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Sep 7, 2016

DealBook Morning News - September 7, 2016: Ackman Buys Burritos, Musk’s Solar Vision, War on ‘Stealing’.

The New York Times 
 By Amie Tsang

William A. Ackman’s hunger for fast food just cannot be satiated.
After investing in McDonald’s, Burger King and Tim Hortons, Mr. Ackman now wants in on burritos. His Pershing Square Capital Management acquired the option to purchase a 9.9 percent stake in Chipotle, worth about $1.2 billion. Mr. Ackman is now the second-largest shareholder after Fidelity Investments.
A regulatory filing said Pershing Square planned to hold discussions with the company about a number of issues, including Chipotle’s governance and board makeup. The burrito restaurant chain’s shares plummeted after hundreds of people got sick from eating at its restaurants.
This is Mr. Ackman’s first big investment in 2016, after two years of tough performance and moves to pare back his portfolio.
A Judgment on Elon Musk’s Solar Vision
Some jeered when Elon Musk proposed creating a solar power juggernaut by having Tesla buy SolarCity. Many saw it as Mr. Musk bailing out his own investment.
Now, we get to see whether Tesla’s shareholders will buy into Mr. Musk’s vision.
But the process by which they deliberate and cast their votes is opaque.
There is little indication of how the different shareholders will decide on their votes, highlighting the often arbitrary and mysterious nature of these ballots.
The high stakes, combined with the secrecy of the vote, is a nice commentary on the pros and cons of today’s shareholder democracy, writes Steven Davidoff Solomon.
Are these divergent investors willing to challenge Mr. Musk’s empire?
The War on White-Collar Crime
How can we combat white-collar crime? Start by calling it stealing, plain and simple.
That’s the recommendation of Alison Levitt, a partner at the London law firm Mishcon de Reya. Ms. Levitt, who oversees the company’s business crime group, said harsher measures were needed to fight the war on white-collar crimes which, it seems, is being lost.
According to Ms. Levitt, financial crimes needed to be associated with the same sort of stigma as rape.
But is it a losing fight?
Many certainly seemed pessimistic about it at the 34th international symposium on economic crime in England.
“We have lost most of the major battles and all of the wars,” said John W. Moscow, the former chief of the frauds bureau and the deputy chief of the investigations division at the New York County district attorney’s office. “The number of people benefiting from large-scale, economic crime is immense, the number of victims is immense, but the number of prosecutions is limited by small and declining budgets.”
Coming Up
• Apple fans can expect updated iPhones and Apple Watches. Follow our live analysis of the Apple event. Sony is also staging an event in New York devoted to the PlayStation console.
• The Labor Department will publish the latest figures on job openings and labor turnover in July, giving a view into the health of the labor market. The Federal Reserve, meanwhile, publishes the Beige Book.
• The House Financial Services Committee will hold a hearing on the governance of Federal Reserve Banks.
• Hewlett Packard Enterprise will publish its third-quarter earnings.
Workers at a pipeline hub run by Spectra Energy Corporation in Guilford, Pa.
2 Pipeline Companies, Enbridge and Spectra Energy, to Merge
If approved by shareholders and regulators, the stock-for-stock deal would create the largest energy infrastructure company in North America.
Volkswagen Takes Minority Stake in Truck Maker
The German automaker’s truck and bus business will enter a strategic alliance with the truck maker, Navistar, giving it greater access to the North American market.
VW May Explore New China Venture With Local Company
Volkswagen is exploring a potential joint venture with the Chinese automaker Anhui Jianghuai Automobile, Chinese news media reported.
Carl C. Icahn’s acquisition of Federal-Mogul comes after his deal to take private the auto parts retailer Pep Boys.
Carl Icahn to Take Federal-Mogul Private
Mr. Icahn’s investment firm will buy the remaining 18 percent of Federal-Mogul, an auto parts supplier, it does not already own for $9.25 a share in cash.
Anbang Says It’s Time to Digest Its Deals
Yao Dafeng, the vice chairman of Anbang Insurance Group, which owns the Waldorf Astoria, said the company would focus on integrating purchases rather than making more deals, suggesting that its huge buying spree might abate.
Petrobras Said to Sell Most of Pipeline Unit
Brazil’s state-run oil company Petroleo Brasileiro agreed to sell 90 percent of its natural gas pipeline unit to a group of investors led by Brookfield Asset Management of Canada for $5.2 billion, according to a person with direct knowledge of the deal.
Monsanto Shareholder Said to Want a Higher Bid from Bayer
“There’s a big likelihood that the deal will go ahead but only in the $130-135 range and with a higher break fee,” one shareholder, who owns stock in both Bayer and Monsanto, told The Financial Times.
Wall Street Re-Engineers the Certificate of Deposit
Changes to certificates of deposit, which offer better interest rates to customers who agree to lock up funds for a period of time, have left many investors with lower returns and facing losses if they cash out early.
For the latest updates:
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Legal and Regulatory
Diane Standaert, director of state policy for the Center for Responsible Lending, said bills aimed at loosening state laws that protect consumers from high-cost lending “were popping up all over the place.”
Subprime Lender, Busy at State Level, Avoids Federal Scrutiny
OneMain Financial, the nation’s largest subprime installment lender, has not weighed in on proposed federal rules, but it has lobbied several states.
White Collar Watch
The whistle-blowing program at the Securities and Exchange Commission has received more than 14,000 tips since its creation in 2011.
Whistle-Blowing Insiders: ‘Game Changer’ for the S.E.C.
More than 14,000 tips on company wrongdoing have been received in the last five years, and rewards to informants reach into the millions.
The ITT Technical Institute campus in Columbus, Ohio.
ITT Educational Services Closes Campuses
The move by the for-profit educational company — which cited strict new federal rules — leaves thousands of students and employees with few options.
Sullivan & Cromwell Hires Online Security Specialist
The law firm said it had hired Nicole Friedlander, a former Manhattan federal prosecutor who had overseen online crime prosecutions.
How Elizabeth Holmes’s House of Cards Came Tubmling Down
The precocious founder of Theranos defied medical experts — even her own chief scientist — about the veracity of its now discredited blood-testing technology.
Gretchen Carlson, a former anchor at Fox News, filed suit on July 6, leading to Roger Ailes’s ouster two weeks later.
Fox Settles With Gretchen Carlson Over Roger Ailes Sex Harassment Claims
In a separate development, Fox News announced that Greta Van Susteren was leaving the network, effective immediately.
Roger Ailes.
Charles Sykes/Invision, via Associated Press
The settlement with the former Fox News anchor Gretchen Carlson is another example of the perils of letting one shareholder control the operation.
Lawyers for Roger Ailes said on Tuesday that he had not paid any money toward Gretchen Carlson’s $20 million settlement.
Drew Angerer/Getty Images
Lawyers for the ousted Fox News chairman say he paid no money in a $20 million sexual harassment settlement with Gretchen Carlson.
Economic Scene
A fence at the border with Mexico. Immigration enforcement costs American taxpayers $30 billion a year, without the cost of a wall proposed by Donald J. Trump.
The Crumbling Case for a Mexican Border Wall
Even looking at a best-case scenario, Donald Trump’s immigration proposals aren’t worth the economic cost.
Joanna Coles
Joanna Coles, Cosmopolitan Editor, Named to New Job at Hearst
Hearst said Ms. Coles would become its first chief content officer. Michele Promaulayko will become editor in chief at Cosmopolitan.
An equal pay march in Germany in 2015. A study of Australian women found that men got a raise 20 percent of the time they asked, compared with 16 percent for women.
Research Suggests Women Are Asking for Raises, but Men Get Them More
A study of Australian women points to discrimination as a cause of a pay gap, with men receiving raises 20 percent of the time they asked, compared with 16 percent for women.
Picking strawberries at a field in Pajaro, Calif. The berries have been bred to produce over a long season.
Driscoll’s Aims to Hook the Berry-Buying Shopper
The company plans a new marketing campaign intended to place it in the company of other big fruit brands like Dole and Chiquita.