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Cuban Sues SEC, Peltz Starts Fund, Dinallo Leaves: Compliance

May 29 (Bloomberg) -- Mark Cuban, the billionaire owner of the Dallas Mavericks basketball team, sued the U.S. Securities and Exchange Commission, claiming the agency is unlawfully withholding documents about an insider-trading probe of him.

Cuban’s complaint, filed yesterday in federal court in Washington, seeks a court order to force the SEC to give him documents he requested in December, including records of any investigations of Copernic Inc., formerly known as Mamma.com, HDNet, his National Basketball Association team and other entities he owns or controls. It also seeks records of any internal probes of SEC Trial Counsel Jeffrey Norris related to his interactions with Cuban.

“The SEC improperly refused to produce any records,” citing an exemption to the Freedom of Information Act related to law enforcement activities, according to the complaint.

The suit is the latest salvo in the legal battle between Cuban and the SEC. On May 27, a lawyer for Cuban asked a federal judge in Dallas to dismiss the agency’s insider-trading suit, saying it failed to show that Cuban was barred from selling shares of Mamma.com Inc. in 2004.

For more, click here.

Peltz Files Plan for Debt Fund Managed by Former Drexel Bankers

Billionaire Nelson Peltz is seeking to raise $300 million for a publicly traded fund that will be managed by a pair of former Drexel Burnham Lambert Inc. executives and will invest in corporate debt.

Trian Capital Corp. filed a registration statement with the U.S. Securities and Exchange Commission to sell common shares that will trade on the New York Stock Exchange under the symbol TCC. According to the filing, the New York-based fund will initially invest in senior debt that trades on the open market.

“Current market conditions have resulted in the secondary market for debt securities of leveraged companies providing more compelling investment opportunities than the origination or syndication markets,” Trian Capital said in the filing. “As business conditions permit, we may seek to increase our level of investment in lower parts of the capital structure.”

The fund will be overseen by a subsidiary of Trian Fund Management LP, the company that Peltz and partners Peter May and Edward Garden use to run activist hedge funds. It will also hire Trimaran Capital Advisers LLC, a firm controlled by Jay Bloom and Dean Kehler, to manage the assets.

Trian Capital is a closed-end fund, meaning it will issue a fixed number of shares. The fund also has the ability to issue debt to finance portfolio purchases.

Bloom and Kehler began working together in the 1980s, first at Lehman Brothers Kuhn Loeb Inc. and then at Drexel Burnham, Michael Milken’s former junk-bond firm.

For more, click here.

Einhorn Shorts Moody’s, Says System Should Be Dropped

David Einhorn, the hedge-fund manager who bet against Lehman Brothers Holdings Inc. four months before the firm collapsed, is shorting Moody’s Corp., whose flawed ratings on asset-backed debt helped fuel the credit crisis.

“Even Moody’s largest shareholder, Warren Buffett, has said he doesn’t believe in using ratings,” Einhorn, 40, said in a speech May 27 at the Ira W. Sohn Investment Research Conference in New York. “We are short Moody’s.”

Moody’s, whose founder created credit ratings in 1909, reported a 25 percent profit drop last month as the recession sapped demand for debt grades. Rating companies have been criticized by the European Union, members of the U.S. Congress and the U.S. Securities and Exchange Commission for ignoring conflicts of interest and risks that contributed to the worst financial crisis since the Great Depression.

Einhorn, who runs New York-based Greenlight Capital Inc., said regulators could improve the stability of financial markets by eliminating the formal rating system. He titled his speech “The Curse of the AAA.”

Moody’s, which climbed 40 percent on the New York Stock Exchange this year before yesterday, fell $1.26, or 4.5 percent, to $26.89 in New York Stock Exchange composite trading yesterday, the biggest drop in two weeks. Investors who sell short borrow shares with the expectation that they can be repurchased at a lower price to pay back the loan.

Moody’s spokesman Anthony Mirenda said the company’s research and credit opinions play an “important role” in the markets.

“Moody’s opinions are a vital source of information and continue to be widely sought by market participants of all types,” Mirenda said in an interview.

Greenlight, which Einhorn started in 1996, manages about $5.1 billion in assets. The firm’s Greenlight Capital LP fund gained 4.4 percent in the first quarter, after losing 23 percent last year. The fund has posted an average annual return of 20.8 percent since its inception.

“The truth is that nobody I know buys or uses Moody’s credit ratings because they believe in the brand,” Einhorn said. “They use it because it’s part of a government-created oligopoly and often because they are required to by law.”

Buffett, the chairman and chief executive officer of Berkshire Hathaway Inc., said earlier this month that assigning ratings to debt and other securities “is still a good business.” Berkshire owns about 20 percent of Moody’s shares.

Still, Buffett said he doesn’t rely on the major credit rating companies to make his own investment decisions.

“We do not think the people of Moody’s, Standard & Poor’s, Fitch or anyplace else should be telling us the credit rating of a company,” Buffett said May 2 when Berkshire had its annual meeting in Omaha, Nebraska. “We don’t believe in outsourcing investment decisions.”

For more, click here.

New York Insurance Superintendent Dinallo Leaves for NYU Post

New York State Insurance Superintendent Eric Dinallo, the industry’s most powerful regulator in the U.S., is stepping down from his post, effective July 3.

Dinallo will become a visiting professor at New York University’s Stern School of Business, Governor David Paterson’s office said yesterday in a statement.

Dinallo engineered the entrance of Warren Buffett’s Berkshire Hathaway Inc. into bond insurance when smaller companies in the industry were hobbled. He testified in Congress about efforts to protect policyholders of New York-based American International Group Inc., which needed four U.S. bailouts after losses on bets tied to subprime mortgages.

“Dinallo and I worked closely together with the United States Treasury Department, the Federal Reserve Bank of New York and others in the rescue of financial services giant AIG,” Paterson said in the statement.

Dinallo was appointed superintendent by then-Governor Eliot Spitzer in 2007 after the two worked together at the New York attorney general’s office. Dinallo is credited with encouraging Spitzer’s probes of financial firms.

For more, click here.

Target Shareholders Re-Elect Board, Reject Ackman Nominees

Target Corp. shareholders re-elected the retailer’s existing directors, rejecting a slate nominated by hedge-fund manager William Ackman after two months marked by dueling claims.

Target won with more than 70 percent of the vote, based on a preliminary tally, Chief Executive Officer Gregg Steinhafel said at a shareholder meeting in Waukesha, Wisconsin. The final results wouldn’t be made public yesterday, he said. Target also won a vote to cap its board at 12 seats, rather than the 13 proposed by Ackman, who heads Pershing Square Capital Management LP and controls the third-largest stake in the retailer.

Ackman nominated himself and four other candidates to the Target board in March, saying current directors lack expertise in credit cards, real estate and groceries and failed to position the company for the recession. Target, the second-biggest U.S. discount retailer, says Ackman ran to promote a plan to form a real-estate investment trust backed by the land under its stores, a proposal it had rejected earlier.

Last year “was one of the toughest years in our history,” Steinhafel said. “We are encouraged by early signs of improvement.”

Shareholders re-elected Richard Kovacevich, chairman of Wells Fargo & Co.; Mary Dillon, global chief marketing officer at McDonald’s Corp.; George Tamke, a partner at private-equity firm Clayton, Dubilier & Rice Inc.; and Solomon Trujillo, former CEO of Telstra Corp., an Australian telecommunications company.

Target and Ackman traded barbs and criticisms almost daily in a flurry of press releases and securities filings.

Recommendations from two of the country’s main proxy research firms were split. RiskMetrics Group LLC last week recommended the election of Ackman and one of his nominees, former Starbucks Corp. CEO Jim Donald, as well as supported a larger board. Glass Lewis & Co. suggested stakeholders back Target’s full slate and hold the board size at 12.

The California Public Employees’ Retirement System, with 2.16 million shares, the State of Wisconsin Investment Board with 2 million and St. Paul, Minnesota-based investment firm Mairs & Power Inc., with 2.9 million, all had said they would back Target.

For more, click here.

PepsiCo Said to Rebuff Bottler Board in ‘Shot Across the Bow’

PepsiCo Inc. played a role in denying $16 million in stock awards for directors of its biggest bottler and withheld support for most of its directors, said people familiar with the matter, as it pressures the board to reconsider a $4 billion takeover bid.

PepsiCo abstained from voting on the re-election of eight of Pepsi Bottling Group Inc.’s directors at its annual meeting on May 27 in Somers, New York, said the people, who declined to be identified because PepsiCo’s votes won’t be disclosed publicly. PepsiCo also voted against the stock plan, they said.

PepsiCo, the world’s second-largest soft-drink maker, controls about 40 percent of the voting power of Pepsi Bottling. The bottler on May 4 called PepsiCo’s takeover offer “grossly inadequate.”

“Pepsi is in a good position to use their voting power to express their dismay,” said Elizabeth Nowicki, a former mergers and acquisitions lawyer at Sullivan & Cromwell LLP who’s now a professor at Tulane University Law School in New Orleans. Using votes as a negotiating tactic would be “a really interesting shot across the bow.”

Jeff Dahncke, a Pepsi Bottling spokesman, declined to comment.

Even without PepsiCo’s support, the bottler’s directors were all re-elected. The stock plan was rejected, Pepsi Bottling said in a statement yesterday. The directors needed to receive more “for” votes than “against” to remain on the board, according to a regulatory filing. The stock plan would have authorized the issuance of as many as 500,000 shares for director awards.

For more, click here.

Mortgage Rates Cloud ‘Risk Appetite’ Return, Credit Suisse Says

A jump in interest rates on typical new U.S. mortgages to the highest since February may end a “two-month-old rebound in risk appetite,” according to Credit Suisse Group analysts.

Rates on 30-year loans climbed 0.37 percentage point to 5.34 percent yesterday, the New York-based analysts, who included Mahesh Swaminathan, wrote in a report yesterday. That’s because yields rose on so-called agency home-loan bonds as investors backed away from the debt and U.S. Treasuries sold off, partly because of mortgage-bond hedging that may continue, they said.

“If not reversed, the spike in mortgage rates has the potential to derail the two-month-old rebound in risk appetite by negatively affecting not just the consumer, but also financial institutions that are relying on elevated mortgage origination for earnings,” they wrote.

The Federal Reserve, seeking to use lower home-loan rates to stem the housing slump and bolster consumers, said in March it would increase its planned purchases of agency mortgage bonds guaranteed by Fannie Mae, Freddie Mac or Ginnie Mae by $750 billion, to as much as $1.25 trillion, and start buying government notes. Amid optimism the global recession is easing and banks are healing, the Standard & Poor’s 500 stock index has climbed 32 percent from March 9 through yesterday, as prices of bonds aside from Treasuries have soared.

For more, click here.

Bank-Asset Plan Delayed by Fraud Concerns, Washington Post Says

The U.S. government’s plan to relieve banks of problem assets has been delayed by the need to draft rules to protect against fraud and audit investors, the Washington Post reported, citing Sheila Bair, chairman of the Federal Deposit Insurance Corp.

Several potential investors also expressed concern to the Treasury that legislation governing the program might require them to divulge confidential information about their operations, the Post added, citing a person familiar with the discussions over rules.

Directors Are Ultimate Arbiters on Executive Pay, Buffett Says

Warren Buffett, CEO and chairman of Omaha, Nebraska-based Berkshire Hathaway Inc., blames out-of-control executive pay on boards of directors who accede to CEO demands for multimillion-dollar compensation packages.

“Half of the directors I’ve met on corporate boards don’t know anything about business,” Buffett told shareholders during Berkshire’s annual meeting in May. “They are not going to do anything that not only gets them kicked off that board but that reduces their chances of getting on another one.”

Ultimately, it will be up to corporate boards, not the government, to put controls on executive pay, and it is by no means clear that they are willing to do so, says Stephen Davis, a senior fellow at the Millstein Center for Corporate Governance and Performance at the Yale School of Management.

“There’s a real question as to whether what we’re seeing is for show in the middle of a crisis, or is part of a long-lasting change,” Davis says. “What would really show that boards are serious is if they have dialogue and outreach with their shareholders, and there’s little sign of that so far.”

Davis is also principal of Madison, Connecticut-based consulting firm Davis Global Advisors.

Mark Borges, a principal at Compensia Inc., a San Jose, California-based pay consultant, says there was never a better opportunity for boards to take strong action to rein in pay. “But I don’t think it’s realistic to say it’s all going to turn on a dime,” he says. “It will depend on the backbone and gumption of the board compensation committees, and that will depend a lot on personalities.”

For Ian Katz’s story on executive pay, click here.

Courts

Former Kmart CEO Conaway Says He Didn’t Mislead Investors

Kmart Corp.’s former chief Charles Conaway said he didn’t withhold information about the company’s strategy of slowing payments to vendors to meet a cash crisis in the months before the retailer’s bankruptcy in 2002.

“I didn’t manage at that level,” Conaway testified yesterday under cross-examination in a trial in Ann Arbor, Michigan. He didn’t have details of the slow-payment program, he said. “I had no view of that at all.”

For more, click here.

SEC Sues 10 Brokers of Defunct Brookstreet Securities for Fraud

The U.S. Securities and Exchange Commission sued 10 former brokers of Brookstreet Securities Inc., a defunct California firm, for falsely selling derivatives based on mortgage-backed securities as safe investments for retirees.

The agency said the brokers, including seven Florida residents, enriched themselves with an estimated $18 million in commissions while investing $36 million belonging to more than 750 investors in risky collateralized mortgage obligations.

“These brokers disguised the risks of investing in these derivatives of mortgage-backed securities, exposing their customers to substantial losses as the subprime crisis emerged,” said Robert Khuzami, SEC enforcement chief. “They disregarded their customers’ needs and used deceptive and misleading tactics to enrich themselves.”

The SEC is seeking fines and repayment of the investors’ money. Broker-dealer watchdog Finra filed a separate fraud compliant against six former Brookstreet brokers.

Madoff Trustee May Need Beyond 2019 to Find Assets

The trustee liquidating Bernard Madoff’s defunct money-management firm may take longer than 10 years to finish locating the company’s assets and paying back victims of Madoff’s $65 billion Ponzi scheme, said Stephen Harbeck, president of the Securities Investor Protection Corp.

Trustee Irving Picard has asked hundreds of victims to voluntarily return their “fictitious” profits from Madoff’s firm, and he sued some of the conman’s biggest investors for the same reason. The funds will ultimately be used to repay thousands of customers a percentage of their claims.

“This case is going to go on for a long, long time,” Harbeck said yesterday in an interview. “I would expect that the collection of assets might take longer than 10 years. Of course we hope to have all the legal issues figured out before that.”

So-called clawback lawsuits will be time-consuming, and some Madoff victims will prolong the process by suing for the right to file bigger claims in the bankruptcy case of Bernard L. Madoff Investment Securities LLC, according to Harbeck, whose Washington-based agency hired Picard. SIPC was formed by Congress in 1970 to liquidate bankrupt brokerages.

For more, click here.

Student Suing Peter Madoff Opposes Dismissal of Case

The law student suing the brother of convicted Ponzi scheme mastermind Bernard Madoff said his case shouldn’t be dismissed because Peter Madoff had a “unique” duty to him that was different from that for other defrauded investors.

Andrew Samuels claims that Peter Madoff lost his $470,000 inheritance while serving as his trustee by investing with Bernard L. Madoff Investment Securities LLC without permission, according to a complaint in New York State Supreme Court in Nassau County in March. Peter Madoff asked the court to dismiss the suit earlier this month, arguing that Samuels’s claims were “baseless speculation.”

Peter Madoff’s request to dismiss should be “denied in its entirety” Samuels’s lawyer, Steven Schlesinger, said in court papers filed with New York State Supreme Court Justice Stephen Bucaria in Nassau County.

“He was not just an ordinary customer of BLMIS, but was the beneficiary under a trust agreement,” Schlesinger said of his client in the papers, which he said were filed May 27 with the court.

Peter Madoff, 64, was appointed trustee of the law student’s trust fund in May 2003 after the death of Samuels’s grandfather, Schlesinger said.

The separate and unique fiduciary relationship between the two because of the trust fund means that Peter Madoff owed Samuels a duty “unrelated to his corporate position at BLMIS,” Schlesinger said, arguing for summary judgment, or a decision in the case before trial.

For more, click here.

Merkin Judge to Approve Receiver for Madoff Feeder Funds

A New York judge said he will sign an order appointing a receiver for two fund groups run by J. Ezra Merkin, who was sued last month by state Attorney General Andrew Cuomo for investing clients’ money with Bernard Madoff.

State Supreme Court Justice Richard Lowe yesterday urged Beth Kaswan, an attorney for New York University, to negotiate with Cuomo’s office on revised terms of the receivership agreement for the Ariel and Gabriel funds. NYU, which sued Merkin in December over its investments in his Ariel funds, objected to provisions covering accountability and transparency.

The parties are due back in court June 1 for a hearing on the revised version of the agreement. Bart M. Schwartz, former chief of the criminal division of the U.S. Attorney’s Office in Manhattan, would become receiver for Merkin’s Ariel and Gabriel groups of funds under the order. Schwartz is now a partner at consulting company Guidepost Investigations & Security LLC.

For more, click here.

Ex-Tyco CEO Kozlowski, CFO Swartz Near SEC Pact, Records Say

Tyco International Ltd.’s jailed ex-chief executive officer, Dennis Kozlowski, and its former chief financial officer, Mark Swartz, are nearing settlements of a 2002 Securities and Exchange Commission lawsuit, David Glovin of Bloomberg News reports.

The lawsuit was filed on the same day the men were arrested for looting the company. They were convicted in 2005 of grand larceny for stealing about $137 million from Tyco, owner of ADT, the world’s largest maker of security systems, through unauthorized bonuses and the abuse of company loans, and for taking $410 million through illicit stock sales. The two men are in jail and may be eligible for work release next year.

“The parties have reached agreements on the general terms of settlements,” Supervisory SEC Trial Attorney Arthur Lowry wrote in a May 27 letter to U.S. District Judge Robert Sweet in New York, who is presiding over the case. Lowry said the SEC staff must submit the settlement to the full Commission for final approval, which may take up to six weeks.

Terms of the settlement were not disclosed in Lowry’s letter. Michael Grudberg, a lawyer for Swartz, declined to comment. Robert Shwartz, a lawyer for Kozlowski, and Lowry didn’t return calls.

The SEC’s complaint accused Kozlowski, Swartz and former General Counsel Mark Belnick of treating Tyco “as their private bank, taking out hundreds of millions of dollars of loans and compensation without ever telling investors.” Belnick was acquitted in the criminal case and settled the SEC lawsuit in 2006 for $100,000.

The SEC case stalled until the conclusion of the criminal trial in 2005.

In October, the New York State Court of Appeals rejected bids by Kozlowski, 62, and Swartz, 48, to overturn the jury verdicts and their 8 1/3-to-25-year prison terms. They also lost a challenge to their fines. They have paid $105 million in fines and $134 million in restitution.

The men are in upstate New York prisons.

Tyco, which is now based in Switzerland and run from New Jersey, agreed in 2006 to pay $50 million to settle SEC allegations that the company inflated results by more than $1 billion under Kozlowski.

For more, click here.

Countrywide Loses Bid to Dismiss Group Lawsuit Claims

Countrywide Financial Corp. lost a bid to dismiss most of a group lawsuit alleging the company, now owned by Bank of America Corp., steered borrowers into risky subprime mortgages.

U.S. District Court Judge Dana Sabraw in San Diego said in a May 18 ruling that borrowers could pursue racketeering and unfair competition claims against the company. Lawsuits against Bank of America and Countrywide have been consolidated into a single case in federal court in San Diego.

Bank of American in July acquired Countrywide, formerly the largest U.S. home lender, for $2.5 billion. Countrywide’s lending practices prompted investigations by attorneys general in California, Florida and other states, leading to an October settlement in which Bank of America agreed to modifications that could save 390,000 borrowers as much as $8.4 million.

“We are pleased that we are helping the ultimate victims of the mortgage scheme that has nearly destroyed our economy,” Joe R. Whatley, a lawyer for the plaintiffs, said yesterday in a statement. “We intend to continue to prosecute this action until those who obtained subprime mortgages from Countrywide are adequately compensated.”

For more, click here.

Conrad Black Co-Defendant Wins Bail Pending Appeal

John Boultbee, one of three Hollinger International Inc. executives convicted with former chief Conrad Black for stealing $6.1 million from the company, won release from prison while the U.S. Supreme Court reviews his conviction.

U.S. District Judge Amy St. Eve in Chicago granted Boultbee’s bail request in a hearing yesterday. The onetime chief financial officer for the newspaper publisher, now known as the Sun-Times Media Group Inc., is serving a sentence of two years and three months at a federal prison in Lompoc, California.

For more, click here.

SEC Filings, Interviews, Company News

GM Bondholders Agree to Plan Clearing Bankruptcy Path

General Motors Corp. and the U.S. Treasury reached an agreement with some of the automaker’s largest bondholders to smooth the way through bankruptcy.

GM, contemplating a sale of its assets to a new company through bankruptcy, would give 10 percent of its equity to the old GM to pay bondholders and other creditors and issue warrants for as much as 15 percent more, the Detroit-based automaker said in a U.S. regulatory filing yesterday.

For more, click here.

Visteon, Metaldyne File for Bankruptcy as Sales Fall

Visteon Corp., the former parts-making unit of Ford Motor Co., and chassis manufacturer Metaldyne Corp. filed for bankruptcy protection after a global slump in vehicle sales reduced orders from U.S. automakers.

For more, click here.

AIG Files to Shed Majority Stake in U.S. Reinsurer

American International Group Inc., the insurer bailed out by the U.S., filed to sell a stake of almost $1 billion in its majority-owned reinsurer Transatlantic Holdings Inc.

AIG may sell 26 million shares, Transatlantic said yesterday in a regulatory filing. That holding is valued at about $985 million based on yesterday’s closing price of $37.87. The New York-based insurer holds about 39 million shares, or 59 percent of Transatlantic, the reinsurer said. The stake will be less than 20 percent after the sale, AIG said.

For more, click here.

Mandel Buys Strayer Education as Chanos Advises Shorting It

Stephen Mandel, who runs the hedge fund Lone Pine Capital LLC, told investors at a conference in New York yesterday to buy shares of for-profit college Strayer Education Inc. Ten minutes later, Kynikos Associates LP’s Jim Chanos advised shorting the industry.

Mandel, 53, and Chanos, 51, were among 11 speakers at the Ira W. Sohn Investment Research Conference. Other investors, like William Ackman of Pershing Square Capital Management LP and Highside Capital Management LP’s Lee Hobson, touted shares of General Growth Properties Inc. and Millicom International Cellular SA.

Mandel, who used to help pick stocks for Julian Robertson’s Tiger Management LLC, predicted Arlington, Virginia-based Strayer will expand beyond the U.S. East Coast, becoming a nationwide system of 300 campuses. The investor is ranked as the 227th-richest American by Forbes magazine.

Schwab Breaks With Fidelity by Cutting Retirement-Fund Stocks

Charles Schwab Corp. cut the amount of stock held by its target-date funds as investors approach retirement, breaking with competitors who say record market losses don’t warrant changes to how the accounts are managed.

Schwab will shift more money out of equities sooner, beginning 10 years before the investor plans to stop working, said Dan Kern, who manages the San Francisco-based company’s $514 million in target-date funds. By two years from retirement, 43 percent of fund assets will be stocks, a reduction of 9 percentage points from the firm’s old investment model.

“As part of this downturn, clients’ attitudes toward risk have changed and they need slightly more conservative investments,” Kern said in a telephone interview. Schwab is also increasing the allocation to stocks when investors open the savings plans.

For more, click here.

Pequot Funds Folding Amid Trading Probe Hold Illiquid Assets

Arthur Samberg, once the world’s biggest hedge-fund manager, said a federal insider-trading investigation is forcing him to shut Pequot Capital Management Inc.

The U.S. Securities and Exchange Commission in January resumed a probe into whether Samberg’s funds illegally profited in 2001 by trading on inside information about Microsoft Corp., people familiar with the matter said at the time. That was about a year after the agency told Samberg and Morgan Stanley Chief Executive Officer John Mack that they wouldn’t be accused of wrongdoing related to insider trading.

Samberg’s firm will sell the holdings of the Pequot Partners, Pequot International and Pequot Endowment funds, according to the letter. The funds, with about $2 billion in assets, will return a “significant amount” of cash to investors by June. The rest will be paid out over the next several months.

“A good portion of Pequot’s investments are in illiquid assets so there is no way that them selling will move the public markets,” said Robert Olman, founder of Roslyn, New York-based Alpha Search Advisory Partners, which advises hedge funds. “This is not a systemic-risk event that the administration talks about.”

Pequot’s top five U.S.-traded stock holdings as of March 31 were SPDR Gold Trust, an exchange-traded fund that buys bullion; Chipotle Mexican Grill Inc., based in Denver; Bermuda-based insurer Everest Re Group Ltd.; hamburger chain McDonald’s Corp., based in Oak Brook, Illinois, and Emeryville, California-based Onyx Pharmaceuticals Inc.

For more on Pequot folding, click here.

For Kotz’s Pequot report, click here.

For insider-trading scandal at SEC, click here.

Comings and Goings

CIBC Promotes Investment Banker Nash to Head Merchant Banking

CIBC World Markets promoted Ted Nash, who oversees the firm’s mergers and acquisition business, to head of strategic merchant banking.

Michael Boyd will replace Nash as head of mergers effective June 29, the company said yesterday in a memo. Nash, 45, who has been with CIBC since 1994, led the mergers team for four years.

CIBC World Markets is the investment banking business of Canadian Imperial Bank of Commerce, the country’s fifth-biggest bank. Boyd previously worked at the Toronto office of Merrill Lynch, a unit of Bank of America.

GMAC Appoints Final Three Board Members After Bailout

GMAC LLC, the auto and home lender that’s received $13.5 billion in government funds, named the final three members of its new board, including Franklin “Fritz” Hobbs as non-executive chairman.

Hobbs, an adviser to One Equity Partners LLC, is joined by Michael Carpenter, chairman of Southgate Alternative Investments, and Mayree Clark, an affiliate of Aetos Capital Asia, Detroit-based GMAC said yesterday in an e-mailed statement.

As part of its agreement with the government to become a bank holding company, GMAC had to remake the board to include more independent directors and government representatives. The other members of the board are GMAC Chief Executive Officer Al de Molina, Cerberus Capital Management LP founder Stephen Feinberg and two U.S. Treasury appointees.

Before joining buyout firm One Equity Partners, Hobbs was CEO of Houlihan Lokey Howard & Zukin Capital Inc. and before that was chairman of UBS AG’s Warburg Dillon Read unit.

Former GMAC Chairman J. Ezra Merkin resigned in January after his hedge funds lost billions of dollars tied to Bernard Madoff’s Ponzi scheme.

International Compliance

Airbus CEO Questioned by French Police in EADS Probe

Airbus SAS Chief Executive Officer Tom Enders was questioned by French police as part of a criminal probe into insider trading at European Aeronautic, Defense and Space Co., the planemaker’s parent company.

Enders, 50, was questioned on May 20 and released the same day without being charged, Stefan Schaffrath, a spokesman for Toulouse, France-based Airbus, said yesterday by telephone.

The French investigation is focused on executives who sold EADS stock options between late 2005 and June 2006, when the announcement of a delay to the A380 superjumbo model caused a record drop in the shares. Enders served as co-chief executive of EADS from 2005 before taking over at Airbus in August 2007.

The police probe centers on what managers knew of problems Airbus was experiencing with the A380 and parallels a civil inquiry led by French market regulator Autorite des Marches Financiers. The AMF last year referred 17 current and former EADS executives and shareholders Lagardere SCA and Daimler AG to its sanctions committee for punishment for insider trading.

For more, click here.

To contact the reporter responsible for this report: Lisa Brennan in New York at lbrennan1@bloomberg.net.

To contact the editor responsible for this report: David E. Rovella at drovella@bloomberg.net.

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