Fraud in Bitcoin, Unchecked

IN BITCOIN, FRAUD IS QUICKER THAN THE LAW  |  Pump-and-dump schemes are shut down in the financial markets all the time. But such frauds involving digital money like Bitcoin have gone unchecked, Nathaniel Popper reports in DealBook. Government authorities do not agree on which laws apply to Bitcoin, the popular virtual currency — or even on what Bitcoin is.

One recent scam began with a call on Twitter: “For insane profits come and join the pump.” The person behind it, a trader known on Twitter as Fontas, told Mr. Popper in a secure Internet chat that he operated with little fear of a crackdown. “For now, the lack of regulations allows everything to happen,” Fontas said in the chat, where he verified his control of the Twitter account but did not give his identity. He added that the world of Bitcoin would benefit when someone steps in to police it, and would stop his schemes when they do.

Mr. Popper writes: “Chinese authorities drew attention to the issue on Thursday when they announced that they were barring Chinese banks from making Bitcoin transactions. The same day, the Bank of France issued its own warning about the potential risks. The news sent the price of Bitcoin tumbling, but it quickly bounced back to near its all-time high of around $1,200.

“Bitcoins are little more than computer code — created according to a set algorithm and traded between online wallets using virtual keys. Some people insist that virtual currencies could become a revolutionary new form of payment in the real world. Bank of America became the first major Wall Street bank to release research about Bitcoin on Thursday, noting that it could become ‘a major player in both e-commerce and money transfer.’”

SEARS TO SPIN OFF LANDS’ END  |  Sears Holdings, the struggling retailer run by the hedge fund manager Edward S. Lampert, said on Friday that it had filed to spin off its Lands’ End business by distributing shares to investors. The company said it expected the spinoff to be tax free for shareholders in the United States, except for any cash received in lieu of fractional shares. The move is subject to approval by the board.

LIVELY DEBATE ON PROXY ADVISORY FIRMS  |  Corporate shareholders voting on a merger or the election of directors often take advice from so-called proxy advisory firms, independent groups that analyze such issues. But companies and regulators are growing uncomfortable with the amount of influence these advisory firms wield, DealBook’s David Gelles reports. These critics say that the two main firms, Institutional Shareholder Services and Glass Lewis, are understaffed and often uninformed, and that the firms, which also offer consulting services, are riddled with conflicts of interest.

The Securities and Exchange Commission on Thursday hosted a round-table discussion that examined the influence of proxy advisers. While it has not proposed any rules, the agency is considering if any regulation is needed. The S.E.C. chairwoman, Mary Jo White, said that as the influence of proxy advisers had grown, so had questions about the fairness of their recommendations and decision making.

“I am particularly interested in the discussion of conflicts of interest that may or may not arise in connection with the participation of proxy advisers in our system — what they are and views on how they should be addressed,” Ms. White said.

TWITTER ADDS FIRST FEMALE BOARD MEMBER  |  Twitter, which came under fire in the run-up to its I.P.O. for the absence of any women on its board of directors, said on Thursday that it had added the former publishing executive Marjorie M. Scardino to its board. The addition of Ms. Scardino, the first woman to serve as a director at the company, expands Twitter’s board to eight members from seven. Ms. Scardino, 66, is the former chief executive officer of Pearson, the London-based education and media conglomerate. She has also served on Nokia’s board.

Vindu Goel writes on the Bits blog: “Ms. Scardino’s background should certainly help Twitter with its global expansion plans and its efforts to encourage use of the service by the media, including news organizations around the world. Before running Pearson, she ran its Economist Group, which is well known for its deeply reported country and industry profiles. And as the leader of one of the world’s largest publishing companies, she certainly got to know some of the biggest advertisers on the planet.”

ON THE AGENDA  |  The jobs report for November is released at 8:30 a.m. Data on personal income and spending in October is out at 8:30 a.m. John Donahoe, the chief executive of eBay, and David Marcus, the president of PayPal, are on Bloomberg TV at 1 p.m. Art dealers and buyers are in Florida this weekend for Art Basel Miami Beach, where some prices are looking particularly lofty.

SPOTLIGHT ON BLACKROCK  |  The giant asset management firm BlackRock appears on the cover of The Economist. The subheadline reads: “In 25 years, BlackRock has become the world’s biggest investor. Is its dominance a problem?”

SAC WITNESS CONCEDES OMISSION ON ILLICIT DATA  |  Jon Horvath has testified at the insider trading trial of his former boss, Michael S. Steinberg of SAC Capital Advisors, that he was pressured to obtain confidential corporate information to do his job. But on Thursday, Mr. Horvath, a former analyst, conceded that he never explicitly told Mr. Steinberg that the data he had obtained about Dell Inc.’s financial results in 2008 was illicit insider information, DealBook’s Michael J. de la Merced reports.

“No, I never told Mike Steinberg explicitly that it was illegal information,” Mr. Horvath testified.

 |  Contact: @williamalden | E-mail

Nestle to Sell Stake in Flavors Business  |  Nestlé is offering its 10 percent stake in Givaudan, a flavors and fragrances maker, through a private placement to institutional investors, The Wall Street Journal reports. The stake is valued at nearly 1.2 billion Swiss francs ($1.3 billion).
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A Look Behind Yahoo’s Glittering Surface  |  In an article in Vanity Fair, Bethany McLean examines whether Marissa Mayer, Yahoo’s chief executive, will be the company’s “savior or its next big problem. A year and a half in, the results are mixed.”
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Carlsberg Increases Stake in Chinese Brewery  |  Reuters reports: “Danish brewer Carlsberg upped its stake in China’s Chongqing Brewery to 60 percent, strengthening its foothold in the world’s largest beer market by volume, and hopes to increase its holding further, the Chinese company said.”
REUTERS

Total of France to Buy Papua New Guinea Assets  |  The oil giant Total “has agreed to buy a 61.3 percent stake in InterOil’s Papua New Guinea gas fields for up to $3.6 billion, as part of a plan to build a liquefied natural gas export plant,” Reuters reports.
REUTERS

Los Angeles Sues Citigroup and Wells Fargo Over Mortgages  |  Reuters reports: “The city of Los Angeles has filed a lawsuit against Citigroup and Wells Fargo, seeking damages for a loss in tax revenue due to discriminatory mortgage lending to the city’s minority communities, a court filing showed.”
REUTERS

Banks Step Up Monitoring of Communications  |  Some financial firms “are tapping a cottage industry of software companies that use complex algorithms to monitor traders’ calls and emails — looking for catchphrases as well as changes in tone — to try to detect signs that traders may be colluding or placing unauthorized bets,” The Wall Street Journal reports.
WALL STREET JOURNAL

‘The Daily Show’ Chides Financial Journalism  |  Samantha Bee, a correspondent for “The Daily Show With Jon Stewart,” questioned why a no-lose credit-default swaps deal by Blackstone hadn’t received wider media coverage.
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Deal Lawyer Joins Willkie  |  Kirk A. Radke, known for his work on private equity deals, is moving to Willkie Farr & Gallagher after a long tenure at Kirkland & Ellis.
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Apax, a European Private Equity Firm, Names 2 New Co-Chiefs  |  Mitch Truwitt and Andrew Sillitoe will take over as co-chief executives beginning in January.
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Investors, Dismayed by Losses at Sears, Pull Money From Hedge Fund  |  Edward S. Lampert was once hailed as a canny value investor in the same league as Warren Buffett, but his struggles with Sears have disenchanted a number of investors.
DealBook »  | Graphic: Lampert’s Legacy

Hayman Capital Sells Penney Stake  |  J. Kyle Bass, the hedge fund manager who runs Hayman Capital, told Bloomberg TV that his firm had sold its shares in J.C. Penney while continuing to hold the company’s debt.
BLOOMBERG TV

Twitter Makes a Push for Global Expansion  |  Twitter “is upping its game on increasing customers outside of the United States, signing deals for prime mobile phone placement in some cases, and for reaching untapped audiences in others,” AllThingsD reports.
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For Palantir, a $9 Billion Valuation  |  Palantir Technologies, a data analysis company that works with government agencies and financial firms, “has raised $58 million during a funding round that’s expected to top $100 million,” Bloomberg Businessweek reports, citing an unidentified person close to the company. The report says Palantir “is seeking at least a $9 billion valuation.”
BLOOMBERG BUSINESSWEEK

Box Achieves $2 Billion Valuation in Financing Round  |  The Wall Street Journal reports: “Box Inc. has secured $100 million in funding at a valuation of about $2 billion, said chief executive Aaron Levie, as new international investors plan to help the online storage provider expand outside the U.S.”
WALL STREET JOURNAL

Glassdoor, a Jobs Website, Raises $50 Million  |  Glassdoor, a job listings site that lets employees anonymously rate and dish on their companies, said on Thursday that the latest round of financing nearly doubled its total fund-raising to $93 million.
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Homejoy Raises $38 Million in New Round  |  Homejoy, a year-old start-up that connects customers with prescreened cleaners, said on Thursday that it had raised new capital from investors that included Google Ventures, Redpoint Ventures and the entrepreneur Max Levchin.
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Government Push Behind London’s Tech Scene  |  “In part, London’s growth into a European tech hub has been because of support from the British government,” Mark Scott writes on the Bits blog. “Central to that initiative is the Tech City Investment Organization, a state-backed body in charge of promoting London’s tech community, which will celebrate its third anniversary on Friday.”
NEW YORK TIMES BITS

California City Returns to Solvency With Pension Problem Unsolved  |  Stockton, a struggling city in California’s Central Valley, is nearly ready to leave bankruptcy court protection. “But what Stockton, along with pretty much every other city in California that has gone into bankruptcy in recent years, has not done is address the skyrocketing public pensions that are at the heart of many of these cases,” The New York Times writes.
NEW YORK TIMES

Kozlowski’s New Job: Software Company Clerk  |  L. Dennis Kozlowski, the onetime chief executive of Tyco International, has had a clerical job as part of a work-release program at a company that provides software to help veterans and ex-offenders.
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Gupta Suit Against Partner Is Dismissed  |  Rajat Gupta had accused a former longtime friend of trying to stop him from having a say over a private equity fund they started together.
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Japanese Employee at Deutsche Bank Arrested on Bribery Charges  |  The former head of Deutsche Securities’ pension fund sales team is suspected of showering a Tokyo pension fund manger with expensive meals and golf outings in return for some 1 billion yen in investments.
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