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DealBook: Credit Suisse Said to Plan New Round of Layoffs in Europe

June 26, 2012 by NewsMaker Leave a Comment

Arnd Wiegmann/ReutersA branch of Credit Suisse in Basel, Switzerland.

LONDON – The Swiss bank Credit Suisse is planning to further reduce the size of its European investment banking department, according to a person with direct knowledge of the matter.

Credit Suisse, which announced plans last year to eliminate 3,500 jobs as part of an overhaul of its worldwide operations, may reduce the work force in its European investment banking division by as much as 30 percent, said the person, who spoke on the condition of anonymity because he was not authorized to speak publicly.

The new job reductions in that unit are part of the bank’s previously announced restructuring plans.

The cutbacks are expected to be focused in the bank’s advisory and capital markets businesses in Europe. Last month, the bank said it would let go 126 employees in the New York area by the beginning of August.

A spokesman for Credit Suisse declined to comment.

The new layoffs in Europe could take place over the next 12 months. In a progress report on its restructuring efforts, Credit Suisse said previously that it had eliminated 2,000 jobs by the end of March.

The prospect of layoffs in the bank’s European investment banking department comes soon after Switzerland’s central bank said Credit Suisse needed to increase its capital this year to prepare for a potential worsening of the European debt crisis

The Swiss National Bank singled out Credit Suisse in its annual financial stability report as a bank that needed to “significantly expand its loss-absorbing capital during the current year.”

In response, Credit Suisse said it was “comfortable” with its progress toward increasing capital reserves.

With a new round of layoffs in Europe, Credit Suisse is reacting to a broad reduction in deal activity and initial public offerings on the Continent prompted by market volatility and the debt crisis.

The total combined value of mergers and acquisitions in Europe has fallen 20 percent this year, to $382 billion, from the same period in 2011, according to the data provider Dealogic.

The total value of deals in Europe’s equity capital markets, including I.P.O.’s and rights issues, also fell 50 percent, to $60.4 billion, in the first half of the year.

Credit Suisse is not the only bank looking to cut back. A Swiss rival, UBS, has said it plans to cut 3,500 jobs, with about half of the layoffs expected within its investment banking division.

The French banks Société Générale and Crédit Agricole have also announced layoffs in response to a slowdown in the European economy.

Article source: http://dealbook.nytimes.com/2012/06/26/credit-suisse-said-to-plan-new-round-of-layoffs-in-europe/?partner=rss&emc=rss

Filed Under: Global Business Tagged With: dealbook, layoffs, worldwide operations

DealBook: S.E.C. Looking at Possible Violations by Exchanges

June 23, 2012 by NewsMaker Leave a Comment

Zef Nikolla/Facebook, via European Pressphoto AgencyFacebook executives ring the opening bell on May 18 with Nasdaq chief Robert Greifeld.

Nasdaq has blamed Facebook’s botched debut last month on flawed computers and “technical errors.”

Regulators suspect it may be something more. The Securities and Exchange Commission has opened an investigation into the exchange for its role in the initial public offering of Facebook, according to people briefed on the inquiry. Regulators are examining whether Nasdaq failed to properly test its trading systems, which broke down during the I.P.O., and whether the exchange violated rules when it rewrote computer code to jump-start trading.

The Facebook investigation comes after a broader inquiry into trading breakdowns and other problems at the nation’s largest exchanges, including two previously undisclosed cases involving Nasdaq’s archrival, the New York Stock Exchange, the people said.

The agency’s enforcement unit, which has opened more than a dozen related cases, is examining whether exchanges lack adequate controls and favor select investors.

As investor confidence in the market wanes, the worry is that missteps by the exchanges are contributing to the dissatisfaction. Since the financial crisis, investors have seen their portfolios erode, prompting them to flee stocks.

“If exchanges have technical problems, that slows capital formation and erodes the confidence,” said Senator Jack Reed, Democrat of Rhode Island, who held a hearing this week on the initial public offering process.

While none of the exchanges has been accused of any wrongdoing and the S.E.C. may never take enforcement action, the crackdown represents a significant shift. Traditionally, the agency has been relatively cozy with the industry, which is increasingly under pressure to produce profits since the exchanges became publicly traded companies.

Along with the threat of enforcement cases, the S.E.C. has stepped up its inspections of exchanges and introduced several measures to improve the safety of the markets. For example, the agency has approved proposals that would help limit volatility in specific stocks, including circuit breakers that would halt trading.

“Cases against exchanges are few and far between, and inevitably a big deal,” said Stephen J. Crimmins, a partner at the law firm KL Gates and a former enforcement official at the S.E.C.

Facebook’s initial public offering highlights the problems facing exchanges — and how regulators are finding their responses lacking.

On May 18, its first day of trading, Facebook got off to a rocky start. Nasdaq delayed the start of trading and later flooded the market with shares, adding to investor trepidation.

Nasdaq’s lack of communication — and at times, lack of contrition — aggravated the situation, according to documents and executives, bankers and regulators. On a May 31 call with the chairwoman of the S.E.C., Mary L. Schapiro, and other officials, Nasdaq’s chief executive expressed confusion about the S.E.C.’s aggressive approach.

“We’re regulators, too,” said the chief executive, Robert Greifeld, adding “we’re all in this together.”

The Facebook debacle comes after a flurry of trading breakdowns. In March, BATS Global Markets canceled its own I.P.O., after its systems faltered. Nasdaq last year halted trading in dozens of stocks amid technical problems.

Such experiences echo the so-called flash crash. On May 6, 2010, the Dow Jones industrial average plummeted more than 700 points in minutes, before recovering shortly thereafter.

In nearly every case, companies blamed technical malfunctions. But regulators say some breakdowns may point to more fundamental issues.

The S.E.C. is also examining whether some exchanges give undue priority to high-frequency trading firms and big institutional investors through its order types and data disclosure.

The New York Stock Exchange is among the most prominent players facing scrutiny from regulators, who have opened two investigations into the Big Board, according to people briefed on the matter who spoke on the condition of anonymity because the cases are not public.

The S.E.C., the people said, is examining whether the New York exchange violated rules by distributing in-depth stock data to paying clients faster than the public received general information. The issue was first discovered in the rubble of the flash crash.

The exchange declined to comment. But people close to the exchange have attributed the problem to unintended technical shortcomings.

The S.E.C., which has penalized the Direct Edge exchange for having “weak internal controls,” is also pursuing the Chicago Board Options Exchange for not properly policing the markets.

In February, BATS Global Markets acknowledged receiving a request from the S.E.C. The agency, a person briefed on the matter said, is examining whether any collaboration between BATS and high-frequency trading firms could hinder competition.

Nasdaq represents one of the most prominent cases.

On the day of Facebook’s debut, its finance team, led by David A. Ebersman, stood on Morgan Stanley’s trading floor surrounded by scores of traders sporting white baseball caps stamped with “Facebook.” While the mood was initially festive, he was growing anxious.

The chief financial officer turned to the bankers: “Why aren’t we starting?” Nearby, a trader clutched phones to his ears, one with a call to another bank, the other to Nasdaq.

At about 11 a.m., Nasdaq said trading would begin in five minutes. After nothing happened, Nasdaq officials phoned S.E.C. trading experts to explain that everything was under control, according to a person briefed on the call.

Nasdaq’s computers were programmed to accept last-second modifications to orders of Facebook shares. When these trades kept piling in, the system reset the price over and over again. Some orders were not executed — or were placed at prices other than the opening bid of $42. Many traders, who usually receive confirmations in seconds, had no idea how many shares they held. “We were flying blind,” said one person at a market-making firm.

The S.E.C. is examining why Nasdaq lacked an action plan for navigating such a crisis, including plans to abort the I.P.O., and whether it failed to follow federal guidelines in running system tests. Nasdaq did run some 400 tests ahead of the Facebook I.P.O., and the company used the system in question for more than five years. Mr. Greifeld has publicly blamed “design flaws” in the system.

Ultimately, Nasdaq overrode the system manually, switching to a backup server. That move, too, has drawn scrutiny. Exchanges must follow their own strict trading procedures. In this case, Nasdaq changed its procedure on the fly without amending its rules. While the exchange may not have followed the letter of the law, a person close to Nasdaq said that the company had previously used the backup system with approval from regulators.

The exchange declined to comment.

Shares started trading at 11:30 a.m., sending brief applause through Morgan Stanley’s trading floor. The Facebook team, which had been hoping for a 5 to 10 percent jump from the offering price of $38, was relieved when it rose. The team headed to Teterboro Airport to fly back to California.

Then at 1:50 p.m., a second wave of confusion ripped through Wall Street. Traders saw an unexpected sell order of roughly 11 million shares. Some wondered whether a big hedge fund had dumped shares. Investors, on the fence about buying, backed off. Others sold. Within minutes, Facebook slipped $2, to roughly $40.

There was no mystery hedge fund seller. As Nasdaq started processing trades backed up in the system, those shares were dumped on the market, according to people with knowledge of the matter. About the same time, some Facebook shares that had ended up in an account at Nasdaq were also sold without warning. The move may have violated Nasdaq’s own rules, which do not explicitly allow the exchange to take a position in the shares of an I.P.O., according to one of the people.

While some analysts have pinned Facebook’s woes on Nasdaq, others have blamed the company and its bankers for being too aggressive on the size and price of the offering.

Facebook shares ended that first day at $38.23, roughly where they started.

Two days later, Mr. Greifeld called the I.P.O. “quite successful” over all and said that technical issues had not affected the price.

Facebook’s management team, which was beginning to grasp the extent of the problems, was livid. Some wondered why Nasdaq had made little effort to keep them apprised on Friday and kept them out of decision-making.

Mr. Greifeld called a senior executive, asking how the exchange could get back into its good graces. The executive erupted. “Bob,” the executive said, “You don’t understand what a hole you’re in.”

Nasdaq soon aggravated the trading woes. The exchange informed traders it might offer “financial accommodation” for claims filed on Monday. Some investors dumped shares, to prove a loss.

In the first hour of Monday trading, Facebook plunged from $38 to less than $34, swiftly wiping out billions of dollars in market value.

Article source: http://dealbook.nytimes.com/2012/06/21/as-facebook-seeks-answers-s-e-c-investigates-exchanges/?partner=rss&emc=rss

Filed Under: Global Business Tagged With: dealbook, initial public offering, new york stock exchange

DealBook: Bain Capital Buys Half of Japanese TV-Shopping Company

June 23, 2012 by NewsMaker Leave a Comment

Bain Capital agreed on Friday to buy 50 percent of one of Japan’s biggest television shopping companies marking the latest move by the private equity firm into that country.

Bain is acquiring the stake in the company, the Jupiter Shop Channel Company, from Sumitomo. The firm is paying more than $1 billion, a person briefed on the matter told DealBook.

Through the acquisition, Bain will buy a piece of one of Japan’s fastest-growing retail companies. Founded in 1996, Jupiter currently controls about 30 percent of the country’s TV-shopping market, according to Sumitomo. It draws an audience of about 27 million households across Japan, though it is available only in about half of the country’s households.

Jupiter generated about 120.9 billion yen, or $1.5 billion, in sales for the fiscal year that ended in March.

“We are pleased to enter this important partnership with Sumitomo Corporation and the company’s management team to accelerate the next phase of growth at Jupiter Shop Channel,” David Gross-Loh, a Bain managing director, said in a statement.

The transaction was led by Bain’s Tokyo office, which was opened in 2006 and has struck a number of deals since then. Among the firm’s acquisitions in Japan are Skylark, a big restaurant operator, and Bellsystem24, a major call center company.

Over all, Bain has struck at least three deals this year. Late last month, the firm agreed to buy Consolidated Container from a group led by Vestar Capital.

Article source: http://dealbook.nytimes.com/2012/06/22/bain-capital-buys-half-of-japanese-tv-shopping-company/?partner=rss&emc=rss

Filed Under: Global Business Tagged With: dealbook, jupiter, tokyo office

DealBook: Europe Bank Shares Rebound After Cuts

June 23, 2012 by NewsMaker Leave a Comment

Arnd Wiegmann/ReutersThe Swiss firm Credit Suisse had its credit score cut three notches.

6:48 a.m. | Updated

LONDON — Shares in many of Europe’s banks rebounded in late morning trading on Friday after initially trading lower, as investors reacted to a new round of credit downgrades for the world’s largest financial institutions.

The volatility in trading activity followed the decision late Thursday by the credit agency Moody’s Investors Service to cut the credit scores of major banks to new lows, reflecting new risks the industry has encountered since the financial crisis began.

Despite the widespread downgrades, analysts said the markets had already reacted to much of the pressures that have hit banks’ trading operations and affected their balance sheets.

The Euro Stoxx bank index, which contains the Continent’s largest financial institutions, has fallen 46 percent in the last 12 months.

This was reflected in how investors reacted to European bank stocks on Friday.

The Swiss firm Credit Suisse, which was warned last week by the country’s central bank to increase its capital reserves, faced a three-notch downgrade, the only bank to have such a pronounced reduction in its credit rating.

Credit Suisse’s share price, which fell as much as 1.9 percent in early morning trading in Zurich, rebounded to trade down less than 1 percent by early afternoon. The Swiss firm said it remained one of the best rated banks by Moody’s Investors Service in its peer group.

The credit rating of UBS was cut by two notches, which was slightly less than many analysts had been expecting. The Swiss financial firm’s shares, which dropped by 1.1 percent in early trading, also came back to trade around 0.4 percent higher on early Friday afternoon.

Moody’s said the wholesale downgrades across the banking industry reflected firms’ exposure to global financial markets, which have come under pressure from the European debt crisis and a broader slowdown in the global economy.

‘‘All of the banks affected by today’s actions have significant exposure to the volatility and risk of outsized losses inherent to capital markets activities,’’ Moody’s global banking managing director, Greg Bauer, said in a statement.

Several European banks with exposure to capital markets, including Barclays of London, Deutsche Bank of Germany and BNP Paribas of France, all had their credit ratings cut by two notches. Shares of the three firms, which all fell approximately 1 percent early morning trading, all traded up around 1 percent by late morning.

The British bank HSBC, which has major operations in the fast-growing emerging markets in Asia, fared better than many of its European competitors after Moody’s cut its credit rating by only one notch. The bank’s stock rose less than 1 percent in morning trading in London.

Article source: http://dealbook.nytimes.com/2012/06/22/shares-in-european-banks-fall-on-ratings-downgrade/?partner=rss&emc=rss

Filed Under: Global Business Tagged With: capital reserves, credit suisse, dealbook

DealBook: Felda Raises $3.1 Billion in Asia’s Biggest I.P.O.

June 14, 2012 by NewsMaker Leave a Comment

HONG KONG– Felda Global Venture Holdings has successfully raised $3.1 billion by selling shares in Malaysia in the world’s second-largest initial public offering this year after Facebook’s botched Nasdaq listing last month.

The palm oil producer successfully priced Asia’s biggest deal this year at 4.55 ringgit per share, or $1.43, near the high end of its indicated price range of 4 ringgit to 4.65 ringgit, a person with direct knowledge of the matter said Thursday. The shares are scheduled to start trading in Kuala Lumpur on June 28.

The high-profile deal came after a recent series of I.P.O.s in Asia and elsewhere were withdrawn or postponed due to slumping markets. Those included a planned $3 billion offering by Formula One in Singapore and a $1 billion Hong Kong share sale by Britain’s Graff Diamonds.

Felda, which is being privatized by the Malaysian government, was selling 1.92 billion shares to institutional investors at the offer price and 273 million shares to retail investors at a 2 percent discount, according to its prospectus.

Of the total I.P.O. proceeds of 9.93 billion ringgit, or $3.12 billion, about 55 percent will go to the government, which sold off a 33 percent stake, and about 45 percent will go to the company, mainly for the purchase of new plantations. Felda already has about 356,000 hectares, or 880,000 acres, of palm plantations in Malaysia.

The Felda offering is the brightest spot in a gloomy market for new listings in Asia this year. Prior to the deal, total funds raised by I.P.O.’s in Asia, excluding Japan, had declined 68 percent, to $13.9 billion, this year from the period a year earlier, the weakest year-to-date performance since 2009, according to data from Dealogic.

Felda’s success was bolstered by cornerstone investors who bought nearly 20 percent of the I.P.O., the person with knowledge of the deal said. Those included the Qatar investment authority; AIA; Fidelity; Value Partners, a Hong Kong-based funds management firm; and several Malaysian state-affiliated pension funds.

A stake of about 11 percent will go to state governments in Malaysia, while about 13 percent will be offered to foreign and domestic institutional investors. The remaining 19 percent stake is being offered to domestic investors, employees and affiliates of the company, the person said.

CIMB, Maybank and Morgan Stanley are the joint bookrunners for the Felda I.P.O., while the same three plus Deutsche Bank and JPMorgan Chase are the underwriters for the retail offering.

Article source: http://dealbook.nytimes.com/2012/06/13/felda-raises-3-1-billion-in-asias-biggest-i-p-o/?partner=rss&emc=rss

Filed Under: Global Business Tagged With: dealbook, high profile, prospectus

DealBook: Nasdaq Sets Aside $40 Million to Settle Facebook Trading Claims

June 6, 2012 by NewsMaker Leave a Comment

The Nasdaq OMX Group said on Wednesday that it planned to set aside as much as $40 million to settle disputes by investors over issues caused by technical glitches in Facebook’s initial public offering.

Under the terms of the plan, Nasdaq will make the money available to its member firms, rather than investors directly. About $13.7 million will be paid in cash, pending review by the Securities and Exchange Commission, while the remainder will be credited to member firms to reduce trading costs.

The long-awaited plan is meant to help quell investor anger over the flawed debut of Facebook on May 18. Errors in Nasdaq’s systems first led to delays in setting an opening price for the social networking giant, and then prevented some traders from knowing for hours whether their orders had been confirmed.

For days afterward, investors claimed that they still didn’t know how many Facebook shares they held, while others argued that the technical problems left them holding stock that had quickly plummeted in value on Friday and days afterward.

Nasdaq has claimed that its technical errors had concluded by 1:50 p.m. on the first day of trading, and that it wasn’t responsible for the company’s stock slide past that. But many investors and people involved in the I.P.O. process still claim that the stock market’s errors spooked investors and created a climate of fear that inhibited trading.

To qualify for Nasdaq’s plan, members must prove they were directly harmed by the glitches that erupted before trading started at 11:30 a.m. on the first day of trading.

And the program applies only to certain kinds of trades, including sale orders priced at $42 or less that did not execute or were carried out at lower prices and purchases that were priced at $42 but were not immediately confirmed.

Claims will be evaluated by the Financial Industry Regulatory Authority.

Nasdaq also said that it had hired I.B.M. to analyze its computer systems in the wake of the Facebook glitches.

Article source: http://dealbook.nytimes.com/2012/06/06/nasdaq-sets-aside-40-million-to-settle-facebook-trading-claims/?partner=rss&emc=rss

Filed Under: Global Business Tagged With: dealbook, initial public offering, securities and exchange

DealBook: MF Global Trustee Says Claims May Exceed $3 Billion

June 5, 2012 by NewsMaker Leave a Comment

Andrew Harrer/Bloomberg NewsLouis J. Freeh, bankruptcy trustee for MF Global.

The trustee overseeing the bankruptcy of MF Global estimates that creditors, including banks, big investors and service providers, could have more than $3 billion in claims against the failed company.

In his latest report to the bankruptcy court, the trustee, Louis J. Freeh, outlined his investigation of MF Global, which collapsed in October after misusing customer money.

In the 119-page document, Mr. Freeh, a former director of the Federal Bureau of Investigation, details that 112 claims could eventually be filed. While most of the claims are likely to occur in the United States, nearly $1 billion of them could stem from the operations in Britain, where MF Global had one of its largest units.

DealBook: Buffett’s Goldman Deal Is Topic in Gupta Insider Case

May 24, 2012 by NewsMaker Leave a Comment

Louis Lanzano/Bloomberg NewsByron D. Trott, a former Goldman Sachs banker, was asked about Warren E. Buffett’s $5 billion investment in the bank.

Byron D. Trott has spent a career carefully cultivating the image of the discreet investment banker, a behind-the-scenes consigliere to some of America’s wealthiest businessmen, including his star client, Warren E. Buffett. At Goldman Sachs, Mr. Trott was so vigilant about guarding clients’ confidences that he was known to fire underlings who discussed private matters in the bank’s elevators.

But on Wednesday, Mr. Trott was forced to speak publicly about one of his biggest and most important deals — Mr. Buffett’s $5 billion investment in Goldman during the heart of the financial crisis in September 2008.

Mr. Trott took the witness stand for about an hour on Wednesday at the insider trading trial of Rajat K. Gupta, the former Goldman director charged with leaking boardroom secrets to his friend and business associate Raj Rajaratnam. Among the accusations is that Mr. Gupta gave Mr. Rajaratnam advance word of Mr. Buffett’s Goldman investment.

The government says that Mr. Rajaratnam traded on Mr. Gupta’s tips, reaping big profits for his Galleon Group hedge fund. Convicted by a jury of insider trading last year, Mr. Rajaratnam is serving an 11-year prison sentence. Mr. Gupta’s trial, in Federal District Court in Manhattan before Judge Jed S. Rakoff, began on Monday and is expected to last about three weeks.

Mr. Trott’s testimony focused on the days surrounding Mr. Buffett’s investment in Goldman, a tumultuous time in the markets. But first, a prosecutor asked Mr. Trott to tell the jury who Mr. Buffett was.

“He’s the most respected businessman and investor in America,” Mr. Trott said.

Mr. Gupta’s lawyer objected to such a superlative.

“I didn’t think that was in dispute,” said Judge Rakoff, breaking into a smile.

Judge Rakoff posed his own question to Mr. Trott for the jury’s sake, exercising more restraint in his description: “Is he a very large and well-known investor?”

“Yes,” Mr. Trott acknowledged.

Mr. Trott, 53, has established a niche advising many of the country’s richest families, including the Wrigleys and the Pritzkers. As a Goldman banker, he began advising Mr. Buffett in 2002 and has advised his company, Berkshire Hathaway, on numerous deals.

“Byron is the rare investment banker who puts himself in his client’s shoes,” wrote Mr. Buffett in his 2008 investor letter. Five years before that, Mr. Buffett wrote that Mr. Trott “understands Berkshire far better than any investment banker with whom we have talked and — it hurts me to say this — earns his fee.”

The silver-haired Mr. Trott, at ease on the witness stand and at times flashing a broad smile, gave the jury an account of how Mr. Buffett’s investment materialized. He described the dark days of September 2008, when Lehman Brothers, which Mr. Trott described as a “second-tier investment bank,” had filed for bankruptcy and there were questions about whether other banks like Goldman could survive.

His purpose in testifying, according to people briefed on the prosecutors’ strategy, was to explain how quickly the Buffett deal came together and how few people knew about it — other than Mr. Gupta — before it was announced.

“This was about as top secret as you can get,” said Mr. Trott, who left Goldman in 2009 to start his own investment firm, BDT Capital Partners.

Mr. Trott, who lives in Chicago, testified that he was at a client meeting near O’Hare Airport on Sept. 22, 2008, when he received a call on his cellphone from Goldman’s co-president, Jon Winkelried. Mr. Winkelried told him that Goldman was planning to raise $10 billion in a common stock offering to help the bank address its problems and calm the markets.

Upon hearing the news, Mr. Trott said that he pitched Mr. Winkelried on having Mr. Buffett act as a “cornerstone investor” on the transaction. He said he would fly to New York immediately so he could discuss the idea with the rest of Goldman’s top officers.

The next morning, on the 30th floor of Goldman’s former headquarters at 85 Broad Street in Lower Manhattan, Mr. Trott outlined a deal that he thought Mr. Buffett would agree to and would also make sense for the bank.

“It was hugely credentializing,” he said. “It was like getting the Good Housekeeping Seal of Approval.”

Later that morning, Mr. Trott said, he had a conversation with Mr. Buffett. Earlier in the year he had floated the idea of investing in Goldman to Mr. Buffett, who rejected the proposal. This time around, Mr. Trott said, the terms would have to be sweeter.

“I have a different proposal for you,” Mr. Trott said, according to his testimony.

Mr. Trott offered Mr. Buffett a “preferred with warrants,” a complex security that gave Mr. Buffett 10 percent annual interest on a $5 billion investment plus the option to buy additional Goldman stock at a set price.

“I know Warren very well,” testified Mr. Trott. “We had done numerous deals together and I knew the structure that he would want.”

After Mr. Buffett accepted the terms, Mr. Trott testified, he took the deal back to the bank’s senior executives. Around lunchtime, the executives agreed to take the deal to the board for a vote. But before they could do that, they needed to inform Mr. Buffett that the deal had been officially agreed upon. But Mr. Buffett was unavailable until after 2:30 p.m. A prosecutor asked Mr. Trott why.

“He promised his grandkids that he would take them to Dairy Queen” — the ice cream and fast-food chain owned by Mr. Buffett — “and he did not want to be interrupted,” said Mr. Trott, eliciting laughter from the jury.

Mr. Trott said that after firming things up with Mr. Buffett, Goldman held a board meeting by telephone at 3:15 p.m. The board approved the investment. Minutes later, the government says, Mr. Gupta called Mr. Rajaratnam and told him to buy Goldman stock. Prosecutors have said Mr. Rajaratnam reaped nearly $1 million by trading before the announcement.

Outside the jury on Wednesday, the prosecution and defense focused on another Goldman employee — David Loeb, a salesman who worked closely with Galleon.

The prosecutor, Reed Brodsky, said that Mr. Loeb had passed illicit tips about Intel, Apple and Hewlett-Packard to Mr. Rajaratnam. A lawyer for Mr. Gupta said that Mr. Loeb can be heard on a secretly recorded telephone call giving confidential information about those companies.

The defense, which complained to Judge Rakoff that prosecutors had not disclosed evidence about Mr. Loeb, is using the government’s investigation of three other Goldman executives to suggest to the jury that there were other sources of inside information within the bank.

Prosecutors have countered that these executives, including Mr. Loeb, had no access to confidential information about Goldman. A Goldman executive declined to comment.

This post has been revised to reflect the following correction:

Correction: May 24, 2012

An earlier version of this article misspelled the surname of Jon Winkelried as Winkelreid.

Article source: http://dealbook.nytimes.com/2012/05/23/buffetts-goldman-deal-is-topic-in-an-insider-case/?partner=rss&emc=rss

Filed Under: Global Business Tagged With: dealbook, goldman sachs, mr buffett

DealBook: Glaxo Amends Its $2.59 Billion Bid for Human Genome Sciences

May 24, 2012 by NewsMaker Leave a Comment

LONDON — The British drug maker GlaxoSmithKline changed the terms of its $2.59 billion proposed takeover of Human Genome Sciences on Wednesday in response to the biotechnology company’s shareholder rights plan, or poison pill.

Last week, Human Genome Sciences had adopted the poison pill, which activates when a third party acquires 15 percent of the company’s stock, as a defensive strategy to ward off Glaxo’s takeover approach.

In response, Glaxo said it had added a condition to its bid, requiring Human Genome Sciences to either redeem the poison pill or ensure that the strategy did not block Glaxo’s approach for the company.

Glaxo has given shareholders in Human Genome Sciences until June 7 to agree to its $13-a-share offer.

The Human Genome Sciences board has already rejected the offer, saying it undervalues the company. While shares in the company are currently trading around $14, the stock has fallen approximately 50 percent in the last 12 months.

Despite rejecting Glaxo’s bid, Human Genome Sciences has said it is looking at its strategic options, which might lead to the company sell itself.

The company, which had asked Glaxo to participate in the discussions, said it was in talks with a number of pharmaceutical and biotechnology companies about a potential sale, though no decision had been made.

Lazard and Morgan Stanley are advising Glaxo on the deal, while Credit Suisse and Goldman Sachs are advising Human Genome Sciences.

Article source: http://dealbook.nytimes.com/2012/05/23/glaxo-amends-2-59-billion-takeover-offer-for-human-genome-sciences/?partner=rss&emc=rss

Filed Under: Global Business Tagged With: credit suisse, dealbook, poison pill

DealBook: Facebook’s I.P.O. Raises Regulatory Concerns

May 23, 2012 by NewsMaker Leave a Comment

Brendan Mcdermid/Reuters Facebook on the NASDAQ Marketsite.

Just days before Facebook went public, some big investors got nervous about the social network.

After publicly warning about challenges in mobile advertising, Facebook executives held conference calls to update their banks’ analysts on the business. Armed with the new information, analysts at Morgan Stanley and other firms started reaching out to their clients to dial back expectations for the Internet company.

One prospective investor was told that second-quarter revenue could be 5 percent lower than the bank’s earlier estimates. Another analyst warned that revenue could be light for the next two years.

As investors tried to digest the developments, Morgan Stanley was busy setting the price and the size of the I.P.O.

While some big institutions chose not to buy the stock, others placed large orders. And retail investors, who weren’t necessarily privy to the same information, continued to clamor for shares.

John Tlumacki/Boston GlobeWilliam Galvin, the Massachusetts secretary of state.

In the end, Morgan Stanley bankers decided they had enough demand and interest for Facebook to justify an offering price of $38 a share.

They didn’t.

When Facebook went public on May 18, shares of the social networking company barely budged — and they have been falling every since. On Tuesday, the stock closed at $31, more than 18 percent below its offering price.

The I.P.O. of Facebook was supposed to be Morgan Stanley’s crowning achievement. The bank had helped usher in a new era of technology companies, leading the offerings of LinkedIn, Groupon, Pandora and more than a dozen other start-ups over the past year.

Facebook was poised to be the biggest and most ambitious. When the dust settles, Morgan Stanley could make more than $100 million on the I.P.O.

But Morgan Stanley may have given the market more than it can chew. Rival bankers and big investors have complained that Morgan Stanley botched the I.P.O., setting the price too high and selling too many shares to the public.

In a statement on Tuesday evening, Morgan Stanley said that it followed the same procedures for the Facebook offering as it does for all I.P.O.’s

Facebook’s fate as a public company is hardly sealed. Many newly public companies stumble out of the gate and later become top performing stocks, including Amazon.com.

But Facebook’s troubled debut raises questions about the I.P.O. process.

Regulators are concerned, in part, that banks may have shared information with certain clients, rather than broadly with investors. On Tuesday, William Galvin, Massachusetts’ secretary of state, subpoenaed Morgan Stanley over discussions with investors about Facebook’s I.P.O. The Financial Industry Regulatory Authority, Wall Street’s self regulator, is also looking into the matter.

“If true, the allegations are a matter of regulatory concern to Finra” and the Securities and Exchange Commision, Richard G. Ketchum, the chief executive of Finra said in a statement.

Morgan Stanley said in its statement:

After Facebook released a revised S-1 filing on May 9 providing additional guidance with respect to business trends, a copy of the amendment was forwarded to all of Morgan Stanley’s institutional and retail investors and the amendment was widely publicized in the press at the time. In response to the information about business trends, a significant number of research analysts in the syndicate who were participating in investor education reduced their earnings views to reflect their estimate of the impact of the new information. These revised views were taken into account in the pricing of the I.P.O.

Article source: http://dealbook.nytimes.com/2012/05/22/facebook-i-p-o-raises-regulatory-concerns/?partner=rss&emc=rss

Filed Under: Global Business Tagged With: dealbook, morgan stanley, retail investors

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