Icahn’s War of Words With eBay

It’s a fight that pits Wall Street against Silicon Valley.

One of the sharper business battles in recent weeks has been playing out between Carl C. Icahn, the activist investor, and Marc Andreessen, the entrepreneur turned technology investor.

The war of words stems from Mr. Icahn’s campaign against eBay, the online auction company, to spin off its fast-growing PayPal electronic payment unit.

Mr. Andreessen, long considered Silicon Valley royalty because he co-founded Netscape and was an early investor in Facebook, has come under attack from Mr. Icahn for his role as a board member of eBay.

Mr. Icahn has accused him of various conflicts of interest, calling him “clueless about corporate governance.” EBay’s chief executive, John J. Donahoe, has also become a target, whom Mr. Icahn described as “either incompetent or negligent.”

Mr. Icahn asserts that eBay’s decision to sell Skype in 2009 for $2.75 billion to a group of investors that included Mr. Andreessen’s venture capital firm represented a conflict and a breach of duty to shareholders. Mr. Andreessen fired back that he had recused himself from the decision to sell Skype.

The investor group that acquired Skype, which was led by the investment firm Silver Lake, turned around less than two years later and sold the business for $8.5 billion to Microsoft. That has led to a lingering question: Why did eBay sell when it did?

Mr. Icahn has suggested that Mr. Donahoe and the board were pressured to sell Skype by Mr. Andreessen, who Mr. Icahn contends knew that Microsoft was waiting in the wings to buy what it saw as a valuable asset at a much higher price.

If only it were that juicy. The real story is more complicated, and perhaps sadly for the conspiracy theorists, less nefarious.

First, a little history: EBay acquired Skype in 2005 for about $2.5 billion. Skype, the online chat service, was such a mess â€" and such a bad fit with the bread-and-butter auction business of eBay â€" that the company wrote down $1.4 billion of the investment in 2007. By 2009, Mr. Donahoe, a former Bain & Company consultant, decided Skype was a distraction and should be sold or spun off.

However, given the postcrisis recession and a major lawsuit hanging over Skype from its founders that involved some of the company’s key intellectual property, few buyers emerged. I covered the auction and distinctly remember the lack of interest from most of Silicon Valley.

Enter Silver Lake, with its $2.75 billion bid. To induce Silver Lake to buy Skype, eBay agreed to cover 50 percent of the losses resulting from the lawsuit from Skype’s founders. Further, eBay agreed to hold onto a 30 percent stake in Skype so that it would participate in the upside â€" or downside â€" of the business into the future.

At the time, Joe Nocera wrote a column in The New York Times suggesting the price tag that Silver Lake was paying was high: “Many people on Wall Street â€" and a number of telecommunications experts I spoke to this week â€" were stunned by the price Skype sold for, and not just because we are in the middle of a recession.”

A little over a year and a half later, with the economy getting a bit better and after a settlement was reached with Skype’s founders to end the litigation, Microsoft paid an astonishing $8.5 billion for the company, which included eBay’s stake. (Microsoft had originally passed on the acquisition because of legal issues.)

Today, with the benefit of hindsight, Mr. Icahn argues that eBay mismanaged the sale, and shareholders lost out on roughly $4 billion that went to the Silver Lake consortium, which included Mr. Andreessen’s firm.

There is no question that, by default, eBay would have benefited by waiting another two years to sell the business and settling the litigation itself. But it is hard to argue in good faith that eBay somehow knew that the business was worth more than the market at the time and still went ahead with the sale mainly to enrich Mr. Andreessen.

Perhaps forgotten in the back-and-forth between Mr. Icahn and eBay is this: From the time the company signaled its intent to divest Skype until the sale to Microsoft closed, eBay’s market value jumped by $29 billion, or 195 percent, in no small part because investors believed that the company had refocused itself on the right priorities. While eBay may be short $4 billion, in truth, the amount was more than made up by the increase in the company’s market value.

So did Mr. Andreessen have an undue influence on the board’s decision to sell Skype to the investor consortium? By all accounts, the answer is no.

That’s not to say that a company selling a business to a group of investors that includes one of its board members should be applauded. It raises all sorts of questions that could have been avoided if Mr. Andreessen had recused himself from being part of the investor group that bought Skype as opposed to a board member involved in a critical decision for eBay’s future.

Silver Lake approached eBay long before Mr. Andreessen was ever invited to be part of the bidding group â€" and his firm, Andreessen Horowitz, invested only $50 million in the deal â€" so it was hardly necessary for him to participate in the deal the way he did.

Sadly, the debate over Mr. Andreessen’s role is obscuring a larger and more important debate: Should PayPal continue to be part of eBay, or would it be more successful separately?

Mr. Icahn may be a bit of Luddite, but when it comes to investing, he has a hot hand. And he has a powerful and unlikely backer of his idea: Elon Musk, the entrepreneur who helped co-found PayPal and now runs Tesla and SpaceX.

“It doesn’t make sense that a global payment system is a subsidiary of an auction website,” Mr. Musk told Forbes magazine. “It’s as if Target owned Visa or something.” Mr. Musk also argued that PayPal “will get cut to pieces by Amazon payments or by other systems like Apple and by start-ups if it continues to be part of eBay,” he said. “It will either wither or be spun out … Carl Icahn can see it, and he’s not exactly super tech-savvy.”

Another view takes the opposite tack. Reid Hoffman, the founder of LinkedIn and a former PayPal executive, backs eBay’s view that PayPal is worth more as part of the company than separated, especially given the powerful trends among its competition.

“Amazon is a commerce platform with its own payments system. Google has a commerce platform and a payments system. Apple has the capacity to leverage its commerce platforms (iTunes, App Store) and its hardware into a closed-loop commerce system that would let users pay for online and offline purchases using their iPhones,” he wrote on LinkedIn. “Square has allied with Starbucks because it needs large commerce partners to feed it transactions to process.”

Whatever the right answer about whether eBay and PayPal should remain together or be separated, there are valid arguments on both sides. Perhaps a breakup is inevitable over the long term. In the meantime, let’s keep the debates on the facts.

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

Suit Over Inheritance in the Perelman Family Nears Its End in Court

A messy family legal brawl involving the daughter of the financier Ronald O. Perelman is entering its final stages in a New Jersey court.

On Monday, James Cohen, the head of the newspaper and magazine wholesaler Hudson Media, took the stand for the first time in a courtroom in Hackensack, N.J. Mr. Cohen has been accused by his niece, Samantha Perelman, of manipulating his ailing father to funnel hundreds of millions of dollars out of her inheritance.

Ms. Perelman is the daughter of Mr. Perelman and Claudia Cohen, a former Page Six columnist for The New York Post, who died in 2007. Ms. Cohen’s father, Robert B. Cohen, founded Hudson Media, and Ms. Perelman claims that her mother’s share of Robert Cohen’s estate would have been worth roughly $700 million had her uncle not exerted “undue influence” over her grandfather.

Robert Cohen, who died in 2012, had progressive supranuclear palsy, which made it difficult for him to speak, walk and even blink toward the end of his life. At times, his words were no more than grunts.

In a lawsuit filed in 2012, Ms. Perelman contended that James Cohen took advantage of his father’s illness to cut Ms. Cohen, and ultimately Ms. Perelman, out of hundreds of millions of dollars. Ms. Perelman wants the court to uphold a will from 2004, which was more generous to her mother, and her.

During more than four hours of questioning by his lawyer on Monday, Mr. Cohen emphasized his close relationship with his father, and attested to Robert Cohen’s cognitive ability and intellect, even toward the end. When describing Robert Cohen’s declining health, Mr. Cohen listed only his father’s physical ailments, describing him as a “proud” man who would not want to walk with a cane or use a wheelchair.

“One of the reasons I went into my father’s business was because my father was probably the smartest guy I had ever met,” Mr. Cohen, the last witness in a civil trial that has dragged on since September, said on Monday. “He was an exciting, dynamic businessman.”

But lawyers for Ms. Perelman contend it was that very closeness that allowed Mr. Cohen to prey on his father’s declining mental faculties. They will start questioning Mr. Cohen on Tuesday.

Lawyers for Mr. Cohen have tried to paint Ms. Perelman as an insensitive, spoiled girl who never paid much attention to her grandfather, a description that makes Ms. Perelman’s side bristle.

On Monday, they sought to portray Mr. Cohen as the dutiful son. Mr. Cohen talked about his first job with Hudson, in the returns department at age 15, and repeatedly mentioned the regular lunches he had with his father.

When asked why his father had not been copied in on an email relating to a major Hudson deal, Mr. Cohen said that the contents would have been something he shared with his father during one of their regular talks.

At the heart of Ms. Perelman’s case is the 2008 sale of Hudson’s media operations to the private equity firm Advent International. Mr. Cohen earned $600 million from the deal, and Ms. Perelman claims that part of that payment should have gone to her grandfather and would now go to her if the 2004 will were enforced.

Lawyers for Ms. Perelman have accused Mr. Cohen of deliberately hiding information from his father and improperly engineering a takeover of the business, claims that Mr. Cohen’s lawyers have denied.

Mr. Cohen described his father’s physical impairments toward the end of the Advent deal. To emphasize his father’s mental abilities, however, Mr. Cohen stiffened his arm and made his voice hoarse to impersonate his father saying “That’s a good price.”

Ms. Perelman’s father has for years waged war with Mr. Cohen over his father-in-law’s estate. Mr. Perelman sued in 2008, but lost.

Now Ms. Perelman is leading the charge in court, while her father is paying her legal bills.

On Monday, Ms. Perlman, a 23-year-old student at Columbia Business School, appeared in court for the first part of her uncle’s testimony, but she left early to give a class presentation.

Puerto Rico Gets a Break With Rates on Its Bonds

Puerto Rico is expected to sell roughly $3 billion in bonds on Tuesday at interest rates that are considerably lower than many investors in the municipal market had expected, providing a rare bright spot for the cash-squeezed island.

The lower yields, investors say, are being driven by a combination of factors, including a recent flow of investments in mutual funds that are large buyers of municipal bonds, Puerto Rico’s progress in closing its chronic budget gap, its improved financial disclosures and a general sense of relief that the commonwealth still has access to the debt market.

“There’s a very explicit, almost to the point of jarring, acknowledgment of many problems,” said Robert Donahue, a managing director at Municipal Market Advisors, referring to a long-sought liquidity report issued last week by the Puerto Rican government. “Now the commonwealth has opened the curtain.”

But the commonwealth’s fiscal agent, the Government Development Bank, also has hired an affiliate of a well-known restructuring firm, raising concerns among some investors that Puerto Rico is weighing a revamping of its existing debt load, even as it prepares to raise fresh funds.

“I have to say it lends an element of discomfort as you look at the new deal,” Joseph Rosenblum, director of municipal credit research at AllianceBernstein, said of the hiring of the restructuring firm Millco Advisers, an affiliate of Millstein & Company. The firm’s founder is James E. Millstein, a former Treasury Department official who oversaw the government’s revamping of the bailed-out insurance giant American International Group after the inancial crisis.

At the moment, plenty of investors appear to be willing to look past the specter of a revamping as well as Puerto Rico’s current liquidity issues. They are betting that the $3 billion in new debt â€" one of the commonwealth’s largest bond sales in recent memory â€" will buy Puerto Rico the time it needs to turn around an economy that has been in a painful recession since 2006.

The tax-exempt debt is expected to be sold with yields from 8.62 to 8.87 percent, according to preliminary pricing documents circulated in the bond market on Monday. Those rates would prove far less expensive for the government than predictions ranging in the low double digits.

Many investors are calculating that any future losses from a revamping could be made up on the high yields that they can collect from the bonds, which will carry the commonwealth’s general obligation pledge. That pledge is stronger than usual when it comes from Puerto Rico because the commonwealth’s constitution states that all the island’s available resources will be used to make investors whole.

The Government Development Bank has not said whether a revamping is under consideration. The agency says that Millco was hired as a financial adviser to help it analyze the size and timing of coming cash requirements and to evaluate financing options.

Mr. Rosenblum of AllianceBernstein said he feared a repeat of what occurred in Detroit, when Kevyn Orr, a bankruptcy expert from the law firm Jones Day, was hired as the city’s emergency manager. It turned out to be a prelude to Detroit’s bankruptcy filing in July 2013.

Like Detroit, Puerto Rico has been losing population, which can hamper economic growth and leave a smaller and poorer group of people responsible for repaying the debt.

“I am not disregarding the progress that they have made in terms of the budget, but the situation continues to be challenged,” Mr. Rosenblum said.

As a United States territory, Puerto Rico cannot file bankruptcy under any existing chapter of the federal bankruptcy code, but many investors expect that the government may have to reduce some of its debt, dealing losses to investors.

Doubts about the credibility of Puerto Rico’s general obligation bonds have been growing, especially since Detroit has proposed resolving its bankruptcy by sharply reducing its payments on such bonds. The Puerto Rican secretaries of the treasury and justice have added an unusual provision to their bond resolution, requiring that any legal disputes be settled in federal court in New York, rather than in Puerto Rico.

The provision, described in materials circulated by the Wall Street banks selling the bonds, is meant to reassure investors who believe they would find a more creditor-friendly judge in New York than in Puerto Rico, people briefed on the sale said. The offering circular notes that a New York judge would still have the power to send any bondholder complaints to a Puerto Rican venue if that would be “more suitable on grounds of judicial fairness to the parties involved.”

For all investors’ concerns about Puerto Rico’s liquidity, many say they are heartened by the commonwealth’s success at cutting its pension expenses and reducing its budget shortfalls.

Some of this optimism is reflected in a recent rally in Puerto Rico bond prices. Yields on Puerto Rico general obligation bonds have fallen to 7.54 percent from 8.9 percent at the start of the year, according to Thomson Reuters data.

Still, Puerto Rico’s financial problems are complex and are not always immediately apparent â€" the result of multiple debt obligations of many government agencies. Sorting out those complexities will be a delicate task for Mr. Millstein and Millco.

Mr. Millstein was the architect of a complicated series of transactions that paid back the Federal Reserve Bank of New York for its initial bailout loans to A.I.G., which were extended before the Treasury got involved through TARP. Finding enough cash within A.I.G. to repay the loans, and separating A.I.G.’s various operating units from each other were operations that took months, and may prove relevant to Puerto Rico.

Since striking out on his own, Mr. Millstein has landed assignments like advising the merger of US Airways with the once-bankrupt American Airlines and some big creditors of Energy Future Holdings, the troubled Texas utility.

A.I.G. had to be revamped outside of bankruptcy, and A.I.G.’s operating units were woven together in ways that made them hard to separate without causing insurance insolvencies.

The Government Development Bank said Millco would also help it analyze the commonwealth’s capital structure, including the relationships between the bank itself, the central government and various public corporations, “including understanding all direct and contingent liabilities.”

At SXSW Conference, a Mother Presses Her Son’s Case

Among the tech start-ups pitching their ideas at SXSW this week, there was a mother, advocating not a new company but the cause of her son.

Lyn Ulbricht’s son, Ross Ulbricht, was arrested in October and charged with operating the Silk Road, the online drug bazaar where Bitcoin was the only money accepted.

Ms. Ulbricht has been raising money to pay for her’s son’s legal bills, and she thought that the crowd at SXSW would be receptive to Mr. Ulbricht’s cause.

By Monday, she looked tired after making appearances at several Bitcoin-related events. At each appearance, she handed out fliers with the website her family set up, FreeRoss.org, and a QR code that allowed donors to give money immediately.

“I see it as my job to pay the people who can help my son,” she said after the biggest Bitcoin-related panel at SXSW, where she was the first person in line to ask a question and mention her effort to the crowd.

She and her husband, who run a business renting houses in Costa Rica, have made her son’s cause into a nearly full-time job. She says she is taking a class on Twitter and Facebook to learn how to use social media to promote the effort. She had used neither â€" and had not possessed a Bitcoin â€" before her son’s arrest.

“It’s a whole new world for us,” she said.

When she has a chance to make her pitch, Ms. Ulbricht has not been talking about the merit’s of the case. She says she doesn’t know more than what is in the public documents.

But Mr. Ulbricht has pleaded not guilty and Ms. Ulbricht has said she wants people to know him not as an indicted suspect, but as the “wonderful person” she knows. Friends and acquaintances described Mr. Ulbricht in a recent New York Times article as soulful and sensitive.

The biggest deterrent to her efforts, she says, is the government allegations that Mr. Ulbricht solicited several murders for hire. Those charges did not end up as formal charges in the indictment that the government recently filed, and Ms. Ulbricht says she is confident they are not true.

“I kept reading these awful things that don’t sound like him at all,” she said.

She has also been arguing that her son’s case matters more broadly.

“This case opens new legal territory and the government is poised to set Internet and financial law with it,” the website she helped build says. “Bad law could be ushered in and we will be forced to live with it.”

The trip to Austin was a homecoming of sorts for Ms. Ulbricht. She and her husband raised their family in Austin, but they recently moved to New York to be near their son, who is in jail in Brooklyn awaiting trial.

Since she began raising money for her son, the donations have not been pouring in. Ms. Ulbricht says that many people have the perception that her family, or her son, was rich from Silk Road, where the operator collected a commission on each purchase.

But she said that the family did not have enough to pay for the bills, and whatever Bitcoins that Mr. Ulbricht owned when he was arrested are off limits until the case is over.

Ms. Ulbricht said she had not seen a major uptick in donations after attending Texas Bitcoin Conference, which took place last week, and SXSW this week. Only a few people took the fliers she handed out to attendees coming out of the Bitcoin talk on Monday.

But she said she had received moral support from enough people, which she said she told her son about when she spoke with him by phone on Monday.

“No one is going to be mean to me,” she said. “I am a mom who is in a very bad position. At worst case, they just ignore me. But people have been very kind.”

Blackstone and TPG Said to Plan $5.5 Billion Bid for Gates Global

The Blackstone Group and TPG Capital are teaming up in a planned bid for Gates Global, a maker of industrial and automotive parts, a person briefed on the matter said on Monday.

The firms are offering roughly $5.5 billion, according to this person, which would make the deal one of the largest private equity buyouts of the year so far, second only to the buyout last week of Safeway, which was worth more than $9 billion.

The deadline to bid for Gates Global is Wednesday, the person said. No other bidders are expected, though the situation remains fluid.

The Canada Pension Plan Investment Board, one of the owners of Gates Global, may contribute its stake to the Blackstone-TPG deal, according to the person, who spoke on condition of anonymity.

The owners of Gates Global, which include the private equity firm Onex, have also contemplated taking the company public, filing a prospectus for an initial public offering in December. A so-called dual-track process â€" in which owners pursue both a sale and an I.P.O. â€" is a popular method of trying to get the best possible price.

Onex and the Canadian pension plan bought Gates Global in 2010. The company, which is based in Denver, makes parts like power transmission belts, engine hoses and hose fittings.

News of the talks was reported earlier by The Wall Street Journal online.

Morgan Stanley Chief Calls Bitcoin ‘Surreal’

To its devotees, Bitcoin represents the future of transactions. But the financial establishment is still scratching its head over the virtual currency.

James P. Gorman, the chief executive of Morgan Stanley, said in a television interview on Monday that he did not have a firm grasp of Bitcoin, which has been much in the news after the collapse of a major exchange, Mt. Gox, and after Newsweek claimed to have found the currency’s creator.

“Wow,” Mr. Gorman said, smiling, when Maria Bartiromo of the Fox Business Network asked him about Bitcoin. “I’m not sure I understand it.”

“It’s totally surreal,” he said. “I mean, who’s the founder? This guy in L.A.? What’s going on with Mt. Gox? There’s so many moving parts.”

“I would think and hope that the regulators are paying a lot of attention to it,” he added.

Another bank chief executive, Jamie Dimon, who runs JPMorgan Chase, has also expressed skepticism about Bitcoin, calling it a “terrible store of value” that could be “replicated over and over.”

“The question isn’t whether we accept it,” Mr. Dimon said in a recent interview with CNBC. “The question is, do we even participate in people who facilitate Bitcoin?”

These pronouncements from big banks’ chief executives are significant for the Bitcoin proponents who think that the best hope for the virtual currency is to become integrated into the existing financial system. Raj Date, a former official at the Consumer Financial Protection Bureau who recently joined the board of a start-up focused on Bitcoin, said recently that “market makers” could help iron out Bitcoin’s volatility.

But another strain of Bitcoin fans thinks that the currency can thrive outside of traditional banking, offering a more seamless way to transfer money around the globe.

Despite the skepticism from bank chief executives, Bitcoin has found a more welcome reception in the research department of Bank of America Merrill Lynch, which predicted in a report in December that it could “become a major means of payment for e-commerce and may emerge as a serious competitor to traditional money transfer providers.”

Rival’s Split May Cast a Shadow on Dow

Andrew N. Liveris, the head of Dow Chemical, may find it harder to keep his company together now that a smaller rival is planning to break up. Mr. Liveris has resisted the campaign by the activist hedge fund manager Daniel S. Loeb to split Dow, a $60 billion company, into separate petro- and specialty chemicals groups.

The decision by a competitor, the FMC Corporation, to hive off its agriculture and pharmaceutical businesses from stodgier commodity minerals should create a more valuable company. The voluntary split makes it harder for Mr. Liveris to resist activist pressure to do the same.

There are decent parallels between the two companies. With a market capitalization of $10 billion, FMC is dwarfed by Dow, but they both have specialty chemical businesses. The better operating margin and revenue growth here is being overshadowed by a decent but weaker performance in minerals at FMC and petrochemicals at Dow.

The two companies also trade below their best-performing peers â€" Dow at 16 times consensus earnings estimates for this year and FMC, before today’s announcement, at around 17 times. Monsanto, by contrast, which deals purely with agriculture, has a multiple of 20 times expected earnings.

Applying that performance to FMC’s newly independent agriculture business, while keeping minerals on the current multiple, would yield some 18 percent in extra value to shareholders. It’s not the biggest jump, but the two separate companies could prosper from being more focused on their respective products.

Granted, FMC may be a cleaner breakup story. A crucial plank in Dow’s defense is that the company benefits from an integrated supply chain, with commodity petrochemicals often serving as building blocks for higher-margin specialty products. It’s harder to see such synergies at FMC. Its main minerals â€" lithium, used in batteries, and soda ash, used in glass manufacturing â€" have little to do with pesticides and drug capsule coatings.

Still, it’s tougher for Dow to argue against a breakup when a rival with similar growth businesses is doing the same. Mr. Liveris may manage to keep Mr. Loeb at bay for now. FMC’s stock market performance after its split, though, could make a potentially uncomfortable yardstick for measuring the Dow boss’s judgment.

Kevin Allison is a columnist at Reuters Breakingviews. For more independent commentary and analysis, visit breakingviews.com.

The Challenge of Linking Dewey’s Leader to Possible Accounting Shenanigans

Criminal charges filed by New York prosecutors against Steven H. Davis, former chairman of Dewey & LeBoeuf, describe actions that sound quite similar to the events that led to the collapse of Enron and WorldCom a decade ago. And, as with those earlier cases, the challenge for the government will be finding enough evidence to link the law firm’s head to accusations that accounting tricks were used to cover up a deteriorating financial position.

The 106-count indictment accuses Dewey & LeBoeuf’s leadership of mischaracterizing assets to deal with declining revenue that put it in danger of violating the terms of crushing bank debt taken on as part of a 2007 merger. Dewey eventually collapsed and filed bankruptcy in May 2012 amid accusations of mismanagement by Mr. Davis.

The other defendants are Stephen DiCarmine, the firm’s former executive director; Joel Sanders, the former chief financial officer; and Zachary Warren, a low-level employee who seems to have been included merely because of an email in which he wrote “Nice work dude” about one of the accounting maneuvers. Through their lawyers, all of the men have denied the charges.

The main charges against the individuals involve grand larceny and falsifying business records to deceive Dewey’s bank lenders and 13 insurance companies that bought $150 million in bonds the firm issued in 2010. The Securities and Exchange Commission also filed civil fraud charges against Mr. Davis, Mr. DiCarmine and Mr. Sanders, as well as two other members of the firm’s finance office. Curiously, the S.E.C. did not name Mr. Warren as a defendant.

Proving larceny under New York law requires showing that the defendant acted with specific intent to steal property with a value of over $1 million. That means the prosecution must show more than just recklessness, but an awareness that the accounting misstatements were designed to deprive the victims of their money.

The indictment recites a number of emails that can help build a case regarding what the defendants knew about the accounting tricks to show their intent to steal. And the New York prosecutors have secured guilty pleas from seven others in Dewey’s finance office, some of whom will testify for the government in the case.

As DealBook pointed out, the leaders at the firm seemed to have ignored the maxim to never put anything about questionable conduct in writing. Thus, the indictment highlights messages about finding “another clueless auditor for next year” and pushing an employee “to go way out on a limb right behind me if you know what I mean.”

Snippets from emails make for good headlines, but Mr. Davis does not appear to be as deeply involved in the financial maneuvers as others at the firm. That may let him offer an ignorance defense to undermine the government’s evidence of his intent to steal. His lawyer, Elkan Abramowitz, said Mr. Davis acted “in good faith in an effort to make the firm a success.”

In one email exchange, when informed on Dec. 30, 2008, that the firm was $50 million short of meeting a year-end covenant for its bank loan, Mr. Davis responded, “Ugh.” That is rather tame compared to what was probably going through his mind, but does not show much intent to engage in accounting shenanigans.

A few days later, he sought to have a client backdate a check for fees it owed to Dewey so that the money could be reported in 2008, helping to overcome the revenue shortfall. That is certainly questionable conduct, but companies often scramble to get paid at the end of the year so they can report good numbers. Whether that rises to the level of grand larceny is an open question.

An email sent by Mr. Sanders in November 2009 to Mr. Davis and Mr. DiCarmine talked about continuing financial problems at the firm, and points out that there would not be enough cash for partner payments “since $25M is fake income.” Any time the word “fake” is used in a sentence there is a problem, but Mr. Davis is only a recipient of the email, not its author.

Proving intent from documents is never easy. A company’s top leader is always dealing with a number of different issues, and so showing that the person actually paid attention to any particular communication is difficult without having witnesses who can discuss what the defendant actually knew at the time.

The fact that Mr. Davis is a lawyer works against a claim of ignorance, but the charges revolve around financial issues, a subject about which most lawyers can plausibly claim a lack of knowledge.

Mr. Davis would not be the first person to defend himself against accounting fraud charges by asserting a lack of knowledge. Nearly 10 years ago, Bernard J. Ebbers, the former chief executive of WorldCom, told the jury that he was unaware of how the company shifted certain expenses that allowed it to mask declining revenue.

Of course, that defense didn’t work for him because the company’s chief financial officer, Scott D. Sullivan, testified about the chief executive’s involvement in the accounting chicanery. Mr. Ebbers was ultimately convicted and sentenced to 25 years in prison.

The prosecution of Mr. Ebbers highlights the importance of having trial testimony from a witness who dealt directly with the boss, rather than just relying on emails and claims that he must have known what was going on. The case against Mr. Davis may hinge on whether the prosecutors can persuade someone close to Mr. Davis - like Mr. DiCarmine or Mr. Sanders - to testify about his involvement in the accounting decisions Dewey made to cover up its financial problems.

Unlike many corporate prosecutions in which the company pays for the lawyers, Dewey’s bankruptcy means the defendants will be largely on their own when it comes to paying for their defense, as the firm’s insurance policy has been depleted. So don’t be surprised if we see a deal made with one of the other defendants in the case as the financial pressure builds to fight the charges.

Minerals Technologies Wins Bidding War for Amcol International

LONDON - Minerals Technologies said on Monday that it had won a bidding war for Amcol International, agreeing to pay about $1.7 billion.

The company, based in New York, beat out the French industrial materials company Imerys after a spirited back-and-forth for Amcol, a producer of specialty minerals and materials based in Illinois.

Imerys originally agreed to pay $41 a share for Amcol on Feb. 11, and it subsequently raised its offer twice after Amcol received unsolicited, competing bids from Minerals Technologies.

Imerys declined to raise its offer a third time on Friday after Minerals Technologies offered to pay $45.75 a share in cash.

On Monday, Minerals Technologies and Amcol announced that they had reached a definitive merger agreement, with Amcol paying a $39 million termination fee to Imerys.

“The combination of MTI and Amcol will create a minerals platform that is well-positioned for growth through geographic expansion and new product innovation,” said Joseph C. Muscari, chairman and chief executive of Minerals Technologies.

The transaction, which was unanimously approved by the boards of directors of Minerals Technologies and Amcol, is expected to close in the first half of 2014.

The deal is intended to create a “more robust U.S.-based international minerals supplier” with a broader product focus, the companies said. The combined company is expected to have more than $2 billion in annual revenue.

Amcol is a leading producer of bentonite, which is used in machine tooling, construction and drilling. Minerals Technologies manufactures precipitated calcium carbonate, which is used in the paper industry and which accounted for about half of its revenue last year.

“This transaction demonstrates the Amcol board’s commitment to maximizing value for our shareholders,” said Ryan F. McKendrick, Amcol’s chief executive. “We look forward to working with Minerals Technologies to ensure a smooth transition and complete the transaction as expeditiously as possible.”

Minerals Technologies plans to finance the deal using cash and debt financing.

Amcol, with a presence in 26 countries, posted revenue of more than $1 billion in 2013.

Minerals Technologies, which was spun off by Pfizer in 1992, had revenue of $1.02 billion last year.

Lazard and JPMorgan Chase served as financial advisers to Minerals Technologies, while Goldman Sachs was the financial adviser to Amcol. The legal advisers were Cravath, Swaine & Moore for Minerals Technologies and Kirkland & Ellis for Amcol.

In Annual Letter, G.E. Chief Extolls ‘Simplification’

General Electric, a century-old industrial company, is taking its cues from the young technology firms of Silicon Valley.

The company, which has sought to streamline itself in the years since the financial crisis, is emphasizing a “culture of simplification,” its chief executive, Jeffrey R. Immelt, wrote in an annual letter to shareholders published on Monday. That focus draws inspiration in part from the “lean start-up” idea that is popular in technology circles.

“The biggest risks at GE are the inability to seize market opportunities,” Mr. Immelt said. “Simplification is making us more competitive.”

The effort to simplify involves reducing the size of the finance unit, GE Capital, which once loaded up on risky bets that wounded its parent company in the financial crisis. Mr. Immelt wants financial services to make up 30 percent of the company’s earnings by 2015. (Last year, the finance unit accounted for 51 percent of General Electric’s earnings.)

GE Capital has been selling assets, including a Swiss subsidiary whose initial public offering created a $1 billion tax benefit in the fourth quarter of 2013.

In the letter, Mr. Immelt said GE Capital had become “smaller and safer,” with “less leverage and more liquidity.”

“We are making substantial investments to meet the standards expected from a Federal Reserve regulated financial institution,” he wrote.

Mr. Immelt said the company had “redeployed capital” by selling businesses outside its core, in areas like insurance and media. Last year, General Electric sold its remaining stake in NBCUniversal to Comcast.

It’s not just start-ups that have caught Mr. Immelt’s attention. He gave a nod in the letter to Jeffrey P. Bezos, the founder and chief executive of Amazon, who said that even the most important companies die out after a few decades.

But not G.E., Mr. Immelt suggested, writing: “GE has remained competitive because we learn and change.”

EBay Rejects Icahn’s Nominees for Its Board

The weekslong battle of words between eBay and Carl C. Icahn has heated up.

In releasing its preliminary proxy statement on Monday, eBay noted that it had rejected the billionaire’s two nominees for its board and instead chose to renominate every director up for re-election this year.

Shortly afterward, Mr. Icahn published his latest criticism of the company in a letter to fellow shareholders, accusing eBay’s chief executive, John J. Donahoe, of costing shareholders $4 billion through his handling of the sale of the online video chatting service Skype.

The escalation of hostilities makes eBay the biggest battleground for this year’s proxy fight season, as Mr. Icahn continues to demand that the technology giant spin off its PayPal payment processing unit. To press his attack, he has published a succession of criticisms in a variety of media - from his corporate blog to Twitter to TV appearances - centering on Mr. Donahoe and two of the company’s directors, Marc Andreessen and Scott Cook.

But eBay has been unmoved. The company has already released statements defending its chief executive and the two directors under attack, and Mr. Andreessen has written a series of blog posts to counter Mr. Icahn’s jabs.

Now eBay has said it plans to renominate all directors up for re-election, including Mr. Cook and Mr. Donahoe. Because the company has a staggered board until next year, only a portion of its directors are up for a shareholder vote.

“They demonstrate the caliber of leadership, business experience, insight and expertise that our company needs and that I believe our stockholders expect on our board,” Pierre M. Omidyar, eBay’s chairman, said in a statement.

And the company added that it had deemed Mr. Icahn’s two nominees - Daniel Ninivaggi, co-chief executive of the auto parts maker Federal-Mogul Corporation and a former chief executive of the billionaire’s firm, and Jonathan Christodoro, currently Mr. Icahn’s lieutenant - insufficiently qualified and too busy with seats on other boards.

Mr. Icahn, however, is not known for taking rejection lightly. In his latest public letter, he reiterated his arguments that eBay was wrong to sell a majority stake in Skype to an investor group that included Mr. Andreessen’s venture capital firm for $1.9 billion. Why wrong? Because the consortium later sold Skype to Microsoft for $8.5 billion roughly two years later.

The billionaire contended that Microsoft had been interested in buying Skype around the time that the investor consortium was negotiating for a majority stake, but was deterred by concerns over a legal fight between eBay and Skype’s founders. What Mr. Donahoe should have done, the blog post argues, was settle the litigation and then run a sales process.

“I believe that all stockholders must consider whether Donahoe is either incompetent or negligent or, perhaps even worse, was simply taking the easy path of bowing to the wishes of a respected and powerful board member,” Mr. Icahn wrote.

Mr. Andreessen has already defended his conduct, noting that he had disclosed his conflicts of interest and recused himself from all eBay board discussions about the first Skype transaction.

And in a statement on Monday, eBay defended the performance of Mr. Donahoe, pointing out that the company’s stock had risen 460 percent over the last five years.

“John’s track record of success at eBay, driving the company’s turnaround and growth, is well documented,” the company said in a statement. “Yet in pursuit of his own profit motives, Carl Icahn has made another unsubstantiated attack on John. Just like his previous ones, this attack is false and misleading and has already been utterly discredited by the facts.”

From Icahn, a Wall Street Billionaire’s Version of Monopoly

The boardroom battles waged by the activist investor Carl C. Icahn have drawn comparisons to poker. But Mr. Icahn apparently prefers to think of his career in terms of a different game: Monopoly.

On Sunday evening, he posted a photograph to Twitter showing an artist’s rendering of what “Icahnopoly: The Activist Edition” would look like. The framed artwork was a “great gift from my daughter,” Mr. Icahn said in the tweet.

The imagined board game reworks Monopoly to reflect Mr. Icahn’s playbook of taking stakes in companies and loudly calling for change. Park Place? That’s Herbalife, the nutritional supplements company that Mr. Icahn is betting on in real life, pitting him against a longtime rival. Boardwalk? That, of course, is Apple.

Great gift from my daughter. She says a 2nd addition coming soon. Hope $EBAY is on it. http://t.co/IyBOXif3Zg

â€" Carl Icahn (@Carl_C_Icahn) 10 Mar 14

In this billionaire’s version of the game, there is no jail. And players collect substantially more than $200 when they pass Go.

Here is what a set of directions in “Icahnopoly” might look like:

Go directly to the cocktail party. Do not pass Go. Do not collect $200 million.

When he is not taking umbrage at corporate directors or plotting his next target, Mr. Icahn has been known to play chess with his son, Brett, staking thousands of dollars on a game. In his younger days, he helped pay his way through Princeton with winnings from poker.

Mr. Icahn’s daughter, Michelle, who gave him “Icahnopoly,” previously worked as a schoolteacher. She now works at Mr. Icahn’s firm, along with Brett.

The “Icahnopoly” board is less a workable game than a playful rendering of Mr. Icahn’s résumé. Here is Dell, the company whose buyout he tried unsuccessfully to block last year, and here Netflix, which delivered hundreds of millions of dollars of profit for Mr. Icahn. The game includes some memorable fights from the 1980s, like Viacom, Texaco and T.W.A.

One company the game does not include is eBay, the latest technology firm in Mr. Icahn’s sights, which on Monday rejected his board nominees. But he said in the tweet that a second edition was “coming soon.”

FMC to Split Up by Spinning Off Its Minerals Division

The FMC Corporation, a chemical maker, said on Monday that it planned to divide itself in two by spinning off its minerals business.

The move is the latest by a company to use a breakup try to create more value for its shareholders. In the last few years, investors have pressed management teams to spin out nonessential divisions to promote greater focus for each operation.

FMC’s plan would create two companies, both traded on the New York Stock Exchange. The bigger entity would contain the corporation’s agriculture and nutrition divisions, which have formed the basis of FMC since its founding over a century ago as the Bean Spray Pump Company.

Together, the two divisions reported $2.9 billion in revenue last year, up 12 percent from 2012.

The second company would be FMC Minerals, which produces materials like soda ash for a variety of industrial customers. Among its most prominent businesses is its lithium division, whose products are used to create batteries like those used in electric cars.

The company said in a statement that it believed the minerals operation would be strong enough financially as a stand-alone to pursue acquisitions. Last year, the division reported revenue of $970 million, relatively flat compared with 2012.

“We believe that creating two companies, each with its own publicly-listed equity, will enable the management of each company to pursue its own strategy,” Pierre R. Brondeau, FMC’s chairman and chief executive, said in a statement. “This will give each company greater focus on the success factors that are most important to its business and allow the adoption of a capital structure that is appropriate to its business profile.”

The company has already divested some businesses, including its peroxygens unit, which it sold to the investment firm One Equity Partners for $200 million.

The breakup is expected to be complete by early next year.

The company was advised by Bank of America Merrill Lynch, Goldman Sachs and the law firm Wachtell, Lipton, Rosen & Katz.

Chiquita to Acquire Irish Fruit Distributor Fyffes in Stock Deal

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Chiquita to Acquire Irish Fruit Distributor Fyffes in Stock Deal

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Ackman’s Battle to Bring Down Herbalife

After staking $1 billion on the collapse of the nutritional supplement company Herbalife, William A. Ackman’s activist hedge fund, Pershing Square Capital Management, has been lobbying aggressively to bring it down, Michael S. Schmidt, Eric Lipton and Alexandra Stevenson write in The New York Times. Others have criticized the business practices of Herbalife, which sells vitamins and other supplements through independent distributors, but Mr. Ackman’s attack is “unprecedented in its scale,” they write. For its part, Herbalife continues to strongly deny his accusations that the company is a pyramid scheme.

An investigation by The New York Times found that Mr. Ackman’s team had helped organize protests, news conferences and letter-writing campaigns across the United States to pressure state and federal regulators to investigate Herbalife, although several people who signed the letters say they do not remember sending them. His team has also paid civil rights organizations at least $130,000 to collect names of the people who claimed they were victimized by Herbalife. In response, Herbalife has mobilized its own army of lobbyists to defend the company against Mr. Ackman’s charges. Mr. Ackman has persuaded a number of elected officials, including a New York State senator, to join his cause, arguing that he is trying to protect Hispanics, who he says are most frequently the victims of Herbalife’s scheme.

Mr. Schmidt, Mr. Lipton and Ms. Stevenson write: “Mr. Ackman’s efforts illustrate how Washington is increasingly becoming a battleground of Wall Street’s financial titans, whose interest in influencing public policy is driven primarily by a desire for profit â€" part of an expanding practice in the nation’s capital, with corporations, law firms and lobbying practices establishing political intelligence units to gather news they can trade on.”

MORE TROUBLE FOR CREDIT SUISSE  |  New documents made public on Friday point to mortgage lapses at Credit Suisse as the housing bubble inflated before the financial crisis, Gretchen Morgenson writes in The New York Times. The documents suggest that top officials at the bank routinely put pressure on subordinates to override due diligence standards and accept questionable loans that were then bundled into mortgage investments.

“The documents are noteworthy because Credit Suisse, unlike many other major banks, has refused to settle large lawsuits stemming from the mortgage crisis. The bank has long maintained that its operations were held to a high standard and that the mortgage investments it sold lost value largely because of the broad housing collapse, rather than its practices,” Ms. Morgenson writes, adding, “The previously confidential documents raise questions about the bank’s decision to fight, rather than settle, cases filed by plaintiffs including the Federal Housing Finance Agency and the New York attorney general.”

The release of the documents, which include emails and other internal communications, is the latest in a string of difficulties for the Swiss bank. In February, United States senators questioned the bank over its role in helping American citizens hide money overseas and avoid taxes. And last year, a former mortgage trader was found guilty of hiding more than $100 million in mortgage bond losses at the bank by inflating the bonds’ value as the housing market collapsed.

JOBS DATA SHOWS SIGNS OF A THAW  |  Things may be looking up in the jobs market. Friday’s jobs report showed that the American economy created more jobs in February than in either of the previous two months, suggesting that the labor market might be waking up from a winter slowdown, Nelson D. Schwartz writes in The New York Times. And while analysts warned that the report was not a cause for celebration quite yet, it did ease fears of another prolonged slowdown.

Employers hired 175,000 workers in February, still well short of the pace needed to return the economy to full employment. And while the unemployment rate rose slightly, to 6.7 percent, some economists were nevertheless encouraged because they viewed the uptick as a sign that more Americans were seeing signs of improving job opportunities and returning to the labor force.

ON THE AGENDA  |  Charles L. Evans, president of the Chicago Fed, speaks at 12:40 p.m. in Columbus, Ga. John C. Bogle, the founder of Vanguard, is on CNBC at 3:10 p.m. The annual South by Southwest festival continues in Austin, Tex.

A BLOW TO LENDERS IN ROYAL BANK OF CANADA RULING  |  A Delaware judge ruled earlier this month against the Royal Bank of Canada over the lender’s advice in the 2011 buyout of Rural/Metro Corporation, an ambulance operator, a decision that might have broad consequences for Wall Street’s deal makers, Reuters writes. The judge said R.B.C. Capital Markets was negligent in its duty to shareholders when it failed to disclose conflicts of interest in the $438 million deal. R.B.C. bankers had pushed for a quick sale to the private equity firm Warburg Pincus at the same time as they were trying to provide financing to the firm to fund the buyout and other transactions. The decision is a blow to banks, which are increasingly facing lawsuits for their roles in mergers.

BANKERS SWAP FEES FOR DEAL CREDIT  |  Bloomberg News reports that Morgan Stanley and Goldman Sachs gave up millions of dollars in fees last month to get credit on a big deal they did not work on. Instead, the investment banks asked for credit in league tables, which are rankings of advisers on mergers and acquisitions maintained by Bloomberg and Dealogic, for working on the $25 billion sale last month of Forest Laboratories to Actavis.

“The trade highlights the importance of league tables to investment banks â€" which use them to pitch for new business â€" and the lengths to which banks will go to climb the rankings,” Bloomberg News writes. The banks’ previous contracts with Forest had a clause that entitled them to fees even if the company was sold by another bank.

 

Mergers & Acquisitions »

Chiquita to Buy Irish Fruit Distributor Fyffes in Stock Deal  |  The combination would create the world’s largest producer and distributor of bananas, with annual revenue of about $4.6 billion. The transaction values Fyffes at about $526 million. DealBook »

Reckitt Benckiser Buys K-Y Lubricants Brand From Johnson & Johnson  |  The British consumer goods company Reckitt Benckiser, which owns the Durex brand of condoms, said no fixed assets or employees were included in the transaction, which is expected to close in mid-2014. DealBook »

HGGC to Buy Serena Software From Silver Lake  |  The investment firm HGGC Capital plans to announce on Monday that it has bought the enterprise software maker from its current owner, the private equity firm Silver Lake. DealBook »

Unilever Acquires Majority Stake in Chinese Water-Purification Company  |  The deal for the Qinyuan Group represents Unilever’s largest acquisition in China in more than a decade. The maker of water purifiers and other drinking water equipment had annual revenue of nearly 1.2 billion renminbi, or about $200 million, last year. DealBook »

China’s Tencent to Buy Stake in JD.com as Part of E-Commerce Push  |  The Chinese Internet company Tencent said it would pay $215 million for a 15 percent stake in JD.com as the two firms seek to challenge the dominance of Alibaba, China’s largest e-commerce company. DealBook »

Bouygues to Sell Network if SFR Bid Is Accepted  |  Bouygues Telecom of France has agreed to sell its mobile network and much of its wireless spectrum to a rival, Iliad, for as much as $2.5 billion if Vivendi accepts Bouygues’ bid for its cellphone unit, SFR, Reuters writes. The move suggests that Bouygues is pre-emptively addressing antitrust concerns that could complicate its merger proposal. REUTERS

Newspaper Publishing Group Puts Cars.Com Up for Sale  |  A group of newspaper publishers, including Gannett, the Tribune Company and McClatchy, is seeking to sell the online marketplace cars.com at a price of up to $3 billion, The Wall Street Journal reports, citing unidentified people familiar with the situation. WALL STREET JOURNAL

INVESTMENT BANKING »

Behind Barclays’ About-Face on Bonuses  |  Antony P. Jenkins, the chief executive of the British bank Barclays, said this week that after the bank cut pay at its investment bank to below-market levels in 2012, it ended up losing top bankers. But the bank’s own numbers throw a different light on the subject. DealBook »

Goldman Sachs’s Special Situations Chief Departs  |  Albert Dombrowski, the chief of Goldman Sachs’s special situations group in the Americas, has left the bank after 12 years, Bloomberg News reports. The group is part of the firm’s investing and lending division, which generated the most profit last year of any of the bank’s four segments. BLOOMBERG NEWS

BlackRock Hires New Head of China Equities  |  BlackRock, the world’s largest asset-management company, said it had hired Helen Zhu, a former Goldman Sachs executive, as a managing director and head of its China equities business. DealBook »

PRIVATE EQUITY »

New Movie Studio Is Formed, With China and Self-Distribution in Mind  |  A group is looking to make $40 million movies with big stars, as an alternative to the blockbusters now favored by Hollywood. DealBook »

K.K.R. Executive Who Led Investments in Retailers Retires  |  Michael M. Calbert, a 14-year veteran of Kohlberg Kravis Roberts who led the team that invests in the retail industry, is retiring and has been succeeded by Nathaniel H. Taylor, a K.K.R. partner. DealBook »

In Safeway Buyout, a Reminder of a Painful Takeover  |  Two decades ago, Safeway was a symbol of the human toll sometimes extracted when private equity used large amounts of debt to take over a company. This week, another private equity firm is taking over the grocery chain, with none of the uproar of the earlier deal. DealBook »

Safeway Customers Could Be Big Winners With Cerberus Deal  |  Cerberus will realize a lot of cost savings by combining Safeway with its Albertsons chain. But competition from the likes of Walmart means cost savings may need to go to shoppers, not investors, writes Robert Cyran in Reuters Breakingviews. DealBook »

JPMorgan’s Sale of Private Equity Unit Stalls  |  The auction of One Equity Partners, JPMorgan Chase’s private equity arm, which has been on the market since at least November, has come to a halt, Reuters writes, citing unidentified people familiar with the situation. REUTERS

HEDGE FUNDS »

Ackman vs. Herbalife, a History  |  A look at some of the crucial events in William A. Ackman’s fight over the nutritional supplements company Herbalife. DealBook »

Icahn Discloses He’s Now on Facebook  |  The billionaire investor Carl C. Icahn said in a regulatory filing on Friday that he planned to start using the social network as another platform for his activism campaigns. He is already on Twitter and has his own corporate blog. DealBook »

Nonbanks Move Into Business of Servicing Home Loans  |  Regulatory efforts to push banks out of the mortgage servicing business have opened up opportunities for hedge funds and nonbank financial arms to handle customers’ loans, The Wall Street Journal writes. WALL STREET JOURNAL

A Deeper Conversation on Women in Hedge Funds  |  Readers offer their own experiences and suggestions in response an Another View column by Whitney Tilson that described the problem of having too few women in hedge funds. DealBook »

I.P.O./OFFERINGS »

GlaxoSmithKline Increases Stake in Indian Pharmaceutical Unit  |  The British drug giant GlaxoSmithKline said it paid 64 billion rupees, or $1.05 billion, to increase its stake in GlaxoSmithKline Pharmaceuticals Limited to 75 percent from 50.7 percent. The Indian unit will continue to trade publicly after the deal. DealBook »

With Its Stock Riding High, FireEye Sells More Shares for $1.1 Billion  |  Taking advantage of a fourfold increase in its stock price since its market debut, the cybersecurity company raised $1.1 billion for itself and some of its backers with a secondary offering. DealBook »

Japan Display Sets I.P.O. Price  |  Japan Display, the world’s biggest maker of screens for tablets and smartphones, set the price of its initial public offering at the bottom of its guidance range after foreign investors responded to the offering without much enthusiasm, Reuters writes. REUTERS

European Real Estate Companies See Investor Confidence Return  |  European property companies are taking advantage of a surge in international investors’ confidence to go public and issue new equity, The Financial Times writes. This year, initial public offerings have raised 1.6 billion euros, more than a third of the €3.9 billion raised in all of 2013. FINANCIAL TIMES

Spotify’s Credit Facility Hints at I.P.O.  |  The music streaming giant Spotify has secured a $200 million credit facility from lenders including Morgan Stanley, suggesting the company might be nearing a potential initial public offering, The Financial Times reports, citing unidentified people familiar with the situation. FINANCIAL TIMES

VENTURE CAPITAL »

Digital Trade School Raises $35 Million in Financing Round  |  General Assembly, a three-year-old academy for budding entrepreneurs, said it had raised more than $35 million in a new round as it seeks to build out its global ambitions. DealBook »

Wayfair Secures $2 Billion Valuation  |  Wayfair, an online vendor of home goods, announced it had raised $157 million from a group of investors including T. Rowe Price as it prepared for an initial public offering in the coming months, The Wall Street Journal writes. WALL STREET JOURNAL

Ride-Sharing App Lyft Files for $150 Million Funding Round  |  The company behind Lyft, a ride-sharing application for mobile phones, has filed for a Series D funding round worth $150 million, ReCode writes. When closed, the funding round is expected to give the company a $700 million valuation, according to an unidentified person familiar with the situation. RECODE

Vox.com Aims to Make Journalism More Palatable  |  A short video posted on Ezra Klein’s new website, Vox.com, explains that the site’s goal is to make the “vegetables” or “spinach” of the news world more palatable, New York magazine reports. NEW YORK MAGAZINE

Newsweek Sets Off a Bitcoin Storm  |  The magazine’s story claiming to have uncovered the founder of the digital currency Bitcoin drew a wave of attention, much of it negative, The New York Times reports. NEW YORK TIMES

LEGAL/REGULATORY »

Former Jefferies Trader Found Guilty of Fraud  |  A jury on Friday convicted Jesse C. Litvak, a former senior trader at the Jefferies Group, of securities fraud for misrepresenting the prices of mortgage-backed securities he sold to brokerage clients after the financial crisis. DealBook »

Guy Hands Drops Lawsuit Against Citigroup in U.S.  |  The British financier Guy Hands has agreed to end a lawsuit against Citigroup in the United States, though the legal battle over the 2007 buyout of EMI may continue in England. DealBook »

European Banks Face Billions in Legal Costs  |  Five of Europe’s largest lenders could face an extra 10 billion euros in legal costs in the next two years to deal with claims of foreign exchange manipulation and other legal issues, The Financial Times writes. FINANCIAL TIMES

New York Regulator Vows to Clean Up Wall Street  |  Benjamin M. Lawsky, New York’s top banking regulator, told The Financial Times that he would hold accountable the individuals, as well as the institutions, whose conduct contributed to the financial crisis. “Corporations are a legal fiction. You have to deter bad individual conduct within corporations,” he said in an interview. FINANCIAL TIMES

Whistle-Blower Gets $63.9 Million as a Result of JPMorgan Settlement  |  A Louisiana man who once worked for JPMorgan in its government insurance unit helped federal prosecutors make their case against the bank. DealBook »

Ackman’s Battle to Bring Down Herbalife

After staking $1 billion on the collapse of the nutritional supplement company Herbalife, William A. Ackman’s activist hedge fund, Pershing Square Capital Management, has been lobbying aggressively to bring it down, Michael S. Schmidt, Eric Lipton and Alexandra Stevenson write in The New York Times. Others have criticized the business practices of Herbalife, which sells vitamins and other supplements through independent distributors, but Mr. Ackman’s attack is “unprecedented in its scale,” they write. For its part, Herbalife continues to strongly deny his accusations that the company is a pyramid scheme.

An investigation by The New York Times found that Mr. Ackman’s team had helped organize protests, news conferences and letter-writing campaigns across the United States to pressure state and federal regulators to investigate Herbalife, although several people who signed the letters say they do not remember sending them. His team has also paid civil rights organizations at least $130,000 to collect names of the people who claimed they were victimized by Herbalife. In response, Herbalife has mobilized its own army of lobbyists to defend the company against Mr. Ackman’s charges. Mr. Ackman has persuaded a number of elected officials, including a New York State senator, to join his cause, arguing that he is trying to protect Hispanics, who he says are most frequently the victims of Herbalife’s scheme.

Mr. Schmidt, Mr. Lipton and Ms. Stevenson write: “Mr. Ackman’s efforts illustrate how Washington is increasingly becoming a battleground of Wall Street’s financial titans, whose interest in influencing public policy is driven primarily by a desire for profit â€" part of an expanding practice in the nation’s capital, with corporations, law firms and lobbying practices establishing political intelligence units to gather news they can trade on.”

MORE TROUBLE FOR CREDIT SUISSE  |  New documents made public on Friday point to mortgage lapses at Credit Suisse as the housing bubble inflated before the financial crisis, Gretchen Morgenson writes in The New York Times. The documents suggest that top officials at the bank routinely put pressure on subordinates to override due diligence standards and accept questionable loans that were then bundled into mortgage investments.

“The documents are noteworthy because Credit Suisse, unlike many other major banks, has refused to settle large lawsuits stemming from the mortgage crisis. The bank has long maintained that its operations were held to a high standard and that the mortgage investments it sold lost value largely because of the broad housing collapse, rather than its practices,” Ms. Morgenson writes, adding, “The previously confidential documents raise questions about the bank’s decision to fight, rather than settle, cases filed by plaintiffs including the Federal Housing Finance Agency and the New York attorney general.”

The release of the documents, which include emails and other internal communications, is the latest in a string of difficulties for the Swiss bank. In February, United States senators questioned the bank over its role in helping American citizens hide money overseas and avoid taxes. And last year, a former mortgage trader was found guilty of hiding more than $100 million in mortgage bond losses at the bank by inflating the bonds’ value as the housing market collapsed.

JOBS DATA SHOWS SIGNS OF A THAW  |  Things may be looking up in the jobs market. Friday’s jobs report showed that the American economy created more jobs in February than in either of the previous two months, suggesting that the labor market might be waking up from a winter slowdown, Nelson D. Schwartz writes in The New York Times. And while analysts warned that the report was not a cause for celebration quite yet, it did ease fears of another prolonged slowdown.

Employers hired 175,000 workers in February, still well short of the pace needed to return the economy to full employment. And while the unemployment rate rose slightly, to 6.7 percent, some economists were nevertheless encouraged because they viewed the uptick as a sign that more Americans were seeing signs of improving job opportunities and returning to the labor force.

ON THE AGENDA  |  Charles L. Evans, president of the Chicago Fed, speaks at 12:40 p.m. in Columbus, Ga. John C. Bogle, the founder of Vanguard, is on CNBC at 3:10 p.m. The annual South by Southwest festival continues in Austin, Tex.

A BLOW TO LENDERS IN ROYAL BANK OF CANADA RULING  |  A Delaware judge ruled earlier this month against the Royal Bank of Canada over the lender’s advice in the 2011 buyout of Rural/Metro Corporation, an ambulance operator, a decision that might have broad consequences for Wall Street’s deal makers, Reuters writes. The judge said R.B.C. Capital Markets was negligent in its duty to shareholders when it failed to disclose conflicts of interest in the $438 million deal. R.B.C. bankers had pushed for a quick sale to the private equity firm Warburg Pincus at the same time as they were trying to provide financing to the firm to fund the buyout and other transactions. The decision is a blow to banks, which are increasingly facing lawsuits for their roles in mergers.

BANKERS SWAP FEES FOR DEAL CREDIT  |  Bloomberg News reports that Morgan Stanley and Goldman Sachs gave up millions of dollars in fees last month to get credit on a big deal they did not work on. Instead, the investment banks asked for credit in league tables, which are rankings of advisers on mergers and acquisitions maintained by Bloomberg and Dealogic, for working on the $25 billion sale last month of Forest Laboratories to Actavis.

“The trade highlights the importance of league tables to investment banks â€" which use them to pitch for new business â€" and the lengths to which banks will go to climb the rankings,” Bloomberg News writes. The banks’ previous contracts with Forest had a clause that entitled them to fees even if the company was sold by another bank.

 

Mergers & Acquisitions »

Chiquita to Buy Irish Fruit Distributor Fyffes in Stock Deal  |  The combination would create the world’s largest producer and distributor of bananas, with annual revenue of about $4.6 billion. The transaction values Fyffes at about $526 million. DealBook »

Reckitt Benckiser Buys K-Y Lubricants Brand From Johnson & Johnson  |  The British consumer goods company Reckitt Benckiser, which owns the Durex brand of condoms, said no fixed assets or employees were included in the transaction, which is expected to close in mid-2014. DealBook »

HGGC to Buy Serena Software From Silver Lake  |  The investment firm HGGC Capital plans to announce on Monday that it has bought the enterprise software maker from its current owner, the private equity firm Silver Lake. DealBook »

Unilever Acquires Majority Stake in Chinese Water-Purification Company  |  The deal for the Qinyuan Group represents Unilever’s largest acquisition in China in more than a decade. The maker of water purifiers and other drinking water equipment had annual revenue of nearly 1.2 billion renminbi, or about $200 million, last year. DealBook »

China’s Tencent to Buy Stake in JD.com as Part of E-Commerce Push  |  The Chinese Internet company Tencent said it would pay $215 million for a 15 percent stake in JD.com as the two firms seek to challenge the dominance of Alibaba, China’s largest e-commerce company. DealBook »

Bouygues to Sell Network if SFR Bid Is Accepted  |  Bouygues Telecom of France has agreed to sell its mobile network and much of its wireless spectrum to a rival, Iliad, for as much as $2.5 billion if Vivendi accepts Bouygues’ bid for its cellphone unit, SFR, Reuters writes. The move suggests that Bouygues is pre-emptively addressing antitrust concerns that could complicate its merger proposal. REUTERS

Newspaper Publishing Group Puts Cars.Com Up for Sale  |  A group of newspaper publishers, including Gannett, the Tribune Company and McClatchy, is seeking to sell the online marketplace cars.com at a price of up to $3 billion, The Wall Street Journal reports, citing unidentified people familiar with the situation. WALL STREET JOURNAL

INVESTMENT BANKING »

Behind Barclays’ About-Face on Bonuses  |  Antony P. Jenkins, the chief executive of the British bank Barclays, said this week that after the bank cut pay at its investment bank to below-market levels in 2012, it ended up losing top bankers. But the bank’s own numbers throw a different light on the subject. DealBook »

Goldman Sachs’s Special Situations Chief Departs  |  Albert Dombrowski, the chief of Goldman Sachs’s special situations group in the Americas, has left the bank after 12 years, Bloomberg News reports. The group is part of the firm’s investing and lending division, which generated the most profit last year of any of the bank’s four segments. BLOOMBERG NEWS

BlackRock Hires New Head of China Equities  |  BlackRock, the world’s largest asset-management company, said it had hired Helen Zhu, a former Goldman Sachs executive, as a managing director and head of its China equities business. DealBook »

PRIVATE EQUITY »

New Movie Studio Is Formed, With China and Self-Distribution in Mind  |  A group is looking to make $40 million movies with big stars, as an alternative to the blockbusters now favored by Hollywood. DealBook »

K.K.R. Executive Who Led Investments in Retailers Retires  |  Michael M. Calbert, a 14-year veteran of Kohlberg Kravis Roberts who led the team that invests in the retail industry, is retiring and has been succeeded by Nathaniel H. Taylor, a K.K.R. partner. DealBook »

In Safeway Buyout, a Reminder of a Painful Takeover  |  Two decades ago, Safeway was a symbol of the human toll sometimes extracted when private equity used large amounts of debt to take over a company. This week, another private equity firm is taking over the grocery chain, with none of the uproar of the earlier deal. DealBook »

Safeway Customers Could Be Big Winners With Cerberus Deal  |  Cerberus will realize a lot of cost savings by combining Safeway with its Albertsons chain. But competition from the likes of Walmart means cost savings may need to go to shoppers, not investors, writes Robert Cyran in Reuters Breakingviews. DealBook »

JPMorgan’s Sale of Private Equity Unit Stalls  |  The auction of One Equity Partners, JPMorgan Chase’s private equity arm, which has been on the market since at least November, has come to a halt, Reuters writes, citing unidentified people familiar with the situation. REUTERS

HEDGE FUNDS »

Ackman vs. Herbalife, a History  |  A look at some of the crucial events in William A. Ackman’s fight over the nutritional supplements company Herbalife. DealBook »

Icahn Discloses He’s Now on Facebook  |  The billionaire investor Carl C. Icahn said in a regulatory filing on Friday that he planned to start using the social network as another platform for his activism campaigns. He is already on Twitter and has his own corporate blog. DealBook »

Nonbanks Move Into Business of Servicing Home Loans  |  Regulatory efforts to push banks out of the mortgage servicing business have opened up opportunities for hedge funds and nonbank financial arms to handle customers’ loans, The Wall Street Journal writes. WALL STREET JOURNAL

A Deeper Conversation on Women in Hedge Funds  |  Readers offer their own experiences and suggestions in response an Another View column by Whitney Tilson that described the problem of having too few women in hedge funds. DealBook »

I.P.O./OFFERINGS »

GlaxoSmithKline Increases Stake in Indian Pharmaceutical Unit  |  The British drug giant GlaxoSmithKline said it paid 64 billion rupees, or $1.05 billion, to increase its stake in GlaxoSmithKline Pharmaceuticals Limited to 75 percent from 50.7 percent. The Indian unit will continue to trade publicly after the deal. DealBook »

With Its Stock Riding High, FireEye Sells More Shares for $1.1 Billion  |  Taking advantage of a fourfold increase in its stock price since its market debut, the cybersecurity company raised $1.1 billion for itself and some of its backers with a secondary offering. DealBook »

Japan Display Sets I.P.O. Price  |  Japan Display, the world’s biggest maker of screens for tablets and smartphones, set the price of its initial public offering at the bottom of its guidance range after foreign investors responded to the offering without much enthusiasm, Reuters writes. REUTERS

European Real Estate Companies See Investor Confidence Return  |  European property companies are taking advantage of a surge in international investors’ confidence to go public and issue new equity, The Financial Times writes. This year, initial public offerings have raised 1.6 billion euros, more than a third of the €3.9 billion raised in all of 2013. FINANCIAL TIMES

Spotify’s Credit Facility Hints at I.P.O.  |  The music streaming giant Spotify has secured a $200 million credit facility from lenders including Morgan Stanley, suggesting the company might be nearing a potential initial public offering, The Financial Times reports, citing unidentified people familiar with the situation. FINANCIAL TIMES

VENTURE CAPITAL »

Digital Trade School Raises $35 Million in Financing Round  |  General Assembly, a three-year-old academy for budding entrepreneurs, said it had raised more than $35 million in a new round as it seeks to build out its global ambitions. DealBook »

Wayfair Secures $2 Billion Valuation  |  Wayfair, an online vendor of home goods, announced it had raised $157 million from a group of investors including T. Rowe Price as it prepared for an initial public offering in the coming months, The Wall Street Journal writes. WALL STREET JOURNAL

Ride-Sharing App Lyft Files for $150 Million Funding Round  |  The company behind Lyft, a ride-sharing application for mobile phones, has filed for a Series D funding round worth $150 million, ReCode writes. When closed, the funding round is expected to give the company a $700 million valuation, according to an unidentified person familiar with the situation. RECODE

Vox.com Aims to Make Journalism More Palatable  |  A short video posted on Ezra Klein’s new website, Vox.com, explains that the site’s goal is to make the “vegetables” or “spinach” of the news world more palatable, New York magazine reports. NEW YORK MAGAZINE

Newsweek Sets Off a Bitcoin Storm  |  The magazine’s story claiming to have uncovered the founder of the digital currency Bitcoin drew a wave of attention, much of it negative, The New York Times reports. NEW YORK TIMES

LEGAL/REGULATORY »

Former Jefferies Trader Found Guilty of Fraud  |  A jury on Friday convicted Jesse C. Litvak, a former senior trader at the Jefferies Group, of securities fraud for misrepresenting the prices of mortgage-backed securities he sold to brokerage clients after the financial crisis. DealBook »

Guy Hands Drops Lawsuit Against Citigroup in U.S.  |  The British financier Guy Hands has agreed to end a lawsuit against Citigroup in the United States, though the legal battle over the 2007 buyout of EMI may continue in England. DealBook »

European Banks Face Billions in Legal Costs  |  Five of Europe’s largest lenders could face an extra 10 billion euros in legal costs in the next two years to deal with claims of foreign exchange manipulation and other legal issues, The Financial Times writes. FINANCIAL TIMES

New York Regulator Vows to Clean Up Wall Street  |  Benjamin M. Lawsky, New York’s top banking regulator, told The Financial Times that he would hold accountable the individuals, as well as the institutions, whose conduct contributed to the financial crisis. “Corporations are a legal fiction. You have to deter bad individual conduct within corporations,” he said in an interview. FINANCIAL TIMES

Whistle-Blower Gets $63.9 Million as a Result of JPMorgan Settlement  |  A Louisiana man who once worked for JPMorgan in its government insurance unit helped federal prosecutors make their case against the bank. DealBook »