July 6, 2022

Danish Wind Turbine Maker Appoints New Leader

LONDON — Vestas, the Danish wind turbine maker, appointed a new chief executive, Anders Runevad, on Wednesday amid signs that the company is continuing to struggle.

Mr. Runevad replaces Ditlev Engel, who been chief executive since 2005.

The company reported a net loss of 62 million euros, or $83 million, for the second quarter, compared with a loss of $10.7 million in the similar quarter a year earlier. Revenue declined to $1.6 billion, compared with $2.1 billion the previous year.

The company’s share price, which has fallen about 85 percent since 2009, was up 5 percent Wednesday in Copenhagen trading.

Vestas, once a star of the wind power industry, has been under pressure in recent years from the recession in Europe, lower government subsidies for alternative energy and competition from China. These trends have put pressure on most of the renewables industry.

The company’s chairman, Bert Norberg, a former executive at Ericsson, the Swedish telecommunications company, has been leading a restructuring of the company since 2012. Several top executives have been replaced. The company also says it is cutting its work force to no more than 16,000 at the end of this year, from 22,700 employees at the end of 2011.

Like Mr. Norberg, Mr. Runevad, the new chief executive, comes from Ericsson, where he was president for Western and Central Europe.

“The company is now entering a new phase, where we want to realize our growth potential, and I am confident that Mr. Runevald has the right experience to lead the company, ” Mr. Norberg said in a statement.

There were some bright spots in the results announced Wednesday. Orders booked in the quarter nearly doubled, to $2.3 billion. Free cash flow, or money available for investment or redistribution to shareholders, was positive, at $264 million, compared to a negative $453 million a year ago.

But there were also signs of lingering problems. For instance, Vestas cut its estimate of its order book by $536 million, to $95 billion, “due to uncertainty surrounding a few customers’ ability to comply with the contractual obligations.” The company said that about half of the amount “relates” to a Central European customer that it did not name.

Article source: http://www.nytimes.com/2013/08/22/business/global/danish-wind-turbine-maker-appoints-new-leader.html?partner=rss&emc=rss

Seaworld’s Unusual Retort to a Critical Documentary

In an unusual pre-emptive strike on the documentary “Blackfish,” set for release on Friday in New York and Los Angeles by Magnolia Pictures, SeaWorld Entertainment startled the film world last weekend by sending a detailed critique of the movie to about 50 critics who were presumably about to review it. It was among the first steps in an aggressive public pushback against the film, which makes the case, sometimes with disturbing film, that orca whales in captivity suffer physical and mental distress because of confinement.

Magnolia and the film’s director, Gabriela Cowperthwaite, shot back with a point-by-point rebuttal in defense of the movie.

The exchange is now promising to test just how far a business can, or should, go in trying to disrupt the powerful negative imagery that comes with the rollout of documentary exposés. That kind of dilemma has surfaced with previous documentaries like “The Queen of Versailles,” which last year portrayed the lavish lifestyle of the real estate moguls Jackie and David Siegel, and even with narrative films like “The Social Network,” which took an unflattering look at Facebook’s Mark Zuckerberg in 2010.

Businesses accused of wrongdoing in films often choose to lie low, hoping the issues will remain out of the public mainstream and eventually fade away without much fuss. That’s especially true of documentaries, which generally have small audiences.

SeaWorld, advised by the communications firm 42West, which is better known for promoting films than punching back at them, is taking the opposite approach. By midweek, the company was providing top executives and animal caretakers for interviews about the movie and its purported flaws.

It was also deliberating possible further moves, which might conceivably include informational advertising, a Web-based countercampaign or perhaps a request for some sort of access to CNN, which picked up television rights to “Blackfish” through its CNN Films unit and plans to broadcast the movie on Oct. 24.

Among other things, SeaWorld claims that “Blackfish,” which focuses on the orca Tilikum’s fatal 2010 attack on a trainer, Dawn Brancheau, exceeded the bounds of fair use by incorporating training film and other video shot by the company. The company also contends that Ms. Cowperthwaite positioned some scenes to create what SeaWorld executives see as a false implication of trouble or wrongdoing.

Asked whether SeaWorld was contemplating legal action against the film, G. Anthony Taylor, the general counsel, said decisions about any such step would have to wait until executives were able to more closely assess the movie. “Blackfish” made its debut at the Sundance Film Festival in January and has since screened at other festivals in the United States and abroad.

In a telephone interview on Wednesday, Ms. Cowperthwaite said she stood by the film and described any quarrel with its construction as an evasion of her inescapable conclusion: “Killer whales are 100 percent not suitable to captivity.”

“For 40 years, they were the message,” she said, referring to SeaWorld. “I think it’s O.K. to let an 80-minute movie” have its moment.

Since 1965, SeaWorld has kept and displayed dozens of orcas in parks here, in Orlando, Fla., and elsewhere. According to Mr. Taylor and other executives, at least 10 million people a year view some of the 29 whales now held. SeaWorld executives say that without access to the whales — which are now bred at the parks, rather than captured wild — humans would be denied a connection to large, intelligent animals with which many feel a bond.

“We’re deeply transformed by them, the killer whale is an animal that does that,” said Dr. Christopher Dold, SeaWorld’s vice president of veterinary services, who spoke at the company’s San Diego park on Wednesday.

Dr. Dold, Mr. Taylor and others point out that only one trainer has died in a whale encounter at SeaWorld parks, though Tilikum has been associated with three deaths. One of those was at another park, and one involved a man who somehow wound up in his tank at night.

On watching “Blackfish,” Kelly Flaherty Clark, who works with Tilikum as the curator of trainers at SeaWorld’s Orlando park, said she was stunned by the presentation of her testimony at an Occupational Safety and Health Administration hearing, at which SeaWorld was cited for violating trainer safety — claiming it was selective in a way that did not accurately represent her views.

“We sleep and breathe care of animals,” said Ms. Clark.

Article source: http://www.nytimes.com/2013/07/19/business/media/seaworlds-unusual-retort-to-a-critical-documentary.html?partner=rss&emc=rss

DealBook: Man Group Faces Further Client Outflows

LONDON – Clients continued to withdraw money from the Man Group in the first quarter, as the world’s largest publicly traded hedge fund announced plans on Friday to buy back almost $500 million of its own debt.

The firm, based in London, has struggled with weak performance during the financial crisis, while outflows from the firm’s investment funds have put pressure on its top management.

Emmanuel Roman, who became chief executive this year, said strong performance in the global equity markets in the first quarter had helped to lift returns for some of the firm’s funds, but a weakening in the bond markets had somewhat hindered their performance.

Man Group investors withdrew $3.7 billion during the first three months of the year, according to a company statement. The firm’s total money under management fell almost 4 percent, to $54.8 billion, over the same time period.

“This was a disappointing quarter from a flows perspective,” Mr. Roman said in a statement. “Investment performance is the lifeblood of our business and in time we expect good performance to translate into flows.”

The bond buyback plan, announced Friday, will save around $78 million in interest payments, the firm said.

Changes last month in how the firm’s capital position was calculated freed up $550 million of extra capital, some of which the firm will use to repurchase the bonds.

The bond buyback program is part of Mr. Roman’s efforts to bolster the firm’s stock price, which has fallen around 60 percent over the last two years. He joined the firm in 2010 after it acquired a rival hedge fund, GLG Partners. Before moving to the top job, Mr. Roman was Man Group’s chief operating officer.

Man Group’s share price rose 9.1 percent in early morning trading in London on Friday.

Earlier this year, the hedge fund imposed a bonus cap for top executives, saying that annual cash bonuses would be no more than 250 percent of individuals’ salaries.

Article source: http://dealbook.nytimes.com/2013/05/03/man-group-faces-further-client-outflows/?partner=rss&emc=rss

British Exit From the European Union Is Not Widely Embraced

Buoyed by the falling value of the pound and a work force with fewer of the labor restrictions found in many parts of Europe, Britain’s industrial exports, led by companies like BM and better-known names like Land Rover and Mini, could find growth markets in the dynamic economies of Asia and Latin America rather than continuing to rely on the rules-bound common market of Europe.

And yet the idea that Britain might be better off outside the 27-member European Union, a notion embraced with a near religious fervor by a small but influential faction of Mr. Cameron’s Conservative Party, is by no means widely accepted by the majority of voters here, according to opinion polls.

Nor is it the belief of top executives at BM Catalysts. They worry that Britain’s withdrawal from the bloc would make it harder to do business in Europe.

Britain, simply put, is already having enough trouble competing in the regional and global economy without making things more difficult by risking its open access to trade with the Continent, to which 58 percent of the country’s exports now go.

A British withdrawal from the European Union “would be a big problem for us,” said Mark Blinston, commercial director at BM. The company depends on the bloc for a third of its sales, which reached £22 million, or $34 million, last year.

In fact, BM, based in Mansfield in the north of England, has already started having trouble in Europe — not because of the Brussels bureaucracy but because of the harsh realities of competitive trade.

BM has been losing market share recently to a leading rival, AS, which is based in Spain, a nation that has one of Europe’s most troubled economies.

Because recession and high unemployment have driven down Spanish labor costs, AS has been able to undercut BM on price in the crucial German automotive market, as well as on BM’s home turf in Britain.

“We are worried,” Mr. Blinston said. “Economic changes in another market can really have an effect on you.”

On Jan. 23, Mr. Cameron called for a referendum on his country’s continued membership in the European Union if sufficient changes from Brussels were not forthcoming. In a poll after the speech, 40 percent of Britons said they would vote to opt out. But nearly as many, 38 percent, said they would oppose withdrawal.

Highlighting the stark trade reality this month was the incoming Bank of England governor, Mark J. Carney. In his first public remarks before Parliament, Mr. Carney pointed out that since 2000, Britain’s share of global exports have decreased about 50 percent — the steepest decline among the world’s 20 biggest economies.

That decline is all the more startling if one considers that it has happened during a time that the pound has lost up to a third of its value against other major currencies, one of the largest currency devaluations in the country’s history.

All other things being equal, a cheaper pound should make British assets, whether exports sent abroad or construction of factories at home, more of a bargain for foreign buyers and investors.

But a growing number of economists and policy experts say that a cheap currency alone is not enough to keep Britain competitive.

They make the case that the painful adjustments undertaken by government and industry in Spain, Ireland, Portugal and Greece have halted the decade-long loss of competitiveness that was at the root of Europe’s sovereign debt crisis.

Unable to devalue their currencies as Britain has, these euro zone nations have cut spending, raised taxes and laid off millions of employees. The resulting gains in competitiveness, painful and hard won as they have been, are now apparent. All of those countries are reporting smaller budget gaps and improved trade deficits that in some cases have swung to surpluses.

By these crucial yardsticks, Britain is emerging less as an economic dynamo poised to become a main trading partner with China than as the surprising economic sick man of a Europe committed to putting its financial house in order.

According to the European Commission, on the purest measure of how much more a government spends than it takes in through taxes, Britain’s primary deficit of 3.9 percent of gross domestic product will be the largest in the European Union this year.

And on the trade front, Austria and France are the only other European countries that, like Britain, have experienced a widening trade deficit since the onset of the financial crisis in 2007.

Through January of this year, new export orders by British industry have fallen for 13 consecutive months, according to official statistics.

Article source: http://www.nytimes.com/2013/02/13/business/global/britains-risk-filled-choice.html?partner=rss&emc=rss

DealBook: Barclays Names Former British Regulator as Head of Compliance

Hector Sants, former chief of the Financial Services Authority.Stefan Wermuth/ReutersHector Sants, former chief of the Financial Services Authority.

LONDON – Barclays appointed Hector Sants, a former chief of Britain’s Financial Services Authority, as head of compliance on Wednesday, as part of an effort to revamp its image in the wake of a rate-rigging scandal.

In June, Barclays agreed to a $450 million settlement with American and British authorities over charges that some of its traders reported false interest rates for financial gain. The case led to the resignation of several top executives, including Robert E. Diamond Jr, its chief.

The scandal also prompted questions about the role of the Financial Services Authority, the British regulator, in policing big banks. In 2008, a Barclays employee told the authority that the bank was lowering its submissions for the London interbank offered rate, or Libor, although Barclays never specifically said the activities amounted to manipulation.

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Since the summer, Barclays has moved to rethink its compliance and risk-taking activities. It has begun a review of its risky trading operations, and is expected to announce an overhaul of many of its business units in time for its next earnings statement in February.

With the appointment of Mr. Sants, a former UBS investment banker, Barclays is hoping to benefit from his experience working with many of the world’s financial regulators. Mr. Sants left the Financial Services Authority in June.

As head of compliance and government and regulatory relations, Mr. Sants will oversee compliance across all of the bank’s operations, and report directly to the chief executive, Antony P. Jenkins. He will start at the beginning of 2013.

Libor Explained

“Relationships with our regulators and governments around the world are obviously also of critical importance to us,” Mr. Jenkins said in a statement on Wednesday. “We must apply a renewed leadership focus on these to make them as constructive and productive as possible.”

The Financial Services Authority has faced harsh criticism from British politicians, who said it did not do enough to monitor risky trading activity in London’s financial services sector.

In tense testimony before Parliament this year, Adair Turner, the former chairman of the authority, was questioned about the culture at Barclays that led to the rate-rigging scandal.

In April, Mr. Turner had written to Marcus Agius, then the chairman of Barclay, about what the regulator perceived as overly aggressive practices by the bank. The concerns focused on efforts to avoid paying about $770 million in corporate taxes and some of the bank’s accounting methods.

“Barclays often seems to be seeking to gain advantage through the use of complex structures, or through regulatory approaches which are at the aggressive end of interpretation of the relevant rules and regulations,” Mr. Turner wrote, according to documents released by Parliament.

Mr. Sants did raise early concerns about the culture at Barclays. After Mr. Diamond was appointed as the bank’s chief executive, the authority warned the Barclays board that he had “not reached the level of openness, transparency and willingness to air issues” with regulators,” according to an e-mail. “I’d like to record that in that conversation, I made clear that our concerns about Barclays’s culture were not some generic observation but specific to Barclays,” Mr. Sants wrote in a 2012 letter to Parliament.

After the Barclays case, the Financial Services Authority conducted a three-month review of the Libor setting process, which has led to a major overhaul of the rate. It acknowledged that the authorities should have stepped in sooner to fix problems with Libor. It also laid out plans to make attempts to alter the rate a criminal offense, and to implement a new auditing system to ensure traders could not unfairly profit from small changes in the rate.

The Financial Services Authority will soon be disbanded, and many of its regulatory powers are to be returned to the Bank of England, the country’s central bank.

This post has been revised to reflect the following correction:

Correction: December 12, 2012

An earlier version of this post misstated Hector Sants’s new job title. He will be head of compliance and government and regulatory relations, not regulatory regulations.

Article source: http://dealbook.nytimes.com/2012/12/12/barclays-appoints-former-british-regulator-as-head-of-compliance/?partner=rss&emc=rss

DealBook: Qatar Wealth Fund Backs Glencore’s Bid for Xstrata

An aluminum warehouse in Krasnoyarsk, in Siberia, operated by Rusal, a partner of Glencore International.Ilya Naymushin/ReutersAn aluminum warehouse in Krasnoyarsk, in Siberia, operated by Rusal, a partner of Glencore International.

1:51 p.m. | Updated
LONDON – The sovereign wealth fund Qatar Holding said on Thursday that it would support Glencore International’s proposed $32 billion takeover of the mining company Xstrata.

The announcement comes less than a week before Xstrata’s shareholders will vote on the multibillion-dollar deal that would create a global mining and commodity trading giant with a market valuation of around $90 billion.

Qatar Holding “continues to see merit in a combination of the two companies and is satisfied with the terms of the proposed merger,” the wealth fund said in a statement on Thursday.

Qatar Holding is the second-largest shareholder in Xstrata after Glencore, and played an important role in successfully pressuring Glencore to increase its all-share offer.

Glencore raised its takeover bid in September, offering 3.05 of its shares for each Xstrata share; it had initially offered 2.8 of its shares for each Xstrata share.

Copper cathodes at the Yangshan Deep Water port near Shanghai. Xstrata is one of the world's biggest miners of copper.Carlos Barria/ReutersCopper cathodes at the Yangshan Deep Water port near Shanghai. Xstrata is one of the world’s biggest miners of copper.

In raising its offer, Glencore also said its chief executive, Ivan Glasenberg, should take over the merged company six months after the deal was completed. Under the original terms, Xstrata’s chief, Michael L. Davis, and his management team were to retain control for a longer period.

Despite its support for the takeover, Qatar Holding, which owns a 12 percent stake in Xstrata, said it would abstain from a vote over proposed executive bonuses potentially worth more than $200 million that investors will be asked to approve on Tuesday.

In a bid to retain top executives, Glencore and Xstrata have offered the payouts, angering several major shareholders, including the activist investor Knight Vinke the British pension fund Standard Life.

Qatar Holding “is conscious of the sensitivities concerning governance issues in the U.K. and does not feel it appropriate to influence the outcome either way,” the fund said in reference to the proposed payouts.

Analysts said the backing of Xstrata’s second-largest shareholder for the takeover probably would lead to overall shareholder approval next week, despite concerns that investors might still reject the proposed payouts.

“In a nutshell, this means the deal is all but done,” Ash Lazenby, a mining analyst at Liberum Capital, wrote in a research note to investors on Thursday.

Shareholder groups remain divided over the deal. The investor advisory firm Pensions and Investment Research Consultants said last week that shareholders should oppose the takeover because of a lack of due diligence and board independence. Others groups, including Institutional Shareholder Services, have backed the deal but opposed the executive payouts.

Shares in Xstrata rose 1.6 percent in trading in London on Thursday, while shares in Glencore fell 0.7 percent.

In a complicated vote on Tuesday, investors will have three options when deciding on the deal: approve the merger and the retention bonuses; support the proposed combined group but not the bonuses; or oppose the deal altogether.

Qatar Holding said it would support the proposed takeover with or without approval of the retention bonuses.

In September, Xstrata’s board recommended that shareholders support both the merger and incentive plan.

A vote on the merger needs the backing of at least 75 percent of Xstrata’s eligible shareholders, while a decision on the retention bonuses only needs the support of 50 percent of investors. While Glencore is Xstrata’s largest shareholder, it is not eligible to participate in either vote.

“We have decided to decouple the resolutions to approve the merger from the resolution to approve the revised management incentive arrangements,” Xstrata’s chairman, John Bond, said in a statement on Sept. 30. “This will enable shareholders to vote in line with their convictions.”

Article source: http://dealbook.nytimes.com/2012/11/15/qatar-holding-supports-glencore-xstrata-deal/?partner=rss&emc=rss

Fraud Trial to Begin Against Former Nortel Executives

OTTAWA — Bitter memories of the collapse of Nortel Networks, once Canada’s most valuable corporation, will be revived on Monday as the fraud trial of three of its former top executives begins.

Prosecutors contend that after Nortel suffered steep financial losses in the dot-com crash at the turn of the century, its postcrash bookkeeping was also fraudulent. On trial are Frank A. Dunn, Nortel’s former chief executive; Douglas C. Beatty, the former chief financial officer; and Michael J. Gollogly, the former controller. The three men were dismissed in 2004 and the company has since been largely broken up and sold.

All three men deny that they committed any fraud.

Nortel’s fall has spurred lingering resentment in Canada. Many of its shares were held by small investors who saw their value wiped out. The collapse also led to an important player in Canada’s technology sector’s coming under foreign control, even if many of the companies that bought Nortel’s assets, like Ciena of Linthicum, Md., maintain substantial operations staffed by former Nortel employees in Canada.

As is the custom in Canada, prosecutors will not publicly detail their case against the former executives until the trial begins in the Ontario Superior Court of Justice in Toronto. But their comments at pretrial hearings, and the charges themselves, indicate that the complex case largely rests on the government’s accusation that the three executives manipulated the company’s financial statements to create a slim and fictional profit. That profit, in turn, led to about $5 million in performance bonus payments to the three accused, prosecutors contend.

Brian H. Greenspan, one of the lawyers representing Mr. Gollogly, said that there are no allegations that the action of the executives caused the company’s collapse. Nortel filed for bankruptcy protection in January 2009.

“The trial has nothing to do with the demise of Nortel,” Mr. Greenspan said on Friday. “It has nothing to do with the bankruptcy; it has nothing to do with the investors who lost money during the fall of Nortel.”

He said that Mr. Gollogly had not manipulated the financial statements to obtain bonuses but “made an honest attempt to get the books in good order.”

He added, “It’s not as if a restatement means something is criminal.”

Gregory L. Lafontaine, the lawyer for Mr. Beatty, said, “Our position is that there was absolutely no fraud committed here by anybody, and we’re confident that the evidence will bear that out.”

Mr. Dunn’s lawyer did not respond to a request for comment but has said in earlier statements that his client had not committed any fraud.

The case is expected to be complex. Prosecutors have turned over about four million documents to the defendants, and the trial is likely to take several months.

Article source: http://feeds.nytimes.com/click.phdo?i=2c6450d289e3727d714373df690571c3

DealBook: A Romance With Risk That Brought On a Panic

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

Soon after taking the reins of MF Global in 2010, Jon S. Corzine visited the Wall Street firm’s Chicago offices for the first time, greeting the brokers, analysts and sales staff there.

One broker, Cy Monley, caught Mr. Corzine’s eye. Unknown to MF Global’s top management in New York, the employee, whose job was to match buyers and sellers in energy derivatives, was also trading a small account on the side, using the firm’s capital.

“How are you making money on side bets? What else are you guys doing to make money here?” Mr. Corzine asked enthusiastically, his eyes widening, the broker recalled. The new chief executive grabbed a seat and spent an hour questioning Mr. Monley as other top executives from New York hovered impatiently nearby.

Although Mr. Corzine had been a United States senator, governor of New Jersey, co-head of Goldman Sachs and a confidant of leaders in Washington and Wall Street, he was at heart a trader, willing to gamble for a rich payoff.

Dozens of interviews reveal that Mr. Corzine played a much larger, hands-on role in the firm’s high-stakes risk-taking than has previously been known.

An examination of company documents and interviews with regulators, former employees and others close to MF Global portray a chief executive convinced that he could quickly turn the money-losing firm into a miniature Goldman Sachs.

Following the Money at MF Global


In the final days before filing for bankruptcy, MF Global moved an estimated$1.2 billion of customer funds to other institutions.

He pushed through a $6.3 billion bet on European debt — a wager big enough to wipe out the firm five times over if it went bad — despite concerns from other executives and board members. And it is now clear that he personally lobbied regulators and auditors about the strategy.

His obsession with trading was apparent to MF Global insiders over his 19-month tenure. Mr. Corzine compulsively traded for the firm on his BlackBerry during meetings, sometimes dashing out to check on the markets. And unusually for a chief executive, he became a core member of the group that traded using the firm’s money. His profits and losses appeared on a separate line in documents with his initials: JSC.

MF Global’s Big Bet and Its Collapse


After joining MF Global, Jon S. Corzine invested heavily in the debt of troubled European countries.

Yet few appeared willing to check Mr. Corzine’s trading ambitions.

The review of his tenure also sheds new light on the lack of controls at the firm and the failure of its watchdogs to curb outsize risk-taking. The board, according to former employees, signed off on the European bet multiple times. And for the first time it is now clear that ratings agencies knew the risks for months but, as they did with subprime mortgages, looked the other way until it was too late, underscoring how three years after the financial crisis, little has changed on Wall Street.

MF Global filed for bankruptcy on Oct. 31. As the firm spun out of control, it improperly transferred some customer money on Oct. 21 — days sooner than previously thought, said people briefed on the matter. And investigators are now examining whether MF Global was getting away with such illicit transfers as early as August, one person said, a revelation that would point to wrongdoing even before the firm was struggling to survive.

The consequences of the firm’s collapse have been severe: Some $1 billion in customer money remains missing and thousands of clients, including small farmers in Kansas or hedge funds in Connecticut, still do not have nearly a third of their funds.

Some of that money may never be recovered if, as some regulators now fear, MF Global used it to cover trading losses and replenish overdrawn bank accounts.

The bet on European sovereign debt is not thought to be directly connected to the missing money. But the fears about the firm’s exposure to Europe tipped an anxious market, causing a run on MF Global that regulators suspect led the firm to fight for its life using customer money.

Mr. Corzine has not been accused of any wrongdoing. Through a spokesman, he declined to comment for this article.

While Mr. Corzine apologized for the firm’s collapse when he appeared before the House Agriculture Committee on Thursday, he has continued to defend the European trade, calling it “prudent” at the time.

The European trade was initiated by Mr. Corzine late in the summer of 2010. The new chief executive explained the bet to a small group of top traders, arguing that Europe would not let its brethren default. In just a few months, the trade swelled to $6.3 billion, from $1.5 billion.

Europe’s debt crisis, meanwhile, continued to flare, raising questions about whether some of the Continent’s bigger economies, Spain and Italy, might be ensnared in the maelstrom.

In August, some directors questioned the chief executive, asking him to reduce the size of the position. Mr. Corzine calmly assured them they had little to fear.

“If you want a smaller or different position, maybe you don’t have the right guy here,” he told them, according to a person familiar with the matter. He also told one senior board member that he would “be willing to step down” if they “had lost confidence in me,” Mr. Corzine told Congress on Thursday, although he said he had not intended to make a threat.

The board relented.

A Curious Career Move

Few would have guessed that Mr. Corzine, having led Goldman Sachs before serving in the Senate and as a governor of New Jersey, would wind up the chief executive of a little-known brokerage house.

At Goldman, which he joined in 1975, the young bond trader quickly gained a reputation as someone able to take big risks and generate big profits. Even after ascending to the top of the firm, he kept his own trading account to make bets with the firm’s capital. In 1999, Mr. Corzine was ousted from Goldman amid a power struggle.

By 2010, having suffered a stinging defeat in his bid for re-election as the Democratic governor of New Jersey, Mr. Corzine hoped to resume his career on Wall Street.

A friend, J. Christopher Flowers, one of MF Global’s largest investors, helped him get there. Mr. Corzine and Mr. Flowers worked at Goldman decades ago, and at one point, Mr. Flowers helped manage Mr. Corzine’s vast wealth while he was a senator, according to Congressional records.

Mr. Corzine’s arrival was a coup. MF Global had hired an executive search firm, Westwood Partners, to hunt for a new leader. But some members of the board, including David I. Schamis, who worked for Mr. Flowers, were recruiting Mr. Corzine.

He was a popular manager, former employees say. An avuncular presence with a beard and sweater vest, he had a knack for remembering names. Even in the firm’s final hours, they recall that Mr. Corzine never lost his temper. His work ethic also impressed colleagues. He often started his day with a five-mile run, landing in the office by 6 a.m. and was regularly the last person to leave the office.

His intense routine was on par with his ambitions for the firm. With 15 top executives in the firm’s boardroom on his first day, March 23, 2010, he said, “I think this firm has tremendous potential and I can’t wait to get started,” one person who attended said.

Mr. Corzine faced a steep challenge.

For years, MF Global aligned buyers and sellers of futures contracts for commodities like wheat or metals, and took a small commission along the way. But over the last decade, that business had become endangered. By the time Mr. Corzine arrived, near zero-percent interest rates and paper-thin commissions had led to five consecutive quarters of losses.

Soon after taking the helm, Mr. Corzine oversaw a wave of job cuts and overhauled compensation, moving from steady commissions to salary and discretionary bonuses like the rest of Wall Street.

At the same time, Mr. Corzine filled the ranks with employees from Goldman Sachs and hedge funds like the Soros Fund Management. He recruited Bradley Abelow, a fellow Goldman alumnus and a top aide when he was governor, to be chief operating officer.

Mr. Corzine arrived just as Washington was pressing the big banks to curb their lucrative yet risky businesses. Spotting an opening, he fashioned new trading desks, including one just for mortgage securities and a separate unit to trade using the firm’s own capital, a business known as proprietary trading.

Not to be outdone, Mr. Corzine was the most profitable trader in that team, known as the Principal Strategies Group, according to a person briefed on the matter. Mr. Corzine traded oil, Treasury securities and currencies and earned in excess of $10 million for the firm in 2011, the person said.

Some inside MF Global worried that the expansion of the profitable trading business in New York came at the expense of its futures clearing operation, which was centered in Chicago. To drum up sales, Chicago brokers were pushed to introduce longtime clients to their counterparts in New York, a move that raised tensions.

At times, Mr. Corzine seemed unfamiliar with some aspects of the futures division. In June, speaking at the Sandler O’Neill Financial Services Conference at the St. Regis Hotel in Manhattan, Mr. Corzine stumbled. “Right now, if you thought about MF Global’s retail business, you probably could only think of — ,” he said, then paused to recall the name of the division at MF Global that catered to individual investors.

He leaned over to an aide, who told him it was Lind-Waldock.

‘Chief Risk Officer’

“I consider one of my most important jobs to be chief risk officer of our firm,” Mr. Corzine told that conference.

Yet soon after joining MF Global, Mr. Corzine torpedoed an effort to build a new risk system, a much-needed overhaul, according to former employees. (A person familiar with Mr. Corzine’s thinking said that he saw the need to upgrade, but that the system being proposed was “unduly expensive” and was focused in part on things the firm didn’t trade.)

While risk at the firm had been sharply increased with the bet on European sovereign debt, there was a compelling argument for Mr. Corzine’s strategy.

MF Global had obtained loans to buy debt of Italy, Ireland and other troubled European nations, while simultaneously pledging the bonds as collateral to support the loans. The loans would come due when the bonds matured, which would happen no later than the end of 2012. MF Global, Mr. Corzine reckoned, would profit on the spread between the interest paid on the loans and the coupons earned from the bonds.

But the size of the European position was making the firm’s top risk officers, Michael Roseman and Talha Chaudhry, increasingly uncomfortable by late 2010, according to people familiar with the situation. They pushed Mr. Corzine to seek approval from the board if he wanted to expand it.

Mr. Roseman then gave a PowerPoint presentation for board members, explaining the sovereign debt trade as Mr. Corzine sat a few feet away. The presentation made clear the risks, which hinged on the nations not defaulting or the bonds losing so much value they caused a cash squeeze. The directors approved the increase. Mr. Roseman eventually left the firm.

Within MF Global, Mr. Corzine welcomed discussion about his bet and his reasons for it, though some senior managers said they feared confronting such a prominent figure. Those who did challenge him recall making little progress. One senior trader said that each time he addressed his concerns, the chief executive would nod with understanding but do nothing.

These concerns were only internal at first because, while MF Global had disclosed the existence of the transactions in at least one filing in 2010, it never mentioned the extent to which they were used to finance the purchase of European debt.

The firm bought its European sovereign bonds making use of an arcane transaction known as repurchase-to-maturity. Repo-to-maturity allowed the company to classify the purchase of the bonds as a sale, rather than a risky bet subject to the whims of the market. That called to mind an earlier era of trading when firms used repo-to-maturity to finance the purchase of risk-free assets like United States Treasury securities, Mr. Corzine’s specialty at Goldman many years earlier.

“It’s like a bond trader from 15 years ago went to sleep and suddenly awoke to make these trades,” one regulator who later reviewed the transactions remarked to a colleague.

Eventually, MF Global’s auditor, PricewaterhouseCoopers, asked Mr. Corzine to report the European debt exposure to his investors. He personally met with the accounting firm in December 2010, two people said, and it was agreed that the transactions would be mentioned in a footnote in the firm’s annual report, which was filed on May 20, 2011.

Earlier, one of MF Global’s many regulators noticed something curious. The Financial Industry Regulatory Authority, which helped watch over MF Global’s securities business, noticed a sharp swing in profits in a monthly report the firm filed to regulators. Finra asked MF Global executives about the volatile accounting line but did not get a satisfactory answer, say people familiar with the matter, until the annual report came out weeks later.

When Finra realized what MF Global was doing, it grew concerned. The Wall Street self-regulator told MF Global to set aside enough money in case the trades went bad. But Finra didn’t have the authority to force the firm to do so — that power was in the hands of the Securities and Exchange Commission, whose rule Finra was citing.

Mr. Corzine then personally took the firm’s case to the S.E.C. in mid-August, taking the Delta Shuttle to Washington for a meeting with a top agency official.

The S.E.C. indicated it would side with Finra, but needed a few weeks to make a final determination. In the meantime, MF Global and Finra haggled over the size of the capital cushion: the regulator wanted $200 million set aside, while the firm pushed for a figure closer to $50 million. In late August, Finra won out.

It would be the beginning of the end for MF Global.

The Unwinding

MF Global’s investors may not have been fully informed about the European bet, but the firm’s executives had been explaining the strategy to the ratings agencies for months, according to two people with direct knowledge of the conservations. Indeed, Moody’s Investors Service and Standard Poor’s had applauded Mr. Corzine’s effort to overhaul the firm, a move that included ratcheting up risk.

“We consider the most recent strategic plan of the new C.E.O. Jon Corzine to be sound,” S. P. said in 2010, while acknowledging the plan “will incrementally increase the firm’s risk profile.”

But the move by Finra to force the extra capital cushion appeared to only unnerve the ratings agencies when news reports about it emerged in October. A week later, Moody’s cut its rating on MF Global to a notch above junk, pointing to the European debt holdings.

The reversal angered some executives at MF Global, who felt it was disingenuous for the agency to change its mind so suddenly. A spokesman for the ratings agency said, “Moody’s does not refrain from taking rating action when its opinion on the credit risk of an issuer has changed.”

The downgrade sent MF Global into free fall on Oct. 25. Its stock price plunged and trading partners and lenders demanded more capital to continue doing business with the company. At day’s end, rattled employees dialed into a conference call with Mr. Corzine, who tried to be encouraging.

“The sun will come out tomorrow,” he told them, according to one employee.

In truth, the company had just two options: sell itself or unload assets. Mr. Corzine organized two teams. Mr. Abelow, his deputy, began hunting for a buyer and decamped to the 40th floor of the firm’s Midtown Manhattan headquarters. On the 39th floor, where his office was next to the trading floor, Mr. Corzine took charge of selling the assets.

On Friday evening, Oct. 28, regulators and top executives trooped into Mr. Corzine’s office, joining a phone conference with Mary L. Schapiro, chairwoman of the S.E.C. Pictures of Mr. Corzine with Presidents Barack Obama and Bill Clinton sat on shelves near his desk. Towering stacks of paper lined the walls and windowsills of his modest office, partly obscuring the window view.

Dressed in his trademark sweater vest, Mr. Corzine expressed confidence a deal would be reached with one of the potential buyers, which included Interactive Brokers, JPMorgan Chase, the Jefferies Group and the Macquarie Group, according to people briefed on the call.

A deal became crucial as trading partners and lenders circled the firm. LCH.Clearnet, the firm responsible for clearing the vast majority of MF Global’s European sovereign debt trades, was also demanding $200 million to maintain the positions, atop $100 million it had claimed from MF Global earlier in the week, one person briefed on the situation said.

Other people close to the investigation, led by the Commodity Futures Trading Commission’s enforcement division, have said that as the firm rushed to pay off creditors, MF Global dipped again and again into customer funds to meet the demands.

The bidders dropped out one by one, leaving just Interactive Brokers on Sunday, Oct. 30. Mr. Corzine and his team briefed regulators at 2 p.m. saying a sale looked likely to go through. About nine hours later, he got word that more than $950 million in customer funds was missing, making a merger impossible. The day after the bankruptcy, Mr. Corzine sifted through transactions in the hope of locating the missing money, one person said.

Ultimately, the bets Corzine placed wound up better than the firm itself. The European debt trades were profitable, though too late for MF Global.

Before Congress on Thursday, Mr. Corzine continued to emphasize how well his trades held up. “As of today, none of the foreign debt securities that MF Global used,” he said, “has defaulted or been restructured.”

“There actually were no losses.”

Kevin Roose and Lisa Schwartz contributed reporting.

Article source: http://feeds.nytimes.com/click.phdo?i=74b53bb4dc1943c6155b2d4539fe5e38

James Murdoch Denies Misleading Parliamentary Panel

“No, I did not,” Mr. Murdoch said after a committee member asked him if he had, in fact, given misleading evidence. Wearing a blue suit and sporting the red lapel poppy that many Britons wear to commemorate those who have fallen in battle, Mr. Murdoch seemed combative and self-assured, repeatedly denying that he had been given evidence of “wider spread phone hacking” at a crucial meeting in 2008.

At one point, a committee member, Tom Watson, compared the Murdoch media empire to a mafia family bound together by a vow of silence — omertà. Mr. Murdoch replied with a pained expression, calling the comparison inappropriate.

Mr. Murdoch was a deft witness in July when he appeared before the parliamentary committee investigating the phone hacking scandal that was riveting the country. Sitting alongside his 80-year-old father, along with family members and legal representatives at that time, he deflected lawmakers’ questions, maintaining that he had learned only recently how widespread the hacking problem really was.

On Thursday, he returned alone to Parliament to a more skeptical panel, faced with trying to defend himself against mounting evidence that he and top executives at News International, the company’s British newspaper arm, knew three years ago that hacking was not limited to a single rogue reporter jailed a year earlier, but was pervasive at The News of the World, the tabloid newspaper that the company shut down in July.

As the hearing began, and Mr. Murdoch was again invited to revisit his earlier testimony, he asked to comment about his father’s remark to the July hearing that he had been humbled by the affair. “I think the whole company is humbled,” James Murdoch replied, saying he was “very sorry” and adding that he wanted to ensure that such events “do not happen again.”

Much rides on how Mr. Murdoch, 38, handles the lawmakers’ questioning, including his personal credibility and the health of the News Corporation media empire. The hacking scandal has tarnished the corporation, rocked its stock price, cost it a $12 billion deal for the takeover of the satellite giant British Sky Broadcasting, and added to strains between Mr. Murdoch and his father. At least 16 former employees of The News of the World have been arrested, and a series of executives up the corporate ladder — including the publisher of The Wall Street Journal Europe, Les Hinton — resigned.

Beyond his own fate and that of his company, Mr. Murdoch’s answers may add to details to a scandal that has reached deep into British society, raising questions of intimate and self-serving ties linking the media, the political elite and the police.

The panel is now armed with recently released News of the World documents related to a case central to the doubts about Mr. Murdoch’s earlier testimony: that of Gordon Taylor, the chief executive of the Professional Footballers’ Association. In 2008, after Mr. Taylor claimed that his voice mail messages had been repeatedly hacked by the tabloid, Mr. Murdoch authorized News International to pay him more than £450,000 ($725,000) and legal fees exceeding $322,000.

Whether Mr. Murdoch knew the hacking accusations to be true is a central focus for the panel as it seeks to determine whether his prior testimony misrepresented what he knew about illegal activities at News of the World and when he knew it.

In his July testimony, Mr. Murdoch maintained that the episode had done nothing to alter his understanding that a single reporter, Clive Goodman, the former royal reporter at The News of the World, had engaged in phone hacking in 2007.

On Thursday, he said that “no documents were shown to me or given to me” at a crucial meeting in 2008, but he was given “sufficient information” to authorize an increase in the payment to Mr. Taylor.

“The meeting, which I remember quite well, was a short meeting, and I was given at that meeting sufficient information to authorize the increase of the settlement offers that had been made,” he said. “But I was given no more than that.”Regarding the settlement, Mr. Murdoch said in July that he had been given an oral briefing on the case and “did not get involved directly” in the negotiations. He denied that the settlement was motivated by a desire to keep the matter from becoming public, but rather a pragmatic one, meant to avoid damages and legal costs from a judgment at trial. He declined to discuss releasing Mr. Taylor from the agreement’s confidentiality clause.

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DealBook: Energy Transfer Raises Southern Union Bid to $5.1 Billion

Panhandle Energy, a division of Southern Union, operates a liquid natural gas terminal in Lake Charles, La.Panhandle Energy, via Associated PressPanhandle Energy, a division of Southern Union, operates a liquid natural gas terminal in Lake Charles, La.

5:23 p.m. | Updated

Energy Transfer Equity raised its bid for the the pipeline operator Southern Union Company to $5.1 billion in cash and stock on Tuesday, topping a rival $4.9 billion bid from the Williams Companies.

Still, the battle may not be done. Shares of Southern Union rose 4.2 percent to $42.07 on Tuesday, indicating that investors expect an even higher bid. The new Energy Transfer offer is meant to address several concerns about its original bid for Southern Union, including the first offer’s complicated structure and two lucrative consulting and noncompete agreements offered to Southern Union’s two top executives.

Under the new terms of the deal, Energy Transfer will offer $40 a choice of either cash or stock. Up to 60 percent of the deal consideration is payable in cash. About 14 percent of Southern Union’s shareholders have signed onto the new offer and have chosen to take stock, potentially letting more investors choose cash.

Moreover, the two Southern Union executives who were offered the rich consulting contracts, George L. Lindemann, the chief executive, and Eric D. Herschmann, the president, have agreed to forgo them.

Energy Transfer executives acknowledged on Tuesday that Williams’ $39-a-share all-cash offer, announced only days after their initial bid, had forced them to counter with a new proposal that was simpler and higher-valued. Energy Transfer initially sought to block Southern Union from holding talks with Williams, a major energy company seeking to bolster its gas pipeline business.

Energy Transfer even decided to offer new partnership units, something it was reluctant to do.

“We’ve been more aggressive here than we have been than probably in my whole career,” Kelcy Warren, Energy Transfer’s chairman, said in a conference call with analysts Tuesday morning.

Mr. Warren argued that combining his company with Southern Union would yield a stronger pipeline operator with significant reach throughout the southern United States. Offering stock alongside cash would allow Southern Union shareholders to benefit if the combined company performs well.

“I don’t think this is a $40 offer,” he said on the call. “I think this is substantially more than $40.”

A Williams spokesman declined to comment.

Shares of Energy Transfer rose slightly on Tuesday, to $44.99, while shares of Williams dipped a little, to $30.68.

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