Facebook’s Friends with Benefits; Government Witness Avoids Prison; Best Buy Buyout? Wall Street Roundup

Friends with benefits: Yesterday marked the end of the quiet period following Facebook’s IPO, during which banks who underwrote the offering were precluded from publishing research on the company. The quiet period over, at least 14 bank analysts put recommendations out today—Morgan Stanley, lead underwriter on the offering, as well as Goldman Sachs and JPMorgan, were among those to place their highest ratings on Facebook. BMO Capital Markets was the only firm to place its lowest rating on the social media company.

As The Wall Street Journal noted yesterday, the initiation of analyst research often sparks a rise in share price. Facebook closed yesterday at $33.10, 28 percent above its June 4 low of $25.87, but still down nearly 13 percent from its offering price of $38.

Minnesota nice: Best Buy will grant each of its four top executives retention bonuses of $500,000 and nearly $2 million in restricted stock, the Minneapolis StarTribune reports, as the board of directors seeks to cement ties to management amid rumors that the company founder Richard Schulze is preparing a bid to take the company private. Mr. Schulze resigned from the board earlier this month in the fallout from allegations that Best Buy CEO Brian Dunn what everyone insists on calling an “improper relationship” with a female employee. The New York Times hears that Mr. Schulze, who owns 20.1 percent of the company, is working with bankers from Credit Suisse on a potential buyout, and would likely bring in a private equity firm to partner in a deal.

Scared straight: Adam Smith, the Galleon Group hedge fund portfolio manager who pleaded guilty to insider trading, was sentenced to two years probation. As the The New York Times recounts, Mr. Smith panicked on the day that Galleon founder Raj Rajaratnam was arrested, driving from his Gramercy Park apartment to a second home upstate to a presumably incriminating laptop. In calmer moments, Mr. Smith would cooperate with the government’s prosecution of Mr. Rajaratnam, earning high marks from U.S. Attorney Preet Bharara and Judge Jed Rakoff for his help.

Falcone suit: The Securities and Exchange Commission is set to sue Phil Falcone, sources tell Bloomberg, after the Harbinger Capital founder and former Harvard hockey star withdrew $113 million from one of his hedge funds in 2009 to pay a personal tax bill (Mr. Falcone later repaid the amount). Another possible charge:

That same year, with client capital locked up, Harbinger allowed Goldman Sachs, which at the end of 2008 had $1 billion invested in two Harbinger funds, to redeem some money from the firm, said one of the people with knowledge of the SEC’s plan.


The SEC may also charge Mr. Falcone with manipulating debt securities of MAAX Holdings, a Canadian maker of bathroom fixtures.

On the rocks: The proposed mega-merger between commodities giants Glencore and Xstrata still needs shareholder approval, and there are indications investors may buck the deal. At issue: price and executive compensation.

Spinoff: News Corp.’s board is likely to decide today whether it will keep pursuing plans to split the media giant into two companies—one company consisting of publishing properties, the other made up of television and movie businesses.

Moves: Citigroup appointed Hong Kong-based Jonathan Larsen to global head of retail banking. David Resnick is leaving Rothschild North America to become president at Third Avenue Management. Wachtell partner Gavin D. Solotar is joining Greenhill & Co. as general counsel.

Sorry: Nomura Holdings chief executive officer Ken Watanabe apologized for instances of insider trading at the brokerage and said the firm would try to restore confidence, according to a Bloomberg source that attended the company’s annual shareholders meeting.

Fresh start: Here comes the first U.S. tech IPO since the Facebook debacle.