February 7, 2023

U.S. Stock Markets Expect to Reopen on Wednesday

NYSE Euronext said the New York Stock Exchange would open, although it would switch to fully electronic trading if necessary. Nasdaq OMX’s Nasdaq Stock Market will be operating on Wednesday as well, and BATS Exchanges will be open as well.

“We are shooting hard to open tomorrow and fully expect to do so, but lots of firms are going to have either connectivity problems, or other things, so we are urging all firms to get out there and test their back-up,” NYSE Euronext Chief Operating Officer Larry Leibowitz said in an interview.

U.S. exchanges, banks, brokers and others conferred for hours on Tuesday about the feasibility of resuming trade after exchanges closed because of bad weather for the first time in 27 years.

Lower Manhattan, where Wall Street and the NYSE are located, lost power on Monday after being buffeted by Sandy, the worst storm to hit New York since at least 1938.

The NYSE has opened in adverse circumstances in the past, including the Monday after Hurricane Irene in August of last year, and on September 17, 2001, six days after the 9/11 attacks.

The NYSE, which accounts for about a quarter of U.S. stock market trading volume, is testing the possibility of routing trades through its electronic platform, Leibowitz said. Under normal conditions it handles about half its volume through its trading floor at 11 Wall Street, where traders and specialists buy and sell stocks in person.

“Tomorrow will not be without hiccups, but will be good enough that the market will be fine,” he said.

The NYSE had said on Sunday afternoon it planned to close its trading floor and to move all trading to its electronic market. It backtracked on that idea after traders and regulators expressed concern – given the difficulties and low staffing levels due to the storm – about moving everything to the all-electronic venue, a plan tested on March 31 but never used live.

An industrywide testing session was held in the morning, and rival exchange Nasdaq also conducted its own tests.

Bond markets were also closed on Tuesday, with traders aiming to reopen on Wednesday.

September 2001 was the last extended period of time that saw the exchanges close, as the exchange closed on September 11 following the World Trade Center attacks, and opened on September 17, the Monday following the event.

“It would be unprecedented to have three days of closure from a weather-related emergency, and the greater point is that American markets do not want to be perceived as anything other than reliable,” said Mike Shea, managing partner and trader at Direct Access Partners LLC in New York.

“That’s really the issue. An emergency like September 11 was different.”

Kenneth Polcari, long-time floor trader at the NYSE, said he was still waiting to hear how the exchange would get the direct market-makers, that is, the specialists who facilitate buy and sell orders, to the floor.

“If they aren’t there and they still trade, then there is no reason for them to have those guys at all,” he said.

MANY BANKS SLOWLY OPENING

Plans to resume trading will be complicated by the lingering effect of the storm on New York. Sandy brought a record storm surge that flooded subway tunnels. The city’s subway service is not likely to resume for four to five days, Mayor Michael Bloomberg said on Tuesday.

JPMorgan Chase Co, the largest U.S. bank, expects many employees will be able to return to buildings starting on Wednesday, according to an internal memo obtained by Reuters.

One of Citigroup’s main investment banking buildings at 388 Greenwich Street in Manhattan had minor flooding, and is without power, an internal memo said. The building sits by the Hudson River. A smaller Citigroup building by the Hudson River is running on a generator. The bank expects both to be accessible within two days.

Article source: http://www.nytimes.com/reuters/2012/10/30/business/30reuters-storm-sandy-nyse.html?partner=rss&emc=rss

DealBook: Barclays Names Chief Operating Officer

LONDON – Barclays said on Friday that it had named its investment banking co-head, Jerry del Missier, to the newly created position of chief operating officer.

In the new role, Mr. del Missier will work with the heads of the bank’s different units to streamline and improve computer systems and operations, Barclays said in a statement. Rich Ricci, who ran Barclays’ investment banking unit with Mr. del Missier, will become sole head of the business.

The change comes as Barclays is seeking to reduce costs and comply with stricter financial regulation in Britain that forces banks to separate their investment banking operations more clearly from those businesses that hold retail deposits.

Robert E. Diamond, Jr., the chief executive of Barclays, said the appointment “brings even more management focus on accelerating” its priorities of improving its capital position and increasing returns.

Mr. del Missier said he was looking “to ensure that we continue to exceed our customers’ and clients’ expectations at every instance, while delivering on our commitments to our shareholders, regulators and broader stakeholders.”

Mr. del Missier joined Barclays in 1997. Before becoming co-head of the investment banking operation in 2010, Mr. del Missier was responsible for the unit’s technology and operations committee.

Article source: http://dealbook.nytimes.com/2012/06/22/barclays-names-chief-operating-officer/?partner=rss&emc=rss

BlackBerry, Aiming to Avoid the Hall of Fallen Giants

Research in Motion, maker of BlackBerry smartphones and tablets, sent its co-chief executives packing last week and replaced them with Thorsten Heins, who had been RIM’s chief operating officer. How would he characterize his employer?

“We make the best communications devices in the world,” said Mr. Heins, who met with editors and reporters from The New York Times on Friday.

Not everyone feels the same way. Over the last year, RIM’s share price has plunged 75 percent. The company once commanded more than half of the American smartphone market. Today it has 10 percent.

RIM has two, maybe three ways forward.

The first — the one that Mr. Heins is clearly aiming for — is a triumphant comeback after a near-death experience. Think Apple and its iMac. RIM is on the verge of upgrading its PlayBook operating system — now with, among other things, e-mail, a feature that the original PlayBook bafflingly lacked — and will release the BlackBerry 10 OS this year.

Behind Door No. 2 is a gradual decline and diminution as rivals like Apple, Google and Microsoft devour most of the market; to some degree, they already have. BlackBerry would keep the scraps — a small but dedicated following of corporate and government customers who want its proprietary messaging and security features.

Then there is the third option: oblivion. The road of progress is littered with the corpses of fallen titans. Objects that once seemed as indispensable as the companies that made them have been mercilessly superseded — as seen below. And RIM ought to know: with mobile devices like the BlackBerry 957, it helped to extinguish the pager era.

SONY WALKMAN (1979-2010)  Before the Walkman, “personal audio” meant holding a transistor radio to your ear. Sony’s invention created an entire category of devices and helped make the company the technology leader of the 1980s. New models (Thinner! Auto-reverse!) were eagerly anticipated, the LP was relegated to the attic and tender moments spent listening to mix tapes from that certain someone proliferated across teenage bedrooms. Sony seemed incapable of putting a foot wrong. It successfully moved the brand into compact discs with the Discman, then bought record labels and movie studios to bring about that illusory marriage of technology and content. When the digital revolution hit, Sony was too beholden to its proprietary formats, as well as to the inertia inside its media companies. Enter Apple and the iPod.

PAGERS (BORN 1951)  At first, pagers were attached to people who worked in fields where lives were on the line. That usually meant doctors, though the group expanded in the late 1980s to include drug dealers. Early beepers displayed only numbers, giving rise to a numerical lexicon that included codes like 911 (call me back immediately) and 07734, which resembles “hello” when read upside down. Pagers briefly gained fame in early 1990s hip-hop, showing up in songs like “Skypager,” by a Tribe Called Quest. The pager’s fall  was attributable to the disruptive and destructive powers of another technology: the mobile phone. Why beep when you can talk? And a pager message is so tiny that it makes a tweet look like “The Iliad.” The beeper does live on, in limited circles: its network remains more reliable than cell networks, making it useful to E.M.S. and other rescue workers.

PALM PILOT (1997-2007) Filofax brought personal organizers to their analog apogee in the early ’90s, but Palm brought them into the digital age. Palm Pilots were dazzling when they first appeared: all of your contacts, calendars and notes in one slim, pocket-size device. A touch screen, which required a stylus, made navigation easy. And you could add software, bought through an online store. Want a Zagat guide to go along with your personal data? No problem. In later years, Palm even added telephone features, creating a compelling, all-in-one gadget. Despite boardroom dramas that affected the company’s name and its ownership, Palm’s reputation as a source of innovative hardware and software endured until Jan. 9, 2007. Why that date? That’s when Apple introduced the iPhone.

POLAROID INSTANT CAMERAS (1948-2008) Edwin Land’s invention of instant-developing film in 1948 put a darkroom inside a handheld camera. That achievement gave his Polaroid Corporation a distinct advantage over traditional film cameras. By 1980, Polaroid was selling 7.8 million cameras a year in the United States — more than half of all the 15 million cameras, instant and traditional, sold that year. In 1985, it won a major patent-infringement suit, forcing Kodak to abandon its own instant-camera efforts. The victory was short-lived. The late ’80s brought the rise of the digital camera. By 2000, digital cameras began appearing on cellphones, placing  cameras in millions of pockets. Polaroid declared bankruptcy for the first time in 2001 and stopped making instant film in 2008. Kodak declared bankruptcy on Jan. 19.

ATARI 2600 (1977-c.1984) It wasn’t the first game console, but the Atari 2600 brought video games into the home and popular culture. Over its life span, more than 30 million were sold. Pong, Combat, Pitfall and Frogger soaked up children’s afternoons. Then came the PC, which could play games and do much more. Atari rushed out games, assuming that its customers would play whatever it released. They didn’t. Millions of unsold games and consoles were buried in a New Mexico landfill in 1983. Warner Communications, which bought Atari in 1976 for $28 million, sold it in 1984 for no cash.

 

Article source: http://www.nytimes.com/2012/01/29/business/blackberry-aiming-to-avoid-the-hall-of-fallen-giants.html?partner=rss&emc=rss

DealBook: Nomura’s Wholesale Banking Chief Retires

A branch of Nomura Securities in Tokyo.Tomohiro Ohsumi/Bloomberg NewsA branch of Nomura Securities in Tokyo.

LONDON — Jasjit Bhattal, chief executive of Nomura Holding’s wholesale banking division, retired on Tuesday after less than two years in the position.

The sudden departure is a blow to Nomura’s attempts to expand in global financial markets.

Mr. Bhattal was the first non-Japanese person to sit on Nomura’s executive board. He joined the bank in 2008 from Lehman Brothers after Nomura bought the European and Asian operations of Lehman after it collapsed.

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Based in Hong Kong, Mr. Bhattal, who was also deputy president of Nomura, was in charge of efforts to expand the wholesale banking unit, which has continued to struggle against international competitors.

As part of an effort to streamline operations last year, Nomura announced $1.2 billion of cuts, mostly in Europe, where it currently has 4,500 employees. In the three months ended Sept. 30, Nomura posted a net loss of $591 million, its first quarterly loss in more than two years.

“Jesse has had a distinguished career, spanning nearly three decades in the industry,” Nomura’s chief operating officer, Takumi Shibata, said in a statement. “We would like to thank him for his contribution in leading the wholesale business through exceptionally difficult markets.”

Mr. Shibata will manage Nomura’s wholesale banking division on an interim basis.

Article source: http://feeds.nytimes.com/click.phdo?i=90b6f7d9f9c4e6b81ad97b6109694fab

DealBook: Live Blog: Senate Panel Hearing on MF Global

Jon S. Corzine, MF Global's former chief executive, testifying in December at a House hearing into the collapse of the firm.Michael Reynolds/European Pressphoto AgencyJon S. Corzine, MF Global’s former chief executive, at a House committee hearing this month into the collapse of the firm.

The congressional inquiry into MF Global continues, a hearing that will focus on the collapse of the commodities brokerage and the disappearance of an estimated $1.2 billion in customer money. Jon S. Corzine, the former leader of the brokerage who testified before a House panel last week, is appearing before the Senate Agriculture Committee on Tuesday. Lawmakers will also hear, for the first time, from two of Mr. Corzine’s former top deputies: Bradley Abelow, MF Global’s chief operating officer, and Henri J. Steenkamp, the firm’s chief financial officer.

Article source: http://feeds.nytimes.com/click.phdo?i=36c08a413cd405e82b9acbcd51bbd031

DealBook: Congressional Panel Seeks to Question Corzine

Jon S. Corzine, former chief executive of MF Global.Rich Schultz/Associated PressJon S. Corzine, the former chief executive of MF Global.

A Congressional panel has asked Jon S. Corzine to testify about the downfall of MF Global, and the hundreds of millions of dollars in customer money that went missing in the brokerage firm’s final days.

The hearing, scheduled for Dec. 15, will be a role reversal for Mr. Corzine, who spent five years on Capitol Hill as a Democratic senator from New Jersey. As a Congressional witness, Mr. Corzine is expected to come under fire for presiding over MF Global as it caused the futures industry’s first major breach of customer money. A spokesman for Mr. Corzine declined to comment on Tuesday.

The hearing, organized by the oversight unit of the House Financial Services Committee, could present the first public grilling of Mr. Corzine about his risky bets on European sovereign debt, wagers that ultimately doomed the firm.

Lawmakers are also planning to question Bradley Abelow, the firm’s chief operating officer and Mr. Corzine’s chief of staff when he was governor of New Jersey.

It is unclear whether Mr. Abelow and Mr. Corzine, who resigned as MF Global’s chief executive earlier this month, will accept the request that they testify, though the subcommittee could subpoena the executives if they balk. Mr. Abelow received the request on Tuesday and plans to respond soon to lawmakers, said a person close to the company who was not authorized to speak publicly.

The hearing will overlap with an intensifying federal investigation into MF Global. The Commodity Futures Trading Commission is leading the search for the missing money while the Federal Bureau of Investigation and federal prosecutors in New York and Chicago are examining potential criminal wrongdoing.

Neither the firm nor Mr. Corzine have been accused of wrongdoing.

Investigators now believe that much of the unaccounted-for customer money left the firm as the company was beginning a tailspin late last month, said people briefed on the matter who requested anonymity because the investigation was still under way. Regulators suspect that MF Global used some of the money to meet its own financial obligations, which could mean that those funds are gone forever.

The exact amount of missing money is undetermined, and it changes by the day. On Monday, the trustee overseeing the dismantling of MF Global’s brokerage unit pegged the number at around $1.2 billion, twice the previous estimate. Forensic accountants from Deloitte and Ernst Young working for the trustee, James Giddens, came to the much larger estimate after they spent roughly three weeks reconstructing the firm’s books.

Regulators were taken aback by the announcement, signaling the first hiccup in an otherwise smooth investigation, according to people briefed on the matter. The trustee’s office gave regulators little more than 20 minutes’ notice before it publicly released the finding, according to the people.

Now, some regulators are questioning the $1.2 billion figure, suspecting that the trustee double-counted $220 million that had been transferred between units of MF Global, according to one of the people briefed on the matter. Over the last day, the C.F.T.C. has tried to independently check the numbers.

The CME Group, the exchange where MF Global did most of its business, disputed the larger figure on Tuesday. In a statement, the exchange said it was “confident reports of significantly larger shortfalls are incorrect.”

Kent Jarrell, a spokesman for the trustee, stood by the larger estimate, while noting that it was preliminary.

Mr. Giddens is charged with returning money to MF Global’s customers. Customers — including farmers in Iowa and hedge funds in New York — have slowly received a portion of their accounts. The trustee has distributed at least $1.5 billion over the last three or more weeks, though that remains a fraction of what customers are owed.

In bankruptcy court in Lower Manhattan on Tuesday, Judge Martin Glenn approved a proposed claims process for the trustee to dispense additional funds. Mr. Jarrell said that electronic application forms would be posted to the trustee’s Web site and that claims would be evaluated soon.

Also on Tuesday, the trustee started receiving a flow of some $1.3 billion in MF Global customer funds that were stored at Harris Bank.

The funds, made up of foreign currencies, securities and cash, will give the trustee additional money to return to the MF Global customers, though it does not reduce the overall shortfall in funds.

“It’s the last big pot of money held in U.S. depositories,” Mr. Jarrell said.

The CME Group also increased a guarantee it had offered the trustee in case there was a shortfall as customers received their money. The exchange will now provide, in essence, a $550 million insurance policy to the trustee’s office, up from $250 million.

Lawmakers are also questioning the sluggish progress in returning money to customers. At the MF Global hearing next month, the House subcommittee plans to scrutinize the lingering woes that the firm’s customers face.

Lawmakers hope to interview top regulators about their oversight of the firm. They plan to call on Robert Cook, head of the Securities and Exchange Commission’s office of trading and markets, and William C. Dudley, the president of the Federal Reserve Bank of New York.

Gary Gensler, chairman of the C.F.T.C., will also be asked to testify, though Mr. Gensler has recused himself from the case after fearing that his past ties to Mr. Corzine would distract from the investigation.

Mr. Gensler, who once worked for Mr. Corzine at Goldman Sachs, is unlikely to testify, a person with knowledge of the matter said.

Article source: http://feeds.nytimes.com/click.phdo?i=0ca2bb9375c4da82ac14ed2e9ea6d6b3

James Murdoch to Face More Questions in Phone Hacking Scandal

Mr. Murdoch, the company’s deputy chief operating officer and the younger son of its chairman, Rupert Murdoch, was a deft and deflecting witness in July, nimbly parrying lawmakers’ questions while maintaining essentially that he had learned only recently how widespread the hacking problem really was. Now, he will be faced with defending himself against mounting evidence that top executives at News International, the company’s British newspaper arm, knew a full three years ago that hacking was pervasive at The News of the World, the tabloid newspaper that the company shut down in July, and that the executives discussed it with Mr. Murdoch at the time.

“Obviously, there are things which the committee wishes to raise with him, particularly in relation to some of the evidence we have received since he testified,” said John Whittingdale, a Conservative member of Parliament and chairman of the committee holding the hearings, the select committee on culture, media and sport.

Mr. Murdoch will also be asked about News International’s behavior after the investigation into its hacking operation intensified. The company acknowledged this week that over the past year and a half, The News of the World had hired a private investigator to conduct covert surveillance of two lawyers representing victims of phone hacking.

The admission was prompted by a report in The Guardian that the investigator, Derek Webb, followed and photographed the lawyers and their families, presumably in the hope of unearthing unsavory information about them and using it to discourage them from pursing their cases.

“While surveillance is not illegal, it was clearly deeply inappropriate in these circumstances,” the company said in a statement. “This action was not condoned by any current executive at the company.”

Mr. Webb told the BBC that he had done such work for The News of the World routinely for eight years, spying on dozens of people, including Prince William; the sports broadcaster Gary Lineker; Lord Goldsmith, the former attorney general; Chelsy Davy, Prince Harry’s former girlfriend; José Morinho, the former manager of the Chelsea soccer team; and the parents of the actor Daniel Radcliffe.

“I was working for them extensively on many jobs throughout that time,” Mr. Webb told the network. “They phoned me up by the day or by the night.”

Recently released News of the World documents, some of them obtained by the parliamentary committee from News International’s former lawyers, Farrer Company, show that on June 3, 2008, a lawyer warned company executives in a memo that there was “a powerful case that there is (or was) a culture of illegal information access” at the paper.

The lawyer, Michael Silverleaf, also said there was “overwhelming evidence of the involvement of a number of senior journalists” in the paper’s attempts to illegally obtain information about Gordon Taylor, the chief executive of the Professional Footballers’ Association.

Mr. Silverleaf’s memo was written at a time when top News International executives, including James Murdoch, were mulling over how to respond to Mr. Taylor’s claim that his voice mail messages had been repeatedly hacked by the News of the World. Mr. Silverleaf counseled them to handle the case privately. “To have this paraded at a public trial would, I imagine, be extremely damaging” to the company, he said.

Even more potentially worrying for Mr. Murdoch is the growing body of evidence that other executives discussed newly discovered details of phone hacking at the paper with him around the same time.

For example, a May 27 note by Julian Pike, a Farrer Company lawyer, says that Colin Myler, the editor of The News of the World, spoke to Mr. Murdoch about Mr. Taylor’s claims and that the two men decided to refer it to outside counsel. Another note two weeks later — after Mr. Silverleaf wrote his damning conclusions — says that after meeting Tom Crone, who was the legal manager of News International at the time, Mr. Murdoch “said he wanted to think through options” about how to proceed in the case.

Several days later, Mr. Murdoch authorized News International to pay Mr. Taylor more than £450,000 ($725,000) and legal fees exceeding $322,000. Mr. Pike has said that Mr. Murdoch personally authorized the amount, in exchange for a pledge of confidentiality, to keep the matter from being made public.

Tom Watson, a Labour member of the parliamentary committee and a persistent critic of News International, said that the panel would question Mr. Murdoch further about the Taylor settlement.

Article source: http://feeds.nytimes.com/click.phdo?i=bce4a24d03183aa0d081831dcef5c534

DealBook: Accounting Change Cuts Groupon’s Revenue

Andrew Mason, Groupon's chief executive.Seongjoon Cho/Bloomberg NewsAndrew Mason, Groupon’s chief executive.

8:56 p.m. | Updated

Groupon disclosed a major accounting change on Friday, essentially halving its once-jaw-dropping revenue after it encountered resistance from regulators with its filing to go public.

Groupon, the online coupon titan, announced separately that its chief operating officer of about five months, Margo Georgiadis, had stepped down.

The changes in the revised filing and the executive departure are likely to spur additional questions about Groupon, a much-envied rising star in the constellation of new Internet companies. The company has grown rapidly, but its ability to sustain that growth, the ways it measures growth and the eccentric public persona of its chief executive have come under fire at times.

Despite those criticisms, and the current turmoil in the stock market, Groupon is still aiming to go public next month, people briefed on the matter have said. That offering could value Groupon at more than $15 billion.

The company’s revised filing for an initial public offering also incorporated portions of a memorandum sent to employees by the company’s chief executive, Andrew Mason, that were subsequently leaked to the press. Analysts had questioned whether that letter ran afoul of a mandatory “quiet period” for companies seeking to go public.

The revenue accounting change is Groupon’s second since it filed to go public in May. Early last month, it removed references to an accounting metric that critics said misleadingly showed the company turning a profit.

In its latest filing, Groupon says that it has restated its financial results for the last three years “to correct for an error” in the way it reported revenue. Before, the company reported as revenue all the money it collected from customers, including cash that was later paid out to Groupon’s merchant partners.

Now, Groupon is reporting what it calls “net revenues,” which exclude the retailer payouts.

For example, in a version of the prospectus filed last month, Groupon reported $1.52 billion in revenue for the first six months of the year. In Friday’s filing, that number is now called net revenue and is $688 million. The original $1.52 billion figure is now counted as gross billings.

Groupon’s accounting change is the inverse of what Google did before its own public debut in 2004. The search giant initially excluded cash that was shared with distribution partners in its revenue figures. It later changed its revenue to include those payouts.

The revenue restatements do not affect the company’s bottom line: Groupon still reported a $253.9 million loss attributable to common shareholders for the same time period. Nor do they affect the company’s preferred business performance metrics, including a pro forma measure known as consolidated segment operating income.

The new “net revenue” metric replaces what Groupon once called “gross profit,” a measure that has appeared in previous filings.

Groupon’s latest prospectus is meant to address concerns by the Securities and Exchange Commission, which regularly reviews initial offering filings.

The agency has raised several questions about the company, like its accounting measures and statements made by senior executives during its quiet period. In that time, companies are supposed to refrain from making public comments about their business performance, in an effort to tamp down on improper stock-promoting.

But earlier this year, Groupon’s chairman, Eric Lefkofsky, said publicly that the company would be “wildly profitable.” And the letter from Mr. Mason, the chief executive, included detailed descriptions of Groupon’s recent business performance. Groupon’s solution in both cases was to include both sets of comments, along with a warning to potential investors not to rely on them for planning purposes.

But the S.E.C. is not Groupon’s only headache. Ms. Georgiadis is the second chief operating officer the company has lost in two years. She will return to her former employer, Google, as president of the Americas.

Her predecessor at Groupon, Rob Solomon, worked at the company for about a year before departing in March. “As a fast-growing company, we’ve done a lot of hiring this year, including on our senior executive team,” Mr. Mason wrote in a blog post announcing Ms. Georgiadis’s departure. “It would have been great if I could say that we batted 1,000 percent, but that’s rarely the case.”

Article source: http://feeds.nytimes.com/click.phdo?i=80f9e1267fb3053dbdb7e4d7540f9f5f

DealBook: New S.&P. Chief Knows Crisis and Change

Douglas Peterson, the new president of Standard  Poor's.Haruyoshi Yamaguchi/Bloomberg NewsDouglas Peterson, the new president of Standard Poor’s.

The new president of Standard Poor’s is used to dealing with crises, including mollifying angry government officials and navigating complex new regulations.

That experience should serve the executive, Douglas Peterson, the chief operating officer of Citibank, well at his new job at a ratings agency under fire on multiple fronts.

Yet his appointment is not likely to ease the pressure from investors on its parent company, McGraw-Hill, to break itself up even as the company presses ahead with a likely spinoff of its education business.

When he takes the reins of Standard Poor’s on Sept. 12, Mr. Peterson, 53, will have to confront persistent public outrage over the agency’s downgrade of the Unites States’ credit rating as well as an investigation by the Justice Department into S.P.’s analysis of subprime mortgage securities.

It is perhaps the most daunting set of challenges that Standard Poor’s, whose rulings on the quality of thousands of debt issues is a fundamental component of modern finance, has faced in years.

Though Mr. Peterson’s arrival does not stem from these issues — McGraw-Hill began searching for a new president months ago — it will put an executive used to troubleshooting tough situations into an important spot all the same.

His predecessor, Deven Sharma, has been the public face of Standard Poor’s for nearly five years, and has borne a significant amount of the criticism against the agency.

In the end, however, Mr. Sharma’s decision to leave was tied to his frustrated desire to be the successor to McGraw-Hill’s current chief executive, Harold McGraw III, according to people close to the company who were not authorized to speak publicly.

But several items in Mr. Peterson’s résumé hint at what attracted him to McGraw-Hill’s board and top management. Chief among them is his stint running Citigroup’s Japanese business for nearly six years, a time when the firm’s private bank ran afoul of the country’s securities laws.

Mr. Peterson testified before Japan’s upper house of Parliament, the first foreign witness called to testify before a legislative committee. And together with Charles O. Prince III, then his boss as Citigroup’s chief executive, he publicly bowed to government regulators to seek their forgiveness.

He subsequently led the bank’s expansion in Japan, including through the $10.8 billion purchase of a local brokerage firm. The financial crisis forced Mr. Peterson to unwind those moves, though he earned plaudits for his execution.

A Citi employee his entire working life, Mr. Peterson was one of the bank’s youngest country managers, having led its Costa Rica operations in 1991. He also worked as the bank’s chief auditor during the introduction of sweeping accounting rule changes, putting him in close contact with several top regulators.

At Standard Poor’s, Mr. Peterson is likely to put a premium on building relationships with regulators, according to people familiar with his thinking. That will prove important as the agency grapples with continued criticism of its decision to cut the United States’ debt rating to AA+ from AAA, even as major rivals declined to follow suit.

Also pressing is the Justice Department’s inquiry into how Standard Poor’s rated bundles of questionable home loans. Investigators are looking into whether the agency’s analysts were pressured by management into rating those securities higher than required in order to maintain good relationships with debt issuers.

That investigation began gaining steam earlier this summer, though the Justice Department is probably pursuing a civil case, people briefed on the matter have said previously.

Mr. Peterson’s appointment is unlikely to affect a campaign by two activists, the hedge fund Jana Partners and the Ontario Teachers’ Pension Plan, for the company to take bolder steps, according to a person briefed on the investors’ thinking who was not authorized to speak on their behalf.

Instead, the two will continue to press their argument that McGraw-Hill needs to do more than just spin off its education unit. The businesses in its current collection — which include magazines, the unit that manages the famous Standard Poor’s market indexes and several financial data companies — make little sense together and would perform better separately,.

A decision to spin off the education business could be announced as soon as next month, according to people close to the company, who cautioned that McGraw-Hill’s board could change its mind. But the company agrees with Jana and Ontario Teachers that the low-growth division would be better off as a separate business that would no longer hurt the faster-growing remainder of McGraw-Hill.

McGraw-Hill’s management still sees merit in keeping the rest of its operations together, believing that they share common customers and would be too weak to stand alone. It will also divest itself of other assets. A sale of several television stations is expected to be announced by the end of next month.

McGraw-Hill is also pursuing other initiatives that Jana and Ontario Teachers have requested, including a share buyback and cost-cutting, though not at a level that satisfies the investors. The prospect of possible changes ahead has excited investors. Shares of McGraw-Hill rose 4.5 percent on Tuesday, to $38.69, and are now up about 6.3 percent for the year .

Mr. Peterson will not have much of a break from his current job. He will have just one weekend off before he heads to over to S. P.

Azam Ahmed contributed reporting.

Article source: http://feeds.nytimes.com/click.phdo?i=885fcac5228c3c3282601538f6d69f41

DealBook: Two Specialty Insurers to Merge in $3.2 Billion Deal

Two insurers, Transatlantic Holdings and Allied World Assurance, said on Sunday that they plan to combine in a $3.2 billion merger that will create a big provider of specialty insurance and reinsurance. 

The deal will give Transatlantic, previously a reinsurance unit of the American International Group, more exposure to international business and specialty products like product and environmental liability policies.

Under the terms of the deal, Transatlantic shareholders will receive .88 Allied shares for each of their holdings, or about $51.10 at Friday’s closing price. That represents a nearly 16 percent premium. 

The combined company will be called TransAllied Group Holdings, but will sell products through the Transatlantic and Allied World Insurance brands. 

Though billed as a merger of equals, Transatlantic shareholders will own about 58 percent of the combined company. 

Scott Carmilani, Allied’s chairman and chief executive, will become TransAllied’s chief executive and will gain a seat on the 11-member board. Richard Press, Transatlantic’s nonexecutive chairman, will become the nonexecutive chairman of TransAllied for a year after the deal closes, while Transatlantic’s chief executive, Robert Orlich, will retire. 

Mike Sapnar, Transatlantic’s chief operating officer, will become president and the chief executive of TransAllied’s global reinsurance operations, and will also become a director. 

The deal is expected to close in the fourth quarter this year, pending approval by the shareholders of both companies. 

Founded in 1986 as Preinco Holdings, Transatlantic gained its full independence when A.I.G. divested its remaining stake in the reinsurer to help pay for its government bailout. Transatlantic is based in New York City and has 640 employees.

Shares in the company have fallen about 3 percent over the last 12 months.

Founded in 2001, Allied is based in Zug, Switzerland and has 686 employees. Its share price has risen 31 percent over the last 12 months.

Transatlantic was advised by Goldman Sachs, Moelis Company and the law firms Gibson Dunn Crutcher and Lenz Staehelin. Allied was advised by Deutsche Bank and the law firms Willkie Farr Gallagher and Baker McKenzie. 

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