist they are continuing their investigation.

Tiger Global to Invest in Brazilian Online Retailer

SAO PAULO â€" Tiger Global Management will invest nearly $520 million in Brazilian online retailer B2W Companhia Digital, the company said, a sign that the New York-based hedge fund continues to see promise in Brazil’s vibrant Internet sector.

Shares of publicly traded B2W jumped 41.41 percent on Monday, to close the day at 21.92 reis.

The company said in a regulatory filing late Friday that its board had approved a capital increase of as much as 2.38 billion reis to come from both Tiger and the company’s controlling shareholder, Lojas Americanas S.A., which currently owns 62.23 percent of the company.

The two firms will purchase as many as 95.2 million shares, priced at 25 reis a share. Tiger will provide at least 459.2 million reis but as much as 1.2 billion reis, while Lojas Americanas will provide at least 1.02 billion reis, the filing said.

The terms represent a premium of 61.3 percent based on Friday’s closing stock price of Reais 15.50.

Lojas Americanas is controlled by Brazilian billionaire Jorge Paulo Lemann and his partners, Marcel Telles and Carlos Alberto Sicupira. It is expected to still maintain control of B2W once the transaction is completed.

For Tiger, the investment suggests rejuvenated interest in Brazil’s e-commerce sector. It also invested in the online travel agency Despegar, based in Buenos Aires, but with a strong presence in Brazil, where it is named Decolar. Tiger continues to be the controlling shareholder.

Subsequently the firm also made several investments in Brazilian e-commerce companies, including Netshoes which it controls.

Some like NetMovies Entretenimento did not work out. Tiger bought that company from Rio de Janeiro-based venture capital firm Ideaisnet in 2010 hoping it could beat Netflix which was arriving in the region. But NetMovies failed to do so.

For B2W, the new capital could help it overcome difficulties it has faced in recent years including a tough competitor in Nova Pontocom. But it has shown some signs of improvement. In the third quarter of 2013, B2W posted a net loss of 38.6 million reis, compared with a net loss of 45.2 million reis in the third quarter a year earlier.

The transaction requires approval from CADE, Brazil’s anti-trust regulator and B2W shareholders.

Kravis Named Chairman of Education Charity

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United Technologies Considers Sale or Spin-Off of Sikorsky

The United Technologies Corporation is considering a spin-off or sale of Sikorsky, the maker of the Black Hawk helicopters favored by the United States military, according to people briefed on the matter.

Discussions about the fate of the Sikorsky unit are preliminary and may not result in a deal. But United Technologies is considering the unit as a candidate for a tax-free spinoff or potentially a sale to a rival.

Sikorsky has been part of United Technologies for nearly all of the helicopter maker’s 90-year history. In addition to the Black Hawk, Sikorsky makes a range of commercial and military helicopters, including the Seahawk and Superhawk. In recent years, the Pentagon has awarded $18 billion in contracts to Sikorsky, according to Defense News, which first reported United Technologies’ deliberations.

In 2011, the company acquired the aircraft parts maker Goodrich for $16.4 billion, a deal that moved it further into the heart of the commercial aviation industry. Since that deal was announced, United Technologies’ shares have risen 54 percent, as the company has rebounded along with the global travel industry in recent years.

A United Technologies spokesman declined to comment. Company shares were up more than 2 percent on Monday.

Two Executives of Bitcoin Businesses Are Arrested

One of the most prominent players in the Bitcoin universe, Charles Shrem, was arrested on Sunday and accused of helping grease the wheels for drug transactions on the now defunct online bazaar Silk Road.

Mr. Shrem was the founder and chief executive of a popular website, Bitinstant, where Bitcoins could be bought using dollars. The criminal charges unsealed on Monday allege that Mr. Shrem used his company to convert money anonymously for people interested in buying narcotics on the Silk Road site, and also personally bought drugs on the site. He was arrested at John F. Kennedy Airport.

The scheme was allegedly operated in cooperation with another man, Robert Faiella, known as BTCKing, who was arrested on Monday.

The complaint says that when a co-founder of Mr. Shrem’s company questioned the cooperation with Mr. Faiella, Mr. Shrem wrote back that “we make good profit from him.”

Bitinstant stopped operating last summer, but the site was viewed as a pioneer in the industry, and Mr. Shrem had recently said that he planned to restart it. The company won early backing from Winkelvoss Capital, which is run by the Winkelvoss brothers, who were early players in Facebook.

In a statement, Winkelvoss Capital said, “We were passive investors in BitInstant and will do everything we can to help law enforcement officials. We fully support any and all governmental efforts to ensure that money laundering requirements are enforced, and look forward to clearer regulation being implemented on the purchase and sale of Bitcoins.”

Mr. Shrem has been an outspoken advocate for the virtual currency. He is the vice chairman of the Bitcoin Foundation, a non-profit that educates the public on digital money. Mr. Shrem was still listed on Monday as a member of the foundation’s board.

A spokeswoman for the foundation, Jinyoung Englund, said, “We are surprised and shocked by the news today. As a foundation, we take these allegations seriously and do not condone illegal activity.”

The unsealing of the complaint comes just a day before the New York State Superintendent of Financial Services, Benjamin Lawsky, is set to hold hearings where the legality of Bitcoin is set to be discussed.

U.S. v. Robert M. Faiella and Charlie Shrem

Google Acquires British Artificial Intelligence Developer

LONDON â€" As it aims to build driverless cars and the next generation of robots, Google said on Monday that it had acquired the British artificial intelligence developer DeepMind.

A Google spokesman confirmed the deal but declined to provide the transaction’s cost or more information on how Google planned to use DeepMind’s projects, which include applications for simulations, e-commerce and games.

The company, which is based in London, was founded by Demis Hassabis, a computer game designer, neuroscientist and former child chess prodigy, and his partners, Shane Legg and Mustafa Suleyman.

On its website, DeepMind describes itself as combining “the best techniques from machine learning and systems neuroscience to build powerful general-purpose learning algorithms.”

“This partnership will allow us to turbo-charge our mission to harness the power of machine learning tools to tackle some of society’s toughest problems and help make our everyday lives more productive and enjoyable,” Mr. Hassabis said in a statement. “We’ve built a world-leading team here in the U.K. and we’re looking forward to accelerating the impact of our technology with Google.”

ReCode, the digital news website venture started by Walter S. Mossberg and Kara Swisher, the founders of All Things Digital, first reported the deal on Sunday, saying Google had agreed to pay $400 million for the firm.

The deal is the latest in a series of acquisitions for Google, which has moved beyond its roots as an Internet search and email provider to a developer of smartphones and cars that drive themselves.

Last year, the company bought seven companies related to the development of advanced robotics, including Boston Dynamics, the maker of Big Dog, a robot that can travel across rough terrain, and Makani Power, which makes airborne wind turbines.

Google announced this month that it was purchasing Nest Labs, which makes thermostats and smoke alarms that are connected to the Internet and learn a home owner’s preferences, for $3.2 billion.

European Telecommunications Companies May Follow Cable’s Lead

European telecommunications companies may well follow cable’s lead on acquisitions. The latest in a string of cable tie-ups sees Liberty Global, John Malone’s consolidator, take full control of its Dutch rival Ziggo for 10 billion euros ($13.7 billion) including debt. Among telecommunications companies, deal making has proved trickier. But here, too, activity should start to rise.

After a long pursuit, the cash and shares purchase of Ziggo comes at a rich-looking enterprise value of 11.3 times last year’s earnings before interest, taxes, depreciation and amortization. That is offset by significant synergies and the lower cost of Liberty’s existing 28.5 percent stake. Adjusted for these factors, Liberty arrives at a less punishing 9.3 times 2014 Ebitda.

Cable is in a sweet spot: cash generating, technologically strong and with little regulatory interference. So Liberty Global â€" fueled by cheap debt and an ardent belief in the benefits of scale â€" has been gobbling up assets. The sector has also proved attractive to mobile groups. Owning cable assets is useful as customers increasingly buy bundled television, phone and broadband, and as exploding data usage strains mobile network capacity. Hence Vodafone’s takeover of Kabel Deutschland last year.

So expect more deal making. In France, the recently listed Numericable could join with mobile group SFR, once the SFR spins out of Vivendi. Bloomberg and Expansion say Vodafone is keen on Ono, a Spanish group that is preparing for an initial public offering.

Life has been much trickier for traditional telecommunications companies. But here, too, acquisitions are likely to pick up. Europe’s regulators belatedly realize a strategically important sector is ailing and requires a more pragmatic stance on mergers. A pending German mobile merger, if permitted, might set off further in-market consolidation in Italy, Sweden, France or Britain.

Major cross-border mergers and acquisitions could return, too. The obvious move is for AT&T, loudly talking up its interest in Europe, to bid for Vodafone, once the Vodafone completes its exit from Verizon Wireless. A denial on Monday came at the urging of Britain’s Takeover Panel after reports of exploratory meetings with regulators. That upset an emerging consensus. But no other target offers the same blend of scale, mobile focus and freedom from political interference. And AT&T’s statement says it cannot make an offer for only six months.

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

In Recruiting Game, Wall Street Still Competes

Despite the refrain that the financial crisis has discouraged students from pursuing jobs in finance, the number of elite students who continue to seek lucrative positions at financial firms indicates that Wall Street has not yet lost its luster.

As this year’s recruiting season begins, some students say they view finance positions as springboards for later careers, while others are are drawn to the challenge and fast-paced environment. Still others are, naturally, motivated by the high salaries that Wall Street offers.

But perhaps, some say, Wall Street’s allure is fueled by the colleges themselves, which allow recruiters to hold sway on these students.

“Wall Street’s influence has led to a situation where students are more likely to become bankers than doctors,” said Laura Newland, who self-published a book this month called “Chasing Zeroes: The Rise of Student Debt, the Fall of the College Ideal, and One Overachiever’s Misguided Pursuit of Success.” “I think the college experience has morphed into something that my parent’s generation probably wouldn’t recognize.”

For Ms. Newland, who is from a small town in Alabama, part of the appeal of a liberal arts college was that she thought she would have time to explore what she wanted to do after graduation. Instead, what she found during her first year at Duke in 2006 was a “gravitational pull” toward jobs in the financial sector and first-year students who attended career fairs with the hopes of impressing the right person early. But unlike most students who aggressively pursue a career in finance, Ms. Newland, who graduated in 2010, realized during her junior year that the Wall Street internship she had been coveting for so long was not, in the end, what she wanted. She is now a management consultant.

Ms. Newland is only one of many students who find themselves seduced by Wall Street by the time they are juniors and seniors despite having no previous aspirations to work in finance.

And many of these students are like Ms. Newland. Attracted by the idea of a high pay and often faced with a pile of debt, students flock to career fairs, attend daylong interviews known as “super days” and anxiously await a phone call announcing an offer.

While Ms. Newland’s book rebukes elite schools for allowing Wall Street recruiters to prey on naive students, it is unlikely to change the high-stakes game of pursuing an offer to join the financial elite.

Jobs in the financial services are still among the top career choices for graduating seniors at elite colleges despite Wall Street’s battered reputation, even if the numbers are somewhat depressed since the financial crisis. Harvard reported that 12 percent of its class of 2013 went into financial services, up from 11 percent in 2012. At Yale, 14.8 percent of the 2013 graduating class joined financial services. Of the 865 Brown students who started working right after graduation in 2012, 15 percent went into finance and banking, with 19 graduates going to Morgan Stanley or Goldman Sachs. Brown’s 2013 numbers will be released in the spring.

“These are industries that have very structured kinds of recruiting processes,” said Andrew Simmons, the director of Brown’s career development center. “They tend to, for that reason, have a high level of visibility among the students.” Brown, like many prestigious universities, sponsors information sessions for summer internships and full-time positions led by a number of finance groups, including Goldman, Morgan Stanley, Barclays and Citigroup, which all continue to draw a significant number of students, he said.

For one, many first-year Wall Street jobs pay at least $70,000 a year in salary, not including a yearly bonus. And securing a job when peers are contemplating their future is attractive â€" offers for junior-year internships are often doled out before March, and for full-time jobs, by October of the senior year. It’s almost impossible to say no to a tangible job at the beginning of senior year when the alternative is to wait and see whether something else with guaranteed less pay will materialize. Other opportunities do exist, but it’s sometimes hard to figure out how to find them.

“We certainly have the Wall Street and consulting recruiters hanging around, but we also have a lot of other options,” Mr. Simmons said. “The real things that students gravitate towards is things that seem clear cut.”

For her part, Ms. Newland, the author, agreed.  “Bankers are very present,” she said. “It seems like they’re everywhere all the time.”

R.B.S. to Take Nearly $5 Billion Charge Related to Litigation Claims

LONDON - The Royal Bank of Scotland said it would take nearly £3 billion, or about $4.97 billion, in charges to cover potential litigation claims related to mortgage-backed securities and other products sold before the financial crisis.

Bailed out by the British government five years ago, Royal Bank of Scotland said it would take a £1.9 billion charge for potential claims related to mortgage-backed securities and other securities litigation in the United States.

It also will take additional £465 million provision to cover claims related to payment protection insurance, a controversial insurance product that British banks have paid billions of dollars in claims for being improperly sold, and another £500 million to cover claims related to so-called interest rate hedging products.

R.B.S. had paid out £2.2 billion in claims and other costs related to payment protection insurance claims as of Dec. 31 after setting aside £3.1 billion to cover those claims. The bank had previously set aside £1.25 billion to cover claims related to the interest-rate products.

“Billions of pounds have been spent to resolve conduct and litigation issues in recent years,” said Ross M. McEwan, the bank’s chief executive. “Costs on this scale were not predicted by anyone when R.B.S. was rescued in 2008. They come in addition to the costs of restructuring the bank’s bad assets and restoring its funding to prudent levels after the financial crisis.”

The announcement comes about a little more than a week after Deutsche Bank reported its results earlier than expected, saying it had posted a loss of 1.2 billion euros, or about $1.64 billion, related to litigation and restructuring costs.

R.B.S. is scheduled to report its results on Feb. 27.

Mr. McEwan, who took over as C.E.O. in October, has already said he would not take a bonus for the bank’s performance in 2013 and 2014. On Monday, R.B.S. said that the eight other members of its executive committee would not receive bonuses for 2013.

“We have to show we take accountability seriously,” Mr. McEwan said on a conference call with journalists on Monday evening.

Last year, R.B.S. said that it planned to create an internal “bad bank,” known as R.B.S. Capital Resolution, to manage about £38 billion in troubled assets. On Monday, the bank reiterated that it expects to report impairments and asset-valuation adjustments associated with that strategy in the range of £4 billion to £4.5 billion in the fourth quarter.

“We have a stronger bank that can take these provisions,” Mr. McEwan said Monday.

Mr. McEwan has said he wants to change the culture of R.B.S., which received £45 billion from the British government during the financial crisis five years ago and repay the government as quickly as possible.

But, he has had to navigate a series of bad news and bad luck as he tries to turn around the bank, which is 81 percent owned by the British government.

The Financial Conduct Authority, a British financial regulator, is reviewing the bank’s lending practices after two reports last year criticized its treatment of small and medium-sized business clients, including claims the bank pushed some business clients into serious financial difficulties. R.B.S. separately hired the law firm Clifford Chance to conduct an independent inquiry into the claims.

A systems crash in December left customers unable to pay with their debit or credit cards on “Cyber Monday,” one of the busiest online shopping days of the year. Then, Nathan Bostock, the bank’s chief financial officer, resigned after less than three months on the job.

The bank also has found itself recently in the middle of a dispute between Prime Minister David Cameron and Ed Miliband, the leader of the opposition Labour Party over banker bonuses. Mr. Miliband wants the British government to block any attempts by R.B.S. to pay bonuses up to double a banker’s annual salary.

 

 

Kleiner Perkins Distances Itself From Founder After Nazi Analogy

Thomas J. Perkins, known as Tom, is a legend in Silicon Valley, an elite investor who was an early backer of Netscape and Genentech. The firm he helped found, Kleiner Perkins Caufield & Byers, cemented its reputation with early bets on Google and Amazon.

But over the weekend, members of the technology elite sought to distance themselves from Mr. Perkins after he publicly compared criticism of the wealthy to Nazi attacks on Jews.

In a letter to the editor printed in Saturday’s Wall Street Journal, Mr. Perkins, 82, wrote: “I would call attention to the parallels of fascist Nazi Germany to its war on its ‘one percent,’ namely its Jews, to the progressive war on the American one percent, namely the ‘rich.’”

“This is a very dangerous drift in our American thinking,” he continued. “Kristallnacht was unthinkable in 1930; is its descendent ‘progressive’ radicalism unthinkable now?”

The seemingly tone-deaf remarks immediately caused a stir on social media and blogs. Many expressed outrage and shock.

Some commentators saw evidence of a more widespread attitude among the very rich.

“Extreme inequality, it turns out, creates a class of people who are alarmingly detached from reality â€" and simultaneously gives these people great power,” Paul Krugman wrote in his column in The New York Times on Monday. “Mr. Perkins isn’t that much of an outlier. He isn’t even the first finance titan to compare advocates of progressive taxation to Nazis.”

Mr. Krugman was thinking of Stephen A. Schwarzman, chief executive of the Blackstone Group, who employed an unfortunate analogy in 2010 when speaking about the Obama administration’s crackdown on finance, particularly a plan to raise the tax rate on carried interest.

“It’s like when Hitler invaded Poland in 1939,” Schwarzman said that summer. He later apologized for the “inappropriate” analogy.

Another venture capitalist, Mark Suster, wrote on his blog on Saturday that Kleiner Perkins Caufield & Byers - often known as simply Kleiner Perkins - should consider shortening its name further.

“This is not a mere gaffe that people won’t remember in 3 years,” Mr. Suster wrote. “Perkins will forever be associated with greed, insensitivity and lack of historical context. If it were my firm I would rebrand as Kleiner.”

Mr. Perkins, a fiercely competitive investor who built one of the world’s most expensive yachts, left a big imprint on his venture capital firm, which has made a number of bold bets over the years. But on Saturday, Kleiner Perkins sought to emphasize that Mr. Perkins no longer worked there.

Tom Perkins has not been involved in KPCB in years. We were shocked by his views expressed today in the WSJ and do not agree.

â€" Kleiner Perkins (@kpcb) 25 Jan 14

That line of argument was also advanced by Marc Andreessen, a co-founder of the venture capital firm Andreessen Horowitz, who wrote on Twitter on Saturday: “Before collective freakout extends too far: Tom Perkins has not been VC for over 20 years, mostly uninvolved in tech industry for long time.”

After that tweet generated a number of heated responses, Mr. Andreessen returned to the issue a day later, this time addressing the comments themselves.

“I wish to express my extreme displeasure with Tom Perkins,” he wrote, using a vulgarity to describe Mr. Perkins.

Others saw an opportunity for humor. Aaron Levie, the chief executive of Box, referred to another wealthy businessman, while Gabe Rivera, the founder of Techmeme, proposed a new name for Kleiner Perkins.

Apparently Tom Perkins just got back from a social media seminar led by Donald Trump.

â€" Aaron Levie (@levie) 25 Jan 14

It’s time @kpcb rebranded to project a younger, more engaged and relatable image and thus I propose: Kleiner Perky Caufield Byers.

â€" Gabe Rivera (@gaberivera) 25 Jan 14

In his letter, Mr. Perkins referred to “libelous and cruel attacks” in the The San Francisco Chronicle on the author Danielle Steel, who is his former wife. A columnist in The Chronicle had called Ms. Steel a snob.

“From the Occupy movement to the demonization of the rich embedded in virtually every word of our local newspaper, the San Francisco Chronicle, I perceive a rising tide of hatred of the successful one percent,” Mr. Perkins wrote. “There is outraged public reaction to the Google buses carrying technology workers from the city to the peninsula high-tech companies which employ them. We have outrage over the rising real estate prices which these ‘techno geeks’ can pay.”

On the subject of real estate, Mr. Perkins has been vocal in the past.

“I’m called the king of Silicon Valley,” he told The Journal in 2012. “Why can’t I have a penthouse?”

Bair, Critic of the Revolving Door, Joins Board of Santander

Sheila C. Bair, the former head of the Federal Deposit Insurance Corporation who once argued that former regulators should be barred from joining the banks they oversaw, is joining the board of Banco Santander, the Spanish bank said on Monday.

Ms. Bair, who ran the F.D.I.C. during the turmoil of the financial crisis, has been appointed a director of Santander, subject to ratification by shareholders, the bank said. She will fill a vacancy left by Terence Burns, a former British official who served for more than a decade on the Spanish bank’s board.

Though Santander is based in Madrid, it has extensive operations in the United States, with billions of dollars in deposits, and is regulated by the F.D.I.C. Santander Consumer USA, the bank’s American auto lending arm, held an initial public offering last week.

In its statement, the bank cited Ms. Bair’s “international experience and her knowledge of the U.S financial market.”

Ms. Bair, who left the F.D.I.C. in 2011, is a senior adviser to the Pew Charitable Trusts, a nonprofit public policy organization. She has previously spoken out against the so-called revolving door, in which former regulators go to work for the industry they once oversaw.

“I would like to see financial regulation be viewed as a lifelong career choice â€" similar to the Foreign Service â€" rather than a revolving door to a better-paying job in the private sector,” she wrote in her book, “Bull by the Horns: Fighting to Save Main Street from Wall Street and Wall Street from Itself.”

“There should be a lifetime ban on regulators working for financial institutions they have regulated,” she wrote.

Ms. Bair did not immediately respond to an emailed request for comment. Her compensation for the board position was not disclosed.

Senior Justice Department Attorney to Join Morrison & Foerster

Charles Duross, a senior attorney at the Justice Department who once prosecuted a congressman who hid $90,000 in his freezer, has decided to join the law firm of Morrison & Foerster as head of its global anticorruption practice.

Mr. Duross, who led the Justice Department’s unit that enforces the Foreign Corrupt Practices Act for four years before his departure on Friday, will begin at Morrison on Feb. 17, the firm announced on Monday. Patrick Stokes, co-head of the fraud section’s securities and financial fraud unit at the agency, will succeed Mr. Duross, according to a Justice Department spokesman, Peter Carr.

Mr. Duross was an architect of some of the Justice Department’s guidelines on the corrupt practices act, which prohibits American companies from bribing foreign officials in seeking competitive advantages.

During his tenure at the Justice Department, Mr. Duross was a principal author of “A Resource Guide to the U.S. Foreign Corrupt Practices Act,” a joint publication of the agency and the Securities and Exchange Commission.

Under his leadership, the Justice Department resolved more than 40 corporate cases, resulting in about $1.9 billion in penalties and more than two dozen convictions, according to the Morrison & Foerster announcement.

“Chuck’s intimate knowledge of the F.C.P.A. enforcement system he was instrumental in creating, along with his relationships with his fellow enforcement officials around the world, will be an invaluable asset to our clients,” Larren M. Nashelsky, chairman of Morrison & Foerster, said in a statement.

Mr. Duross was also one of the lead prosecutors of William J. Jefferson, a former congressman who famously hid $90,000 in his freezer and was sentenced to 13 years in prison in 2009 on bribery, money laundering and racketeering charges.

In an interview, Mr. Duross said he began looking at about a half-dozen law firms in October after deciding he was ready for a change. While he praised the firm’s white-collar practice and global platform, Mr. Duross recalled various meetings with the firm’s lawyers, and added that it was also the collegial environment that ultimately won him over.

“They were having as much fun talking to each other as with me,” he said.

Before running the Justice Department’s corrupt practices unit, Mr. Duross served as assistant chief of the unit from October 2008 to April 2010, and as a line prosecutor with the fraud section from December 2006 to October 2008. He joined the Justice Department’s fraud division in 2006 after serving in the United States attorney’s office in the southern district of Florida since 2001.

“Chuck has been an extraordinary public servant for many years and has been a tireless and dedicated leader of our F.C.P.A. program,” Mythili Raman, acting assistant attorney general in the Justice Department’s criminal division, said in a statement. “Chuck’s strategic, tenacious, and thoughtful approach to our F.C.P.A. enforcement program has not only resulted in individuals and institutions being held accountable for F.C.P.A. violations, but has helped to change corporate culture for the better.”

Bitcoin and the Fictions of Money

Ethan Miller/Getty Images The D Las Vegas casino recently announced that it would accept Bitcoins.

How should we think about a currency like Bitcoin? The first thing to remember is this: Money is a sort of collective fiction. What money we choose to trust says much about how we see the world.

Above the simplest exchanges, most money has limited use. Gold, the most common historical currency, is almost only good for adornment. To its fans, gold’s uselessness is a value in itself; since the stock of gold is not consumed, it’s reasonably stable, while governments can print all the currency they want.

Paper is, of course, a proxy for the government issuing the money. How much we trust the government’s ability to collect taxes, pay debts, and so on is the collective fiction that gives a country’s money value.

Paper or metal, money is worth something only if people continue to believe in it. And right now, an increasing number of people believe in Bitcoins and similar, emerging stateless currencies. From parity with the dollar three years ago, one Bitcoin is now just over $800.

Marc Andreessen, a venture capitalist whose firm has invested just under $50 million in start-ups related to Bitcoin, has written a very helpful introduction to Bitcoin in Dealbook. It is also a spirited defense of Bitcoin. Mind you, a sensible person should read the essay aware that Mr. Andreessen has a significant number of United States dollars bet on Bitcoin’s increasing use.

The journalist Glenn Fleishman, with whom Mr. Andreessen has been spiritedly debating Bitcoin on Twitter for several days, wrote a strong critique of Mr. Andreessen’s thinking. Much of the argument is about the mathematics, or whether Bitcoin is deflationary, or the way in which the creation of new Bitcoins burns increasing amounts of electricity to no good end.

So far, there is little discussion of what the collective decision to believe a fiction like Bitcoin might mean. In many ways, that is the more interesting phenomenon. Certainly, it is applicable not just to Bitcoin, but to Bitcoin proxies like Zerocoin or to other new stateless, math-based currencies, like Ripple. It also sharpens current preoccupations in the high-tech world.

In the place of believing in a central bank, or its owner, a powerful nation state, what do we believe in when we believe in Bitcoin? Specifics around the algorithm, of course. More deeply, we believe in a borderless world of hyper-empowered individuals, alive mostly through the Internet.

They are not gated by language, thanks to image sharing and Google Translate. Many have sent thousands of messages around the world, without ever using a sovereign nation’s stamps. Many have never done national service in the physical world. Even more do not expect their children to fight in a country’s wars, at least not as soldiers carrying arms. (Cyberwar is another matter, perhaps.)

None of this bodes well for the relationship between the most wealthy, powerful and gifted, and their home nations. At a telling moment a few months ago, I asked three tech executives - an American, a Czech and a Romanian, the following question: If I threw down five passports from “good” countries, like Germany or Singapore, would you care which one you picked up? No one would. Their business is on the Internet, everywhere and nowhere, and they have friends all over the world.

Charles Stross, the science fiction writer, wrote in a strong critique of Bitcoin that it has an inherently elitist, libertarian agenda. Alex Payne, another critic, wrote a piece slamming one of Mr. Andreessen’s partners that took it farther, saying that belief in Bitcoin was another symptom of Silicon Valley’s enormous self-regard.

By those lights, the old fiction of the central bank is being swapped for the new collective fiction of the almighty tech elite. That idea settles in uncomfortably close to recent calls by some prominent tech executives to detach, as much as possible, from the old, failed nations. San Francisco’s continuing antagonisms between tech workers and “normal” people takes on an even darker cast, once the protesters are seen as a crowd anxious at being left behind.

There are also other fictions associated with other currencies. Ripple, developed after Bitcoin, hopes to be a kind of universal proxy currency, perhaps enabling the owner of a farm animal in Nepal to directly trade it for an iPhone in Britain, or American frequent-flyer miles to become gold in Mexico.

“People will decide what kind of things they want to hold,” said Chris Larsen, the co-founder and chief executive of Ripple Labs, a company that is associated with the Ripple currency. “We think there will be an explosion of different currencies.”

Chris Larsen, the co-founder and chief executive of Ripple Labs, a company associated with the math-based currency.

Ripple, the digital money, was created, open-sourced, and put out into the world in a finite amount. Its presence is distributed over 50 servers on three continents, and all of them must agree on the rises or falls in the net value of the money. That should prevent the injection of new, inflationary Ripples being injected into the system. Even so, Mr. Larsen said that at this point it was “clearly a speculative market.”

“Is Bitcoin Friendster, and we’re MySpace? I hope not,” he said, referring to a pair of the earliest social networks. “Are we still waiting for our Facebook? Possibly. People worry a lot about the dollar now.”

It may be, as Mr. Larsen says, that math-based systems have a kind of purity, “the exchange of value within the exchange of information,” without the messy stuff of nations getting in the way. It may also be that life stays messy, and these new systems learn how to accommodate that, possibly by agreeing to be taxed by one or another government.

The language we use around money is telling. Words like “currency,” “tender,” “exchange” bespeak a world of social interaction, trust. In the meantime, informal terms like “loot,” “lucre,” and even today’s “cheddar” (from government handouts of cheese) show our more problematic feelings about money. So far Bitcoin is spoken of in extreme terms, as a threat, or a bubble, or the empowerment of drug dealers. If it is taxed, and becomes normal, it may actually be more revolutionary.

The poet Wallace Stevens called money “a kind of poetry.” He also had the horse sense to write his verses about the romance of the human imagination while walking to his job as a vice president for an insurance company. He knew both sides of the coin, when he said how closely the real and the imaginary need each other for society to work.

Study Puts Price Tag on ‘Too Big to Fail’

LONDON - An analysis commissioned by the Green Party in the European Parliament estimates that the cost of the implicit guarantee that governments will back large financial institutions, known as “too big to fail,” was about 234 billion euros in 2012.

To remedy the distortions of this subsidy, policy makers should go further in carving out the risky parts of banks, demand that the banks hold even heftier capital cushions and tax any remaining advantage, said Philippe Lamberts, a Green Party member of the European Parliament who commissioned the study.

“It is urgent to eliminate the market advantage given to these institutions,” said Mr. Lamberts, who added that he commissioned the study to provide evidence for coming banking reform legislation.

Alexander Kloeck, the author of the study and an independent consultant, said the problem with the implicit guarantee was that it created distortions in financial markets. “It’s a free guarantee the institutions benefit from,” he said on a conference call with reporters. It creates moral hazard, or the willingness of banks to take outsize risk, knowing there is a lender of last resort, he said.

The €234 billion figure was reached by looking at eight academic and institutional studies focused on implicit subsidies. “We’ve taken everything we could find and tried to extract a meaningful average out of it,” Mr. Kloeck said.

Most of the studies arrive at a figure by quantifying the lower lending costs that large financial institutions enjoy from the market because of governments’ willingness to prop up failing national financial institutions, called the funding advantage approach. Others use a more complex option-pricing theory model.

The study comes as policy makers are focused on the health of Europe’s banks and their role in aiding or hindering Europe’s economic growth. The European Central Bank is examining the books of European banks this year in an attempt to uncover any serious problems. Unveiling toxic assets, the hope is, would help to restore faith in balance sheets and allow European banks to start lending again.

At the World Economic Forum meeting in Davos, Switzerland, last week, Mario Draghi, president of the European Central Bank, said he did not know whether any banks would need to be closed as a result of the central bank’s examination but that the system was prepared to deal with the consequences if any significant problems materialized.

“The banks that should go, should go,” Mr. Draghi said.

Regulators in the United States, Britain and Europe have scrambled to enact rules aimed at better monitoring of bank balance sheets. Last year, Britain passed legislation that separated retail banking from riskier investment banking and made it easier to hold senior executives accountable for reckless behavior.

Sajid Javid, financial minister to the British Treasury, told The Financial Times last December that the bill would reduce the risk of too big to fail, but he said it was impossible to completely insure against future state bailouts. British taxpayers had to rescue the Royal Bank of Scotland and the Lloyds Banking Group in 2008-2009.

In the United States, the Volker Rule bans proprietary trading by banks. Stricter capital requirements from the so-called Basel III accords will require banks to hold larger capital reserves to insure against losses. With the European Commission set to take up structural banking reform this year, Mr. Lamberts said he was looking for evidence to bolster tougher reforms.

Mr. Lamberts is familiar to those in Britain and Europe as one of the primary authors of the bill to limit bankers’ bonuses to 100 percent of fixed salary, or 200 percent if approved by shareholders. Britain has challenged that bill in the European Court of Justice. He is also a proponent of a financial transaction tax and a supporter of limits on short-selling that were upheld by the European Court of Justice last week.

Mr. Lamberts acknowledged that his policy recommendations â€" further ring-fencing, higher capital cushions and increased taxes â€" could make credit more expensive at a time when economic recovery is weak.

“I don’t want to make credit more expensive,” he said. “I want markets to pay the real price of credit, and I don’t want taxpayers to subsidize credit for everyone.”

According to European Central Bank figures cited in the too big to fail analysis, European Union banks as a whole lost €29.4 billion in 2012, while large banks posted profits of €16.2 billion.

“These figures clearly show that without the implicit subsidies the large banking institutions in the E.U. would be making substantial losses,” the study said.

AT&T Denies Pursuit of Vodafone

LONDON â€" AT&T announced on Monday that it was not in talks to buy Vodafone, the European telecommunications giant.

The denial came after speculation during the weekend that AT&T might be looking to acquire Vodafone, which agreed last year to sell its 45 percent stake in Verizon Wireless to Verizon Communications for $130 billion.

The rumors were fueled by a meeting between AT&T’s chief executive, Randall Stephenson, and Neelie Kroes, the European commissioner who oversees the Continent’s telecommunications sector, during the World Economic Forum in Davos, Switzerland, last week.

While the two discussed AT&T’s potential future plans in Europe, the meeting also included broader issues like data privacy and recent government surveillance revelations, according to a person briefed on the matter, who spoke on the condition of anonymity because he was not authorized to speak publicly.

Vodafone’s shares fell almost 6 percent on Monday after AT&T’s announcement. AT&T added, however, that it reserved the right to make a potential offer in the future. Under British takeover rules, AT&T must wait at least six months before announcing any prospective plans.

Speculation continues about the future of Vodafone. It is in early discussions to buy the Spanish cable operator ONO, which is considering an initial public offering, according to a person briefed on the matter, who spoke on the condition of anonymity because he was not authorized to speak publicly.

Analysts said the deal could be worth about $10 billion, though discussions between Vodafone and ONO may not may necessarily lead to a deal, the person added.

A spokesman for Vodafone declined to comment. A representative for AT&T was not immediately available for comment.