JPMorgan Promotes Pinto and Smith to Co-Presidents: DealBook Briefing

— Mr. Smith, 59, is head of the bank’s consumer and community bank. He oversees 140,000 of the bank’s 240,000 employees. Mr. Smith joined JPMorgan in 2007 from American Express.

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Antonio Weiss is back in the deal business, thanks to Keurig

Listed in the phalanx of bankers and lawyers behind the $18.7 billion acquisition of Dr Pepper Snapple is a name that you might easily miss, “AFW LP.”

That happens to be short for “Antonio Francesco Weiss,” the former Lazard banker and Treasury Department official — and an adviser to Keurig.

During his career at Lazard, Mr. Weiss became one of the investment bank’s biggest deal makers, eventually becoming the firm’s global head of investment banking after having done tours of duty in New York and Paris.

Among the deals he worked on were InBev’s acquisition of Anheuser Busch, Reynolds American’s takeover of fellow cigarette maker Lorillard, Burger King’s takeover of Tim Hortons and Google’s purchase of Motorola Mobility. (He was also publisher of The Paris Review.)

During his career, he came to know the executives who run JAB, which is Keurig’s majorityshareholder, and sold the company D.E. Master Blenders, the international coffee business then owned by Mondelez. JAB later combined D.E. Master Blenders with Keurig in a nearly $14 billion deal.

But Mr. Weiss left Lazard to become a counselor at the Treasury Department in the Obama administration, taking on issues like Puerto Rico’s debt crisis and the marketplace lending practiced by the likes of Lending Club.

Since leaving government, Mr. Weiss has taken up residence as a senior fellow at the Mossavar-Rhamani Center for Business and Government at Harvard’s Kennedy School, as well as a directorship at the Volcker Alliance. (He’s also a prolific op-ed and briefing writer.)

He has weighed whether to get back into investment banking, and has been courted by many an investment bank. It’s unclear whether he will ultimately join an existing shop or start his own, as rain makers like Paul Taubman have done.

The other advisers on the deal

For Keurig Green Mountain:

• Goldman Sachs, BDT & Company (which is also investing in the deal), Mr. Weiss, JPMorgan Chase, Bank of America Merrill Lynch and the law firms Skadden, Arps, Slate, Meagher & Flom and McDermott, Will & Emery

• JPMorgan, Bank of America and Goldman are also providing financing for the deal. (The combined company is expected to have some $16.6 billion in debt if the deal closes, though it also anticipates keeping an investment-grade credit rating.)

For Dr Pepper Snapple

• Credit Suisse and the law firm Morgan, Lewis & Bockius

For Mondelez

• The law firm Clifford Chance

— Michael J. de la Merced

Who’s afraid of an I.P.O.?

Companies want to go public. They just want to avoid the initial public offering process.

That’s at least one take away from Monday morning’s deal news.

Exhibit #1: Keurig Green Mountain’s $18.7 billion deal for Dr Pepper Snapple Group.

Under the terms of the proposed transaction, Keurig, which was taken private in 2016 by JAB Holding, would merge with Dr Pepper Snapple. The deal would create a new company to be called Keurig Dr Pepper, which would trade on the New York Stock Exchange. Keurig’s current shareholders would own about 87 percent of the combined company, with Dr Pepper Snapple investors owning the remainder.

Exhibit #2: Speculation that Dell could merge with VMware through so-called reverse merger.

Alex Sherman of CNBC reports:

Dell Technologies could emerge as a public company through a reverse-merger with VMware, the $60 billion cloud computing company it already controls, according to people familiar with the matter.

The reverse merger, whereby VMware would actually buy the larger Dell, would then allow Dell to be traded publicly without going through a formal listing.

The news comes as Spotify is planning to hit the public markets through a so-called direct listing. Such listings essentially move trading in a company’s stock from private markets to public ones, with new investors buying shares on the open market. Instead of a prospectus many weeks before the market debut, the company files a registration statement soon before a direct listing.

Wall Street and Silicon Valley are closely watching Spotify’s listing. If it goes well, it could spur other high profile start-ups to pursue a direct listing. That would be bad news for Wall Street since direct listings generate lower fees than the typical I.P.O.

Spoofing.

A small provision in the Dodd-Frank Act outlawing something called “spoofing” has generated the latest round of criminal charges against eight traders along with civil settlements by Deutsche Bank, HSBC, and UBS. All for doing something that happens every second of the trading day: entering and then canceling orders.

The law makes it illegal to engage in “bidding or offering with the intent to cancel the bid or offer before execution.”

The federal appeals court in Chicago upheld the first criminal conviction for spoofing last year in United States v. Coscia, in which the judges rejected the argument that no one was deceived by orders placed and then quickly canceled because other traders do that routinely. “His scheme was deceitful because, at the time he placed the large orders, he intended to cancel the orders.”

Apparently, the only requirement to prove spoofing is that the defendant enters orders without any real hope they will be filled to pull the market in one direction so that other orders can be filled, generating a small profit. Proving the case requires showing multiple orders were used and not just isolated transactions, such as one defendant who engaged in what the government claims was 36,000 different instances of spoofing.

And it wouldn’t be a case involving traders if there weren’t the usual messages showing how they were gladly abusing the market. In one chat, a trader wrote “so glad I could help . . . got that up 2 bucks . . . that does show u how easy it is to manipulate it.” Describing something as manipulation sure does help prove intent.

Who is fooled by the spoofing? It turns out that most of the time it is competing computer algorithms of other high-frequency trading firms. So this isn’t a case in which mom-and-pop investors are taking it on the chin.

— Peter J. Henning

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The activists pushing Avon to sell itself

Meet Shah Capital, Barington Capital Group and NuOrion Partners, who together own about 3.5 percent of the cosmetics maker and today publicly called upon the company to consider selling itself.

Barington and NuOrion were behind a previous campaign to force out Avon’s C.E.O., Sherilyn McCoy. Ms. McCoy has already announced plans to step down.

From the hedge funds’ letter:

The shareholder group is extremely disappointed with the deteriorating operating and share price performance that has occurred under the stewardship of the current board. The shareholder group is also dismayed by the Board’s failure to act quickly and decisively on the past recommendations its members have made to improve the long-term performance of the company, including promptly hiring a new chief executive officer – a step that has been long overdue and members of the shareholder group recommended over two years ago.

The context

Avon is just over two years removed from an agreement to spin off its North American business into a privately held company that was majority-owned by Cerberus Capital Management. After the sale, Avon announced a three-year strategic plan to focus on its remaining operations outside the U.S. and reduce costs.

Avon reported $12.5 million in profit for its third fiscal quarter, after previously reporting three consecutive quarterly losses. The company is set to report its fourth quarter results next month.

— Chad Bray

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What’s next for Steve Wynn

In the wake of a WSJ investigation into allegations of sexual assault and misconduct, the casino magnate’s empire has already taken a hit. He has also resigned as the Republican National Committee’s finance chairman.

But more pain is probably in store for Mr. Wynn, whom the veteran reporter Jon Ralston calls “the biggest name in the history of Nevada business.”

The corporate fallout

The Wynn board — long criticized as too cozy with its chairman — has already said that it will form an independent investigating committee.

Then there’s the question of what will happen to Mr. Wynn’s casinos, particularly in Macau, which accounts for the vast majority of Wynn Resorts’ revenue.

More from Daniela Wei and Bruce Einhorn of Bloomberg:

Any fallout from the allegations could have a major impact on Macau. Gaming regulators in Nevada and Massachusetts are looking into the accusations, and punitive actions in the U.S. could prompt Macau regulators to ramp up their scrutiny, said Wang Changbin, director of the Gaming Teaching and Research Centre at the Macau Polytechnic Institute.

Whether Mr. Wynn will be ousted — for a second time — is unclear. He owns 21 percent of Wynn Resorts, but has no extra voting power.

The political fallout

Lawmakers are starting to distance themselves, with House Speaker Paul Ryan donating $1,000 he had received from a Wynn affiliate to charity. “We were in the dark for 24 hours,” one unnamed R.N.C. member fumed to Robert Costa of the WaPo.

Mr. Wynn wasn’t among the top 100 political donors in the 2016 election cycle. But President Trump chose him as the R.N.C.’s finance chair, and he hosted a fund-raiser for the president at Mar-a-Lago on Jan. 20.

More misconduct news

• Senator Marco Rubio, Republican of Florida, fired his chief of staff this weekend over inappropriate relations with lower-level employees.

• Investment funds are piling into the settlement-advance industry, in which firms pay plaintiffs in anticipation of a big court victory.

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How did Trump do at Davos?

Andrew’s take:

“All week, Davos-goers worried that he was going to try to humiliate and verbally attack them. He did the opposite. He stayed on script and made a compelling argument for investment in the U.S. C.E.O.s from around the world wanted selfies with him.”

Per Daniel Yergin of IHS Markit:

“He was selling America, he was selling the economic story and he was selling himself to an international business community who expected something else.”

And Ishmael Sunga of the Southern Africa Confederation of Agricultural Unions:

“He made no controversial statements. He was talking to the crowd of people that he’s been brought up to be part of.”

Mr. Trump’s speech, largely written by Gary Cohn and the White House staff secretary, Rob Porter, was both a defense of the White House’s nationalist policies and a case for international cooperation, on U.S. terms. (“America first does not mean America alone.”)

The bigger picture

While Mr. Trump sought to play down any isolationist tendencies — and the director general of the World Trade Organization said, “I haven’t seen anything at this point that we are in a trade war” — China was still in his sights.

A headline from The South China Morning Post: “China should ‘be ready for a trade war’ after Donald Trump’s Davos speech.”

(To many attendees, China remained the real star of this year’s World Economic Forum.)

A bit of color: Many C.E.O.s left Davos before Mr. Trump’s speech.

Also, this happened: Andrew was pelted with a snowball by Steven Mnuchin.

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How would nationalizing 5G work?

Depends what we’re talking about. Axios reported that the White House has considered creating a centralized, national 5G network for national security reasons, citing a National Security Council memo.

More from Jonathan Swan, David McCabe, Ina Fried and Kim Hart of Axios:

The memo argues that a strong 5G network is needed in order to create a secure pathway for emerging technologies like self-driving cars and virtual reality — and to combat Chinese threats to America’s economic and cyber security. A PowerPoint slide says the play is the digital counter to China’s One Belt One Road Initiative meant to spread its influence beyond its borders.

Bloomberg, citing its own sources, paints a slightly different picture: “The U.S. is in talks with private companies to build a secure 5G network amid concerns about China and cybersecurity.” The decision deadline is the end of September.

The bigger picture

AT&T, Verizon, T-Mobile and others have already spent billions of dollars on 5G networks. Given its speed and data capacity, it remains their biggest initiative, and it’s unclear how much control, if any, they would be willing to give up.

Any nationalization effort would run counter to how the government has handled wireless infrastructure for decades: by auctioning off the airwaves and letting private companies do the work.

From AT&T’s statement on the issue:

“Thanks to multibillion-dollar investments made by American companies, the work to launch 5G service in the United States is already well down the road.”

The policy flyaround

• Republican lawmakers warned Mr. Trump not to fire Robert Mueller, but showed little interest in a bill to protect him. (NYT)

• The Koch brothers’ political network plans to spend as much as $400 million on this year’s midterm elections. (Axios)

• A portrait of Paul Manafort as a dangerously successful foreign-policy entrepreneur. (Atlantic)

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What will Alwaleed bin Talal do now he’s free?

He spoke to Reuters shortly before being freed from detention in the Riyadh Ritz-Carlton over the weekend:

Q: Do you expect to retain ownership of Kingdom Holding and stakes in companies like Citigroup?

“Yes, Kingdom Holding will remain under my ownership, the same ownership.”

The prince denied forfeiting a significant part of his fortune or pledging donations to projects spearheaded by his jailer, Crown Prince Mohammed bin Salman. But analysts in the region still think his ultimate settlement will be pricey.

Shares in Kingdom Holding are back to where they traded before Mr. bin Talal’s detention.

The big questions: Will international businesses feel better about investing in Saudi Arabia after what the crown prince said was a crackdown on corruption? And how much will the kingdom collect from the royals who were detained?

In other Saudi news: The government still hasn’t decided where to list Aramco, and it may not begin trading on an international stock exchange this year. Meanwhile, the U.S. oil industry is still riding high.

Eric Schneiderman will investigate fake social media followers

That’s in the wake of the NYT Magazine’s inquiry into Devumi, a company that sold millions of fake followers (some using stolen identities) to the likes of Michael Dell and the Twitter director Martha Lane Fox. “Impersonation and deception are illegal under New York law,” the state attorney general said.

The big question

Do Twitter and other social media companies really want a crackdown? Here’s the take of Dan Leal, a pornographer who bought followers:

“Countless public figures, companies, music acts, etc. purchase followers,” he wrote. “If Twitter was to purge everyone who did so there would be hardly any of them on it.”

In other tech news: Intel’s initial disclosures about flaws in its chips included briefings for Chinese tech companies but not the U.S. government, the WSJ reported, citing unnamed sources.

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The deals flyaround

• Sanofi agreed to buy Ablynx, a Belgian biotech company, for $4.7 billion. (Reuters)

• Three activist investors — Shah Capital, Barington Capital Group and NuOrion Partners — who together own a 3.5 percent stake in Avon plan to push the cosmetics maker into selling itself. (WSJ)

• Low interest rates, legal bills and capital demands have eroded profits at European banks, making the rationale for mergers more compelling. (Bloomberg)

• Alibaba and Foxconn led a $350 million fund-raising round by Xiopeng Motors, an electric carmaker that wants to be China’s Tesla. (Bloomberg)

• Leonard Green is near a deal to buy Pro Mach Group, a packaging company, for more than $2.2 billion, including debt, according to unnamed sources. (Reuters)

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More regulation looms for virtual currencies

Coincheck, a Japanese digital currency exchange, promised to partially reimburse customers after being hit by a $500 million theft on Friday. But the heist has again raised the prospect of more regulation.

Coincheck has until Feb. 13 to explain the cause of the incident and how it will stop it happening again.

Another Bitcoin no-trade zone: Deutsche Bank’s wealth management unit is advising clients against investing in virtual currencies

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The obits corner

• Ingvar Kamprad, who made a multibillion-dollar fortune with Ikea and introduced the world to cheap, Nordic-designed furniture, died on Saturday.

• William McDonough, who led the New York Fed through both Sept. 11 and the Long-Term Capital Management crisis, died last week.

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Quote of the day

“The problem now is that innovation is not viewed as an unalloyed way to improve the human condition. And that’s fair, because it’s not pure.”

— Bill Gates, speaking about social media, A.I. and many other topics in the NYT’s Table for Three column.

The Speed Read

• Every major economy on earth is expanding. (NYT)

• The expansion of the U.S. economy rests on consumer confidence. But history indicates that it will eventually shift the other way, writes Robert Shiller. (NYT)

• The L.A. Times is expected to name Jim Kirk, former editor and publisher of The Chicago Sun-Times, as its next editor in chief. He replaces Lewis D’Vorkin, who touched off unrest in the newsroom. (NYT)

• Some consolation for the places that lost out on being Amazon’s HQ2: Their applications will help Amazon pick warehouse and secondary office sites. (NYT)

• In China, the collapse of a string of online investment companies has devastated small investors. Beijing is acting to tamp down on potential unrest. (NYT)

• HNA Group’s liquidity woes could test China’s legal system. (FT)

• Tech giants are scrambling to prepare for stringent new data privacy rules in Europe, with Facebook rolling out a new global data privacy center on Sunday. (NYT)

• Rob Norman, the retiring chief digital officer of GroupM talks to us about Facebook’s news plans. (NYT)

• Volkswagen, Daimler and BMW are struggling to deal with a public relations disaster that stemmed from their financing a test that used monkeys to monitor the health effects of diesel exhaust. (NYT)

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