Tuesday, January 22, 2013

DealBook: Inside Davos | China's Aerospace Ambitions | Private Equity Faces New Tax Reality | A Prosecutor to Lead the S.E.C.?

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NYTimes.com Home |Business Day| Video The New York Times
Tuesday, January 22, 2013
TODAY'S TOP HEADLINES

M & A From Atlanta to the Pinnacle of American Finance

INVESTMENT BANKING R.B.S. Said to Consider Splitting Investment Bank

PRIVATE EQUITY In Europe, Private Equity Struggles to Find an Exit

HEDGE FUNDS Group Led by Hedge Fund Manager Clinches Deal for Basketball Team

OFFERINGS Employers' Restrictions on Social Media Come Under Scrutiny

VENTURE CAPITAL How M.I.T. Caught a Hacker

LEGAL/REGULATORY Atari's U.S. Division Files for Bankruptcy, Hoping for a Sale

For the latest updates, go to dealbook.nytimes.com »
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BY WILLIAM ALDEN

INSIDE DAVOS It's that time of year again - when business and policy leaders descend on Davos, Switzerland, for several days of networking, meetings and celebrity spotting at the World Economic Forum. The panel discussions will be full of impressive speakers making provocative predictions, but, please, don't believe everything you hear, Andrew Ross Sorkin writes in the DealBook column. "The predictions that have emanated from Davos always have a ring of plausibility to them, in part because of the credibility of the speakers. But all too often they fall short." Some have been directionally accurate, but others - including a couple by Bill Gates - have not panned out.

But forget the meetings. For many attendees, the event is all about networking. Chancellor Angela Merkel of Germany and the European Central Bank president, Mario Draghi, join Prime Minister Mario Monti of Italy and Christine Lagarde of the International Monetary Fund as keynote speakers on the state of Europe. Prime Minister David Cameron of Britain may turn up later in the week. And from Wall Street, Jamie Dimon of JPMorgan Chase, Stephen A. Schwarzman of the Blackstone Group, Brian T. Moynihan of Bank of America and Lloyd C. Blankfein of Goldman Sachs (who has avoided Davos in the past) are expected to join the party. Notable absentees will be the crew from Google, Sergey Brin, Larry Page and Eric E. Schmidt.

This year Davos will again take place against a changing economic landscape in Europe. The Continent, no longer a ticking time bomb, is "potentially facing a starker problem," Liz Alderman and Jack Ewing write in DealBook. "The biggest concern is that leaders might become less vigilant now that the heat is off, ushering in a spate of new troubles that could dog the euro for years to come." For example, European leaders have not settled on a way to wind down ailing banks without relying on taxpayers, and they are a long way off from creating a deposit insurance fund for the Continent.

Bankers attending Davos may find the mood to be more congenial than in years past. "Among the government overseers who will also be in attendance, there appears to be a growing sentiment that the banks have taken enough abuse," DealBook writes.

ON THE AGENDA The World Economic Forum kicks off Tuesday evening with a speech by the executive chairman, Klaus Schwab. Delta Air Lines, DuPont, Johnson & Johnson and TD Ameritrade report earnings before the market opens, while Advanced Micro Devices, Google and I.B.M. announce results this evening. Mr. Draghi speaks in Frankfurt at 1 p.m. Sheila Bair, former chairwoman of the Federal Deposit Insurance Corporation, is on CNBC at 11 a.m. David Tepper of Appaloosa Management is on Bloomberg TV at 11 a.m. Mr. Schwarzman is on CNBC at 3 p.m.

CHINA'S AEROSPACE AMBITIONS Aerospace is the latest frontier for China, where the government has been searching for new ways to invest the country's $3 trillion of foreign reserves, Keith Bradsher writes in DealBook. "The country now rivals the United States as a market for civilian airliners, which China hopes to start supplying from domestic production. And the new leadership named at the Party Congress in November has publicly emphasized long-range missiles and other aerospace programs in its push for military modernization."

Wall Street has been eager to get in on the action, but regulators in Washington will likely take a close look at any deals. "The push into aerospace coincides with growing worries in the West and across Asia about China's increasingly assertive territorial claims, including the dispatch of Chinese warships to waters long patrolled by Japan, the Philippines and Vietnam."

PRIVATE EQUITY PREPARES FOR NEW TAX REALITY Publicly, the private equity industry continues to resist possible changes to the tax break for carried interest. But many in the industry acknowledge that the special status of their profits, currently treated as capital gains, is coming to an end, Jane Sasseen reports in DealBook. "If the proposal does re-emerge, the industry is expected to focus its lobbying on softening transition rules. One issue will be the amount of carried interest reclassified as ordinary income."

A PROSECUTOR TO LEAD THE S.E.C.? Mary Jo White, a former United States attorney in Manhattan, is "the Obama administration's likely pick to lead the Securities and Exchange Commission," according to The Wall Street Journal, which cites unidentified people familiar with the search. Ms. White, currently a partner at Debevoise & Plimpton, would be the first prosecutor to lead the S.E.C., potentially bringing more muscle to the agency, the newspaper notes.

Contact: @williamalden | E-mail

MERGERS & ACQUISITIONS »

From Atlanta to the Pinnacle of American Finance The story of how IntercontinentalExchange came to acquire NYSE Euronext shows "the disruptive power of innovation," Nathaniel Popper writes in The New York Times.

Bumi Inquiry Fails to Prove Misconduct Claims The mining company Bumi, partly owned by the British financier Nathaniel Rothschild, announced on Tuesday that it had been unable to prove that financial misconduct occurred at two of its Indonesian units.

Before H.P.'s Autonomy Deal, a Red Flag During a call with Hewlett-Packard executives days before the company agreed to buy Autonomy, outside auditors mentioned that an executive at the British company "had raised an allegation of improper accounting," The Wall Street Journal reports.

Glencore-Xstrata Deal Gets Blessing in South Africa A regulator in South Africa on Tuesday approved Glencore's takeover of Xstrata, but included some conditions to limit job losses, Reuters reports.

Thai Magnate's $11.2 Billion Bid Poised to Win Fraser & Neave A long battle for control of Singapore's Fraser & Neave appears to be ending, with the victor likely to be TCC Assets, which is controlled by Charoen Sirivadhanabhakdi of Thailand.

INVESTMENT BANKING »

R.B.S. Said to Consider Splitting Investment Bank The Royal Bank of Scotland may split its investment bank into two separate divisions if the division's head, John Hourican, leaves the company as part of a settlement over rate-rigging, The Wall Street Journal reports, citing an unidentified person briefed on internal discussions.

How to Cut Big Banks Down to Size Gretchen Morgenson discusses a proposal by Richard W. Fisher, the president of the Federal Reserve Bank of Dallas.

Britain's Financial Industry Expected to Shed Thousands of Jobs in Coming Months

For the latest updates, go to dealbook.nytimes.com »
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PRIVATE EQUITY »

In Europe, Private Equity Struggles to Find an Exit Reuters reports: "Altius Associates, one of the largest investors in the private equity industry, said the market for initial public offerings - one of private equity's favoured routes for selling down the stakes in firms they own - remained largely closed."

Equistone Partners Raises $2 Billion for European Buyout Fund

HEDGE FUNDS »

Group Led by Hedge Fund Manager Clinches Deal for Basketball Team Chris Hansen of Valiant Capital and other investors signed a deal to buy a controlling interest in the Sacramento Kings, and are expected to bring the franchise to Seattle, Reuters reports.

SAC Said to Have Missed Out on Investment From Japanese Bank The Mizuho Financial Group "had discussed last year making a major investment that could have brought as much as $500 million" to SAC Capital Advisors, the firm at the center of an investigation into suspicious trading, The Wall Street Journal reports.

Co-Founder of Commodities Fund Plans a New Venture Financial News reports: "The co-founder of BlueGold Capital Management, the commodities hedge fund manager whose fund shut down last year after losing a third of its value in 2011, is preparing to launch a hedge fund that will focus on trading oil derivatives."

I.P.O./OFFERINGS »

Employers' Restrictions on Social Media Come Under Scrutiny The New York Times reports: "As Facebook and Twitter become as central to workplace conversation as the company cafeteria, federal regulators are ordering employers to scale back policies that limit what workers can say online."

Child Care Company, Backed by Bain, to Go Public An I.P.O. from Bain Capital's Bright Horizons Family Solutions is expected to raise as much as $212 million at the end of the week.

VENTURE CAPITAL »

How M.I.T. Caught a Hacker When the Massachusetts Institute of Technology detected a mysterious visitor using its network to download articles belonging to Jstor, university officials did not know at the time that the intruder was Aaron Swartz, "one of the shining lights of the technology world," The New York Times writes.

Uber, Car-Sharing Service, Goes to Asia

LEGAL/REGULATORY »

Atari's U.S. Division Files for Bankruptcy, Hoping for a Sale The company's United States subsidiary, Atari Interactive, filed for Chapter 11 protection on Monday as part of an effort to cleave itself from its French parent, Atari S.A.

Deutsche Bank Unit Expected to Be Fined Over Energy Trades The Federal Energy Regulatory Commission is expected to fine a Deutsche Bank subsidiary $1.5 million after determining that it "extracted illicit profits from the California electricity marketplace in 2010," The Wall Street Journal reports.

Euro Official Looks to Heal Rift Over Austerity Jeroen Dijsselbloem, the newly elected president of the group of ministers overseeing the euro, said he wanted to improve the image of the currency and mend divisions over austerity policies.

Bank of Japan Expands Stimulus Efforts

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