Weibo, a Chinese Answer to Twitter, Prices Its Offering at $17

Weibo, the microblogging service formed by the Sina Corporation, has been called the Twitter of China. But the company will carry a value well below that of its American counterpart when it begins trading on the public markets.

Weibo priced its initial public offering at $17 per American depositary share on Wednesday, at the bottom of its expected range. At that level, the social network operator will have raised $285 million, and would be valued at $3.6 billion. By contrast, Twitter ended trading on Wednesday worth $26 billion.

For some time, Weibo (WAY-bwoh) had generated a fair amount of investor interest. It is the biggest of China’s microblogging services, with Alibaba Group, the online commerce titan, a major shareholder. And it is the latest Chinese company to seek a listing in an American market. Alibaba itself is preparing what may be one of the biggest I.P.O.’s in history, while other big Chinese online players like JD.com are in the process of going public.

But Weibo’s I.P.O. prospectus revealed that the company’s growth isn’t quite as impressive as analysts and investors had expected.

While its revenue more than doubled last year, to $188.3 million, and its loss shrank to $38.1 million, according to the offering prospectus, its user base is far less than Twitter’s. Weibo claimed 143.8 million monthly active users as of March 31, compared with the American company’s 241 million.

Its performance pales in comparison with Alibaba’s, which disclosed a 66 percent jump in fourth-quarter revenue and a more than doubling of profit on Tuesday.

It isn’t just financial concerns that may weigh down Weibo’s prospects. Among the risk factors in its prospectus is the possibility of government censorship harming the company’s business.

The microblogging site is also attempting to come to market at a time when both I.P.O.’s and technology stocks have suffered from growing investor skepticism. One of the most highly awaited market debutants this week, the investment bank Moelis & Company, chose to price its offering a dollar below its expected price range to ensure that its stock traded well.

Weibo’s offering is being led by Goldman Sachs and Credit Suisse.

A Settlement on Soured Mortgages May Raise Questions on What Is Enough

One of the unsettled questions from the financial crisis is whether the big banks have paid enough to cover the mortgage abuses they committed before the market collapsed.

A settlement announced Wednesday that involves Bank of America indicates that, in some cases, the banks could have been made to pay more than they have.

Bank of America agreed to pay a combined $950 million to the Financial Guaranty Insurance Company, a bond insurer, and a group of investors that includes Fir Tree Partners, a New York hedge fund. In litigation, Financial Guaranty contended that Countrywide Financial, the mortgage giant that Bank of America bought in 2008, had packaged defective home loans into bonds that were then sold to investors.

In recent months, Bank of America and other large banks have agreed to pay seemingly huge sums to settle lawsuits that contend they stuffed bonds with mortgages that fell far short of contractual standards. Last year, for instance, JPMorgan Chase agreed to a $13 billion deal over such claims.

But as large as the headline numbers might appear, some investors have voiced two chief criticisms. The settlements, they contend, effectively underestimated how many mortgages fell short of the bonds’ written standards. Also, the investors complain that they, not the banks, end up bearing some of the settlements’ costs. For instance, the big government settlements have required the banks to write down the value of the loans in the bonds to help make them more manageable for stressed borrowers. The investors bear any losses caused by such write-downs â€" not the banks.

But investors said the Bank of America deal announced on Wednesday was different.

In a statement, Fir Tree applauded the settlement, saying it provided “excellent value for bondholders.” The investors holding nine Countrywide bonds are receiving $365 million in cash from the deal. Fir Tree said that Bank of America had already made payments on seven of the nine bonds, and that it expected the remaining payments to be made within 45 days. Under other settlements, investors have had to wait for months for payment. Fir Tree said the deal was also not subject to a court approval.

Financial Guaranty received $584 million in the settlement because the company had backstopped the securities and had to make good on the bonds’ payments when the underlying mortgages soured, thus suffering losses.

Investors can measure whether a bank got off lightly in settlements or paid a high price. They take their payout and measure it as a percentage of losses suffered on the bonds.

In the Bank of America deal announced on Wednesday, the $365 million works out to 14 percent of $2.58 billion in current or estimated future losses for the nine bonds, according to a member of the investor group who was not authorized to speak publicly on the deal. This person compared the 14 percent favorably with the 6 percent figure that some have calculated for JPMorgan’s $13 billion settlement.

One reason Financial Guaranty and Fir Tree might receive a higher number is that the quality of the loans in the nine bonds might have been poorer than it was in other settlements. For example, the Countrywide deals contained second-lien mortgages, which produce higher losses than first-lien loans when they default.

Still, other investors might look at Fir Tree’s actions and feel emboldened to press on with their litigation. One of the hurdles investors face is gathering enough support to direct the trustees of the bonds to pursue litigation. To do this, bondholders typically need 25 percent of a bond’s voting rights. Fir Tree was able to amass investors with more than 50 percent of the ownership rights on the bonds, according to a person briefed on the fund’s actions. If investors had been similarly organized in the first few years after the financial crisis, they might have been able to obtain larger payments from the banks, some mortgage experts say.

Prominent mutual funds that own mortgage bonds have typically participated in private settlements that have gained payouts that some hedge funds think are too small.

While time is running out for hedge funds to file new lawsuits, several are already in the courts. Earlier this year, Nomura estimated that as many as 200 bond deals faced lawsuits that are not part of the litigation being brought on behalf of prominent investors. Those bonds could have been worth $100 billion to $200 billion at the time they were issued.

2 Hedge Fund Titans Agree to Buy the Milwaukee Bucks

Two Wall Street bigwigs, Marc Lasry and Wesley Edens, have a taste for distressed assets.

So the Milwaukee Bucks, the basketball team that currently holds the worst record in the N.B.A., is right up their alley.

Mr. Lasry, the chief executive and chairman of the Avenue Capital Group, and Mr. Edens, the co-chairman of the Fortress Investment Group, have agreed to buy the Bucks for about $550 million, the league announced on Wednesday. Their task now is to try to revitalize the flagging team, just as their hedge funds have done numerous times with unloved debt and equity investments.

For basketball fans, a major point to take away from the announcement was that the new owners planned to keep the Bucks in Milwaukee. Herb Kohl, the former United States senator who owns the franchise, said in a statement that Milwaukee “is and will continue to be the home of the Bucks.”

But the deal also aroused intrigue on Wall Street, as Mr. Lasry and Mr. Edens add their names to the list of wealthy financiers with personal investments in sports. They set an ambitious goal on Wednesday: winning an N.B.A. championship.

“Having each built competitive teams in the business world, we will apply that same intensity and determination as owners of the Milwaukee Bucks,” the two said in a statement.

The Bucks have won only 15 games this season, and lost 66, putting them at the bottom of the N.B.A. rankings. The team has won the league championship only once, in 1971.

One thing the new owners have is money. They plan to spend at least $100 million to build a new sports arena in Milwaukee, according to the announcement on Wednesday. They also said in the statement that they had “attended various sporting events in Milwaukee and Green Bay over the years.”

Basketball teams can be a magnet for Wall Street billionaires. Joshua Harris, a co-founder of the private equity giant Apollo Global Management, led a group to buy the Philadelphia 76ers in 2011. Mr. Harris and his partners then bought the New Jersey Devils hockey team last year.

Stephen Pagliuca, a managing director of Bain Capital, was part of a group that bought the Boston Celtics in 2002. Another private equity investor, Tom Gores, bought the Detroit Pistons in 2011.

In baseball, Steven A. Cohen, the fallen hedge fund titan, owns a small stake in the Mets, and John W. Henry, the hedge fund manager who bought The Boston Globe last year, is the principal owner of the Red Sox.

Ownership by a Wall Street titan does not guarantee success. According to Dan Primack of Fortune, four basketball teams that were bought by private equity and venture capital investors did only slightly better after the new owners took over.

The deal for the Bucks is subject to approval by the N.B.A.’s board of governors.

For Mr. Lasry, the co-founder of Avenue, the deal provides a diversion as he steps back from some investing responsibilities at the firm.

Last year, amid speculation that Mr. Lasry was being considered for the role of ambassador to France, Avenue reorganized its management, promoting Richard P. Furst to chief investment officer. Mr. Lasry did not get the ambassador job, but he told his investors he was “very grateful to have been considered.”

Steven Cohen Gets to Trade for 90 Days Before Paying Penalty

Even when he loses, the billionaire investor Steven A. Cohen manages to find a way to win.

Overlooked in the judge’s approval last week of the guilty plea entered by Mr. Cohen’s hedge fund SAC Capital Advisors to insider trading charges is that the firm was given 90 days to pay a $1.2 billion penalty to federal prosecutors. That is longer than the 30 days recommended by federal probation officials but it is the time frame lawyers for SAC and federal prosecutors agreed to in November, when the hedge fund entered its guilty plea.

The 90-day time frame means Mr. Cohen’s newly christened family office Point72 Asset Management will have more flexibility to deploy capital to the roughly 80 portfolio managers and trading teams that remain with the firm. In other words, Point72 will effectively get another full quarter in the markets to take advantage of that $1.2 billion before it must turn it over prosecutors.

It’s easier for stock-focused investment firms fund to liquidate positions to raise cash than firms that trade mostly bonds or other less liquid securities. So given that Point72, like its predecessor, mainly trades stocks, it shouldn’t be difficult for Mr. Cohen to come up with the necessary cash when the deadline runs out in mid-July.

To put the $1.2 billion sum in perspective, it represents roughly 10 percent of the $11.9 billion in net assets SAC reported to the securities regulators shortly before it converted to a family office that will manage mostly Mr. Cohen’s money. But since Mr. Cohen’s new firm will also use borrowed money from Wall Street banks to boost its trading power, the relative worth of that $1.2 billion could be closer to $4.2 billion. That’s assuming Point72 operates at a similar leverage ratio as SAC.

If Mr. Cohen were to allocate the $1.2 billion to a single portfolio manager and his team, it would be one of the largest single accounts with the firm. Gabriel Plotkin, one of Mr. Cohen’s best-performing managers who is leaving at the end of the year to start his own hedge fund, manages a little over $1 billion of the firm’s money, not including the impact of leverage.

So Mr. Cohen, who personally made $2 billion last year even in the midst of an insider trading scandal that dominated the business headlines, is in the position to make a nice amount of money from the $1.2 billion his firm owes the government, if it trades wisely.

James Margolin, a spokesman for Preet Bharara, the United States attorney for the Southern District of New York, whose office indicted SAC last summer and negotiated the plea deal, did not comment on why prosecutors had agreed to the 90-day deadline.

It’s also not clear why prosecutors did not request that Mr. Cohen’s firm put the money to be paid, or some portion of it, into an escrow account, which would prohibit Mr. Cohen’s firm from trading with it. A person briefed on the situation but not authorized to discuss the matter publicly said escrow arrangements are rare in criminal cases.

Once the $1.2 billion is paid, Point72 is expected to have $9 billion to $10 billion in assets not accounting for leverage, or borrowed money. The firm will also manage about $611 million in so-called illiquid investments â€" assets that can’t be easily sold â€" that technically belong to some of Mr. Cohen’s former investors in SAC. The proceeds from those assets will eventually be returned to Mr. Cohen’s former investors once they are liquidated.

In the meantime, though, it’s fair to think of Point72 as a family office with a rump SAC appendage.

Post Holdings Said to Reach $2.5 Billion Deal for Michael Foods

The cereal maker Post Holdings has reached a deal to buy Michael Foods, a food processing and distribution company, two people briefed on the matter said on Wednesday.

The deal, which could be announced as soon as Thursday, values Michael Foods at $2.5 billion, one of the people said. It would allow Post, known for brands like Raisin Brain and Honey Bunches of Oats, to expand into egg whites and potatoes.

Shares of Post were up about 7 percent on Wednesday after The Wall Street Journal earlier reported the pending deal.

Representatives of Post and Michael Foods did not immediately respond to requests for comment.

A sale would close a long chapter of private equity ownership for Michael Foods. The company was bought in 2003 by Thomas H. Lee Partners, the Boston-based private equity firm, which sold a majority stake in 2010 to the private equity arm of Goldman Sachs. It was valued at $1.7 billion in the 2010 transaction.

Michael Foods, whose brands include Simply Potatoes, All Whites and Crystal Farms, reported $1.9 billion of net sales for the year ended Dec. 28, an increase of 5 percent from the year earlier.

Bank of America Not Alone in Reporting Anemic Results

Anemic results underscore how little fun it is to run a big bank these days. The $276 million loss that Bank of America announced on Wednesday, however, at least provides some valuable perspective.

The bank, led by Brian Moynihan, was already expected to report a pretty low number because of its earlier flagged $3.6 billion mortgage settlement with Fannie Mae and Freddie Mac’s regulator. What surprised shareholders, though, was a $2.4 billion addition to reserves. Bank of America took the step after deciding that the amount it may have to pay out on lawsuits and other mortgage issues went up in the first three months of the year.

Penalty inflation has become a growing concern. Even so, much of the worst news at rival banks, not least JPMorgan Chase’s $13 billion settlement, came out before the end of 2013. That suggests that Bank of America has been tardy in re-evaluating its own exposures.

JPMorgan’s chief executive, Jamie Dimon, may take some comfort from the discouraging signs at his rival. He and his institution have been beaten up over the past two years on home loans and other mistakes. And yet it took a $9 billion hit, or 50 percent more than what Bank of America just paid, to cause a quarterly loss last year. That’s a stark reminder of JPMorgan’s comparative profitability despite its similarly sized balance sheet.

But Michael Corbat, the Citigroup boss, is probably scratching his head. Mr. Corbat has been coping with the embarrassment of the Federal Reserve rejecting his bank’s plan to return capital to shareholders, citing concerns over how the bank measures risk.

Judging by Wednesday’s showing, Bank of America’s issues sound similar. Citi’s results, while hardly awe-inspiring, nevertheless bested those of its Charlotte-based rival. Mr. Corbat’s bank eked out an anemic 7.8 percent annualized return on equity. After stripping out the litigation costs, Bank of America mustered just 6.8 percent. JPMorgan clocked in at a modest 10 percent. The context is instructive but hardly makes any of them inspiring.

Antony Currie is an associate editor at Reuters Breakingviews. For more independent commentary and analysis, visit breakingviews.com.

Moelis & Co. Rises After Smaller-Than-Expected I.P.O.

When Moelis & Company first disclosed the price range for its initial public offering less than two weeks ago, the market for newly public stocks was on a tear.

But when it came time to actually price the stock sale on Tuesday, the environment had changed substantially. And given the choice, executives at the boutique investment bank opted to price their shares at $25, a dollar below expectations, to help ensure the stock traded well. (They sold fewer shares as well.)

The strategy seems to have worked. Shares in Moelis & Company were trading 5.6 percent above the offer price by midday on Wednesday, at $26.40. That values the advisory shop at about $1.4 billion.

The firm’s founder, Kenneth D. Moelis, told DealBook in an interview on Wednesday that reducing the size of the offering was a necessity.

“We thought that’s probably where the world had moved,” he said. “We tried to think, ‘At what price and what size can we assure the people who are putting their faith in us that they will make money?’”

Just getting the I.P.O. off the ground was a long-held goal for Mr. Moelis and his team â€" “One of those things in life you get to do once,” he said â€" as they built out their firm nearly seven years ago.

Having a publicly traded stock will give the firm another tool for recruiting, because prospective new employees can more easily measure how much a Moelis & Company job offer that includes stock is worth versus a similar bid from another publicly traded firm.

Though the firm will be publicly traded, new investors won’t have much say in how the firm is run, because Mr. Moelis will control about 97 percent of the voting power. The banker steadfastly defended the corporate governance structure as one necessary to protect investors and the business.

Part of the reason behind the staggering amount of control is technical: Mr. Moelis controls a special entity on behalf of his partners that holds more powerful Class B shares, which carry 10 votes each. But he also made no apologies for maintaining such a tight grip.

“If we ever had a control fight, I don’t believe would win a lot of business,” Mr. Moelis said. “It’s my largest investment in the world, and I’m protecting it.”

Nor did he think that other perquisites were out of line. He noted that he bought a private jet with his own money, so if he needs to use it for firm business â€" meeting with a potential client, for example â€" it’s only fair to receive reimbursements.

And as for receiving reimbursements for what he would have paid in hotel fees when he visits New York, despite owning an apartment in the Plaza Hotel, Mr. Moelis said those were fair, too. “I don’t know of a hotel that’s as cheap as what the firm is reimbursing me,” he said.

Now that his firm is public, Mr. Moelis plans to continue building the investment bank across the world and across various industries. And he thinks that the environment for the firm’s mainstay mergers business will remain favorable, though it won’t jump anytime soon.

“I don’t think it’s going to spike,” he said. “I think it’s going to be a slow and steady improvement in the market, and someday we’ll have a full cycle.”

Lacking Revival Plan, Bitcoin Exchange Mt. Gox Likely to Be Liquidated

Mt. Gox, the Bitcoin exchange that filed for bankruptcy protection earlier this year saying that hackers had made off with a half-billion dollars’ worth of the virtual currency, said on Wednesday that it would most likely be liquidated.

In a statement posted on its website, the Tokyo-based company said a local court had dismissed its request that it be allowed to try to rehabilitate its business. A court-appointed lawyer will now oversee its assets, the statement said, ahead of any payout to creditors.

Mt. Gox said that drafting a rehabilitation plan had proved “difficult.” When it filed for bankruptcy protection last month, the exchange said it was unclear what had happened to its users’ Bitcoin, or indeed whether its accounting of its currency holdings was accurate.

The company later said it had discovered about 200,000 of the virtual coins in an “old-format” wallet that stored the virtual currency offline.

Documents leaked earlier this week showed one plan, backed by a group of United States investors, that proposed buying the company for just one Bitcoin, or about $500.

The move to liquidate the company “will create great inconvenience and concerns to our creditors for which we apologize,” the company statement said. Mark Karpeles, the exchange’s chief executive, has “lost his authority” over the company’s assets, it said.

Mt. Gox had been a pioneer in the world of virtual currency exchanges, at one point handling about 80 percent of Bitcoin transactions. But last year it began losing significant ground to more advanced exchanges, like BTC-e in Bulgaria and Bitstamp in Slovenia.

Mt. Gox was also plagued by late payments to its users, especially after the authorities seized some $5 million of its funds in the United States in mid-2013, saying it had failed to register as a money-transmitting service.

Mt. Gox filed for bankruptcy protection in Tokyo in late February, saying it had lost 750,000 of its Bitcoin customers’ holdings and more than 100,000 of its own coins â€" essentially its entire stock, worth almost $500 million.

The company faces class-action lawsuits in the United States and Canada from users who claim fraud by the company and by Mr. Karpeles. Mr. Karpeles could not be reached for comment.

French Caterer Elior Considering an I.P.O. This Summer

Elior, a French catering and support services provider, said on Wednesday that it was considering an initial public offering this summer.

The company filed documents with France’s market watchdog, the Financial Markets Authority, in the first step toward a public offering.

The company is Europe’s third-largest caterer behind the Sodexo Group of France and the Compass Group of Britain.

Elior is considering offering 30 to 35 percent of its capital in an I.P.O. and expects to raise up to 750 million euros, or slightly more than $1 billion, according to a person briefed on the matter.

“The I.P.O. opens a new chapter in our history of strategic and entrepreneurial development,” Gilles Petit, the chief executive of Elior, said in a statement. “It supports our ambitions to continue enhancing our services to clients and relationships with partners. It also enables us to pursue our strategy of profitable growth including the consolidation of our leadership positions.”

Elior, founded in 1991, employs about 105,000 people and provides catering services in 13 countries, with more than half of its revenue coming from France. The company posted pro forma revenue of €5.22 billion in its fiscal year ended Sept. 30, 2013.

Elior was acquired by the private equity firm Charterhouse Capital Partners in 2006 and would be the latest European company backed by private equity to seek to go public this year.

Bank of America’s Big Loss

Bank of America reported a first-quarter loss of $276 million on Wednesday, as legal expenses related to the financial crisis mounted, Michael Corkery writes in DealBook. The bank said its litigation expenses increased to $6 billion in the quarter, showing how Bank of America is still paying for its mortgages missteps nearly six years after the financial crisis.

Its quarterly loss of $276 million, or a loss of 5 cents a share, was in sharp contrast with a profit of $1.5 billion, or earnings of 10 cents a share, it posted in the period a year earlier. Analysts polled by Bloomberg News had been expecting earnings per share of 5 cents.

Morgan Stanley and Goldman Sachs are to report first-quarter results on Thursday before the bell.

NEW RULES ON SHORT-TERM BORROWING?  |  Janet L. Yellen, chairwoman of the Federal Reserve, suggested some measures on Tuesday that could restrain the use of short-term borrowing at the largest banks, including requiring them to hold more capital, Peter Eavis writes in DealBook. Capital is the financial cornerstone of a bank. A bank with more capital can, in theory, absorb more losses and may be less vulnerable to a bank run.

Banks, particularly those that borrow billions of dollars a day in the short-term debt markets, may oppose the measures out of self-interest, since holding more capital can make it harder for banks to post the sort of returns that their shareholders expect. Bankers may also argue that the Fed is practicing overkill. And though bank lobbyists might note that since the crisis, Wall Street firms make much less use of the so-called repo lending market â€" in which banks lend and borrow money for short periods against financial collateral â€" Ms. Yellen said in her speech that the existing overhaul might not address potential weaknesses in such places.

MOELIS & CO. FIGHTS I.P.O. MARKET CHILL  |  When Moelis & Company begins trading on Wednesday, it will be contending with a volatile market that is weighing on initial public offerings. The pricing of its offering at $25 a share â€" below its expected range â€" suggests that not even a strongly performing investment bank can escape the chill in the I.P.O. market, which had flown high until recently, Michael J. de la Merced writes in DealBook. The bank’s I.P.O. will also test whether investors believe it is different than other boutique banks, which shone in 2013 but whose shares have suffered a bit recently.

For the bank’s founder, Kenneth D. Moelis, going public has always been part of the plan. Part of what attracted many bankers to the firm was the lucrative stock compensation packages, giving them shares that they hoped to sell in an I.P.O. someday. And while the offering will give them that long-awaited payday, the bank will remain firmly under the control of Mr. Moelis, who will control the Class B shares of Moelis & Company, giving him roughly 97 percent of the voting power.

A GLIMPSE OF ALIBABA’S GROWTH  |  Investors on Tuesday got a sneak peek at the earnings of the Chinese online commerce giant Alibaba Group. What they found may cause some excitement as Alibaba’s long-awaited initial public offering draws closer, Michael J. de la Merced writes in DealBook.

Alibaba had profit of $1.4 billion in its fourth quarter, more than double the amount it made during the period a year earlier. Revenue jumped 66 percent, to nearly $3.1 billion. Such a big jump may help allay concerns that Alibaba’s enormous growth had begun to slow. Those worries began to arise when Alibaba reported only a 51 percent gain in third-quarter revenue compared with figures in the period a year earlier.

The window into Alibaba’s financial results came courtesy of Yahoo, which owns 24 percent of Alibaba and must disclose some of its financial data as part of its own quarterly reports, Vindu Goel writes in The New York Times. But Alibaba will soon provide much more information about its business â€" it plans to file paperwork as early as next week for an initial public offering of stock on an American exchange. For its part, Yahoo said revenue and profit growth were flat for the first-quarter, a slight improvement from previous quarters. Yahoo’s shares soared in after-hours trading, primarily on Alibaba expectations.

ON THE AGENDA  |  Housing starts for March are out at 8:30 a.m. The index of industrial production for March is released at 9:15 a.m. The Fed’s regular report on economic activity across the country, known as the beige book, is out at 2 p.m. Janet L. Yellen, chairwoman of the Federal Reserve, delivers remarks at 12:15 p.m. to the Economic Club of New York. Richard W. Fisher, president of the Dallas Fed, gives a speech on the economic outlook at 1:25 p.m. Kenneth D. Moelis, founder and chief executive of Moelis & Company, is on CNBC at 10:15 a.m. and on Bloomberg TV at 10:40 a.m.

QUESTIONING CORPORATE MONITORS  |  “In the insider trading case against SAC Capital Advisors, federal prosecutors have given a particularly nice gift to a former federal prosecutor, Bart M. Schwartz,” Steven M. Davidoff writes in the Deal Professor column. Mr. Schwartz, who is now the chairman of the consulting firm Guidepost Solutions, was appointed SAC’s independent compliance consultant as a condition of SAC’s guilty plea to insider trading charges, which was accepted by a federal judge last week.

Mr. Davidoff writes: “The job is likely to earn Mr. Schwartz millions, but it will do little more than that. It’s all part of the corporate monitoring industry, a full employment act for former federal prosecutors that may have little effect on the way any company that is forced to hire a monitor conducts its business.” He adds, “When a corporation accused of wrongdoing agrees to settle the charges or is sentenced to probation, it is often required to pay for a monitor to ensure that it does not break the law again.”

But it turns out, there may be problems. One of the main criticisms of these compliance programs is that they perpetuate an “old boys’ network,” rewarding former federal prosecutors with a job that pays millions of dollars. The work of these monitors is also secretive. Mr. Davidoff writes, “Without seeing the monitors’ work, it’s hard not to think that this is all just part of one of the biggest growth industries around â€" the corporate investigation industry. It’s a nice profit center for former prosecutors, but it may not be much more.”

 

Mergers & Acquisitions »

Citic Group Seeks $36.5 Billion in Hong Kong Listing  |  The cash-and-stock deal calls for the Citic Group to sell almost all of its operating assets to its Hong Kong-listed unit, Citic Pacific. DealBook »

Metso Board Rejects Merger Approach by Scottish Rival  |  The Finnish engineering company Metso, which provides services for the mining, construction and energy sectors, said its board had decided a proposal by the Weir Group was not in the interest of shareholders. DealBook »

Diageo Makes New Bid for Controlling Stake in United Spirits of India  |  Diageo, the world’s largest distiller, offered to pay about $1.9 billion for an additional 26 percent stake in United Spirits of India, after an unsuccessful bid to take a controlling stake last year. DealBook »

Twitter Acquires Gnip, Bringing a Valuable Data Service in House  |  Twitter announced on Tuesday that it had acquired Gnip, a company that provides data about activity on the social network as it is occurring, the Bits blog writes. The eight-year-old company is the latest data company to be acquired by Twitter. NEW YORK TIMES BITS

Facebook Requires Users to Install Separate Messaging App  |  Facebook is removing messaging from its smartphone app, requiring users to install a separate app â€" a move the company says will improve user experience, the Bits blog writes. The new Messenger app will also include features that are in competing messaging apps, including WhatsApp, which Facebook recently agreed to buy for more than $16 billion. NEW YORK TIMES BITS

Game of Drones  |  It just might be the right time for a “Top Gun” sequel, considering we are already on the highway to the danger zone, Maureen Dowd writes in a New York Times Op-Ed column. “Instead of unmanned planes controlled by terrorists, the drones could be an army of angry birds amassed by our computer overlords, Google, Facebook and Amazon,” she writes. NEW YORK TIMES

Washington Post Editorial Backs Comcast-Time Warner Cable Deal  |  “The government’s smartest move is not to block the merger, but to make clear that regulators will respond if big industry players begin to violate basic principles of market fairness,” according to an editorial in The Washington Post. WASHINGTON POST

INVESTMENT BANKING »

Credit Suisse Profit Falls 34% in First Quarter  |  The bank reported quarterly earnings of 859 million Swiss francs, or about $976 million, compared with profit of 1.3 billion francs in the year-earlier period. DealBook »

European Parliament Approves Laws on Banking Overhaul  |  The move put in place the final pieces of a landmark plan for managing a banking system whose troubles have dented the bloc’s economic prospects, The New York Times reports. NEW YORK TIMES

Barclays Picks Former Bain & Co. Executive to Lead Compensation Committee  |  The addition of Crawford Gillies to the board of directors comes after Barclays increased its bonus pool for last year despite a steep loss in the fourth quarter. DealBook »

As Credit Dries Up, Smaller Companies in China Feel the Pinch  |  Exorbitant interest rates and a scarcity of loans have turned financing into a challenge for those without the political connections to borrow at regulated rates, The New York Times writes. NEW YORK TIMES

Intel’s Profit Slips, but Investors Are Still Turning Toward Tech’s Staid Stalwarts  |  While tech’s Internet darlings have stumbled, a number of older tech giants, like Hewlett-Packard, Microsoft and Oracle, have so far this year outperformed market averages, The New York Times writes. NEW YORK TIMES

PRIVATE EQUITY »

German Firm Sells Heat Exchanger Operations to Funds Advised by Triton  |  The GEA Group said the deal valued the unit at about $1.8 billion and was part of its strategy to focus on supplying systems to the food industry. DealBook »

Symantec Draws Buyers and Activists  |  The sudden firing last month of Steve Bennett, Symantec’s chief executive, is said to be luring private equity firms and activist investors to the company, which makes security software, Reuters reports, citing unidentified people familiar with the situation. A number of private equity firms, including Bain Capital, the Blackstone Group and the Carlyle Group, have begun considering the possibility of a leveraged buyout of all or parts of Symantec, the people said. REUTERS

CVC Capital’s Auto Racing Gamble Pays Off  |  The private equity firm CVC Capital has made $8.2 billion from its investment in Formula One auto racing, Forbes reports, citing new research. The firm bought F1 for $2 billion in 2006 in a leveraged buyout financed with two loans. FORBES

HEDGE FUNDS »

Elliott Holds Firm With $21 a Share Bid for Riverbed  |  The activist hedge fund Elliott Management said on Tuesday that it was keeping its takeover bid for Riverbed Technology at $21 a share, or $3.3 billion, noting that its offer remained well above where Riverbed’s stock is trading. DealBook »

R.B.C. to Turn Trading Desk Into Hedge Fund  |  The Royal Bank of Canada is said to be planning to spin off its global arbitrage and trading arm, based in New York, into a stand-alone hedge fund as soon as the end of this year, The Wall Street Journal reports, citing unidentified people familiar with the situation. WALL STREET JOURNAL

Hacker Discusses Plans for Hedge Fund  |  Weev, the 29-year-old hacker also known as Andrew Auernheimer who was released from federal prison last weekend, said he was planning to start a new hedge fund called TRO LLC, TechCrunch writes. TECHCRUNCH

I.P.O./OFFERINGS »

New Crop of I.P.O.’s Getting Back to Basics  |  A fresh crop of eager initial public offerings this week may encounter a more rational market as investors now seem to want companies they can understand, Robert Cyran writes in Reuters Breakingviews. DealBook »

SoftBank Shares Rise on Alibaba Profit Report  |  Shares in SoftBank rose as much as 8 percent after Alibaba, which is 37 percent owned by SoftBank, reported $1.4 billion in profit for the October to December quarter. DealBook »

Associated Materials Withdraws I.P.O.  |  Associated Materials, a maker of homebuilding products, said on Tuesday that it had decided to withdraw its plans for an initial public offering, Reuters reports. The company, owned by the private equity firm Hellman & Friedman, filed last July for an I.P.O. of up to $100 million. REUTERS

I.P.O. of China’s WH Group Involves 29 Banks  |  “The spread of the company’s operations may have resulted in a myriad of banking relationships, but certainly not any divisional coherence,” The Financial Times writes in the Lex blog. FINANCIAL TIMES LEX

VENTURE CAPITAL »

Squarespace Raises $40 Million From General Atlantic  |  Squarespace, an all-in-one website and e-commerce service provider, said on Tuesday that it had raised $40 million from the private equity firm General Atlantic. That brings the start-up’s fund-raising total to nearly $80 million. DealBook »

Automattic Said to Be Seeking More Than $100 Million  |  Automattic, which runs the blogging platform WordPress, is said to be raising between $100 million and $150 million in new venture capital funding round, Fortune reports, citing unidentified people familiar with the situation. The round will value the company at more than $1 billion. FORTUNE

Anti-Tech’s New Nativism  |  “In the past, it was racists and homophobes who attacked newcomers to San Francisco. Today, anti-tech activists are promoting a new nativism, charging incoming tech workers with undermining the city’s traditional values,” Randy Shaw writes in BeyondChron, San Francisco’s alternative online daily. BEYONDCHRON

LEGAL/REGULATORY »

Pension Deal Edges Detroit a Step Closer to Recovery  |  In its rush to exit bankruptcy, the city reached an agreement that would prevent cuts to pensions of retired police officers and firefighters, The New York Times reports. NEW YORK TIMES

3 Former ICAP Brokers Appear in British Court in Libor Manipulation Case  |  At a brief hearing in Westminster Magistrates’ Court, the former brokers Danny Martin Wilkinson, Darrell Paul Read and Colin John Goodman spoke only to confirm their identities. DealBook »

Not All Investigations Are Alike  |  Not all criminal investigations of a company are alike, and there are telltale signs about how serious a threat one may present, writes Peter J. Henning in the White Collar Watch column. DealBook »

Brazil’s Star, Petrobras, Is Hobbled by Scandal and Stagnation  |  Petrobras has recently come to symbolize disarray in Brazil’s sluggish economy and the reassessment of growth prospects in emerging markets, The New York Times writes. NEW YORK TIMES

Troubled Italian Bank May Seek Larger Share Sale  |  Monte dei Paschi will try to raise €5 billion instead of the expected €3 billion, Italian news reports said, sending shares lower, The New York Times writes. NEW YORK TIMES

Bank of America Swings to Quarterly Loss on Legal Costs

Bank of America swung to a first-quarter loss of $276 million, as legal expenses related to the financial crisis mounted.

The bank said on Wednesday that its litigation expenses increased to $6 billion in the quarter, showing how Bank of America is still paying for its mortgage missteps nearly six years after the financial crisis.

Its quarterly loss of $276 million, or a loss of 5 cents a share, was in sharp contrast with a profit of $1.5 billion, or earnings of 10 cents a share, it posted in the period a year earlier. Analysts polled by Bloomberg News had been expecting earnings per share of 5 cents.

“The cost of resolving more of our mortgage issues hurt our earnings this quarter,” Brian T. Moynihan, the bank’s chief executive, said in a statement. “But the earnings power of our business and customer strategy generated solid results and we continued to return excess capital to our shareholders.”

First-quarter profit was weighed down by $6.3 billion that the bank paid last month to settle a lawsuit arising from troubled mortgage-backed securities it bundled and sold to Fannie Mae and Freddie Mac before the financial crisis.

The bank agreed to pay that sum to settle a lawsuit filed by the Federal Housing Finance Agency on behalf of the two government-sponsored mortgage finance firms. As part of the settlement, Bank of America will also repurchase mortgage securities from Fannie and Freddie that are valued at about $3.2 billion.

The agreement covers so-called private-label mortgage-backed securities sold by Bank of America and its affiliated entities, like Countrywide Financial and Merrill Lynch.

Bank of America continues to grapple with the legal fallout from the mortgage lending debacle. The settlement with the Federal Housing Finance Agency concludes one of the bank’s largest legal liabilities, but there are other large pending cases that could continue to weigh on future earnings.

Excluding the legal expenses, the bank’s results mirrored those of its Wall Street peers like Citigroup and JPMorgan Chase.

Bank of America’s fixed-income trading operations suffered from declining client demand and low interest rates - a fate none of the largest Wall Street firms has escaped in the first quarter. The bank’s fixed-income trading fell 2 percent in the first quarter from the period a year earlier, a drop that was not nearly as steep as at some of its peers.

On the consumer side, the bank’s profits increased, spurred by lower losses on loans and growth in newly issued credit cards. Overall loan values were down, as the bank continued to run off its legacy portfolio.

Despite the high legal expenses, which the bank flagged to investors last month when it settled with the federal housing agency, the first quarter was a milestone in the bank’s efforts to put its troubled past behind it.

After its capital plan passed the Federal Reserve’s stress test last month, Bank of America announced that it was raising its dividend for the first time since the financial crisis.

The bank’s shares are up roughly 35 percent over the last year, outperforming many of its rivals.

Metso Board Rejects Merger Approach by Scottish Rival

LONDON - The Finnish company Metso said Wednesday that it had rejected an offer by its Scottish engineering rival, the Weir Group, to open merger discussions.

In a statement Wednesday, Metso, which provides services for the mining, construction and oil and natural gas sectors, said that its board of directors had unanimously found that Weir’s proposal was “not in the best interest of Metso shareholders.”

“The Metso board remains extremely positive and confident in Metso’s standalone growth and value creation prospects by pursuing its current strategy,” the company said in the statement. “As a consequence, the board has rejected Weir’s proposal and sees no reason to commence discussions regarding a potential combination.”

Earlier this month, Weir said that it had made an “all-share merger proposal” to acquire Metso and envisioned the merged entity being listed in London and Helsinki, Finland.

The Times of London newspaper reported at the time that Weir was willing to pay as much as 30 euros, or about $41.54, a share for Metso.

Metso shares fell 5 percent, to €27.27, in early trading Wednesday in Helsinki.

Metso, created by a merger in 1999 of Valmet and Rauma, reported revenue of €3.86 billion last year and employs about 16,000 people.

Weir, which was founded in Glasgow in 1871, posted 2013 revenue of 2.43 billion pounds, or about $4.08 billion, and employs about 15,000 people in more than 70 countries.

German Firm Sells Heat Exchanger Operations to Funds Advised by Triton

LONDON - GEA Group of Germany said on Wednesday that it had sold its heat exchangers business to funds advised by the private equity firm Triton Partners, in a deal that valued the unit at 1.3 billion euros, or about $1.8 billion. GEA had announced plans last year to sell the unit, which involves components for heating, air conditioning and ventilation systems.

The transaction is part of GEA’s strategy to focus its operations on its core business of supplying packaging and processing systems to the food industry, which will account for about 70 percent of its revenue after the sale.

“We are pleased that, with Triton, we have found a reputable owner for the heat exchangers segment,” Jürg Oleas, the chairman of GEA’s executive board, said in a statement. “In its capacity as investor, Triton brings in the perspective of further developing the business potential” of the heat exchange business in the best way possible.

The deal, which is subject to regulatory approval, is expected to close by the end of the year.

GEA posted revenue of €4.3 billion in 2013 and employs about 18,000 people worldwide.

Citic Group Seeks $36.5 Billion in Hong Kong Listing

The Citic Group, one of China’s biggest state-owned conglomerates, said on Wednesday that it had reached a formal deal for what amounts to a backdoor listing in Hong Kong valuing the company at about $36.5 billion.

The cash-and-stock deal, valuing the company at 227 billion renminbi, calls for Citic to sell nearly all of its operating assets to its Hong Kong-listed unit, Citic Pacific, which invests in steel, iron ore and real estate.

Citic Group was founded in 1979 at the start of China’s modern economic era and has investments that include banking, trust companies, insurance, energy resources and manufacturing. It has been considering a listing in Hong Kong for several years and is ranked No. 172 on the Fortune 500 list of the world’s biggest companies.

‘‘For the first time ever, Citic Pacific investors will have access to China’s largest, most prestigious and pioneering conglomerate,’’ Chang Zhenming, the chairman of both Citic and Citic Pacific, said on Wednesday in a news release. ‘‘Citic has always been right at the heart of the process of reform and development in China, and this landmark transaction marks the next stage of the group’s transformation.’’

Analysts have described the giant listing as a potential harbinger for a new era of overhauls to China’s huge but sometimes sclerotic state-owned corporations.

‘‘We believe that this transaction in the equity market may signal a new way for Hong Kong to catch the wave of China’s next round of state-owned enterprise reform,’’ Liu Li-Gang, the chief economist for greater China at the Australia and New Zealand Banking Group, wrote last month in a research note, when Citic’s negotiations were announced.

State-owned Chinese companies that are listed in Hong Kong had a combined market value of 9.7 trillion Hong Kong dollars, or $1.25 trillion, at the end of last year. But Mr. Liu calculates that is equal to only about 9 percent of the assets on the books of all Chinese state companies â€" implying many more state assets could be heading for public listings in Hong Kong. ‘‘This means that there is plenty of room for Hong Kong’s equity market to grow,’’ Mr. Liu wrote.

Under the terms of the deal announced on Wednesday, Citic Pacific, a much smaller subsidiary, will issue 177 billion renminbi worth of new shares to Citic at a price of 13.48 Hong Kong dollars apiece â€" a premium of 6.5 percent to where Citic Pacific’s stock closed the day before the negotiations were announced.

To maintain a minimum public float â€" ensuring that 25 percent of its shares are listed and not owned by the controlling shareholder â€" Citic Pacific will issue an additional 4.68 billion new shares to unnamed institutional investors, raising 63 billion Hong Kong dollars to fund the cash portion of its deal.

The 227 billion renminbi price for the deal is a minimum; it could be revised upward by an independent appraiser, whose yet-to-be announced valuation for the assets must be approved by China’s Ministry of Finance, Citic Pacific said in its announcement.

China requires that state assets not be sold for less than their book value. Because of this, Citic Pacific has had to price its deal for the parent company’s businesses at a level that in several cases has represented a premium to what the stock markets have signaled they are worth.

Nine companies that are part of the Citic family are already listed in Hong Kong. Four of those companies trade at a discount to their book value, including Citic Bank, which trades at 0.77 times its book value, and Citic Resources, which trades at 0.67 times book value.

Credit Suisse Profit Falls 34% in First Quarter

LONDON -Credit Suisse said on Wednesday that profit fell 34 percent in the first quarter as the Swiss bank shed assets and streamlined its investment banking operations as part of an overhaul of its business.

For the first three months of the year, Credit Suisse reported earnings of 859 million Swiss francs, or about $976 million. That compares with profit of 1.3 billion francs in the same period a year earlier.

Analysts had expected the bank to post a profit of 1.15 billion francs in the first quarter, according to a survey by Reuters.

Revenue fell 8 percent to 6.47 billion francs.

Credit Suisse announced plans last year to shift some of its fixed-income operations and other businesses to a nonstrategic unit within the investment bank, as it focused more on wealth management. Credit Suisse and its larger rival UBS have shed loans and other debt in recent years to meet Swiss regulatory rules, while also bolstering their capital reserves.

Brady W. Dougan, the chief executive of Credit Suisse, said the company was able to achieve a return on equity of 14 percent in the quarter as a result of recent changes, not far from the company’s target of 15 percent.

“This strong performance was driven by significantly improved profitability in private banking and wealth management, solid returns in investment banking and continued effective cost and capital management,” Mr. Dougan said in a statement. “We saw continued momentum with clients across many of our key businesses, including the highest net asset inflows in our strategic businesses since the first quarter of 2011 and a meaningful increase in the share of assets under management from ultra-high-net-worth clients.”

In the private banking and wealth management business, pretax profit rose to 1.01 billion francs in the quarter, compared with 881 million francs a year earlier.

The business had assets under management of 1.29 trillion francs at the end of the quarter, down from 1.31 trillion francs at the end of the first quarter of 2013. The decrease reflected a decline in assets associated with business lines considered by Credit Suisse to be nonstrategic.

The investment bank reported a pretax profit of 827 million francs, compared with profit of 1.3 billion francs in the prior-year period.

Within the investment bank, underwriting revenue was higher than in the first quarter of 2013, in part because of gains in market share. Revenue in its fixed-income business was lower in the quarter because of “substantially reduced client activity and challenging trading conditions” in global macro products and emerging markets, the company statement said. Equity sales and trading also were lower.

Credit Suisse has recently revised its fourth-quarter results twice to reflect increased legal costs. It first revised the results downward in March to reflect an $885 million settlement to resolve claims that it had sold questionable loans to the mortgage finance giants Fannie Mae and Freddie Mac in the run-up to the financial crisis.

Earlier this month, the Swiss bank revised its fourth-quarter results again to reflect an additional charge of 468 million francs in increased legal provisions, primarily related to a continuing investigation into Americans who secretly held assets in Swiss accounts. As a result, Credit Suisse reported a fourth-quarter loss of 476 million francs.

The first-quarter results included additional litigation provisions of 107 million francs.