Bank Boards, Goldman-PBGC Ties, SEC: Compliance

Bank of America Corp., which has received $45 billion in taxpayer commitments, is still being run by CEO Ken Lewis, even after shareholders stripped him of his board chairmanship in a vote last month.

Federal regulators wanted more from Bank of America shareholders. They are now pressing the bank to add directors with more banking experience to its board in an overhaul, the Wall Street Journal reported.

Such changes were promised on May 7 at the conclusion of the stress tests when Treasury Secretary Timothy Geithner said that any financial firm needing “significant” government aid in future will be subject to a Treasury evaluation on “whether existing board and management are strong enough.”

Walter Massey, whom the bank’s board named to replace Chief Executive Kenneth Lewis as chairman, on May 7 introduced a committee to recommend changes to the board’s structure and size and supervise the bank’s response to a federal “stress test” that showed it needed $33.9 billion in additional equity, the Journal said.

Just how much influence the government should wield over bank management is a bone of contention among federal regulators, who will be questioned on why bank managers aren’t being held to account at a Senate Banking Committee hearing on May 20.

The clash intensified as supervisors completed last week’s stress test results on the biggest U.S. banks. Federal Deposit Insurance Corp. officials sought to make top executives and boards of directors of 10 banks accountable for raising more capital by November, Craig Torres of Bloomberg News reports. The Federal Reserve insisted that managers’ fates be left to boards and shareholders.

While a compromise left the matter to the companies, FDIC Chairman Sheila Bair signaled the debate isn’t done, issuing a statement May 7 that she looked forward to reviewing “corporate governance structures” with the Fed.

The exchanges are a contrast with the clear line the U.S. has taken in other industries -- the heads of General Motors Corp., American International Group Inc., Fannie Mae and Freddie Mac were all removed -- and raises questions about regulators’ handling of the financial rescue.

“It is very clear that we have a special class of corporate citizens,” said Joshua Rosner, managing director at Graham Fisher & Co., a New York research firm. “Banks get special treatment, but we don’t hold them to a higher standard.”

The commercial bank that’s received the most federal-rescue money is Citigroup Inc., where Chief Executive Officer Vikram Pandit and nine of the bank’s 14 board members remain in office.

Citigroup, the New York-based lender, received $50 billion in pledges of taxpayer funds last year, with a portfolio of about $301 billion of its assets guaranteed. The third-largest bank by assets, Citigroup paid dividends every quarter last year, and reported losses every quarter. It wasn’t until February that the Fed re-stated “guidance” on “prudent” dividend policy. The government stress tests said Citigroup needs to raise $5.5 billion as a capital buffer to support lending even if the economy worsens.

“The boards of the banks were pathetic,” said Charles Elson, director of the John L. Weinberg Center for Corporate Governance at the University of Delaware. “But the solution is investors in those institutions to force changes, not the government.”

While financial shares soared as the results of the stress tests were released last week, some investors remain concerned at the government’s role in bank management.

Officials still lack a single, coherent framework and it’s “very disconcerting,” said Richard Schlanger, a portfolio manager at Pioneer Investment Management USA Inc. in Boston, who helps manage $13 billion. Government action “is a wild card.”

When the Fed announced its preliminary stress-test results to the banks last month, it told BofA that its capital hole was $50 billion, the Wall Street Journal reported, citing people with direct knowledge of the process.

The figure was lowered after two weeks of negotiating, the newspaper said. And the Fed wound up using a different metric or measurement of bank-capital levels than analysts had expected, resulting in much smaller capital deficits, the Journal reported. Most experts said the Fed would use tangible common equity which accounts for unrealized losses; instead the Fed used the Tier 1 common capital metric.

Citigroup’s capital shortfall was initially pegged at roughly $35 billion, the Journal said; the figure was shaved to $5.5 billion, with the inclusion of a boost from future deals.

For Craig Torres’s story, click here.

SEC Said to Consider 1 Percent Threshold for Board Nominations

The U.S. Securities and Exchange Commission may let shareholders who own 1 percent of the biggest companies nominate directors on corporate proxy statements, giving investors a new tool to overhaul boards at banks blamed for helping fuel the financial crisis.

The SEC will probably consider the proposal, which would apply to companies with market values exceeding $700 million, at a May 20 public meeting in Washington, said three people familiar with the matter. Investors would have to own a larger proportion of shares to nominate directors at smaller companies, said the people, who declined to be identified because the plans are still under discussion.

“This is going to strike chief executives of all public companies as confrontational,” said James Cox, a law professor at Duke University in Durham, North Carolina. “It gives shareholders a significant amount of leverage.”

The SEC is responding to investor complaints that directors are too cozy with management and failed to block decisions that led to $1.4 trillion of writedowns and credit-market losses at banks including Citigroup Inc. and Bank of America Corp. Efforts by labor unions and public pension funds to gain more authority over corporate boards have stalled amid company opposition.

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House Probes Ex-PBGC Director Millard’s Goldman, JPMorgan Ties

Former Pension Benefit Guaranty Corp. Director Charles E.F. Millard is being investigated by Congress over his relationships with JPMorgan Chase & Co., Goldman Sachs Group Inc. and other firms that bid on agency contracts.

A draft report by the PBGC inspector general alleges that Millard had inappropriate communications with eight of 16 Wall Street firms that bid last year to manage $2.5 billion of the agency’s $48 billion investment portfolio. A lawyer for Millard said his client acted in a “transparent and ethical manner.”

The government-owned PBGC pays the employee pensions of bankrupt companies. Millard, who ran the agency from December 2007 through January 2009, is said to have violated “blackout” rules that prohibited him from contacting bidders on three contracts for “strategic partnerships” that were to involve investments in stock, real-estate and private equity assets.

Fees on the contracts, awarded in October to BlackRock Inc., Goldman and JPMorgan, were expected to exceed $100 million, according to the report, which the House Education and Labor Committee released. An investigation by the committee will examine if there “were laws broken, and to ensure our nation’s pension funds are managed in a manner free from politics and conflicts,” said Aaron Albright, a committee spokesman.

Millard, in a letter to the PBGC included in the report, said the conversations he had were personal and unrelated to the contracts. He said his conduct was “appropriate as a policy matter, based firmly on agency regulations.” Millard is a former Lehman Brothers Holdings Inc. managing director and had worked for New York Mayor Rudolph Giuliani’s administration.

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U.S. Subpoenas New Mexico Fund in Investments Probe

U.S. prosecutors have subpoenaed New Mexico’s $11.8 billion state endowment funds for documents regarding investment activities, according to a state spokesman.

The New Mexico Investment Council, which includes Governor Bill Richardson, received the request earlier this month, said spokesman Charles Wollman, in a telephone interview. He declined to describe the contents of the subpoena, issued by the U.S. Attorney in Albuquerque. The state’s $6.3 billion teachers pension fund also received a federal subpoena, said general counsel Christopher Schatzman, who declined to describe its contents or to what it pertains.

“We’re working to comply with the request of the authorities,” Wollman said. “We’ll be cooperating fully.”

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Two SEC Lawyers Investigated by FBI on Insider-Trading Concerns

SEC Inspector General David Kotz, who told Congress last year he was examining whether frequent trades by two Securities and Exchange Commission lawyers broke agency rules, referred the case to the U.S. Attorney’s Office in Washington after finding evidence the bets might amount to insider trading.

Kotz, in a March 3 report, faults the SEC for inadequately monitoring trades by employees and relying on an “honor system.” The lawyers frequently discussed stocks at work, traded in at least one company under investigation and didn’t properly disclose some transactions, it says. One lawyer made 247 trades in the two years ending January 2008, and the other made 14.

The agency “has essentially no compliance system in place” to ensure employees don’t abuse the “tremendous amount of nonpublic information they have at their disposal,” Kotz wrote.

Senator Charles Grassley, an Iowa Republican, released Kotz’s report; he said in a May 14 letter to SEC Chairman Mary Schapiro that it represented “a serious violation of the public trust.” Both lawyers tagged by Kotz still work for the agency and denied improper conduct.

The SEC is already working on steps to guard against potential misconduct, and the report doesn’t conclude that insider trading occurred, agency spokesman John Nester said. Schapiro is taking steps to augment the agency’s ethics and compliance programs around employee stock ownership, he said.

The regulator is developing a new computer system to collect and review reports of employee trades, Nester said. It is also hiring a chief compliance officer and “clarifying” rules on stock investments by personnel.

The 51-page report, redacted to remove names of employees and the stocks in which they traded, details stock bets. One of the SEC employees sold all her shares in a “large health-care company” two months before the agency began investigating the company, the report says. She also sold stock in a “global” oil company two days before the SEC opened an inquiry.

Grassley asked what disciplinary action the employees will face and what the SEC has done to determine how “systemic” insider trading by agency staff may be. He also asked what systems the SEC has to “flag” suspicious transactions and whether the agency will impose further restrictions on employees’ trading. Grassley requested a briefing by agency staff by May 28.

For the David Scheer-Jesse Westbrook story, click here.

Prudential Among Insurers Cleared for U.S. Bailout

Prudential Financial Inc. and Hartford Financial Services Group Inc. are among six insurers granted access to U.S. aid as the government moves to shore up an industry battered by investment losses.

Hartford won preliminary approval for $3.4 billion in capital from the Treasury’s Troubled Asset Relief Program, the Connecticut-based insurer said yesterday in a statement. Prudential, Allstate Corp., Principal Financial Group Inc. and Ameriprise Financial Inc. also are eligible for funds, said Andrew Williams, a spokesman for the Treasury. Lincoln National Corp. said it may receive $2.5 billion.

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Bernanke Eyes Revisions to Unfair Rules Favoring Moody’s, S&P

The U.S. Federal Reserve may revise rules that currently favor Moody’s Investors Service, Standard & Poor’s and Fitch Ratings, Fed Chairman Ben S. Bernanke said in a letter released yesterday by Connecticut Attorney General Richard Blumenthal.

The Fed is “conducting a broad review of our approach to using rating agencies,” Bernanke said in an April 13 letter written in response to a complaint from Blumenthal that the central bank’s rules unfairly favor the companies that helped cause the financial crisis.

“That review encompasses the ratings of securities of all types accepted as collateral at all our recently established credit facilities as well as collateral accepted to secure regular discount window loans,” Bernanke wrote.

The Fed currently only accepts collateral evaluated by the “major” nationally recognized statistical ratings organizations, or NRSROs, Bernanke said. Because “the number of NRSROs is expanding” the Fed is conducting its review, he said.

Blumenthal wrote Bernanke last month to complain about the Term Asset-Backed Securities Loan Facility, or TALF, a $1 trillion program aimed at restarting the market for asset- backed securities. The Fed mandated that for securities to be eligible for government support they must be rated by two or more “major” NRSROs.

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SEC’s Failure Cedes Turf to Cuomo to Enact Pension Market Reform

New York Attorney General Andrew Cuomo raised the stakes in his attack on “pay-to-play” in the public pension-fund market as Carlyle Group agreed to a $20 million settlement that limits campaign contributions to officials who oversee state money.

Carlyle, the world’s second-largest private-equity firm, also agreed yesterday not to use placement agents to solicit investment business from public retirement plans nationwide. It is the first money manager to adopt Cuomo’s new “code of reform” for the municipal-pension market, though it probably won’t be the last, said Elizabeth Nowicki, a professor at Tulane University Law School in New Orleans.

While New York state has already banned the use of placement agents, Cuomo has gone a step further. The code he seeks to have adopted industrywide prohibits money managers from doing business anywhere in the country with a public pension plan for two years after making political donations to officials who can influence the fund’s investment decisions. The U.S. Securities and Exchange Commission proposed similar restrictions in 1999, though it backed off amid opposition from the investment industry and politicians.

“The onus is going to be on the private-equity firms to really market their results,” Nowicki said. “They need to go out and get business the old-fashioned way.”

Under the SEC’s 1999 proposal, investment advisers would have been barred from managing pension money for two years after making a political contribution. The measure also would have required money managers with government clients to keep records of their contributions. SEC Chairman Mary Schapiro said April 21 that the agency is re-evaluating those rules.

Carlyle executives will not be subject to any criminal liability under the settlement, Cuomo said yesterday at a press conference. Founded by David Rubenstein with William Conway and Daniel D’Aniello in 1987, the firm manages about $85.5 billion in assets, second in the private-equity industry to Blackstone Group LP of New York.

For more, click here.

For more on Carlyle settlement, click here.

SEC Adopts Post-Madoff Money-Manager Rules to Curb Ponzi Scams

The U.S. Securities and Exchange Commission moved to impose new rules on money managers to safeguard client holdings after Bernard Madoff’s Ponzi scheme cost investors as much as $65 billion.

SEC commissioners voted 5-0 yesterday on a proposal to subject about 9,600 investment advisers to annual surprise inspections by independent auditors. About 370 money managers with direct custody of client holdings also would face yearly compliance exams to ensure they have adequate procedures to protect assets.

“We are taking this action in response to major investment scams such as Madoff,” SEC Chairman Mary Schapiro said at a public meeting in Washington. “Our proposals would greatly enhance the independent checks on client assets.”

About 11,000 money managers are registered with the SEC and most keep client assets with an outside firm to prevent misuse.

Still, almost all investment advisers have custody of customer holdings “in one form or another” through an affiliate or because they have authority to withdraw funds, Schapiro said. Fewer than 200 money managers now undergo surprise audits, SEC staff told reporters after the meeting.

Under current SEC rules, money managers aren’t subject to surprise audits if an independent custodian sends account statements to clients detailing their holdings. Under the proposed rule, money managers who hire brokers to send out statements would also undergo unannounced examinations.

For more, click here.

Frank Defends Government Role in Setting Executive Pay Standard

House Financial Services Committee Chairman Barney Frank said the federal government should play a role in setting executive-pay rules for public companies to reduce incentives that lead to excessive risk-taking.

Government involvement, including passing legislation, is appropriate “not in terms of dollars, but in terms of the rules,” Frank said yesterday in a Bloomberg Television interview. “I do think the dollar amount should be addressed, but not by the government, by the shareholders.”

President Barack Obama’s administration is discussing with federal regulators how to create new compensation limits for financial companies, including those that haven’t received money from the government’s Troubled Asset Relief Program. Frank said the rules should extend to non-financial companies.

For more, click here.

For a transcript of Peter Cook’s interview, click here.

JPMorgan’s TARP Warrants Cost About $1.13 Billion

JPMorgan Chase & Co., the second-biggest U.S. bank by assets, would have to pay $1.13 billion to buy back warrants that the U.S. government received as part of the Troubled Asset Relief Program, an analyst estimated.

Goldman Sachs Group Inc., whose executives have said since February that they want to repay the TARP money as soon as they can, would probably need to pay $685 million to repurchase the government’s warrants; Morgan Stanley’s warrants would probably cost $770 million, he calculates.

For more, click here.

BankUnited Bidders Said to Seek Receivership Before Purchase

Bidders for BankUnited Financial Corp. are asking federal regulators to put the company into receivership before selling its assets, a step that could wipe out shareholders, people familiar with the matter said.

New York-based Goldman Sachs Group Inc. is weighing a bid with Toronto-Dominion Bank, people familiar with the matter said.

For more, click here.

PNC to Sell Shares for Capital: Stress-Test Scorecard

U.S. lenders are selling shares to raise $40.2 billion as they fill capital shortfalls or seek to repay the Treasury’s bailout fund after receiving results from the government’s stress test.

For the table, click here.

Schapiro May Implement Trace-Like Reporting for OTC Swaps

For more, click here.

For TMX Group CEO Thomas Kloet on the plan, click here.

For more on yesterday’s press conference, click here.


U.S. SEC Charges Ex-KB Home Executive With Backdating

Gary A. Ray, a former head of human resources at homebuilder KB Home Inc., agreed to pay more than $550,000 to settle U.S. Securities and Exchange Commission allegations of stock-options backdating.

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Ex-Lehman Salesman Bowers Pleads Guilty in Insider Trading Case

A former Lehman Brothers Holdings Inc. salesman pleaded guilty to federal charges that he traded on stock tips gleaned from the wife of a colleague.

The guilty plea yesterday by Frederick Bowers in Manhattan federal court is the third since May 5 in the case. It follows pleas from Eric Holzer, a tax lawyer who worked at Paul Hastings Janofsky & Walker LLP, and Jamil Bouchareb, a former day trader.

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Credit Suisse Chief Dougan Owes Interest to Ex-Wife, Court Says

Credit Suisse Group AG Chief Executive Officer Brady Dougan must pay a year’s worth of interest on a late $7.5 million payment he made to his ex-wife under their 2005 divorce agreement, a Connecticut appeals court ruled.

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SEC Accuses Two New Jersey Men of Craigslist Securities Fraud

The U.S. Securities and Exchange Commission today accused two New Jersey men of raising $1.1 million in a fraudulent scheme that sold unregistered securities and commingled investor funds with their payroll service used by New Jersey municipalities and small businesses.

Paul Bultmeyer and Arthur Piacentini carried out the fraud through their firms Sherbourne Capital Management Ltd. and Sherbourne Financial Ltd. by selling so-called “Prime Certificates of Participation” they advertised in print publications as well as on Craigslist and other internet sites, the SEC said yesterday in a statement. The regulator said it obtained a court order freezing the defendants’ assets.

Halliburton, KBR Accused of Bribery, False Claims

Halliburton Co. and KBR Inc., two of the largest contractors to the U.S. military, paid bribes, made false claims and operated as criminal enterprises for the better part of a decade, according to a shareholder lawsuit.

For more, click here.

UnitedHealth Minnesota Backdating Accord Is Approved

UnitedHealth Group Inc. shareholders won approval of part of a lawsuit settlement in which former company officers agreed to relinquish stock options and other benefits then valued at more than $900 million.

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Madoff Trustee Seeks to Block Money Transfers by Kingate Funds

The trustee liquidating Bernard Madoff’s defunct money management firm asked a judge to block two Kingate Management Ltd. funds from moving money during the trustee’s $255 million lawsuit against the funds.

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SEC Filings, Interviews, Company News

Blackstone Cancels Plan for Asian Event-Driven Fund

Blackstone Group LP, the world’s biggest buyout company, canceled a plan to start a hedge fund that initially aimed to invest as much as $1 billion in Asian companies affected by events such as mergers and reorganizations.

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New York, London Exchanges See Rebound in Listings After Crisis

Corporate listings are set to rebound as financial markets stabilize and companies seek funding, the heads of the New York and London exchanges said.

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Goldman’s Whitehall Calls on Investors for $1 Billion, WSJ Says

A Goldman Sachs Group Inc. real-estate investment fund has called on investors to provide $1 billion in additional capital after writing down investments by $2.1 billion and offering to buy out Goldman employees who invested in the fund, the Wall Street Journal reported.

Whitehall Street Global Real Estate Limited Partnership 2007 has given investors until May 18 to provide the money, some of which will be used to pay back $677 million on a credit line, the newspaper said, citing documents reviewed by the Journal.

Goldman last year offered to buy out employees who invested in the fund, while not offering a similar buyout to outside investors, the Journal said. Goldman and its employees still owns 33 percent of the fund, and one unidentified Goldman employee who accepted the buyout got about 36 cents for every dollar he put in without being required to provide additional funding, the Journal said

Goldman didn’t permit employees in its Real Estate Principal Investment Area, which manages Whitehall, to use the buyout offer, the Journal said, citing a spokeswoman for the company. Goldman employees, unlike outside investors, also can’t sell their stakes on the secondary market, the newspaper reported.

UBS Shares Need to Rise Before State Sells Stake, Merz Says

UBS AG shares would need to rise to at least 18 francs before the Swiss government would consider selling its investment in the country’s biggest bank, Finance Minister Hans- Rudolf Merz said.

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Proxy Governance Recommends 13-Member Board for Target Corp.

Proxy Governance Inc. recommended that Target Corp. shareholders reject the retailer’s proposal that the board be fixed at 12 members.

Given the size of the company, the existing board would be strengthened by the addition of certain nominees from the dissident slate put forward by William Ackman, Proxy said yesterday in a report.

“We recommend shareholders endorse a board size of 13 by rejecting this proposal,” Proxy Governance said in the report.

Tudor Investment Buys Financial Industry ETF, Filing Shows

Paul Tudor Jones’s hedge-fund firm Tudor Investment Corp. raised its holdings in the first quarter of an exchange-traded fund that tracks financial companies.

The fund bought 3.2 million shares of Financial Select Sector SPDR Fund, making the ETF its largest U.S. stock investment, according to a filing yesterday with the U.S. Securities and Exchange Commission. The ETF tumbled 30 percent in the quarter, compared with a 12 percent drop for the Standard & Poor’s 500 Index of U.S. stocks.

Tudor, based in Greenwich, Connecticut, also increased its stake in Semiconductor HOLDRs Trust depositary receipts, which invests in companies in the semiconductor industry. It bought 929,000 shares.

Tudor oversees $10.5 billion.

For more, click here.

Lehman Creditors May Recover $45 Billion From Assets

Lehman Brothers Holdings Inc., the bankrupt New York-based investment bank, may recover a total of $45 billion for its remaining creditors who are owed $200 billion to $250 billion, said Chief Executive Officer Bryan Marsal.

Within a year, Marsal plans to spin off an estimated $34 billion in real estate and private-equity properties to Lehman creditors, with an eye to taking the unit public eventually, he said in a phone interview yesterday. Marsal has raised about $11 billion in cash from the assets of Lehman in the eight months since it filed for bankruptcy, he said.

For more, click here.

For Weil Gotschal’s delay on fee bid, click here.

Comings and Goings

Sanders, Cantwell Withdraw ‘Holds’ on CFTC Nominee

Gary Gensler, President Barack Obama’s nominee to run the Commodity Futures Trading Commission, cleared obstacles to congressional approval, as Senators Bernie Sanders and Maria Cantwell dropped their opposition.

The nomination can now be considered by the full Senate after Sanders, a Vermont independent, and Cantwell, a Washington Democrat, removed procedural holds that prevented a vote. Sanders made his announcement in a statement yesterday, while Cantwell later gave a speech on the Senate floor.

For more, click here.

U.S. SEC Legislative, Intergovernmental Director Schulz to Leave

William Schulz, the director of legislative and intergovernmental affairs at the U.S. Securities and Exchange Commission, is leaving to join the private sector, the agency said in an e-mailed statement.

UBS Names Wang, Png as Co-Heads of Financial Institutions Group

UBS AG, the biggest Swiss bank by assets, appointed Ren Wang and Chin Yee Png as joint heads of its financial institutions group in Asia, the company said in an internal memo today.

Wang, a managing director, joined UBS in 2002 and has worked on several initial public offerings by Chinese banks including China Merchants Banks Co. and Bank of China Ltd. Png, a 12-year veteran at UBS, is an executive director focusing on Southeast Asia. She led the S$4 billion ($2.7 billion) rights offerings by DBS Group Holdings Ltd. in December.

Chrysler Asks Permission to Cancel 789 Dealer Agreements

Chrysler LLC asked court permission to cancel 789 car dealership agreements, many in the suburbs of major U.S. cities, a step it called critical to its future.

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BlackRock High-Yield, High-Risk Debt Managers Resign From Firm

BlackRock Inc., the largest publicly traded U.S. asset manager, said Mark Williams and Kevin Booth, two managing directors who ran high-yield debt portfolios, resigned.

Williams ran the New York-based company’s bank-loan investment team and was co-head of its leveraged finance business. Booth was co-head of the firm’s high-yield team and also co-ran the leveraged finance business, according to regulatory filings.

James Keenan, Mitchell Garfin and Derek Schoenhofen are now managing the BlackRock High Yield Bond Portfolio, according to a May 8 filing with the U.S. Securities and Exchange Commission. Leland Hart and Adrian Marshall are now the portfolio managers for the BlackRock Senior Floating Rate Fund, which invests in high-yield, high-risk loans, according to another regulatory filing that day from the $1.3 trillion investment firm.

For more, click here.

Kurt Froehlicher Leaves Energy Trading Team at Valartis Bank

Kurt Froehlicher, managing director of the energy team at Valartis Bank AG, has moved to another position at the Pfaeffikon, Switzerland-based bank.

Froehlicher will take up the position of head of brokerage, trading and services at Valartis Bank, according to Huy Hoang, a managing director and the head of energy trading.

Citigroup Hires Four Staff for Foreign-Exchange Team in Japan

Citigroup Inc., the world’s fifth-largest currency trader, is hiring four staff to increase its foreign-exchange presence in Japan, a company official said.

The last of the four, Justin Geaney, will join Citibank Japan Ltd. as vice president for e-commerce on May 18, from Royal Bank of Scotland Plc in Tokyo, said Bapi Maitra, managing director and head of foreign exchange at Citibank Japan, a unit of New York-based Citigroup.

The company has also recently hired Toshikatsu Furumi from Barclays Plc as head of investor sales, Yoichi Tasaki from Societe Generale SA for its corporate sales division, and Tomosuke Ezoe from Sumitomo Mitsui Banking Corp. as assistant vice president in charge of bank sales, Maitra said in an interview with Bloomberg News.

Bank of America’s Asia-Pacific M&A Head Desai Said to Resign

Bank of America Corp.’s head of Asia-Pacific mergers and acquisitions Kalpana Desai is leaving after 11 years with Merrill Lynch & Co., which the U.S. bank bought this year, two people with knowledge of the matter said.

Desai joined Merrill Lynch in 1998 and rose to become one of the most senior-ranking women at the firm.

JPMorgan’s China Chairman Charles Li Said to Quit After 6 Years

JPMorgan Chase & Co. China Chairman Charles Li is leaving after six years with the New York-based firm, two people with knowledge of the matter said.

Li, 48, will quit the investment banking industry and take up a senior position with a Hong Kong company, the people said, asking not to be identified before an announcement is made. He plans to leave around September, one of the people said.

NY Governor Fires Six From Ethics Panel, Appoints Cherkasky

New York Governor David Paterson dismissed all six gubernatorial appointees on the state ethics panel, after an Inspector General’s report said they failed to contain leaks last year in an investigation of then-Governor Eliot Spitzer.

Paterson also asked for the resignations of Commission on Public Integrity Executive DirectorHerbert Teitelbaum and General Counsel Barry Ginsberg.

The governor appointed as commission chairman Michael Cherkasky, 59, a former chairman and chief executive officer of Marsh & McLennan Cos. He is now president and chief operating officer of U.S. Investigations Services, which Paterson described as the largest supplier of security investigations for the U.S. government.

For more, click here.

International Compliance

Krugman Says Global Economy Faces Japanese-Style ‘Lost Decade’

The world economy may face near-stagnation for 10 years similar to Japan’s “lost decade” in the 1990s, Nobel Prize- winning economist Paul Krugman said.

“The world as a whole looks quite a lot like Japan during its lost decade,” Krugman, 56, said at a forum yesterday in Taipei. “I am very optimistic about the world in, let’s say, 2030; it’s the next 10 years or so that have me worried.”

China Construction Bank Says Bank of America Sold Stake

China Construction Bank Corp., the world’s second-largest lender by market value, said Bank of America Corp. raised $7.3 billion selling part of its stake to investors including China Life Insurance (Group) Co.

For more, click here.

To contact the reporter responsible for this report: Lisa Brennan in New York at

To contact the editor responsible for this report: David E. Rovella at

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