DealBook: Fuld Breaks His Silence | Battle Behind the Scenes at S.E.C. | Broadcom Purchase Underscores Avago's Ambitions | S. Parker Gilbert, Morgan Stanley Leader, Dies at 81

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Friday, May 29, 2015
TODAY'S TOP HEADLINES

M & A Equinix to Buy Data Center Rival Telecity for $3.6 Billion

INVESTMENT BANKING JPMorgan Chase Said to Cut 5,000 Jobs

PRIVATE EQUITY Buyout Loan Business at Jefferies Picks Up

HEDGE FUNDS Massachusetts Pension Fund Considers Investing With Goldman Sachs

OFFERINGS Chinese Tech Companies Staying Home for I.P.O.s

LEGAL/REGULATORY How Netflix Keeps Finding Itself on the Same Side as Regulators

For the latest updates, go to NYTimes.com/DealBook
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By DEALBOOK

FULD BREAKS HIS SILENCE In his first public appearance since the financial crisis, Richard S. Fuld Jr., the former chief executive of Lehman Brothers, used his speech at the Marcum MicroCap Conference in New York to touch on a wide range of topics like the Islamic State and the American economy, quoted from the movie "Rocky" and ruminated on the meaning of life. "But while Mr. Fuld, known as 'the Gorilla' of Wall Street for his brusque style, was eager to share his views about the world, he assiduously avoided talking about his role in the largest bankruptcy in United States history," David Gelles writes in DealBook. Instead, Mr. Fuld offered his views on personal topics and made frequent references to his resilience. One example: "What did Rocky say? 'It's not how hard you hit but whether you get up after you've been knocked down.' I love Rocky."

In explaining the root causes of the financial crisis, Mr. Fuld avoided any mention of investment firms' eagerness to issue subprime mortgages; instead, he blamed the government's push for homeownership. Mr. Fuld did defend Lehman in passing remarks, contending that the firm could have survived had the Federal Reserve not forced it to fail. "God, there's so much I'd love to say," he said. Then, gesturing to a dark drink in his hand, he said, "No, this is not Scotch or rum." He then paraphrased the Rat Pack singer Dean Martin: "You know what, I feel sorry for all of you that don't drink, 'cause when you wake up in the morning, that's as good as you're going to feel for the rest of the day. I told my children that for many years." After his formal remarks, a moderator asked Mr. Fuld what he could have done differently. He responded: "I think I missed the violence of the market and how it spread from one asset class to the next. Did we do everything we could? Did we fall prey to some other agendas? I'll leave it at that."

His remarks drew strong criticism from online readers of The New York Times and observers on Twitter. One reader, JEG, expressed a common reaction: "Richard Fuld's comments demonstrate the utter delusion" of Wall Street leaders, adding, "If he won't accept responsibility and apologize, he should remain silent."

BATTLE BEHIND THE SCENES AT S.E.C. A landmark accounting fraud case against Computer Sciences, a large technology company that holds contracts with governments around the world, has been held up over a political battle at the Securities and Exchange Commission, Ben Protess and Peter Eavis write in DealBook. The case has pitted the commission's two Democrats, champions of strict enforcement cases, against two Republicans, who are reluctant to impose heavy corporate fines. Mary Jo White, the agency's chairwoman, would normally either cast the deciding vote or try to sway a reluctant commissioner, but she had to recuse herself from this case because her husband, John White, a partner at the law firm Cravath, Swaine & Moore, represented Computer Sciences.

This week, the agency looked at ways to break the impasse, including a reduction of the penalty that Computer Sciences would have to pay, according to lawyers briefed on the matter, Mr. Protess and Mr. Eavis write. The S.E.C. also discussed whether to penalize a former controller of the company, whom the agency had not originally planned to charge, and whether to bring a complaint against the company's former chief executive and chief financial officer, according to the lawyers. The S.E.C. could announce the case as soon as next week, though the discussions could fall apart, Mr. Protess and Mr. Eavis write.

BROADCOM PURCHASE UNDERSCORES AVAGO'S AMBITIONS Since going public in 2009, Avago Technologies has demonstrated a desire to grow through acquisitions. With its $37 billion takeover of Broadcom, Avago will vault into the top ranks of semiconductor makers, though still behind Intel and Qualcomm, Michael J. de la Merced and Chad Bray write in DealBook. "The transaction, one of the biggest deals for a chip maker, illustrates the growth-by-acquisition strategy that Avago has followed since spinning out from its former corporate parent," they write. "It also highlights the broader wave of consolidation that has swept over the computer chip industry as manufacturers have sought to expand to keep pace with customers like Apple and Amazon.com."

Under the terms of the deal, Broadcom shareholders may choose either $54.50 a share in cash, roughly 0.44 of a share of a newly created holding company that will own both businesses, or a combination of cash and stock. Avago plans to pay out about $17 billion and the equivalent of $20 billion worth of stock. Though Broadcom shares fell 1.6 percent on Thursday, to $56.25, they remained above Avago's offer price. Investors and analysts have speculated that another bidder may emerge, but the cash part of the deal values Broadcom at about four times last year's earnings before interest, taxes, depreciation and amortization, Bloomberg News calculated - significantly higher than in recent acquisitions of semiconductor companies.

ON THE AGENDA The Commerce Department releases revised first-quarter gross domestic product data at 8:30 a.m. The consumer sentiment index for May is out at 10 a.m. John Stumpf, the chief executive of Wells Fargo, speaks at the Sanford C. Bernstein Strategic Decisions Conference in New York at 8 a.m.

S. PARKER GILBERT, MORGAN STANLEY LEADER, DIES AT 81 S. Parker Gilbert, a former chairman of Morgan Stanley who led its public offering in 1986, died on Wednesday at New York-Presbyterian Hospital at the age of 81, Landon Thomas Jr. reports in DealBook. Mr. Gilbert, a stepson and a godson of Morgan Stanley's founders, played a key role in uniting Morgan Stanley bankers behind the idea that the firm could grow and prosper only if it sold shares to the public. "That move, and the subsequent pressures that the firm faced as a public company, would lead to Morgan Stanley's merger in 1997 with the retail brokerage firm Dean Witter," Mr. Thomas writes.

Fiercely protective of the company he helped build, in 2005 a retired Mr. Gilbert "lent his name, reputation and finances to a searing guerrilla war" to push out the chief executive at time, Philip J. Purcell, on the charge that Mr. Purcell's more conservative financial approach was ruining Morgan Stanley's culture, Mr. Thomas writes. "Parker was the heart and soul of Morgan Stanley," said Anson M. Beard Jr., a childhood friend and colleague who was also a member of the group of eight retired Morgan Stanley bankers who led the fight against Mr. Purcell.

MERGERS & ACQUISITIONS »

Equinix to Buy Data Center Rival Telecity for $3.6 Billion The proposed transaction ends an all-share deal announced in February between Telecity and its European competitor Interxion.

Intel Said to Be in Talks to Buy Altera for $15 Billion Intel is close to finalizing an agreement to buy the chip maker Altera for about $15 billion, The New York Post reports, citing a person close to the situation, who also said a deal is likely by the end of next week.

Pfizer Said to Be in Talks to Acquire Cellectis Pfizer is among the potential buyers in talks with Cellectis, the French biotech company, The Financial Times reports, citing two people familiar with the situation.

Breakingviews: Avago Deal Offers Blueprint for Chip Maker Consolidation Avago Technologies' $37 billion deal for the rival chip maker Broadcom appears to be a textbook merger case, though it leaves room for another suitor.

Steris Says It Will Fight F.T.C. Move to Block Merger With Synergy Health The deal was one of a series of so-called inversions announced last year, in which an American company would reincorporate overseas to lower its tax rate.

INVESTMENT BANKING »

JPMorgan Chase Said to Cut 5,000 Jobs JPMorgan Chase plans to eliminate more than 5,000 jobs in the next year, The Wall Street Journal reports, citing people familiar with the bank's decision.

R.B.S. Said to Prepare for Government Share Sale Royal Bank of Scotland has invited investment banks to pitch for an enlarged corporate broking role that includes acting as privatization advisers, The Financial Times reports.

For the latest updates, go to NYTimes.com/DealBook
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PRIVATE EQUITY »

Buyout Loan Business at Jefferies Picks Up The investment bank Jefferies Group is expanding its leveraged finance business with the help of regulations that prevent bigger banks from taking on risky deals, Bloomberg News reports.

HEDGE FUNDS »

Massachusetts Pension Fund Considers Investing With Goldman Sachs The Massachusetts Pension Reserves Investment Management Board will decide whether to invest as much as $200 million with Goldman Sachs's asset management arm as it moves away from hedge fund-like strategies to accounts with lower fees, Bloomberg News reports.

I.P.O./OFFERINGS »

Chinese Tech Companies Staying Home for I.P.O.s The booming stock market in China and friendlier domestic regulations are enticing Chinese companies to go public at home rather than in the United States, The Wall Street Journal reports.

LEGAL/REGULATORY »
Reed Hastings, chief executive of Netflix. Some media executives - half-jokingly and half-enviously - have taken to calling the Federal Communications Commission the

How Netflix Keeps Finding Itself on the Same Side as Regulators The invisible hand of Netflix has been at work influencing policy and proposed mergers in the cable, broadband and media businesses, James B. Stewart writes in the Common Sense column.

David Friehling in 2009. He was sentenced on Thursday to a year of home detention and another year of supervised release.

Madoff Accountant Avoids Prison Term David G. Friehling, who worked for the Ponzi scheme mastermind Bernard L. Madoff, was sentenced to a year of home detention and another year of supervised release.

Senator Charles E. Grassley, Republican of Iowa.

Senator Charles Grassley Asks S.E.C. to Explain False Bid on Database The senator requested that the agency review standards for posting on Edgar, which is used to file documents electronically.

Deutsche Bank received a waiver from sanctions it would have normally suffered as a result of its role in manipulating Libor.

S.E.C.'s Kara Stein Takes Aim at Deutsche Bank Wall Street banks have been able to escape any real penalty for wrongdoing, but for one S.E.C. commissioner, the line has finally been crossed, William D. Cohan writes in the Street Scene column.

Senator Ted Cruz, campaigning in Iowa in 2013, and other Republican presidential contenders have addressed income inequality.

Review: In 'Inequality,' a Respected Scholar Wades Into a Contentious Political Issue The new book by Professor Anthony B. Atkinson fails to add much to the increasingly polarized and rhetorical discussions of income inequality, Jonathan A. Knee writes in the Book Entry column.

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