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Jul 12, 2016

DealBook Today's Top Headlines on July 12, 2016: S.E.C. Said to Be Investigating Tesla | Xerox Said to Be in Talks to Buy R.R. Donnelley | Regulator Warning Over Banks' Property Lending


TUESDAY, JULY 12, 2016
TODAY'S TOP HEADLINES
BY AMIE TSANG
S.E.C. SAID TO BE INVESTIGATING TESLA The Securities and Exchange Commission is investigating whether Tesla Motors breached securities laws by failing to disclose to investors a fatal crash involving an electric car that was driving itselfThe Wall Street Journal reports, citing a person familiar with the matter. The crash killed the driver, Joshua Brown, who collided with an 18-wheeler that pulled in front of him on a Florida highway in May.

Tesla alerted the National Highway Traffic Safety Administration to the accident and investigated to determine whether the car was using its Autopilot system, but did not disclose the crash to investors in a securities filing. The National Transportation Safety is also investigating whether systemic issues are tied to driverless cars, an agency spokesman said on Monday.

The S.E.C. is examining whether Tesla should have disclosed the accident as a "material" event, or a development a reasonable investor would consider important, a person familiar with the matter said. A Tesla spokeswoman asserted that the crash did not require disclosure to investors.

"Tesla has not received any communication from the S.E.C. regarding this issue," she said. "Our blog post last week provided the relevant information about this issue."

The crash happened on May 7 and Tesla learned of it soon afterward. It informed auto safety regulators on May 16. In its security filing for its $2 billion stock sale two days later, the company did not disclose the accident.
XEROX SAID TO BE IN TALKS TO BUY R.R. DONNELLEY Xerox is in talks to buy R.R. Donnelley & Sons, the owner of the Edgar financial statement wire service, Bloomberg reports, citing people with knowledge of the matter.

Xerox plans to separate into two companies by the end of the year andwould merge some of R.R. Donnelley with its copier and printer business. The rest would be merged with its smaller business outsourcing services, people with knowledge of the matter told Bloomberg.

A deal could be announced before Xerox's split is completed. R.R. Donnelley had also announced plans to split into three publicly traded companies, but a deal with Xerox would negate that plan.

Xerox and R.R. Donnelley reportedly saw the opportunity of a merger after the deal between Hewlett Packard Enterprise and Computer Sciences bolstered both companies' share prices.

Xerox has a market value of about $9.6 billion, while R.R. Donnelley is worth about $3.9 billion.
ON THE AGENDA Daniel K. Tarullo, of the Federal Reserve Board of Governors, will speak at the Center for American Progress in Washington about shadow banking and how the nation can avoid the next crisis at 9 a.m. The House Financial Services Committee will hold a hearing on theFinancial Choice Act at 10 a.m. and a hearing on online marketplace lending at 2 p.m. The president of the Minneapolis Fed, Neel Kashkari, will hold a town hall at Northern Michigan University at 5 p.m.
REGULATOR WARNING OVER BANKS' PROPERTY LENDINGThomas Curry, comptroller of the currency, used a biannual financial risk report to issue a warning over looser underwriting standards and concentrations in banks' commercial real estate portfoliosThe Financial Times reports.

His alert added to concerns that bubbles may be forming in parts of the country's property market.

Mr. Curry suggested that these loans were of greater concern than car loans and lending to already indebted companies.

"While leveraged lending and auto lending remain concerns, CRE lending and concentration risk management has become an area of emphasis for regulators," he said in a speech, referring to commercial real estate lending."Our exams found looser underwriting standards with less-restrictive covenants, extended maturities, longer interest-only periods, limited guarantor requirements, and deficient-stress testing practices."

His remarks come after the Federal Reserve and the Federal Deposit Insurance Corporation said they would pay special attention to banks' commercial property lending. In spite of these concerns, banks have been expanding in this area.

Commercial real estate loans originated by banks in the first quarter jumped 44 percent from the same period in 2015 and banks' share of these loans has risen from over a third in 2014 to more than half in the first quarter of 2016.
MERGERS & ACQUISITIONS »
UniCredit and Santander Scramble to Save Asset Manager Merger UniCredit of Italy and Banco Santander of Spain are scrambling to save a plan to create one of Europe's largest money managers after Britain's vote to leave the European Union complicated the outlook for the deal, which is worth 5.3 billion euros, or about $5.9 billion.
Deutsche Börse Lowers Threshold for London Stock Exchange Merger At least 60 percent of Deutsche Börse's outstanding shares must be tendered for the deal to be successful, down from 75 percent.
Valuation Quirks Help End Proposed Polycom-Mitel MergerInvestors were unimpressed after both companies lost money while under threat from larger rivals like Cisco, Jeffrey Goldfarb writes in Breakingviews.
Online Security Company Said to Work With Qatalyst to Explore Sale Imperva, an online security company that has been targeted by Elliott Management, hired Qatalyst Partners to explore a sale after receiving unsolicited takeover interest, Bloomberg reports, citing people with knowledge of the matter.
ThyssenKrupp Confirms Talks With Tata Steel Over Possible Merger The German conglomerate ThyssenKrupp confirmed that it is in talks with Tata Steel of India and other steel groups over a potential tie-up, giving the strongest indication yet that the German company would help drive a new wave of expected consolidation in the beleaguered European steel sector.
China Vanke's headquarters in Shenzhen, China. The real estate developer is in talks with the American investment group Blackstone on the purchase of commercial property in the mainland.
Chinese Developer in Talks With Blackstone on Property Purchase China Vanke said it was working with other partners on a $1.9 billion acquisition of commercial property in China from the American group.
INVESTMENT BANKING »
Jamie Dimon of JPMorgan: Why We're Giving Our Employees a Raise Wages for many Americans have gone nowhere for too long. So I'm announcing an increase for 18,000 of my workers.
Goldman Sachs Informs Regulator of 55 More Job Cuts in New York About half are traders and salesmen in the securities division, with the rest scattered across other units, Bloomberg reports, citing a person briefed on the matter.
Citi Bolsters Equities Team to Exploit Uncertainty About 'Brexit'Citigroup is increasing its European strategic equities team to meet higher client demand for solutions to deal with the financial fallout of the Britain's decision to leave the European Union.
Britain's chancellor, George Osborne, urging Britons in June to remain in the European Union.
Investors Scan the Murky Waters of Britain's FutureAs Britain's chancellor proclaims a commitment to global free trade, many are skeptical of prospects while alienated from European trading partners.
Osborne Said to Intervene in HSBC Money Laundering Investigation The British chancellor, George Osborne, sought to help HSBC avoid criminal charges in the United States for money laundering by warning that a heavy-handed approach from the authorities could plunge the global financial system into turmoil, according to a House committee report prepared by the Republicans.
For the latest updates, go to NYTimes.com/DealBook
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VENTURE CAPITAL »
To play the free smartphone game, players follow a digital map to search for cartoon characters.
Pokémon Go Brings Augmented Reality to a Mass Audience Pokémon Go is the work of a start-up, Niantic, which was created inside Google and spun out of the company last year.
Lyft Says It Is Likely to Expand Overseas John Zimmer, the president and co-founder of Lyft, the second-largest ride-hailing company in the United States, said that the company would "very likely" expand to other countries.
LEGAL/REGULATORY »
Janet Yellen of the Federal Reserve during a June news conference, as reflected in a specialist's screen on the floor of the New York Stock Exchange.
Can We Ignore the Alarm Bells the Bond Market Is Ringing? Interest rates are ultralow across the globe. Here's what that may be telling us about the economic future.
Judge Rejects New Trial for Sumner Redstone's Ex-GirlfriendManuela Herzer, an ex-girlfriend of the media mogul Sumner Redstone, will not be granted a new trial over her lawsuit that challenged the 93-year-old's mental competence, a California judge said in a tentative ruling on Monday.
Volkswagen Profits at Risk of Seizure Under German Investigation German prosecutors widened an investigation into Volkswagen's emissions cheating, potentially paving the way for hundreds of millions of euros in penalties on top of the $15.3 billion settlement in the United States.
Johnson Controls Settles China Corruption Case With S.E.C. The commission said a Chinese subsidiary of the company used "sham" vendors to make $4.9 million in payments to employees of Chinese government-owned shipyards.
Thomas J. Donohue, the U.S. Chamber of Commerce chief.
Trump and U.S. Chamber of Commerce Pull No Punches on Trade Policy Differences over trade policies have led to an acrimonious relationship between the business association and the presumptive Republican nominee.
President Obama on the South Lawn of the White House last week. He has suggested that Congress increase subsidies for private health insurance and that it devise a public plan like Medicare to compete with private insurers in some states.
Obama Offers Ways to Improve His Health Care LawThe president suggested creating a public plan like Medicare to promote competition and criticized pharmaceutical companies for failing to lower drug prices.