Clean tech generating buzz with money crowd

Venture capitalists' growing enthusiasm for a broad range of clean technology investments has some talking bubble. But clean tech also has all the hallmarks of a fertile field for venture investing: innovative technology in large markets with the potential to pay off big. The so-called double-bottom line -- doing good while doing well -- is seen by some as merely a bonus.

One Last Peek Through the Hedges?

It is a strange time for people who follow the hedge fund industry. Thousands of these traditionally secretive investment pools were forced to cough up all kinds of information when a new Securities and Exchange Commission rule took effect in February. Then an appeals court tossed out the rule last month, raising the possibility that the stricter registration requirements will vanish, allowing these funds to retreat back into obscurity.
Drawing upon the figures reported to the S.E.C., Private Equity Info, an Austin, Texas-based outfit that runs a database on private equity firms and hedge funds, offers some data points about an industry in which solid numbers can be hard to come by.

I'd rather laugh with the sinners than cry with the saints...

Nathan Myhrvold and his somewhat mysterious company Intellectual Ventures have gotten plenty of attention lately, both in Corporate Dealmaker and BusinessWeek, where Myhrvold was the subject of the July 3 cover story. While the debate is raging in the IP corridors as to whether Nathan is a sinner (“he's nothing but a deep pocketed troll!”) or a saint (“he's the Edison of our age, and has the interest of the true inventor at heart!”), there is little debate that he will have an impact.

Keeping Up with the Blackstones

Pity the strategic investor. There was a time that an operating company — as opposed to a financial investor — had a built-in advantage in corporate auctions: It could afford to pay more because of the potential for cost reductions and economies of scale. But private equity firms, fueled by gobs of money, low interest rates and an increase in operational expertise, appear to have closed the gap, CFO Magazine reports.

Options Scorecard

Here's an updated look at companies that have come under scrutiny in recent months for past stock-option grants.
Updated July 3, 2006 -- RED TEXT indicates most recent updates

Venture-Backed I.P.O.’s Increased in 2nd Quarter

The picture is looking a bit brighter for initial public offerings of venture-capital-backed firms, which showed renewed activity — both in terms of dollar volume and the number of offerings — in the second quarter.
According to a report released Wednesday by Thomson Financial and the National Venture Capital Association, there were 19 venture-backed I.P.O.’s in the second quarter of 2006. That represents a 90 percent increase over the anemic 10 I.P.O.’s during the first three months of the year, as well as the 10 from the second quarter of 2005. This quarter’s venture-backed offerings totaled $2.01 billion, compared to $540.8 million raised in the first quarter of this year and $714.1 raised in the second quarter last year.

M&A TO STEP UP

DEALS COULD BE MARKET DRIVERS IN 2ND HALF OF '06
Federal Reserve Chairman Ben Bernanke not only unleashed a market rally when he hinted about a pause in interest-rate hikes but may have added even more fuel to the red-hot mergers and acquisitions market.
With the market believing the rate environment will be predictable, it will be easier for buyout firms, a major driver of deals, to raise financing, said S&P senior index analyst Howard Silverblatt.

Investment Banks Jockey for Position

The hot mergers-and-acquisitions market surged deep into record territory during the first half of the year, according to new data released on June 30 by market researcher Dealogic. But the investment banking business isn't what it used to be: The numbers show that investment banking revenue has dropped 29% from the record level of 2000, the peak of the last boom.
RECORD DEAL VOLUME. Such deals helped hike global deal volume for the first half of the year to $1.93 trillion, up from $1.4 trillion during the first half of 2005, according to analyst Natalie Cogan of market researcher Dealogic. "Global announced M&A has reached the highest half-year volume on record," she said. At the current pace, the volume of M&A deals will approach the $4 trillion mark. That would shatter the annual record of $3.32 trillion set in 2000, the peak of the late '90s stock and tech bubble.

Investors Hesitant on Publicly Traded Venture Capital

Reductions in the size of offerings reflect a trend towards an increasingly difficult I.P.O. market for venture capital portfolio companies.
A pair of initial public offerings for venture-backed companies hit the Nasdaq Wednesday but both had to scale back in the face of weak investor demand.

In Washington, Hedge Funds Feel the Glare

There was so much buzz about hedge funds on Wednesday it was difficult to keep track of it all. Members of the Senate Judiciary Committee held a hearing that was billed as a discussion of hedge funds and their ties to independent analysts. But the issues on the floor — and the reactions off of it — spanned a wide range of controversial topics.

Hilfiger’s Private Deal With Prosecutors Irks Shareholders

The undisclosed details of a nonprosecution agreement between the Justice Department and the Tommy Hilfiger Corporation are drawing keen interest from former Hilfiger shareholders who filed a class-action lawsuit against the clothing company. Corporate Counsel magazine reports on the controversy and suggests that prosecutors’ treatment of Hilfiger, now owned by the buyout firm Apax Partners, may amount to special treatment.

Winners and Losers in the KPMG Ruling

Here are three thoughts on possible winners/losers in the wake of Judge Kaplan’s stinging ruling today that the government’s prosecutorial tactics in pressuring KPMG to limit its payment of employee legal fees to avoid indictment violated the individual KPMG defendants’ constitutional rights.

Are Share Buybacks a Shell Game?

Cisco Systems, Yahoo and Affiliated Computer Services are some of the many companies that have recently started share repurchase plans or increased the size of previous ones.
These kinds of announcements usually win gold stars from analysts and pundits, who consider them a prudent way to funnel cash back to investors. TheStreet.com puts a negative spin on the trend, however, suggesting Tuesday that share buybacks are often just a way to stanch the dilution caused by the unbridled use of stock options.

Hedge Funds in Limbo

Most hedge funds do not want someone looking over their shoulder. So it was seen as a big victory for the industry on Friday when an appeals court threw out the Securities and Exchange Commission’s rule that forced thousands of these investment pools, which cater largely to wealthy and institutional investors, to register with the agency.
The matter of hedge fund oversight is hardly settled, however.

Venture Capital’s ‘I.P.O. Problem’

The venture-capital market is doing great — if the only measure is how much money venture funds are attracting. The problem, as venture capitalist Paul Kedrosky pointed out in his blog on Monday, is that the market is “not scalable.” His takeaway from a recent panel discussion hosted by the Venture Capital Journal was that there aren’t nearly enough initial public offerings to provide a profitable exit.

Hedge Fund Registration Rule Is Overturned

The push to regulate hedge funds was dealt a major setback on Friday when a federal appeals court threw out a rule that forced thousands of United States-based funds to register with the Securities and Exchange Commission.
In its opinion published Friday, the Court of Appeals for the D.C. Circuit found fault with the commission’s decision to change its interpretation of what constitutes a hedge fund’s “client” — a change that pulled many hedge funds into the scope of the Investment Advisers Act of 1940, from which they had previously been exempt.

End of ‘Bountiful Era’ for Private Equity?

Even as private equity firms continue to enjoy “heady times,” the business is beset by a number of threats, The Economist suggests in its latest issue. There is “a growing sense among fund managers that the bountiful era is drawing to a close.”
Firms must deal with more competition, higher interest rates, troubled markets, demanding investors and hawk-eyed regulators. Further, many firms have taken on too much debt, often in the form of loans from hedge funds.

S.E.C. Is Reported to Be Examining a Big Hedge Fund

One of the nation's most prominent hedge funds, Pequot Capital Management, is under investigation by the Securities and Exchange Commission for possible insider trading, according to government officials briefed on the case.

SEC Probing Hedge Fund “Side Letters”

Side letters, commonly used by hedge funds, give certain investors preferential terms — cheaper fees, shorter lock-ups — to incent them to invest in the funds. While they’re not illegal, there is an issue whether they’re being properly disclosed to all the funds’ investors. If not, a fund could be breaching its fiduciary duty to be fair and equitable to all investors. Investor-protection laws demand that all investors be treated equally, regardless of size.

Why the World Needs Private Equity

Far from being vultures who do not care what gets destroyed in their single-minded pursuit of profits, private equity firms, rather, see their role as “empowering business leaders as they seek to make change,” wrote Marek Gumienny, managing director of Candover, in what amounted to an industry apologia published Tuesday by the Web site of BBC News. Coming one day before The Financial Times warned about the dangers of private equity on its editorial pages, Mr. Gumienny’s commentary underscores the growing attention, good and bad, these kinds of investment pools are getting.

More Tech Deals Likely in 2006, Survey Says

Technology deals and cross-border transactions are expected to make a strong showing in the back half of 2006, according to a recent poll of 1,200 deal-making professionals and corporate executives.

A Little Industry With a Lot of Sway on Proxy Votes

Few shareholders ever cast a proxy vote themselves. Moreover, according to a recent poll of mutual fund investors, proxy voting policies ranked last among the 19 issues that people consider before making a purchase. But for institutional investors — pension funds, endowments, hedge funds and the like — corporate governance is an entirely different matter. They may not care deeply about it, but they need to pay attention as a fiduciary duty, typically relying for advice on a tiny group of little-known companies.

Inquiry Into Stock Option Pricing Casts a Wide Net

What began as a creative solution among a handful of technology firms to address recruitment issues soon became common practice in Silicon Valley. It appears the practice also became a way to enrich chief executives and other top managers.
The result is a nationwide scandal with major accounting, corporate governance, tax and disclosure ramifications. Dozens, perhaps hundreds, of companies are caught up in a giant civil and criminal law enforcement sweep by the Justice Department, the I.R.S. and the Securities and Exchange Commission.

Debating the Poison Pill

A Harvard law professor and software company CA Inc. will square off in court on Friday over one of the most contentious corporate-governance issues out there — the antitakeover provision commonly known as the poison pill.

Private-equity M&A reaches record

SAN FRANCISCO (MarketWatch) -- The volume of private-equity backed mergers and acquisitions in the United States so far this year has reached record levels, research firm Dealogic said Thursday. More than 500 deals worth $157.4 billion and backed by private equity have been announced in 2006, according to data Dealogic compiled through June 14. That's a record and almost double the volume during the same period of 2005, the firm reported.

For eBay, $2.6 Billion Question Looms

The honeymoon period that followed eBay’s purchase of Skype is clearly over, and many investors want to know what is in it for them. The moment of truth is likely to come this week as eBay, the heavyweight of online auctions, is expected to explain how it will integrate Skype’s Internet phone service into its United States operations.

For eBay, $2.6 Billion Question Looms

The honeymoon period that followed eBay’s purchase of Skype is clearly over, and many investors want to know what is in it for them. The moment of truth is likely to come this week as eBay, the heavyweight of online auctions, is expected to explain how it will integrate Skype’s Internet phone service into its United States operations.

Is Backdating the New Corporate Scandal?

The newest intrigue in corporate America, the apparent backdating of stock options to boost top executives' compensation, is rapidly taking on the dimensions of a major scandal.
The number of public companies under investigation by the Securities and Exchange Commission or federal prosecutors has grown to more than 30 and executives at several companies have been fired.

In Switch, G.M. Shareholders Ask Board for Stronger Say in Elections

WILMINGTON, Del., June 6 — Shareholders of the troubled General Motors approved two proposals on Tuesday aimed at giving them more influence over the way directors are elected, the first time they have defied G.M.'s recommendations. Rick Wagoner, G.M.'s chief executive and chairman, told investors Tuesday that the company's turnaround plan was gaining momentum. For G.M., which faces an array of competitive and cost issues, the votes, which were nonbinding, were another reflection of the company's diminished fortunes and the dissatisfaction among many investors with its leadership.

Specter Proposes Jail Time for Lax Executives

Senate Judiciary Committee Chairman, Sen. Arlen Specter, just drafted legislation that may become the next battleground in the tort reform wars. The Pennsylvania Republican's bill would impose criminal penalties on employees who "knowingly and recklessly" allow defective products into the marketplace. Maximum sentences, under the proposal, would be five years for causing serious injury and 15 years for causing death.

Shareholder Suits Follow on Heels of Home Depot Meeting

The Home Depot's truncated annual meeting last week was followed by howls of criticism by corporate governance experts -- and three shareholders' suits filed in Fulton County Superior Court against chairman and CEO Robert Nardelli and the company's board of directors.
Central to the suits is what the plaintiffs call Nardelli's "unreasonable compensation" of $245 million over five years during which the company's stock price fell 12 percent.

Cleary Gottlieb: Putting Its SEC-Practice Band Back Together

Alan Beller, who left the SEC as its director of the Division of Corporation Finance earlier this year, announced today that he will rejoin his former partners at Cleary Gottlieb Steen & Hamilton, where he was a longtime partner before joining the commission. He follows in the footsteps of Giovanni Prezioso, the former Cleary partner who left in 2002 for a stint as the SEC’s general counsel and recently said he’ll rejoin the firm this summer.
Both announced plans to leave the agency around the time Bill Donaldson passed the reins to Christopher Cox, who brought in his own peeps. Beller was replaced by longtime Cravath, Swaine & Moore partner John White, who’s married to Mary Jo White of Debevoise & Plimpton, the former U.S. Attorney in Manhattan. Prezioso was replaced by Cox’s former Latham & Watkins colleague Brian Cartwright.

Verizon Delivers $49 Million in Pregnancy Discrimination Case

Verizon struck a settlement with the EEOC yesterday in which it will pay almost $49 million to more than 12,000 current and former female employees as part of a landmark class-action lawsuit alleging pregnancy discrimination.
The EEOC had reached a settlement in 2002 against Verizon’s predecessor companies, Nynex and Bell Atlantic, but the settlement amount was not made public until yesterday. It’s the largest pregnancy discrimination settlement in EEOC history.
The companies had been accused of violating federal law by denying women pensions and other benefit accruals when they spent time on pregnancy or maternity leave.

For Law Firm, Serial Plaintiff Had Golden Touch

When it came to investing, Howard J. Vogel seemed to possess a perverse kind of Midas touch.
In early October 1997, he bought 50 shares of Oxford Health Plans. Three weeks later, the stock nose-dived, and Mr. Vogel lost about $3,000 of his investment. Still, Mr. Vogel reaped $1.1 million.
How was that possible?

Poison Pills Lose Their Appeal

When Sun Microsystems announced last week that it would ditch its poison pill anti-takeover provision, it was hardly alone. Thanks in part to pressure from institutional activist shareholders, including hedge funds, the proportion of companies with active poison pills has recently declined for the first time in many years, according to Institutional Shareholder Services, a proxy advisory firm. The proportion of companies with poison pills has dropped from 55.1 percent two years ago to 51.2 percent of the 1,925 public firms included in the survey.

KPMG Settles Clients’ Suit

According to the AP, a federal judge in Newark, N.J., on Friday gave final approval to a $153.9 million settlement between KPMG and about 200 former clients who used its tax shelters. The KPMG shelters, sold from 1996 to 2002, were later found “abusive” by the Internal Revenue Service.

New York Comptroller Seeks to Remove Milberg As Pension Fund Council

The New York State comptroller, Alan G. Hevesi, the trustee of the $140 billion New York State Common Retirement Fund, has announced he will ask Judge William H. Pauley of Southern District Court to replace the indicted class action firm Milberg Weiss Bershad & Schulman as lead counsel in a shareholder suit against the German pharmaceutical giant Bayer.
Mr. Hevesi also said he was removing the firm from the pool of those eligible to serve as the retirement fund’s counsel in future securities litigation matters.

Home Depot Alters Rules for Electing Its Directors

Home Depot, in a bow to disgruntled shareholders, said yesterday that it would require a majority vote from shareholders for the election of board members.
The company also released vote tallies from last week’s annual meeting showing that a surprisingly high percentage of shareholders had withheld their support from 10 of the 11 directors, including Robert L. Nardelli, the chairman and chief executive.

A Tax Rule Could Save Treasury Nominee Millions

Henry M. Paulson Jr., the nominee for Treasury secretary, has a big reason to support tax relief. Because of a little-known provision in the federal tax code, Mr. Paulson, the departing Goldman Sachs chief executive, could receive a tax break of at least $48 million if he is confirmed.

Law Firm Testing the Waters for Vonage Suit

At least one law firm is trying to put together a class-action lawsuit for disgruntled Vonage customers who invested in the Internet telephone company’s disastrous I.P.O. Customers, who have watched Vonage’s shares tank 32 percent since their debut last week, may have a strong legal leg to stand on, I.P.O. experts said.

Wall Street’s Risky Business

Wall Street has always been about taking risk. But never has the “R” word been such an obsession for the men and women who rule the nation’s biggest investment banks. Never have they had to reconcile so many bets made on so many fronts. Ripe conditions have allowed a new type of firm to flourish, one that acts primarily as a trader and only secondarily as a traditional investment bank, underwriting securities and advising on mergers.

Lerach’s Enron Class-Action: The First $1 Billion Fee?

While his former partners deal with the fallout from the indictment of Milberg Weiss, class-action king Bill Lerach could be on the verge of winning the first billion-dollar award of attorneys’ fees in the history of American securities litigation. On Tuesday, the New York Sun reported on the possibility of the eye-popping fee in the Enron shareholders’ lawsuit, which has already won settlements of $7.2 billion from banks and investment firms accused of contributing to energy giant’s fraud.

The Year of the Mega-M.B.O.

The Wall Street Journal reported on Thursday that there have already been nearly $39 billion worth of deals either led or initiated by top executives so far this year. For all of last year, such deals amounted to just $6.5 billion. To be clear, the number of management-led buyouts is still far behind last year. This year has seen 18 such deals so far; there were 73 in 2005. But the deals of 2006 have generally been large ones.

Exxon Mobil Shareholders Reject Effort to Restrain Executive Pay

DALLAS, May 31 (AP) — Shareholders of the Exxon Mobil Corporation, whose last chief executive took home $147 million when he retired, overwhelmingly rejected resolutions to rein in compensation at the company's annual meeting on Wednesday. But the chairman and chief executive, Rex W. Tillerson, said some shareholders sent a signal by withholding votes for directors who approved the pay and pension packages of the former chief, Lee R. Raymond.

Debate heats up on Justice's deferred-prosecution deals

The legal debate over the Justice Department's aggressive prosecution of businesses has been reignited after the recent indictment of securities class-action law firm Milberg Weiss, plus an ongoing court battle between prosecutors and former KPMG executives indicted on fraud charges.

Collapsed Hedge Fund Bayou Wants Its Money Back

There may be a rude surprise in store for investors who think they escaped getting burned by last year’s scandal at hedge fund Bayou Group.
The fund, which raised more than $450 million before it abruptly imploded in August with most of that money missing, filed for Chapter 11 protection on Tuesday in New York. As part of the bankruptcy, Bayou’s court-appointed overseer hopes to claw back funds that were paid out to previous Bayou investors over the past two years.

Mushrooming Backdating Scandal Hits McAfee’s Top Lawyer

McAfee, Inc. terminated its general counsel Kent Roberts after an internal review of the company’s employee stock options revealed an “improper” grant involving Mr. Roberts in 2000. Here’s the press release from the antivirus-software king, the latest company to be ensnared by the backdating scandal.

Big Buyout in the Pipeline

If there was a question about whether potential conflicts would prompt investment bank Goldman Sachs to lower its profile in private equity investing, here is a $22 billion answer. The firm’s buyout arm has a prominent role in Monday’s proposed management-led buyout of Kinder Morgan, which, if it gets done, would be the largest leveraged buyout since Henry Kravis’ private equity shop made its audacious run at RJR Nabisco in the late 1980’s.

Plaintiff Says Incentives Were Offered in KPMG Case

A lead plaintiff in a proposed tax shelter settlement that was brokered by the class-action securities law firm of Milberg Weiss Bershad & Schulman indicated that he was offered a financial incentive to serve as plaintiff, according to documents filed yesterday in federal court in Newark.

Verdict on an Era: Arrogance and Recklessness at Enron

Kurt Eichenwald, author of Conspiracy of Fools, an inside look at the events leading up to the Enron collapse, has an excellent wrap-up article on the Lay and Skilling verdicts in today's New York Times. His opening paragraphs are particularly succint:

"Regardless of whether the jury verdict against Kenneth L. Lay and Jeffrey K. Skilling is upheld, testimony from 56 days of trial has sealed what is sure to be history's judgment - one that is unlikely to be vulnerable to appeal.

The Enron case will forever stand as the ultimate reflection of an era of near madness in finance, a time in the late 1990's when self-certitude and spin became a substitute for financial analysis and coherent business models. Controls broke down and management deteriorated as arrogance overrode careful judgment, allowing senior executives to blithely push aside their critics.

Indeed, it could be argued that the most significant lesson from the trial had nothing to do with whether the defendants, both former Enron chief executives, committed the crimes charged in their indictments. Instead, the testimony and the documents admitted during the case painted a broad and disturbing portrait of a corporate culture poisoned by hubris, leading ultimately to a recklessness that placed the business's survival at risk."

Bill Lerach Soldiers On and Mints Money

While his former partners are dealing with the indictment of Milberg Weiss, class-action raj Bill Lerach stood outside the Houston federal courthouse this morning trumpeting a multi-billion dollar settlement in the Enron shareholder civil litigation.
According to the WSJ, Lerach was the original focus of the Milberg Weiss kickback investigation when it began in 1999. In 2004, Lerach split from the firm to create Lerach Coughlin Stoia Geller Rudman & Robbins in San Diego

Judge Approves 3 Enron Banks' Civil Settlement

HOUSTON, May 24 (Reuters) — A federal judge approved a $6.6 billion civil settlement on Wednesday by three banking companies accused in a lawsuit of helping the Enron Corporation hide financial abuses that led to its collapse.

Some Mergers Bring Honeymoons, Others Bring Lawsuits

Companies and their boards face challenging legal issues when embarking on any business combination. When the deal wraps up, everyone generally breathes a sigh of relief. But the real legal challenge may begin immediately after the companies publicly announce the deal.

Why Wasn’t Spitzer Involved in the Milberg Weiss Investigation?

In his more than seven years as New York’s attorney general, Eliot Spitzer has never seemed to meet a kickback case he didn’t like. So why didn’t he have a hand in the Milberg Weiss case?
That’s the question some Spitzer watchers are asking, after his campaign said that he plans to return the $124,455 in contributions given to him by lawyers at the indicted class-action law firm.

Vonage trades at discount in debut

NEW YORK (MarketWatch) -- Vonage Holdings Corp. fell below its offering price in its stock-market debut Wednesday as Wall Street hung up on the Internet-phone provider in what could be the worst opening day for an IPO all year.

Giant technology leveraged buyouts expected

SAN FRANCISCO (MarketWatch) -- Leveraged buyouts of technology companies will reach unprecedented scale in the next two years because funds have raised billions of dollars in new money recently and have easy access to attractively priced credit, executives of leading private-equity firms said on Tuesday.

eBay Sued Over Skype Technology

StreamCast Networks filed a federal lawsuit against eBay and 21 other defendants on Monday in a dispute over the rights to Internet telephony technology, according to the AP. Last year, eBay bought Internet telephone company Skype for $2.6 billion. StreamCast, the company behind online file-swapping software Morpheus, says it developed the technology that led to the online phone service.

Delaware’s Judge Chandler to Lawyers: Plain English, Please!

Delaware Chancery Court Judge William Chandler said he will approve News Corp.’s proposed settlement of a shareholder lawsuit over its “poison pill” corporate defensive measures, but warned that it better write the agreement in plain English.

Whirlpool Puts Hoover on the Block

Whirlpool has sifted through the assets of recently acquired Maytag and decided to divest several business lines that it picked up in the deal. Among the brands slated for sale are Hoover, which makes vacuum cleaners, as well as Amana and Jade, both of which make commercial appliances, Whirlpool said Tuesday in a press release.

Sara Lee Agrees to Drop Poison Pill, But Not Yet

They say nobody doesn’t like Sara Lee, but plenty of people don’t like its poison-pill takeover defense. The company’s shareholders approved a non-binding resolution to dissolve the poison-pill provision in October, and Sara Lee management responded on Monday by meeting them halfway, the Chicago Tribune reported.

Lawyer Pleads Guilty to Funneling Money

A Los Angeles lawyer pleaded guilty yesterday to a tax charge related to claims that he funneled money to a client of Milberg Weiss Bershad & Schulman, the law firm indicted last week for paying more than $11 million in kickbacks.

7 indicted in National Century failure

Seven former executives of the defunct National Century Financial Enterprises were indicted Monday on money laundering, conspiracy and securities fraud charges stemming from the Dublin company's 2002 collapse.
Officials alleged the company's collapse was the largest corporate fraud case involving a privately held company that the FBI has investigated. The 60-count indictment seeks to recover about $2 billion in property.

Apollo files $1.5 billion IPO

Apollo Management LP, the New York-based private equity firm, is raising a $1.5 billion publicly traded private equity vehicle similar to the one raised on May 3 by Kohlberg Kravis Roberts & Co. According to sources, Apollo is raising the money as a 144A private placement, and plans to list the securities on the Euronext Amsterdam exchange within the next two weeks, after which the fund will become publicly traded.

A Fannie Mae Settlement Is Reported

Fannie Mae, the giant mortgage buyer, is expected to pay more than $400 million today as part of a settlement to resolve claims that executives manipulated earnings in the 1990’s so they could receive bigger bonuses, The New York Times reported.

WSJ Editorial — Milberg Weiss Bad, Indicting Firm Worse

In its lead editorial “Very Rough Justice,” The Wall Street Journal calls the Justice’s Department indictment of the entire firm a “blunderbuss tactic” and a “nuclear option.” It says the indictment — like that of Arthur Andersen — could mean the death of the firm and that innocent victims “will be the secretaries and paralegals who aren’t rich but may well lose their jobs.”
But the editorial’s biggest concern is the DOJ’s stance of threatening to indict unless it waived attorney-client privilege and label its partners criminals. The editorial warns that this is “a dangerous precedent that can be used — and surely will be — against more honest business enterprises.” It adds: “The threat of a corporate death sentence is an abuse of prosecutorial discretion against any but the most corrupt criminal enterprises — namely, the mob.”

Ohio Attorney General Fires Milberg Weiss

The ripple effects of yesterday’s criminal indictment of Milberg Weiss Bershad & Schulman are starting to be felt. Today the Ohio attorney general, acting on behalf of its client the Ohio Tuition Trust Authority, fired Milberg Weiss. The class-action firm was representing Ohio’s public college savings fund in class-action litigation against Putnam American Government Income Fund for its alleged involvement in improper mutual-fund trading.

N.Y.S.E. Bids $10 Billion for Euronext

The New York Stock Exchange announced its $10. 2 billion proposal to acquire its European counterpart Euronext on Monday in a deal that would create the world’s first trans-Altantic exchange.

Justice Department Joins Whistleblower Suit Against Abbott Labs

The Justice Department announced yesterday that it joined a whistleblower lawsuit against Abbott Laboratories and its spinoff Hospira, alleging that the companies conspired to inflate Medicare and Medicaid reimbursements on some drugs from 1991 to 2001.

Anheuser-Busch Buys Rolling Rock — Is Goose Island Next?

In a deal that has been in the works for months, Anheuser-Busch, the largest brewer in the United States, said Friday it had purchased the Rolling Rock beer brand from InBev, the Belgian brewer, for $82 million.

Senate Aide for S.E.C. Post

WASHINGTON, May 18 (AP) — President Bush will nominate Kathleen L. Casey, a Senate aide and specialist on banking and securities law, to the five-member Securities and Exchange Commission, the White House said on Thursday.

Hedge Funds’ Next Big Thing Is Everything

What are hedge funds up to these days? Perhaps a better question is, what aren’t they up to? Three news articles — all of them published Thursday — suggest that coffee futures, distressed debt and initial public offerings are hedge funds’ obsession of the moment.

U.S. Indictment for Big Law Firm in Class Actions

The nation's leading class-action securities law firm, Milberg Weiss Bershad & Schulman, and two of its partners were charged yesterday with making more than $11 million in secret payments to three individuals who served as plaintiffs in more than 150 lawsuits.

Washington in No Rush to Regulate Hedge Funds

The Bush administration, the Federal Reserve and Congress betrayed no sense of urgency Tuesday about the need for any beefed-up federal oversight over the booming hedge-fund business.
Late on Tuesday evening, new Federal Reserve chief Ben Bernanke suggested that government oversight of hedge funds might create “moral hazard” where private investors would assume they would be bailed out for any losses.

Battle Expands Over Attorney-Client Privilege

A bipartisan group of House lawmakers may soon formally ask the Department of Justice to change its controversial policy on waivers of attorney-client privilege in government investigations, and one of the nation's top business groups is actively looking for court cases in which to challenge the policy's legality.

Blackstone President Sees More Private Equity I.P.O.’s

Hamilton “Tony” James, the president of private equity giant Blackstone Group, said Tuesday that he expects to see more examples of buyout firms launching publicly traded funds, a move that Kohlberg Kravis Roberts recently made — in a big way — in Europe.

Two Lawyers Take Leave as Part of Inquiry

Two partners at a prominent securities class-action law firm have taken leaves of absence in the latest twist of a federal investigation into accusations that illegal tactics were used in shareholder lawsuits.
According to the statement released last night by the law firm, Milberg Weiss Bershad & Schulman, the two lawyers, David J. Bershad and Steven G. Schulman, have left the firm in order to prepare defenses for their possible indictments.

Of Lawyers and Eavesdropping

As details emerged last week of the National Security Agency's massive eavesdropping on ordinary citizens, two New Jersey public interest lawyers sued Verizon Communications for $5 billion Friday, asserting that it violated privacy laws by turning over phone records.
Meanwhile, The New York Times reported yesterday on the role played by the NSA's own lawyers in pushing back against Vice President Cheney's efforts to widen the eavesdropping even further to include purely domestic calls.

Hedge Funds Love Buybacks, But Do They Work?

“Those loudmouthed hedge funds” are behind the “runaway fad” of stock buybacks, according to Forbes magazine. The article says that many hedge funds are pressuring companies to repurchase their shares on the “belief that the repurchases will prop up demand for a stock, giving it a quick boost that the funds can cash in on.”
But Forbes also notes that, while buybacks are similar in many respects to the payment of dividends, buybacks offer no guarantee that stockholders will benefit in the long term.

SCOTUS: Injunctions Not Always Appropriate For Patent Infringers

The Supreme Court just issued its decision in Ebay v. MercExchange (opinion not yet available), ruling that a permanent injunction does not automatically follow a court’s finding of patent infringement. Justice Thomas authored the unanimous decision with concurring opinions by Chief Justice Roberts and Justice Kennedy.

SCOTUS Avoids Ruling on Constitutionality of Ohio Tax Credits

In DaimlerChrysler v. Cuno, the Supreme Court passed on deciding on the constitutionality of state tax credits that incentivize corporations to do business in their states. Instead, the Court ruled that the taxpayers who had challenged the credit did not have “standing” to do so, so the federal trial court should not have ruled that the Ohio tax credits provided to DamilerChrysler were unconstitutional under the Commerce Clause.

Private Equity Hears from Skeptics

Earlier this month, investing guru Warren Buffett took a public jab at private equity firms at the annual meeting of his company, Berkshire Hathaway. In his speech to shareholders, Mr. Buffett dismissed them as “deal flippers” and suggested that Berkshire would avoid acquiring businesses from buyout firms.
As with many things on Wall Street, Mr. Buffett seems to have inspired a trend. The past few days have brought a flurry of stories questioning the private equity industry, even as many of these articles readily concede that the flow of money to private equity firms shows no sign of slowing.

NYT on Preserving the Purity of the Organic Club

The New York Times is worried about Wal-Mart’s plan to sell organic food. One would think that fans of organic would be happy about this development. It means that organic products will be available more cheaply at Wal-Mart, which is planning to sell organic products for just 10% more than conventionally grown food, and it’s almost certain to lower organic food prices elsewhere.

The Times, though, worries that Wal-Mart’s entry into the organic food market will pollute the label “organic.” It’s concerned that Wal-Mart will affix the organic label to foods that, while produced using organic methodologies, are grown on large, non-local farms.

LBOs Don’t Necessarily Line Banks’ Pockets

The worldwide boom in leveraged buyouts isn’t translating into record fees for some of the biggest banks and securities firms, including Citigroup and Merrill Lynch.

Boeing to Pay $615 Million to Settle Investigations

Boeing has agreed to pay $615 million to end three years of Justice Department investigations into high-profile contracting scandals at the defense giant, according to The Wall Street Journal. The deal allows Boeing to avoid criminal charges or any admission of wrongdoing.

Two Guilty Pleas in Front-Running Case

Friday’s guilty pleas by two former trading specialists may be the first of many in the government’s wide-ranging investigation of front-running on the floor of the New York Stock Exchange.

Will the New SEC Hedge Fund Inspector Have Industry Running Scared?

On Squawk Box this morning, David Faber, recently voted an Influential by New York magazine, reported on the SEC’s recent hiring of Thomas Biolsi as its Northeast head of compliance for hedge funds. Though the SEC announced the news a month ago (here’s the press release), Faber thinks the news could spell trouble for hedge funds seeking to steer clear of regulation and enforcement.

For a contrary view, see the comment to the above post by Perrie M. Weiner. Int'l Co-Chair of Securities, at DLA Piper, who begins " Anyone who truly understands hedge funds understands that heightened regulation is unnecessary and antithetical to what is needed. "

Yahoo Chief: No Sale to Microsoft

Terry Semel, the chief executive of Web powerhouse Yahoo, on Thursday gave his side of the story following a report earlier this month that Microsoft has considered taking a stake in his company.

Harvard Study: Medical Malpractice Problem’s Overblown

A new study by the Harvard School of Public Health to be published by the New England Journal of Medicine debunks the notion that medical malpractice lawsuits are a major problem in this country. It concludes that the common perception that they innundate the courts with frivolous litigation and cause of skyrocketing health is overblown.

Google Keeps Two-Tier Ownership Structure

Shareholders of Google, the world’s most popular Web search provider, on Thursday rejected a dissident investor proposal to end a two-tier ownership structure that vests power in its founders.
A majority of the shareholders participating in the company’s annual shareholder meeting voted against a proposal by a union pension fund that would have diluted control of the company’s brain trust, its top three executives.

J.P. Morgan Faces Votes on Lobbying, Governance

Ahead of the banking giant’s annual meeting on Tuesday, the Free Enterprise Action Fund is trying to round up shareholder support for a proposal that would force J.P. Morgan to lay out the rationale behind its public policy agenda — especially as relates to lobbying on greenhouse gas regulations. The group argues in a press release that J.P. Morgan’s current policy “seems unduly influenced, if not driven, by anti-business activists, rather [than] management’s use of due diligence and sound business judgment.”

Owens Corning Clears Bankruptcy Roadblock

The building products maker Owens Corning will pay more than $5 billion to asbestos claimants and as much as $2.27 billion to holders of bank debt as part of a plan to exit federal bankruptcy protection, a company lawyer told a bankruptcy court Wednesday.

Home Depot's plan renews worries

Home Depot Inc.'s announcement late Tuesday, May 9, that it plans to acquire a Utah industrial loan company is sure to invigorate efforts on Capitol Hill to eliminate this controversial category of lending institution.

Reverse mergers, SPACs on rise

Reverse mergers are gaining in popularity for companies hoping to tap the equities markets, according to a specialist newsletter.
The use of special-purpose acquisition companies, or SPACs, also is popular, it said.

For Knight-Ridder Chief, Parting Gets Sweeter

When a company is acquired, its top management often get sizable sendoff packages. At newspaper chain Knight Ridder, which is about to be bought by McClatchy, several executives are set to collect several million dollars more than previously expected, Footnoted.org said after scanning an amended regulatory filing from McClatchy.

Shark Attack on the PGA Tour

In a “kind of Sarbanes-Oxley gesture,” golfer Greg Norman has threatened to sue the PGA Tour over access to its books and records. Forbes reports that “the Shark” wants to see all of the Tour’s financial documents and meeting minutes from 1993 to present.

Prosecutor Says KMPG Move Held No Sway

A senior federal prosecutor said yesterday that a move by the accounting firm KPMG to cut off legal fees to employees caught up in a criminal investigation of the firm over tax shelters played no role in the government's decision not to indict the firm.

Mergers hit fastest pace since 2000

The mergers-and-acquisitions business is booming this year. Companies flush with cash looking to boost growth, profit and geographical clout are shaking hands on M&A deals at the fastest pace since the record-setting year of 2000.

New Congressional Report Finds Higher-Than-Expected Cost for SOX Compliance

A new report by congressional auditors finds that the costs for public companies to comply with a 2002 anti-fraud law ("SOX") have been higher than anticipated, providing ammunition to business interests that have been complaining about the law's impact.

Hedge Funds as Organized Crime?

Prosecutors traditionally used the Racketeer Influenced and Corrupt Organizations Act, or RICO, in cases against organized crime. But a receiver overseeing a collapsed Philadelphia hedge fund is using the statute to go after a unit of the Man Group of Britain, the largest publicly traded hedge fund in the world.

Seeing Hedge Funds Everywhere

Hedge funds have gone mainstream, according to Phil Davis of The Financial Times. Traditional fund managers are buying or building hedge funds. New hedge funds are hooking up with big firms rather than going it alone. Hedge funds are listing on stock exchanges.