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Sep 2, 2016

DealBook Today's Morning News - September 2, 2016: A Chinese Mystery, Mylan’s Capitalist Nirvana, J.P. Morgan Faces Suit

The New York Times


 By Amie Tsang

When you think of the Waldorf Astoria, you may think of its iconic architecture, its long history or even the salad invented in its kitchens. You probably don’t think of villagers and rice paddies in eastern China. But The New York Times has uncovered that some small-time merchants and villagers in Pingyang County control multibillion-dollar stakes in Anbang Insurance Group, the company that bought the Waldorf and has been making waves with its enormous deals.
If you have some questions about this, so do the American regulators responsible for approving the company’s deals. And Anbang could come under further scrutiny as it prepares to sell shares in its life insurance business on the Hong Kong stock exchange, a move that has already stirred some debate among bankers considering working on the deal, according to Bloomberg.
The one thing that does seem to link Anbang’s many shareholders through a byzantine network of holding companies is their connection with Wu Xiaohui, Anbang’s chairman and a native of Pingyang County, who married into the family of Deng Xiaoping. About 100 people seem to have stakes in Anbang through different companies, one on an empty floor of a dusty office building and another above a post office. Read more about these mysterious shareholders here and the company that seemed to come from nowhere to go on a global takeover binge here.
Mylan’s Capitalist Nirvana
It does good for others while doing well for itself, the pharmaceutical company Mylan maintains.
But that argument just does not hold up, Gretchen Morgenson writes in Fair Game.
Proxy filings show that top executives received a windfall when the company incorporated overseas. And they will be further rewarded if the company meets earnings and stock price goals by the end of 2018 — partly on the back of price increases on the EpiPen. Mylan is just the latest company that allowed executives to reap bounties from activities that wound up harming other stakeholders, Ms. Morgenson contends.
Still, public shaming goes only so far. It may be that the outrage over the EpiPen will put greater pressure on Congress to change policy to help patients with medication bills. The question is whether the industry’s lobbying money is greener, according to Breakingviews.
J.P. Morgan Sued by Investors in Good Technology
Start-ups in Silicon Valley have plenty on their plate, dealing with the competing interests of their founders, investors and employees. Now add bankers to that list.
Good Technology, a maker of mobile security software, was bought by BlackBerry last year for $425 million, and its shareholders are suing J.P. Morgan, accusing it of having so many conflicts of interest that it ended up selling the company for less than it was worth. The plaintiffs say J.P. Morgan used the sale of Good, once valued at $1 billion, to win business with BlackBerry.
It is hardly new for a bank to be accused of conflicting interests, but it seems that with fund-raising slowing down and a sleepy market for initial public offerings, it is becoming a more salient issue for start-ups looking to sell.
Coming Up
The Labor Department will publish its report on hiring and unemployment during August. After the numbers rose sharply in June, analysts expect payroll expansion to have slowed slightly.
Contact amie.tsang@nytimes.com

 
Deals
HP Enterprise Said to Be in Talks to Sell Software Unit
By REUTERS
Hewlett Packard Enterprise is in talks with Thoma Bravo to sell its software division with the hope of fetching $8 billion to $10 billion, according to people familiar with the matter.
China Investigates Uber’s Deal to Sell Operations There
By PAUL MOZUR
Sale of ride-hailing operations to a rival, Didi Chuxing, faces antitrust review by the Chinese Commerce Ministry, an agency that could hold up the deal.
Comcast Deal Faces Antitrust Review in China
By BLOOMBERG
China will conduct an antitrust review of Comcast’s $3.8 Billion Deal for DreamWorks Animation after authorities received complaints that the deal could threaten competition in the Chinese markets.
 
Banking
Outside Canary Wharf in London. Researchers found that some managers placed as much importance on whether a potential hire fit the traditional, polished image of an investment banker as on their skills and qualifications.
Want a Job in British Banking? You May Have to Ditch the Brown Shoes
By CHAD BRAY
A report said that some managers placed as much importance on whether a potential hire fit the polished image of an investment banker as on their skills and qualifications.
Banks Consider Legal Challenge to Fed Stress Tests
By THE WALL STREET JOURNAL
Bank trade groups and industry advisers are debating the possibility of legally challenging the Federal Reserve in an attempt to force changes to annual “stress tests” of the biggest United States lenders, according to people familiar with the talks.
Second Big Bang for London
By THE FINANCIAL TIMES
The vote on Britain’s departure from the European Union is set to create a second revolution for the financial center.
 
Tech
At an awards ceremony for Facebook’s chief, Mark Zuckerberg, in February. Researchers from his company, along with Amazon, IBM and others, have been meeting to discuss the impact of artificial intelligence on jobs, transportation and even warfare.
How Tech Giants Are Devising Real Ethics for Artificial Intelligence
By JOHN MARKOFF
Four people involved in the creation of an industry partnership say its intent will be clear: to ensure that A.I. research is focused on things that will benefit people, not hurt them.
A Google Chromecast among Nexus phones in San Francisco. The idea of a customizable phone proved difficult to move beyond prototypes.
Alphabet Ends Effort to Create Modular Smartphone
By DAISUKE WAKABAYASHI
The decision to shelve Project Ara comes after the company announced plans in May to release an early version of the product for developers.
SpaceX Rocket Explodes at Launchpad in Cape Canaveral
By KENNETH CHANG, MIKE ISAAC AND MATT RICHTEL
The fiery blast also destroyed a satellite that Facebook had planned to use to expand internet services in Africa.
Andreessen Horowitz’s Returns Trail the Venture Capital Elite
By THE WALL STREET JOURNAL
Since its founding through last year, Andreessen Horowitz had returned a total of $1.2 billion in cash to investors, net of fees.
Samsung to Halt Sales of Galaxy Note 7 on Battery Problem
By REUTERS
The technology giant Samsung Electronics said that it would stop the sales of its Galaxy Note 7 smartphones and would prepare replacement devices for phones already sold after finding problems with the battery cell used.
 
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Legal and Regulatory
A Los Angeles jury says MetLife and two affiliates should pay $15.6 million to Christine Ramirez, who invested nearly $280,000 in a reported Ponzi scheme.
Retiree Awarded $15.6 Million in Reported Ponzi Scheme Tied to MetLife
By VICTORIA FINKLE
After an eight-week trial, a Los Angeles jury awarded the retiree, Christine Ramirez, punitive and compensatory damages.
Another View
A Plea for Plain English in Financial Documents
By STEVE LIPIN AND ADAM ROSMAN
Stop writing solely for lawyers and professional investors and start writing so that anyone with an interest will understand.
Common Sense
An ad for the new Trump hotel in Washington, seen last month. Donald Trump’s new tax proposal adds new breaks for real estate developers like Mr. Trump himself.
If Trump Gets His Way, Real Estate Will Get Even More Tax Breaks
By JAMES B. STEWART
A proposal to shave the tax rate on business income would also help out hedge funds and private equity shops.
Life Insurance Customers Sue Over Surprise Cost Increases
By THE WALL STREET JOURNAL
Big life insurers in the United States blame higher costs on the Federal Reserve’s decision to keep interest rates low.
How $1 Billion Made Its Way to Malaysia’s Prime Minister
By THE WALL STREET JOURNAL
Every time the Malaysian government investment fund 1MDB borrowed money, large amounts of cash were quickly misappropriated and followed a circuitous path through private banks, offshore companies and funds, before some of it landed in the private bank accounts of the prime minister, Najib Razak, according to investigators.
 
Trade
Ho Chi Minh City, Vietnam, greeted President Obama in May. Vietnam is among 12 nations to sign the Trans-Pacific Partnership.
Pacific Trade Pact Faces Rough Road in Congress
By JACKIE CALMES
Democrats and Republicans are finding the politics of the trade accord so risky that its prospects are uncertain.
A Homegrown Disaster
By BUZZFEED
The Trans-Pacific Partnership could leave the United States vulnerable to investor-state dispute settlement claims from major companies of developed nations such as Japan and Australia.
 
Business
A dealership in Carlsbad, Calif. Vehicle sales in the United States outperformed the general economy for years, but slackened in August. Autodata said car sales slipped more than 12 percent in August, though truck and S.U.V. sales rose about 2 percent.
Big Decline in U.S. Auto Sales May Signal End of Six-Year Boom
By BILL VLASIC
Pent-up demand from the recession may have finally run its course, as August sales fell by 4 percent from a year earlier.
The Turkish town of Hasankeyf will be submerged under 200 feet of water after a hydroelectric dam now under construction is completed.
Dam Project Threatens to Submerge Thousands of Years of Turkish History
By TIM ARANGO
A contentious dam project that dates to the 1950s is more than 80 percent complete, and the filling of a reservoir will swamp much of the town of Hasankeyf.
A worker from the Israeli Tamar gas platform and the Mari-B platform in the eastern Mediterranean Sea off Israel. The Tamar field now supplies the fuel for a sizable portion of Israeli electricity production.
Israel Courts Foreign Money in Effort to Become Gas Exporter
By STANLEY REED
The campaign is a major shift for a country whose government wrestled with how to regulate the energy industry.
Bottles of Coca-Cola on an assembly line at a factory near Paris.
Bags of Cocaine Worth $56 Million Are Found at Coca-Cola Factory in France
By CHRISTOPHER MELE
The cocaine amounted to 370 kilograms and was stowed in a shipment of orange juice concentrate to the plant in the town of Signes.